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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 Application s of) ) GRK PRODUCTIONS JOINT VENTURE ) ) For Modification of Facilities of ) File No. BPCT-970516KE Television Station WGKI(TV) ) Cadillac, Michigan ) ) For License to Cover a Construction Permit) File No. BLCT-970626KE for Modification of Facilities of ) Television Station WGKU(TV) ) Vanderbilt, Michigan ) MEMORANDUM OPINION AND ORDER Adopted: June 22, 1998 Released: June 24, 1998 By the Chief, Mass Media Bureau 1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it for consideration the above-captioned unopposed applications for modification of the facilities of station WGKI(TV), Channel 33 (FOX), Cadillac, Michigan ("WGKI"); and for license to cover the modification of facilities of station WGKU(TV), Channel 45 (FOX), Vanderbilt, Michigan ("WGKU"). GRK Productions Joint Venture ("GRK") is the licensee of both WGKI and WGKU, and grant of WGKI's modification application would result in overlap of the stations' Grade B contours. In conjunction with the applications, GRK has requested Commission authorization, pursuant to Note 5 of Section 73.3555 of the Commission's rules, to operate WGKU as a satellite of WGKI. Discussion 2. Under the Commission's television satellite policy, set forth in Television Satellite Review of Policy and Rules, Report and Order, 6 FCC Rcd 4212 (1991) ("Television Satellite Order") an applicant for television satellite status is entitled to a presumption that the proposed satellite operation is in the public interest if it meets three criteria: (1) there is no City Grade contour overlap 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 to construct or to purchase and operate the satellite as a full-service station. 6 FCC Rcd at 4213-14. If an applicant cannot qualify for the presumption, we will evaluate the proposal on an ad hoc basis and grant the application if there are other compelling circumstances that warrant approval. Id. While GRK does not meet all three criteria for a presumptive waiver, for the reasons set forth below, we find that the operation of WGKU as a satellite of WGKI would be consistent with the Commission's policy based on an ad hoc analysis. 3. With respect to the first criterion, GRK has submitted an engineering map which demonstrates that, after grant of the above-referenced applications, there will be no City Grade contour overlap between WGKU and WGKI. Based on this showing, we find that GRK has satisfied the first prong of the presumptive satellite standard. 4. Regarding the second criterion, an applicant may show that a proposed satellite provides service to an underserved area by demonstrating compliance with the "transmission test." Television Satellite Order, 6 FCC Rcd at 4215. Under the transmission test, a proposed satellite's community of service is deemed underserved if there are two or fewer full-service stations licensed to it. GRK asserts that Vanderbilt is underserved under the transmission test because WGKU is the only station licensed to the community. We agree that GRK has demonstrated that WGKU provides service to an underserved community, in satisfaction of the second prong of the presumption test. 5. As for the third criterion, an applicant may show, in the case of an existing station, the unavailability of an alternative operator by presenting evidence of attempts to sell the station. Television Satellite Order, 6 FCC Rcd at 4215. We note, however, that GRK does not base its satisfaction of the third criterion on efforts to sell WGKU. GRK contends that operation of WGKU as a full-service station would, due to the increased operational costs, make continued operation of WGKU infeasible. GRK asserts that the remoteness and small population of Vanderbilt and the surrounding area render it impossible to operate WGKU as a full-service station. While we do not find this argument meets the third criterion, we find that GRK has made a strong enough showing to justify satellite operation under our ad hoc analysis. See e.g., Plains Television Partnership, 9 FCC Rcd 4435 (1994). 6. First, GRK notes the following population statistics which are derived from the 1990 U.S. Census. Vanderbilt, WGKU's city of license, has a population of only 605 persons. In addition, Otsego County, in which Vanderbilt is located, has a population of only 17,957. Moreover, the county seat of Otsego, Gaylord, has just 3,256 residents. We note that the Commission has authorized satellite operations in communities considerably larger than Vanderbilt. In Eagle 22, Ltd., 7 FCC Rcd 5295 (1993), the Commission approved satellite authorization in a community with a population of 87,758. Next, GRK cites the community's lack of a substantial economic base as insufficient to support a full-service station. According to the Rand McNally Commercial Atlas and Marketing Guide 1996, Otsego County's 7400 households have an estimated per capita income of $14,058. In the entire county of Otsego there are only 225 retail establishments. See City and County Data Book 1994 at 281. Furthermore, states GRK, in 1996 the total advertising revenue generated by both WGKU and WGKI from Otsego County was only $9,543. We find that the area's lack of economic base is a significant factor in considering GRK's satellite waiver request. As the Commission stated in Sidney T. Warner, 3 FCC Rcd, 4034 (1988), "[i]n the past, we have authorized satellite stations . . . as a means of providing television service to small communities having an insufficient economic base to support a full-service television operation." (footnote omitted). In addition, GRK observes, Vanderbilt's geographical isolation from major population centers further contributes to its inability to generate enough advertising revenues to sustain a full-service station. The closest significantly sized towns are located many miles away from Vanderbilt. Specifically, Petoskey, population 6,056, and Traverse City, population 15,155, are approximately 22 miles away and 55 miles away, respectively. 7. Finally, GRK opines, the presence of other satellite stations in the market underscores the economics of the area. The Traverse City-Cadillac market, GRK observes, consists of three pairs of parent stations and their satellites: WWTV(TV), Cadillac, which operates WWUP-TV, Sault Ste. Marie, as a satellite; WGTU(TV), Traverse City, which operates WGTQ(TV), Sault Ste. Marie, as a satellite; and WPBN-TV, Traverse City, which operates WTOM-TV, Cheboygan, as a satellite. We agree with GRK's contention that these facts tend to demonstrate that the communities of northern Michigan do not generate sufficient revenues to support a full-service station. See Sidney T. Warner, 3 FCC Rcd at 4035 (inability to support full-time station shown by fact that other similarly-sized communities in region had satellites of network affiliates). 8. Based on our review of the information submitted, including the size of WGKU's community, the area's small economic base and the existence of other satellite combinations, we conclude that GRK has set forth sufficiently compelling arguments to support an ad hoc determination that a grant of the waiver of the duopoly rule pursuant to the satellite exception set forth in Note 5 to Section 73.3555 would serve the public interest. However, in a recent Notice of Proposed Rulemaking the Commission has undertaken a reexamination of its broadcast television ownership policies, including the continued exemption of satellite stations from broadcast ownership restrictions. See Second Further Notice of Proposed Rule Making in MM Docket Nos. 91-221 and 87-8, FCC 96-438 (released November 7, 1996). Accordingly, we will condition the grant of this satellite waiver on whatever action is undertaken in that proceeding. In view of the foregoing, and having determined that the applicant is qualified to operate the stations as proposed, we find that grants of these applications will serve the public interest, convenience and necessity. Conclusion 9. Accordingly, IT IS ORDERED, That the request by GRK for operation of station WGKU(TV), Vanderbilt, Michigan, pursuant to the satellite exception of the duopoly rule, Section 73.3555 of the Commission's rules, IS GRANTED, subject to the outcome of the Commission's pending television ownership rule making in MM Docket Nos. 91-221 and 87-8. 10. IT IS FURTHER ORDERED, That the application (File No. BPCT-970516KE) for modification of the facilities of WGKI(TV), Cadillac, Michigan, and the application (File No. BLCT-970626KE) for license to cover the construction permit for modification of the facilities of WGKU(TV), Vanderbilt, Michigan, ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau