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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In re:                          )
                                )
Complaint of Family Stations, Inc.)          CSR-4224-M
against Viacom Cable            )
                                )
Request for Carriage            )


                  MEMORANDUM OPINION AND ORDER

     Adopted:  November 24, 1997        Released:  November 26, 1997  

By the Chief, Consumer Protection and Competition Division, Cable Services Bureau:

                           INTRODUCTION

     1.   Family Stations, Inc., licensee of Television Broadcast Station KFTL (Ind., Ch. 64),
Stockton, California, filed a must carry complaint with the Commission, pursuant to 76.61 of the
Commission's Rules, claiming that Viacom Cable has refused carriage of its station on its system serving
Colusa and Oroville, California.  Viacom has filed an opposition to this complaint as well as supplementary
information.  KFTL has replied.

                            BACKGROUND

     2.   Pursuant to Section 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.

                       SUMMARY OF PLEADINGS

     3.   In support of its petition, KFTL argues that it is entitled to must carry status on Viacom's
Colusa, California cable system because it is a home shopping station located in the Sacramento-Stockton,
California ADI, the same market as Viacom's system.  KFTL states that on November 5, 1993, it informed
Viacom by letter that it was licensing its programming at the source and that the cable system would be
eliminated from any increased copyright liability for the carriage of KFTL's signal.  At the same time KFTL
maintains that it pledged that, should it be necessary, it would indemnify Viacom for any increased liability
that might apply.  On December 22, 1993, KFTL indicates that Viacom stated in reply that KFTL's
indemnification proposal did not meet Commission requirements and that instead it would require a standard
indemnification agreement from KFTL indemnifying Viacom from any copyright liability resulting from
carriage of the station.  KFTL states that it questioned Viacom's interpretation of the copyright law and
informed the system that its continued refusal to negotiate an agreement based on licensing programming
at the source was a violation of the must carry rules and it would treat the system's December 22nd letter as
a refusal of carriage.  KFTL indicates that no further response was received.  KFTL requests, therefore, that
the Commission order Viacom a) to negotiate in good faith an agreement indemnifying Viacom from
increased copyright liability premised upon licensing KFTL's programming at the source and b) commence
carriage of KFTL within thirty days of the station providing a good quality signal to the system's principal
headend.

     4.   In its opposition, Viacom argues that KFTL does not ask the Commission to order it to carry
the station in Colusa, California, the portion of its cable system located within the Sacramento ADI, because
it has improperly refused carriage, but rather to assist it in negotiating a copyright indemnification agreement
premised on the licensing of KFTL's programming at the source.  Viacom states initially that, regardless of
the copyright issues, KFTL's complaint is premature and should be dismissed since:  a) no denial of carriage
rights has actually taken place; b) KFTL acknowledges it does not deliver a good quality signal to Viacom's
principal headend and therefore has no formal must carry rights to complain of; and c) there is no assurance
that KFTL's signal quality problems will ever be resolved.  Viacom argues further that there is serious doubt
as to whether the Commission can order it to negotiate a copyright agreement of the kind proposed by the
station.  It maintains that KFTL fails to recognize that a cable operator's potential liability where broadcast
programming is licensed at the source is far greater than in situations where operators retransmit
programming under the cable compulsory license; a method which sufficiently protects both the cable
operator and the broadcaster.  Viacom argues that KFTL's direct licensing agreement does not do so and may
render the cable system liable for other costs such as copyright infringement and transaction costs. 
Moreover, Viacom states that KFTL's reliance on an unpublished written advisory from the Copyright Office
is misplaced and has no force of law.  Viacom therefore requests that KFTL's requests either be dismissed
or held in abeyance until the Commission can conduct an inquiry into the copyright question contained
herein.

     5.   In reply, KFTL states that Viacom's arguments are without merit and should be rejected. 
It maintains that its complaint is not premature and should be considered.  It argues that if its signal quality
problems have not been resolved it is due to Viacom's failure to work with the station, despite repeated
attempts by KFTL to do so.  Moreover, Viacom's December 22nd letter is clearly, despite the system's
assertions, a denial of KFTL's carriage rights under the Act.   Finally, it argues that a dismissal of its
complaint would improperly deny KFTL's statutory rights to seek redress.

     6.   In subsequent correspondence between Viacom and KFTL, which was submitted to the
Commission in 1994, KFTL references the changes in the Copyright Law and requests immediate carriage
on Viacom's system.  Viacom in reply pointed out that a portion of its system lay outside the Sacramento
ADI market and thus it would continue to need copyright indemnification for the carriage of KFTL's signal. 
Further technical information was submitted by Viacom in January 1995 at the request of the Bureau,
detailing the viability of carrying KFTL on the Colusa, California portion of Viacom's system only (the only
community of Viacom's technically-integrated system within KFTL's ADI).  While Viacom provided several
options for such restricted carriage, it concluded that all available avenues would be excessively burdensome
for the system to accomplish.  KFTL reiterated in a February 1995 letter that its signal has adequate signal
strength at the system's principal headend and submitted tests it performed at that time.  Between February
1995 and March 1996 nothing further was received by either party until Viacom submitted a March 8, 1996,
letter requesting that, due to the apparent abandonment of the complaint by KFTL for over eleven months,
the complaint should be dismissed.  If not dismissed, however, Viacom argues that the signal strength tests
provided in February 1995 by KFTL should be given no probative value as they do not appear to comply
with the Commission's engineering criteria and were done without the knowledge of or cooperation with
Viacom personnel.  Viacom suggests that furthers tests should be made with the cooperation of both parties.

                            DISCUSSION

     7.   There are two issues under dispute in this case.  The first issue relates to the technically-
integrated nature of Viacom's cable system which is located in two ADI markets, Sacramento-Stockton and
Chico-Redding.  Only one community served by Viacom's system, Colusa, is within the same market as
KFTL and is, therefore, the only community in which KFTL has must carry rights.  However, due to the
technical configuration of Viacom's system, carriage of KFTL in Colusa would also result in the station's
carriage in the other communities served by Viacom's system, where the station has no must carry rights. 
Viacom has stated its system cannot limit carriage of KFTL on its cable system to only Colusa due to the
architecture of its system.  The Commission, in its Must Carry Order held, as is the case here, that in the
event a television station is a must carry station ". . . in situations where a cable system serves a community
or communities in more than one county and those counties are assigned to different ADIs, the cable operator
must carry all of the local commercial television signals in both ADIs" unless "where it is technically able
to do so, the cable operator may offer different must-carry channel line-ups" for communities in respective
ADIs.  Moreover, it states, that ". . . if the cable system is not able to alter its channel line-up on a
community-by-community basis and the systems straddles two ADIs, all broadcast stations in both ADIs will
be considered "local" for must-carry purposes."  It should be noted that in instances where the carriage of
a station from another ADI creates copyright costs for the cable operator, the television station will be
required to negotiate a copyright indemnification agreement with the cable system.  Consequently, Viacom's
carriage of KFTL will result in copyright liability for which KFTL must indemnify Viacom.

     8.   Viacom objects to the fact that KFTL has asked the Commission to order it to agree to an
indemnification agreement premised upon the licensing of KFTL's programming at the source.  We agree
with Viacom's objection and will decline to do so.  The Communications Act requires that television stations
reimburse cable operators for any copyright liability incurred for their carriage.  Therefore, the cable operator
is entitled to an unqualified copyright indemnification agreement.  If KFTL believes that no copyright
liability will be incurred by Viacom due to the manner of its program licensing, we see no reason why KFTL
should not negotiate a general copyright indemnification agreement. 

     9.   The second issue in dispute involves KFTL's signal quality at Viacom's principal headend. 
In a signal strength test performed by KFTL in February 1995, the station appears to fall within Commission
criteria with regard to signal quality.  However, the method used in conducting the test fails to comport with
criteria the Commission has established for signal strength tests and therefore its results are unacceptable. 
An earlier test, however,  submitted by Viacom does comply with our engineering criteria and demonstrates
that KFTL's signal does not meet the signal quality standards.  Therefore, we conclude that KFTL has not
established that it meets the Commission's signal quality criteria and its must carry complaint will be
denied.  

                         ORDERING CLAUSES

     10.  In light of the above, the complaint filed February 22, 1994 by Family Stations, Inc. IS
DENIED pursuant to 614 of the Communications Act of 1934, as amended.

     11.  This action is taken pursuant to authority delegated by 0.321 of the Commission's Rules.

                         FEDERAL COMMUNICATIONS COMMISSION



                         Gary M. Laden
                         Chief, Consumer Protection and Competition Division
                         Cable Services Bureau