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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 Time Warner Inc. ) CSR 4998-X ) Petition for Special Relief ) Requesting Waiver of ) 47 C.F.R.  76.501(a) ) MEMORANDUM OPINION AND ORDER Adopted: September 26, 1997 Released: September 30, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. Time Warner Inc. (herein "TWI") has filed a petition requesting a permanent waiver of Section 76.501(a) of the Commission's Rules, which prohibits cross-ownership of a cable system and a television broadcast station when the station's predicted Grade B contour overlaps some or all of the cable system's service area. Alternatively, TWI requests an extension of the temporary waiver granted on October 9, 1996. This petition is unopposed. BACKGROUND AND ARGUMENTS 2. In connection with TWI's merger with Turner Broadcasting System, Inc. (herein "Turner"), TWI applied to the Commission for consent to the transfer of control of the licensee of television broadcast station WTBS(TV), channel 17, Atlanta, Georgia, from Turner to TWI. TWI's application requested a temporary waiver of the Commission's cable/broadcast television cross-ownership rule to enable it to divest a cable system serving three Georgia counties that fall within the predicted Grade B contour of WTBS(TV). The Commission granted TWI a twelve month waiver to divest the cable system, which expires on October 9, 1997. 3. TWI is now seeking a permanent waiver of the cable/broadcast television cross-ownership rule. TWI directly or indirectly owns and controls Summit Communications Group, Inc., (herein "Summit") which operates a cable system that serves communities within the predicted Grade B contour of WTBS(TV). TWI acquired Turner, which is the indirect parent of SuperStation, Inc., the licensee of WTBS. TWI concedes that its ownership of both Summit and WTBS(TV) would violate 76.501(a) of the Commission's Rules absent a waiver. 4. TWI asserts that because the Telecommunications Act of 1996 eliminated the statutory ban on cable/broadcast television cross-ownership, the Commission now has the authority to grant permanent waivers of the broadcast/cable television cross-ownership rule when a waiver would be in the public interest. TWI asserts that the Commission should grant a permanent waiver in this case because only 68,485 households would be affected, which is 4.8% of the 1,440,150 households in WTBS-TV's Designated Market Area ("DMA"), a percentage that TWI asserts is de minimis. TWI argues that the city of Atlanta is the tenth largest DMA in the country and has abundant media diversity, including 13 separately owned television broadcast stations, plus nine separately owned low-power television stations; 25 separately owned radio stations; two daily newspapers; an unspecified number of cable operators with 67% cable penetration; nine separate Multipoint Distribution Service ("MDS") or Multichannel MDS ("MMDS") systems; and a growing penetration of direct-to-home ("DTH") satellite providers. TWI further contends that the waiver it seeks would be consistent with permanent waivers granted recently for other cross-ownership rules, such as duopoly and one-to-a-market. 5. TWI contends also that WTBS(TV) and Summit are independently managed by different divisions of TWI. TWI pledges to provide a diverse array of programming on the Summit cable system. TWI further urges that under the Commission's must-carry rules, recently affirmed by the Supreme Court, all television broadcast stations in the Atlanta market area may assert rights to carriage and channel positioning. Thus, TWI argues, common ownership of WTBS(TV) and Summit cannot prejudice other stations in the market. 6. In the alternative, TWI argues that if the Commission does not grant the request for a permanent waiver of the broadcast/cable television cross-ownership rule, the Commission should extend the existing temporary waiver beyond its current expiration, until six months after the Commission completes its review of 76.501(a), as mandated by the Telecommunications Act of 1996. TWI asserts that the Commission must begin the mandatory biennial review of the cross-ownership rules in early 1998, which is just a few months after the temporary waiver will expire. TWI argues that the Commission should not require TWI to undertake a costly and complex divestiture when abolition of the broadcast/cable cross-ownership rule would eliminate the necessity therefor. TWI proposes that the Commission grant TWI a conditional waiver similar to that granted in Stockholders of Infinity Broadcasting Corporation, which waived the one-to-a-market rule until six months after the Commission issues a decision in the ongoing broadcast ownership rulemaking. DISCUSSION 7. For the reasons discussed below, we find that TWI has not demonstrated that a permanent waiver of Section 76.501(a) would be in the public interest, nor has TWI presented sufficient justification for an extension of the temporary waiver until six months after the completion of a rulemaking which has not commenced. Permanent Waiver 8. Section 76.501(a) of the Commission's Rules prohibits the common ownership and/or control of a television station and a co-located cable television system. The stated policy goals of Section 76.501(a) were to "further the Commission's policy of favoring diversity of control over mass communications media" and to increase competition in the economic marketplace and in the marketplace of ideas. This regulatory restriction was subsequently codified into a statutory restriction by the Cable Communications Policy Act of 1984, and this codification was then repealed by the Telecommunications Act of 1996. Prior to codification of Section 76.501 in 1984, the Commission, on a number of occasions, granted waivers of the rule. Since repeal of the statutory prohibition, the Commission again has the authority to grant waivers of Section 76.501 in cases where enforcement of the ban on cross-ownership does not promote these goals. 9. Prior to 1984, the Commission granted permanent waivers of the broadcast/cable television cross-ownership rule when the petitioner demonstrated that the waiver was necessary to promote diversity and competition in a market; when, for example, it was found unlikely that a cable operator other than the party with a cross-ownership conflict would be interested in providing service to the community. Waivers were also granted when petitioners demonstrated that "separation of the co-located properties would not result in greater diversity or that there are certain additional public benefits flowing from continued common ownership that would outweigh any impact on diversity." Waivers were found in the public interest when, for example, "the television station or the cable system required the revenues of the co-owned property for survival." 10. Unlike the previously granted waivers, TWI has not demonstrated that the situation presented here is anything other than the ordinary situation that the rules were intended to cover. TWI has not argued that granting the waiver would promote diversity or competition nor that the waiver would provide a public benefit. 11. TWI argues that a permanent waiver here would be consistent with recent rulings in duopoly and one-to-a-market cases. We disagree that the duopoly cases cited by TWI, which involve cross-ownership of two or more broadcast stations where there is overlap in the predicted Grade B contours, are controlling or relevant to the facts here. In the duopoly cases cited, the broadcast stations were not in the same market area (DMA or ADI). In contrast to the duopoly cases, TWI's petition does not present two separate markets; rather TWI's broadcast station and cable system are in the same market and two of the counties served by the Summit cable system are within WTBS-TV's Grade A contour. 12. TWI argues further that the "presumptive standard" the Commission applies in one-to-a- market cases, should apply to TWI, by analogy, because Atlanta is the tenth largest DMA in the country with 45 separately-owned broadcast stations. While it is true that one-to-a market cases involve multiple ownership within one market, one-to-a market cases apply to common ownership of television and radio stations and the presumptive waiver standard is part of the rule and was adopted through a rulemaking process Such a standard has not been adopted or proposed by the Commission with respect to the broadcast/cable television cross-ownership rule. The Commission has specifically recognized that the issues and goals in the radio/television cross-ownership (one-to-a market) rule are not necessarily the same as in the broadcast/cable television cross-ownership rule. We note, too, that in one-to-a market waiver cases evaluated on a case-by-case basis, the Commission looks to demonstrations of the "potential public service benefits of joint ownership" as a factor in determining whether to grant the waiver. No effort has been made to demonstrate any such benefits in this proceeding. 13. TWI further contends that the must-carry rules will assure that common ownership of WTBS(TV) and the Summit cable system will not result in abuse of the other broadcast stations in the Atlanta market. TWI notes that the must-carry rules were recently affirmed and argues that this will assure carriage and channel positioning rights to all stations in the Atlanta DMA. We agree that the must-carry rules lessen the risk of anti-competitive treatment of other local broadcasters by a cable system directly or indirectly owned by a broadcast station. This concern is, however, but one of the goals of the broadcast/cable television cross-ownership rule. Indeed the existence of mandatory signal carriage rules in force at the time the rule here in question was adopted did not result in a conclusion that the rule was unnecessary. Whether the implementation of the must-carry rules will obviate the need for the broadcast/cable television cross-ownership rule or permit modifications to the rule are questions best addressed in the rulemaking context rather than in a waiver proceeding. 14. There is also little basis for the conclusion urged by TWI that the overlap in question is simply too insignificant to warrant concern. The system in question has in excess of 68,000 subscribers. TWI refers to the number of households affected by the cross-ownership as de minimis, involving only 4.8% of television household in the Atlanta market area. TWI, however, cites no precedent for its conclusion that this degree of overlap is so small that it may be ignored as de minimis in nature. In WHOA-TV, Inc., an overlap of 2.1% was said to exceed the de minimis standard of 1% in duopoly cases, citing Hubbard Broadcasting, Inc., involving nor more than .43% of the population in the stations' Grade B contour 15. TWI finally relies also on the elimination of the cable/network cross-ownership rule, mandated by the 1996 Telecommunications Act, and the pending relaxation of the duopoly and one-to-a market rules to support its argument that the presence of a diverse and allegedly competitive market in the Atlanta area justifies grant of a permanent waiver of the broadcast/cable television cross-ownership rule. We find that while TWI's analogies to other types of multiple ownership analyses could provide support for revising the rule, it provides no public interest basis for granting a waiver. The waiver process, by its very nature, presumes unique circumstances or some special public interest benefit that indicates that the underlying basis for the rule in question is inapplicable. TWI has presented nothing in its petition that would distinguish this situation from any other comparably sized cable system in a large television market. Consequently, we conclude that the public interest would not be served by granting a permanent waiver of the broadcast/cable television cross-ownership rule in this case. Extension of Temporary Waiver 16. TWI proposes that, if it is not granted a permanent waiver of Section 76.501(a), its temporary waiver should be extended until six months after the conclusion of the Commission's review and rulemaking on the continued efficacy of the broadcast/cable television cross-ownership rule, as required by the 1996 Telecommunications Act. TWI argues that such a conditional waiver would be consistent with the Commission's approach with respect to requests for waivers of the duopoly and one-to- a-market rules, as well as the attribution rulemaking. For the reasons discussed below, we disagree with TWI's argument that granting a waiver when, as here, there is no pending rulemaking and no proposed revised rule under consideration, is equivalent or analogous to granting a conditional waiver during the pendency of a rulemaking, when the waiver sought is consistent with the revised rule under consideration. 17. The 1996 Telecommunications Act provides that the Commission review all of its ownership rules biennially "and determine whether any of such rules are necessary in the public interest as the result of competition [and] . . . repeal or modify any regulation it determines to be no longer in the public interest." However, it is premature to forecast now whether the Commission will determine that this rule requires repeal or modification, and if modification is necessary in the public interest, how the rule would be modified. Thus, it is likewise premature to grant a conditional waiver pending the outcome of a rulemaking that may not occur or that may propose a rule with which TWI's cross- ownership would still not comply. What TWI is suggesting would effectively abolish the rule subject only to the possibility that it might be restored as part of the biennial review process. ORDERING CLAUSES 18. Accordingly, IT IS ORDERED, that the captioned petition for special relief filed by Time Warner Inc. requesting permanent waiver of the Commission's broadcast/cable television cross-ownership rule,  76.501(a), IS DENIED. 19. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's Rules, 47 C.F.R. 0.321 (1996). FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau