******************************************************** 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 ) ) North Idaho Broadcasting Co. ) (Assignor) ) ) File Nos. BAL-970801EA, and ) BALH-970801EB ) QueenB Radio, Inc. ) (Assignee) ) ) For Assignment of Licenses of ) KVNI(AM), Coeur d'Alene, Idaho ) KHTQ(FM) Hayden, Idaho ) MEMORANDUM OPINION AND ORDER Adopted: May 11, 1998 Released: May 11, 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 application for assignment of the licenses of KVNI(AM), Coeur d'Alene, Idaho and KHTQ(FM) Hayden, Idaho from North Idaho Broadcasting Co. ("North Idaho") to QueenB Radio, Inc. ("QueenB"); 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 station ownership in the same market. The application and the waiver request are unopposed. For the reasons set forth below, we grant the assignment application and a conditional waiver of our one-to-a-market rule. 2. QueenB is wholly owned by Spokane Television, Inc. ("Spokane Television"), which through its subsidiaries controls VHF television station KXLY-TV (ABC affiliate), two FM stations (KZZU-FM and KXLY-FM), and two AM stations (KTRW(AM) and KXLY(AM)) licensed to Spokane, Washington, and one AM station -- KKPL(AM) -- licensed to Opportunity, Washington. In 1996, QueenB was granted a permanent one-to-a-market waiver to acquire KTRW(AM) and KZZU-FM Spokane, Washington, to be commonly owned by its parent corporation, Spokane Television, with VHF station KXLY-TV, KXLY(AM) and KXLY-FM, Spokane. DeArias, 11 FCC Rcd at 3662. Subsequently, QueenB was granted a conditional, temporary waiver to add another AM station, KKPL(AM), to this radio/television combination. Concrete River Associates, L.P., DA 97-1067 (rel. May 23, 1997). The waiver is subject to the outcome of the television ownership proceeding, in which the Commission is considering issues related to radio/television cross-ownership. See infra  14. 3. Grant of the instant assignment application would create a new radio-television station combination because the Grade A contour of KXLY-TV encompasses the entire communities of license of KVNI(AM) in Coeur d'Alene, Idaho and KHTQ(FM) in Hayden, Idaho. QueenB's proposed acquisition of these stations also implicates the radio local ownership rules. Consequently, QueenB has submitted a showing to demonstrate that its acquisition of KVNI(AM) and KHTQ(FM) complies with the radio local ownership rules and has requested a permanent one-to-a-market rule waiver to permit common ownership of one TV, three FM and four AM stations in the Spokane DMA, the 73rd largest. One-to-a-Market Waiver Showing 4. QueenB 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. 5. We shall review QueenB's waiver request under the case-by-case standard because Spokane is the 73rd largest DMA in the country and there is no claim that either KVNI(AM) or KHTQ(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 transactions involve 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, QueenB submits a showing which addresses each of the five factors. 6. Public Service Benefits of Joint Operation. QueenB contends that the proposed combination of KVNI(AM) and KHTQ(FM) with KKPL(AM), KTRW(AM), KXLY(AM), KXLY-FM, KZZU-FM, and KXLY-TV would create efficiencies that would save between $155,000 and $225,000 per year. Specifically, it states that consolidation of on-air talent, sales management, engineering, and clerical staffs would result in estimated annual savings of approximately $155,000. Bulk discounts on services and supplies, such as long distance rates and Arbitron ratings, would save an estimated $5,000 to 15,000 per year. Combined purchasing of advertising and promotional expenses would save approximately $5,000, consolidation of engineering facilities would save an additional estimated $5,000, and savings in other areas such as reduced corporate insurance rates are estimated between $15,000 and $45,000 per year. 7. QueenB asserts that the communities of Coeur d'Alene and Hayden will benefit from the economic efficiencies created by the proposed combination through improved programming and public service benefits. QueenB states that KVNI(AM) and KHTQ(FM) will have access to the award-winning news services of KXLY-TV and QueenB radio stations for coverage of breaking news, community events, weather and local traffic reports. Specifically, QueenB plans to expand local news coverage on both KNVI and KHTQ by adding two more hours of local news during the week and by increasing news coverage on weekends. QueenB also plans to produce a weekly talk show to be aired on KVNI that will be devoted to discussions of arts and entertainment events in the Coeur d'Alene area and a weekly news-maker show to be aired on KHTQ that will address issues of public concern. Additionally, QueenB states that it is prepared to invest approximately $70,000 to upgrade the transmitting antenna of KHTQ to enable more listeners to receive an unobstructed signal. 8. Types of Facilities. Regarding the two stations QueenB proposes to acquire, KVNI(AM) is a Class B station that operates on 1080 kHz at 10,000 watts daytime with a non- directional antenna and at 1,000 watts nighttime, while KHTQ(FM) is a Class C station that operates on 94.5 MHz at 100,000 watts effective radiated power ("ERP") from a transmitter at 1,883 feet height above average terrain ("HAAT"). Among the AM stations already controlled by QueenB or through its related corporations, KKPL(AM) is a Class B station that is licensed at 630 kHz and operates at 1,000 watts daytime, 540 watts nighttime; KTRW(AM) is a Class B station and operates on 970 kHz at 5000 watts, using a non-directional antenna daytime, and operates at 1000 watts during nighttime directional operations; and KXLY(AM) is a Class B station, operating full time at 5000 watts both day and nighttime on 920 kHz utilizing a non- directional antenna. With regard to the FM stations, KXLY-FM is a Class C station operating on 99.9 MHz with 37,000 watts effective radiated power ("ERP") from a transmitter at 2999 feet HAAT; and KZZU-FM is a Class C station operating on 92.9 MHz with an ERP of 81,000 watts from a transmitter at 2,080 feet HAAT. Lastly, KXLY-TV, is a VHF station operating on Channel 4 as an ABC network affiliate, and operates at 48,000 watts visual and 9550 watts aural power from a transmitter at 3061 feet HAAT. 9. QueenB acknowledges that its commonly owned stations are not insignificant from a technical standpoint but contends that there are other stations in the market with comparable facilities. Specifically, QueenB asserts that eight other AM stations have facilities that equal or surpass QueenB's most powerful station, KXLY(AM), in daytime operations, and three equal KXLY's facilities for nighttime operation. QueenB also claims that among the other FM stations serving the Spokane market, seven are Class C stations, operating at the maximum permissible power limit for a Class C channel. With respect to television stations serving the market, QueenB contends that there are six other VHF (three commercial and three non-commercial) stations in the Spokane DMA, as well as three UHF stations (two commercial and one non- commercial). 10. Other Media Outlets. As noted, Spokane Television, the parent corporation of both QueenB and Spokane Radio, Inc., owns and operates KXLY-TV, Spokane, Washington. QueenB owns KTRW(AM) and KZZU-FM, an AM-FM combination also in Spokane and KKPL(AM) in Opportunity, Washington. Spokane Radio, Inc., owns KXLY AM/FM, an AM/FM combination licensed to Spokane. Neither QueenB nor its related corporations own other broadcast or print interests operating in the Spokane market. 11. Economic Status. QueenB states that although KVNI(AM) and KHTQ(FM) are not failed stations, they are financially distressed stations which have produced a ten-year negative aggregate cash flow. As a result, there have been no significant investments in technology or equipment for either station. However, with the creation of a larger economic base from the integration of KVNI/KHTQ with the QueenB/Spokane Radio stations, QueenB contends that such investments can be made in order to compete more successfully in the Spokane market. 12. Competition and Diversity in the Market. The final factor in QueenB's showing is the nature of the relevant market in light of the Commission's concerns about diversity and competition. QueenB states that there are a total of 33 radio stations in the Spokane market and 14 separate owners. QueenB also states that there are nine full-power commercial television stations including KXLY-TV in the Spokane DMA, controlled by seven separate owners. QueenB asserts that, after the acquisition of KVNI/KHTQ, these 42 stations would be operated by 20 separate broadcast owners. Additionally, QueenB states that there are 24 low power television stations, a wireless cable system, two daily newspapers, two weekly newspapers, and one bi-weekly newspaper. Discussion 13. Radio Ownership Rules. We turn first to QueenB's compliance with our local radio ownership rules. 47 C.F.R. 73.3555(a)(1). Our analysis of the data QueenB has submitted indicates that the radio market formed by the mutually overlapping contours of its proposed commonly owned radio stations consists of 40 commercial radio stations. Under our rules, in a radio market with 30 - 44 commercial radio stations, a party may own, operate, or control up to seven commercial radio stations, not more than four of which are in the same service (AM or FM). QueenB's proposed ownership of seven commercial radio stations, three FM and four AM, in this market 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 applications under the radio ownership rules. We conclude that, with respect to local radio ownership, QueenB's acquisition of KVNI(AM), and KHTQ(FM) would serve the public interest. 14. One-to-a-Market Waiver. Turning to the substance of QueenB's one-to-a-market waiver request, we will follow the policy established in recent one-to-a-market waiver cases where the radio component to a proposed combination exceeds those permitted prior to the adoption of the Telecommunications Act of 1996. See Maximum Media, Inc., 12 FCC Rcd 3391, 3395-96 (1997); see also S.E. Licensee G.P., 11 FCC Rcd, 16727, 16732-33 (1996); Shareholders of Citicasters, Inc., 11 FCC Rcd 19135, 19143 (1996). In such cases, the Commission declined to grant permanent waivers of the one-to-a-market rule, and instead where appropriate, granted temporary waivers conditioned on the outcome of related issues raised in the television ownership rulemaking proceeding. Second Further NPRM, 11 FCC Rcd at 21689. Similarly, we conclude that a permanent, unconditional waiver would not be appropriate here. QueenB has, however, demonstrated sufficient grounds for us to grant a temporary waiver conditioned on the outcome of the rulemaking proceeding. 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. QueenB has demonstrated that combining KVNI(AM) and KHTQ(FM) with its existing stations will result in substantial cost savings in the range of $150,000 to $225,000 annually. These cost savings will translate into public service and programming improvements. In this regard, KVNI(AM) and KHTQ(FM) will have access to the newsgathering and weather forecasting resources of KXLY-TV. Specifically, QueenB plans to expand local news coverage on both stations for an additional two hours during weekday afternoons and increase news coverage on weekends. Additionally, public service programming and community service initiatives on the stations will be augmented through the development of a weekly talk show on KVNI and weekly news-maker show on KHTQ for discussions of local arts, entertainment events and issues of public concern. Lastly, QueenB will be able to increase its investment in technology and equipment for KVNI(AM) and KHTQ(FM). 16. While QueenB's commonly owned facilities will be significant in technical terms, our independent analysis verifies that there are competing stations with comparable facilities including at least two other group owners with existing multiple AM-FM combinations. 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 at 6349-50. All three of the FM stations in QueenB's proposed combination are Class C stations, and our analysis shows that there are at least six additional Class C stations in the Spokane TV metro market. At least two of these Class C stations are technically comparable to KHTQ(FM), the most powerful FM in QueenB's proposed combination. With regard to the four AM stations in QueenB's proposed combination, there are at least three additional AM stations in the Spokane TV metro market with facilities that are technically comparable to QueenB's most powerful AM station KXLY. Our independent analysis also indicates that aside from QueenB's KXLY-TV, there are six other VHF stations and three UHF stations in the Spokane DMA. At least two of these VHF stations, KREM-TV, a CBS affiliate, and KHQ-TV, an NBC affiliate, have technical facilities that are comparable to those of KXLY-TV, an ABC affiliate. 17. With respect to financial conditions, as stated earlier, neither KVNI(AM) nor KHTQ(FM) is a failed station nor has it demonstrated financial distress. However, we previously have indicated that not all five factors need be present to justify grant of a waiver. Second Report and Order Recon., 4 FCC Rcd at 6491. We also 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., DeArias, 11 FCC Rcd at 3662; Alta Gulf FM, Inc., FCC Rcd 7750, 7751 (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. Regarding QueenB s media holdings, we find that the proposed combination would not create undue concentration of ownership and control in the Spokane market, the 73rd largest DMA. We have verified that there are 33 radio stations in the Spokane TV metro market licensed to 16 separate owners. There are also 10 commercial and noncommercial television stations including KXLY-TV in the Spokane DMA controlled by 9 separate owners. After the proposed transaction, these 43 stations would be operated by 23 separate broadcast owners. Additionally, QueenB states that there are several other media outlets in the market, including 24 low power television stations, a wireless cable system, two daily newspapers, two weekly newspapers, and one bi-weekly newspaper. We also note that the cable penetration rate for the Spokane market has reached 62% of TV households. This level of diversity is consistent with the level we have approved in previous waiver requests. See, e.g., Paso Del Norte Broadcasting Corp., DA 97-1147 (rel. June 2, 1997) (20 "voices" in 99th ranked market); Triad Skywaves, Inc., 12 FCC Rcd 6102 (1997) (22 "voices" in 46th ranked market); Moosey Communications, Inc., 8 FCC Rcd 5247 (1993) (24 "voices" in 141st ranked market). 19. With respect to economic concentration and competition, our independent analysis indicates that KXLY-TV garners 27.9 percent of television advertising revenues in the Spokane DMA. QueenB's existing radio stations garner 21.1 percent of radio advertising revenues. The acquisition of KVNI and KHTQ will add 2.4 percent to QueenB's existing share for a total of 23.5 percent of radio advertising revenues in the Spokane Radio Metro Market. Together, the stations in the proposed combination have a combined television and radio advertising revenue share of 26.8 percent, a figure consistent with temporary one-to-a-market waiver requests previously approved. See Paxson Communications Corp., DA 97-2443 (MMB Nov. 21, 1997) (33.3 percent of radio advertising revenue and 20.4 percent of combined television and radio advertising revenues in 61st ranked market); Triathlon Broadcasting of Little Rock, DA 97-1979 (rel. Sept. 16, 1997) (44.02 percent of radio advertising revenue and 24.97 percent of combined television and radio advertising revenues in 57th ranked market); NewCity Communications, Inc., 12 FCC Rcd 3929 (1997) (32 percent of radio advertising revenue and 29 percent of combined television and radio advertising revenues in 22nd ranked market); S.E. Licensee G.P., 11 FCC Rcd 16727, 16734 (1996) (40.4 percent of radio advertising revenue and 24.2 percent of combined television and radio advertising revenues in 42nd ranked market). 20. We conclude, based on the record, that grant of a temporary, conditional waiver is appropriate. Grant of the waiver will result in economic efficiencies and facilitate enhanced public interest programming without undue effect on competition or diversity in the Spokane market. Ordering Clauses 21. Accordingly, IT IS ORDERED that the original request for a permanent waiver of the Commission's one-to-a-market rule, 47 C.F.R. 73.3555(c), IS HEREBY DENIED. 22. IT IS FURTHER ORDERED, that a temporary conditional waiver of the one-to-a- market rule, 47 C.F.R. 73.3555(c), to permit common ownership of stations KXLY-TV, KZZU- FM, KXLY-FM, KXLY(AM), KTRW(AM), all Spokane, Washington; KKPL(AM), Opportunity, Washington; KVNI(AM), Coeur d'Alene, Idaho; and KHTQ(FM), Hayden, Idaho, IS HEREBY GRANTED, subject to the outcome in the pending television ownership rulemaking proceeding, Review of the Commission's Regulations Governing Television Broadcast Ownership, Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 & 87-8, 11 FCC Rcd 21655 (1996). Should divestiture be required as a result of that proceeding, QueenB is directed to file an application for Commission consent to sell the necessary station(s) within six months from the release of the final Order in that proceeding. 23. IT IS FURTHER ORDERED, that, having found the applicants fully qualified and that grant of the applications would serve the public interest, the applications to assign the licenses of KVNI(AM), Coeur d'Alene, Idaho and KHTQ(FM) Hayden, Idaho from North Idaho Broadcasting Co. to QueenB Radio, Inc. (File Nos. BAL-970801EA and BALH-970801EB) ARE HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau