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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 ) ) Alton Rainbow Corporation ) File No. BALH-980309GK (Assignor) ) ) and ) ) Cox Radio, Inc. ) (Assignee) ) ) For Assignment of License of ) WPYO(FM), Apopka, Florida ) MEMORANDUM OPINION AND ORDER Adopted: July 22, 1999 Released: August 4, 1999 By the Commission: Commissioner Tristani dissenting and issuing a statement. 1. The Commission has under consideration (1) the above referenced application to assign the license of WPYO(FM) (formerly WTLN-FM), Apopka, Florida, from Alton Rainbow Corporation to Cox Radio, Inc. ("Cox); (2) a request by Cox for a temporary conditional waiver of 47 C.F.R.  73.3555(c), the Commission's one-to-a-market rule; (3) a April 20, 1998, Petition to Deny or Defer Action filed by Press Communications, LLC ("Press"); (4) a Petition to Deny filed by Gross Communications Corporation ("Gross") on April 20, 1998; and (5) responsive pleadings to these petitions and supplemental comments filed by Gross on July 15, 1999. Summary 2. At the time of filing the instant application, Cox owned seven stations, four FM and three AM. Six of the stations are located in Orlando and one in Daytona Beach. Cox's parent, Cox Enterprises, Inc., also controls the licensee of VHF television station WFTV (Channel 9, ABC), Orlando. Cox was previously granted conditional waivers of the one-to-a-market rule to permit common ownership of WFTV and these seven radio stations, and a television local marketing agreement ("LMA") with WZWY(TV), Channel 27, Orlando, a new station that is not yet operating. See NewCity Communications, Inc., 12 FCC Rcd 3929 (1997) (approving Cox's acquisition of WDBO(AM), WWKA(FM), and WZKD(AM) in Orlando, and WCFB(FM) in Daytona Beach) and Infinity Holdings Corp. of Orlando, 11 FCC Rcd 17813 (1996) (approving Cox's acquisition of WHOO(AM), WMMO(FM) and WHTQ(FM), all in Orlando). On July 14, 1998, the Commission granted an application authorizing Cox to assign WZKD(AM) to TM2, Inc. ("TM2"). Cox proposes to acquire WPYO(FM), and with its divestiture of WZKD(AM), will again hold the licenses of seven radio stations, effectively substituting an FM for an AM station so that it will now control five FM and two AM stations, the principal community contours of which all overlap. Cox has made the requisite showing to demonstrate compliance with the numerical limitations of our local radio ownership rules. 47 C.F.R.  73.3555(a). 3. The Grade A contour of WFTV encompasses Apopka, the community of license of WPYO(FM). In order to add WPYO(FM) to its existing radio-television combination, Cox requests a temporary conditional waiver of the Commission's one-to-a-market rule which would otherwise prohibit common ownership of the proposed radio stations and television station combination in the Orlando market. See 47 C.F.R.  73.3555(c). 4. For the reasons set forth below, we find that Press and Gross have failed to raise a substantial and material question of fact that would preclude the grant of the assignment application. Therefore, we will deny the petitions to deny, grant the assignment application, and grant Cox's request for a conditional waiver of the one-to-a-market rule for Cox's proposed television-radio combination in the Orlando market. Our approval of the conditional one-to-a-market waiver will be conditioned on consummation of the sale of WZKD(AM) to TM2. One-to-a-Market Waiver Showing 5. Cox bases its request for a one-to-a-market waiver on the case-by-case standards adopted in the Second Report and Order in MM Docket 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 licenses or "voices" after the proposed combination ("top 25 market/30 voice standard"). The Commission also favors requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time or are involved in bankruptcy proceedings. Id. Otherwise, waiver requests must be evaluated under the case-by-case approach. See 47 C.F.R.  73.3555 n.7. 6. Cox does not allege that its waiver request involves a failed station. And, although Apopka is within the Orlando DMA, which is the 22nd largest DMA according to Nielsen, Cox's request must be evaluated under the case-by-case standard 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 in 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 on the following five criteria: (1) the potential public service benefits of joint operation of the facilities such as economies of scale 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 the joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753-54. In enunciating these five factors, the Commission noted that not all five factors must be satisfied in each case, but rather overall consideration of these factors must weigh in favor of granting the waiver request. Second Report and Order on Recon., 4 FCC Rcd at 6491. In support of its waiver request, Cox submits a showing which addresses each of the five factors. 7. Benefits of Joint Operation. Cox states it will integrate WPYO(FM) into its radio station operations and that WPYO(FM) will benefit from common ownership with WFTV. Cox asserts that its Orlando radio stations and WFTV have achieved operational efficiencies resulting from the coordination of certain administrative, sales, news, and programming functions. A substantial benefit will be the sharing of WFTV's news sources, particularly WFTV's high tech weather tracking system. Cox also states that its radio stations obtain discounts on telephone equipment and services, office supplies, direct mail and promotional merchandise. Cox states it will also consolidate WPYO(FM)'s operations with its Orlando stations in the areas of payroll, benefits, and administrative functions. Cox estimates the total savings from the proposed combined ownership to be approximately $273,500 per year. 8. In addition, Cox points to five separate areas of public service benefits that will result from the proposed ownership combination. First, increased news coverage, particularly during weather related emergencies and second, on-going in-depth weather reports and forecasts. Second, Cox states the common ownership will enhance public service activities including soliciting and distributing supplies to tornado victims, and promotional events for local and national charities. Third, under Cox's ownership, WPYO(FM) will benefit from joint minority and female recruitment efforts and its intern program. Cox notes that its interns will benefit from expanded job opportunities. Fourth, Cox states it will add WPYO(FM) to its radio/television website and create the station's own website as well. Finally, Cox claims it has plans to construct a new building with state of the art facilities from which all stations, including WPYO(FM), will be operated. 9. Types of Facilities/Other Media Outlets. Cox states that WPYO(FM), as well as the facilities it presently owns, are comparable to many other stations in the Orlando market. Television station WFTV, an ABC affiliate, is one of 16 television stations licensed in the Orlando DMA. The station operates on Channel 9 with 316 k authorized power, from an antenna height above average terrain (HAAT) of 1570. Cox states there are two other commercial VHF stations in the Orlando TV market. Regarding radio stations it currently operates, Cox states that WWKA is a Class C FM station operating at authorized power of 100 kW, 408 meters HAAT. WCFB is a Class C FM station operating at authorized power of 100 kW from an antenna 448 meters HAAT. WHTQ is a Class C station operating at 100 kW from an antenna of 487 meters HAAT. WMMO is a Class C2 FM station operating at an authorized power of 38 kW from an antenna 134 meters HAAT. WPYO(FM), which Cox proposes to acquire, is a Class A FM station operating at 6 kW from an antenna height of 96 meters HAAT. Cox reports that the Orlando market includes 11 other Class C stations, 4 Class C1 stations, and three other Class C2 stations. WDBO is a Class B AM station operating at authorized power of 5 kW and WHOO is a Class B AM station operating at 50 kW. Cox asserts there are 19 Class B AM radio stations in the Orlando market. Cox also notes there are other large media owners throughout the Orlando DMA. 10. In addition to WFTV, Cox states that its parent, Cox Enterprises, Inc., through a subsidiary, has a nonattributable interest in News Journal Corp., which publishes the Daytona Beach News-Journal, a daily newspaper in Daytona Beach. Cox also states that another subsidiary of its parent, Cox Communications of Greater Ocala, Inc., operates a cable system serving Ocala and portions of Marion County. Cox also has a local marketing agreement ("LMA") with television station WZWY(TV) in Orlando, a new station not yet on the air. 11. Financial Status. Cox states that none of its stations nor WPYO(FM) are in a state of financial distress. However, because the absence of any one factor is not dispositive, Cox states that the fact that none of the stations in its proposed group are suffering financial difficulties does not preclude a waiver in its case. 12. Competition and Diversity in the Market. Cox points to the Commission's prior decisions granting waivers to allow its common ownership of WFTV and seven radio stations which the Commission concluded "will not unduly affect" competition or diversity in the Orlando market. See NewCity Communications, Inc., 12 FCC Rcd at 3944. After the acquisition of WPYO(FM), and with the sale of WZKD, Cox states the diversity in the market will remain extraordinarily high. Collectively, Cox states that the 67 radio stations and 16 television stations in the Orlando market will be licensed to 64 separate broadcast voices. In addition, according to Cox, there are 58 cable systems with 28 different owners in the Orlando DMA. Cox reports a cable penetration rate of 76 percent in the Orlando DMA. There are also three Multipoint Distribution Services ("MDS") operated by two owners, and six Multichannel Multipoint Distribution Services ("MMDS") with five owners. Further, the Orlando DMA is served by seven daily newspapers and 20 weekly newspapers. Cox also cites to increased competition from the news media including direct broadcast satellite and satellite DARS, as well as direct mail and outdoor advertising. Cox asserts that the Commission has granted waivers in smaller markets with less diversity. Cox concludes that the proposed common ownership would not have an impact on existing diversity or competition because the number of stations owned by Cox would remain the same. Petitions to Deny 13. Press is the licensee of WKCF(TV), Clermont, Florida, located within the Orlando DMA. Press claims there is a "lack of rationality" underlying the Commission's current one-to-a-market rule and suggests that action on the instant application be deferred until the Commission has completed its proceeding to review and revise these rules and policies. In the alternative, as a competitor to Cox, Press claims it would be adversely affected by the grant of the assignment application because the assignment would result in the "aggravation of Cox's control" of the broadcast media in the Orlando market. Press is particularly troubled by Cox's estimated savings as a result of the consolidation, stating that Cox has failed to justify how selling an AM station and acquiring an FM station will result in the savings claimed by Cox. Nonetheless, Press compares Cox's present and prior waiver requests. Press asserts that in 1996 Cox estimated that its ownership of seven radio stations would enable it to "save $179,000 to $236,000." Press claims that Cox's estimated savings of $ 273,500 for essentially "swapping" an AM station for a FM station makes no sense, and questions the reliability of the figures provided by Cox. 14. Press also questions Cox's alleged public service benefits. Press states that because of Cox's already dominant position in the market, the utilization of these services in one more station is not a public benefit that can be tied to the proposed transaction. In particular, Press claims that Cox's 1996 waiver request was based in part on its plan to preserve a children's programming format on WZKD(AM), a station that was suffering operating losses. Press argues that Cox asserted that this proposal was a public interest benefit supporting its earlier waiver, but that it now has abandoned this public interest benefit and has decided to sell WZKD(AM). Press also states Cox has failed to show how utilizing its weather and news facilities on yet another station can be deemed a benefit. Press suggests that Cox's charitable activities will not change as a result of its acquisition of WPYO(FM), nor is Cox's addition of WPYO(FM) to its website a factor justifying a waiver of the Commission's rules. Press also argues that the acquisition of WPYO(FM) will not benefit employment for minorities and females, but rather will decrease employment opportunities because Cox will consolidate personnel at its stations. Finally, Press claims that Cox erroneously characterizes the Orlando market as "at least as diverse if not more so" than it was when its 1996 waiver was approved. Specifically, Press claims that the number of separately owned radio "voices" has decreased. In addition, Press claims a decrease in the number of operating LPTV stations, MMDS and MDS systems. Press also asserts that the number of separately owned MMDS and MDS systems has decreased. 15. In its petition, Gross asserts that the Commission uses a faulty methodology in defining a radio market for multiple ownership purposes. Gross states that although Cox has demonstrated there are 72 stations in the market under the rule, only 18 stations earn 99% of advertising revenue. Because the Commission's ownership rules are under review, Gross requests the Commission defer consideration of the application pending its decision in this proceeding. In the alternative, Gross opposes the assignment on the grounds that it will enable Cox to increase its already significant share of advertising revenue in the Orlando market. Gross states that it owns one of 18 stations in the Orlando market that competes for national advertising revenue, and that the remaining 17 stations are owned by either Cox, Clear Channel or Chancellor, and that together these owners control 90 percent of advertising revenues in Orlando. Gross maintains that the assignment application should be denied to prevent further consolidation in the market. Further, Gross states that Cox has engaged in anti-competitive behavior by "tying" the sale of its advertising for its leading station with that of two less popular stations. Specifically, Gross claims that on at least three separate occasions Cox has refused to sell advertising on its leading station unless purchased as a package with two less popular stations, a business practice specifically prohibited by the Sherman Act and the Clayton Act. Gross claims that permitting Cox to acquire WPYO(FM) will enable Cox to incorporate another station into this illegal practice. 16. Cox filed oppositions to Gross' petition and Press' petition to deny or defer action. In brief, Cox maintains that Gross has failed to establish that Cox exercises market power or any elements of a tying violation, and that Gross' alleged injury is based on its own loss of market share due to more efficient competitors in the market. Cox also states that its waiver request is not the proper forum for Press to attack the Commission's waiver standard, or the prior waivers granted to Cox. In this regard, Cox states that it did coordinate children's programming on WFTV and WZKD(AM), although this was not the primary basis for its waiver request or for the Commission's decision granting its 1996 waiver. In addition, Cox disputes Press' challenge to the cost savings that will result when WPYO(FM) is added to its existing radio station combination. Cox points out that its earlier waiver requests involved the acquisition of existing radio station groups, which already had in place joint operations that resulted in operating efficiencies. Thus, Cox states that it did not, as it has in its present waiver request for WPYO(FM), analyze cost savings by determining what it would have cost to operate each of the seven stations in its proposed radio-television combination, as stand-alone operations. Moreover, Cox contends that Press has misconstrued its statements as to the level of diversity in the Orlando market. Cox argues that it did not, in its waiver request, assert that there are at least the same number of media outlets and independent "voices" in each category of mass media as there were in 1996. Rather, Cox argues that the number of independently owned media voices that will remain following its acquisition of WPYO(FM) exceeds the number of independent media outlets present in other decisions in which the Commission has approved one-to-a-market waiver requests. Discussion 17. Press requests that the Commission defer action on Cox's acquisition of WPYO(FM) pending the outcome of the television ownership and broadcast attribution proceedings. As the Commission has previously stated, requests for waiver of the one-to-a-market rule submitted prior to the resolution of our proceedings would be processed pursuant to our current criteria and may be conditioned on the outcome of that proceeding. See NewCity Communications, Inc., 12 FCC Rcd at 3938. We will not deviate from this course with respect to the conditional one-to-a-market waiver that Cox requests here. This decision does not prejudge the outcome of any of the issues in our pending local television ownership and broadcast attribution proceedings. With its acquisition of WPYO(FM) and the consummation of its sale of WZKD(AM), Cox will not increase the overall number of radio stations in its existing radio-television combination, but will instead change the composition of its combination from one television station, 3 AM stations and 4 FM stations to one television station, 2 AM stations and 5 FM stations. We have reviewed the pleadings submitted by Press and Gross, as well as Cox's response to those pleadings, and, as set forth below, find that there are no substantial and material questions of fact that would warrant further inquiry. Therefore, we will not delay consideration of Cox's waiver request pending conclusion of the rulemaking proceedings. 18. Local Ownership Rules. We start with Cox's compliance with our local radio ownership rules. 47 C.F.R. 73.3555(a)(1). First, we turn to Gross' challenge to the Commission's method for defining local radio markets. It is generally inappropriate to address this argument in a restricted adjudicatory proceeding, "where third parties, including those with substantial stakes in the outcome, have had no opportunity to participate, and in which we, as a result, have not had the benefit of a full and well-counseled record." Capital Cities/ABC, Inc., 11 FCC Rcd 5841, 5888 (1996) (stating that an open proceeding is the proper forum to reexamine the daily newspaper cross-ownership rule); 47 C.F.R.  1.401. Further, the Administrative Procedure Act ("APA") contemplates that a substantive rule would be amended or repealed by a rulemaking under the APA. 5 U.S.C.  553(e). See Consumer Energy Council of Am. v. FERC, 673 F.2d 425, 446 and 447 n.79 (the question of whether a regulation is defective is one worthy of notice and an opportunity to comment); Community Television of Southern California v. Gottfried, 459 U.S. 498, 511 (1983) ("rulemaking is generally better, fairer, and more effective method of implementing a new industry wide policy than the uneven application of conditions in isolated [adjudicatory] proceedings"). In this regard, we note that the Commission recently sought comment on the current methodology for determining a "radio market." See Notice of Inquiry, In the Matter of 1998 Biennial Regulatory Review -- Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, MM Docket 98-35, 13 FCC Rcd 11276, 11283 (1998). Gross cites pendency of the Commission's biennial review of the ownership rules and requests that the Commission defer consideration of Cox's acquisition of WPYO(FM) until the proceeding is concluded. However, the pendency of a rulemaking does not suspend the application of existing substantive rules. See Palm Beach Cable Television Co., 78 FCC 2d 1180, 1183 (1980). Moreover, as discussed below, our analysis of Cox's showing to demonstrate compliance with the local radio ownership rules indicates that Cox's proposed ownership of WPYO(FM) complies with those rules and our review of the record indicates no other circumstances that would preclude approval of Cox's acquisition of this station under the local radio ownership rules. 19. Specifically, our analysis of data submitted by Cox indicates that the radio market formed by the mutually overlapping contours of its proposed commonly owned radio stations consists of 72 commercial radio stations. Under the local radio ownership rules, in a radio market with 45 or more commercial stations, a party may own or operate up to 8 commercial stations, not more than 5 of which are in the same service (AM or FM). Cox's proposed ownership of seven stations, five FM and two AM, in this market complies with the numerical local ownership cap for radio stations. Moreover, our independent review indicates that Cox's proposed radio combination would receive 29.7 percent of the advertising revenue in the Orlando market. This level of revenue is consistent with the radio combinations the Commission has granted in the past. See, e.g., Shareholders of Citicasters, Inc., 11 FCC Rcd 19135 (1996) (49 percent of radio advertising revenue and 32 percent of combined television and radio advertising revenues in 29th ranked market). 20. Before considering Cox's request for waiver of the one-to-a-market rule, we address Cox's LMA with WZWY(TV) in assessing this request. Currently, television LMAs are not attributable to the brokering station, nor taken alone, are they considered a "meaningful" relationship within the scope of the cross-interest policy. Therefore, we do not accord significance to Cox's LMA in evaluating its ownership waiver request. This decision, however, does not prejudge the issues in our ownership and attribution proceedings. The Commission has proposed to attribute television LMAs to the brokering station, where as in Orlando, the stations involved are in the same market and the brokerage agreement includes more than 15 percent of the brokered station's weekly broadcast hours. Further Notice of Proposed Rulemaking in MM Docket Nos. 94-150, 92-51 and 87-154, 11 FCC Rcd 19895 (1996) (Attribution Further Notice). The Commission has also proposed that any LMA which would be attributable for duopoly rule purposes under this approach "would also count in applying our other ownership rules, including, for example ... the one-to-a- market rules (or radio-television cross ownership rule)." Id. at 19909. Further, while the Commission has proposed to grandfather those LMAs -- such as the LMA here -- that were entered into prior to November 5, 1996, the adoption date of the Review of the Commission's Regulations Governing Television Broadcasting, Second Further Notice of Proposed Rulemaking, 11 FCC Rcd 21655 (1996), it also indicated it reserved the right "to invalidate an otherwise grandfathered LMA in circumstances that raise particular competition and diversity concerns, such as those that might be presented in very small markets." Id. at 21694. Therefore, if the Commission establishes final rules for attributing and grandfathering LMAs, we would also assess whether the class of transactions involving radio, television and LMA interests such as those involved in this case should be permitted to continue. Because this is a pending issue, the one-to-a-market waiver we grant here will be conditioned on the ultimate result reached in the pending rulemaking proceedings in attribution and television ownership concerning the significance and the grandfathering of television LMAs. See S.E. Licensee G.P., 11 FCC Rcd 16727, 16731 (1996). 21. One-to-a-Market Waiver. The Commission's goal in evaluating a case-by-case request for waiver of the one-to-a-market rule 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 areas involved." Second Report and Order Recon., 4 FCC Rcd at 6491. We appreciate the concerns expressed by Press and Gross regarding the impact of consolidation on competition and diversity in the Orlando market. However, for the reasons set forth below, we find that the proposed radio- television combination serves the public interest and is consistent with one-to-a-market combinations the Commission has previously approved on a conditional basis. 22. Benefits of Joint Operation. In connection with this factor, the Commission considers the benefits that could result from the proposed television radio combination, such as projected economies of scale, cost savings, and program and service benefits. Second Report and Order, 4 FCC Rcd at 1753. Cox has asserted that its ownership of WPYO(FM) in combination with the other radio stations will reduce the costs of operating WPYO(FM) as a stand-alone station by approximately $273,500. Cox states that these cost savings will result in benefits in the form of improved news resources, particularly in the areas of traffic and weather. Specifically, Cox explains that WFTV has state of the art weather tracking equipment, including Doppler 9000 radar and a first strike lightening detection system. Cox states these systems will greatly enhance WPYO(FM)'s coverage of severe weather conditions affecting the Orlando area. Cox also asserts that savings will result from discount purchases of telephone service, office supplies, promotional merchandise and direct mail. WPYO(FM) would also benefit from Cox's experienced management and engineering personnel. Additional savings and efficiencies will result when WPYO(FM)'s transmission tower is relocated to one of Cox's existing towers, and when its radio station operations are consolidated into one facility. Cox has also stated that common ownership will enable WPYO(FM) to benefit from joint efforts to recruit minority and female employees. In this regard, we have previously rejected the argument that staff consolidation and enhanced recruitment are inconsistent. See NewCity Communications, 12 FCC Rcd at 3941. We are persuaded that, as Cox states, the sharing of information on applicants and recruitment sources will enable the radio and television stations to work more efficiently to increase the effectiveness of their recruitment of minorities and females and job opportunities for interns. 23. We reject Press' comparison of the instant waiver request with Cox's 1996 waiver request. In 1996 Cox estimated an annual savings of $423,000 from common ownership of WFTV and seven radio stations. Specifically, common ownership of WFTV and the radio stations accounted for $187,000 in annual savings, with an additional $236,000 in savings attributable to consolidation of radio station operations. See NewCity Communications, Inc., 12 FCC Rcd at 3934. In the instant request, Cox estimates cost savings of at least $273,500 based on additional expenses that would be incurred if WPYO(FM) were operated as a stand alone facility. Press asserts that a savings this great as a result of a station "swap" "makes no sense" and claims Cox's figures are unreliable. However, Cox's prior request consolidated two radio group operations, which had certain efficiencies in place with WFTV. See NewCity Communications, Inc., 12 FCC Rcd at 3940, and Infinity Holdings Corp. of Orlando, 11 FCC Rcd at 17822. In addition, Press has not offered specific evidence sufficient to raise a substantial and material question of fact as to the projected cost savings. See Greater Muskegon Broadcasters, Inc., 11 FCC Rcd 15464 (1996) (unsubstantiated challenge to projected cost savings insufficient in light of additional programming and public service benefits). In this regard, Cox's itemized projected cost savings include significant savings for a tower lease and website development for WPYO(FM) not associated with Cox's prior waiver requests. 24. As to public service benefits, the radio stations will join with WFTV to sponsor and promote charitable causes and local community events. Press asserts that Cox will not stop engaging in these activities if it does not acquire WPYO(FM), so this is not a valid factor to consider in reviewing the waiver request. While we agree Cox may not alter its charitable acts if the waiver is denied, the point is that the common ownership of stations and acquisition of WPYO(FM) will allow Cox to reach a wider audience. See, e.g., SFX Broadcasting, Inc., 13 FCC Rcd 12366, 12383 (1998). Moreover, we will not discount the public service benefits that Cox proposes here, in support of its acquisition of WPYO(FM), based on its decision to sell WZKD(AM), a station that was part of its previously granted radio-television combination and which had a children's programming format that Cox stated would be promoted as part of the public interest showing supporting its waiver request. The Commission's decision approving Cox's 1996 conditional one-to-a-market waiver in Orlando was based in part on this public interest benefit. NewCity Communications, Inc., 12 FCC Rcd at 3940. Cox has demonstrated that it did pursue cross-promotion of children's programming on WZKD(AM) and WFTV and that some of WZKD(AM)'s children's programming was broadcast on WFTV. Moreover, Press cites no precedent that precludes a licensee from further assigning or transferring a station that is part of a radio-television combination permitted under a conditional waiver of the one-to-a-market rule. 25. Types of Facilities. The Commission's concern with this criterion reflects our interest in assessing the potential impact of a proposed combination of stations in a given market in order to "predict and avoid any significant adverse effect on diversity or competition from so powerful a combination." Great American Television & Radio Co., Inc., 4 FCC Rcd 6347, 6349-50 (1989). In analyzing this factor the Commission considers "whether the proposed radio or television combination involves a UHF or VHF station or AM or FM station, as well as the size or class of the stations involved." Second Report and Order, 4 FCC Rcd at 1753. Our independent analysis of Cox's showing indicates there are 13 other television stations in the Orlando DMA, including three noncommercial stations. Two of the commercial television stations are VHF stations. In addition, WHTQ(FM), WCFB(FM) and WWKA(FM) are Class C stations authorized to operate at 38 kW, WMMO(FM) is a Class C2 station operating at 38 kW. WPYO(FM), the station that Cox will acquire here, is a Class A station authorized to operate at 6.0 kW. These FM stations are only five of 33 FM stations in the Orlando television metro market and include 11 Class C stations, 4 Class C1 stations, and 4 Class C2 stations. WHOO and WDBO are AM stations operating at 50 kW and 5 kW respectively. These two AM stations are part of 37 AM stations in the market, 15 of which are also Class B stations. Although the facilities Cox proposes to own in Orlando are significant, we find that there are comparable facilities in the market and that there is little danger that Cox will be able to dominate the market based on the nature of its facilities. In this regard, WPYO(FM) is a less powerful FM station than the FM stations that are already part of the radio-television combination that Cox now holds under a conditional waiver. 26. Media Outlets. With respect to the number of media outlets owned by Cox, in addition to the radio and television stations, Cox's parent controls a cable system which serves Ocala County and a portion of Marion County. Cox's parent also has a nonattributable interest in a newspaper in the Orlando-Daytona Beach-Melbourne DMA. The Commission previously reviewed these interests in connection with the radio- television combination that Cox now owns. With respect to the cable system, the Commission found no rule violation based on Cox's representation that WFTV's Grade B contour does not overlap the service area of the cable system, which serves an area approximately 60 miles northwest of Orlando. NewCity Communications, Inc., 12 FCC Rcd at 3942. Additionally, the Commission concluded that the non-cognizable minority ownership interest in the Daytona Beach News-Journal does not violate any of the Commission cross- ownership rules. Id. Moreover, the Commission found no reason to invoke the cross-interest policy to prohibit the combined ownership of the Daytona Beach News-Journal and the seven radio stations for the temporary period pending completion of the attribution rulemaking proceeding, which includes a re-examination of the need for the cross-interest policy. Id at 3942-43. See also, Notice of Proposed Rule Making in MM Docket Nos. 94-150, 92-51 & 87-154, 10 FCC Rcd 3606, 3642 (1995). However, the Commission recognized that Cox's radio ownership includes a Daytona Beach FM station, as well as additional Orlando FM stations with 1 mV/m contours encompassing Daytona Beach. Under these circumstances, and given the pendency of the Commission's review of the cross-interest policy and the attribution rules, the Commission did not consent to Cox's radio-newspaper cross-ownership on a permanent basis. Instead, because Cox had demonstrated the competitive nature of the market involved, the Commission determined that there would not be any appreciable harm to competition as a result of permitting Cox's common ownership of these newspaper and radio interests during the pendency of, and subject to the outcome in the attribution rulemaking proceeding. Id. Cox's addition of WPYO(FM) to its existing radio-television combination does not require a different result. Cox has shown that the Daytona Beach News-Journal is not widely circulated in Orange County, where Apopka, WPYO(FM)'s community of license is located. Moreover, Cox's showing demonstrates that WPYO(FM)'s 1 mV/m contour does not reach Daytona Beach. Nevertheless, we will place a condition on Cox's acquisition of WPYO(FM). This conditional grant is appropriate for the same reasons that a temporary conditional waiver of the one-to-a-market rule is appropriate. Like the one-to-a-market waiver, it is of limited duration and will allow the parties to go forward with the proposed assignment while at the same time ensuring that Cox's ownership interests are subject to the same limitations as other group owners as a result of the pending broadcast attribution proceeding. 27. Financial Status. Although Cox states that none of the broadcast stations at issue is in financial distress, we have previously indicated that not all five factors need to be present to justify a grant of a waiver. See Second Report and Order Recon., 4 FCC Rcd at 6491; Great American Television & Radio Co., Inc., 4 FCC Rcd at 6349. We have also 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., Pennino Broadcasting Corp., 12 FCC Rcd 10752 (1997); S.E. Licensee, G.P., 11 FCC Rcd 16727 (1996). 28. Competition and Diversity in the Market. Cox has shown that its ownership and operation of WPYO(FM) will not appreciably diminish competition or diversity in Orlando. Indicia of the level of diversity include the number of broadcast outlets, the number of separately owned and operated "voices" in the market, and the presence of cable and non-broadcast media. According to our independent analysis of Cox's showing, after the subject transaction, Orlando will have 70 radio stations, consisting of 37 AM and 33 FM radio stations, and 14 television stations. Collectively, these television and radio broadcast interests will be licensed to 55 different "voices." Although this is fewer than the 60 independent broadcast voices which existed in the market when the Commission approved Cox's prior combination, there remain abundant independent broadcast voices in Orlando. Further, the market is served by numerous other media "voices" including cable, MDS, MMDS, and numerous daily and weekly newspapers. In addition, the DMA has substantial cable penetration, numerous daily and weekly newspapers, as well as MMDS and MDS facilities. Press points out, and Cox acknowledges, that the number of operating LPTV stations and the number of operating MMDS and MDS systems and independent "voices" have decreased in Orlando. However, this does not alter our conclusions concerning competition and diversity in Orlando given the level of full-service broadcast competition in the market. Grant of a conditional waiver in this market is within the Commission's one-to-a- market waiver precedent. See, e.g., Paxson Communications Corp., 11 FCC Rcd 19583, 19594 (MMB 1997) (conditional one-to-a-market waiver granted in market with 47 broadcast stations representing 30 separate voices); Triathlon Broadcasting of Little Rock Licenses, Inc., 12 FCC Rcd 13907 (MMB 1997) (conditional one-to-a-market waiver granted in market with 51 broadcast stations representing 32 separate voices). 29. Gross asserts that the three largest group owners in the market, including Cox, control over 90 percent of advertising revenue. Gross complains that Cox's acquisition of WPYO(FM) will lead to further consolidation in the market and increase Cox's share of advertising revenue. Because Cox is selling WZKD(AM), a station in its existing radio-television combination, the overall level of diversity in the market will not decrease based on Cox's acquisition of WPYO(FM). Further, the acquisition of WPYO(FM) will result in only a .6 percent gain in radio advertising revenues for Cox because it already owns six radio stations in the market. Our independent analysis indicates that after the proposed transaction, Cox's seven radio stations will receive a 31.0 percent share of radio advertising revenue. In addition WFTV will garner a 26.4 percent share of television advertising revenue. Together, Cox's television and radio stations receive a combined radio and television advertising share of 27.8 percent. Moreover, the level of advertising revenue attributable to Cox's proposed radio-television combination with the addition of WPYO(FM) is lower than the level previously approved for Cox's ownership in the market. NewCity Communications, Inc. 12 FCC Rcd at 3944 (approving Cox's post-acquisition radio advertising revenue share of 32 percent and combined radio- television advertising revenue of 29 percent in Orlando). Nevertheless, Gross argues that use of the Herfindahl- Hirschman Index ("HHI") demonstrates that the Orlando market is already highly concentrated, such that Cox's acquisition of WPYO(FM) would give Cox the capacity to increase market concentration to a level unacceptable under the Department of Justice's Merger Guidelines. See U.S. Department of Justice/Federal Trade Commission 1992 Horizontal Merger Guidelines (Revised April 8, 1997). 30. Gross asserts that the pre-merger HHI for the Orlando market is 2881.58 points. The Commission, using BIA revenue data for 1998, calculates a pre-merger HHI of 2854 points and a post-merger HHI of 2867 points. The HHI is one of several screening devices used to measure relative market concentration. The HHI may provide useful information regarding the potential unilateral and coordinated effects of a proposed merger. However, we believe that the general standards in the Horizontal Merger Guidelines, which regard a post-merger HHI above 1,800 as a highly concentrated market, and which regard a post-merger increase of more than 50 points in a highly concentrated market to raise potential competitive concerns do not require a finding in this case that the proposed transaction raises substantial and material questions of fact as to concentration. 31. Although the post-merger HHI is over 1800, Cox's acquisition of WPYO(FM) will increase the HHI by only 13 points. According to the Horizontal Merger Guidelines, '[m]ergers producing an increase in the HHI of less than 50 points, even in highly concentrated markets post-merger, are unlikely to have adverse competitive consequences." See Horizontal Merger Guidelines, section 1.51. Thus, the proposed transaction does not raise a concern that Cox will be able to impede competition in the Orlando market even under a strict application of DOJ guidelines. Moreover, the transaction is consistent with precedent. See, e.g.,Triathlon Broadcasting of Little Rock License, Inc., 12 FCC Rcd at 13913 (44.4 percent of radio advertising revenue and 24.9 percent of combined television and radio advertising revenue in 57th ranked market) and S.E. Licensee, Inc., 11 FCC Rcd 16734 (1996) (40.4% or radio advertising revenue and 24.2 percent of combined television and radio advertising revenue in 42nd ranked market). 32. Gross' allegation that Cox has violated antitrust laws by "tying" the sale of advertising of its leading station to two less popular stations is a legal question the Commission does not evaluate in the first instance. The Commission has eliminated its policies concerning combination advertising rates and joint sales of advertising. See Elimination of Unnecessary Broadcast Regulation, 59 Rad. Reg. 2d 1500, 1511 (1986). The Commission observed that these policies prohibited practices not in conflict with anti-trust laws and determined that, as to combined advertising rates, the Commission would consider any final adjudication that the practice violated anti-trust laws. Id. Cox disputes Gross' allegations that it has engaged in any illegal tying arrangement, and there is nothing in the record to suggest that there has been even an investigation of Cox's advertising practices. Although Gross cites Section 313(a) of the Communications Act in support of its argument, we note that Section 313(a) applies only after adjudications by a competent court regarding antitrust violations or anti-competitive practices. Under these circumstances, and in the absence of an adjudicated violation of antitrust laws with respect to tying, Gross fails to raise a substantial and material question of fact that warrants further inquiry. See e.g. Shareholders of Jacor Communications, Inc., DA 99-803  18, 27 (April 29, 1999); WBBS(FM), DA 99-804, slip op. at 5 (April 29, 1999) (unadjudicated allegations of anticompetitive conduct with regard to advertising practices do not warrant further inquiry). 33. We conclude, based on the record and Commission precedent, that approval of a conditional waiver in this instance is appropriate. Although some of Cox's commonly owned facilities are significant, comparable facilities do exist. Moreover, grant of the waiver will result in economic efficiencies and enhanced public interest programming. In addition, Cox will preserve the same aggregate number of television and radio stations following the proposed acquisition of WPYO(FM) and consummation of the assignment of WZKD(AM), a station that is part of the radio-television combination it now holds under a conditional one-to- a-market waiver. See, e.g., QueenB Radio, Inc., 14 FCC Rcd 3287 (MMB 1999)(conditional one-to-a-market waiver granted where station exchange changed the identity of one radio station in existing radio-television combination but did not change the aggregate number of television and radio stations). For the reasons set forth above, we are persuaded that grant of a temporary conditional waiver of the one-to-a-market rule is justified. Conclusion 34. Accordingly, IT IS ORDERED, That the Petition to Deny or Defer Action filed by Press Broadcasting on April 20, 1998, IS DENIED. 35. IT IS FURTHER ORDERED, That the Petition to Deny filed by Gross Communications Corporation on April 20, 1998, is DENIED. 36. IT IS FURTHER ORDERED, That, the request for waiver of the Commission's one-to-a- market rule, 47 C.F.R.  73.3555(c), to permit the common ownership of WMMO(FM), Orlando, Florida; WHTQ(FM), Orlando, Florida; WCFB(FM), Daytona Beach, Florida; WWKA(FM), Orlando, Florida; WDBO(AM), Orlando, Florida; WHOO(AM), Orlando, Florida and WPYO(FM), Apopka, Florida, is GRANTED subject to the outcome in the pending television ownership rulemaking proceeding, Second Further Notice of Proposed Rule Making, 11 FCC Rcd 21655 (1996) and pending broadcast attribution proceeding, Further Notice of Proposed Rule Making, 11 FCC Rcd 19985 (1996). Should divestiture be required as a result of those proceedings, Cox Radio, Inc. is directed to file an application for Commission consent to sell the necessary station(s)/newspaper within six months from the release of final Orders in those proceedings. Any request to extend this conditional waiver should be filed at least 45 days prior to the end of the six-month period and will be closely scrutinized. 37. IT IS FURTHER ORDERED, That the application to assign the license of WPYO(FM), Apopka, Florida, File No. BAL-980309GK, from Alton Rainbow Corporation to Cox Radio, Inc. is GRANTED subject to Cox Radio, Inc.'s consummation of the sale of WZKD(AM)(now WTLN(AM)) to TM2 simultaneous or prior to the consummation of the instant transaction. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary