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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 Applications of ) ) Christian Faith Broadcast, Inc. ) File Nos.: BPH-960507M5 KM Communications, Inc. ) BPH-960507MD Thomas P. Kilbane ) BPH-960507MH Knox Broadcasting, Inc. ) BPH-960507M1 Willard Community Broadcasting Corp.) BPH-960507MN Rick S. Smith d/b/a Great Plains Broadcasting) BPH-960507MP ) for Joint Request for Approval of Settlement) Agreement ) ) for New FM Radio Station Construction Permit) Channel 245A, Willard, Ohio ) ) MEMORANDUM OPINION AND ORDER Adopted: August 21, 1998 Released: August 25, 1998 By the Chief, Mass Media Bureau: 1. The Commission by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it: (1) the above-captioned mutually exclusive construction permit applications for new FM radio station, Channel 245A, Willard, Ohio, (2) the joint request for approval of a settlement agreement filed on January 27, 1998; and (3) a related request by Christian Faith Broadcast, Inc. ("CFB") for a permanent waiver of 47 C.F.R. 73.3555(c), the Commission's one-to-a-market rule, which restricts common radio and television station ownership in the same market. 2. The joint request for approval of a settlement agreement resolves the mutually exclusive applications for new FM radio station, Channel 245A, Willard, Ohio, and contemplates the issuance of a construction permit to CFB. Currently, CFB is the licensee of UHF television station WGGN-TV, Sandusky, Ohio (a Trinity Broadcasting Network "TBN" affiliate) and radio station WGGN(FM), Castalia, Ohio. Grant of the instant construction permit application would create a new radio-television station combination because the Grade A contour of WGGN-TV entirely encompasses Willard, the proposed community of license of the new FM radio station. Thus, the issuance of a construction permit to CFB requires a one-to-a-market waiver. CFB's application for a construction permit and its related waiver request are unopposed. For the reasons set forth below, we will approve the settlement agreement and grant CFB the construction permit application and a permanent waiver of our one-to-a-market rule. One-to-a-Market Waiver Showing 3. CFB bases its request on the one-to-a-market waiver standards adopted in the Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 (1989) ("Second Report and Order"), recon. granted in part and denied in part, 4 FCC Rcd 6489 (1989) ("Second Report and Order Recon."). Under these criteria, the Commission presumptively favors waiver requests involving station combinations serving the top 25 markets where there are at least 30 separately owned, operated, and controlled broadcast licensees or "voices" after the proposed combination ("top 25 market/30 voice standard"). The Commission also favors waiver requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time or that are in bankruptcy proceedings. Otherwise, the requests must be evaluated under a more rigorous case-by-case approach. See 47 C.F.R.  73.3555, note 7. 4. WGGN-TV is licensed to Sandusky and WGGN(FM) is licensed to Castalia, both of which are located in Erie County, while the new FM station will be licensed to Willard in adjacent Huron County. All three stations in CFB's proposed combination are considered part of the 13th ranked Cleveland DMA as defined by Nielsen. CFB, however, submits its waiver request pursuant to the case-by-case standard because it states that its waiver request does not fall into either of the circumstances for a presumptive waiver, i.e., "top 25 market/30 voice" standard or failed station status. CFB asserts that the relevant market is the "Willard market" and that only those radio stations that place a principal community contour and those TV stations that place a Grade A or B signal over the Willard area should be considered. We agree with CFB that it is not entitled to a presumptive waiver under the "top 25 market/30 voice" standard. Previously, we have determined that where the DMA covers a large area and the stations at issue compete only in a smaller community, and not with most television stations in the DMA or radio stations in the TV metro, our analysis would focus on the local community rather than the DMA. See, e.g., Citadel License, Inc., 13 FCC Rcd 2700 (MMB 1998); Spectrum Radio, Inc., 12 FCC Rcd 1667 (1997); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 9495 (1995) (where subject stations compete within smaller community of large DMA, permanent or temporary waivers granted based on case-by-case showing rather than presumptive waiver under "top 25 market/30 voice" standard). In this case, consistent with this precedent, we will consider as competing facilities those radio stations within the Cleveland DMA that are either licensed to communities in Huron or Erie County or that place a principal community contour over all or portions of those areas and those TV stations within the Cleveland DMA that place a Grade B or better signal over all or portions of Huron or Erie County. Based upon our review and as discussed below, we find that CFB's case-by-case showing satisfies the criteria for a permanent waiver. 5. Under the case-by-case standard, the Commission makes a public interest determination based upon the following five criteria: (1) the potential public service benefits that will arise from the joint operation of the facilities involved, such as economies of scale, cost savings and programming and service benefits; (2) the types of facilities involved; (3) the number of media outlets owned by the applicant in the relevant market; (4) the financial difficulties of the stations involved; and (5) the nature of the relevant market in light of the level of competition and diversity after joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753- 54. In enunciating the five factors to be considered under the case-by-case standard, the Commission noted that not all five factors must be satisfied in each case, but rather the overall consideration of these factors must weigh in favor of granting the waiver request. Second Report and Order Recon., 4 FCC Rcd at 6491. In support of its waiver request, CFB submits a showing which addresses each of the five factors. 6. Public Service Benefits of Joint Operation. CFB states that it anticipates substantial savings of approximately $75,000 in construction and equipment acquisition costs for the new FM Willard station as a result of its present ownership of WGGN-TV and WGGN(FM). These savings will be derived primarily from using CFB's recently renovated master control center in Castalia for most of the Willard station's program production according to CFB. Once the new FM Willard station is operational, CFB anticipates annual savings of approximately $144,000 from the joint operation of these stations and through the sharing of personnel. CFB estimates that the use of an existing master control center will save an estimated $9,000 per year to rent space for such a production facility. With regard to shared personnel, CFB's vice president, who currently works at WGGN-TV and WGGN(FM), will also serve as the manager and chief engineer of the new station resulting in savings of at least $60,000 per year in salaries and benefits for those two positions according to CFB. Additionally, CFB plans to use its current sales and engineering staffs for the advertising and technical needs of the new station which CFB anticipates will result in at least $60,000 annual savings in salaries, commissions, and engineering fees. CFB also anticipates annual savings of $15,000 in advertising and promotional costs by cross promoting programming and events to be broadcast on the Willard station on both WGGN-TV and WGGN(FM). CFB states further that its ability to cross promote programming will help to attract an audience for the new FM station. CFB contends that these financial savings will also help ensure the economic viability of the new FM station in Willard. 7. With projected annual savings of approximately $144,000, CFB states that,"more money will mean more program production." CFB states that it plans to invest greater amounts in riskier programming ventures such as local program production and public service programming. For example, CFB states that local and regional news service will be provided to Willard by producing the same news format on the new FM station that is currently broadcast on WGGN-TV and WGGN(FM). According to CFB, the use of common staff and equipment will result in more issue responsive programming being produced and broadcast on both the radio and TV stations. CFB states further that the lower cost of program production and reduced costs of production assistance will enable it to pass on the savings to local programmers such as area churches and ministries to produce their own programming for broadcast on the Willard station, as well as continuing broadcasts on its other stations. 8. Types of Facilities/Other Media Outlets. With regard to radio stations, CFB has submitted an engineering study which indicates that there are 17 radio stations including the new FM Willard station and WGGN(FM) that place a principal community contour over all or portions of Huron or Erie County. WGGN(FM), located in Erie County, is a Class A FM station that operates on 97.7 MHz with an effective radiated power ("ERP") of 0.64 kW from an antenna at 725 feet height above average terrain ("HAAT"). The proposed Willard station, located in Huron County, is also a Class A FM station that would operate on 96.9 MHz with an ERP of 6 kW from an antenna 328 feet HAAT. Among the total 17 radio stations identified by CFB as serving the Willard area, four have substantially greater power and coverage than either WGGN(FM) or the proposed Willard station according to CFB. With regard to television stations, CFB provides exhibits which indicate that there are 11 TV stations within the Cleveland DMA that place a Grade B or better signal over all or portions of Huron or Erie County. WGGN-TV, is a UHF TV station, (a TBN affiliate) which operates on Channel 52 with 1,482 kW maximum ("max.") visual from an antenna at 774 feet HAAT. CFB states that, WGGN-TV has among the smallest coverage contours of any TV station in the Cleveland DMA. Aside from the proposed combination, CFB will not own any other media outlets in Huron or Erie County. 9. Economic Status. CFB states that neither WGGN-TV nor WGGN(FM) is a failed station or is in financial difficulties. However, CFB notes that previous waivers have been granted where the applicant did not make a showing of financial distress. 10. Competition and Diversity in the Market. The final factor in CFB's showing is the nature of the relevant market in light of the Commission's concerns about diversity and competition. As stated above, consistent with case precedent, CFB counts those radio stations that place a principal community contour over the Willard area because the subject stations in CFB's proposed combination compete only in a relatively small local community within a large DMA. CFB's engineering exhibit shows that in addition to the proposed new FM, there are 16 radio stations including WGGN(FM) owned by 12 separate owners that are either licensed to communities in Huron or Erie County or which place a principal community contour over all or portions of those areas. CFB also includes an additional 28 radio stations owned by 20 different owners which it asserts, without any supporting engineering exhibits, "have a strong listenable signal in the [Willard] community which is not subject to destructive interference." With regard to TV stations serving the Willard area, CFB's exhibits show that there are 11 TV stations within the Cleveland DMA that place a Grade B or better signal over all or portions of Huron or Erie County. CFB also includes an additional 3 TV stations from the 66th ranked Toledo DMA that place a Grade A or B signal over all or portions of the relevant counties. 11. Finally, with regard to advertising revenue, CFB states that neither WGGN(FM) nor WGGN-TV has ever had a reportable share of the market. Therefore, the addition of the new FM Willard station to CFB's existing radio-TV combination will not result in competitive dominance for CFB or adversely monopolize advertising revenue in the market according to CFB. Additionally, CFB notes that the number of voices will remain the same while the number of broadcast services will increase since it is providing new FM service to the Willard community. Discussion Settlement Agreement 12. We find the applicants have complied with the requirements of Section 73.3525 of the Commission's Rules, which implements Section 311(c)(3) of the Communications Act of 1934, as amended. Additionally, since the applicants propose to serve the same community, no question is raised pursuant to Section 307(b) of the Act. One-to-a-Market Waiver 13. At the outset, we note that the pending television ownership proceeding, in which the Commission is considering eliminating or modifying the one-to-a-market rule, does not preclude consideration of CFB's request for a permanent one-to-a-market waiver. In the Second Further NPRM in the television ownership proceeding, we stated that waiver requests submitted pending resolution of the proceeding will be considered under the current criteria for evaluating such requests. Second Further NPRM, 11 FCC Rcd at 21689 n.130. Thus, the Second Further NPRM contemplates approval of permanent, unconditional waivers to allow radio-television combinations that do not propose common ownership of stations exceeding a combination of one television station, two AM stations and two FM stations, as long as the requested waivers are clearly consistent with Commission precedent. See id. CFB's proposed combination of one UHF television station and two FM radio stations including the construction permit for the new FM Willard station, is consistent with that approach. See, e.g., Alabama Universal Corporation, 12 FCC Rcd 7556 (1997). 14. In evaluating a request for a permanent waiver of the one-to-a-market rule, the Commission's goal "is to permit the public to benefit from such efficiencies of operation as may be achieved through the use of common facilities and staff, consistent with the maintenance of diversity and vigorous competition within the market areas involved." Second Report and Order Recon., 4 FCC Rcd at 6491. The Commission does not require that all five case-by-case criteria be satisfied as a precondition of a waiver, but rather that the overall consideration of these factors weighs in favor of the public interest. Id. at 6493; Second Report and Order, 4 FCC Rcd at 1753. We conclude that, on balance, CFB meets our case-by-case criteria, and that a permanent waiver in this instance would not adversely affect competition and diversity in the relevant market. 15. As to the first criterion, the potential public service benefits of joint ownership, the Commission considers the public service benefits that could result from the proposed radio-television combination, such as projected economies of scale, cost savings and program and service benefits. Second Report and Order, 4 FCC Rcd at 1753. In this regard, we note that grant of the one-to-a-market waiver request will enable CFB to provide a new FM radio service to the Willard area. CFB has demonstrated that its current ownership of WGGN(FM) and WGGN-TV will enable it to save approximately $75,000 in construction and equipment acquisition costs for the new FM Willard station primarily by using CFB's renovated master control center for the new station's program production. Upon operation of the new FM station with its other owned stations, CFB anticipates annual savings of approximately $144,000 through the sharing of key management, engineering and sales staffs as well as production facilities. These cost savings will help ensure the economic viability of the new FM station and will enable CFB to invest more in public service and local programming. Specifically, CFB will be able to provide local and regional news service to Willard by adopting the same news format that is currently broadcast on WGGN-TV and WGGN(FM) through the use of consolidated staff and technical facilities. Moreover, CFB will be able to cross promote the new FM Willard station's programming on WGGN(FM) and WGGN-TV which will help attract an audience for the new station. Additionally, reduced production costs will enable CFB to pass on savings to area churches and ministries that broadcast their local programming on CFB's stations. 16. With regard to technical facilities, the Commission aims to predict and avoid any significant adverse effects on diversity or competition from too powerful a combination. See Great American Television and Radio Co., Inc., 4 FCC Rcd 6347, 6349 (1989). CFB has submitted an engineering exhibit which indicates that there are 17 radio stations including the new FM Willard station and WGGN(FM) that serve the Willard area. As discussed below, we have determined that there are an additional 2 FM stations which should be included for a total count of 19 radio stations that place a principal community contour over all or portions of Huron or Erie County where CFB's proposed radio-TV combination will compete. Among the 9 Class A FM stations, WGGN(FM) which operates at 0.64 kW ERP from an antenna at 725 feet HAAT is the weakest while the proposed facilities of the new FM Willard station at 6 kW ERP from an antenna at 328 feet HAAT would make it the strongest. Additionally, there are 5 Class B FM stations with far greater technical facilities than either WGGN(FM) or the new FM. Four out of the 5 Class B FM stations operate at 50 kW ERP from an antenna at 135, 371, 466, 499 feet HAAT while the fifth operates at 40 kW ERP from an antenna at 545 feet HAAT. With regard to technical comparisons of TV stations within the Cleveland DMA that place a Grade B or better signal over all or portions of Huron or Erie County, our independent analysis of CFB's showing indicates that WGGN-TV competes with 7 other UHF TV stations, at least 2 of which have comparable facilities. These UHF-TV stations include affiliates of WB, CBS, and PBS. There are also 3 VHF stations including affiliates of ABC, NBC, and FOX that place a Grade B signal over all or portions of Huron or Erie County where CFB's proposed radio-TV combination would compete. Aside from its proposed radio-TV combination, CFB will own no other media outlets in either Huron or Erie County. We find based on the foregoing, that the proposed combination does not present issues of market dominance from a technical standpoint that would be inconsistent with the public interest. 17. As regards the financial status of the stations involved in the proposed combination, CFB states that neither WGGN(FM) nor WGGN-TV is a "failed station." However, not all five factors need be present to justify grant of a waiver. Second Report and Order Recon., 4 FCC Rcd at 6491. We have granted a number of one-to-a-market waivers where there was no finding that any of the stations were in financial distress. See, e.g., Louis C. DeArias, 11 FCC Rcd 3662 (1996); Alta Gulf FM, Inc., 10 FCC Rcd 7750 (1995); Henry Broadcasting Co., 11 FCC Rcd 1175 (1995); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 9495 (1995); Secret Communications Ltd., 10 FCC Rcd 6874 (1995). 18. We find that a sufficient number of media "voices" will continue to serve the relevant market and that the proposed combination will not create any undue concentration of ownership or control of the broadcast media therein. In considering one-to-a-market waiver requests, the Commission typically counts the television stations in the relevant Nielsen DMA and radio stations in the relevant Nielsen Television Metro Market. However, in several cases in which the relevant DMA (or formerly used ADI) was very large but the stations involved in a transaction competed only in a relatively small local community, we have accepted alternative methods for determining the number of relevant voices. See, e.g., Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 9495, 9497 (1995); Glendive Broadcasting Corp., 10 FCC Rcd 2708, 2711 99194); Duane J. Polich, 4 FCC Rcd 5596, 5597 (1989). Since WGGN(FM) and the proposed new FM Willard station, are licensed to communities in Erie and Huron Counties, respectively, which are part of the Cleveland DMA but not part of any defined television metro market, we accept CFB's alternative method of counting only those radio stations that are either licensed to communities in Erie or Huron County or that place a principal community contour over all or portions of those counties. See, e.g., Triad Skywaves, Inc., 12 FCC Rcd 6102, 6107 (MMB 1997) citing Gadsen Broadcasting Co., 10 FCC Rcd 8741, 8743 and n.4 (1995). CFB submitted an engineering exhibit which shows that aside from the new FM Willard station, there are 16 other radio stations that place a principal community contour over all or portions of Huron or Erie County. In addition to CFB's count of 17 radio station including WGGN(FM) and the new FM Willard station, we also include WVMS(FM) and WMTX(FM) both of which are licensed to communities in Erie County for a total of 19 commercial and noncommercial radio stations (5 AM and 14 FM). However, with the exception of WVMS, we reject those additional 28 radio stations that CFB asserts provide "a strong listenable signal" to the Willard area for which CFB fails to provide any supporting engineering exhibits. 19. As for TV stations, we accept CFB's alternative method of counting those TV stations within the Cleveland DMA that provide Grade B service to Huron or Erie County where CFB's proposed radio-TV combination would compete rather than relying on the TV stations included in the larger Cleveland DMA. See, e.g., Citadel License, Inc., 13 FCC Rcd 2700 (MMB 1998). Cf., Hearst-Argyle Stations, Inc., DA 98-1316, 1998 WL 347224 (MMB rel. July 1, 1998). We reject CFB's inclusion of 3 TV stations from the Toledo DMA which place a Grade B signal over all or portions of Huron or Erie County because those stations compete for advertising revenues in a separate and distinct DMA. Thus, based upon our independent analysis of CFB's showing, there are 11 TV stations including WGGN-TV (8 UHF and 3 VHF stations) that place a Grade B or better signal over all or portions of Huron or Erie County. 20. We conclude that, based upon our independent analysis of CFB's showing, there are a total of 19 commercial and noncommercial radio stations (5 AM and 14 FM) and 11 TV stations (8 UHF and 3 VHF stations) serving Huron or Erie County where CFB's proposed radio-TV combination will compete. As noted by CFB, the proposed radio-TV combination will not affect the number of voices competing in the market. These 30 broadcast stations will be owned and operated by 23 separate owners following the grant of the construction permit to CFB. 21. With respect to economic concentration and competition in the context of one-to-a-market waiver requests, we usually consider the combined advertising revenue share of the proposed radio-TV combination in the relevant market. See, e.g. Stockholders of Infinity Broadcasting Corp., 12 FCC Rcd 5012 (1996). Here, our independent inquiry indicates that neither WGGN-TV nor WGGN(FM) has a reportable share of advertising revenue in the Cleveland DMA as reported in the BIA Publications, Inc.'s ("BIA") Television and Radio Master Access Databases. Moreover, radio advertising revenues for WGGN(FM) are unavailable because it is not located in an Arbitron Radio Metro Market for which BIA Radio Master Access Database reports such data. Obviously, radio advertising revenues are unavailable for the new FM Willard station which has yet to be constructed. Nor are we able to independently determine advertising revenue shares for any geographical area that may constitute a functional equivalent of an Arbitron Radio Metro Market in this case. Thus, we are unable to determine the combined radio-TV advertising share for CFB's proposed combination. Nevertheless, the fact that the TV and radio stations at issue compete with comparable or technically superior facilities and the fact that the TV station has no share at all, persuade us that the proposed combination will not have an adverse effect on competition in this area. Overall, CFB has demonstrated that economic efficiencies and public interest benefits will be gained and such benefits support the grant of a permanent waiver. Based on the totality of circumstances, we conclude that the addition of the new FM Willard station to CFB's existing UHF-TV and FM combination will not have a significant negative impact on competition for broadcasting advertising revenue in Huron or Erie County or the larger Cleveland DMA. Finally, we find that CFB is fully qualified and that a grant of its application for a construction permit would serve the public interest by expediting a new FM service to Willard, Ohio. 22. Accordingly, IT IS ORDERED, that the Joint Request for Approval of a Settlement Agreement IS GRANTED; the applications filed by KM Communications, Inc. (File No. BPH-960507MD), Thomas P. Kilbane (File No. BPH-960507MH), Knox Broadcasting, Inc. (File No. BPH-960507M1), Willard Community Broadcasting Corp. (File No. BPH-960507MN), and Rick S. Smith d/b/a Great Plains Broadcasting (File No. BPH-960507MP), ARE HEREBY DISMISSED; and the application filed by Christian Faith Broadcast, Inc. (File No. BPH-960507M5), for a construction permit for a new FM radio station, Channel 245A, Willard, Ohio, IS HEREBY GRANTED. 23. IT IS FURTHER ORDERED, that the request for a permanent waiver of the Commission's one-to-a-market rule, 47 C.F.R. Section 73.3555(c), to permit common ownership of new FM radio station, Channel 245A, Willard, Ohio, WGGN(FM), Castalia, Ohio and WGGN-TV, Sandusky, Ohio, by Christian Faith Broadcast, Inc., IS HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau