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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 of ) ) WDRQ, INC. ) (ASSIGNOR) ) ) and )File No. BALH-970421GF ) ABC, INC. ) (ASSIGNEE) ) ) For assignment of license of ) WDRQ(FM), Detroit, Michigan ) ) MEMORANDUM OPINION AND ORDER Adopted: August 4, 1997Released: August 6, 1997 By the Chief, Mass Media Bureau: 1. The Commission has before it for consideration the above captioned application to assign the license of station WDRQ(FM), Detroit, Michigan from WDRQ, Inc. to ABC, Inc.("ABC") and a related unopposed request from ABC for a four-month temporary waiver of the radio/newspaper cross-ownership rule, 47 C.F.R.  73.3555(d). ABC requests a four-month waiver to allow common ownership of WDRQ(FM), Detroit, Michigan and the Oakland Press & Reminder (Oakland Press) in Pontiac, Michigan. 2. Background. This proposed transaction is related to a broader proceeding. Chancellor Broadcasting Company, the parent of WDRQ(FM)'s current licensee, proposes to merge with Evergreen Media Corporation ("Evergreen"). In preparation for the proposed merger, Evergreen and Chancellor have each proposed to sell stations located in certain markets where the combined holdings of Evergreen and Chancellor would otherwise violate the local limits in our radio ownership rule. See 47 C.F.R.  73.3555(a). In the Detroit market, a merged Chancellor/Evergreen would own six FM stations, one more than our rules permit. Thus, to facilitate the proposed merger, Chancellor seeks to assign the license of WDRQ(FM) to ABC. 3. ABC also owns and publishes a daily newspaper, The Oakland Press, in Pontiac, Michigan. Because the 1 mV/m contour of WDRQ(FM), Detroit, encompasses Pontiac, Michigan, our radio/newspaper cross-ownership rule would prohibit ABC's acquisition of the radio station. On June 18, 1997, ABC entered into a contract to sell the newspaper to 21st Century Newspapers Acquisition, Inc., which has no interest in ABC. On July 31, 1997, the Federal Trade Commission indicated that it had no objection to the newspaper transaction, by granting early termination of the Hart-Scott-Rodino waiting period. Nevertheless, ABC requests a temporary four-month waiver of our newspaper/broadcast cross-ownership rule so that it might purchase the FM station prior to closing the newspaper sale, thereby facilitating the merger of Evergreen and Chancellor. ABC already has a temporary waiver allowing its common control of The Oakland Press with ABC's two existing Detroit radio stations, WJR(AM) and WHYT(FM). Capital Cities/ABC, Inc., 11 FCC Rcd 5841 (1996). ABC's existing waiver is conditioned upon the outcome of a pending proceeding examining our radio/newspaper cross-ownership waiver policy. Letter to Joel Rosenbloom, Ref No. 1800E1-DB (Mass Media Bureau, October 24, 1996). See Newspaper/Radio Cross-Ownership Waiver Policy, MM Docket No. 96-197, 11 FCC Rcd 13,003 (1996). 4. Discussion. The Commission generally considers permanent waivers of the daily newspaper cross-ownership rule in four instances: (1) where there is an inability to dispose of an interest in order to conform to the rules; (2) where the only sale possible is at an artificially depressed price; (3) where separate ownership and operation of the newspaper cannot be supported in the locality; and (4) where, for whatever reason, the purposes of the rule would be disserved by divestiture. Fox Television Stations, Inc., 8 FCC Rcd 5341, 5348 (1993) aff'd sub nom. Metropolitan Council of NAACP Branches v. FCC, 46 F.3d 1154 (D.C. Cir. 1995); Multiple Ownership of Standard, FM, and Television Broadcast Stations, Second Report and Order, 50 FCC 2d 1046, 1085, recon., 53 FCC 2d 589 (1975), aff'd sub nom. Federal Communications Commission v. National Citizens Committee for Broadcasting, 436 U.S. 775 (1978). In addition, as we have previously stated in cases of temporary newspaper/broadcast waivers, "[w]here mergers or transfers of multiple stations are involved, in general we believe that the benefits derived from such transactions support grant of a reasonable waiver period to effectuate the merger and permit time to come into compliance with our rules." See Multimedia, Inc., 11 FCC Rcd 4883, 4885 (1995) (quoting Stockholders of CBS Inc., 11 FCC Rcd 3733, 3755 (1995)); Capital Cities/ABC, Inc., 11 FCC Rcd 5841 (1996). 5. ABC argues that its proposed acquisition of WDRQ(FM) is directly related to the proposed merger of Evergreen and Chancellor, and would facilitate that merger. It notes that the newspaper and the radio station would be operated autonomously, with separate editorial, sales, and other personnel. Additionally, ABC maintains that, if we grant the temporary waiver for WDRQ(FM), there would remain a multiplicity of media outlets serving Pontiac and Oakland County, the area of publication and primary circulation of the newspaper. ABC has submitted a showing which indicates that there are 39 domestic commercial broadcast stations (14 AM, 18 FM, and 7 TV) that place a coverage contour over Pontiac sufficient to invoke the newspaper cross- ownership rule (the 2 mV/m contour for AM stations, the 1 mV/m contour for FM stations, and the Grade A contour for TV stations). ABC states that these commercial stations would have 21 separate owners if we permit ABC to acquire WDRQ(FM). ABC also identifies 5 noncommercial stations (3 noncommercial FM and 2 noncommercial TV) that place a 1 mV/m or Grade A contour over Pontiac, with 4 separate owners. ABC states that, in addition to the Oakland Press, two daily newspapers The Detroit Free Press and The Detroit News are widely circulated in Oakland County. ABC also lists several weekly and semi-weekly newspapers that serve Pontiac. According to ABC, Oakland County has a cable penetration rate of 68%. ABC states that there is also a construction permit outstanding for a low power television station in Pontiac. 6. ABC argues that its count of alternative media outlets, as described above, is conservative in several respects. First, it notes that it did not include 14 domestic radio stations (7 AM, 6 FM, and 1 noncommercial educational FM) with 12 separate licensees although the stations are licensed to communities in the Detroit Arbitron radio metro market, because their signals do not encompass Pontiac with a 2 mV/m, or 1 mV/m contour. Similarly, ABC points out that it has not included four additional daily newspapers (The Monroe News, Mount Clemens Macomb Daily, Port Huron Times- Herald, and Royal Oak Tribune) which are published within the Arbitron Detroit radio metro market, but which are not widely circulated in Oakland County. Finally, ABC notes that it has not included seven Canadian broadcast stations (4 AM, 2 FM, and 1 TV) although they encompass Pontiac with the relevant service contour. See generally Newspaper/Radio Cross-Ownership Policy, 11 FCC Rcd 13,003, 13,011 (1996) citing Hopkins Hall Broadcasting, Inc., 10 FCC Rcd 9764 (1995) (identifying the defining contour of broadcast stations and the area of significant circulation of newspapers, rather than Arbitron data, as the current method for evaluating diversity, but seeking comments on whether to modify this practice). 7. We agree with ABC that its acquisition of WDRQ(FM) is related to a larger merger, one basis for waiver of the rule. Although the waiver requested in the current case is one-step removed from the proposed Evergreen/Chancellor merger (in that neither of those merging companies itself owns the newspaper) there is nevertheless a strong link between ABC's proposal and that merger. See generally Infinity Holdings Corp. of Orlando, FCC 96-494 (1996) (granting an assignee (Cox) a temporary waiver of the one-to-a-market rule, 47 C.F.R.  73.3555(c), which would facilitate a merger between the assignor (Infinity) and another party (Westinghouse)). Chancellor and Evergreen, as a merged entity, could not comply with the local radio ownership rules in certain markets without selling several radio stations. ABC proposes to facilitate the merger by purchasing two of those stations: WDRQ(FM), Detroit and WJZW(FM), Woodbridge, Virginia. The purchase of the Virginia station was approved by the staff on June 27, 1997, as one of several actions taken in preparation for the proposed merger. See Viacom International, Inc., DA 97-1354 (Mass Media Bureau June 27, 1997). Due to the close connection between this transaction and the proposed Evergreen/Chancellor merger, we find ABC's waiver request consistent with our policy favoring temporary waivers to facilitate the transfer of multiple stations. 8. We also conclude, based on representations by ABC, that a temporary waiver to come into compliance with Section 73.3555(d) of our rules will not result in undue adverse effects on diversity and competition in the relevant market. In the present case ABC has submitted conservative figures demonstrating that the area of newspaper/radio overlap will be served by at least 39 commercial domestic broadcast stations owned by 21 separate parties and 3 domestic daily newspapers as well as other media sources. This level of voice diversity and competition that will prevail during the waiver period is consistent with other cases in which we have granted temporary waivers. See, e.g., Stauffer Amarillo Radio Trust, 11 FCC Rcd 14865 (1996) (4 TV stations, 1 newspaper, and 15 radio stations would serve Topeka, Kansas, of which applicant would own the newspaper and 2 radio stations); Multimedia, Inc., 11 FCC Rcd 4883 (1995) (5 commercial TV, 22 commercial radio stations, and two daily newspaper would serve Cincinnati, Ohio, of which applicant would own one TV and one newspaper). 9. Moreover, the four-month period that ABC requests is relatively short. We have stated in recent cases that a temporary waiver of twelve months from the date of consummation of a merger or other multiple-station transaction is a generally acceptable period which properly accommodates our interests in promptly ensuring compliance with our rules and in affording parties ample time to locate potential purchasers and to negotiate purchase agreements to divest radio stations and/or newspapers. Multimedia, Inc., 11 FCC Rcd at 4885; see Stockholders of Renaissance Communications Corp., FCC 97-98 (March 21, 1996); Capital Cities/ABC, Inc., 11 FCC Rcd 5841, 5895 & n.62 (1996); Stockholders of CBS Inc., 11 FCC Rcd at 3755-56. In this case, of course, the buyer has already been located and has received necessary antitrust clearances to proceed. Thus, ABC's request for a four-month waiver to sell its newspaper, pursuant to an existing agreement, appears reasonable. 10. Accordingly, finding the parties fully qualified and that grant of the application would serve the public interest, IT IS ORDERED, that the above-captioned application to assign the license WDRQ(FM) from WDRQ, Inc. to ABC, Inc. (File No. BALH-970421GF) IS GRANTED. 11. IT IS FURTHER ORDERED, that the request for temporary waiver of Sections 73.3555(d) IS GRANTED, subject to the condition that within four months of the date of consummation of the proposed transfer of WDRQ(FM) from WDRQ, Inc. to ABC, Inc., ABC divests itself of its interest in The Oakland Press or takes such other action as may be necessary to bring it into compliance with Section 73.3555(d)(2) of the Commission's rules. Should the parties need to request an extension of this four-month waiver period for any reason, they must make such request no fewer than 30 days before the end of the four-month waiver period. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau