******************************************************** 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 ) ) Broadcasting Licenses, LP ) File No. BPCT-961001KZ ) For Construction Permit for a ) New Television Station on ) Channel 9, Walla Walla, Washington) MEMORANDUM OPINION AND ORDER Adopted: August 31, 1998 Released: September 2, 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 Broadcasting Licenses, LP (BLLP) for a construction permit for a new commercial television station to operate on Channel 9, Walla Walla, Washington (File No. BPCT-961001KZ). 2. BLLP indirectly controls the licensee of KAYU(TV), (Channel 29, Fox), Spokane, Washington. Because the predicted Grade B contours of the Channel 9 proposal and KAYU overlap, BLLP requests that the Commission grant a waiver of the television duopoly rule, 47 C.F.R.  73.3555(b), which proscribes such common ownership. BLLP requests a permanent duopoly waiver or, in the alternative, 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, BLLP has submitted an engineering statement which shows that the predicted Grade B overlap of the new Walla Walla television station and KAYU encompasses 1,187 square kilometers and 3,051 persons. This represents 9.2% of the area and 0.55% of the population within the Grade B contour of KAYU, and 7.7% of the area and 0.33% of the population within the Grade B contour of the new Walla Walla television station. The stations' Grade A contours do not overlap. BLLP maintains that the Commission routinely grants permanent waivers of the television duopoly rule where the Grade B signal overlap is de minimis (the overlap represents less than 1% of both the area and population of the Grade B contour of each station). BLLP states that Grade B overlap in this case, as measured by the overall population, satisfies the de minimis standard. While the percentage of land area overlap exceeds 1%, BLLP argues that the extent of the overlap is "not so large as to require a finding that the . . . stations 'serve substantially the same area.'" Capital Cities/ABC, Inc., 11 FCC Rcd 5841, 5865 (1996) (citations omitted). 4. BLLP submits that the stations serve separate, distinct markets. KAYU is located in the Spokane Designated Market Area (DMA), the 73rd largest and the new Walla Walla television station is located in the Yakima-Pasco-Richland-Kennewick DMA, the 123rd largest. In addition, BBLP notes that the cities of Spokane and Walla Walla are located approximately 160 miles apart. 5. BLLP also contends that the number of television stations serving the overlap area is comparable to other cases in which the Commission has approved permanent duopoly waivers. According to BBLP's engineering statement, there are three network affiliated commercial television stations and two noncommercial television stations serving the entire overlap area with a Grade B signal or better. BLLP states that ten television stations, of which six are commercial and network affiliated, are licensed to communities in the Spokane DMA, whereas eight television stations, six of which are commercial and network affiliated, are located in the Yakima-Pasco-Richland-Kennewick DMA. Further, according to BLLP, 28 commercial radio stations are licensed to communities within the Spokane market and seven commercial radio stations are licensed to communities in the Walla Walla market. BLLP reports that numerous cable systems serve the overlap area and that cable penetration in the Spokane DMA is 62% and in the Yakima-Pasco-Richland-Kennewick DMA is 61%. Finally, BLLP finds that Spokane is served by one daily and three weekly newspapers and Walla Walla is served by one daily newspaper. 6. BLLP states that, while the stations will be under common control, they will nevertheless be independently operated with separate station managers and advertising sales departments. While both stations will be Fox network affiliates, each will have its own separate programming contract. 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 its 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) (Telecom 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 DMA's 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. Given the clearly articulated policy in the Television Ownership Second Further Notice, we do not believe that an unconditional grant of a duopoly waiver to permit common ownership of KAYU and the new Walla Walla television station is appropriate. See WHOA-TV, Inc., 11 FCC Rcd 20041, 20046-47 & 20051 (1996). Contrary to BLLP's assertion, the amount of overlap between the stations is not de minimis as the percentage of land area overlap exceeds 1%. However, we believe that grant of a conditional waiver of the duopoly rule, subject to the outcome of the pending ownership proceeding, is justified. The stations are located in separate DMA's and there is no Grade A overlap between them. Moreover, our examination of the record presented here reveals nothing suggesting that we should not follow the established interim policy. Accordingly, we conclude that grant of a temporary waiver, conditioned on the applicant coming into compliance with 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 the conditional waiver should be filed at least 45 days prior to the end of the six-month period and would be closely scrutinized. 11. Having determined that BLLP is qualified in all respects to become a Commission licensee, we find that grant of its application for a permit to construct the proposed Walla Walla television station would serve the public interest, convenience and necessity. 12. ACCORDINGLY, IT IS ORDERED, That the request for permanent waiver of Section 73.3555(b) of the Commission's Rules, to permit the common ownership of television station KAYU(TV), Spokane, Washington, and the new television station on Channel 9 at Walla Walla, Washington, IS DENIED. 13. IT IS FURTHER ORDERED, That the request for conditional waiver of Section 73.3555(b) to permit Broadcast Licenses, LP's common ownership of KAYU(TV) and the Channel 9 proposal IS GRANTED, subject to the outcome of the Commission's pending broadcast television ownership rulemaking in MM Docket Nos. 91-221 and 87-8. Should divestiture be required as a result of that proceeding, the permittee 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 it to come into compliance with the rules as provided in the final order. 14. IT IS FURTHER ORDERED, That the application for construction permit for a new commercial television station to operate on Channel 9, Walla Walla, Washington (File No. BPCT- 961001KZ) IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau