NEWSReport No. MM 96-8 MASS MEDIA ACTION February 8, 1996 FCC GRANTS THE APPLICATIONS FOR TRANSFER OF CONTROL OF BROADCAST LICENSES AND PERMITS OF CAPITAL CITIES/ABC, INC. TO THE WALT DISNEY COMPANY AND GRANTS VARIOUS WAIVERS OF ITS MULTIPLE OWNERSHIP RULES, WHILE DENYING OTHERS The FCC has granted applications approving the transfer of control of the broadcast licenses and permits of Capital Cities/ABC, Inc. (CC/ABC) to The Walt Disney Company (Disney). CC/ABC is a publicly traded media corporation which directly, or through its subsidiaries, operates the ABC Television Network and the ABC Radio Networks. Additionally, CC/ABC provides programming for cable television, has a controlling interest in ESPN, Inc. and Lifetime Television, and publishes daily and weekly newspapers. It is also directly or indirectly the licensee of 10 full-service television stations, 11 AM radio stations and 10 FM stations. Disney is a diversified international entertainment company with operations in filmed entertainment, theme parks and resorts, and consumer products. It is also indirectly the licensee of KCAL-TV, Los Angeles. The applications sought both permanent and temporary waivers of the FCC's ownership rules, including: (1) a permanent waiver of the duopoly rule to permit Disney to continue CC/ABC's common ownership of a television station in Philadelphia and in New York City; (2) a temporary waiver of the duopoly rule to permit Disney to control KCAL- TV and KABC-TV, both licensed to Los Angeles; (3) six permanent waivers of the one-to-a- market rule involving television and radio stations commonly owned by CC/ABC in New York, Chicago, Detroit-Flint, Detroit-Toledo, Los Angeles and San Francisco; (4) two permanent waivers of the newspaper-broadcast cross-ownership rule to permit Disney to continue CC/ABC's common ownership of radio stations in Detroit and the Oakland Press & Reminder in Pontiac and its ownership of radio stations in Fort Worth and the Fort Worth Star-Telegram. (over) - 2 - Petitions to deny the applications were filed by the United Church of Christ, filing jointly with three other parties (UCC), and by the Small Cable Business Association (SCBA). UCC contended that Disney had not justified its request for an 18-month temporary duopoly waiver in Los Angeles or its request for permanent waivers of the newspaper-broadcast cross-ownership rule for Detroit and Fort Worth. UCC argued that the Commission should either deny the waivers or seek children's or political programming commitments from Disney to support the waivers. UCC also suggested that Disney's children's programming performance as the licensee of KCAL-TV had been "inadequate" as measured by criteria proposed in pending Commission proceedings or by comments filed in those proceedings. It therefore asked the FCC to seek reassurances from Disney that it will not operate the ABC network in a similar manner. SCBA's petition raised questions concerning the adverse competitive effects on small cable operators of CC/ABC's business practices, including its pricing of program material. The FCC concluded that in this transfer proceeding it could not, in fairness, apply standards that have not been adopted in evaluating the sufficiency of Disney's past children's programming efforts. To the extent UCC's argument suggested that Disney failed, under existing criteria, to meet its children's programming obligations under the Children's Television Act (CTA), the Commission found these allegations to be without foundation. In a transfer case, the FCC noted, the question presented by UCC's allegations is whether the conduct of the licensee demonstrated a pattern of behavior involving persistent and unremedied violations of the CTA. Viewing Disney's record at KCAL-TV as a whole, the Commission found no such pattern. The FCC also found no basis on which to seek reassurances from Disney concerning its future operation of the ABC network. With respect to the SCBA petition, the Commission recognized the variety of difficulties faced by small cable operators in competing with larger operators, including issues of program pricing. The FCC found, however, that SCBA's petition had not made a prima facie showing that grant of the particular applications in this case would not be in the public interest. The FCC granted Disney a permanent waiver of the duopoly rule to permit it to continue CC/ABC's common ownership of WPVI-TV in Philadelphia and WABC-TV in New York City. It also granted permanent waivers of the one-to-a-market rule to permit Disney to retain CC/ABC's ownership of radio-television station combinations in six urban markets (Chicago, New York, Detroit-Flint, Detroit-Toledo, Los Angeles and San Francisco). The Commission found, however, that an extended temporary waiver of the duopoly rule permitting Disney to control two (KCAL-TV and KABC-TV) of the seven VHF stations licensed to Los Angeles had not been justified in this case. It therefore granted Disney a six-month waiver and directed it to file an application to divest either KCAL-TV or KABC-TV within that period. - 3 - The FCC also determined that permanent waiver of the newspaper-broadcast rule for CC/ABC's Detroit and Fort Worth newspaper-radio combinations had not been justified under existing criteria for such waivers and that this restricted, adjudicatory proceeding was not the appropriate forum in which to amend its waiver policies. Accordingly, the FCC granted Disney temporary 12-month waivers of the newspaper-broadcast rule in Detroit and Fort Worth. The Commission acknowledged that a review of its waiver policies in the newspaper- broadcast area was warranted and expressed its intent to promptly commence an open proceeding in which all interested parties could participate and in which it could develop a fully informed record to conduct such a review. Action by the Commission February 8, 1996, by Memorandum Opinion and Order (FCC 96-48). Chairman Hundt, Commissioners Barrett and Ness, with Commissioners Quello and Chong approving in part and dissenting in part. - FCC - News Media contacts: David Fiske and Rosemary Kimball at (202) 418-0500. Mass Media Bureau contact: Robert Ratcliffe at (202) 418-2600.