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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 ) )Citicasters Co. ) (Assignor) ) ) and ) ) The Audio House, Inc. ) (Assignee) ) ) For Assignment of the License of ) File Nos. BAL-9800610GE KSGS(AM) and the License and Construction ) BAPLH-980610GF Permit of KMJZ(FM), ) St. Louis Park, Minnesota ) MEMORANDUM OPINION AND ORDER Adopted: September 17, 1998 Released: September 18, 1998 By the Chief, Mass Media Bureau: 1. The Chief, Mass Media Bureau, has under consideration: (1) the above-captioned applications for assignment of the license of KSGS(AM) and for the assignment of the license and construction permit of KMJZ(FM), St. Louis Park, Minnesota, from Citicasters Co. ("Citicasters") to The Audio House, Inc. ("CBS") and CBS's related request for waiver of 47 C.F.R.  73.3555(c), the Commission's one-to-a-market rule, which restricts common radio and television ownership in the same market. The applications and the waiver request are unopposed. For the reasons set forth below, we grant the assignment applications along with a permanent waiver of the Commission's one-to-a-market rule. 2. CBS, which proposes to acquire two radio stations in the Minneapolis market, is also the licensee, through its subsidiaries, of radio stations WCCO(AM) and WLTE(FM) and VHF television station WCCO- TV, all licensed to Minneapolis. Grant of the subject assignment applications would create a new radio-television station combination because the predicted 2 mV/m contour of KSGS(AM) and the predicted 1 mV/m contour of KMJZ(FM) both completely encompass Minneapolis, the community of license of WCCO- TV. Accordingly, CBS requests a waiver of the Commission's rules to permit common ownership of WCCO- TV, KSGS(AM) and KMJZ(FM). If CBS is permitted to acquire KSGS(AM), KMJZ(FM) it will control a total of one TV, two FM and two AM stations in the Minneapolis- St. Paul, Minnesota, Designated Market Area ("DMA"), the 14th largest DMA in the country. 3. CBS bases its waiver request on the one-to-a-market waiver standards adopted in Second Report and Order, Amendment of Section 73.3555 of the Commission's Rules, the Broadcast Multiple Ownership Rules, 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 standards, the Commission presumes that waiver of the rule will serve the public interest in cases involving television and radio station combinations in the top 25 markets where at least 30 separately owned, operated and controlled broadcast licensees, or "voices," would remain after the proposed combination. Second Report and Order, 4 FCC Rcd at 1751-52. The Commission also presumes that the public will be served by the acquisition of "failed" stations, i.e., stations that have not been operating for a substantial period of time, or that are involved in bankruptcy proceedings. 47 C.F.R.  73.3555, n.7(2). Other waiver requests are evaluated using more rigorous case-by-case criteria, also set forth in the Second Report and Order. 4. Although the DMA implicated here is the 14th largest in the country, we will consider the subject waiver request under the case-by-case standard because the proposed transactions involve the common ownership of more than one same-service radio station with a television station. See Revision of Radio Rules and Policies (Recon.), 7 FCC Rcd 6387, 6394 n. 40 (1992); see also Moosey Communications, Inc., 8 FCC Rcd 5247 (1993). Under the case-by-case standard, we make a public interest determination based upon the following criteria: (1) the potential public service benefits of joint operation 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) 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 the joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753-54. We note that not all five of the case-by-case factors are necessarily relevant in each case. Second Report and Order Recon., 4 FCC Rcd at 6491. CBS has submitted a showing that addresses each of the criteria. 5. Public Service Benefits of Joint Operation. CBS contends that the proposed combination of WCCO-TV, WCCO(AM), WLTE(FM), KSGS(AM) and KMJZ(FM) "would enhance the overall ability of [its] free over-the-air television and radio stations to meet their public service obligations in the competitive Minneapolis-St. Paul marketplace." Specifically, CBS estimates that as a result of purchasing and promotional efficiencies, the proposed acquisition of KSGS(AM) and KMJZ(FM) would yield an annual savings of $300,000. CBS claims that these cost savings and operational efficiencies will generate substantial public service and programming benefits in the Minneapolis-St. Paul market. In this regard, CBS states that KSGS(AM) and KMJZ(FM) will have access to the public affairs and news gathering resources of WCCO- TV, as well as WCCO-TV's production facilities and personnel. 6. CBS anticipates that cooperation between WCCO-TV's weather and news reporters and KSGS(AM) and KMJZ(FM) will provide a "deeper and richer news product for the listeners of [the radio] stations and will extend the reach of WCCO-TV's reporting "to a more diverse and extensive audience." CBS also explains that CBS's resources will be used to "enhance the current public affairs programming" on KSGS(AM) and KMJZ(FM). Specifically, CBS indicates that WCCO-TV's specialty reporters (i.e., medical, legal, environmental and business reporters) would be available to appear on KSGS(AM) and KMJZ(FM)'s public affairs program "Dialogue" which provides commentary and analysis on the issues of economic and political concern to the Minneapolis area. In addition, KSGS(AM) and KMJZ(FM) may rebroadcast a portion of the public affairs programming of WCCO-TV. Moreover, CBS intends to provide to KSGS(AM) and KMJZ(FM) its "Parents Guide to Children's Educational Television," an on-air program guide that provides parents with scheduling and content information for CBS television network programming that addresses the educational and informational needs of children. CBS states that this programming is broadcast on CBS radio stations in markets where it also owns a television station. 7. CBS further states that KSGS(AM) and KMJZ(FM) will have access to CBS's significant media resources and thus will be able to enhance their community outreach services. In addition, CBS will devote increased resources to "comprehensive media campaigns [to meet] the special needs of many local organizations" such as "Minnesota Foodshare" which raises awareness and funds for the area's homeless population and "Taste of the Nation" which raises funds for area foodbanks. Moreover, CBS explains that the coordinated effort of the radio and television stations in the proposed combination will significantly increase the audience and the area to which information concerning such public service campaigns and events is disseminated. 8. CBS also anticipates other public interest benefits from the addition of KSGS(AM) and KMJZ(FM) to its radio-television combination in Minneapolis-St. Paul. In this regard, CBS states that the Equal Employment Opportunity Programs of KSGS(AM) and KMJZ(FM) will be augmented. For example, KSGS(AM) and KMJZ(FM) will have access to the WCCO-TV job candidate pool, and will be able to enhance the effectiveness and reach of their recruitment of female and minority applicants. Moreover, CBS notes its proposal, made in connection with the Commission's approval of its merger with American Radio Systems, to conduct six job fairs in various markets where it has radio-television combinations, in order to recruit qualified minority and female candidates. See Shareholders of American Radio Systems Corporation, 13 FCC Rcd 12430 (MMB 1998). These job fairs will be a cooperative effort between CBS and the Minority Media and Telecommunications Council ("MMTC"). MMTC will have the opportunity to collect resumes of job candidates participating in the fairs and will enter these candidates into a national job bank database operated by MMTC. CBS will extend the benefits of this cooperative effort with the MMTC to the stations in its radio-television combination in Minneapolis-St. Paul, and states that one of the six job fairs may be conducted in Minneapolis-St. Paul. 9. CBS also points to its pledge, also made in connection with the approval of its merger with American Radio Systems, to develop a relationship with a United Negro College Fund member institution that has a mass media program. Id at  37. CBS states that if a suitable United Negro College Fund member institution is identified in Minneapolis-St. Paul, the benefits of this arrangement will be extended to KSGS(AM) and KMJZ(FM). 10. Types of Facilities/Other Media Outlets. WCCO-TV is a CBS affiliate operating on VHF Channel 4 at a power of 100 kw from an antenna 436 meters height above average terrain ("HAAT"). WLTE(FM) is a Class C station that operates on Channel 275 (102.9 MHz) with an effective radiated power ("ERP") of 100 kw from an antenna 315 meters HAAT. WCCO(AM) is a fulltime Class A station that operates on 830 kHz with a transmitted power of 50 kw from a nondirectional antenna. KMJZ(FM) is a Class C1 station that operates on Channel 281 (104.1 MHz) with an ERP of 89 kw from an antenna 315 meters HAAT. KSGS(AM) is a fulltime Class B station that operates on 950 kHz with a transmitted power of 1 kw with different daytime and nighttime directional antenna patterns. 11. CBS asserts that the facilities of the proposed combination are comparable to a large number of other stations licensed to communities in the immediate Minneapolis area. Specifically, CBS lists four other comparable commercial VHF television stations, including an ABC, an NBC and a Fox affiliate, as well as an ABC-affiliated UHF station, each of which is licensed to a community in the immediate area. CBS also lists nine comparable FM and 5 comparable AM radio stations. 12. Economic Status. CBS does not assert that any of the radio stations involved in this waiver request is in financial distress. 13. Competition and Diversity in the Market. CBS asserts that the Minneapolis-St. Paul DMA, the country's 14th largest, is diverse and highly competitive. CBS states that the market is currently served by 42 separately owned, operated and controlled broadcast operators. Specifically, CBS states that the market is served by 42 commercial and 14 noncommercial radio stations (25 AM and 31 FM) licensed to 34 separate owners. Additionally, CBS asserts that there are 17 television stations serving the market licensed to 11 separate owners. CBS also states that 52% of the households in the market receive cable television and that the area is served by several MMDS facilities. Finally, CBS asserts that the Minneapolis-St. Paul market is served by numerous print media outlets, including 11 daily newspapers and 3 local weekly publications. Discussion 14. Radio Ownership Rules. We turn first to CBS's compliance with our local radio ownership rules which, 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 that may be commonly owned in any given radio market. The relevant radio market is defined as the area encompassed by the principal community contours of the mutually overlapping stations proposed to be co-owned. See Broadcast Radio Ownership, 11 FCC Rcd 12368, 12370 (1996); Revision of Radio Rules and Policies, 7 FCC Rcd 6387, 6395 (1992). Under the local radio ownership rules, as amended by the Telecommunications Act of 1996, a party may own, operate, or control: (1) up to 8 commercial radio stations -- not more than 5 of which are in the same service -- in a radio market with 45 or more commercial radio stations; (2) up to 7 commercial radio stations -- not more than 4 of which are in the same service -- in a radio market with 30-44 commercial radio stations; (3) up to 6 commercial radio stations -- not more than 4 of which are in the same service -- in a radio market with 15-29 commercial radio stations; and (4) up to 5 commercial radio stations -- not more than 3 of which are in the same service -- in a radio market with 14 or fewer commercial radio stations, except that a party may not own, operate, or control more than 50 percent of the stations in such market. Broadcast Radio Ownership, 11 FCC Rcd 12368 (1996). See also Telecommunications Act of 1996,  202(b). 15. Our analysis of the data CBS has submitted indicates that all four of the radio stations in the proposed combination, WCCO(AM), WLTE(FM), KSGS(AM) and KMJZ(FM), have mutually overlapping principal community contours and therefore the defined radio market is the composite of the four contours. CBS has submitted the required showing indicating that the relevant radio market contains at least eight radio stations. Under our rules, a party may own, operate, or control up to five commercial radio stations, not more than three of which are in the same service, in any size market, provided that the party may not own, operate, or control more than 50 percent of the stations in a market with 14 or fewer commercial radio stations. See 47 C.F.R.  73.3555(a)(1). Thus, even with a minimum of eight stations in the relevant local radio market, CBS's proposal to control four commercial radio stations (2 AM and 2 FM) does not constitute more than 50 percent of the stations in the market. Our independent analysis of CBS's showing confirms that its acquisition of KSGS(AM) and KMJZ(FM) 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 the applications under the radio ownership rules. We conclude that, with respect to local radio ownership, CBS's acquisition of KSGS(AM) and KMJZ(FM) would be consistent with the public interest. 16. One-to-a-Market Waiver. CBS requests waiver of our one-to-a-market rule on the basis that it satisfies our case-by-case criteria, as set forth in the Second Report and Order. See Revision of Radio Rules and Policies (Recon.), 7 FCC Rcd 6387, 6394 n. 40 (1992)(consideration of one-to-a-market waivers under the case-by-case standard is appropriate when the transaction involves ownership of more than one same- service radio station). See also REP WWBB G.P., 11 FCC Rcd. at 19689; Moosey Communications, Inc., 8 FCC Rcd 5247 (1993). At the outset, we note that the pending television ownership proceeding, in which the Commission is considering eliminating or modifying the one-to-a- market rule, does not preclude consideration of CBS's request for a permanent one-to-a-market waiver. In the Second Further NPRM in the television ownership proceeding, we stated that waiver requests submitted pending resolution of the proceeding will be considered under the current criteria for evaluating such requests. Second Further NPRM, 11 FCC Rcd at 21689 n.130. Thus, the Second Further NPRM contemplates approval of permanent, unconditional waivers to allow radio-television combinations that do not propose common ownership of stations exceeding a combination of one television station, two AM stations and two FM stations, as long as the requested waivers are clearly consistent with Commission precedent. See id. CBS's proposed combination of one VHF television station and two FM and two AM radio stations is consistent with that approach. In evaluating a request for a waiver of the one-to-a-market rule, the Commission's goal "is to permit the public to benefit from such efficiencies of operation as may be achieved through the use of common facilities and staff consistent with the maintenance of diversity and vigorous competition within the market areas involved." Second Report and Order Recon., 4 FCC Rcd at 6491. We conclude that CBS's showing in support of a waiver of the one-to-a-market rule meets our case-by-case criteria, and that a permanent waiver in this instance is consistent with the public interest and would not have an adverse effect on diversity and competition in the Minneapolis- St. Paul market. 17. As to the first factor, 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, program and service benefits. Second Report and Order, 4 FCC Rcd at 1753. CBS demonstrates that acquisition of KSGS(AM) and KMJZ(FM) will create efficiencies resulting in significant cost savings and the potential for enhanced programming and service benefits. In particular, CBS represents that it will save approximately $300,000 through joint ownership due to purchasing and promotional efficiencies. The news and public affairs programming on KSGS(AM) and KMJZ(FM) will be improved by virtue of those stations gaining access to the resources of WCCO-TV. In addition, CBS will broadcast its "Parents Guide to Children's Educational Television Programming" on KSGS(AM) and KMJZ(FM). Moreover, the combined station operations will result in expanded community service projects and campaigns. CBS has also pledged to include Minneapolis-St. Paul as a potential site for one of the six job fairs that it intends to conduct in order to recruit qualified minority and female job applicants and will also consider whether there is a United Negro College Fund member institution in Minneapolis-St. Paul which can be partnered with one of its radio and television stations. Therefore, we find that CBS will achieve explict programming and public service benefits as a result of its proposed radio-television combination. 18. The second factor in our analysis concerns the types of facilities that the merged entity will own. We must "consider such factors as whether the proposed radio-television combination involves a UHF or VHF television station or an AM or FM radio station as well as the size and class of the stations involved." Second Report and Order, 4 FCC Rcd at 1753. With respect to types of facilities and other media outlets, CBS's station WLTE(FM) is a Class C station and our analysis shows that there are at least seven additional, comparable Class C commercial FM stations in the market. Additionally, each of the these Class C stations is more powerful than the FM station that CBS seeks to acquire -- KMJZ(FM) -- which operates as a Class C1 station. Our analysis also shows that there is at least one other comparable Class C1 commercial FM stations in this market. With respect to WCCO(AM), which is a fulltime Class A station, there is at least one additional comparable commercial AM station in the market and with respect to KSGS(AM), which is a fulltime Class B station, there are at least five other comparable Class B stations in the market. There are also at least three Class B AM stations with comparable daytime power and reduced nighttime power. Our independent analysis also shows that there are two network-affiliated VHF stations in the DMA in addition to CBS's WCCO-TV, each with area coverage comparable to WCCO-TV. We therefore conclude that the technical capabilities of the proposed combination do not present issues of market dominance inconsistent with the public interest. 19. Under the third factor, CBS will not own media outlets other than those listed in its waiver request. With respect to financial conditions under the fourth factor, as stated earlier, CBS has not claimed that any of the stations in the proposed combination is in 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., Louis C. DeArias, 11 FCC Rcd 3662 (1996); 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). 20. Finally, under the fifth factor of our analysis, regarding the level of competition and diversity in the Minneapolis-St. Paul market, the nation's 14th largest, we find that the proposed combination would not create undue concentration of ownership and control. 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. Taking into account the proposed radio-television combination and based on our independent analysis we find that there are 43 commercial (23 AM and 20 FM) and 11 noncommercial radio stations (9 FM and 2 AM) for a total of 54 radio stations serving the Minneapolis-St. Paul TV metro market. There are also 4 commercial VHF television stations including WCCO-TV, (two of which operate as satellites) and 8 commercial UHF stations (two of which operate as satellites) for a total of 12 commercial television stations in the market. Additionally, there are five noncommercial television stations (three VHF and two UHF) in the market. 21. After consummation of the proposed transactions, we find the Minneapolis-St. Paul market will be served by 71 radio and television broadcast stations, representing 41 independent "voices." There are also numerous other media outlets available in this market, including cable (52% penetration), and 11 daily and several weekly local newspapers. This level of diversity is consistent with the level we have approved in previous waiver requests. Shareholders of Citicasters, Inc., 11 FCC Rcd 19135, 19140 (1996) (31 separate voices, nine daily newspapers, 58.9% cable penetration in 29th largest market); S.E. Licensee, G.P., 11 FCC Rcd 16728, 16731 (1996) (27 separate voices, nine daily newspapers, 58.1% cable penetration in 42nd largest market); Great American Television and Radio Co., Inc., 4 FCC Rcd 6347, 6348-6350 (33 separate voices, 21 daily newspapers and 50% cable penetration in 28th largest market). 22. With respect to economic concentration and competition, our independent analysis indicates that the four radio stations at issue in the one-to-a-market waiver request, WCCO(AM), WLTE(FM), KSGS(AM) and KMJZ(FM), receive 27% of the radio advertising revenue in the Minneapolis-St. Paul market and that WCCO-TV captures 28% of the television advertising revenue. Together, the WCCO-TV and the subject radio stations receive a combined television and radio advertising revenue share of 28%. These figures are consistent with one-to-a-market waiver requests previously approved. See e.g. NewCity Communications, Inc., 12 FCC Rcd 3929 (1997) (32% radio advertising revenue share and 29% combined television and radio advertising share). 23. We conclude, based on the record, that grant of a permanent waiver is appropriate. A significant number of independent broadcast voices serve the market, and the stations to be commonly owned compete with technically comparable facilities. Moreover, grant of the waiver will result in cost savings and enhanced service to the communities served by the stations. On balance, we are persuaded that the public benefits to be derived from common ownership of the subject stations would outweigh any negative effect on competition and diversity, and therefore conclude that grant of a permanent waiver of the one-to-a-market rule is justified. Conclusion 24. Having determined that the applicants are qualified in all respects, we find that grant of the assignment applications will serve the public interest, convenience and necessity. Accordingly, IT IS ORDERED, that the request for permanent waiver of the Commission's one-to-a-market rule, 47 C.F.R. s 73.3555(c) to permit common ownership of WCCO-TV, WCCO(AM), WLTE(FM), Minneapolis, Minnesota, KSGS(AM), and KMJZ(FM), St. Louis Park, Minnesota IS GRANTED. IT IS FURTHER ORDERED, that the applications to assign the license of KSGS(AM) and to assign the license and construction permit of KMJZ(FM), St. Louis Park, Minnesota, from Citicasters Co. to The Audio House, Inc. (File Nos. BAL-980610GE & BAPLH-980610GF) ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau