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BAL970304EA  X -R)hpp BALH970304EB GulfCalifornia Broadcast Co.R) (Assignee)R) R) For Assignment of Licenses ofR) Stations KUNA(AM), Indio, California andR) KUNAFM, La Quinta, CaliforniaR) R)  X4-}  MEMORANDUM OPINION AND ORDER TP  X-X` hp x (#%'0*,.8135@8:&- xԍ GCBC is 100% owned by NewsPress & Gazette Co. which does not own newspapers in Palms Springs or the surrounding areas. Grant of the instant assignment application would create a new  xradiotelevision combination because the grade A contour of KESQTV encompasses the entire  xcities of license of KUNA(AM) in Indio and KUNAFM in La Quinta. For the reasons stated"! ,))ZZ " below, we grant the permanent waiver request and the assignment application.  X-  Request for Waiver of the OnetoaMarket Rule ă x  X-  /x3. GCBC bases its request on the onetoamarket waiver standards adopted in the Second  X- x?Report and Order in MM Docket No. 877, 4 FCC Rcd 1741 (1989) ("Second Report and  Xz- xOrder"), recon. granted in part and denied in part, 4 FCC Rcd 6489 (1989) ("Second Report and  Xe- xOrder Recon."). Under these criteria, the Commission presumptively favors waiver requests  xinvolving station combinations serving the top 25 markets where there are at least 30 separately  xowned, operated, and controlled broadcast licensees or "voices" after the proposed combination  X" - x("top 25 market/30 voice standard").l" ۠ yO - xԍ Pursuant to the statutory directive "to extend its [onetoamarket] waiver policy to any of the top 50 markets,  xconsistent with the public interest, convenience and necessity," under the Telecommunications Act of 1996, Pub.  xL. No. 104104,  202(d), 110 Stat. 56 (1996), the Commission is considering a proposal to implement extension  {O - xof the waiver policy in the Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91221 and 878, FCC 96438 at para. 66 (rel. Nov. 7, 1996). l The Commission also favors waiver requests involving  x"failed" broadcast stations, that is, stations that have not been operating for a substantial period  xof time or that are in bankruptcy proceedings. Otherwise, the requests must be evaluated under  X -a more rigorous casebycase approach. See 47 C.F.R.  73.3555, note 7.  X -  x4. We shall review GCBC's waiver request under the casebycase standard because Palm  xSprings is the 164th largest Designated Market Area ("DMA") in the country and there is no  xclaim that KUNA(AM) or KUNAFM is a "failed station," as defined by the Commission. Under  xKthe casebycase standard, the Commission makes a public interest determination based upon the  xfollowing five criteria: (1) the potential public service benefits that will arise from the joint  xyoperation of the facilities involved, such as economies of scale, cost savings and programming  xyand service benefits; (2) the types of facilities involved; (3) the number of media outlets owned  xby the applicant in the relevant market; (4) the financial difficulties of the stations involved; and  x.(5) the nature of the relevant market in light of the level of competition and diversity after joint  X- xoperation is implemented. Second Report and Order, 4 FCC Rcd at 175354. In enunciating the  xfive factors to be considered under the case-by-case standard, the Commission noted that not all  xLfive factors must be satisfied in each case, but rather the overall consideration of these factors  X- xmust weigh in favor of granting the waiver request. Second Report and Order Recon., 4 FCC  x.Rcd at 6491. In support of its waiver request, GCBC submits a showing which addresses each of the five factors.  XE-  x5. Benefits of Joint Operation. GCBC estimates that consolidation of the staffs and  xstudios of KESQTV and KUNAAMFM will result in annual cost savings of $160,000 which  x will result in public interest benefits. GCBC asserts that KUNAAMFM, which have been  xoperating at a loss, could be transformed into a profitable operation by gaining access to KESQ xTV's state of the art broadcast facilities, its trained sales staff, its award winning news staff, and  x its experienced administrative support staff. Specifically, GCBC plans to improve the news  xMprogramming of KUNAAMFM by utilizing the bilingual (Spanish/English) onair talent of"!z,-(-(ZZ "  x<KESQTV to provide spot news coverage and expand daily news broadcasts. The bilingual news  xoperations of KESQTV would also be expanded. GCBC notes that KUNAAMFM currently  x>lacks fulltime news personnel. The savings would also enable GCBC to better address the  xcommunity needs of the growing number of HispanicAmericans in the Cochella Valley  xcommunity. GCBC plans to appoint a minority affairs advisor for KESQTV and KUNAAM xiFM, continue KUNAFM's Spanishlanguage programming, increase the number of public service  xannouncements on KUNAAMFM, and fund student internships for KUNAAMFM.  xCommunity needs would be further addressed in regular meetings between the general manager of KUNAAMFM and KESQTV and a community advisory board.  X -  x6. Types of Facilities/Other Media Outlet. GCBC reports that (1) KESQTV broadcasts  xwith 316 kW visual with an antenna height above average terrain of 192 meters, (2) KUNA(AM)  xis a Class C AM station operating at 1400 kHz with one kilowatt of power, and (3) KUNAFM  xjis a Class A FM station operating at 96.7 MHz with 650 watts. GCBC states that KESQTV and  xjKUNAAMFM face numerous competitors with comparable if not superior technical facilities.  xNAccording to GCBC, KESQTV, a UHF station affiliated with ABC, competes in the Palm  xSprings DMA with another UHF station that is affiliated with NBC and five low power TV  x("LPTV") stations including affiliates of Fox and Univision, as well as a Trinityowned LPTV  xstation. GCBC also states KUNAAMFM faces competition in the Palm Springs market from  x17 other radio stations. Additionally, GCBC contends that the proposed acquisition of KUNA x\AMFM is necessary in order for the stations to remain viable in a market undergoing rapid  xjconsolidation of radio stations. GCBC points to the 1996 acquisition of KDESFM, the number  xthree station in the market, by the owner of KPSIFM, the number one station in the market, and  X- xa more recent transaction involving the acquisition of KLCX(FM)Y۠ yOh-ԍ The call letters have been changed to KJJZ(FM).Y by the owner of KPLM(FM).  xGCBC reports that its owner holds no other media interests in the Palm Springs DMA, the 164th largest.  X-  x7. Economic Status. GCBC indicates that although KUNAAMFM are not "failed"  xstations, both are nevertheless small stations that have experienced financial difficulties. The  xcurrent licensee states that during the period of its ownership neither station has ever earned an  XN-operating profit.NX۠ yOW- xZԍ The Commission's records show that Pennino, the current licensee, has owned KUNA(AM) since 1990 and KUNAFM since 1988.  X -  x8. Competition and Diversity in the Market. GCBC asserts that its acquisition of KUNA x>AMFM will not affect diversity and competition in the Palm Springs market. According to  xGCBC, there are 11 FM stations and 8 AM stations licensed to communities in the Palm Springs  xtelevision metro market, and 2 UHF stations and 5 LPTV stations (three of which are network  xaffiliates) licensed to communities in the Palm Springs DMA. GCBC reports that after the  xyproposed acquisition, there will be 17 other radio stations, two network affiliated UHF stations,"!,-(-(ZZ "  xMtwo network affiliated LPTV stations, and three other nonnetwork affiliated LPTV stations.  xyGCBC also indicates that a wide variety of other media are available. Specifically, GCBC reports  x[that the market is served by five separately owned cable systems with a 90% cable penetration  xrate. As a result of the high cable penetration, KESQTV faces direct competition from the  xnearby Los Angeles area TV stations, most of which are carried on the cable systems. GCBC also indicates that the market is served by three daily newspapers.  X_-*0 Discussion ă x  X1-  x9. At the outset, we note that the pending television ownership proceeding, in which the  xCommission is considering eliminating or modifying the one-to-a- market rule, does not preclude  X - xconsideration of GCBC's request for a permanent one-to-a-market waiver. In the Second Further  X - xjNotice of Proposed Rulemaking in the television ownership proceeding, we stated that waiver  xrequests submitted pending resolution of the proceeding will be considered under the current  X - xcriteria for evaluating such requests. Second Further Notice of Proposed Rulemaking, in MM  X - xjDocket Nos. 91221 and 878, slip op. at 35 and n.130 (Nov. 7, 1996). Thus, the Second Further  X- xNotice of Proposed Rulemaking contemplates approval of permanent, unconditional waivers to  xallow radio-television combinations that do not propose common ownership of stations exceeding  x.a combination of one television station, two AM stations and two FM stations, as long as the  XU- xZrequested waivers are clearly consistent with Commission precedent. See Second Further Notice  X@- xof Proposed Rulemaking, in MM Docket Nos. 91221 and 878, slip op. at 35 and n.130 (Nov.  X+- x[7, 1996). GCBC's proposed combination of one television station and one AM station and one  X- xFM station is consistent with that standard. See, e.g., Alabama Universal Corporation, FCC 9713 (Apr. 18, 1997).  X-  X-  nx 10. In evaluating a request for a permanent waiver of the onetoamarket rule, the  xCommission's goal "is to permit the public to benefit from such efficiencies of operation as may  xybe achieved through the use of common facilities and staff, consistent with the maintenance of  X- x<diversity and vigorous competition within the market areas involved." Second Report and Order  Xw- xRecon., 4 FCC Rcd at 6491. The Commission has recognized that "[i]n smaller markets, where  xcompetition is usually more limited, of particular importance would be demonstrated financial  xzdifficulties and the practical question of whether a waiver grant . . . would in fact increase or  X4- x=decrease the vigor of competition and diversity in the market." Id. at 64916492. We conclude  xthat GCBC's showing in support of a waiver of the onetoamarket rule meets our casebycase  xcriteria, and that a permanent waiver in this instance is consistent with the public interest and would not have an adverse effect on diversity and competition in the Palm Springs market.  X!-  x 11. GCBC has shown that common ownership and joint operation of KESQTV and  xjKUNAAMFM will result in significant cost savings, operating efficiencies, and programming  xbenefits. GCBC has projected annual savings of $160,000 resulting from the consolidation of  xthe studio facilities and staff functions. GCBC has represented that these savings will enable it  xto enhance and expand the public service programming of KUNAAMFM. In this regard,  xGCBC states that the onair talent of KESQTV will provide spot news coverage and increase  xdaily newscasts on KUNAAMFM, which currently lack fulltime news staff. GCBC also"9',-(-(ZZ%"  xindicates that the proposed combination will enable it to more easily procure programming of  x{interest to listeners and viewers in the Palm Springs community, particularly the growing  xHispanicAmerican population. Additionally, GCBC indicates that KUNAAMFM may become  xcompetitive economically by gaining access to KESQTV's state of the art facilities and by benefiting from its seasoned advertising, administrative and award winning news staffs.  Xv-  @x 12. With regard to technical facilities, the Commission aims to predict and avoid any  X_- xsignificant adverse effects on diversity or competition from too powerful a combination. See  XJ- x Great American Television and Radio Co., Inc., 4 FCC Rcd 6347, 6349 (1989). KESQTV is  xa UHF station (an ABC affiliate) operating in a market with one other UHF station (an NBC  x-affiliate). Our independent analysis of GCBC's showing indicates that the one other UHF station,  x\KMIRTV, channel 36, an NBC affiliate, operates with facilities of 490 kW visual power with  xan antenna height above average terrain of 207 meters that are comparable to KESQTV's  X - xfacilities of 316 kW visual power with an antenna height above average terrain of 192 meters.7 ۠ yOR- x<ԍ KESQTV has an outstanding construction permit for modification of its facilities to increase visual power  xto 1820 kW and to increase antenna height above average terrain to 1087 meters. Although there will be a  xsignificant improvement in the technical facilities of KESQTV, based on the totality of circumstances presented,  x;we do not believe that the proposed televisionradio combination would likely so dominate the market as to impede competition.7  X - x As for KUNA(AM), a 1,000 watt AM station operating at a frequency of 1400 kHz, our  xindependent analysis of GCBC's showing indicates that there are five other AM stations with  xbetter daytime coverage and more power and two other AM stations with comparable coverage  xand the same power. As for KUNAFM, a 650 watt Class A FM station, our independent  xanalysis shows that there are five Class B FM stations and one class B1, all of which have  xcoverage areas that significantly exceed that of KUNAFM. Additionally, there are four other  x[Class A FM stations, two of which provide substantially more coverage than KUNAFM, with  x-the remaining two FM stations currently providing comparable coverage. Therefore, we find that  xthe proposed combination does not present issues of market dominance from a technical  xstandpoint that would be inconsistent with the public interest. In fact, the Commission has been  xpredisposed to grant waivers of its onetoamarket rule in cases, such as this, involving a UHF  xyTV, small AM or Class A FM station that in terms of power and competitive position may have  X- xdifficulty surviving in a competitive market. Second Report and Order, 4 FCC Rcd at 1753; See,  X- xMe.g., Spectrum Radio, Inc., FCC 9713 (Feb. 4, 1997); Salt of the Earth Broadcasting, Ltd., 9  xFCC Rcd 3621 (1994). Moreover, aside from KESQTV, GCBC holds no other broadcast interests in the Palm Springs market.  X?-  ]x 13. The Commission has advised applicants relying on the financial difficulties factor to  xsubmit "appropriate documentation, including a history of the station's past financial losses and  X- x<predictions of projected losses for the next several years." Second Report and Order, 4 FCC Rcd  X- xat 1760, n. 103. Although GCBC has made reference to the operating losses of KUNAAMFM,  xit has not provided any documentation to substantiate its assertion that these radio stations are  xexperiencing financial difficulties. We can, therefore, accord this contention little weight.  X!- xHowever, not all five factors need be present to justify grant of a waiver. Second Report and"!x,-(-(ZZ "  X- xOrder Recon., 4 FCC Rcd at 6491. We have granted a number of one-to-a-market waivers where  X- xthere was no finding that any of the stations were in financial distress. See, e.g., Louis C.  X- x@DeArias, 11 FCC Rcd 3662 (1996); Alta Gulf FM, Inc., 10 FCC Rcd 7750 (1995); Henry  X- xBroadcasting Co., 11 FCC Rcd 1175 (1995); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd  X-9495 (1995); Secret Communications Ltd., 10 FCC Rcd 6874 (1995).  X-  x 14. With regard to the potential impact of the waiver on diversity and competition, our  xindependent analysis indicates that in the Palm Springs market, KUNAAMFM garner 6.6% of  xthe radio advertising revenue and KESQTV garners 55.3% of the television advertising revenue.  xTogether, KESQTV and KUNAAMFM would receive a combined television and radio station  X$ - xadvertising share of 31.4%.$ ۠ yO - xԍ Advertising revenue data was based on 1995 data obtained from BIA Publications, Inc.'s Radio Master Access and Television Master Access database (BIA Publications, Inc.). Although the combined stations would thus garner a significant  xlpercentage of advertising revenue in the Palm Springs market, this is mainly because the  xproposed assignee already owns KESQTV, the leader in television advertising revenues for the  X - xmarket." ۠ yO- xZԍ There are no VHF stations in the Palm Springs DMA but the market is served by one other UHF television  xstation, KMIRTV which garners 26.2% of the television advertising revenues; low power KVER, a Univision  xaffiliate which garners 13.6%; and low power K40DB, an affiliate of both FOX/UPN, which garners 4.9%. The  {O-other three LPTVs do not have estimated advertising revenues attributed to them. See BIA Publications, Inc. The acquisition of KUNAAMFM would result in a 3.2% gain in total radio and TV  x<advertising revenues for GCBC. Moreover, the percentage of KUNAAMFM's radio advertising  x\share is comparable if not smaller than the advertising shares of the six other AMFM radio combinations operating in this small market.  Xl-  Nx15. Our independent analysis of GCBC's showing, based on a count of the fullpowered  xtelevision stations licensed to the DMA and radio stations licensed to the television metro market,  x[confirms that after the assignment is approved, Palm Springs will be served by 2 UHF stations,  X'- xand 19 radio stations (11 FM and 8 AM). ~' ۠ yO- x=ԍ As to the market definition within which to count the number of broadcast stations in the context of a  xone-to-a-market waiver, the Commission considers "the relevant TV metro market for radio stations and the relevant  {Or- xADI [Arbitron Area of Dominant Influence] TV market for TV stations." Second Report and Order, 4 FCC Rcd  xat 1760 n.101. However, since Arbitron no longer compiles ADI data, we now accept showings using the Nielsen  {O- xDMA in determining the number of broadcast "voices" in the relevant market. See Media/Communications Partners  {O- xZL.P., 10 FCC Rcd 8116 n.3 (1995); see also Further Notice of Proposed Rulemaking, MM Dockets Nos. 91-221 and 87-8, 10 FCC Rcd 3524, 3539 n.59 (1995). There is also a noncommercial educational FM station  xxserving the market, which we include in the count of voices. Upon consummation of the proposed  xtransaction, these 22 broadcast stations will be licensed to 12 separate owners. Our analysis  X- xfurther shows that there are three cable systems, achieving a cable penetration rate of 90%C P ۠ yO$-ԍ 1997 TV & Cable Factbook.C and  xfive low power TV stations (including a Univision affiliate, another that is affiliated with both  X- xUPN/FOX, and a Trinity owned station) . And, according to GCBC, the community is served by" ,-(-(ZZR"  xKthree daily newspapers. This level of competition and diversity that would be present in the Palm  xSprings market after the proposed combination is consistent with the level we have approved in  X- xprevious waiver cases involving similar markets. See, e.g. Twenty First Century Broadcasting,  X- x>Inc., FCC 97174, (rel. May 18, 1997) (12 "voices" in the 140th DMA); Westar Broadcasting  X- xGroup, Ltd., 11 FCC Rcd 11,221 (1996) (15 "voices" in the 188th ranked market); Perry  X-Television, Inc., 5 FCC Rcd 1667 (Rev. Bd. 1990) (14 "voices" in the 130th ranked market).  Xg-  |x16. Furthermore, as demonstrated above, the radio stations involved in the proposed  x/radioTV combination are not powerful stations. In this regard, nearly all of the other radio  xstations in the market have comparable or greater technical facilities. Although the Palm Springs  xmarket is only served by two UHF stations, we have determined that combinations involving  x-small or weak stations, such as the small AM or Class A FM stations involved here, decrease the  X - xNpotential for negative concentration. See Second Report and Order, 4 FCC Rcd at 1753.  xLOverall, GCBC has demonstrated that economic efficiencies and public interest benefits will be  x\gained and such benefits support the grant of a permanent waiver. Based on the totality of  xcircumstances, and our treatment of waiver requests from licensees serving similar size markets,  xwe conclude that grant of the onetoamarket, permanent waiver request would be in the public interest. x  XU-  x17. Accordingly, IT IS ORDERED, that the request for waiver of the Commission's  xone-to-a-market rule, 47 C.F.R. Section 73.3555(c), to permit common ownership of KUNA(AM),  xjIndio, California and KUNAFM, La Quinta, California, and KESQTV, Palm Springs, California, IS HEREBY GRANTED;  X-  @x18. IT IS FURTHER ORDERED, that, having found the applicants fully qualified, the  xZabove-captioned applications to assign the licenses of KUNA(AM), Indio, California and KUNA xlFM, La Quinta, California, from Pennino Broadcasting Corp. to GulfCalifornia Broadcast Company, ARE HEREBY GRANTED. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@William F. Caton x` `  hh@Acting Secretary