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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 Application s of) ) Pappas Telecasting of the Midlands, ) a California Limited Partnership ) File No. BPCT-950804KG ) Steven Soldinger, d/b/a SiouxLand ) Broadcast Associates ) File No. BPCT-951106KO ) Hinton Telecasting ) File No. BPCT-951107KH ) For a Construction Permit for a New ) Television Station on Channel 44 ) at Sioux City, Iowa ) ) MEMORANDUM OPINION AND ORDER Adopted: February 25, 1997 Released: February 25, 1997 By the Chief, Mass Media Bureau: 1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it for consideration the above-captioned, mutually exclusive applications for a construction permit for a new commercial television station to operate on Channel 44 at Sioux City, Iowa. Also before the Commission is a Joint Motion for Approval of Settlement Agreements between Pappas Telecasting of the Midlands, a California Limited Partnership (Pappas Telecasting) and Steven Soldinger, d/b/a/ SiouxLand Broadcast Associates (Soldinger), and between Pappas Telecasting and Hinton Telecasting (Hinton). 2. Pappas Stations Partnership, an affiliate of Pappas Telecasting, is the licensee of KPTM(TV), Channel 42 (Fox), Omaha, Nebraska, and has been granted a construction permit to expand the Grade B contour of KPTM(TV). Because the predicted Grade B contours of the proposed new station in Sioux City and of KPTM(TV), as modified, will overlap, Pappas Telecasting requests a permanent waiver of the duopoly rule, 47 C.F.R.  73.3555(b). 3. In support of its request, Pappas Telecasting asserts that there is no Grade A contour overlap, and that the degree of Grade B contour overlap between the proposed Sioux City station and KPTM(TV), as modified by the terms of the construction permit, is well below the degree of Grade B overlap that has been permitted by the Commission in prior duopoly cases. According to Pappas Telecasting's engineering study, the predicted Grade B overlap between the new Sioux City station and KPTM(TV), as modified, encompasses 663 square kilometers, representing 2.1% and 1.9% of the land area within the Grade B contours of the new station and KPTM(TV), respectively, and 2,684 people, representing 0.7% and 0.2% of the populations within the Grade B contours of the new station and KPTM(TV), respectively. 4. Pappas Telecasting also identifies a number of television stations and other media available to residents of the overlap area. According to Pappas Telecasting's engineering study, five television stations provide service to the entire overlap area, and an additional five television stations and one television translator provide service to a portion of the overlap area. Pappas Telecasting asserts that this number of broadcast television stations serving at least a portion of the overlap area is comparable to other cases in which the Commission has waived the duopoly rule. Moreover, Pappas Telecasting notes the existence of numerous AM and FM radio stations serving the overlap area, the availability of several weekly newspapers, and the offering of service by four cable television providers in the overlap area. 5. Finally, Pappas Telecasting points out that KPTM(TV) and the new Sioux City station serve separate and distinct markets, the 75th and 140th largest Designated Market Areas (DMAs), respectively, in the United States, and that Omaha and Sioux City are 89 miles apart and are located in different states. Given this geographic separation, Pappas Telecasting contends that common ownership of the two stations will not result in an undue concentration of economic power, particularly as KPTM(TV) does not have a dominant position in the overlap area and the proposed Sioux City station, as a new entrant in the market, is unlikely to possess significant market power. Pappas Telecasting also states that, although KPTM(TV) personnel will be involved in a number of the new station's operations, the Sioux City station will have its own general manager/sales manager, sales and production staff, engineer and support personnel, all of whom will be located in Sioux City. Thus, Pappas Telecasting asserts that the operations of the proposed Sioux City station will to a significant degree be separate and independent from those of KPTM(TV). 6. The television duopoly rule, 47 C.F.R.  73.3555(b), generally prohibits the common ownership of television stations whose Grade B contours overlap. The objective of the duopoly rule is to promote diversity in programming sources and viewpoints and to prevent an undue concentration of economic power by fostering economic competition in broadcasting. Multiple Ownership Rules, 22 FCC 2d 306, 307 (1970), recon. granted in part, 28 FCC 2d 662 (1971). In adopting the duopoly rule's fixed standard of a prohibited overlap of Grade B service contours, the Commission expressly acknowledged the need for "flexibility" in that rule's application, noting that waivers should be granted where rigid conformance to the rule would be "inappropriate." Multiple Ownership of Standard, FM and Television Broadcast Stations, 45 FCC 1476, 1479 n.12, recon. granted in part, 3 RR 2d 1554 (1964). The Commission has accordingly developed a set of factors to be considered when evaluating an applicant's request for permanent or temporary waivers of the duopoly rule, including the extent of the overlap, the number of media voices available in the overlap area, the distinctiveness of the respective markets, the independence of the stations' operations, and the concentration of economic power resulting from the combination. Iowa State University Broadcasting Corporation, 9 FCC Rcd 481, 487-88 (1993), aff'd sub nom. Iowans for WOI-TV, Inc. v. FCC, 50 F.3d 1096 (D.C. Cir. 1995); H & C Communications, Inc., 9 FCC Rcd 144, 146 (1993). After weighing these various factors, the Commission considers whether the public interest benefits that would be gained from waiving the duopoly rule outweigh any detrimental effects that would result from grant of the waiver. As with any waiver, it will only be granted if the Commission concludes that the waiver is in the public interest. 7. The Commission is currently reexamining its broadcast television ownership policies, including the duopoly rule. In January 1995, the Commission proposed a new analytical framework within which to evaluate the broadcast television ownership rules. See Review of the Commission's Regulations Governing Television Broadcasting, Further Notice of Proposed Rule Making, 10 FCC Rcd 3524 (1995) (Television Ownership Further Notice). Subsequent to the release of that Television Ownership Further Notice, Congress directed the Commission to conduct a rulemaking proceeding to determine whether to retain, modify or eliminate existing limitations on the number of television stations that an entity may control within the same television market. See Section 202(c) of Telecommunications Act of 1996, Pub. L. No. 104- 104, 110 Stat. 56 (Feb. 8, 1996) (Telecomm Act). In response to this Congressional directive in the Telecomm Act and to update the record, the Commission recently released another further notice of proposed rulemaking. See Review of the Commission's Regulations Governing Television Broadcasting, Second Further Notice of Proposed Rule Making, FCC 96-438 (released Nov. 7, 1996) (Television Ownership Second Further Notice). In the Television Ownership Second Further Notice, the Commission tentatively concluded to authorize temporary common ownership of television stations that are in separate DMAs and whose Grade A contours do not overlap. 8. The Commission stated in that Second Further Notice that it will, during the pendency of the television ownership proceeding, generally grant duopoly waivers involving stations in different DMAs with no overlapping Grade A signal contours, conditioned on coming into compliance with the outcome of the proceeding within six months of its conclusion. Id. at  57. It also noted there its tentative conclusion that the record in that proceeding "supports relaxation of the geographic scope of the duopoly rule from its current Grade B overlap standard to a standard based on DMAs supplemented with a Grade A overlap criterion." Id. The Commission further stated that "we do not believe granting waivers satisfying the proposed standard, and conditioning them on the outcome of this proceeding, will adversely affect our competition and diversity goals in the interim." Id. Additionally, the Commission gave the staff delegated authority to act on applications seeking waivers consistent with this interim policy. 9. Given the clearly articulated policy in the Television Ownership Second Further Notice, we do not believe that an unconditional grant of Pappas Telecasting's duopoly waiver request is appropriate. WHOA-TV, Inc., FCC 96-458 at  12-13; 27 (released Dec. 10, 1996). We conclude, however, that grant of a conditional waiver of the duopoly rule, subject to the outcome of the pending ownership rulemaking, is justified. In this case, the Grade A contours of KPTM(TV) and the new Sioux City station do not overlap, and the stations are located in separate DMAs. Moreover, our examination of the record presented here reveals nothing suggesting that we should not follow the established interim policy in this case. Accordingly, we believe that grant of a temporary, conditional waiver to permit the common ownership of KPTM(TV) and the new Sioux City station, subject to the outcome of the television ownership proceeding, is appropriate. Finally, having found Pappas Telecasting qualified in all respects, we conclude that grant of its application for a construction permit for a new station at Sioux City would serve the public interest, convenience and necessity. 10. Accordingly, IT IS ORDERED, That the Joint Motion for Approval of Settlement Agreements IS GRANTED, and the applications of Steven Soldinger, d/b/a/ SiouxLand Broadcast Associates (BPCT-951106KO), and Hinton Telecasting (BPCT-951107KH) ARE DISMISSED WITH PREJUDICE. 11. IT IS FURTHER ORDERED, That the request for a permanent waiver of the duopoly rule, Section 73.3555(b) of the Commission's rules, to permit common ownership of KPTM(TV), Omaha, Nebraska and the proposed new station on Channel 44 at Sioux City, Iowa, IS DENIED. 12. IT IS FURTHER ORDERED, That a conditional waiver of Section 73.3555(b) IS GRANTED to permit common ownership of KPTM(TV) and the proposed new station on Channel 44 at Sioux City, Iowa, subject to the outcome of the Commission's pending broadcast television ownership rulemaking (MM Docket Nos. 91-221 and 87-8). Should divestiture be required as a result of that proceeding, the licensee is directed to file, within six months from the release of the final order in MM Docket Nos. 91-221 and 87-8, an application for Commission consent to dispose of such station as would be necessary for Pappas Telecasting of the Midlands, a California Limited Partnership, to come into compliance with the rules as provided in the final order. 13. IT IS FURTHER ORDERED, That the application of Pappas Telecasting of the Midlands, a California Limited Partnership, for a construction permit for a new television station on Channel 44 at Sioux City, Iowa (BPCT-950804KG) IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau