******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) In re Applications of ) ) Alabama Universal Corporation ) (Assignor) ) ) and ) File Nos. BAL-960709GE; BALH-960709GF ) H and P Radio Birmingham II, LLC) (Assignee) ) ) For Assignment of Licenses of Stations) WTNW(AM) and WBHJ(FM), Tuscaloosa,) Alabama ) - - - ) ) North South Broadcasting Company, L.L.C.) (Assignor) ) ) and ) File No. BALH-960808GE ) H and P Radio Birmingham, LLC ) (Assignee) ) ) For Assignment of License of Station) WBHK(FM), Warrior, Alabama ) MEMORANDUM OPINION AND ORDER Adopted: April 15, 1997 Released: April 18, 1997 By the Commission: 1. The Commission has before it: (1) the above-captioned application for assignment of licenses of WTNW(AM), Tuscaloosa, Alabama and WBHJ(FM), Tuscaloosa, Alabama, from Alabama Universal Corporation to H and P Radio Birmingham II, LLC ("HP II"); (2) the above-captioned application for assignment of license of WBHK(FM), Warrior, Alabama, from North South Broadcasting Company, L.L.C. to H and P Radio Birmingham , LLC ("HP"); and (3) related requests for permanent waivers of the Commission's one-to-a-market rule, which restricts common radio and television station ownership in the same market. The applications are unopposed. 2. The principals of HP and HP II control WDBB-TV, Inc., the licensee of independent UHF television station WDBB, Bessemer, Alabama. Grant of the instant assignment applications would create new radio-television combinations because the Grade A contour of WDBB(TV)'s newly authorized facilities encompasses the entire community of license of each radio station to be acquired in these proposed transactions. In addition, the 1 mV/m contour of WBHJ(FM) and the 1 mV/m contour of WBHK(FM)'s newly authorized facilities encompass Bessemer. Accordingly, we simultaneously are considering HP's request for a one-to-a-market waiver in the Birmingham market and HP II's request for a one-to-a-market waiver in the Tuscaloosa market. Radio Contour Overlap 3. We note that all three radio stations in the proposed combination do not have mutually overlapping principal community contours. WTNW(AM)'s principal community contour is totally encompassed by the principal community contour of WBHJ(FM). The principal community contour of WBHJ(FM) overlaps the principal community contour of WBHK(FM), but there is no principal community contour overlap between WTNW(AM) and WBHK(FM). Therefore, there are two separate local radio markets involved in the proposed station combination: (1) WTNW(AM) and WBHJ(FM); and (2) WBHJ(FM) and WBHK(FM). See Implementation of Sections 202(a) and 202(b) of the Telecommunications Act of 1996, FCC 96-90 (rel. March 8, 1996). Under our rules, even in the smallest market, a party may own, operate or control up to five commercial radio stations, not more than three of which are in the same service, except that a party may not own, operate or control more than 50 percent of the stations in such market. 47 C.F.R. Section 73.3555(a)(1)(iv). HP and HP II have submitted contour overlap maps indicating that there are at least eight commercial radio stations in each of these markets not under their control. HP's and HP II's proposal to own two radio stations in each of the relevant markets therefore complies with the local radio ownership numerical limits. Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of this application. We conclude that, with respect to local radio ownership, nothing in the record suggests that HP's and HP II's acquisition of WTNW(AM), WBHJ(FM) and WBHK(FM) would be inconsistent with the public interest. See, e.g., WHFS, Inc., FCC 97-109 (Mar. 27, 1997); NewCity Communications, Inc., FCC 97-107 (Mar. 26, 1997). Permanent One-to-a-Market Waiver Requests 4. Section 73.3555(c) of the Commission's rules, the one-to-a market rule, generally proscribes common ownership of a television and radio station in the same market. In the Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 ("Second Report and Order"), recon. granted in part, 4 FCC Rcd 6489 (1989)("Second Report and Order Recon."), the Commission established three standards for waiver of the rule. First, under the "top 25 markets/30 voices" standard, the Commission presumes that waiver of the rule will serve the public interest in cases involving television and radio station combinations in the top 25 markets where at least 30 separately owned, operated and controlled broadcast licensees, or "voices," would remain after the proposed combination. Second Report and Order, 4 FCC Rcd at 1751-52. Second, under the "failed station" standard, the Commission presumes that the public interest also will be served in cases involving acquisition of "failed" broadcast stations. That is, stations that have not been operating for a substantial period of time or that are in bankruptcy. Second Report and Order, 4 FCC Rcd at 1752- 53. Third, under the more rigorous "case-by-case" standard, the Commission evaluates the waiver request by weighing five factors: (1) the public service benefits that will arise from the joint operation of the facilities such as economies of scale, cost savings and programming and service benefits; (2) the types of facilities involved; (3) the number of media outlets owned by the applicant in the relevant market; (4) the financial difficulties of the stations involved; and (5) the nature of the relevant market in light of the level of competition and diversity after joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753. In enunciating the five factors to be considered under the case-by-case standard, the Commission noted that not all five factors must be satisfied in each case, but rather the overall consideration of these factors must weigh in favor of granting the waiver request. Second Report and Order Recon., 4 FCC Rcd at 6491. 5. The instant waiver requests must be evaluated under the case-by-case standard because the stations in the proposed transaction do not serve a "top 25" market nor do the parties allege that any of the stations involved are "failed stations." Moreover, evaluation of the waiver requests under the case-by-case standard is appropriate because the proposed transactions involve the common ownership of more than one same service radio station with a television station. We note that HP and HP II are eligible for permanent, unconditional waivers because this level of cross-service ownership is well within that permitted even under one-to-a-market waiver cases decided before the substantial relaxation of radio ownership limits effected by the Telecommunications Act of 1996. See, e.g., Louis C. DeArias, 11 FCC Rcd 3662 (1995) (2 AM-2 FM-VHF combination); see alsoReview of the Commission's Regulations Governing Television Broadcast Ownership in MM Docket Nos. 91-221 and 87-8, FCC 96-438, para. 79 (November 7, 1996) (contemplates approval of permanent, unconditional waivers to allow radio-television combinations that do not propose common ownership of stations exceeding a combination of one television station, two AM stations and two FM stations and that are otherwise consistent with prior Commission precedent). 6. We further note that the radio and television stations in the proposed combination are not all located in the same television market. WDBB(TV) is licensed to Bessemer, which is part of the Birmingham television market. WDBB(TV)'s grade A contour encompasses the communities of license of all three radio stations in the proposed combination. WBHK(FM)'s community of license, Warrior, also is part of the Birmingham television market. However, WTNW(AM) and WBHJ(FM), both are in Tuscaloosa, a separate one-county television market that is surrounded on all sides by counties in the Birmingham television market. The Commission previously has determined that where the radio stations being acquired are located in a separate DMA (Designated Market Area) from the television station whose Grade A contour implicates the one-to-a-market rule, evaluation of the waiver request should focus on the DMA in which the radio stations are located. SeeStockholders of CBS, Inc., 11 FCC Rcd 3733, 3767-3768 (1996). Accordingly, while we focus on the effects on competition and diversity in the Birmingham DMA with regard to the proposed combination of WBHK(FM) and WDBB(TV), we focus on the effects on competition and diversity in the Tuscaloosa DMA in evaluating the proposed combination of WBHJ(FM), WTNW(AM) and WDBB(TV). In support of their requests, HP and HP II each submits a showing that addresses the five case-by-case factors. 7. Benefits of Joint Operation. Because WDBB(TV) is programmed pursuant to a time brokerage agreement by Sinclair Communications, Inc., the licensee of independent television station WTTO(TV) (Channel 21), Birmingham, Alabama, HP and HP II state that the operation of the radio stations will not be consolidated with the television station. Nevertheless, HP and HP II estimate $170,000 in savings annually from common ownership of the two FM stations. HP and HP II assert that these savings will enable it to direct more resources to news and public affairs programming, including a local public affairs program that will be broadcast one hour per week on each radio station. HP II in particular states that it is committed to serving the African-American community of Tuscaloosa and that it intends to invest a portion of the cost savings in a program called "Stop the Violence/Increase the Peace," which is designed to address the local gang problem that has plagued the Tuscaloosa community. 8. Types of Facilities/Other Media Outlets. In the Birmingham market, HP and HP II report that WDBB(TV) is an independent UHF station operating on Channel 17 with a height above average terrain of 266 meters and an Effective Radiated Power ("ERP") of 794 kW. In addition, WDBB(TV) has a construction permit to operate WDBB(TV) with an HAAT of 610 meters and an ERP of 5000 kW-DA. Even at the facilities authorized in the construction permit, HP and HP II claim that because of terrain shielding, WDBB(TV) will not provide a "viewable signal" to the entire Birmingham television metro market nor the entire Birmingham Urbanized Area. HP further claims that WDBB(TV)'s signal will be inferior to the facilities of 6 television stations licensed to Birmingham. WBHK(FM) is a 6 kW Class C3 station operating on 98.7 mHz. HP states that there are 8 commercial FM stations licensed to the Birmingham television metro market that are 100 kW Class C stations. In addition, HP states that WBHK(FM)'s 1.2 audience share in the Birmingham market is "overshadowed by ratings of more dominant stations." 9. In the Tuscaloosa market, HP II reports that WTNW(AM) is a 1 kW Class C AM station operating on 1230 kHz and WBHJ(FM) is a 100 kW Class C1 station operating on 95.7 mHz. HP II reports that WTNW(AM) operates with the lowest daytime effective radiated power in the market. With regard to WBHJ(FM), HP II reports that there are 11 other radio stations with comparable or superior facilities. HP II claims that WBHJ(FM)'s 3.2 audience share is approximately one-sixth that of the market leader. In addition, HP reports that the only television station licensed to Tuscaloosa is UHF station WCFT (ABC affiliate). With regard to other media interests in the markets, HP and HP II report that they hold no attributable interests in Tuscaloosa or Birmingham other than WDBB(TV) . 10. Economic Status. HP and HP II report that prior to entering into a time brokerage agreement, WDBB(TV) had losses of $230,000 in fiscal year 1995. HP now provides programming to WBHK(FM) pursuant to a time brokerage agreement and HP II provides programming to WBHJ(FM) pursuant to a time brokerage agreement. HP states that prior to its provision of programming to WBHK(FM) pursuant to a time brokerage agreement, the station did not have a positive cash flow. Similarly, HP II reports that WTNW(AM) and WBHJ(FM) had losses of $202,287.97 in 1994 and $246,798.20 in 1995 prior to HP II's provision of programming to WBHJ(FM) under a time brokerage agreement. HP II notes that while only WBHJ(FM) is brokered, WTNW(AM) remains viable only by virtue of the payments received by HP II under the time brokerage agreement. 11. Competition and Diversity in the Market. With regard to HP's proposed acquisition of WBHK(FM), HP reports that there are 10 television stations licensed to communities in the Birmingham DMA, held by 9 separate owners. In addition, HP reports that there are 15 FM stations and 17 AM stations licensed to the Birmingham television metro market, held by 23 separate owners. HP claims that following consummation of the proposed transaction, these 42 broadcast stations will be licensed to 31 separate owners. HP reports that the Birmingham DMA is served by 37 cable operators, which reach 65.5% of the total households in the market. In addition, the Birmingham DMA is served by 15 low power television stations, 5 daily newspapers, 10 weekly newspapers and 17 magazines having a circulation of 10,000 or more. 12. HP II contends that WTNW(AM) and WBHJ(FM) are in Tuscaloosa, a market distinct from that of the television station, and that the proposed combination will not have an adverse impact on the level of diversity or competition in the Birmingham market. HP II nonetheless provides information regarding competition and diversity in the Tuscaloosa DMA, which is a one-county DMA. HP II states that there are 5 AM stations, 6 FM stations and 1 UHF television station licensed to communities in the Tuscaloosa DMA. Following consummation of the proposed transaction, HP II reports that these 12 broadcast stations will be held by 8 separate owners. In addition, HP II reports that there are 17 radio stations licensed to the Birmingham DMA whose principal community service contours enter or cover the Tuscaloosa DMA. HP II also reports that there are 7 television stations licensed to the Birmingham DMA, including WDBB(TV), whose Grade B contours enter or cover Tuscaloosa. Including these additional radio and television stations, HP II reports that there are 36 broadcast stations held by 25 separate broadcast owners serving Tuscaloosa and that following consummation of the proposed transaction, 24 separate broadcast owners would remain. In addition, HP II reports that Tuscaloosa is served by 4 cable operators with 78.6% penetration and one daily newspaper. Discussion 13. With regard to the potential public service benefits, HP and HP II have demonstrated programming benefits and economic benefits that would result from the joint operation of the three radio stations. HP and HP II estimate total savings of $170,000 annually from common ownership of WBHJ(FM) and WBHK(FM). HP and HP II indicate that these savings will enable them to direct more resources to news and public affairs programming, including a local public affairs program that will be broadcast one hour per week on each radio station. In addition, HP II states that in an effort to address the gang problem in Tuscaloosa, it intends to broadcast a program called "Stop the Violence/Increase the Peace," which addresses gang violence. Because WDBB(TV) currently is programmed by a third party pursuant to a time brokerage agreement, the radio and television station operations will not be consolidated and therefore no operating efficiencies or cost savings will be realized from joint operation of the radio stations and the television station. This fact, however, is not fatal to the request for a one-to-a-market waiver. We previously have approved one-to-a-market waiver requests where economic efficiencies existed only among the radio stations in a proposed combination of television and radio facilities. See Golden West Broadcasters, 10 FCC Rcd 2081 (1995); First Broadcasting Company, 10 FCC Rcd 2904 (1995). 14. With respect to the types of facilities involved, the Commission aims to predict and avoid any significant adverse effects on diversity or competition from too powerful a combination. Great American Television and Radio Co., 4 FCC Rcd 6347, 6349 (1989). In the Birmingham market, our independent analysis of HP's showing indicates that in contrast with WBHK(FM)'s 6 kW facility, there are 8 FM stations in the market that operate with authorized power of 100 kW. We have also independently determined that there is at least one other television station in the market operating with more powerful facilities than WDBB(TV)'s newly authorized facilities. Furthermore, HP has submitted persuasive evidence showing that WDBB(TV)'s signal, even operating with modified facilities, will provide only a marginally viewable signal to the most densely populated areas of Birmingham. We therefore conclude that the proposed combination does not present issues of market dominance in the Birmingham market inconsistent with the public interest. With regard to the Tuscaloosa DMA, we independently have determined that WDBB(TV) has a 7% audience share in the Tuscaloosa market. In contrast, the only television station licensed to the Tuscaloosa DMA, UHF station WCFT (ABC affiliate), has a 21% audience share -- three times that earned by WDBB(TV). Although WBHJ(FM) is a 100 kW station, we independently have determined that there are two FM stations licensed to Tuscaloosa with authorized power of 100 kW that will not be under HP II's control. In addition, our independent analysis of HP II's showing indicates that there are at least seven other FM stations whose principal community service contours substantially cover Tuscaloosa that operate with authorized power of 100 kW. Also, we independently have determined that WBHJ(FM) has a 3.2% audience share in the Tuscaloosa market. Our independent analysis indicates that such audience share is approximately one-fifth of the market leader in the Tuscaloosa DMA. Furthermore, our independent analysis indicates that there are 4 AM stations licensed to Tuscaloosa with greater authorized power than WTNW(AM)'s 1 kW facility. In light of the substantial competing facilities in the Tuscaloosa market, we conclude that the proposed combination does not present issues of market dominance inconsistent with the public interest. 15. The applicants have demonstrated that the FM stations did not have positive cash flows until HP and HP II began brokering the stations. In addition, HP II claims that WTNW(AM) remains viable only because HP II receives payments under WBHJ(FM)'s time brokerage agreement. WDBB(TV) likewise suffered losses of $230,000 in fiscal year 1995 until a third party began programming the station. Although these showings do not demonstrate that the stations are in immediate financial distress (cf. Glendive Broadcasting Corporation, 10 FCC Rcd 2708 (1995)), "[n]ot all of the factors mentioned will be relevant in every case." Second Report and Order Recon., 9 FCC Rcd at 6491. Indeed, one-to-a-market waivers have been granted absent financial difficulties. See, e.g., Louis C. DeArias, Receiver, 11 FCC Rcd 3662 (1996); Alta Gulf FM, Inc., 10 FCC Rcd 7750, 7751 (1995); Henry Broadcasting Co., 11 FCC Rcd 1175 (1995); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 9495 (1995); Secret Communications Ltd., 10 FCC Rcd 6874 (1995). 16. Finally, HP and HP II have shown that the proposed combinations will not create any undue concentration of ownership or control of the broadcast media in the Tuscaloosa market or the Birmingham market. In the Birmingham DMA, there are 10 television stations, including WDBB(TV), licensed to 9 separate owners. In addition, there are 15 FM stations and 17 AM stations in the Birmingham television metro market, licensed to 23 separate owners. Following consummation of the proposed transaction, these 42 broadcast stations will be licensed to 31 separate owners. HP also has shown that the Birmingham DMA is served by 37 cable operators reaching 65.5% of the total households in the market, 15 low power television stations, 5 daily newspapers and 10 weekly newspapers. The level of diversity that would be present in the Birmingham market after the proposed combination is consistent with the level we have approved in previous waiver requests. See, e.g. Moosey Communications, Inc., 8 FCC Rcd 5247, 5249 (1993)(24 separate voices, 1 daily newspaper and 73% cable penetration); Liggett Broadcasting, Inc., 7 FCC Rcd 7124, 7125-26 (1992)(28 separate voices, 7 daily newspapers and 51% cable penetration); South Central Communications Corp., 5 FCC Rcd 6697, 6698-99 (1990)(26 separate voices, 2 daily newspapers and 61.9% cable penetration). 17. In the Tuscaloosa DMA, HP II has shown that there are 6 FM stations, 5 AM stations and 2 UHF television stations, including WDBB(TV), held by 9 separate owners. Furthermore, because there is no television metro market in the one-county Tuscaloosa DMA, we also count as market stations those radio stations whose principal community service contours substantially cover Tuscaloosa and those television stations whose Grade B contours substantially cover Tuscaloosa. See Gadsden Broadcasting Company, 10 FCC Rcd 8741, 8743 and n. 4 (1995). Based on these showings, we find that there are at least an additional 12 radio stations and 6 television stations held by 14 separate owners that serve Tuscaloosa. Thus, there are a total of 8 television stations and 23 radio stations serving Tuscaloosa. Following consummation of the proposed transaction, these 31 broadcast stations will be licensed to 22 separate owners. HP II also has demonstrated that the Tuscaloosa DMA is served by 4 cable operators with 78.6% penetration. The level of diversity that would be present in the Tuscaloosa market after the proposed combination is consistent with the level we have approved in previous waiver requests. Westar Broadcasting, Ltd., FCC 96-364 (rel. September 12, 1996)(15 separate voices in the 188th ranked market); Perry Television, Inc., 5 FCC Rcd 1667, 1671 (1990)(14 separate voices in the 130th ranked market). 18. With respect to economic concentration and competition, our independent analysis indicates that in the Tuscaloosa DMA, WTNW(AM) and WBHJ(FM) garner 13.3% of the radio advertising revenue. No advertising revenue share is reported for television stations in the Tuscaloosa market and thus we are not able to determine the combined radio and television advertising revenue share of WTNW(AM), WBHJ(FM) and WDBB(TV) in Tuscaloosa. In the Birmingham market, WBHK(FM) garners 0.6% of the advertising revenue. No advertising revenue share is reported for WDBB(TV) in the Birmingham market and therefore we are not able to determine the combined radio and television advertising revenue share of WDBB(TV) and WBHK(FM) in Birmingham. 19. We conclude that, on balance, granting a permanent waiver will not unduly affect competition or diversity in either the Tuscaloosa market or the Birmingham market. The combination does not involve powerful stations nor do the stations garner a significant percentage of advertising revenue. Moreover, HP and HP II have demonstrated that economic efficiencies will be gained and such benefits support the grant of a permanent waiver. 20. Accordingly, IT IS ORDERED, that the requests for waiver of the Commission's one-to-a- market rule, 47 C.F.R. Section 73.3555(c), to permit common ownership of WDBB(TV), Bessemer, Alabama; WBHJ(FM) and WTNW(AM), Tuscaloosa, Alabama; and WBHK(FM), Warrior, Alabama, ARE HEREBY GRANTED. 21. IT IS FURTHER ORDERED, that having found that the applicants are fully qualified and that a grant of the application would be in the public interest, the above-captioned application to assign the licenses of WBHJ(FM) and WTNW(AM), Tuscaloosa, Alabama from Alabama Universal Corporation to H and P Radio Birmingham II, LLC IS HEREBY GRANTED. 22. IT IS FURTHER ORDERED, that having found that the applicants are fully qualified and that a grant of the application would be in the public interest, the above-captioned application to assign the license of WBHK(FM), Warrior, Alabama from North South Broadcasting Company, L.L.C. to H and P Radio Birmingham , LLC IS HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary