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A. 1. a.(1)(a) i) a) 1. 1. 1. a.(1)(a) i) a)#X\  P6G;ɓP#X01Í ÍX01Í Í#Xj\  P6G;yoXP#2 XK!KlK Times New RomanTimes New Roman BoldTimes New Roman ItalicTimes New Roman Bold Italic"i~'^09CSS999S]+9+/SSSSSSSSSS//]]]Ixnnxg]xx9?xgxx]xn]gxxxxg9/9MS9ISISI9SS//S/SSSS9?/SSxSSIP!PZ9+ZM999+99999999S/xIxIxIxIxIlnIgIgIgIgI9/9/9/9/xSxSxSxSxSxSxSxSxSxSxIxSxRxSxSxS]SxIxIxInInInZnIxigIgIgIgIxSxSxSxZxSxZxS9/9S999Su]ZZxSg/gCg9g9g/xSbxSxSxSxSxn9n9n9]?]?]?]ZgFg/gMxSxSxSxSxSxSxxZgIgIgIxSg9xS]?g9xSi+SS88WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN/>/>/>/x]SSSSx]x]x]x]xSxSx]SSxSxSf]xSxSxSxIxIxWxIx{nInInInISSSWS]a?/?]?9?]]WW]n/nKn9nCn/x]xx]x]SSxxIxIxI]?]?]?]WnUn9nax]x]x]x]x]x]xxWnInInIx]n9x]]?n9xSz+SS8-8WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN8HH"&H>XHH8HB8>HH^HH>"".2",2,2,"222N2222"&22H22,006"6."""""""""""2H,H,H,H,H,XAB,>,>,>,>,""""H2H2H2H2H2H2H2H2H2H2H,H2H1H2H2H282H,H,H,B,B,B6B,H?>,>,>,>,H2H2H2H6H2H6H2""2"""2F866H2>>(>">">H2;H2H2H2H2XHB"B"B"8&8&8&86>*>>.H2H2H2H2H2H2^HH6>,>,>,H2>"H28&>"H2?22!!WFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN$<<$.2",2222`2 LL2 LL2L"",,2d""Broadcasting, Second Further Notice of Proposed Rule Making, 11 FCC Rcd 21655 (1996)  XL- &(Second Further Notice). Finally, to permit continued common ownership of KCFWTV and  &KECITV, the Grade B contours of which also overlap, DGH proposes to continue operating  &\KCFWTV as a satellite of KECITV and requests grant of its transfer of control application  &pursuant to Note 5 of Section 73.3555 of the Commission's rules, which exempts satellite stations from the duopoly prohibition. The applications and waiver requests are unopposed.  X -   X - Duopoly Waiver  X- (#!2. Waiver Showing. DGH maintains that there is "ample basis" for a permanent waiver  X- &of the Commission's television duopoly rule in this case. DGH notes that KECITV and  & KTVM(TV) have been under common ownership since KTVM(TV) went on the air in 1970.  &xDGH argues that the transfer for which approval is sought here would not create a new ownership  &xcombination but would simply continue a common ownership situation that has existed under two  &!successive owners. DGH also argues that the existing KECITV/KTVM(TV) ownership  &combination parallels other Missoula/Butte television ownership combinations that exist with  X-respect to all other stations in both markets.XW yO- (#.ԍIn addition to the existing KECITV/KTVM(TV) ownership combination in Missoula/Butte, Montana, DGH  &notes that the Evening Post Publishing Co. owns KPAXTV, Missoula and KXLFTV, Butte, and that Continental Television Network, Inc., owns KTMF(TV), Missoula and KWYB(TV), Butte, which is a satellite of KTMF(TV).   X- (#3.  As demonstrated in DGH's Engineering Statement, the predicted Grade B overlap of  &stations KECITV and KTVM(TV) encompasses 9,562 square kilometers and 17,924 persons.  &This represents 22.4% of the area and 12.3% of the population within the Grade B contour of  & KECITV, and 19.5% of the area and 9.5% of the population within the KTVM(TV) Grade B contour. The stations' Grade A contours do not overlap.  "?( ,-(-(ZZ"Ԍ (#4. DGH also notes that the stations serve separate markets. Station KECITV is licensed  &to Missoula, which is the 171th ranked Designated Market Area (DMA), while KTVM(TV) is  &licensed to Butte/Bozeman, the 192th ranked DMA. DGH asserts that there are abundant  &=competing media in the overlap area. According to DGH's Engineering Statement, the Grade B  &=contours of 7 other television stations serve all or a portion of the KECITV/KTVM(TV) Grade  X- &B overlap area. W yO- (#OԍThese stations are as follows (the percentage of overlap area covered is indicated in parantheses):  &KBCC(TV), Helena, Montana (65%); KPAXTV, Missoula, Montana (100%); KTMF(TV), Missoula, Montana  &,(30%); KTVH(TV), Helena, Montana (30%); KUFMTV, Missoula, Montana (20%); KWYB(TV), Butte, Montana (30%); and KXLFTV, Butte, Montana (100%). Six LPTV or translator stations also serve portions of the overlap area, as do  &26 radio stations. According to DGH, all of the communities in the overlap area have existing  &.multichannel cable operations and cable penetration in the Missoula DMA as a whole is 52%  &and in the Butte/Bozeman DMA is 57%. In isolated areas not reached by cable, DGH notes that  &many homes subscribe to direct broadcast satellite services. Finally, DGH states that three daily newspapers are published in or near the area of overlap.  X - (#5. Discussion. In adopting the duopoly rule's fixed standard of prohibiting overlap of  &Grade B service contours, the Commission also acknowledged the need for "flexibility" in that  &rule's application, noting that waivers should be granted where rigid conformance to the rule  X - &would be "inappropriate." Multiple Ownership of Standard, FM and Television Broadcast  X- &>Stations (Multiple Ownership), 45 FCC 2d 1476, 1479 n.12, recon. granted in part, 3 RR 2d  &1554 (1964). To that end, the Commission has developed a set of factors to be considered when  &/evaluating an applicant's request for waiver of the duopoly rule, including the extent of the  &loverlap, the number of media voices available in the overlap area, the distinctness of the  &respective markets, the independence of the stations' operations, and the concentration of  X#- &economic power resulting from the combination. See Iowa State University Broadcasting  X- &>Corporation, 9 FCC Rcd 481, 48788 (1993), aff'd sub nom. Iowans for WOITV, Inc. v. FCC,  X- &M50 F.3d 1096 (D.C. Cir. 1995); H&C Communications, Inc., 9 FCC Rcd 144, 146 (1993). After  &weighing the factors, the Commission considers any public interest benefits proposed by the  &Kapplicant to determine whether, in light of the overlap, the benefits outweigh any detriment which  X- &.may occur from grant of the waiver. See, e.g., Iowa State University, 9 FCC Rcd at 48788. As  &with any waiver, it will only be granted if the Commission concludes that the waiver is in the  X-public interest.   Xs-   X\- (#]6. Currently, the Commission is reexamining its broadcast television ownership policies,  &Nincluding the duopoly rule. In January 1995, the Commission proposed a new analytical  X.- &framework within which to evaluate its broadcast television ownership rules. See Review of the  &Commission's Regulations Governing Television Broadcasting, Further Notice of Proposed Rule  X- &Making, 10 FCC Rcd 3524 (1995) (Further Notice). Subsequent to the release of that Television  X- &?Ownership Further Notice, Congress directed the Commission to conduct a rulemaking  X - &proceeding to determine whether to retain, modify or eliminate existing limitations on the number  X!- &jof television stations that an entity may control within the same television market.  See Section"!,-(-(ZZ "  &202(c) of the Telecommunications Act of 1996, Pub. L. No. 104104, 110 Stat. 56 (Feb. 8, 1996)  &-(Telecom Act). In response to this Congressional directive in the Telecom Act and to update the  X- &record, the Commission released the Second Further Notice in its pending television ownership  X- &jrulemaking proceeding. In that Second Further Notice, the Commission tentatively concluded  &to authorize common ownership of television stations that are in separate DMAs and whose Grade  &A contours do not overlap, conditioned on coming into compliance with the outcome of the  Xz-proceeding within six months of its conclusion.  Second Further Notice at 57.  XN- (#7. The Commission also stated in the Second Further Notice that it will be inclined,  &iduring the pendency of the television ownership proceeding, to grant temporary duopoly waivers  X" - &involving stations in different DMAs with no overlapping Grade A contours. It also noted there  &its tentative conclusion that the record in that proceeding "supports relaxation of the geographic  &\scope of the duopoly rule from its current Grade B overlap standard to a standard based on  X - &DMAs supplemented with a Grade A overlap criterion." Id. The Commission further stated that  X - &-"we do not believe granting waivers satisfying the proposed standard, and conditioning them on  &ythe outcome of this proceeding, will adversely affect our competition and diversity goals in the  X- &interim. Id. Additionally, the Commission gave the staff delegated authority to act on  X-applications seeking waivers consistent with this interim policy.   XW- (#M8. Given the clearly articulated policy in the Television Ownership Second Further Notice,  XB- &Mwe do not believe that an unconditional grant of DGH's duopoly waiver is appropriate. See  X-- &WHOATV, Inc., 11 FCC Rcd 20041, 2004647 & 20051 (1996). However, we believe that grant  &of a conditional waiver of the duopoly rule, subject to the outcome of the pending ownership  &yproceeding, is justified. The temporary common ownership of KECITV and KTVM(TV) would  X- &be consistent with the interim policy set forth in the Television Ownership Second Further Notice,  X- &as the stations are in separate DMAs and there is no Grade A overlap between KECITV and  &-KTVM(TV). Moreover, our examination of the record presented here reveals nothing suggesting  X- &that we should not follow the established interim policy in this case."W yO - (#MԍWe note that the land area and population overlaps herein are within the range that the Commission has  {O- &permitted in previously approved conditional waivers. See, e.g., Abilene Radio and Television Company, DA 98255  &(MMB February 12, 1998) (granting conditional waiver where Grade B area overlap was 20.9% and 32.7%, and population overlap was 7.2% and 13.5%). Accordingly, we conclude  &that grant of a temporary waiver, conditioned on the resolution of the pending broadcast  &television ownership rulemaking, will serve the public interest, convenience and necessity. Any  &requests to extend this conditional waiver should be filed at least 45 days prior to the end of the sixmonth period and would be closely scrutinized.  X- Request for Satellite Status  X-  X- (#9. DGH's Request. DGH also seeks authority to continue operating station KCFWTV,  &Kalispell, Montana, as a satellite of KECITV, Missoula, Montana, after the proposed transfer of  &control. The Commission requires all applicants seeking to transfer existing satellite stations and"!,-(-(ZZ "  &to continue those stations' satellite operation to demonstrate that the stations meet our satellite  X- &policy at the time of transfer of control. See Television Satellite Stations, 6 FCC Rcd 4212, 4215  X- &(1991), on reconsideration Second Further Notice of Proposed Rulemaking in MM Docket No.  X- &@878, 6 FCC Rcd 5010 (1991), on further reconsideration Review of the Commission's  X- &\Regulations Governing Television Broadcasting, 10 FCC Rcd 3524 (1995). Pursuant to the  &Commission's satellite policy, an applicant is entitled to a presumption that its proposed satellite  &>operation is in the public interest if it meets three criteria: (1) no City Grade contour overlap  &exists between the parent and the satellite; (2) the proposed satellite would provide service to an  &>underserved area; and (3) no alternative operator is ready and able either to construct or to  X9- &purchase and operate the satellite as a fullservice station. Id. at 4212. If an applicant cannot  X$ - &qualify for the presumption, we will evaluate the proposal on an ad hoc basis to determine  X - &whether other compelling circumstances warrant grant of the application. Id. at 4214. The  & satellite operation here fails to meet one of the three presumptive criteria. Nevertheless, as detailed below, we find compelling circumstances exist that warrant continued satellite authority.  X - (#{ 10. Discussion. The satellite proposal does not meet the first criteria of the presumption  &because the stations' City Grade contours overlap. The City Grade overlap encompasses 806  &square kilometers and a population of 8,090. This represents 5.4% of the area and 7.3% of the  &population within the KECITV City Grade contour and 8.9% of the area and 11.4% of the population within the KCFWTV City Grade contour.  (#1 11. With respect to the second criterion, DGH has demonstrated that the area where  &satellite station KCFWTV is located is underserved by applying the Commission's  &"transmission" test. That test defines as "underserved" an area with two or fewer fullservice  & stations already licensed to the community. DGH notes that Station KCFWTV is the only  &<television station licensed to Kalispell, Montana. Moreover, KCFWTV continues to provide the  &only Grade B television service for Kalispell. DGH also applies the Commission's "reception"  &xtest to demonstrate that the area where KCFWTV is located is underserved. A proposed satellite  &station is regarded as serving an "underserved" area if 25% or more of the area within the  &proposed satellite's proposed Grade B contour (but outside the parent's Grade B contour) receives  X^- &four or fewer services, not including the proposed satellite service. See Television Satellite  XI- &yStations, 6 FCC Rcd at 4215. DGH notes that, considering the area within the KCFWTV Grade  &B contour but outside the KECITV Grade B contour, 87.6% of this area receives no television  &service other than KCFWTV and 95.1% receives four or fewer TV, LPTV or translator  &television services. DGH argues that Kalispell is "clearly an 'underserved' area within the  X- &meaning of the satellite exemption policy." DGH concludes that continuation of satellite status  &for KCFWTV is necessary to preserve the station's service to a very large underserved area and  &/that permitting KCFWTV to continue to its satellite status would "plainly serve the public  X"-interest and would be consistent with Commission precedent.""W {O#%- (#.ԍDGH cites to the Commission decision in Craig O. McCaw, 9 FCC Rcd 5836, 59125914 (1994), in support of its arguments. "#",-(-(ZZe""Ԍ (# 12. As to the third criterion, to qualify for the presumption, an applicant must  &demonstrate that no alternative operator is ready and able to construct or to purchase and operate  &the proposed satellite as a fullservice standalone station. DGH has submitted the Declaration  &Robert Precht, the President of Eagle Communications, Inc. (Eagle), which has been the licensee  &kof KECITV and KCFWTV since November 1, 1978. Precht states that, during the time that  &Eagle has been the licensee of the stations, he has never received an offer for the purchase of KCFWTV as a "stand alone" station.  (#o 13. DGH also submits a Declaration from Peter Bowman, Vice President of BIA  &Consulting, Inc., a financial consulting firm specializing in the appraisal of broadcast properties,  &which states that firm's opinion on the current viability of a sale of station KCFWTV. Bowman  &states that he has performed a "stick value" analysis of KCFWTV to determine its economic  &feasibility. This discounted cashflow analysis assumes the highest and best use of KCFWTV  &as a standalone station. Bowman states that the highest and best use of KCFWTV as a stand &=alone station would be as an affiliate of the Fox Network, the only network not currently in the  &market. However, Bowman notes that, were KCFWTV to be operated as a networkaffiliated  &standalone station, it is likely that it would incur high programming costs considering its signal  &only serves a small part of the Missoula market. Bowman finds that KCFWTV's Grade B signal  &<is disadvantaged and does not extend to the city of Missoula. Instead, the station serves smaller  &\communities to the north of Missoula, including Kalispell and, thus, the station would only  &achieve fragmented viewership due to competition not only from the Missoula stations but also  &from the Spokane, Washington, stations available on the cable system serving Kalispell. Bowman  &also notes that the market has a small population and sparse revenues. Bowman states that a  &market the size of Missoula with estimated revenues in 1996 of $8.1 million can only support two  &[to three viable stations. A fourth station would generate revenues well below $1 million which  &yare considered marginal and it would be unlikely that a fourth station would generate sufficient  &cash flow to return an acceptable rate of return to lenders and equity investors. In Bowman's  &/opinion, this would render KCFWTV economically unfeasible as a standalone station. In  &xconclusion, Bowman states that the level of competition, the sparse market revenues, the station's  &disadvantaged signal and the unusually high programming/operating expenses associated with KCFWTV preclude a knowledgable broadcaster from attempting a standalone operation.  (#O 14. Although the KCFWTV/KECITV satellite proposal fails to meet the first criteria  &of the presumptive standard, we believe "other compelling circumstances" warrant continued  &satellite status of station KCFWTV. As we have stated in the past regarding satellite proposals  &Lthat fall outside of our presumption, "the degree of departure from the presumptive criteria will  X - &yalso influence our decision." Television Satellite Stations, 6 FCC Rcd at 4214. We believe that  &ythe "departure" from the presumptive criteria in this case is not so substantial as to outbalance  &<the competing considerations favoring grant. Significantly, Station KCFWTV is the only station  &Klicensed to Kalispell, Montana, and is the only Grade B service to significant portions of Kalispell  &and the surrounding area. We also find persuasive Bowman's opinion that, the level of  &competition, the sparse market revenues, the station's disadvantaged signal and the unusually high  &programming/operating expenses associated with KCFWTV preclude a knowledgable broadcaster  &yfrom attempting a standalone operation. Accordingly, we find such compelling circumstances"%',-(-(ZZ%"  &warrant continued satellite status for KCFWTV and a grant of waiver of the duopoly rule  X- &pursuant to Note 5 to Section 73.3555 would serve the public interest. However, as noted supra,  X- &Lin its Second Further Notice, the Commission has undertaken a reexamination of its broadcast  &television ownership policies, including the continued exemption of satellite stations from  X- &kbroadcast ownership restrictions. See Second Further Notice, supra. Accordingly, we will  X-condition the grant of this satellite waiver on whatever action is taken in that proceeding.  (#l15. In view of the foregoing, and having determined that the applicants are qualified, we  XN-find that a grant of these applications will serve the public interest, convenience and necessity.   X9-  (#16. ACCORDINGLY, IT IS ORDERED, that the request for permanent waiver of the  &television duopoly rule, Section 73.3555(b) of the Commission's Rules, to permit the common  &<ownership of television stations KECITV, Missoula, Montana, and KTVM(TV), Butte, Montana, IS DENIED.  (#P17. #Xj\  P6G;yoXP#IT IS FURTHER ORDERED, that the request for conditional waiver of Section  &73.3555(b) of the Commission's rules, to permit the common ownership of television stations  &KECITV, Missoula, Montana, and KTVM(TV), Butte, Montana, IS GRANTED, subject to the  &outcome of the Commission's pending broadcast ownership rulemaking in MM Docket Nos. 91 &221 and 878. Should divestiture be required as a result of that proceeding, the licensee is  &=directed to file, within six months from the release of the final order in MM Docket Nos. 91221  &and 878, an application for Commission consent to dispose of such station as would be necessary for the licensee to come into compliance with the rules as provided in the final order.  X-  (#18. IT IS FURTHER ORDERED, that the request for operation of KCFWTV, Kalispell,  &?Montana, pursuant to the satellite exemption to the duopoly rule, Section 73.3555 of the  &NCommission's rules, IS GRANTED, subject to the outcome of the Commission's pending broadcast ownership rulemaking in MM Docket Nos. 91221 and 878.  Xm- (#19. IT IS FURTHER ORDERED, that the applications for transfer of control of Eagle  &LCommunications, Inc., licensee of KECITV, Missoula, Montana, KTVM(TV), Butte, Montana,  &and KCFWTV, Kalispell, Montana, and associated television translator stations, from Precht  &kCommunications, Inc., to the DGH Company (File Nos. BTCCT980113IB, OOOOOOBTCCT980113IC,  &]BTCCT980113ID, BTCTTV980113IE, BTCTTV980113IF, BTCTTV980113IG, BTCTTV &980113IH, BTCTTV980113II, BTCTTV980113IJ, BTCTT980113IK,       BTCTT980113IL,  X-BTCTT980113IM, BTCTT980113IN) ARE GRANTED.   FEDERAL COMMUNICATIONS COMMISSION   Roy J. Stewart  Chief, Mass Media Bureau