******************************************************** 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: ) ) Priscilla A. Schwier, et al. ) (Transferor) ) ) and ) File No. BTCCT-960205IE ) SJL Communications, L.P. ) (Transferee) ) ) For Consent to the Transfer of Control of) station WICU-TV, Erie, PA ) ) Erie Broadcasting, Inc. ) (Assignor) ) ) and ) File No. BALCT-960311IA ) NV Acquisition Co. ) (Assignee) ) ) For Consent to the Assignment of License of) station WFXP(TV), Erie, PA ) MEMORANDUM OPINION AND ORDER Adopted: September 2, 1997 Released: September 22, 1997 By the Commission: 1. The Commission has before it for consideration an application for review filed by The Jet Broadcasting Co., Inc. ("Jet"), licensee of station WJET-TV, Erie, Pennsylvania, seeking reversal of the August 26, 1996 decision of the Chief, Video Services Division, Mass Media Bureau, granting the above referenced applications of Priscilla L. Schwier to transfer control of Great Lakes Communications, Inc., licensee of station WICU-TV, Erie, Pennsylvania, to SJL Communications, L.P. ("SJL"), and of Erie Broadcasting, Inc. to assign the license of station WFXP(TV), Erie, Pennsylvania, to NV Acquisition Co. ("NV"). SJL and NV filed oppositions to the application for review and Jet filed a reply. 2. In its application for review, Jet raises two issues (1) whether a time brokerage agreement ("LMA") entered into between SJL and NV is in the public interest; and (2) whether the Commission should adopt an interim policy of refraining from processing television applications which propose LMAs in smaller markets. We address each issue in turn. 3. Prior to the approval of the applications, SJL and NV executed an LMA whereby SJL, as licensee of WICU-TV, would provide the majority of the programming for WFXP(TV). The LMA also contains a purchase option whereby SJL may purchase WFXP(TV) should such a collocated television combination become permissible under our multiple ownership rules. In acting upon the applications, the staff properly found the agreement to be in accord with the interim policy regarding LMA's. Under that policy, assignment and transfer applications that are otherwise acceptable and that propose LMAs will be processed and granted "where the broker proposes a relationship with the assignee or transferee which includes at most: (1) entering into an LMA, either part-time or full-time, plus (2) providing an arms length loan for some or all of the acquisition price of the station or holding a bona fide option to purchase the station." Processing of Applications Proposing Local Marketing Agreements (Public Notice), Mimeo No. 54161, released June 1, 1995; see also, WEPR, Inc., 10 FCC Rcd 8140, 8142 (1995). The agreement to which Jet objects consists of an LMA with an option to purchase. No additional relationships, i.e. a loan for the acquisition price of the station, exist under the agreement. Furthermore, the staff found that the provisions of the LMA indicated that control would remain properly vested with the licensee according to the requirements of our rules. Jet has not presented any new facts or arguments that would cause us to alter the staff's conclusions on this issue. 4. We also affirm the Bureau's ruling regarding Jet's request for an interim policy on television LMAs in smaller markets. Jet argues that the Bureau staff should have adopted a policy to refrain from processing any application that proposes an LMA involving a VHF station in a smaller market, which Jet would define as any market "rated by Nielsen as the 100th or higher market." Jet argues that the type of arrangement it hopes to prohibit would be anti-competitive in that it would overwhelm any independent UHF stations in a smaller market. We believe that proper review of Jet's proposal would call for full public participation and the examination of numerous different markets. All possibly affected parties, including licensees, viewers and advertisers, should be given the opportunity to express and debate their respective viewpoints. Considering Jet's proposal in the context of this adjudicatory proceeding, however, would focus review exclusively on one market and not permit consideration of variable factors that would affect other markets. It would also deny other parties who would be affected by a change in policy any chance to comment. We thus agree with the Bureau and with SJL and NV that Jet's concerns are more appropriate for consideration in a rulemaking proceeding, such as those underway which deal with various relationships by broadcasters in the same market, including television LMAs. See, Further Notice of Proposed Rulemaking, MM Docket No. 94-150, et al., 11 FCC Rcd 19895 (1996); Second Further Notice of Proposed Rulemaking, MM Docket Nos 91-222 and 87-8, FCC 96-438 (released November 7, 1996). In that proceeding we stated, we would "reserve the right ... to invalidate an otherwise grandfathered LMA in circumstances that raise particular competition and diversity concerns, such as those that might be presented in very small markets." Id. at para. 88. 5. Upon review of the staff's action, we find that the matters raised by Jet were fairly, fully, and correctly treated. Accordingly, IT IS ORDERED, That the application for review filed by The Jet Broadcasting Co., Inc. IS DENIED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary