WPC3 2HBX@33|P (TT)Times New Roman (TT)Times New Roman (Bold) (TT)6Q DXP#"5@^*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZ*7777CE7SSxJxJxJxJxJooJfJfJfJfJ7.7.7.7.xSxSxSxSxSxSxSxSxSxSxJxSxSxSxSxS]SxSxJxJoJoJoJfJfJfJxSxSxxSxSxSxSCS7S777SAxSf.fExSxSxSxo7oE]A]AN:*LS7JSSSSS.4}}S2S}277JJS77SS7J72t7[\\[^\d*C`^.wRSSn\Cfx`xWlRx\]\cdIfIs`Wx\rriwgd*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZ7SJSS7]777JJ:S7A7xx*7SSSS!S7.S^7SC[227`L*724S}}}Jxxxxxxoffff7777xxxxxxx^xxxxxx]SJJJJJJoJJJJJ....SSSSSSS[SSSSSSSTimes New Roman (TT)Times New Roman (Bold) (TT)Times New Roman (Italic) (TT)HP2W Ez ZR X-#XP\  P6Q DXP#XPPS - PSt 4/4Mt1 Room 228XPPSPS.WRSSC\  P6Qu"nGPzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`l2CC!CCPRCddYYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddoddYYYYYzYzYzYddddddPdCdCCCdNdz8zRdddCRoNoNNF2[dCYddddd7>d<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddndddddddTimes New Roman (TT)Times New Roman (Bold) (TT)Times New Roman (Italic) (TT)7PC2X DXP\  P6QXP.7UC2XxXU4  pQX5PC2X3EXP*f9 xQXX2s V Z 3 3|Py.C8*XpC\  P6QPozzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`l2CC!CCPRCddYYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddoddYYYYYzYzYzYddddddPdCdCCCdNdz8zRdddCRoNoNNF2[dCYddddd7>d<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddndddddddHP LaserJet 4/4MCL)HPLAS4.WRSSC\  P6Q,,"P X- I. A. 1. a.(1)(a) i) a) 1. 1. 1. a.(1)(a) i) a)#XP\  P6Q XP#ѐdddoddYYYYYzYzYzYddddddPdCdCCCdNdz8zRdddCRoNoNNF2[dCYddddd7>d<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddnddddddd2pvXz@vTimes New Roman (TT)Times New Roman (Bold) (TT)Times New Roman (Italic) (TT)Times New Roman (Bold Italic) (TT)#XP\  P6Q DXP#Ky.C8*XpC\  P6QPL7PC2X XP\  P6QXP.M7UC2XXU4  pQX5PC2X3XP*f9 xQXXCCddCdCd<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddndddddddTimes New Roman (TT)Times New Roman (Bold) (TT)Times New Roman (Italic) (TT)Times New Roman (Bold Italic) (TT)2%@Z@"@b""5@^2Coddȧ8CCdr2C28ddddddddddCCrrrdzNdzoȐC8CtdCdoYoYCdo8Co8odooYNCodddYO,Oh2CC!CCPRCdodddddȐYYYYYN8N8N8N8oddddooooddoddddzodddYYYYYYddddooPoNoNCNodo8RoodȐYYoNoNNF2ldCddddddd<d<CCoodCCddCoCddzzzzzzzzzzCCCCozdddddddYYYYY8888dddddddndddddYd"5@^2Nodd8CCdr2C28ddddddddddCCrrrdNdzzozzzC8CrdCddYdYCdo88d8odddNN8oYdYNF,Fr2CC!CCPRCdddddddYYYYYN8N8N8N8oddddoooozYddddzYdzddddYYYYYYddddooPdNdNCNdddz8zRoodNRoNoNNF2ddNdddddd5could not agree on the terms under which the station would be sold or because the offer to purchase the station was withdrawn when the buyer decided not to pursue the sale.  Xy-   x9. In addition, Wild Horse argues that competition and diversity will not be adversely  xaffected if it is permitted to acquire KRYK(FM). With regard to diversity, Wild Horse states  xthat in addition to three commerical stations, the market is served by three noncommercial  xstations that have principal community contour overlap with the three commercial stations in the  xmarket. Wild Horse also lists 15 outofmarket commercial radio stations that it claims provide  xyservice to Chinook and Havre. In this regard, Wild Horse argues that the radio market at issue  xis in a rural area, where it is possible to receive service from radio stations even though those  xstations do not provide principal community contour coverage to the market. Specifically, Wild  x=Horse states that there are five FM stations in Great Falls, Montana that place signal contours  xof 60 dBu in the market and two AM stations in Great Falls, Montana that place signal contours  x[of 2 mV/m in the market. Wild Horse lists two additional commercial AM stations, one licensed  xto Shelby, Montana and one licensed to Lewiston, Montana that provide 2 mV/m signals to the  xmarket. Wild Horse also claims that residents of Chinook and Havre receive service from an FM  xstation licensed to Missoula, Montana, and five Canadian stations. Wild Horse acknowledges that  xjthe three noncommercial stations and the fifteen listed outofmarket AM and FM stations are  xnot counted for purposes of determining the number of stations in the relevant radio market, and  xthus the level of ownership permitted under the local radio ownership rules. Nevertheless, Wild  xyHorse argues that these stations contribute to diversity in the local radio market at issue. Wild  x[Horse also states that Chinook and Havre are served by six television stations, including three  xnetwork affiliates, whose signals are transmitted through television translator stations. According  xto Wild Horse, cable and DBS service is also available, as well as two daily newspapers in Chinook and three daily newspapers in Havre.   x10. Wild Horse states that, currently, its controlling principal is the only commercial  xlicensee operating in the market since Davies, the market's only other commercial radio licensee,  x ceased broadcast operations on KRYK(FM). Thus, Wild Horse argues that even if it is not  x-permitted to acquire and reactivate service on KRYK(FM), the market will nevertheless have only"#',-(-(ZZ%"  xone commercial "voice" competing for advertising revenue. Under these circumstances, Wild Horse argues that its acquisition of KRYK(FM) will not adversely affect economic competition.   x11. Wild Horse also contends that approval of its acquisition of KRYK(FM) under the  x=Section 202(b)(2) exception will benefit the public interest, because the addition of KRYK(FM)  x[to an AM/FM station combination under common control will result in economies of scale and  xoperating efficiencies as well as cost savings and enhanced programming on KRYK(FM).  x=Specifically, Wild Horse states that the existing staff and facilities of the AM/FM combination  x=will be used to operate KRYK(FM). Wild Horse projects annual savings of $42,037 in salaries,  xcontract wages and payroll taxes from consolidation of the stations' employees. Wild Horse also  xkestimates that consolidation of KRYK(FM) with the existing station operations will result in  xadditional annual savings of $30,217 on utilities and telephone service, office supplies, office  xexpenses, lease payments and repairs. In addition, Wild Horse will save $6,618 annually on wire  xservices, and other similar expenses. Annual savings of $79,272 in these categories is offset by  xzadditional expenses of $17,648 that Wild Horse expects as a result of combining KRYK(FM)  xwith the existing AM/FM station combination, including additional expenses for an engineer,  xtalent, and royalties. Thus, Wild Horse claims net total annual savings of $61,624 in operational  xexpenses based on consolidation of KRYK(FM) with the AM/FM combination licensed to its controlling principal.   x12. In addition, Wild Horse states that the proposed joint station operation will permit  xKRYK(FM) to take advantage of upgraded equipment, which will be available for news gathering  xyand public service programming. Wild Horse also intends to maintain a separate entertainment  xprogramming format on KRYK(FM). Wild Horse is committed not only to continuing existing  xpublic service programming on KRYK(FM) but also to improving KRYK(FM)'s programming  xby airing on a regular basis additional programming oriented to needs and interests of Chinook,  xKRYK(FM)'s community of license. Specifically, Wild Horse intends to add a new public affairs  xprogram, during the morning drive time, specifically dedicated to issues of importance in the  xlocal community. Wild Horse adds that unless it is permitted to acquire KRYK(FM), Chinook will lose this significant source of local programming.  X7<) DISCUSSION ă   Nx13. Although we previously indicated that the Section 202(b)(2) exception would be the  xsubject of a rulemaking proceeding, we now believe that for the immediate future, the Section  xj202(b)(2) exception should be applied on a casebycase basis. This approach will permit us to  xgain some experience with the types of circumstances presented as justifying an exception under  xthis provision and to use this experience in fashioning a generally applicable statement of the  xproper scope of the exception. This casebycase approach is also appropriate in light of the  xZTelecommunications Act of 1996, which recently and substantially increased the permissible level  xzof common ownership in local radio markets. Significant consolidation in the radio industry  xcontinues to occur in the wake of that legislative change. Under these conditions, it is  xparticularly important, in our view, to proceed in a careful, casebycase manner with any additional relaxation of the ownership limits afforded by Section 202(b)(2)."$',-(-(ZZ%"Ԍ   @x14. In the particular case before us here, we conclude that compelling circumstances  xwarranting grant of an exception pursuant to Section 202(b)(2) exist. Grant of Wild Horse's  xacquisition of KRYK(FM) pursuant to the Section 202(b)(2) exception appears to be the only  xalternative to loss of the only local radio broadcast station licensed to Chinook. The market  xinvolved in this case is located in a rural portion of northern Montana. KRYK(FM) is one of  x[only three commercial stations licensed not just to the communities of Havre and Chinook, but  xto the entire area comprised of Blaine and Hill counties in which Havre and Chinook are situated.  xThat area, approximately 7122 square miles, is roughly the size of Massachusetts, a state with  xa population of some 6 million, yet it contains only 24,000 people. This is, in short, an  xzextremely small, sparsely settled market area which would, by its nature, present exceptional challenges to parties attempting to sustain the operation of multiple, competing radio facilities.  xKRYK(FM)'s history of financial difficulties, and the parties' contention that KRYK(FM) will  xbe unable to return to the air absent common ownership of KRYK(FM) and KOJM(AM) and  xKPQX(FM), are consistent with the competitive obstacles that appear to be present in the  X -extremely small, rural market in this case.A. I yO - x<ԍ Wild Horse asserts there are three noncommercial stations in the market and 15 additional outofmarket  xcommercial stations that serve the market with signals of less than principal community strength. Wild Horse argues  xthat these stations also serve the market, and thus should be considered for purposes of evaluating diversity and  xcompetition. We disagree. For purposes of evaluating competition, noncommercial stations are not considered under  {O@- xZthe local radio ownership rules because those stations do not compete for advertising revenue. See Memorandum  {O - xOpinion and Order and Further Notice of Proposed Rule Making in MM Docket 91140, Revision of Radio Rules  {O- x;and Policies, 7 FCC Rcd 6387, 6395 (1992). Also under our rules, commercial stations are not counted unless those  x,stations have principal community contours that overlap with any of the proposed commonlyowned or controlled  xLstations. Moreover, Wild Horse has not presented audience share data or advertising revenue data in order to  xYdemonstrate that the 15 listed outofmarket stations compete for listeners or advertising dollars in the market. We  xtherefore decline to base an exception to the numerical ownership limitations, even in part, on service from the noncommercial stations or the outofmarket commercial stations. A   ox15. In this regard, documentation submitted with the application indicates that  x[KRYK(FM) has incurred losses in five years during the six year period between 1990 and 1996.  xKFinancial problems previously caused the station to discontinue operation for an extended period  xKof time in 1986 and 1987. Moreover, the station's licensee, Davies, has stated that based on these  xongoing financial difficulties, he will permanently cease operating the station if the assignment  xto Wild Horse is not approved. In addition, the record includes substantial evidence documenting  x.Davies' repeated and unsuccessful efforts, since 1990, to sell the station to alternative buyers.  xThus, although KRYK(FM) has only recently ceased broadcasting, the record in this case  xjsupports a finding that but for the application of the exception and approval of the assignment  X-of the station's license, service on the station will not be reactivated. I yO%- xԍ We note that on May 6, 1997, Davies notified the Commission, as required by 47 C.F.R.  73.1740, that KRYK(FM) had discontinued broadcast operations. ",-(-(ZZ"Ԍ  {x16. Based on the foregoing, we believe that Wild Horse has met the burden of justifying  xPits acquisition of KRYK(FM) pursuant to the exception in Section 202(b)(2) of the  xTelecommunications Act of 1996. We emphasize that our decision to permit the use of the  xSection 202(b)(2) exception in this case primarily is to ensure the reactivation of service on  xKRYK(FM), the only radio station licensed to Chinook. Under the circumstances presented, we  xfind that grant of the assignment of the license of KRYK(FM), which permits Wild Horse's  xcontrolling principal to exceed the numerical limitations of the local radio ownership rules, would  xresult in an increase in the number of stations in operation, as required under the Section  x{202(b)(2) exception. We are also persuaded that, on balance, our decision to permit joint  xownership of KRYK(FM), KOJM(AM) and KPQX(FM) poses no greater risk to economic  xcompetition and diversity in this small market than would our refusal to do so. Indeed, given  xour conclusion that KRYK(FM) will cease operating permanently absent its assignment to Wild  xjHorse, our decision will preserve some portion of the diversity which previously existed in this  xmarket, including retention of the only local transmission service in Chinook. We additionally  x=find that the parties to the asssignment application are fully qualified. Therefore, we conclude  x/that the grant of the assignment of the license of KRYK(FM) to Wild Horse is in the public interest.   Ox17. Accordingly, IT IS ORDERED, That the application for assignment of the license  xkof KRYK(FM), Chinook, Montana, from Rick David Davies to Wild Horse Communications,  x>Inc., File No. BALH960909GJ, and the common ownership of KRYK(FM), KOJM(AM) and  x[KPQX(FM) pursuant to the exception set forth in Section 202(b)(2) of the Telecommunications  xAct of 1996, Pub. L. No. 104104,  202(b), 110 Stat. 56 (1996), IS HEREBY GRANTED.  xKHowever, our grant of the assignment application will be conditioned on resumption of broadcast service on KRYK(FM) within 120 days after consummation. x FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary