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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 Petition of: ) ) Marcus Cable Associates, LLC ) CSR-5295-A ) For Modification of Market of Station ) KTAQ, Channel 47, Greenville, TX ) ) Request for Mandatory Carriage of ) CSR-5316-M Television Station KTAQ-TV ) MEMORANDUM OPINION AND ORDER Adopted: December 22, 1998 Released: December 28, 1998 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. In the above-captioned proceeding, Marcus Cable Associates, LLC. ("Marcus") has asked the Commission to exclude certain Texas cable communities from the area of dominant influence ("ADI") of television broadcast station KTAQ (Ch. 47), Greenville, Texas, for must-carry purposes. KTAQ filed an opposition to this petition, Marcus has replied, and KTAQ filed a response to the reply. Subsequent to the filing of the market modification request, KTAQ filed a must carry complaint against Marcus, to which Marcus filed an opposition. BACKGROUND 2. Pursuant to  614 of the Communications Act and implementing rules adopted by the Commission in Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Broadcast Signal Carriage Issues Report and Order ("Must-Carry Order"), a commercial television broadcast station is 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 purpose of this section. In considering such request, 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 non-cable 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 is 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. The factors are 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 Must-Carry Order 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 of other programming of interest to the community could be demonstrated by program logs or other descriptions of local programming offerings. The final factor concerns viewing patterns in the cable community in cable and non-cable 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 non-cable homes, and significantly viewed surveys typically measure viewing only in non-cable households, such surveys may need to be supplemented with additional data concerning viewing in cable homes. 6. 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 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. MARKET FACTS AND THE PARTIES' ARGUMENTS 7. Marcus requests that KTAQ's market be modified to exclude the communities served by its Dallas-Ft. Worth area cable systems. Marcus notes that even though the Dallas-Ft. Worth, Texas ADI encompasses both the station and the systems, KTAQ does not serve the cable communities in question, which, on average, lie about 70 miles from Greenville, Texas, KTAQ's city of license. Marcus notes further that KTAQ does not provide either a Grade B contour coverage or an off-air signal to the communities at issue. 8. Marcus argues that the statutory factors for market modification weigh in favor of deleting the cable communities from KTAQ's market. Marcus asserts that the station has no history of carriage on it systems even though it has been on-the-air since 1994; thus, deleting the cable communities from KTAQ's market will not deprive the station of any existing cable audience. With regard to local coverage, Marcus asserts that the station's Grade B contour does not cover any of the cable communities and the distances between Greenville and the cable communities range from approximately 45 miles (Highland Park) to nearly 85 miles (Benbrook). In addition, Marcus claims, through its own engineering tests, that KTAQ's signal is barely detectable at its headends. Marcus also claims that KTAQ, as a home shopping station, does not provide local programming specifically targeted to the cable communities at issue. As for coverage by other qualified television stations, Marcus asserts that it carries Dallas stations KDFW (FOX) and WFAA (ABC), and Ft. Worth stations KXAS (NBC) and KTVT (CBS), which air local newscasts and programming geared to the cable communities. Finally, Marcus asserts that KTAQ has no significant viewership in the cable communities; the operator states that a study conducted by Media Strategies, a television research firm, shows that KTAQ has no ratings in either cable or non-cable households in Dallas, Denton, Ellis, Johnson, or Tarrant Counties, where the cable communities are located. 9. In opposition, KTAQ generally argues that the petition should be denied because Marcus fails to provide particularized and persuasive evidence that the communities in question are not part of KTAQ's market, and thus does not overcome the presumption in favor of ADI carriage. With regard to the historical carriage factor, KTAQ asserts that it is carried on cable systems covering 53 communities in the Dallas-Ft. Worth ADI, including several communities surrounding the areas served by Marcus' systems, with an estimated 477,000 subscribers. KTAQ also argues that Marcus has never let it build a record of carriage because the operator never let the station test its signal at the headends. KTAQ asserts that because it provides local religious and shopping programming to several of the cable communities, it does not matter whether other local stations provide coverage of local programming; moreover, Marcus does not provide any evidence that the television stations carried on its systems provide the same type of programming as KTAQ. Discussing audience share, KTAQ asserts that while it is not in the Nielsen County Coverage Report for 1997, it is listed in the more recent "Dallas-Ft. Worth Metered Market Service, Nielsen Station Index Viewers in Profile" (May, 1998). KTAQ, nevertheless, argues that audience share does not count as much as annual sales data when a home shopping station is involved in a market modification dispute; in this instance, KTAQ has generated between $750,000 and $1,250,000 in annual sales through its home shopping programming seen in areas surrounding Marcus' cable communities. 10. As for local coverage, KTAQ argues that distance and Grade B contour coverage are not determinative factors in market modification proceedings. Nevertheless, KTAQ states that it has an application on file with the Commission seeking to increase its effective radiated power, and by consequence, its Grade B contour. KTAQ argues that signal strength is irrelevant in the context of a market modification petition, especially when it has agreed to cure its signal quality deficiencies. As for Marcus' distance argument, KTAQ asserts that the operator carries KMPX-TV 29 from the city of Decatur, Texas, even though the station is outside of the metro Dallas-Ft. Worth ADI. Finally, in response to Marcus' programming claim, KTAQ states that it carries 145 hours of home shopping programming, which provides an important service to area viewers, 17.5 hours of local religious programming, 3 hours of children's programming, and 2.5 hours of news each week 11. In reply, Marcus generally states that carriage of KTAQ would constitute an unwarranted commercial windfall for the station as it would extend viewership beyond the area it reaches through its own off-air transmission. With regard to historical carriage, Marcus reiterates that it has never carried KTAQ and adds that it is not carried in at least two of the communities served by TCI (Euless and Grand Prairie) in which the station claims to have cable carriage. Marcus also asserts that although the cable systems which currently carry KTAQ's signal may be located near Marcus systems, but they certainly do not surround Marcus systems. Marcus again states that KTAQ is distant from the cable communities and that the station fails to cover the cable communities with a Grade B contour. Marcus adds that KTAQ's pending application to increase its effective radiated power is of no consequence here because there is no guarantee that the Commission will grant the application and even if it did, only 3 of the 26 communities appear to be covered. As for signal strength, Marcus claims that signal inadequacies may be a proper indicator of a station's actual technical reach. Marcus also argues that the station fails to demonstrate how its programming can be considered local, how such programming serves the public interest, and how programming from other area stations does not serve the local needs of subscribers in the cable communities. Concerning audience share, Marcus asserts that the Nielsen Viewers in Profile information fails to demonstrate that KTAQ has any ratings in either cable or non-cable households in Dallas, Denton, Ellis, Johnson or Tarrant counties, where the cable communities are located; in fact, the Profile indicates that while KTAQ is located in the market, it did not meet the minimum reporting standards. Marcus also discounts the sales data and profile, arguing that the consummated transactions have occurred throughout the entire Dallas area and it hardly represents evidence of sustained viewership in the cable communities. 12. KTAQ filed a response to Marcus' reply to correct alleged erroneous information presented by the operator and to clarify previously submitted information. First, KTAQ supplies evidence that it is carried on TCI's systems serving Euless and Grand Prairie, in addition to 17 other communities. Second, KTAQ claims that Marcus signal strength test at one of its headends were inadequate because the operator pointed the testing antenna in the wrong direction at the time of the test. Third, KTAQ provides new highlighted maps to show where it receives phone calls for its home shopping products and to show that it has viewers in the cable communities at issue. ANALYSIS AND DECISION 13. We grant Marcus' modification request. Based on geography and other relevant information, we believe that the cable systems herein are sufficiently removed from KTAQ that the communities ought not be deemed part of the station's market for mandatory carriage purposes. 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 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 Marcus's deletion petition appears to be a legitimate request to redraw ADI boundaries to make them congruous with market realities. Marcus's actions do not reflect an intention to avoid its signal carriage responsibilities under the 1992 Cable Act and the Commission's Rules, nor do they evidence a pattern of discriminatory conduct against the station. Because we grant Marcus' request, we dismiss KTAQ's must carry complaint as moot. Historic Carriage 14. KTAQ began operation in 1994. Despite being on-the-air for nearly five years, it has no history of carriage on Marcus' systems. Given the statutory directive, weight must be given to this factor, but that must be done bearing in mind that the objective of the Section 614(h) process is to "better effectuate the purposes" of the broadcast signal carriage scheme. Thus, with respect to the question of historical carriage patterns, attention must be paid to the circumstances from which such patterns developed. Some stations have not had the opportunity to build a record of historical carriage for specific reasons that do not necessarily reflect a judgment as to the geography of the market involved. Therefore, the historical carriage factor -- to the extent such lack of carriage is reflective of factors outside of the shape of the market -- is not by itself controlling in these circumstances because such an implementation of the 1992 Cable Act would, in effect, prevent weaker stations, that cable systems had previously declined to carry, from ever obtaining carriage rights. We recognize that other cable systems in the general vicinity of Marcus' systems carry KTAQ. However, it does not appear that there is a clearly defined pattern of widespread carriage of KTAQ in the general area served by Marcus. As such, the evidence relating to this statutory factor, as it pertains directly to Marcus' systems, does weigh in favor of excluding the cable communities from KTAQ's market but is not outcome determinative by itself. We also note that Marcus carries station KMPX-TV 29, out of Decatur, Texas, which KTAQ argues is distant to the cable communities. This fact is not decisionally significant because KMPX-TV is not located in the same area as KTAQ. Its carriage by Marcus does not impute historic carriage to KTAQ because the two stations, KTAQ and KMPX-TV, are not located in the same area which is a requirement to impute historic carriage under the second factor of the market modification test. Grade B Coverage/Local Service 15. A station's local service to cable communities is one of the relevant factors to consider in this particular case that is not influenced by the type or age of the station involved or historical carriage. Service may be measured through geographic means: by examining the distance between the station and the cable communities subject to the deletion request and taking into account natural phenomena such as waterways, mountains and valleys which tend to separate communities. A station's broadcast of local programming, which has a distinct nexus to the cable communities, is also evidence of local service. Finally, a station's Grade A or Grade B contour coverage is an additional indicator of local service and we will weigh the presence or absence of such technical coverage accordingly. In the instant case, KTAQ does not satisfy any of the local coverage elements we find important in the market modification analysis. First, KTAQ, which broadcasts in a home shopping format, does not air programming that could be considered "local" to the cable communities at issue. Second, the cable communities involved all lie outside of KTAQ's predicted Grade B contour, and even if the Commission were to grant the station's application to increase its radiated power, which we are in no position to prejudge, it does not appear that the vast majority of cable communities would be covered. Finally, Greenville, Texas, the city of license of KTAQ, is distant, in terms of mileage, located approximately 45-85 miles from cable communities. Carriage of Other Stations 16. We also believe that Marcus' carriage of other local television stations provides support for the action requested. Where a cable operator is seeking to delete a station's mandatory carriage rights in certain communities, the issue of local coverage by other stations becomes a factor to which we will give greater weight than in cases where a party is seeking to add communities. In this case, we find the Dallas-Ft. Worth stations carried by Marcus to have a closer nexus to the cable systems herein than does KTAQ. These market facts, coupled with the distance between the cable systems and KTAQ, supports Marcus' arguments under the third factor. Viewership 17. Marcus also shows that KTAQ has no audience, despite being listed by Nielsen, in the cable communities at issue. This dearth of viewership is of evidentiary significance when tied with the lack of both historical carriage and Grade B coverage. While, in certain circumstances a home shopping station could conceivably indicate an audience by other means, such as local sales figures, we find that KTAQ's showing in this proceeding falls short because it did not adequately demonstrate that it has sold merchandise in or near the Marcus cable communities. Nonetheless, KTAQ correctly notes that the Commission has recognized that specialty stations, such as itself, typically attract limited audiences. Consequently, while of some significance, we will not heavily rely upon this factor. Summary 18. We have carefully considered each statutory factor in the context of the circumstances presented here. Given the evidence as to the lack of Grade B coverage, the lack of viewership in the cable communities at issue, the lack of carriage of KTAQ on Marcus' cable systems, and the minimal local programming, we conclude that it is logical and consistent with the objective of Section 614 of the Communications Act to delete Marcus' cable communities from KTAQ's market for mandatory carriage purposes. ORDERING CLAUSES 19. 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 captioned petition for special relief filed August 19, 1998 by Marcus Cable Associates IS GRANTED. 20. It is FURTHER ORDERED that KTAQ-TV's must carry complaint, filed on October 6, 1998, is dismissed as moot. 21. These actions are taken pursuant to  0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson, Deputy Chief Cable Services Bureau