******************************************************** 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 Application of ) ) Paxson Communications Corporation) File No. BPCT-960405KJ ) For Construction Permit for a ) New Television Station on ) Channel 39, Newton, Iowa ) MEMORANDUM OPINION AND ORDER Adopted: August 12, 1998 Released: August 13, 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 application of Paxson Communications Corporation (Paxson) for a construction permit for a new commercial television station to operate on Channel 39, Newton, Iowa (File No. BPCT-960405KJ). 2. Paxson is the licensee of station KPXR(TV), Channel 48 (IND), Cedar Rapids, Iowa. Because the predicted Grade B contours of the Channel 39 proposal and KPXR(TV) will overlap, Paxson requests that the Commission grant a waiver of the television duopoly rule, 47 C.F.R.  73.3555(b), which proscribes such common ownership. Paxson requests that a waiver be granted pursuant to the interim waiver policy expressed by the Commission in connection with its pending review of the duopoly rule. See Review of the Commission's Regulations Governing Television Broadcasting, Second Further Notice of Proposed Rule Making, 11 FCC Rcd 21655 (1996) (Television Ownership Second Further Notice). 3. Duopoly Waiver Showing. In support of its waiver request, Paxson has submitted an engineering exhibit which shows that there will be no Grade A contour overlap between KPXR(TV) and Channel 39. The Grade B overlap between KPXR(TV) and Channel 39 will encompass an area of 643 square kilometers and 8,415 individuals. This overlap constitutes 1.6% of the population and 3.8% of the area within the KPXR(TV) Grade B signal contour, and 1.5% of the population and 5.3% of the area within the predicted Grade B signal contour of the Channel 39 proposal. 4. Next, Paxson asserts that KPXR(TV) and Channel 39 will serve separate and distinct markets. The proposed Channel 39 will be a UHF station licensed to Newton, Iowa in the Des Moines-Ames Designated Market Area (DMA), which is ranked 72nd. Station KPXR(TV) is located approximately 74.3 miles from the Channel 39 transmitter site in the Cedar Rapids-Waterloo & Dubuque DMA, which is ranked 86th in size. Paxson also states that the two stations will not compete for advertisers, since their marketing efforts will be directed toward separate geographic areas. 5. With regard to diversity in the overlap area, which will occur entirely in Tama and Poweshiek counties, Paxson asserts that the area is well-served. Paxson's engineering exhibit represents that viewers in the overlap area are served by a minimum of eight and a maximum of nine television stations (six commercial and three noncommercial), in addition to KPXR(TV) and Channel 39. There are also several other media outlets serving the overlap area, including 12 AM radio stations, 13 FM radio stations, 12 separate cable systems and a number of weekly newspapers. Paxson contends that the number of alternative media in the overlap area far exceeds that which the Commission has considered acceptable in other cases. 6. Finally, Paxson asserts that Channel 39 and station KPXR(TV) will be operated separately, thus having no "diminishing" effect on diversity or competition in the overlap area. The stations will maintain separate staffs, including sales personnel and general managers. The stations will not share job recruitment information, office space or offer joint advertising rates. Further, each station will seek to air locally produced infomercials and programming provided by local churches, as well as public affairs programming focused on the interests and concerns of each station's local community. 7. 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 would be "inappropriate." Multiple Ownership of Standard, FM and Television Broadcast Stations, 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 overlap, 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 economic power resulting from the combination. See Iowa State University Broadcasting Corporation, 9 FCC Rcd 481, 487-88 (1993), aff'd sub nom. Iowans for WOI-TV, Inc. v. FCC, 50 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 applicant to determine whether, in light of the overlap, the benefits outweigh any detriment which may occur from grant of the waiver. See, e.g., Iowa State University, 9 FCC Rcd at 487-88. As with any waiver, it will only be granted if the Commission concludes that the waiver is in the public interest. 8. Currently, the Commission is reexamining its broadcast television ownership policies, including the duopoly rule. In January 1995, the Commission proposed a new analytical framework within which to evaluate our broadcast television ownership rules. See Review of the Commission's Regulations Governing Television Broadcasting, Further Notice of Proposed Rule Making, 10 FCC Rcd 3524 (1995) (Television Ownership Further Notice). Subsequent to the release of that Television Ownership Further Notice, Congress directed the Commission to conduct a rulemaking proceeding to determine whether to retain, modify or eliminate existing limitations on the number of television stations that an entity may control within the same television market. See Section 202(c) of the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (Feb. 8, 1996) (Telecomm Act). In response to this Congressional directive in the Telecomm Act and to update the record, the Commission released the Television Ownership Second Further Notice. 9. The Commission stated in the Television Ownership Second Further Notice that it will be inclined, during the pendency of the television ownership proceeding, to grant temporary duopoly waivers involving stations in different DMAs with no overlapping Grade A contours, conditioned on coming into compliance with the outcome of the proceeding within six months of its conclusion. 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 DMA's supplemented with a Grade A overlap criterion." Television Ownership Second Further Notice, 11 FCC Rcd at 21681. The Commission further stated that "we do not believe granting waivers satisfying the proposed standard, and conditioning them on the outcome of this proceeding, will adversely affect our competition and diversity goals in the interim." Id. Additionally, the Commission gave the staff delegated authority to act on applications seeking waivers consistent with this interim policy. 10. Based on the Commission's interim policy outlined in the Television Ownership Second Further Notice, we believe that grant of a conditional waiver of the duopoly rule, subject to the outcome of the pending ownership rulemaking, is justified. The temporary common ownership of KPXR(TV) and Channel 39 would be consistent with the interim policy set forth in the Television Ownership Second Further Notice, as the stations will be in separate DMAs and there will be no Grade A contour overlap between KPXR(TV) and Channel 39. Moreover, our examination of the record presented here reveals nothing suggesting that we should not follow the established interim policy in this case. Accordingly, we conclude that grant of a temporary waiver, conditioned on the applicant coming into compliance with the outcome of the pending television ownership rulemaking proceeding within six months of its conclusion, 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 six-month period and would be closely scrutinized. 11. ACCORDINGLY, IT IS ORDERED, That the request for conditional waiver of Section 73.3555(b) of the Commission's Rules, to permit the common ownership by Paxson Communications Corporation of television station KPXR(TV) and the Channel 39 proposed station IS GRANTED, subject to the outcome of the Commission's pending broadcast television ownership rulemaking in MM Docket No. 91-221 and 87-8. 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 No. 91-221 and 87-8, an application for Commission consent to dispose of such station as would be necessary for it to come into compliance with the rules as provided in the final order. 12. IT IS FURTHER ORDERED, THAT the application for a construction permit for a new commercial television station to operate on Channel 39, Newton, Iowa (BPCT-960405KJ) IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau