******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) Xenia Broadcasting, Inc. ) File Nos. BAL-980302GE (Assignor) ) BALH-980302GF ) BALH-980302GG and ) ) Cox Radio, Inc. ) (Assignee) ) ) For Assignment of Licenses of ) WPTW(AM), Piqua, Ohio ) WCLR (FM), Piqua, Ohio ) WZLR (FM), Xenia, Ohio ) MEMORANDUM OPINION AND ORDER Adopted: September 18, 1998 Released: September 18, 1998 By the Chief, Mass Media Bureau: 1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it: (1) the above-captioned application for assignment of the licenses of WPTW(AM) and WCLR(FM), Piqua, Ohio and WZLR(FM) Xenia, Ohio from Xenia Broadcasting, Inc. ("Xenia") to Cox Radio, Inc. ("Cox"); and (2) a related request for a temporary, conditional waiver of 47 C.F.R.  73.3555(c), the Commission's one-to-a-market rule, which restricts common radio and television station ownership in the same market. The application and the waiver request are unopposed. For the reasons set forth below, we grant the assignment application and a conditional waiver of our one-to-a-market rule. 2. Cox is wholly owned by Cox Enterprises, Inc. ("CEI"), which through its subsidiaries controls VHF television station WHIO-TV (CBS affiliate), FM station WHKO(FM), and AM station WHIO(AM), all licensed to Dayton, Ohio. Grant of the instant assignment application would create a new radio- television station combination because the Grade A contour of WHIO-TV encompasses the entire communities of license of WPTW(AM) and WCLR(FM) in Piqua, Ohio and WZLR(FM) in Xenia, Ohio. Cox's proposed acquisition of these stations also implicates the radio local ownership rules. Consequently, Cox has submitted a showing to demonstrate that its acquisition of WPTW(AM), WCLR(FM) and WZLR(FM) complies with the radio local ownership rules and has requested a temporary one-to-a-market rule waiver to permit common ownership of one TV, three FM and two AM stations in the Dayton DMA, the 53rd largest. The waiver is subject to the outcome of the television ownership proceeding, in which the Commission is considering issues related to radio/television cross- ownership. See infra  14. One-to-a-Market Waiver Showing 3. Cox bases its request on the one-to-a-market waiver standards adopted in the Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 (1989) ("Second Report and Order"), recon. granted in part and 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 are at least 30 separately owned, operated, and controlled broadcast licensees or "voices" after the proposed combination ("top 25 market/30 voice standard"). The Commission also favors waiver requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time or that are in bankruptcy proceedings. Otherwise, the requests must be evaluated under a more rigorous case-by-case approach. See 47 C.F.R.  73.3555, note 7. 4. We shall review Cox's waiver request under the case-by-case standard because Dayton is the 53rd largest DMA in the country and there is no claim that any of stations WPTW(AM), WCLR(FM) or WZLR(FM) are "failed stations," as defined by the Commission. Moreover, evaluation of the waiver request under the case-by-case standard is appropriate because the proposed transactions involve the common ownership of more than one same-service radio station with a television station. See Memorandum Opinion and Order, MM Docket 91-140, 7 FCC Rcd 6387, 6394 n. 40 (1992). Under the case-by-case standard, the Commission makes a public interest determination based upon the following five criteria: (1) the potential public service benefits that will arise from the joint operation of the facilities involved, such as 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) the financial difficulties of the stations involved; and (5) the nature of the relevant market in light of the level of competition and diversity after joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753-54. In enunciating the five factors to be considered under the case-by-case standard, the Commission noted that not all five factors must be satisfied in each case, but rather the overall consideration of these factors must weigh in favor of granting the waiver request. Second Report and Order Recon., 4 FCC Rcd at 6491. In support of its waiver request, Cox submits a showing which addresses each of the five factors. 5. Public Service Benefits of Joint Operation. Cox contends that the proposed combination of WPTW(AM), WCLR(FM) and WZLR(FM) with WHIO(AM), WHKO(FM) and WHIO-TV would create efficiencies that would result in annual savings of $630,123 and a one time savings of $256,500, totaling approximately $886,623. Specifically, Cox states that consolidation of management, administration, data processing, professional services and news and public affairs personnel would result in estimated annual savings of approximately $50,523. The shared use of technical staff for consultation and tower maintenance and inspection will result in annual savings of $7,000. Bulk discounts on services, supplies and major capital items would save an estimated $32,000 per year. Combined studio usage will save at least $120,000 in rent a year. Presently, the Piqua/Xenia stations do not have news, weather or traffic departments. Cox estimates that it would cost over $120,000 per year for the stations to provide these services which will become available under the proposed common ownership. In addition, by providing for shared news resources, such as wire services and stringers, Cox estimates that it will save $17,500 annually. Common ownership will permit the stations to access WHIO-TV's weather tracking equipment at an estimated one time savings of $200,000 and Cox's school watch system, with a one time savings of $6,500 and an annual savings of $1,000. Cox foresees significant savings in the combined operations of the stations' sales and marketing efforts, expecting to realize an annual savings of $20,000 from market research costs and $10,000 from Arbitron subscription fees. Combined purchasing of advertising and promotional expenses would save approximately $230,100. Consolidation of sales operations will result in a one time savings of $50,000 and annual savings of $10,000 associated with the operation of the stations' traffic system and $11,000 in fees and marketing supplies. 6. Cox asserts that the communities of Piqua and Xenia will benefit from the economic efficiencies created by the proposed combination through improved programming and public service benefits. Cox states that efficiencies associated with common ownership will allow it to significantly enhance the Piqua/Xenia stations' traffic and weather reports. Specifically, WPTW(AM), WCLR(FM) and WZLR(FM) will have access to WHIO-TV's extensive meteorological resources and, in times of emergency, consolidated operations will permit in-depth coverage over a broad geographic area and the simulcasting of reports. In addition, by accessing WHIO(AM)'s comprehensive traffic monitoring system, the Piqua/Xenia stations will be able to update listeners more frequently on traffic and road conditions. Furthermore, combined ownership will permit Cox to pool its resources in producing public affairs programs for its stations. Cox plans to produce three new weekly public affairs programs, all entitled Miami Valley Reports, which will air on each of the Piqua/Xenia stations. Its commitment to airing local public affairs programs also includes coverage of the Piqua and Xenia communities in the Dayton stations' newscasts. Cox anticipates that the stations will collaborate on addressing community issues and participate in joint interviews for local public affairs programs, fostering increased involvement in the communities and greater exploration of ascertained community issues. Common ownership will allow Cox to telecast remote community events such as town meetings, sporting events and political debates on WHIO-TV and simulcast those events on one or more of the radio stations. In addition, the Piqua/Xenia stations will have access to the audio feeds of WHIO-TV's news and weather bulletins and live coverage of local emergencies, as well as access to the television station's local news programming for rebroadcast. Cox states that common ownership will foster further interaction with the communities of Piqua and Xenia. For example, Cox will name a public affairs director for WZLR(FM) and WCLR(FM) to explore public service activities within the stations' respective communities. The proposal will also enable the stations to engage in joint minority and female recruitment efforts, sharing information concerning sources, referrals and prospective applicants. Finally, Cox currently operates an Internet website for its Dayton stations and plans to expand this website to include information concerning the Piqua/Xenia stations. Expansion of this website will provide an additional opportunity for the stations to engage in cross-promotion, publicize job opportunities, and promote public affairs programming and community events. 7. Types of Facilities. Regarding the three stations Cox proposes to acquire, WPTW(AM) is a Class B station that operates on 1570 kHz at 250 watts both day and nighttime, with a non-directional antenna; WCLR(FM) is a Class B station that operates on 95.7 MHz with 50,000 watts effective radiated power ("ERP") at 145 meters antenna height above average terrain ("HAAT"); WZLR(FM) is a Class A station that operates on 95.3 MHz with 6000 watts ERP at 98 meters antenna HAAT. With respect to the radio stations already controlled by Cox or through its related corporations, WHIO(AM) is a Class B station that is licensed at 1290 kHz and operates at 5,000 watts, with a non-directional daytime antenna and a directional nighttime antenna, while WHKO(FM) is a Class B station operating on 99.1 MHz with 50,000 watts ERP at 325 meters antenna HAAT. Lastly, WHIO-TV is a VHF station operating on Channel 7 as a CBS network affiliate, and operates with 200,000 watts authorized power at 348 meters antenna HAAT. 8. Cox contends that the Piqua/Xenia stations are comparable in size and power to many other stations in the Dayton radio market. Specifically, Cox asserts that there are at least five other Class B FM commercial stations operating at 50 kW, two Class B AM stations operating at 5 kW, and one Class A FM commercial station operating at 6 kW. With respect to television stations serving the market, Cox contends that WHIO-TV competes with one commercial VHF station and four powerful commercial UHF stations in the Dayton DMA. All six of the commercial stations are network affiliates. One noncommercial television station also operates in the Dayton DMA. 9. Other Media Outlets. As noted, CEI, the parent corporation of Cox, owns the Miami Valley Broadcasting Corporation, licensee of television station WHIO-TV, Dayton, Ohio, as well as WHIO, Inc., licensee of WHIO(AM) and WHKO(FM), Dayton, Ohio. In addition to these Dayton radio and television stations, CEI, through subsidiary companies, owns the Dayton Daily News and Springfield News-Sun, both daily newspapers serving the Dayton market. Cox contends that, because the 1m/Vm contours of WCLR(FM) and WZLR(FM) and the 2 mV/m contour of WPTW(AM) do not encompass the cities of Dayton and Springfield, no waiver of the radio-newspaper cross-ownership rule, 47 C.F.R.  73.3555(d), is required. 10. Economic Status. Cox states that, while none of the broadcast stations at issue face financial distress, the Piqua/Xenia stations are not strong competitors in the Dayton radio market. At best, Cox contends, the Piqua/Xenia stations break even and have operated with only a marginal operating budget. Cox asserts that low Arbitron audience share ratings are indicative of the Piqua/Xenia stations' deficient financial situation and ability to perform in the market. 11. Competition and Diversity in the Market. The final factor in Cox's showing is the nature of the relevant market in light of the Commission's concerns about diversity and competition. Cox's submission indicates that there are a total of 33 radio stations in the Dayton market, 21 commercial stations and 12 noncommercial stations. Following the proposed acquisition, the Dayton market will have eleven separately owned commercial radio voices and twelve separately owned noncommercial radio voices. Cox also states that there are seven full-power television stations, including WHIO-TV, in the Dayton DMA, controlled by seven separate owners. Additionally, Cox states that Dayton is served by three low power television stations, one independently operated Multipoint Distribution Service and six independently operated Multichannel Multipoint Distribution Services. The cable penetration in the Dayton television market is 69%. Cox further asserts that the Dayton market is served by a substantial number of newspapers and that the two Cox-owned newspapers compete with five other daily newspapers, as well as fourteen weekly newspapers, including those owned by other group newspaper publishers. Thirteen other daily newspapers are published in the Dayton DMA. It contends that national publications such as the Wall Street Journal and USA Today provide additional competition to the market. Discussion 12. Radio Ownership Rules. We turn first to Cox's compliance with our local radio ownership rules. 47 C.F.R. 73.3555(a)(1). Our analysis of the data submitted indicates that Cox's proposed common ownership of the Piqua/Xenia radio stations and the Dayton radio stations creates two separate radio markets under the Commission's rules. The first radio market (Market #1) is defined by the principal community contours of radio stations WCLR(FM), WHKO(FM), WHIO(AM) and WPTW(AM). There are 64 commercial radio stations, including 28 AM and 36 FM stations whose principal community contours overlap Market #1. The second radio market (Market #2) is defined by the principal community contours of WHKO(FM), WZLR(FM) and WHIO(AM). The principal community contours of fifty-five commercial radio stations, including 24 AM and 31 FM stations, overlap Market #2. In markets of this size, Commission rules permit Cox to own up to eight radio stations, no more than five of which may be in the same service. 47 C.F.R.  73.3555(a)(1)(i). Here, Cox's radio holdings will not exceed four stations in either market - two FM and two AM radio stations in Market #1 and two AM and one FM in Market #2. Accordingly, Cox's proposed ownership of four commercial radio stations, two FM and two AM, in Market #1 and three commercial radio stations, one FM and two AM, in Market #2, complies with the numerical local ownership cap for radio stations. Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of the applications under the radio ownership rules. We conclude that, with respect to local radio ownership, Cox's acquisition of WPTW(AM), WCLR(FM) and WZLR(FM) would serve the public interest. 13. One-to-a-Market Waiver. Turning to the substance of Cox's one-to-a-market waiver request, we will follow the policy established in recent one-to-a-market waiver cases where the radio component to a proposed combination exceeds those permitted prior to the adoption of the Telecommunications Act of 1996. See Maximum Media, Inc., 12 FCC Rcd 3391, 3395-96 (1997); see also S.E. Licensee G.P., 11 FCC Rcd, 16727, 16732-33 (1996); Shareholders of Citicasters, Inc., 11 FCC Rcd 19135, 19143 (1996). In such cases, the Commission declined to grant permanent waivers of the one-to-a-market rule, and instead where appropriate, granted temporary waivers conditioned on the outcome of related issues raised in the television ownership rulemaking proceeding. Second Further NPRM, 11 FCC Rcd at 21689. Similarly, we conclude that a permanent, unconditional waiver would not be appropriate here. Cox has, however, demonstrated sufficient grounds for us to grant a temporary waiver conditioned on the outcome of the rulemaking proceeding. 14. As to the first criterion, the potential public service benefits of joint ownership, the Commission considers the public service benefits that could result from the proposed radio-television combination, such as projected economies of scale, cost savings and program and service benefits. Second Report and Order, 4 FCC Rcd at 1753. Cox has demonstrated that combining WPTW(AM), WCLR(FM) and WZLR(FM) with its existing stations will result in substantial cost savings of approximately $630,000 annually and a one time savings of $256,500. These cost savings will translate into public service and programming improvements. In this regard, WPTW(AM), WCLR(FM) and WZLR(FM) will have access to the newsgathering and weather forecasting resources of WHIO-TV, as well as the traffic monitoring system of WHIO(AM). In the event of an emergency, the consolidated operations will permit coverage over a broad geographic area and the simulcasting of reports. Cox will share the advanced technology and equipment of its currently owned stations with stations WPTW(AM), WCLR(FM) and WZLR(FM) and these stations will have access to the audio feeds of WHIO-TV's news and weather bulletins and live coverage of local emergencies, as well as access to the television station's local news programming for rebroadcast. In addition to greater accessibility to extensive operational resources, Cox specifically plans to increase its public service programming by producing three new weekly public affairs programs which will air on the Piqua and Xenia stations. Furthermore, Cox will expand the Dayton stations' newscasts to include coverage of the communities of Piqua and Xenia. Community service initiatives will be augmented through the appointment of a public affairs director for WZLR(FM) and WCLR(FM) to investigate public service opportunities within the stations' respective communities, and the engagement in joint minority and female recruitment efforts, sharing information concerning sources, referrals and prospective applicants. Finally, Cox proposes to expand its current Website to include information concerning the Piqua and Xenia stations, providing the stations with an additional opportunity to promote their public affairs programming and community events. 15. While Cox's commonly owned facilities will be significant in technical terms, our independent analysis verifies that there are competing stations with comparable facilities including at least three other group owners with existing multiple AM-FM combinations. The Commission's "concern with the types of facilities merging under the authority of a one-to-a-market waiver reflects our interest in assessing the potential impact of a proposed combination of stations in a given market in order that we might predict and avoid any significant adverse effect on diversity or competition from too powerful a combination." Great American Television and Radio Co., Inc., 4 FCC Rcd at 6349-50. Two of the three FM stations in Cox's proposed combination are Class B stations, and our analysis shows that there are at least five additional commercial Class B FM stations in the Dayton TV metro market, as well as three additional noncommercial Class B FM stations. All five of these commercial Class B stations are technically comparable to WHKO(FM), the most powerful FM in Cox's proposed combination. With regard to the two AM stations in Cox's proposed combination, there are at least two additional AM stations in the Dayton TV metro market with facilities that are technically comparable to Cox's most powerful AM station, WHIO(AM). Our independent analysis also indicates that aside from Cox's WHIO-TV, there is one other commercial VHF station, four commercial UHF stations, and one noncommercial television station in the Dayton DMA. One of these stations, VHF station WDTN, an ABC affiliate, has technical facilities that are comparable to those of WHIO-TV, a CBS affiliate. 16. With respect to financial conditions, as stated earlier, neither WPTW(AM), WCLR(FM), nor WZLR(FM) are failed stations, nor has Cox demonstrated financial distress. However, we previously have indicated that not all five factors need be present to justify grant of a waiver. Second Report and Order Recon., 4 FCC Rcd at 6491. We also have granted a number of one-to-a-market waivers where there was no finding that any of the stations were in financial distress. See, e.g., DeArias, 11 FCC Rcd at 3662; Alta Gulf FM, Inc., 10 FCC Rcd 7750, 7751 (1995); Henry Broadcasting Co., 11 FCC Rcd 1175 (1995); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 9495 (1995); Secret Communications Ltd., 10 FCC Rcd 6874 (1995). 17. Regarding Cox's media holdings, we find that the proposed combination would not create undue concentration of ownership and control in the Dayton market, the 53rd largest DMA. We have verified that there are 33 radio stations in the Dayton TV metro market licensed to 21 separate owners. There are also seven commercial and noncommercial television stations including WHIO-TV in the Dayton DMA controlled by seven separate owners. After the proposed transaction, these 40 radio and television stations would be operated by 27 separate broadcast owners. Additionally, Cox states that there are several other media outlets in the market, including three low power television stations, an independently operated Multipoint Distribution Service, seven daily newspapers in the Dayton metro market and 15 daily newspapers in the Dayton DMA. We also note that the cable penetration rate for the Dayton market has reached 70% of TV households. Finally, we recognize that the radio-newspaper cross- ownership rule, 47 C.F.R.  73.3555(d), is not implicated in the proposed transaction, as the 1mV/m contours of WCLR(FM), Piqua, Ohio and WZLR(FM), Xenia, Ohio, and the 2mV/m contour of WPTW(AM), Piqua, Ohio do not encompass the cities of Dayton and Springfield. We conclude that this level of diversity is consistent with levels approved in previous waiver requests. See, e.g., Paso Del Norte Broadcasting Corp., 12 FCC Rcd 6876 (1997) (20 "voices" in 99th ranked market); Triad Skywaves, Inc., 12 FCC Rcd 6102 (1997) (22 "voices" in 46th ranked market); Moosey Communications, Inc., 8 FCC Rcd 5247 (1993) (24 "voices" in 141st ranked market). 18. With respect to economic concentration and competition, our independent analysis indicates that WHIO-TV garners 40.6 percent of television advertising revenues in the Dayton DMA. Cox's existing radio stations garner 24.1 percent of radio advertising revenues. The acquisition of WPTW(AM), WCLR(FM) and WZLR(FM) will result in only a 2.4 percent increase in Cox's existing share for a total of 26.5 percent of radio advertising revenues in the Dayton Radio Metro Market. Together, the stations in the proposed combination have a combined television and radio advertising revenue share of 36.4 percent. Although the combined stations would thus receive a significant percentage of advertising revenue in the Dayton market, this is primarily because the proposed assignee already owns WHIO-TV, the leader in television advertising revenues for the market. We have granted waivers in situations involving similar incremental gains. See Pennino Broadcasting Corp., 12 FCC Rcd 10752 (1997) (television station garnered 55.3 percent of television advertising revenue; 6.6 percent of radio advertising revenue; acquisition of one AM and one FM station resulted in 3.2 percent gain in total radio and television advertising revenue; combined advertising share of 31.4 percent in the 164th ranked market); Furthermore, these figures are consistent with temporary one-to-a-market waiver requests previously approved. Shareholders of Citicasters, Inc., 11 FCC Rcd at 19145-19146 (1996) (49.01 percent of radio advertising revenue and 32.03 percent of combined television and radio advertising revenues in 29th ranked market). NewCity Communications, Inc., 12 FCC Rcd 3929 (1997) (32 percent of radio advertising revenue and 29 percent of combined television and radio advertising revenues in 22nd ranked market); Triathalon Broadcasting of Little Rock Licensee, Inc., 12 FCC Rcd 13907 (1997) (44.4 percent of radio advertising revenue and 24.97 percent of combined television and radio advertising revenues in 57th ranked market). 19. We conclude, based on the record, that grant of a temporary, conditional waiver is appropriate. Grant of the waiver will result in economic efficiencies and facilitate enhanced public interest programming without undue effect on competition or diversity in the Dayton market. Ordering Clauses 20. Accordingly, IT IS ORDERED that a temporary conditional waiver of the one-to-a-market rule, 47 C.F.R. 73.3555(c), to permit common ownership of stations WPTW(AM) and WCLR(FM), Piqua, Ohio; WZLR(FM), Xenia, Ohio and WHIO(AM), WHKO(FM) and WHIO-TV, Dayton, Ohio IS HEREBY GRANTED, subject to the outcome in the pending television ownership rulemaking proceeding, Review of the Commission's Regulations Governing Television Broadcast Ownership, Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 and 87-8, 11 FCC Rcd 21655 (1996). Should divestiture be required as a result of that proceeding, Cox is directed to file an application for Commission consent to sell the necessary station(s) within six months from the release of the final Order in that proceeding. Any request to extend this conditional waiver should be filed at least 45 days prior to the end of the six-month period and would be closely scrutinized. 21. IT IS FURTHER ORDERED, that, having found the applicants fully qualified and that grant of the applications would serve the public interest, the applications to assign the licenses of WPTW(AM) and WCLR(FM), Piqua, Ohio and WZLR(FM), Xenia, Ohio from Xenia Broadcasting, Inc. to Cox Radio, Inc. (File Nos. BAL-980302GE, BALH-980302GF and BALH-980302GG) ARE HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau