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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 applications of ) ) File No. BALH-961017G2 WHFS, INC. ) (Assignor) ) ) and ) ) CBS INC. ) (Assignee) ) ) For Assignment of the License of WHFS-FM ) Annapolis, Maryland ) ) and ) ) CBS INC. ) File Nos. BALH-961017GL (Assignor) ) BALH-961017HA ) and ) ) WHFS, INC. ) (Assignee) ) ) For Assignment of the Licenses of ) KRRW(FM), Dallas, Texas ) and KTXQ-FM, Fort Worth, Texas ) MEMORANDUM OPINION AND ORDER Adopted: March 27, 1997 Released: March 27, 1997 1. The Commission has under consideration: (1) the above-captioned application to assign the license of WHFS-FM, Annapolis, Maryland, from WHFS, Inc. to CBS Inc. (Westinghouse/CBS), a subsidiary of Westinghouse Electric Corporation (Westinghouse); (2) Westinghouse/CBS's request for a permanent waiver of the one-to-a-market rule related to its proposed acquisition of WHFS-FM; and (3) the above-captioned applications to assign the licenses of KRRW(FM), Dallas, Texas, and KTXQ-FM, Fort Worth, Texas, from Westinghouse/CBS to WHFS, Inc. These applications, and Westinghouse/CBS's request for a one-to-a-market rule waiver are unopposed. Background 2. The transactions proposed in the above-captioned applications represent a like-kind exchange of assets between Westinghouse/CBS and WHFS. The parties propose to exchange the Annapolis station owned by WHFS, Inc. for two Dallas/Fort Worth stations owned by CBS. This exchange will enable Westinghouse to complete divestitures in Dallas/Fort Worth related to its earlier acquisition of Infinity Broadcasting Corporation and to come into compliance with the radio ownership rules in the Dallas/Fort Worth radio market. See Stockholders of Infinity Broadcasting Corporation, FCC 96-495 (Dec. 26, 1996). 3. Westinghouse, CBS's parent, is also the parent of the licensee of VHF television station WJZ-TV (CBS affiliate), Baltimore, Maryland. WHFS-FM's community of license, Annapolis, Maryland, is located in the Baltimore television market. The Grade A contour of WJZ-TV totally encompasses Annapolis; likewise the 1 mV/m contour of WHFS-FM totally encompasses Baltimore. Consequently, Westinghouse/CBS has requested a permanent waiver of the Commission's one-to-a- market rule, which would otherwise prohibit the common ownership of WHFS-FM and WJZ-TV. See 47 C.F.R.  73.3555(c). Westinghouse also controls two additional Baltimore FM stations, WXYV(FM) and WLIF(FM), and two additional Baltimore AM stations, WCAO(AM) and WJFK(AM). Westinghouse was granted a conditional waiver of the one-to-a-market rule to hold these stations in combination with WJZ-TV, subject to the outcome of the television ownership rulemaking proceeding. See Stockholders of Infinity Broadcasting Corporation, FCC 96-495 (Dec. 26, 1996). 4. Westinghouse/CBS's proposed acquisition of WHFS-FM also implicates the radio local ownership rules. In this regard, the principal community contour of WHFS-FM overlaps the principal community contours of the four Baltimore stations which Westinghouse controls. Additionally, WHFS-FM's principal community contour overlaps the principal community contours of four stations in communities in the Washington, DC area which Westinghouse controls: WJFK(FM), Manassas, Virginia; WPGC-FM, Morningside, Maryland, WPGC(AM), Morningside, Maryland; and WARW(FM), Bethesda, Maryland. Consequently, Westinghouse/CBS has submitted a showing to demonstrate that its acquisition of WHFS-FM complies with the radio local ownership rules. Westinghouse/CBS's One-to-a-Market Waiver Showing 5. Westinghouse/CBS bases its request for a one-to-a-market waiver on the standards adopted in the Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 ("Second Report and Order"), recon. granted in part, denied in part, 4 FCC Rcd 6489 (1989) (Second Report and Order Recon."). Under these criteria, the Commission presumptively favors waiver requests involving station combinations serving the top 25 markets where there remain at least 30 separately owned, operated and controlled broadcast licensees or "voices" after the proposed combination is consummated ("top 25 market/30 voice" standard). The Commission also favors requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time, e.g., four months, or that are involved in bankruptcy proceedings. See 47 C.F.R.  73.3555 note 7. Waiver requests not eligible for consideration under either the "top 25 market/30 voice" standard or the "failed station" standard are evaluated under the more rigorous case-by-case standard, as set forth in the Second Report and Order. 6. Although Baltimore is the 23rd largest television market, according to Nielsen, Westinghouse/CBS's waiver request must be evaluated under the case-by-case standard because the proposed transaction involves the common ownership of a television station and more than one same-service radio station. See Memorandum Opinion and Order in MM Docket 91-140, 7 FCC Rcd 6387, 6394 n.40 Under the case-by case standard, the commission makes a public interest determination using the following criteria: (1) the potential public service benefits of joint ownership of the facilities, such as the economies of scale, cost savings and programming and service benefits; (2) the types of facilities involved; (3) the number of media outlets owned by the applicant in the relevant market; (4) any financial difficulties involving the stations; and (5) the nature of the relevant market in light of the level of competition and diversity after the joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753-54. Not all five of the factors mentioned are necessarily relevant in each case. See Second Report and Order Recon., 4 FCC Rcd at 6491. In support of its waiver request, Westinghouse/CBS has submitted a showing which addresses each of the five case-by-case factors. 7. Benefits of Joint Operation. Westinghouse/CBS states that WHFS-FM will be operated with its existing radio and television combination and asserts that this consolidation will result in substantial cost savings. Specifically, Westinghouse/CBS estimates annual cost savings of $200,000 from combining WHFS-FM's management, accounting, engineering, legal and human resource functions with its existing station operations. Additionally, Westinghouse/CBS expects to save $50,000 by combining purchasing and promotion for WHFS-FM with its other stations. WHFS-FM will also have access to Westinghouse's corporate human resources department, which will enable the station to augment its recruitment and outreach efforts. 8. Westinghouse/CBS also asserts that the addition of WHFS-FM to its existing radio- television combination will lead to a number of public interest benefits. Westinghouse/CBS indicates that WHFS-FM will have access to the newsgathering and weather forecasting resources of WJZ-TV. Additionally, Westinghouse/CBS contends that combining stations will permit it to undertake more substantial public interest campaigns and community service projects and to devote more resources to these projects. For example, Westinghouse/CBS notes that WJZ-TV's Black History Month campaign, as well as the television station's fund raising efforts for the arts and for AIDs could be extended to WHFS-FM. Also, WHFS-FM's current charitable campaigns would benefit from increased publicity that Westinghouse/CBS could provide on its other stations. Westinghouse/CBS further states that WHFS-FM will air its "Parent's Guide to Children's Programming," an on-air radio program guide to children's informational and educational television programming. The guide is broadcast on all Westinghouse radio stations, and provides parents with on-air scheduling and content guides for educational children's programming airing on Westinghouse/CBS television stations in the same market. Additionally, in the future, WHFS-FM would broadcast statements on key issues presented by major presidential candidates during the campaign season. Westinghouse/CBS television stations carried these unedited statements during the recently concluded 1996 Presidential campaign, and Westinghouse intends to extend the presidential candidates' broadcast messages to radio in order to reach an additional audience. 9. Types of Facilities/Other Media Outlets. Westinghouse/CBS has described the facilities of the stations that comprise its proposed radio-television combination in the Baltimore market. WJZ-TV is a VHF station and a CBS affiliate operating on Channel 13 with 316 kW from a 990-foot antenna height above average terrain (HAAT). WHFS-FM is a Class B facility operating on 99.1 MHz with authorized power of 50 kW from a 459-foot antenna. WXYV(FM) and WLIF(FM) are also Class B facilities. WXYV(FM) operates on 102.7 MHz with authorized power of 50 kW from a 436-foot antenna, and WLIF(FM) operates on 101.9 MHz with authorized power of 13.5 kW from a 960-foot antenna. The AM stations in the proposed combination, WCAO(AM) and WJFK(AM), are both Class B AM stations operating at authorized power of 5 kW. Westinghouse/CBS asserts that there are numerous other comparable AM, FM and television facilities in market. Additionally, Westinghouse states that Hearst Broadcasting Corporation operates an existing radio-television combination in Baltimore, and that there are other radio combinations in the market which are composed of more than one same-service radio station. Aside from the stations listed here, Westinghouse/CBS has no other media outlets in the Baltimore market. 10. Economic Status of the Stations. Westinghouse/CBS does not claim that any of the stations in the proposed combination are in financial distress. However, Westinghouse/CBS argues that financial considerations are of less importance because a strong showing has been made that the requested one-to-a-market waiver is otherwise in the public interest. Additionally, Westinghouse/CBS asserts that the Commission has granted one-to-a-market waivers without regard to the current economic status of the stations involved, and that not all five factors of the case-by- case waiver standard must be satisfied as a precondition to approval of the requested waiver. 11. Competition and Diversity in the Market. Westinghouse/CBS contends that approval of the requested permanent waiver of the one-to-a-market rule to permit it to combine WHFS-FM with its other commonly owned radio and television stations in the Baltimore market will not have an adverse effect on the level of diversity and competition in the market. Westinghouse/CBS states that Baltimore is the 23rd largest television market, and has eight television stations (four commercial and four non-commercial) licensed to seven separate owners. Additionally, there are 38 radio stations in the Baltimore television metro market (20 FM and 18 AM), licensed to 26 separate owners. Westinghouse/CBS states that these 46 broadcast stations will constitute 30 separate broadcast "voices" following consummation of its acquisition of WHFS-FM. In addition, Westinghouse/CBS states that the Baltimore market is served by comprehensive non-broadcast media, including a cable system with a penetration rate of greater than 60 percent and at least six daily newspapers. Westinghouse/CBS claims that in terms of market competition and diversity, grant of a one-to-a-market waiver to permit the acquisition of WHFS-FM is in accord with waivers previously granted by the Commission. Discussion 12. Radio Ownership- Baltimore/Washington, D.C. We turn first to Westinghouse/CBS's compliance with our local radio ownership rules. Although WHFS-FM's principal community contour overlaps the principal community contours of commonly-owned Westinghouse radio stations licensed to communities in and around Washington, DC and Baltimore, the principal community contours of all of Westinghouse's Washington and Baltimore radio stations do not mutually overlap. A local radio market is defined by the area encompassed by the principal community contours of the mutually overlapping stations proposed to be co-owned. SeeImplementation of Section 202(a) and 202(b)(1) of the Telecommunications Act of 1996, 11 FCC Rcd 12368 (1996). We have evaluated the showing submitted by Westinghouse/CBS in order to to determine which of its Washington, DC and Baltimore-area radio stations have mutually overlapping principal community contours. We conclude that Westinghouse/CBS's radio stations in the Washington, D.C. and Baltimore area constitute three local radio markets, each composed of stations with mutually overlapping principal community contours: (1) WHFS-FM, WLIF(FM), WXYV(FM), WCAO(AM) and WJFK(AM); (2) WHFS-FM, WARW(FM), WPGC-FM, WXYV(FM), and WCAO(AM); and (3) WHFS-FM, WARW(FM), WPGC(FM), WJFK(FM), and WPGC(AM). 13. The radio local ownership rules, as mandated by the Telecommunications Act of 1996, impose numerical restrictions on the number of radio stations in the same service and on the number of radio stations overall which may be commonly owned in any given local radio market. Pub. L. No. 104-104, 202(d), 110 Stat. 56 (1996). See Implementation of Section 202(a) and 202(b)(1) of the Telecommunications Act of 1996, 11 FCC Rcd 12368. Westinghouse/CBS's showing demonstrates that there are at least 45 commercial radio stations in each of these markets. Under the radio local ownership rules, as amended by the Telecommunications Act of 1996, in a market with 45 or more commercial radio stations, a party may own up to eight commercial radio stations, no more than five of which are in the same service. Westinghouse/CBS's common ownership of WHFS-FM and its other stations in these three local radio markets in the Washington, DC and Baltimore area does not exceed the applicable overall numerical ownership limits of eight stations or the limitation on same service stations ownership. In this regard, Westinghouse/CBS's overall radio ownership in any one of the three local radio markets will not exceed a total of five stations and it will own no more than four same service stations in any one market. Thus, Westinghouse's ownership of WHFS-FM in combination with its commonly owned Baltimore and Washington, DC area stations complies with the numerical limits of the local radio ownership rules. Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of this application. We conclude that, with respect to local radio ownership, nothing suggests that Westinghouse/CBS's acquisition of WHFS-FM would be inconsistent with the public interest. See, e.g., S.E. Licensee G.P., FCC 96-464 (Nov. 27, 1996); Shareholders of Citicasters, Inc., FCC 96-380 (Sept. 17, 1996). 14. One-to-a-Market Waiver. Westinghouse/CBS has requested a permanent one-to-a- market waiver in connection with its acquisition of WHFS-FM. However, Westinghouse/CBS already controls, through temporary conditional waivers of the one-to-a-market rule, a one television/two FM/two AM station combination in this market. The addition of WHFS-FM to this station combination requires reliance on the statutory radio ownership limitations adopted in the Telecommunications Act of 1996 and incorporated in our rules. We have declined to grant requests for permanent waiver of the one-to-a-market rule for radio-television combinations that include more radio stations than were permitted prior to passage of the Telecommunications Act of 1996. See, e.g., S.E. Licensee., FCC 96-464; Citicasters, FCC 96-380. In this regard, issues related to radio- television cross-ownership remain in the pending television ownership proceeding. See Review of The Commission's Regulations Governing Television Broadcast Ownership in MM Docket Nos. 91- 221 and 87-8, FCC 96-438 (Nov. 7, 1996). We have concluded, however, that radio-television combinations exceeding a one television/two AM/two FM station combination are eligible for temporary one-to-a-market waivers conditioned on the resolution of the issues raised concerning the one-to-a-market rule in the television ownership proceeding. Such conditional waivers may be approved if they are consistent with precedent and the proposed station combination will not unduly affect competition and diversity in the relevant market. S.E. Licensee; Citicasters. For the same reasons, we conclude that a permanent, unconditional waiver to permit Westinghouse/CBS to acquire WHFS-FM would not be appropriate here, but that Westinghouse/CBS has justified a grant of a temporary waiver pending resolution of the television ownership proceeding. Our view that a temporary, conditional waiver is warranted is based in part on our analysis of Westinghouse/CBS's case-by-case showing in support of its permanent waiver request. 15. Westinghouse/CBS has demonstrated that combining WHFS-FM with its existing stations will result in substantial cost savings and economic benefits. Westinghouse/CBS estimates total additional savings of $250,000 based on operating WHFS-FM with its other stations. These cost savings will translate into public service and programming improvements. In this regard, WHFS-FM will have access to the newsgathering and weather forecasting resources of WJZ-TV, and will also broadcast a guide to children's educational and informational programming available on WJZ-TV. Additionally, public service programming and community service initiatives on the stations will be augmented. 16. The second factor of our analysis takes into consideration the types of facilities of the stations involved in the proposed radio-television combination. Westinghouse/CBS's present station combination in the Baltimore market includes stations with substantial technical facilities, including a VHF television station and one FM station operating at maximum power. WHFS-FM is also a Class B FM station operating at maximum power. However, the other stations in the proposed combination are less powerful Class B AM and FM stations, and Westinghouse/CBS has demonstrated that there are other stations with comparable facilities operating in the market. In this regard, we note that WJZ-TV competes against two other network VHF stations in the Baltimore television market. Additionally, there are three other Class B FM stations in the market operating at maximum facilities. Thus, although Westinghouse/CBS's temporary station combination includes stations with significant facilities, we find that comparable facilities do exist and that Westinghouse/CBS will not likely be able to dominate the market based on the nature of its facilities. See, e.g., Infinity Holdings Corp. of Orlando., FCC 96-494 (Dec. 26, 1996). 17. With regard to the third factor, Westinghouse/CBS will not own any media outlets in the Baltimore market other than those listed in its request for a one-to-a-market waiver. Fourth, regarding the financial status of the stations in the proposed combination, none of the stations is experiencing financial difficulties. However, not all of the five case-by-case factors must be met as a precondition to grant of a one-to-a-market waiver. The Commission has previously granted one-to- a-market waivers absent financial difficulties. Id. See, e.g., Louis C. DeArias, Receiver, 11 FCC Rcd 3662, 3666 (1996); Alta Gulf FM , Inc., 10 FCC Rcd 7750, 7751 (1995); Secret Communications, Ltd., 10 FCC Rcd 6874, 6877-79 (1995). 18. Finally, the fifth factor relates to the level of diversity and competition in the market. Indicia of the level of diversity include the number of broadcast outlets, the number of separately owned and operated "voices" in the market, and the presence of cable and non-broadcast media. The Baltimore market is ranked 23rd in the country and, according to our independent analysis of the data provided by Westinghouse/CBS, the market will have 38 radio stations (20 FM and 18 AM) and eight television stations licensed to 30 separately owned broadcast "voices" following consummation of Westinghouse/CBS's acquisition of WHFS-FM. Additionally, the market is served by a number of daily newspapers and has substantial cable penetration. 19. There is no advertising revenue data available for WHFS-FM in the Baltimore market because BIA Publications Inc. reports advertising revenue for the station in the adjacent Washington, D.C. market. Our independent analysis also indicates that Westinghouse/CBS's radio stations, excluding WHFS-FM, garner an 18.5 percent share of the radio advertising revenue in the Baltimore market. Even if we were to assume that WHFS-FM acquired a level of radio advertising revenue in the Baltimore market similar to the level it receives in Washington, D.C., it would garner approximately 8.9 percent of the radio advertising revenue. Adding this share to Westinghouse/CBS's existing 18.5 percent share would yield an aggregate share of radio advertising revenue of 27.4 percent in Baltimore. WJZ-TV garners 25 percent of television advertising revenue in the Baltimore market. Together, the television and radio stations would have a combined television and radio advertising revenue share of 26 percent if we were to assume that WHFS-FM receives a level of radio advertising revenue in Baltimore that is similar to the level it receives in Washington, D.C. Given the limited duration of the waiver, we do not believe that this level of advertising revenue is so significant as to raise a concern that diversity and competition in Baltimore will be unduly affected for the waiver period. See e.g., S.E. Licensee, G.P., FCC 96-464 (Nov. 27, 1996); Shareholders of Citicasters, Inc., FCC 96-380 (Sept. 17, 1996). 20. We conclude that grant of a conditional, temporary waiver of the one-to-a-market rule to permit Westinghouse/CBS to acquire WHFS-FM, and thus to commonly own Stations WHFS- FM, Annapolis, Maryland, WJZ-TV, WLIF(FM), WXYV(FM), WCAO(AM) and WJFK(AM), all Baltimore, Maryland, for a period of six months from the issuance of an Order in our pending television ownership proceeding is warranted. Additionally, we find that the applicants are fully qualified and that grant of the application for the assignment of the license of WHFS-FM from WHFS, Inc. to CBS Inc. would serve the public interest. 21. Radio Ownership-Dallas/Fort Worth. We have also reviewed WHFS, Inc.'s compliance with the radio local ownership rules in connection with its acquisition of KRRW(FM) and KTXQ- FM. Although WHFS, Inc. and its parent, SFX Broadcasting, Inc., do not have any attributable interests in broadcast stations in Dallas or Fort Worth, the principal community contours of KRRW(FM) and KTXQ-FM mutually overlap. There are more than 45 radio stations in the relevant local radio market. In radio markets of 45 or more radio stations, a party may own up to eight stations, no more than five of which are in the same service. See Implementation of Section 202(a) and 202(b)(1) of the Telecommunications Act of 1996, 11 FCC Rcd 12368 (1996). Therefore, WHFS, Inc.'s ownership of these two FM stations complies with the numerical limits of the radio local ownership rules. Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of this application. We conclude that, with respect to local radio ownership, nothing suggests that WHFS Inc.'s acquisition of KRRW(FM) and KTXQ-FM would be inconsistent with the public interest. See, e.g., S.E. Licensee G.P., FCC 96-464 (Nov. 27, 1996); Shareholders of Citicasters, Inc., FCC 96-380 (Sept. 17, 1996). 22. Accordingly, IT IS ORDERED, That the request for a waiver of the one-to-a-market rule, 47 C.F.R.  73.3555(c), to permit common ownership of Stations WHFS-FM, Annapolis, Maryland, WJZ-TV, WLIF(FM), WXYV(FM), WCAO(AM) and WJFK(AM), all Baltimore, Maryland, IS HEREBY GRANTED, subject to the outcome in the pending television ownership rulemaking proceeding, Second Further Notice of Proposed Rulemaking in MM Docket Nos. 91-221 and 87-8. Should divestiture be required as a result of that proceeding, CBS Inc. IS DIRECTED to file an application for Commission consent to sell the necessary stations within six months from the release of the final Order in that rulemaking proceeding. 23. IT IS FURTHER ORDERED, That, having found the applicants fully qualified, the application to assign the license of WHFS-FM, Annapolis, Maryland, from WHFS, Inc. to CBS Inc., File No. BALH-961017G2, IS HEREBY GRANTED. 24. IT IS FURTHER ORDERED, That, having found the applicants fully qualified, the applications to assign the licenses of KRRW(FM), Dallas, Texas and KTXQ-FM, Fort Worth, Texas from CBS Inc. to WHFS, Inc., File Nos. BALH-961017GL and BALH-961017HA ARE HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary