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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: ) ) TKR Cable Company ) ) CSR-4845-A for Modification of the ) Television Market for Stations ) WHAI-TV, Bridgeport, Conn. ) MEMORANDUM OPINION AND ORDER Adopted: February 20, 1997 Released: February 27, 1997 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. Before the Commission is a petition filed by TKR Cable Company and TKR Cable Company of Warwick, Inc. (collectively "TKR" or "operator") seeking to modify the New York "area of dominant influence" (ADI) and to exclude several communities located in Orange County, New York and Hamilton, Mercer, Monmouth, Middlesex, Ocean, Passaic, Somerset and Union Counties, New Jersey, from WHAI's television market for purposes of the cable television broadcast signal carriage rules. Paxson New York License, Inc., licensee of television broadcast station WHAI-TV (channel 43-home shopping), Bridgeport, Connecticut filed an opposition to the petition to which TKR replied. BACKGROUND 2. Pursuant to 614 of the Communications Act and implementing rules adopted by the Commission in its Report and Order in MM Docket 92-259, commercial television broadcast stations are entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market for this purpose is its "area of dominant influence" or ADI as defined by the Arbitron audience research organization. An ADI is a geographic market designation that defines each television market exclusive of others, based on measured viewing patterns. Essentially, each county in the United States is allocated to a market based on which home-market stations receive a preponderance of total viewing hours in the county. For purposes of this calculation, both over-the-air and cable television viewing are included. 3. Under the Act, however, the Commission is also directed to consider changes in market areas. Section 614(h)(1)(C) provides that the Commission may: with respect to a particular television broadcast station, include additional communities within its television market or exclude communities from such station's television market to better effectuate the purposes of this section. In considering such requests, the Act provides that: the Commission shall afford particular attention to the value of localism by taking into account such factors as -- (I) whether the station, or other stations located in the same area, have been historically carried on the cable system or systems within such community; (II) whether the television station provides coverage or other local service to such community; (III) whether any other television station that is eligible to be carried by a cable system in such community in fulfillment of the requirements of this section provides news coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; and (IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community. 4. The legislative history of this provision indicates that: where the presumption in favor of ADI carriage would result in cable subscribers losing access to local stations because they are outside the ADI in which a local cable system operates, the FCC may make an adjustment to include or exclude particular communities from a television station's market consistent with Congress' objective to ensure that television stations be carried in the areas which they serve and which form their economic market. * * * * * [This subsection] establishes certain criteria which the Commission shall consider in acting on requests to modify the geographic area in which stations have signal carriage rights. These factors are not intended to be exclusive, but may be used to demonstrate that a community is part of a particular station's market. 5. The Commission provided guidance in its Report and Order in MM Docket 92-259, supra, to aid decision making in these matters, as follows: For example, the historical carriage of the station could be illustrated by the submission of documents listing the cable system's channel line-up (e.g., rate cards) for a period of years. To show that the station provides coverage or other local service to the cable community (factor 2), parties may demonstrate that the station places at least a Grade B coverage contour over the cable community or is located close to the community in terms of mileage. Coverage of news or other programming of interest to the community could be demonstrated by program logs or other descriptions of local program offerings. The final factor concerns viewing patterns in the cable community in cable and noncable homes. Audience data clearly provide appropriate evidence about this factor. In this regard, we note that surveys such as those used to demonstrate significantly viewed status could be useful. However, since this factor requires us to evaluate viewing on a community basis for cable and noncable homes, and significantly viewed surveys typically measure viewing only in noncable households, such surveys may need to be supplemented with additional data concerning viewing in cable homes. 6. As for deletions of communities from a station's ADI, the legislative history of this provision indicates that: The provisions of [this subsection] reflect a recognition that the Commission may conclude that a community within a station's ADI may be so far removed from the station that it cannot be deemed part of the station's market. It is not the Committee's intention that these provisions be used by cable systems to manipulate their carriage obligations to avoid compliance with the objectives of this section. Further, this section is not intended to permit a cable system to discriminate among several stations licensed to the same community. Unless a cable system can point to particularized evidence that its community is not part of one station's market, it should not be permitted to single out individual stations serving the same area and request that the cable system's community be deleted from the station's television market. 7. In adopting rules to implement this provision, the Commission indicated that requested changes should be considered on a community-by-community basis rather than on a County-by-County basis, and that they should be treated as specific to particular stations rather than applicable in common to all stations in the market. The rules further provide, in accordance with the requirements of the 1992 Cable Act, that a station not be deleted from carriage during the pendency of an ADI change request. MARKET MODIFICATION ARGUMENTS 8. In its petition for special relief, TKR requests that the Cable Services Bureau delete several communities located in Orange County, New York and Hamilton, Mercer, Monmouth, Middlesex, Ocean, Passaic, Somerset and Union Counties, New Jersey, from WHAI's television market for purposes of the cable television broadcast signal carriage rules. TKR generally asserts that WHAI is not "local" to these New York and New Jersey Counties and its programming is geared to the local needs and interests of the distant Bridgeport, Connecticut area. Moreover, the needs of TKR's subscribers for local news, public affairs and public service programming are being fully met by the local broadcast stations and other programming carried on the New York and New Jersey systems at issue here. TKR also notes WHAI has never been carried on any of the affected systems and is not generally viewed in either cable or noncable households in the affected areas. 9. With regard to the historical carriage factor, the operator asserts that WHAI has never been carried on the systems because it has never believed that the station provides any locally- oriented programming of interest to its New York and New Jersey cable subscribers. Referring to the third factor, TKR states that other stations and cable offerings provide ample local news, sports, and public service programming throughout each day. The operator alleges that WHAI has achieved no measurable viewership in the affected New York and New Jersey counties. TKR also argues that the addition of WHAI would have an adverse impact upon its subscribers as it would have to drop cable programming services to accommodate carriage of its signal. 10. TKR's principal argument, however, is that WHAI does not provide local service to the relevant cable communities. The operator claims the station makes no effort to serve the affected New York and New Jersey counties with programming of local interest. TKR points out that almost all of WHAI's programming consists of home shopping infomercials. The operator also notes that WHAI is not physically proximate as Bridgeport, CT is from 57 to 123 miles away from the affected New Jersey cable communities. TKR submits that WHAI's Grade B contour does not cover the areas served by its New York and New Jersey systems and the station fails to provide an adequate strength signal to the headend of any of the systems. 11. In opposition, WHAI first asserts that the statutory must carry scheme contemplates market-wide carriage, provided that the station takes the necessary steps to deliver a good quality signal. The station believes that TKR ignores this premise as well as Congressional intent to narrowly limit a cable operator's ability to diminish a local broadcast station's must carry market. Here, WHAI argues that the only "conceivable circumstance in which deletion of a local station would enhance localism is the rare instance of a capacity-constrained cable system being unable, in the absence of a deletion, to carry the signal of another station (e.g., a nearby but out-of-the-market station) that provides demonstrably more local service." WHAI argues that TKR does not claim that carriage of WHAI would force it to drop a more local but out-of-the-ADI over-the-air television signal. 12. WHAI alternatively argues that it provides local service to the affected New York and New Jersey cable communities and satisfies each prong of the four factor market modification test. WHAI asserts that the historical carriage factor is not controlling because it would prevent weaker stations, like itself, which cable systems had previously declined to carry, from ever being carried. As for carriage of other local stations, WHAI remarks that this factor is analytically important only when a station requests a community to be added to a market, not when a cable operator seeks to delete a community from a market. With regard to its lack of viewership, WHAI asserts that ratings have no probative value when a cable operator seeks deletion of a specialty station because such stations typically attract very limited audiences. 13. Turning to local service and coverage, WHAI asserts that TKR's reliance on Grade B coverage is inapt as Congress did not assign television markets, for must carry purposes, based on this criterion. Similarly, WHAI notes that Congress specifically rejected a mileage-based approach when it defined a station's market by reference to an ADI. With regard to its programming format, WHAI asserts that it provides an effective advertising platform for local merchants and other business, and provides a means for local businesses and community and minority organizations to communicate to residents in the New York ADI. Moreover, WHAI states that it produces several local public service programs, "For the Record" and "Jersey Cares", which feature programming specifically targeted to meet the needs and interests of the communities served by TKR. WHAI argues that even a small amount of local programming advances the value of localism and that neither the 1992 Cable Act nor the legislative history suggests any threshold or minimum criterion for local programming. It also remarks that a substantial number of residents of the cable communities can receive an over-the-air signal from one of its low power stations, W23BA (East Orange, NJ). WHAI also states that its has an agreement to deliver its signal through fiber optic cable to those headends in New Jersey and New York that cannot receive a good quality over-the-air signal. Finally, WHAI states that the Bureau has held that ratings are of no probative value when a cable operator seeks to delete an independant station. 14. In its reply, TKR argues that WHAI ignores the 1992 Cable Act and numerous Commission and Bureau decisions, when presenting its arguments in opposition to the petition for special relief. With regard to WHAI's position that stations may only be deleted where an out-of- market station can be shown to be more "local," TKR argues WHAI's proposal would flout Congress' dictate that markets may be modified where television station's ADI does not accurately reflect the station's true local geographic, political and economic service area. TKR also asserts that the Bureau found that WHAI is not local, and therefore not part of the market, in other cases involving New York and New Jersey cable operators. 15. With regard to the historical carriage factor, the operator asserts that the Commission should take this factor into account in considering both additions and deletions to a television station's market. TKR also states WHAI ignores the fact that historical carriage, in combination with other factors, becomes highly relevant in cable operator petitions seeking to exclude communities from a television station's market. The operator also reiterates that WHAI does not provide local service to the systems' cable communities. TKR asserts that WHAI tries to hide the fact that it provides no local coverage by attempting to transfer must carry rights to its low power station. The operator also states that WHAI's "program length presentations" are nothing more than "infomercials" and that the station's future programming plans are purely speculative. As for WHAI's arguments regarding the irrelevancy of geographic distance and Grade B contour coverage, the operator asserts that the Commission has recognized both of these factors as pertinent considerations with respect to the second statutory factor. Moreover, WHAI's assertion that it is committed to deliver the requisite signal strength by translator does not lessen the relevance of the lack of Grade B coverage. Finally, TKR claims that WHAI does not dispute the showing that it is barely watched in the New York market nor did the station deny the fact that TKR's cable subscribers receive an abundance of local programming from other broadcast stations and cable sources. ANALYSIS AND DECISION 16. We will grant TKR's request. Based on geography and other relevant information, we believe that the New York and New Jersey cable communities at issue here are sufficiently removed from WHAI that they ought not be deemed part of the station's market for mandatory carriage purposes. The evidence before us distinguishes these communities from the rest of the New York television market and persuades us that the action requested would better effectuate the purposes of Section 614 of the Communications Act. 17. New York is the nation's largest television market with almost seven million television households. Approximately 68% of the households in the market subscribe to cable service. Geographically, the market encompasses some 29 counties in four states, and is roughly 170 miles long and 150 miles wide, stretching north into Ulster County and the Catskill Mountains then down the shores of Monmouth and Ocean Counties, New Jersey to the south; Pike County, Pennsylvania is at the westernmost edge of the market which then extends eastward to include Fairfield County, Conn. and all of Long Island, NY. The heart of the ADI is New York City, one of the largest cities in the United States and the community of license for several local commercial television stations. WHAI, which signed on-the-air in 1987 and broadcasts on channel 43 from a transmitter located in Seymour, Connecticut. The station's city of license is Bridgeport, Connecticut (Fairfield County). 18. As an initial matter, we note that, according to the legislative history of the 1992 Cable Act, the use of ADI market areas is intended "to ensure that television stations be carried in the areas which they service and which form their economic market. Changes may be sought and granted by the Commission "to better effectuate the purposes" of the mandatory carriage requirements. The ADI market change process incorporated into the Communications Act, however, is not intended to be a process whereby cable operators may seek relief from the mandatory signal carriage obligations apart from the question of whether a change in the market area involved is warranted. When viewed against this backdrop, and considering all of the relevant factual circumstances in the record, we believe that the operator's deletion petition appears to be a legitimate request to redraw ADI boundaries to make them congruous with market realities. 19. We also find that WHAI's interpretation of Section 614 (h) of the 1992 Cable Act and the Commission's implementing rules regarding the filing of market deletion requests, is too restrictive and without a sufficient textual basis. The statute, on its face, does not limit market deletion requests only to those situations where an out-of-the market station is more deserving of carriage than an in-market station. There is also no language in either the legislative history of Section 614(h) or the Commission's rules directly supporting the station's viewpoint. To the contrary, WHAI ignores Congress' directive allowing either broadcasters or cable operators to ask for market modifications so that a station's ADI could better reflect the economic market at hand. Moreover, WHAI's formulation disregards Congress' directive that the Commission may conclude that a community within a station's ADI may be so far removed from the station that it cannot be deemed part of the station's market. 20. Turning to the statutory factors, we note that WHAI has no history of cable carriage on any of TKR's New York and New Jersey systems despite having commenced broadcasting in 1987 and been consistently broadcasting for a number of years. The evidence also suggests that WHAI does not provide local service to the communities in question and does not place a Grade B contour over the cable communities. That is due to the location of WHAI's transmitter, Seymour, Connecuticut, which is in a different market, the Hartford-New Haven ADI, from the affected New York and New Jersey cable communities, which are, on average, over 90 miles away. Here then, the distance and lack of service combined with the general geographic pattern of the areas involved attenuates any local ties the station might have with the cable communities. Furthermore, WHAI's reliance on its commercial translator, W23BA in East Orange, New Jersey, is misplaced. Commercial translators and low power stations are secondary service stations that are explicitly not entitled to carriage in their own right and the service here involved is not otherwise sufficient to persuade us that WHAI's market includes the affected New Jersey and New York cable communities. 21. We also do not believe that WHAI has sufficiently countered TKR's argument that the station does not carry programming of specific local interest or import for cable viewers in the relevant New York and New Jersey cable communities. The WHAI schedule information provided in the pleadings indicates it airs home shopping programming the majority of the broadcast day with some material of potential general interest interspersed throughout; neither the home shopping programming nor the general interest programming can be said to have specific ties to any of the cable communities at issue. In addition, the station's plans to air ethnic and minority programming in the future are too speculative and as such, do not count in the present market modification analysis. 22. We also believe that TKR's carriage of other local television stations provides support for the action requested in this particular case. Where a cable operator is seeking to delete a station's mandatory carriage rights in certain communities within its ADI, and it is clear that the station is not providing local service to those communities, the issue of local coverage by other stations will be given greater weight than in cases where a party is seeking to add communities. In this particular instance, there are several television stations, such as WWOR, licensed to the New York ADI and adjacent communities which have a closer nexus, cast a Grade A signal over the cable communities, and provide more focused local programming than WHAI. These market facts, coupled with the distance between the cable communities and WHAI, supports TKR's argument under the third factor. 23. TKR also demonstrates that WHAI has no audience in the counties in which the cable systems are located. We recognize that home shopping stations, like religious and non-English language stations, which were once referred to as specialty stations, are capable of "offer[ing] desirable diversity of programming . . . ," yet typically attract limited audiences. Because the station has a specialized format catering to a niche audience, this point, by itself, is not a complete indicator of the relationship between the cable communities and the market of the television station. However, the fact that the station also has no historical carriage on the cable systems in question even though it is not a new station does have decisional significance when linked with other information regarding the market and the geography involved. In this particular circumstance, we cannot entirely discount WHAI's lack of carriage as an indicator of the scope its market area. ORDERING CLAUSES 24. Accordingly, IT IS ORDERED, pursuant to 614(h) of the Communications Act of 1934, as amended, 47 U.S.C. 534, and 76.59 of the Commission's Rules, 47 C.F.R. 76.59, that the "Petition for Special Relief" (CSR-4845-A) filed by TKR Cable Company IS GRANTED. 23. This action is taken pursuant to authority delegated by 0.321 of the Commission's Rules, 47 C.F.R. 0.321. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau