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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 of ) ) KLZK, Inc. ) (Assignor) ) ) and ) File No. BALH-980422GH ) Ramar Communications II, Ltd. ) (Assignee) ) ) For Assignment of License of ) Station KLZK(FM), Brownfield, Texas) ) MEMORANDUM OPINION AND ORDER Adopted: March 25, 1999 Released: March 26, 1999 By the Commission: Commissioner Tristani dissenting and issuing a statement. 1. The Commission has under consideration: (1) the above-captioned application for assignment of the license of KLZK(FM), Brownfield, Texas, from KLZK, Inc. to Ramar Communications II, Ltd. ("Ramar"); and (2) a related request for permanent waiver of 47 C.F.R.  73.3555(c), the Commission's one-to-a-market rule, which restricts common radio and television ownership in the same market. The application and waiver request are unopposed. Background 2. Ramar is the licensee of Fox network affiliate UHF television station KJTV (Channel 34), Lubbock, Texas, and radio stations KXTQ(AM) and KXTQ-FM, which also are licensed to Lubbock. In 1993, Ramar was granted a permanent one-to-a-market waiver to acquire KXTQ(AM) and KXTQ-FM (formerly KKIK- FM). Dennis Elam, Chapter Seven Trustee for Bakcor Communications, Inc. and Bakke Communications, Inc., 8 FCC Rcd 5185 (1993). 3. Grant of the instant assignment application would expand an existing radio-television station combination because the Grade A contour of KJTV encompasses Brownfield, Texas, the community of license of KLZK(FM). Consequently, Ramar has requested a permanent one-to-a-market waiver to permit common ownership of one TV, one AM and two FM stations in the Lubbock market. Grant of the subject transaction would allow Ramar to control one TV, one AM and two FM stations in the Lubbock Designated Market Area ("DMA"), the nation's 147th largest DMA. For the reasons set forth below, we grant the assignment application and a permanent waiver of our one-to-a-market rule. One-to-a-Market Waiver Showing 4. Ramar 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, waiver requests must be evaluated under a case-by-case approach. See 47 C.F.R.  73.3555, note 7. 5. We shall review Ramar's waiver request under the case-by-case standard because Lubbock is the 147th largest DMA in the country and there is no claim that KLZK(FM) is a failed station, as defined by the Commission. Moreover, evaluation of the waiver request under the case-by-case standard is appropriate because the proposed transaction involves the common ownership of more than one same-service radio station with a television station. See Memorandum Opinion and Order, MM Docket 91-140, 7 FCC Rcd 6387, 6394 n. 40 (1992). 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, Ramar has submitted a showing which addresses each of the five factors. 6. Public Service Benefits of Joint Operation. Ramar contends that the proposed combination of KLZK(FM) with KXTQ(AM), KXTQ-FM and KJTV would create efficiencies that would generate substantial cost savings. Ramar has identified several specific areas of potential savings, totaling more than $250,000 per year. Specifically, Ramar estimates annual cost savings of at least $174,000 from centralization of the management, accounting, engineering and administrative functions of its stations with those of KLZK(FM). Ramar expects to save at least another $54,000 from combined purchasing power and promotional and other efficiencies. Furthermore, Ramar estimates that consolidation of programming operations should produce an additional $35,000 in savings. 7. Ramar asserts that the communities of Brownfield and Lubbock will benefit from the economic efficiencies created by the proposed combination through improved programming and public service benefits. Ramar states that it intends to invest a portion of these substantial cost savings to enhance the locally originated and public interest programming of KLZK(FM). Toward this end, Ramar has committed to expand the live local programming provided on KLZK(FM) by nearly 75 hours per week, to double the amount of local news programming provided on the station, to improve the scope and depth of that programming, to hire new programming talent for the station, as well as to increase the amount of public service announcements broadcast on KLZK(FM). Additionally, Ramar states that these savings will enable KLZK(FM) and the Ramar stations in general to enhance their overall community outreach efforts, including expanding their existing community service projects and fund-raising campaigns, such as America's Walk for Diabetes. Ramar also states that it will utilize a portion of the generated cost savings to implement an internship program for qualified minority candidates interested in a career in communications at one or more of its stations. 8. Ramar recites other public service programming benefits of combined ownership and operation of these radio and television stations, some of which have already been experienced through the combination of resources and facilities of KJTV, KXTQ(AM) and KXTQ-FM. Ramar states that KXTQ-FM, which serves the Lubbock Hispanic community, simulcasts the audio portion of KJTV's broadcast of the Tejano Music Awards, an annual event that celebrates indigenous tejano music and recognizes the accomplishments of Hispanic musical artists. Ramar contends that stand alone stations have difficulty financing the production of similar programming for listeners without the pooling of such resources, and that these established resources stand to considerably benefit listeners of KLZK(FM), increasing both efficiency of operations and providing a richer programming product to the station's listeners, benefits which would not be available without the efficiencies created by co-ownership. Moreover, Ramar states that public affairs programs on all of Ramar's stations would benefit from sharing knowledge of community issues and program producers. In this regard, Ramar states that through synergies with KLZK(FM), the listeners to programs such as KXTQ-FM's "Morning Show" would be exposed to broader coverage of more issues and information. Finally, Ramar argues that combined operations would strengthen Ramar's overall ability to continue to serve the programming and information needs of the Hispanic community in the Lubbock area through its programming on KXTQ-FM. 9. Types of Facilities. Ramar reports that KLZK(FM) is a Class C2 station that operates on 104.3 MHz with 50 kW effective radiated power ("ERP") at 466 feet antenna height above average terrain ("HAAT"). With respect to the stations currently owned by Ramar, Ramar states that KXTQ-FM is a Class C1 station that operates on 93.7 MHz with 100 kW ERP at 740 feet antenna HAAT and KXTQ(AM) is a Class B station that operates on 950 kHz at 5 kW daytime with a directional antenna and at 500 watts nighttime with a directional antenna. KJTV is a UHF station operating on Channel 34 as a Fox Network affiliate, and operates with 3720 kW authorized visual power at 840 feet antenna HAAT. 10. Ramar states that these facilities are comparable in size and power to many other stations in the Lubbock radio market. Specifically, Ramar's showing indicates that there are at least six other Class B AM commercial stations, eight other Class C1 FM stations, one of which is noncommercial, and six other Class C2 FM stations, two of which are noncommercial. With respect to television stations serving the market, Ramar contends that KJTV competes with two commercial VHF stations, one commercial UHF station and one noncommercial UHF station. All three commercial stations are network affiliates. 11. Other Media Outlets. Ramar states that the only other media outlets owned by Ramar in the Lubbock market are low power television stations KUPT-LP, KXTQ-LP and K62DG. Ramar contends that because of their secondary status, low power stations are subject to no multiple ownership restrictions and Ramar's ownership of them has negligible impact on its request for a waiver of the one-to-a-market rule. 12. Economic Status. Although Ramar does not argue that KLZK(FM) is a failed station, it contends that the station suffered financial losses of approximately $57,000 during the 12-month period from February 1997 through January 1998. In addition, Ramar notes that the station was silent for several years and that Southwest Broadcasting Corporation, predecessor-in-interest to KLZK, Inc., and later KLZK, Inc., incurred approximately $40,000 in legal, engineering and settlement fees relating to their efforts to prosecute a modification application and to resume broadcast operations on the station. Ramar asserts that KLZK(FM) only resumed broadcast operations in February 1997. Finally, Ramar contends that, absent an assignment of the license to a qualified buyer, KLZK(FM) would lose approximately $2,000 to $3,000 per month. In the event that the Commission concludes that KLZK(FM)'s financial condition does not satisfy the strict financial difficulties component of the waiver showing set forth in the Second Report and Order, Ramar notes that not all case-by-case factors are relevant in every waiver case, and that the Commission has granted numerous one- to-a-market waivers in the absence of a showing of financial difficulties. See, e.g., S.E. Licensee G.P., 11 FCC Rcd 16728, 16734 (1996); Stockholders of Infinity Broadcasting, 12 FCC Rcd 5012, 5052 (1996). 13. Competition and Diversity in the Market. The final factor in Ramar's showing is the nature of the relevant market in light of the Commission's concerns about diversity and competition. Ramar states that in the Lubbock market there are at least 12 AM stations, 18 FM stations (for a total of at least 30 radio stations -- 26 commercial and 4 noncommercial) and 6 television stations, licensed to 24 separate owners, and that following the consummation of the proposed transaction, there will be at least 23 independent voices serving that market. Furthermore, Ramar states that the predicted city grade contours of 21 of the 30 radio stations in the Lubbock market penetrate Terry County (the county in which KLZK(FM) is located) and that following the consummation of the proposed transaction, these 20 stations would be licensed to 12 separate owners. Additionally, the cable penetration in the Lubbock television market is 64%. Finally, Ramar contends that the Lubbock market is served by two daily newspapers and ten additional weekly publications. Discussion 14. Radio Ownership Rules. We turn first to Ramar's compliance with our local radio ownership rules. 47 C.F.R.  73.3555(a)(1). The relevant radio market is defined by the mutually overlapping principal community contours of radio stations KLZK(FM), KXTQ(AM) and KXTQ-FM. There are at least 26 commercial radio stations, including 14 FM stations and 12 AM stations, whose principal community contours overlap this market. In markets of this size, Commission rules permit Ramar to own up to six radio stations, no more than four of which may be in the same service. 47 C.F.R.  73.3555(a)(1)(iii). Thus, Ramar's ownership of three commercial radio stations, two FM and one AM, complies with the numerical local ownership cap for radio stations. Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of the application under the radio ownership rules. We conclude that, with respect to local radio ownership, Ramar's acquisition of KLZK(FM) would serve the public interest. 15. One-to-a-Market Waiver. 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. We conclude that Ramar's showing in support of a waiver of the one-to-a-market rule meets our case-by-case criteria, and that a permanent waiver in this instance is consistent with the public interest and is not likely to unduly diminish diversity and competition in the Lubbock market. 16. As to the first criterion, the potential public service benefits of joint ownership, the Commission considers the public service benefits that would 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. Ramar demonstrates that common ownership and operation of KLZK(FM), KXTQ(AM), KXTQ-FM and KJTV creates efficiencies and cost savings which inure to the public benefit. Ramar has shown that combined operation of the stations will generate approximately $250,000 in annual savings which will be used to enhance the locally originated and public interest programming of KLZK(FM) through expansion of KLZK(FM)'s live local programming by nearly 75 hours per week, doubling the amount of local news programming on the station, improving the scope and depth of that programming, hiring new programming talent for the station, and increasing the amount of public service announcements broadcast on KLZK(FM). 17. Ramar also has shown that the cost savings resulting from combined ownership will enable KLZK(FM) and the Ramar stations in general to enhance their overall community outreach efforts, including expanding their existing community service projects and fund-raising campaigns. We also note with approval Ramar's commitment to utilize a portion of these funds to implement an internship program for qualified minority candidates interested in a career in communications at one or more of its stations. 18. With regard to technical facilities, our independent analysis verifies the existence of competing facilities in the market that are generally technically comparable or superior to the proposed combination. The Commission's "concern with the types of facilities merging under the authority of a one-to-a-market waiver reflects our interest in assessing the potential impact of a proposed combination of stations in a given market in order that we might predict and avoid any significant adverse effect on diversity or competition from too powerful a combination." Great American Television and Radio Co., Inc., 4 FCC Rcd 6347, 6349-50 (1989). According to our review, there are two other Class C2 FM stations with technical facilities comparable to KLZK(FM) that provide service to Terry County. Two other Class C2 FM stations with comparable technical facilities provide service to Lubbock County. Additionally, there are two noncommercial Class C2 FM stations, both of which provide service to Lubbock County. There are seven commercial Class C1 FM stations that have technical facilities comparable to KXTQ-FM and that provide service to Terry County. There are seven Class B AM stations, at least three of which have technical facilities comparable to KXTQ(AM), and one of those three stations serves Terry County. Our independent analysis also indicates that, in addition to KJTV, which is a UHF station, there are five other television stations licensed to Lubbock, three of which are VHF stations. One of these VHF stations is a noncommercial station. Given the existence of these competing television and radio facilities in the market, the proposed combination does not present issues of market dominance inconsistent with the public interest. 19. With respect to financial condition, KLZK(FM) is not a failed station, but Ramar has demonstrated that the station has suffered financial losses in the past. Ramar has also shown that KLZK(FM) was silent for several years before returning to the air. Even though the record does not support a showing that the station is in immediate financial distress, the Commission has held that "not all of the [five] factors mentioned will be relevant in every case" (Second Report and Order, 4 FCC Rcd at 6491), and has granted one-to-a-market waivers in the absence of a showing of financial distress. See, e.g., Greater Muskegon Broadcasters, Inc., 11 FCC Rcd 15464, 15470 (1996); Alabama Universal Corporation, 12 FCC Rcd 7556, 7563 (1997). 20. Finally, we have carefully considered whether the proposed combination would create undue concentration of ownership or control in the Lubbock market. The Lubbock market is the 147th largest television market in the United States. Following consummation of the proposed transaction, Ramar will hold the licenses of one television station, one AM station and two FM stations in the Lubbock market, and will not have any other significant media interests in that market. Based upon Ramar's showing, we have independently verified that there are 5 television stations licensed to the Lubbock ADI. There are also a total of 19 radio stations -- 7 AM and 12 FM -- licensed to communities in the Lubbock television metro market. Following consummation of the subject transaction, these 24 broadcast stations will be licensed to 15 separate owners. In addition, KLZK(FM)'s community of license is located in Terry County, outside the one county Lubbock television metro market. In other cases in which some of the radio stations in the proposed combination were not located in the television metro market, the Commission has also counted radio stations licensed to communities in the county where the radio stations' communities of license were located. See, e.g., United Radio Group, Inc., 7 FCC Rcd 2207, 2208 (1992); Shareholders of American Radio Systems Corp., 13 FCC Rcd 12430, 12453 (MMB 1998); Paxson Communications Corporation, 12 FCC Rcd 19583, 19594 n.9 (MMB 1997). We have identified 2 additional FM radio stations, including KLZK(FM), and 1 additional AM radio station, licensed to communities in Terry County. These 3 stations represent 2 additional separately owned "voices." Thus, there will be at least 17 independent "voices" in the market following Ramar's acquisition of KLZK(FM). A wide variety of other media outlets are available in the market as well, including one daily newspaper, ten additional weekly publications, and cable television, which reaches 64 percent of the households in the market. This level of diversity is consistent with the level we have approved in previous waiver requests. See e.g., Pennino Broadcasting Corp., 12 FCC Rcd 10752 (1997) (12 "voices" in 164th ranked market); Twenty First Century Broadcasting, Inc. 12 FCC Rcd 6974 (1997) (12 "voices" in 140th ranked market). 21. Regarding economic concentration and competition, our independent analysis indicates that KJTV garners 19.2 percent of television advertising revenues in the Lubbock DMA. Although KLZK(FM) is licensed to Brownfield, in Terry County, which is outside the Lubbock BIA/Arbitron radio metro, its advertising revenue is included in the Lubbock BIA/Arbitron radio metro. However, KLZK(FM) receives less than the threshold necessary to receive a reported share. KXTQ(AM) and KXTQ-FM have a total 7.3 percent of radio advertising revenues in the Lubbock Radio Metro Market. Together, the stations in the proposed combination have a combined television and radio advertising share of 15.6%, a figure substantially lower than combined television and radio advertising shares previously approved by the Commission. See, e.g., Shareholders of Citicasters, Inc., 11 FCC Rcd at 19135 (1996) (32.03 percent combined television and radio advertising revenues in the 29th ranked market); Pennino Broadcasting Corp., 12 FCC Rcd 10752 (1997) (31.4 percent combined advertising revenues in the 164th ranked market); Triathlon Broadcasting of Little Rock Licensee, Inc., 12 FCC Rcd 13907 (MMB 1997) (24.97 percent of combined advertising revenues in 57th ranked market. 22. Based on the record, we conclude that the parties are fully qualified and that grant of a permanent one- to-a-market waiver will result in economic efficiencies and facilitate enhanced public interest programming without undue adverse effect on competition or diversity in the Lubbock market. ORDERING CLAUSES 23. Accordingly, IT IS ORDERED, that the request for permanent waiver of the Commission's one-to-a- market rule, 47 C.F.R.  73.3555(c), to permit common ownership of stations KLZK(FM), Brownfield, Texas, KXTQ(AM), KXTQ-FM and KJTV, Lubbock, Texas, IS GRANTED. 24. IT IS FURTHER ORDERED, that the application to assign the license of station KLZK(FM), Brownfield, Texas, from KLZK, Inc. to Ramar Communications II, Ltd.. (File No. BALH-9804322GH), IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary DISSENTING STATEMENT OF COMMISSIONER GLORIA TRISTANI In re Applications of KLZK, Inc. and Ramar Communications II, Ltd., File No. BALH-980422GH For the reasons set forth in my dissenting statement in In Re Applications of United Broadcasting Company, Inc, et al., 13 FCC Rcd 21563 (1998), I do not believe that the Commission applies the five- part permanent waiver standard with sufficient rigor. I therefore respectfully dissent. I do note, however, that my concerns are somewhat ameliorated by the applicant's specific and laudable commitments to increase the amount of live local programming on KLZK(FM) by nearly 75 hours per week, and to double the amount of news programming on the station.