******************************************************** 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. ***************************************************************** C O R R E C T E D Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of ) ) MILTON S. MALTZ ) (Transferor) ) ) and ) File Nos. BTCCT-980421IB-G ) BTCTT-980430IA RAYCOM MEDIA, INC. ) (Transferee) ) ) For Consent to the Transfer of Control) of Malrite Communications Group, Inc., ) Licensee or Controlling Corporation of the ) Licensee of: ) ) WFLX(TV), West Palm Beach, FL ) WNWO-TV, Toledo, OH ) WXIX-TV, Newport, KY ) WOIO(TV), Shaker Heights, OH ) WLII(TV), Caguas, PR ) WSUR-TV, Ponce, PR ) W50AW, Vero Beach, FL ) MEMORANDUM OPINION AND ORDER Adopted: August 13, 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 the above-captioned, unopposed applications seeking consent to the transfer of control of Malrite Communications Group, Inc. (Malrite) and Estrella Brillante, Ltd. (Estrella) from Milton S. Maltz to Raycom Media, Inc. (Raycom). Malrite is the licensee of television stations WFLX(TV) (Channel 29, FOX), West Palm Beach, Florida, WNWO-TV (Channel 24, NBC), Toledo, Ohio, WXIX-TV (Channel 19, FOX), Newport, Kentucky, WOIO(TV) (Channel 19, CBS), Shaker Heights, Ohio and low power television station W50AW, Vero Beach, Florida. The predicted Grade B contours of stations WNWO-TV and WOIO(TV) overlap, and Malrite has commonly- owned those stations since 1996, pursuant to the grant of a permanent waiver of Section 73.3555(b), the Commission's duopoly rule, 47 C.F.R. Section 73.3555(b). WNWO Associates, 11 FCC Rcd 18596 (1996). Estrella is the licensee of WLII(TV) (Channel 11, Ind.), Caguas, Puerto Rico and WSUR-TV (Channel 9, Ind.), Ponce, Puerto Rico. Station WSUR-TV has operated as a satellite of station WLII(TV) for over 30 years, having previously been granted satellite exemption status pursuant to Note 5 to Section 73.3555 of the Commission's Rules, which exempts from application of the multiple ownership rules those television stations that are "satellite" operations. 2. Raycom controls the corporate licensees of 21 full-service television stations, four "satellite" television stations, one FM radio station and one AM radio station. The Grade B contour of one of its television stations, WUPW(TV) (Channel 36, FOX), Toledo, Ohio, overlaps the Grade B contours of stations WNWO-TV and WOIO(TV), thereby implicating the Commission's duopoly rule. In view of these facts and to effect the proposed transfer of control, Raycom makes three requests with respect to the multiple ownership rules. First, to permit its common ownership and control of stations WNWO-TV and WOIO(TV), Raycom seeks either: (1) a continuation of the 1996 duopoly waiver; or (2) a waiver of the duopoly rule conditioned upon the outcome of the Commission's pending broadcast television ownership rulemaking concerning the duopoly and other multiple ownership rules. 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). Second, Raycom asks for six-month, temporary duopoly waivers to permit its common ownership and control of stations WUPW(TV), WNWO-TV and WOIO(TV) during the "brief period necessary to divest" station WUPW(TV). An application to assign the license for that station to STC Broadcasting, Inc. (STC Broadcasting) was filed on July 31, 1998 (BALCT-980731KE). Third, Raycom requests continued satellite exemption status for station WSUR-TV so that it may commonly own that station and station WLII(TV). For the reasons discussed below, we will grant Raycom's requests for conditional and temporary duopoly waivers and continued satellite exemption status, as well as the proposed transfer of control transaction. DUOPOLY WAIVER REQUESTS Duopoly Standard 3. In adopting the duopoly rule's fixed standard of a prohibited 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 distinctiveness 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. 4. Currently, the Commission is reexamining its broadcast television ownership policies, including the duopoly rule. In the Telecommunications Act of 1996, 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). Pursuant to that Congressional directive and to update the record, the Commission released a second notice, the Television Ownership Second Further Notice, to its pending television ownership proceeding. See Review of the Commission's Regulations Governing Television Broadcasting, Further Notice of Proposed Rule Making, 10 FCC Rcd 3524 (1995). 5. In the Television Ownership Second Further Notice, the Commission stated that it will be inclined, during the pendency of the television ownership proceeding, to grant 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 DMAs 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. With regard to waiver requests not falling in this category, i.e., those involving stations in the same DMA or with overlapping Grade A contours, the Commission stated it would be disinclined to grant them during the pendency of the television ownership proceeding absent extraordinary circumstances. Id. Stations WNWO-TV and WOIO(TV) Conditional Waiver 6. Waiver Showing. Preliminarily, Raycom asserts that the market circumstances which justified the Commission's 1996 grant of a permanent duopoly waiver allowing Malrite's common ownership of stations WNWO-TV and WOIO(TV) have not significantly changed, and that continuation of the existing waiver is appropriate. In the alternative, Raycom maintains that stations WNWO-TV and WOIO(TV) meet the Commission's interim policy on duopoly waivers because no Grade A overlap exists between the stations, which are located in cities approximately 105 miles apart and in separate markets, with station WNWO-TV located in the Toledo, Ohio Designated Market Area (DMA), ranked 66th in size, and station WOIO(TV) located in the Cleveland, Ohio DMA, ranked 13th in size. 7. Raycom also states that, as the Commission found at the time it granted Malrite a permanent duopoly waiver, the predicted Grade B contour overlap between stations WNWO-TV and WOIO(TV) remains insubstantial since the technical facilities of the stations have not been altered since 1996. In support, Raycom submits an Engineering Exhibit, which demonstrates that the predicted Grade B overlap encompasses 352 square kilometers and 47,204 people, representing 1.92 percent of the area and 2.25 percent of the population within station WNWO-TV's predicted Grade B contour, and 2.66 percent of the area and 1.35 percent of the population within station WOIO(TV)'s predicted Grade B contour. According to Raycom, though not de minimis, the Grade B overlap falls well within the range of those approved by the Commission in granting previous waivers. 8. In addition, Raycom contends that its common ownership of stations WNWO-TV and WOIO(TV), which remain affiliated with separate networks, will not impair the underlying diversity and competition goals of the Commission's duopoly rule. To this end, Raycom asserts that the degree of diversity has not changed since the 1996 waiver grant. Raycom claims that 14 stations continue to provide Grade B or better service to the overlap area, with two of those stations serving virtually the entire area, and seven stations serving the entire overlap area. Furthermore, Raycom states, as in 1996, a wide variety of cable systems, radio stations and newspapers continue to serve the overlap area. 9. As for competition, Raycom indicates that nearly all of the overlap area falls in Erie and Huron Counties, which are part of the Cleveland DMA. In this regard, Raycom states that station WOIO(TV), a UHF station licensed to the Cleveland DMA and affiliated with the CBS television network, faces stiff competition in the Cleveland market from three VHF stations, Gannett-NBC- owned station WKYC-TV (Channel 3, NBC), FOX-owned station WJW-TV (Channel 8, FOX) and Scripps Howard Broadcasting-owned station WEWS(TV) (Channel 5, ABC). Raycom further notes that another CBS-affiliated station, WTOL-TV, Toledo, provides service to the overlap area. With respect to station WNWO-TV, Raycom states that that station receives no reportable Nielsen ratings in the Cleveland DMA, whose residents "naturally turn to their local NBC affiliate . . . VHF station WKYC-TV rather than to the NBC affiliate in Toledo, UHF station WNWO-TV." Also with respect to diversity and competition in the overlap area, Raycom pledges to maintain separate management, programming and sales operations of stations WNWO-TV and WOIO(TV). Finally, Raycom concludes, the fact that grant of its requested duopoly waiver will create no new television ownership combination, but merely maintain the status quo, mitigates against any adverse impact on diversity and competition in the overlap area. 10. Discussion. Given the clearly articulated policy in the Television Ownership Second Further Notice, we do not believe that grant of Raycom's request for a continuation of the permanent duopoly waiver accorded Malrite in 1996 is appropriate. See WHOA-TV, Inc., 11 FCC Rcd 20041, 20046-47, 20051 (1996). However, we believe that grant of a conditional waiver of the duopoly rule, subject to the outcome of the pending ownership proceeding, is justified. Because the two stations are in separate DMAs and the stations' Grade A contours do not overlap, the temporary common ownership of stations WNWO-TV and WOIO(TV) would be consistent with the interim policy set forth in the Television Ownership Second Further Notice. 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 request to extend the conditional waiver should be filed at least 45 days prior to the end of the six- month period and will be closely scrutinized. Stations WUPW(TV), WNWO-TV and WOIO(TV) Temporary Waivers 11. As mentioned supra  2, the predicted Grade B contours of stations WNWO-TV, Toledo, and WOIO(TV), Shaker Heights, overlap with that of Raycom's Toledo station, WUPW(TV). However, Raycom has filed an application to assign the license of station WUPW(TV) in furtherance of an agreement to sell that station to STC Broadcasting. Given the pendency of that assignment application, Raycom requests two six-month, temporary duopoly waivers to permit its common ownership and control of the three stations during the period necessary to complete the sale of station WUPW(TV). 12. Stations WOIO(TV) and WUPW(TV) Waiver Showing. According to Raycom, stations WOIO(TV) and WUPW(TV) meet the Commission's interim duopoly policy because no Grade A overlap exists between the stations which are located in separate markets, with station WOIO(TV) in the Cleveland DMA and station WUPW(TV) in the Toledo DMA. Furthermore, Raycom describes the predicted Grade B overlap of the stations as very slight, constituting 1.49 percent of the area and 1.19 percent of the population within station WOIO(TV)'s predicted Grade B contour, and 1.38 percent of the area and 2.91 percent of the population within station WUPW(TV)'s predicted Grade B contour. Raycom maintains that, while not de minimis, this degree of overlap is well within the range of overlaps permitted in recent duopoly waivers. 13. With regard to diversity and competition, Raycom claims that the WOIO(TV)/WUPW(TV) overlap area, which falls essentially in the same area of the Cleveland DMA as the WOIO(TV)/WNWO-TV Grade B overlap, enjoys a wide variety of media outlets. Specifically, Raycom states that 14 other television stations provide Grade B or better service to all or part of the overlap area, with two of those stations serving 99 percent, and seven of those stations serving the entire, overlap area. See supra  8. Raycom also asserts that stations WOIO(TV) and WUPW(TV) do not significantly compete in the overlap area, which chiefly falls in the Cleveland DMA. In this regard, Raycom asserts that its FOX-affiliated station, WUPW(TV), neither significantly competes, nor receives reportable ratings in the Cleveland DMA, where residents instead view the local VHF, FOX-owned station, WJW-TV. Furthermore, station WOIO(TV), a CBS affiliate, competes with at least one other CBS affiliate which provides service to the overlap area, and faces strong competition in the Cleveland DMA from stations WKYC-TV (NBC), WJW-TV (FOX) and WEWS(TV) (ABC), supra  9. Also with respect to the Commission's concerns regarding competition, Raycom pledges to continue the separate operations of each station, including separate sales staffs, management and programming during the temporary waiver period. 14. Stations WNWO-TV and WUPW(TV) Waiver Showing. In turning to its other request, Raycom acknowledges that stations WNWO-TV and WUPW(TV) do not meet the Commission's interim duopoly policy because their Grade A contours overlap and they are located in the same market, the Toledo DMA. However, Raycom contends that, in other cases where stations failed to meet the interim standard, the Commission has granted temporary waivers based on "extraordinary circumstances," and has recognized that temporary duopoly waivers are appropriate to encourage commerce by facilitating multiple-station transactions. According to Raycom, the multiple-station nature of the proposed transfer of control and the multitude of other media serving the overlap area create such "extraordinary circumstances," warranting grant of the requested waiver. 15. As for the degree of overlap, Raycom states that the predicted Grade B contour of station WNWO-TV encompasses the entire, somewhat smaller, predicted Grade B contour of station WUPW(TV). Raycom argues, however, that the degree of overlap is not determinative in analyzing a temporary duopoly waiver request. Though the overlap here is substantial, Raycom maintains that the Commission has found the degree of overlap a more critical concern in cases involving permanent duopoly waiver requests than in cases, such as this one, involving temporary requests. Raycom asserts, moreover, that the Commission has previously granted temporary waivers to same-market duopolies in markets larger and smaller than that involved in this case, the Toledo DMA, in order to facilitate multiple-station transactions, such as the one at issue here. 16. According to Raycom, in at least two of those same-market duopoly cases, the Commission noted that the temporary waivers were supported by the diversity of voices in the DMAs at issue. To wit, Raycom claims that the WNWO-TV/WUPW(TV) overlap area is served by a high number of television stations and other media outlets. More specifically, Raycom states that, excluding stations WNWO-TV and WUPW(TV), five other full-service television stations serve the market, including two competitively stronger VHF stations, WTVG-TV (Channel 13, ABC) and WTOL-TV (Channel 11, CBS). In addition, 32 other television stations in adjacent DMAs provide Grade B or better service to all or part of the overlap area, and 110 radio stations are either licensed to communities within the overlap area, or provide service to that area from adjacent counties. Raycom also points to the wide variety of alternative media in the Toledo DMA, which includes 29 daily newspapers, 56 weekly publications, 28 cable operators with a cable penetration of 67 percent and four wireless cable operators. Given this level of diversity, Raycom concludes that "the brief period of co-ownership would not so adversely affect competition and diversity as to outweigh the benefits of accommodating the reasonable business needs of this multi-station, multi-market transaction." 17. Raycom further claims that the different network affiliations of stations WNWO-TV and WUPW(TV), NBC and FOX, respectively, significantly minimizes the potential impact of the requested temporary duopoly waiver on diversity and competition. Excluding stations WNWO-TV and WUPW(TV), moreover, the residents in the overlap area receive service from up to four other NBC-affiliated stations and up to three other FOX-affiliated stations. As a final matter related to competition, Raycom states that it will maintain the separate management, programming and sales operations of each station. 18. Lastly, Raycom maintains that requiring an immediate divestiture of one of the Toledo stations would pose an undue hardship on the parties without any meaningful public interest benefits. On the other hand, grant of a temporary duopoly waiver for the limited time needed to complete the sale of station WUPW(TV) would serve the public interest by, inter alia, encouraging investment in the broadcast industry and allowing for the free transferability of broadcast licenses without undermining the diversity and competition goals of the duopoly rule. 19. Discussion. Based on our review of the record in this case, we conclude that Raycom has justified grant of a six-month, temporary waiver to permit its common ownership and control of stations WUPW(TV) and stations WOIO(TV) and WNWO-TV. Although we stated in the Television Ownership Second Further Notice that we would, during the pendency of the television ownership proceeding, be disinclined to grant waivers inconsistent with our interim policy, we believe, based on the totality of the circumstances presented here, that brief, fixed waivers of the television duopoly rule are warranted. 20. Along this line, the Commission has previously stated that it is not constrained from granting a temporary waiver where circumstances "will not significantly frustrate the policies underlying the multiple ownership rules." Telemundo Group, Inc., Debtor in Possession, 10 FCC Rcd 1104, 1106 (1994) (quoting Family Television Corp., 59 RR2d 1344, 1348 (1986)). In light of the numerous broadcast and other media voices serving the overlap areas in the Cleveland and Toledo DMAs, we believe that allowing Raycom to commonly own and control station WUPW(TV) and stations WOIO(TV) and WNWO-TV for a brief period will not undermine our twin goals of promoting diversity in programming and viewpoints, and fostering economic competition. Moreover, Raycom has pledged to operate these stations independently during its brief period of common ownership and control. We note, too, that the Commission has approved other same-market duopoly waivers to facilitate multiple-station transactions, including a case involving same-market stations in smaller DMAs than Toledo, whose Grade A contours overlapped. See AFLAC Broadcasting, Inc., 12 FCC Rcd 3907. As in the case of multiple-station transactions where the Commission has granted temporary waivers for duopolies inconsistent with the interim policy, we believe that grant of the waiver requested in this case will "promote commerce [and] encourage investment in the broadcast industry." Stockholders of CBS Inc., 11 FCC Rcd 3733, 3755 (1995). Based on these factors, we conclude that diversity and competition in the Cleveland and Toledo DMAs will not be adversely affected by a short period of common ownership and control of station WUPW(TV) and stations WOIO(TV) and WNWO-TV. 21. Finally, the Commission has previously considered an applicant's expressed commitment to divest a station involved in a duopoly as a factor in granting a temporary waiver. See ITT-Dow Jones Television, 13 FCC Rcd 4678 (MMB 1998); Providence Journal Company, 12 FCC Rcd at 2888. Raycom has not only expressed its commitment to divest station WUPW(TV), but has executed an agreement to sell the station to STC Broadcasting, and has filed an assignment of license application in accordance with that agreement. Such actions corroborate Raycom's intention to divest station WUPW(TV) as expeditiously as possible. 22. For these reasons, we believe that grant of the requested waivers will serve the public interest, convenience and necessity. Accordingly, we will grant Raycom six-month waivers of the television duopoly rule to permit its temporary common ownership and control of station WUPW(TV) and stations WOIO(TV) and WNWO-TV. Any request to extend these temporary waivers should be filed at least 45 days prior to the end of the six-month period and will be closely scrutinized. CONTINUED SATELLITE REQUEST 23. Continued Satellite Showing. In furtherance of its proposed transfer of control, Raycom requests continued satellite status for station WSUR-TV, which operates as a satellite of station WLII(TV). Note 5 to Section 73.3555 of the Commission's rules exempts from application of the multiple ownership rules those television stations that are "satellite" operations. In Television Satellite Stations, 6 FCC Rcd 4212, 4215 (1991) (Television Satellite Stations), the Commission established the requirement that all applicants seeking to transfer or assign satellite stations justify continued satellite status by demonstrating compliance with a three-part "presumptive" satellite exemption standard applicable to new satellite stations. Alternatively, applicants may demonstrate that there exist "other compelling circumstances" to warrant continued satellite authorization. The presumptive satellite exemption is met if the following three public interest criteria are satisfied: (1) there is no City Grade 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. Id. at 4212-14. Applications meeting this criteria, when unrebutted, will be viewed favorably by the Commission. Id. at 4214. 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 compelling circumstances that warrant approval. Id. While Raycom does not meet all three of the presumptive criteria, for the reasons discussed below, we find that the continued operation of station WSUR-TV as a satellite of station WLII(TV), which have overlapping Grade B contours, would be consistent with our policy based on an ad hoc analysis. 24. As an initial matter, Raycom concedes that it fails to meet the first two presumptive criteria because city-grade contour overlap exists between the parent and satellite stations, here, and station WSUR-TV does not provide service to an underserved area. For the purposes of the second criterion, an area is deemed underserved if, under the "transmission test," there are two or fewer full- service stations already licensed to the proposed satellite community of license, or, under the "reception test," 25 percent or more of the area within the proposed satellite's Grade B contour, but outside the parent's Grade B contour, receives four or fewer services, not including the proposed satellite service. Raycom states that it fails the transmission test since Ponce has four other commercial television stations. Of those stations, Raycom further remarks, two operate as satellites of San Juan area stations, one rebroadcasts the programming of another San Juan station and one operates under a unique television broadcast system utilizing a number of specially-authorized high power booster stations across the island. In noting the nature of the other stations' operations, Raycom also asserts that the Commission has found satellite or rebroadcast arrangements to be "`essential to the provision of programming choices to Ponce, a community that is effectively isolated from the island's economic center in San Juan.' [citing Canal 48, Inc., 8 FCC Rcd 2193, 2194 (1993)]." Raycom indicates that it likewise fails the reception test, suggesting that there is no area constituting at least 25 percent of station WSUR-TV's Grade B contour which receives four or fewer services. However, Raycom argues that, given the geographically small, highly concentrated nature of the Puerto Rican market, it would be difficult for any television station to show a sufficient lack of predicted Grade B service to satisfy the reception test. 25. Notwithstanding its inability to satisfy the first two presumptive criteria, Raycom contends that Puerto Rico's special geographic characteristics warrant grant of continued satellite exemption status for station WSUR-TV. More specifically, Raycom refers to the fact that the entire island of Puerto Rico is one market, approximately 125 miles long and 40 miles wide, with a central mountain range that not only separates the island from east to west, but divides it into three basic areas, San Juan, Ponce and Aguadilla-Mayaguez. In addition, the mountain range separates Ponce, which is served by station WSUR-TV, from the more populous San Juan/Caguas/Fajardo area served by station WLII(TV). Raycom asserts that the Commission has previously acknowledged the severely limiting effect Puerto Rico's unique mountainous terrain has on signal propagation, which prevents stations in the more populous San Juan area from serving the two other main, but less populous areas of the island. Puerto Rico's special geographic characteristics and their effect on over- the-air coverage of television stations, Raycom further maintains, has formed the basis for the Commission's grant of satellite exemption status for other island stations, including repeated authorizations for station WSUR-TV to operate as a satellite of station WLII(TV). 26. With respect to the third criterion, which requires a showing that no alternative operator is ready and able to purchase and operate the proposed satellite as a full-service station, Raycom begins by arguing that the Ponce area alone lacks the population and economic base to sustain full- service station operations. Like other Ponce stations, Raycom asserts, station WSUR-TV, has experienced serious financial difficulties. In support of this assertion, Raycom submits a statement from John C. Chaffee, Jr., President and Chief Operating Officer of Estrella, in which he relates the difficulties confronting television stations in Puerto Rico. Principally, Mr. Chaffee refers to the serious financial problems stemming from the island's rugged terrain, which causes "grossly inferior signal coverage" and makes it impossible for station WLII(TV) at Caguas/San Juan to cover Ponce on the south coast or communities on the west coast, or for a station in Ponce, like station WSUR- TV, to cover adequately San Juan and the west coast. In addition, he relates the troubled financial history of station WSUR-TV, which was controlled and operated by American Colonial Broadcasting Corporation (American Colonial) as a satellite of station WLII(TV) from the early 1960s until 1981, when American Colonial became bankrupt and both stations ceased operations. According to Mr. Chaffee, in 1985, following approval from the bankruptcy court, the Commission granted the new licensee of station WSUR-TV continued satellite exemption status for that station, questioning its ability to operate independently when it had already failed as a satellite. 27. As described by Mr. Chaffee, moreover, Ponce is a smaller community which has not enjoyed economic growth and has uncertain prospects for large scale economic improvement. Mr. Chaffee asserts that less than one percent of the total revenues generated by stations WSUR-TV and WLII(TV) derive from sales in the Ponce area, such revenues falling far below the costs of sustaining station WSUR-TV's operations. In Mr. Chaffee's opinion, there is no reasonable likelihood that station WSUR-TV could operate as a full-service, stand-alone station. Given that station's past financial trouble, the history of Puerto Rican television stations and the "unique technical circumstances" in Puerto Rico, he reasons that, "no prudent business person . . . would be willing to invest in the acquisition of WSUR-TV for the purpose of operating it as a full-service stand-alone station." 28. Also in support of the third criterion, Raycom submits a statement from Francis A. L'Esperance III, Managing Director of Veronis, Suhlar & Associates, a New York firm specializing in mergers and acquisitions, who, inter alia, also worked as a media investment banker for 12 years. Like Mr. Chaffee, Mr. L'Esperance believes that it would be unreasonable to expect to find a qualified buyer who would purchase station WSUR-TV and operate it as a full-service, stand-alone facility. Mr. L'Esperance bases his opinion on station WSUR-TV's insufficient revenues and the current environment in which buyers are aware of the impending need to convert stations from NTSC to DTV service. In this regard, it is Mr. L'Esperance's view that "the revenues which could be generated by a stand-alone WSUR-TV would be substantially insufficient to sustain a viable full-service television operation," and would fall far short of supporting the type of major expenditure necessary to convert the station's operations from NTSC to DTV. He believes, too, that "there is a need for the efficiencies of satellite operations for WSUR-TV to continue to supply off-air program service to Ponce." For these reasons, Mr. L'Esperance states that, if solicited to broker station WSUR-TV as a full-service, stand-alone station, he would respectfully decline. 29. Discussion. In Television Satellite Stations, the Commission stated that if an applicant cannot qualify for the presumption, its proposal would be evaluated on an ad hoc basis, and granted if there are compelling circumstances that warrant approval. 6 FCC Rcd at 4213. The Commission also indicated that the "degree of departure from the presumptive criteria will also influence our decision" under the ad hoc approach. Id. Here, the deviation is not insubstantial given Raycom's inability to satisfy the first two presumptive criteria. However, Raycom has demonstrated the unlikelihood of finding an alternative operator who is ready and able to operate station WSUR-TV as a stand-alone facility, thereby meeting the third criterion. We believe, moreover, that Raycom has shown compelling circumstances which justify satellite operations under an ad hoc analysis. In this regard, we note that station WSUR-TV has operated as a satellite of WLII(TV) for over 30 years, during which time it experienced serious financial troubles resulting in bankruptcy. Furthermore, the record strongly suggests that Ponce, station WSUR-TV's community of license, lacks the population and economic base to sustain full-service operations, and must therefore rely upon satellite authorizations, rebroadcasting and other arrangements for the provision of television programming it otherwise would not receive. As Raycom also points out, the Commission has previously recognized the unique geographic characteristics of Puerto Rico, authorizing satellite operations "[t]o overcome these terrain limiting conditions and to permit television operations to be viable . . . ." Hector Nicolau, 5 FCC Rcd 6370, 6371 (1990); see also Canal 48, Inc., 8 FCC Rcd 2193. 30. In view of these considerations, we believe that termination of continued satellite status to station WSUR-TV would deprive Ponce of service that, in all likelihood, would not be provided by a stand-alone operation. Therefore, based on all of the information provided, we conclude that Raycom's satisfaction of the third presumptive criterion and presentation of sufficiently compelling circumstances supports an ad hoc determination that a grant of continued satellite exemption status for station WSUR-TV, pursuant to Note 5 of Section 73.3555, would serve the public interest. See, e.g., Precht Communications, Inc., 13 FCC Rcd 8659 (1998). We note, however, that among the matters being reexamined in the Commission's broadcast television ownership policies in the Television Ownership Second Further Notice is the continued exemption of satellite stations from broadcast ownership restrictions. Accordingly, we will condition the grant of this satellite proposal on whatever action is taken in that proceeding. CONCLUSION 31. Having determined that the applicants are qualified in all respects, we find that grant of the applications to transfer control of Malrite Communications Group, Inc. and Estrella Brillante, Ltd. from Milton S. Malt to Raycom Media, Inc. will serve the public interest, convenience and necessity. 32. Accordingly, IT IS ORDERED, That the request for a permanent waiver of the television duopoly rule, Section 73.3555(b) of the Commission's rules, to permit the common ownership of television stations WNWO-TV, Toledo, Ohio and WOIO(TV), Shaker Heights, Ohio IS DENIED. 33. IT IS FURTHER ORDERED, That the request for a conditional waiver of the television duopoly rule, Section 73.3555(b) of the Commission's rules, to permit the common ownership by Raycom Media, Inc. of television stations WNWO-TV, Toledo, Ohio and WOIO(TV), Shaker Heights, Ohio IS GRANTED, subject to the outcome of the Commission's pending broadcast ownership rulemaking in MM Docket Nos. 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 Nos. 91-221 and 87-8, an application for Commission consent to dispose of such station as would be necessary for Raycom Media, Inc. to come into compliance with the rules as provided in the final order. 34. IT IS FURTHER ORDERED, That the request for temporary waivers of the duopoly rule, Section 73.3555(b), to permit common ownership and control of stations WUPW(TV), WOIO(TV), and WNWO-TV IS GRANTED, provided that within six months of the consummation of the transfer of control of stations WOIO(TV) and WNWO-TV to Raycom Media, Inc., Raycom must dispose of station WUPW(TV), or otherwise come into compliance with the broadcast multiple ownership rules. 35. IT IS FURTHER ORDERED, That the request of Raycom Media, Inc. for operation of station WSUR-TV, Ponce, Puerto Rico, pursuant to the satellite exemption of Note 5 to 47 C.F.R.  73.3555, IS GRANTED, subject to the outcome of the Commission's pending television ownership rulemaking in MM Docket Nos. 91-221 and 87-8. 36. IT IS ORDERED, That the above-captioned applications for transfer of control of Malrite Communications Group, Inc. and Estrella Brillante, Ltd. from Milton S. Maltz to Raycom Media, Inc., File Nos. BTCCT-980421IB-G and BTCTT-980430IA, ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau