******************************************************** 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: ) ) Amzak Cable Midwest, Inc. ) CSR-4996-A dba Paragon Cable ) ) For Modification of the ADI of Television) Broadcast Station KXLI, St. Cloud,) Minnesota ) MEMORANDUM OPINION AND ORDER Adopted: August 26, 1997 Released: August 29, 1997 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. Amzak Cable Midwest, Inc. dba Paragon Cable ("Paragon"), filed the above-captioned petition for special relief seeking to modify the Minneapolis, Minnesota Area of Dominant Influence ("ADI") relative to television broadcast station KXLI (Ch. 41), St. Cloud, Minnesota. Specifically, Paragon requests that KXLI be excluded for purposes of the cable television mandatory broadcast signal carriage rules from the communities of New Ulm and Madelia, Minnesota. An opposition was filed on behalf of Paxson Minneapolis License, Inc., licensee of Station KXLI, to which Paragon has replied. BACKGROUND 2. Pursuant to 614 of the Communications Act and implementing rules adopted by the Commission in its Report and Order in MM Docket 92-259, commercial television broadcast stations are entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market for this purpose is its "area of dominant influence," or ADI, as defined by the Arbitron audience research organization. An ADI is a geographic market designation that defines each television market exclusive of others, based on measured viewing patterns. Essentially, each county in the United States is allocated to a market based on which home-market stations receive a preponderance of total viewing hours in the county. For purposes of this calculation, both over-the-air and cable television viewing are included. 3. Under the Act, however, the Commission is also directed to consider changes in market areas. Section 614(h)(1)(C) provides that the Commission may: with respect to a particular television broadcast station, include additional communities within its television market or exclude communities from such station's television market to better effectuate the purposes of this section. In considering such requests, the Act provides that: the Commission shall afford particular attention to the value of localism by taking into account such factors as - (I) whether the station, or other stations located in the same area, have been historically carried on the cable system or systems within such community; (II) whether the television station provides coverage or other local service to such community; (III) whether any other television station that is eligible to be carried by a cable system in such community in fulfillment of the requirements of this section provides new coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; and (IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community. 4. The legislative history of this provision indicates that: where the presumption in favor of ADI carriage would result in cable subscribers losing access to local stations because they are outside the ADI in which a local cable system operates, the FCC may make an adjustment to include or exclude particular communities from a television station's market consistent with Congress' objective to ensure that television stations be carried in the areas in which they serve and which form their economic market. * * * * [This subsection] establishes certain criteria which the Commission shall consider in acting on requests to modify the geographic area in which stations have signal carriage rights. These factors are not intended to be exclusive, but may be used to demonstrate that a community is part of a particular station's market. 5. The Commission provided guidance in its Report and Order in MM Docket No. 92-259, supra, to aid decision making in these matters, as follows: For example, the historical carriage of the station could be illustrated by the submission of documents listing the cable system's channel line-up (e.g., rate cards) for a period of years. To show that the station provides coverage or other local service to the cable community (factor 2), parties may demonstrate that the station places at least a Grade B coverage contour over the cable community or is located close to the community in terms of mileage. Coverage of news or other programming of interest to the community could be demon- strated by program logs or other descriptions of local program offerings. The final factor concerns viewing patterns in the cable community in cable and noncable homes. Audience data clearly provide appropriate evidence about this factor. In this regard, we note that surveys such as those used to demonstrate significantly viewed status could be useful. However, since this factor requires us to evaluate viewing on a community basis for cable and noncable homes, and significantly viewed surveys typically measure viewing only in noncable households, such surveys may need to be supplemented with additional data concerning viewing in cable homes. 6. As for deletions of communities from a station's ADI, the legislative history of this provision indicates that: The provisions of [this subsection] reflect a recognition that the Commission may conclude that a community within a station's ADI may be so far removed from the station that it cannot be deemed part of the station's market. It is not the Committee's intention that these provisions be used by cable systems to manipulate their carriage obligations to avoid compliance with the objectives of this section. Further, this section is not intended to permit a cable system to discriminate among several stations licensed to the same community. Unless a cable system can point to particularized evidence that its community is not part of one station's market, it should not be permitted to single out individual stations serving the same area and request that the cable system's community be deleted from the station's television market. 7. In adopting rules to implement this provision, the Commission indicated that requested changes should be considered on a community-by-community basis rather than on a county-by-county basis, and that they should be treated as specific to particular stations rather than applicable in common to all stations in the market. The rules further provide, in accordance with the requirements of the 1992 Cable Act, that a station not be deleted from carriage during the pendency of an ADI change request. MODIFICATION ARGUMENTS 8. The communities here in question are located in Brown and Watonwan Counties, Minnesota and are considered to be part of the Minneapolis, Minnesota ADI. St. Cloud, Minnesota, the city of license of KXLI, is also part of the same ADI. KXLI is located approximately 85 miles from the nearest of the communities served by Paragon. 9. In support of its request, Paragon argues that KXLI should be excluded from carriage on its systems because its fails to meet any of the criteria for market stations. First, Paragon states that there is no history of carriage of KXLI on either of its systems even though the station has been in operation since 1982. Secondly, Paragon points out that not only does KXLI's Grade B contour not encompass either of the communities at issue, but the station is geographically remote as well. Paragon states that the closest community, New Ulm, is approximately 85 miles from St. Cloud, while the farthest, Madelia, is more than 100 miles away. It maintains that these distances are even farther away than those cited in previous modification requests where the Commission granted requests to exclude stations from system communities. Third, Paragon indicates that KXLI provides no programming covering issues of specific concern to its subscribers. Indeed, Paragon stresses that a good portion of its programming seems to include program-length "infomercials" by national businesses and organizations. Moreover, Paragon states that the absence of any nexus between its systems and KXLI is buttressed by the fact that it is not listed in the Journal, New Ulm's daily newspaper nor in the Minneapolis-St. Paul edition of TV Guide. In addition, Paragon argues that issues of concern to its subscribers are more than adequately covered by the local stations it currently carries on its systems. Finally, Paragon states that KXLI has no reported viewership in either Brown or Watonwan Counties, where the communities are located. 10. In its opposition, KXLI argues that Paragon has failed to demonstrate how granting its exclusion request would promote local broadcast service and foster the goals of diversity and competition mandated by Congress. KXLI states that it is undisputed that both KXLI and Paragon's communities are all located within the Minneapolis ADI. Therefore, KXLI maintains that it is entitled to carriage on Paragon's systems. KXLI argues that the factors which Paragon relies upon for its exclusion request (i.e. distance and Grade B coverage) were expressly rejected by Congress as dispositive of must carry rights. Instead, KXLI points out that Congress stated that "ADI lines are the most widely accepted definition of a television market and more accurately delineate the area in which a station provides local service than any arbitrary mileage- based definition." (emphasis supplied in filing). Therefore, granting Paragon's request to exclude based on the lack of a Grade B contour, maintains KXLI, effectively eliminates the ADI-wide carriage contemplated by Congress. Moreover, KXLI states that Paragon has not shown that grant of its request would allow it to "better effectuate" the purposes of the must carry rules by alleging that carriage of its station would preclude the systems from carrying a more local broadcast station. KXLI argues further that it is an independent commercial station airing a unique program format combining program-length presentations by local and national businesses and community organizations with religious and local public affairs programming. It states that it airs local news and programming designed to address the needs and interests of residents throughout the Minneapolis ADI, including Paragon's subscribers. In addition, KXLI points out that the Commission has previously stated in exclusion cases that lack of historical carriage "should not be given great weight." At the same time, KXLI states that it is immaterial that Paragon carried other local stations which provide local programming to its subscribers. It indicates that the Commission has previously held that "[We] do not believe Congress intended the third criterion to operate as a bar to a station's ADI claim whenever other stations could also be shown to serve the communities at issue, but rather that this criterion was intended to enhance a station's claim where it could be shown that other stations do not serve the community at issue." Finally, KXLI argues that the Commission has previously rejected arguments regarding lack of local audience shares, finding instead that specialty stations, such as KXLI "are capable of 'offer[ing] desirable diversity of programming. . .' yet typically attract limited audiences." 11. In its reply, Paragon reiterates the factors addressed in its petition for exclusion and maintains that they fully support grant of request. It also argues that KXLI offers in opposition its now- standard analysis of the must carry requirements and the related modification provisions which have been repeatedly rejected by the Commission in previous decisions. Moreover, Paragon points out that KXLI essentially ignores the distance between it and the cable systems and the failure of its Grade B contour to encompass the communities. In addition, Paragon argues that while KXLI maintains that it provides programming focused on newsworthy events outside the Minneapolis-St. Paul metro area, it fails to provide any examples of coverage of news events involving either New Ulm or Madelia specifically, or Brown and Watonwan Counties generally. DISCUSSION 12. Based on the four statutory and other relevant factors, Paragon's petition will be granted. As an initial matter, we note that, according to the legislative history of the 1992 Cable Act, the use of ADI market areas is intended "to ensure that television stations be carried in the areas which they service and which form their economic market." Changes may be sought and granted by the Commission "to better effectuate the purposes" of the mandatory carriage requirements. The ADI market change process incorporated into the Communications Act, however, is not intended to be a process whereby cable operators may seek relief from the mandatory signal carriage obligations apart from the question of whether a change in the market area involved is warranted. When viewed against this backdrop, and considering all of the relevant factual circumstances in the record, the operator's deletion petition appears to be a legitimate request to redraw ADI boundaries to make them congruous with market realities. Paragon's actions do not reflect an intention to skirt its signal carriage responsibilities under the Communications Act and the Commission's Rules nor do they evidence a pattern of discriminatory conduct against the station subject to deletion. Based on the geography and the statutory factors, we believe that the communities in question are sufficiently removed from KXLI that they ought not be deemed part of the station's market for mandatory carriage purposes. Congress enacted Section 614(h) with a deletion provision so that market anomalies such as this one could be properly rectified through the special relief process. 13. At the outset, the evidence suggests that KXLI does not provide local service to the communities in question. KXLI does not place either a Grade A or Grade B contour over the cable communities. In addition, we do not believe that it has been shown that KXLI carries programming of specific local interest or import for cable viewers in the instant communities. The KXLI programming information provided to us indicates programming of potential general interest but without specific ties to the communities at issue in this matter. We also believe that Paragon's carriage of other local television stations provides support for the requested action. Where a cable operator is seeking to delete a station's mandatory carriage rights in certain communities within its ADI, and it is clear that the station is not providing local service to those communities, the issue of local coverage by other stations becomes a factor which we will give greater weight than in cases where a party is seeking to add communities. In this case, there are several television stations carried by Paragon which have a closer nexus to the system communities herein. 14. Paragon also demonstrates that KXLI has no historical carriage on the cable systems in question, despite 15 years of operation, and has no reported audience in either Brown or Watonwan County, where the cable systems are located. We note that these facts are not determinative, in and of themselves, of the relationship between the cable communities and the market of the television station, nor should their absence permit a cable operator to undermine the objectives of the mandatory carriage requirement. However, we also note in this instance, that St. Cloud, Minnesota, KXLI's city of license, is located from 85 to 100 miles from Paragon's headends. The distances involved in this situation further attenuates the local ties that the station might have to the cable communities and helps explain why the station's viewership is too low to be reported. Thus, we conclude that the lack of historical carriage and the dearth of audience is of evidentiary significance when linked with other information regarding the market and the particular distances involved, particularly where a station has been broadcasting since 1983 and has no reportable audience share in the relevant community. This is not a situation where the carriage pattern suggests that a station is logically part of the market for carriage purposes, but has not been carried for competitive reasons. Nor do we believe that the operator has impermissibly singled out KXLI from among other similarly situated stations as the sole station it has declined to carry. 15. KXLI argues that there is a strong presumption of carriage throughout a station's ADI. And KXLI takes the position that the presumption should be given full effect in this case. This argument disregards the information provided for the record as well as the four statutory factors set forth in the market modification provisions. For instance, as noted above, KXLI claims the availability of other local stations in the market should not be considered in this case. In addition, KXLI discounts as insignificant to our decision the station's lack of historical carriage, the station's lack of technical coverage of the communities, and the station's lack of viewership, as well as the distance of the station from the communities. Section 614(h)(1)(C), however, specifically and unambiguously directs the Commission, in considering requests for market modification, to afford particular attention to the value of localism by taking each of these factors into account. We have previously observed that the must carry rules "were not intended to transform an otherwise local station into a regional `super station' that must be automatically carried in every single community in an ADI. . . ." KXLI contends the only circumstance in which deletion of a local station would enhance localism is where a cable system is unable, in the absence of deletion, to carry the signal of another station that is outside of the ADI market and that provides demonstrably more local service. We find these interpretations of Section 614(h) and of the Commission's implementing regulations too restrictive and without a sufficient basis in either the legislative history or the wording of the statute. The statute, on its face, does not limit market deletion requests only to those situations where an out-of-the-market station is more deserving of carriage than an in-market station. There is also no language in the legislative history of Section 614(h) directly supporting KXLI's viewpoint, nor is there any in the Commission's Rules. To the contrary, KXLI ignores Congress' directive allowing either broadcasters or cable operators to ask for market modifications so that a station's ADI could better reflect the economic market at hand. In summary, we reject KXLI's arguments that amount to a wholesale attack on the statutory market modification provisions of Section 614 of the Communications Act. ORDERING CLAUSES 16. Accordingly, IT IS ORDERED, pursuant to 614(h) of the Communications Act of 1934, as amended, 47 U.S.C. 534, and 76.59 of the Commission's Rules, 47 C.F.R. 76.59, that the petition for special relief, filed April 15, 1997, on behalf of Amzak Cable Midwest, Inc. dba Paragon Cable IS GRANTED. 17. This action is taken pursuant to authority delegated by 0.321 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau