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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** FCC 96-434 Before the Federal Communications Commission Washington, D.C. 20554 In re Application of ) ) ) Fox Television Stations, Inc. ) ) For a Permit to Transmit Program ) File No. BFP940217AG Material to Mexican television station ) XETV, Tijuana, Mexico ) MEMORANDUM OPINION AND ORDER Adopted: November 1, 1996 Released: November 1, 1996 By the Commission: Background 1. In January, 1995, the Commission granted, pursuant to Section 325(c) of the Communications Act of 1934, applications filed by Fox Television Stations, Inc. ("Fox") for permits to transmit live program material to three Mexican television stations for broadcast of the programs back into the United States. Those stations were XETV, Tijuana, Mexico, XHNUL-TV (now XHFTX), Nuevo Laredo, Mexico and XHRTA-TV (now XHFOX), Reynosa, Mexico. In that decision, the Commission denied a petition to deny the application pertaining to station XETV that had been filed by Channel 51 of San Diego, Inc. ("Channel 51") and it denied a petition to deny the application pertaining to XHNUL-TV that had been filed by Century Development Corporation. Bay City Television, Inc., ("Bay City"), a U.S. corporation which represents XETV in its acquisition of programming from Fox, had filed comments in support of the application pertaining to XETV. 2. Channel 51 appealed the Commission's Memorandum Opinion and Order (" 1995 MO&O") to the U.S. Circuit Court of Appeals for the District of Columbia ("Court") which, on March 29, 1996, rendered its decision (hereinafter Channel 51) . The Court vacated that portion of the Commission's 1995 MO&O that granted the permit to Fox for cross-border transmission to XETV and remanded the case to the Commission for reconsideration. 3. On April 19, 1996, Fox filed a motion with the Court which asked that it either modify its order to the extent it vacated the Commission's grant of a permit for transmission of live Fox programming to XETV or that it stay issuance of its mandate. On May 3, 1996, Fox filed with the Commission a request for a Special Temporary Authority ("STA") to transmit a "limited amount of time-sensitive live programming to Mexican station XETV...." In its request Fox indicated that, were the Court to deny its motion of April 19, live Fox programming provided to the San Diego, California television market by XETV would cease absent an STA so as to maintain the status quo pending the Commission's decision on remand. In an order dated May 7, 1996, the Court denied the Fox motion of April 19. 4. In letters to the Commission dated May 8 and 9, 1996, Channel 51 opposed a grant of the STA requested by Fox. Subsequently, Fox filed an answer to the opposition from Channel 51 and Bay City filed a letter supporting a grant of an STA to Fox. By letter of May 17, 1996, the International Bureau, granted, pursuant to delegated authority, an STA to Fox to transmit program material to station XETV until the occurrence of the following, whichever is earlier: (a) 90 days from the date of that letter or (b) the completion by the Commission of the remand proceeding. On May 22, 1996, Channel 51 filed an Application for Review of the grant of the STA and on May 24 it filed a Motion to Expedite Action on Application for Review. 5. On June 7, 1996, the Commission released an Order, issued pursuant to delegated authority, that requested that Fox, Channel 51 and Bay City file comments on the Court's decision of March 29, 1996 vacating grant of the permit for transmission of Fox programming to XETV and remanding the case to the Commission. All three parties filed comments in response to the Order. Comments were also filed by Century Development Corporation ("Century"), licensee of station KGNS-TV, Laredo, Texas. As noted in paragraph 1, Century had been a party to an earlier stage of this proceeding. In its comments, Century requests that the Commission institute revocation proceedings with respect to the Section 325(c) permit granted to Fox to deliver live programming to station XHFTX (formerly XHNUL-TV), Nuevo Laredo, Mexico. 6. Century did not appeal the Commission's 1995 MO&O which also granted a 325(c) permit to Fox for station XHFTX, and thus is no longer a party to this proceeding. Accordingly, Century lacks standing to participate in this remand proceeding and its comments will be dismissed. Comments Fox 7. In its comments, Fox argues that the basic issue in this proceeding is whether the public would be served by its affiliation with station XETV. Fox believes that a reaffirmation of its authority to transmit live programming to XETV would serve the public interest in that, as opposed to Channel 51, XETV provides much greater coverage to the San diego market and has an established identity as the Fox affiliate in that market. Fox also argues that the Commission should explicitly overrule its decision in American Broadcasting Companies, 35 F.C.C. 2d 1 (1972) ("ABC 1972"). It contends that it was the ABC 1972 decision, not our 1995 decision granting its application for XETV, that misapplied the established public interest standard governing Section 325 cases. Fox asserts that the "1972 ABC decision, with its wholesale adoption of a Section 309 issue-responsive programming requirement into the Section 325 calculus, is an anomaly whose erroneous legal standard, together with ... dramatically changed market conditions ... , mandate its rejection." Fox takes the position that the Commission's 1995 MO&O is consistent with prevailing precedent and the original intent of Congress in enacting Section 325. Finally, Fox outlines what it terms "dramatic changes" that have taken place in the San Diego television market between 1972 and 1996 that it believes mandate that the ABC 1972 decision be overruled. Bay City 8. Bay City asks that the Commission affirm, on broader grounds than was done in its 1995 MO&O, its departure from the ABC 1972 decision. It argues that : (1) the ABC 1972 case deviated from the fundamental purpose of Section 325(c); (2) that case has been generally ignored by the Commission in granting Section 325 permit applications; (3) it is arbitrary for the Commission to apply ABC 1972 only in contested cases such as the present one, since to do so violates the requirement that it treat similarly-situated parties in a like manner. 9. As to its first argument, Bay City cites Wrather-Alvarez Broadcasting, Inc, 248 F2d. 646 (D.C. Cir. 1957) , for the proposition that rather than applying all programming criteria applicable to U.S. broadcast stations to foreign stations in Section 325 proceedings, the consideration of "serious defects" in a foreign station's programming more accurately reflects the original intent of Congress in enacting Section 325. Bay City argues that the ABC 1972 decision runs directly counter to the expressed objectives of Congress by attempting to impose domestic programming obligations on foreign stations. Secondly, Bay City notes that the relevant application (FCC Form 308) for authority to transmit programming to a foreign station for rebroadcast to the U.S. does not require any information as to the station's other programming. As such, Bay City contends, the Commission has "generally ignored" the ABC 1972 decision in the processing of such applications. As to its third argument, Bay City states "[T]here simply is no legally supportable basis on which the Commission can justify denying a Section 325 permit to Fox - - to deliver its U.S. network programming to XETV -- solely because it is asserted (or even found) that XETV fails to meet program standards adopted by the FCC for U.S.-licensed television stations, when the FCC has failed to apply the same standards to other similarly- situated applicants." Finally, Bay City argues that the imposition of an issue-responsive programming requirement in 325 cases would be an unnecessary restraint on trade, in violation of North American Free Trade Agreement ("NAFTA"). This would result, it is contended, since such a requirement would inevitably favor U.S. stations over Mexican stations in the 325 process, something specifically prohibited by Annex VI of NAFTA. 10. Bay City also asks that the Commission not apply the restriction set forth in its Order seeking comments that such arguments be based on the existing record in this proceeding. To that end, Bay City sets forth case and verse to demonstrate that, regardless of other issues, the programming on station XETV meets the issue-responsive and other U.S. programming requirements. Bay City lists various programs that it contends are fully responsive to the needs, interests and concerns of viewers in the San Diego area. Channel 51 11. Channel 51 asserts that the Court has remanded this matter to the Commission "[To] reconsider (1) the effect of NAFTA on the Commission's policy that broadcast operation in the public interest requires that a licensee provide issue-oriented programming to meet the problems of its community, and (2) whether the performance of XETV complies with that policy as it exists at this time." Channel 51 contends that neither of these questions can be decided without a full evidentiary hearing. 12. As to the effect of NAFTA on the importance of issue-responsive programming, Channel 51 states "[I]]t thus appears that the Court has held that whatever issue-responsive programming requirements apply to domestic stations must also apply to foreign stations, insofar as NAFTA applies to Section 325(c) of the Act." If such a requirement applies to both types of stations, Channel 51 argues, it can be changed for foreign stations only if it is also changed for domestic stations. Such a fundamental change in Commission policy, it is contended, would not be permissible without a full hearing or a rule making. 13. Channel 51 also believes an evidentiary hearing is necessary to determine whether XETV's current programming meets the issue-responsive programming requirement. It notes the Commission's 1995 MO&O did not affirmatively conclude that XETV was in compliance with such a requirement. XETV has not simply failed to present any issue-responsive programming, it is averred, it has in fact refused to air such programming preferring less costly entertainment programming. Channel 51 contends that it has, in this proceeding, presented a prima facie showing that XETV is virtually devoid of any issue-responsive programming. Channel 51/Bay City Reply Comments 14. While our Order seeking comments did not provide for submission of reply comments, we will consider those filed by Channel 51 and Bay City since it will prejudice none of the parties. Channel 51 takes issue with Bay City's request that the Commission not limit its consideration on remand to matters already on record. It contends that both Fox and Bay City have included factual material in their comments relating to U.S. trade policy and new programming on XETV that go beyond the existing record and thus should not be considered. Channel 51 also takes issue with the assertion by Fox and Bay City that the ABC 1972 decision is an anomaly that incorrectly applied the standards applicable to 325 proceedings. It states that "For the Commission now to overrule ABC 1972 without the most compelling reasons, supported by a full record, would violate basic concepts of administrative regulation and of the supervision of such regulation by the Courts." 15. In turn Bay City argues that, based on the record, the Commission can provide the Court with a reasoned explanation for its departure from the ABC 1972 decision. Bay City contends that providing such an explanation is a matter of law, not of fact, thus eliminating any need for a hearing on remand. It also argues that Channel 51 has failed to make a prima facie showing that the Fox application for a Section 325 permit is inconsistent with the public interest as is required under Section 309 of the Communications Act to warrant conducting an evidentiary hearing. Finally, Bay City asserts that Channel 51's conclusion that the Commission may not change the public interest criteria applicable in 325 proceedings for foreign stations without also changing such criteria for domestic stations is "unfounded." Discussion 16. Our analysis in this case must start with the question of interference to American broadcast stations. As noted by the Court in its Channel 51 decision, "NAFTA requires that 'the primary criterion' for assessing the public interest, convenience and necessity in Section 325 proceedings be ' avoiding the creation or maintenance of electrical interference to U.S. broadcast stations." Channel 51 at 1191. There are no issues involving electrical interference to U.S. stations in this case. As the Court indicated, however, our analysis cannot stop here. 17. While electrical interference was the primary criterion, it is not the only criterion in Section 325 licensing proceedings. Channel 51 at 1191. In this regard, the Court determined that: " Prior to the present case, the FCC applied the same criteria for meeting the programming standards component of the 'public interest, convenience, and necessity' requirement to both a domestic broadcast license proceeding under Section 309 and a cross-border license proceeding under Section 325. The issue in this case is whether the FCC has adequately explained its determ- ination that relevant provisions of NAFTA now permit a different, more lenient standard in a Section 325 proceeding." Channel 51 at 1189. The Court held that " [T]he FCC has failed to adequately explain its decision to depart from ABC 1972's application of the issue-responsive programming requirement in Section 325 proceedings." Also noted by the Court was the acknowledgment by the Commission that it "at one time shared the view that we should apply all of the public interest criteria used in domestic proceedings to Section 325 proceedings,' Channel 51 at 1190, but that it determined 'in light of NAFTA, that conclusion is no longer valid." Id. The Court noted, however, that the Commission's reliance on NAFTA was insufficient as a basis for its departure from its ABC 1972 decision imposing such a requirement. "The FCC might reasonably conclude that some Section 309 domestic licensing requirements are irrelevant or should carry different weight in the Section 325 context .... It is certainly permissible for the FCC to change its existing interpretation of Section 325, but it must provide a reasoned explanation for doing so." Id. In concluding that the Commission had "erred in holding that NATFA's Annex VI prohibits application of ABC 1972's  325 issue- responsive programming," the Court remanded the case to the Commission for treatment consistent with its opinion. Id. 18. The question as to what public interest standard should be applied in Section 325 proceedings in general, and more specifically, as to whether the Commission should permit a U.S. network to use XETV to serve the San Diego market, has been before the Commission and the Court since 1955. In American Broadcasting-Paramount Theatres, Inc. 13 R.R. 177 (1955), aff'd 21 F.C.C. 624 (1956) ("ABC 1955") , the Commission refused altogether to consider arguments going to the adequacy of XETV's programming. On appeal, the Court ruled that, in the context of a 325 proceeding, the "Commission may not altogether exclude from consideration such serious defects of the foreign station's programming as would affect the public interest." Wrather-Alvarez Broadcasting, Inc. v. FCC 248 F2d 646, 651 (D.C. Cir. 1957). On remand from the Court's decision in Wrather-Alvarez, the Commission reaffirmed its grant of Section 325 authority involving XETV after considering, pursuant to the Court's directive, the alleged defects in that station's programming and concluding that they were not so serious as to affect the public interest. American Broadcasting-Paramount Threatres, Inc., 24 F.C.C. 296 (1958) ("ABC 1958"). 19. In the ABC 1972 decision, the Commission expressly addressed the question of whether some or all of Section 309's requirements apply in the Section 325 application context. As in the earlier proceedings, XETV and a local San Diego television station were involved. The Commission denied a Section 325 renewal to the ABC television network to use XETV as its San Diego affiliate based, inter alia, on its belief thatXETV's programming practices did not "serve the public interest in San Diego or serve to support a grant of [the Section 325] application in order to insure the availability of ABC programming in the market." ABC 1972 at 11-12. Before reaching that determination, the Commission expressly rejected the argument that the public interest requirements of Section 309 apply to Section 325 applications only to a limited extent. Instead, the Commission specifically stated that "Section 325 (c) contemplates the consideration of all the similar criteria of Section 309." ABC 1972 at 7. The Commission noted that the statutory language of Sections 309 and 325 unambiguously indicated that all the Section 309 requirements should be applied by the Commission to Section 325 licensing. Of particular note, the Commission cited Wrather-Alvarez in support of its belief that "the Court's language requires that the Commission inquire into the overall programming practices of XETV, as it would affect the viewing public in San Diego." ABC 1972 at 7-8 (emphasis in original). The Commission ultimately concluded that the public interest would not be served by renewing the Section 325 license. 20. Fox has argued that we should take a different approach to our public interest analysis because there have been dramatic changes in the San Diego Television marketplace since the 1972 ABC decision. Specifically, it states that the highly competitive environment in the San Diego market reflected by significant increases in the number of television stations, broadcast networks and non-broadcast video program sources, undermines the rationale of the 1972 case. We disagree. Added diversity of signals is clearly in the public interest because it increases the mix of programming information available to consumers. However, increased competition in broadcast television that results from these added signals does not per se eliminate the public interest obligations under Section 325 any more than it eliminates a domestic licensee's public interest obligation under Section 309. 21. Upon further review of the record in this case, and in light of the Court's Channel 51 decision, we conclude, as we did in ABC 1972, that our Section 325 analysis must include an analysis of the public interest convenience and necessity consistent with Section 309. For purposes here, that includes, as the Court described in Channel in 51 at 1189: "the same criteria for meeting the programming standards component of the 'public interest, convenience, and necessity' requirement to both a domestic license proceeding under  309 and a cross-border broadcast license proceeding under  325." 22. With regard to programming, we note initially that we have no evidence that XETV's programming suffers from "serious defects" as would affect the public interest. Wrather-Alvarez, at 651. In the 1995 MO&O, 10 FCC Rcd at 4066, we stated that programming that would raise such public interest concerns might include, for example, programming that is obscene, indecent, illegal, encourages use of harmful products or activities, or is otherwise inimical to the public health and safety. We found no evidence that XETV's programming suffered from such defects. Id. at 4067-69. There is no additional information that has been presented to cause us to change our previous determination that XETV's programming does not create "a substantial risk of public harm." 23. Looking more generally at XETV's overall programming, we note that Fox, in the "Programming Statement" included as part of its original Section 325 application, stated that it proposed to transmit NFL football games to XETV and "such other live programming including news, public affairs, sports and entertainment, as Fox Broadcasting Company transmits to its affiliates." See Fox Television Stations, Inc. Application for Permit to Deliver Programs to Foreign Stations (Form 308), Exhibit B "Programming Statement." And, in its May 3, 1996 request for an STA, Fox stated that the programming transmitted to XETV would include a live one-hour weekly news program. See Letter of William S. Reyner, Jr. et al., dated May 3, 1996, at 2. We further note that Radio Television, S.A., the licensee of XETV, and Bay City, in June 24, 1996 comments, described XETV's current, and planned, efforts to broadcast adult and young adult public affairs and other issue-responsive programming. See "Comments of Radio Television, S.A. and Bay City Television, Inc." at 12-14. Thus, the record indicates that XETV is providing some programming it asserts is issue-responsive. 24. To ensure that our obligation under Section 325 is met, we will condition our grant of Fox's application on XETV's provision of programming that meets the Commission's issue- responsive requirement during the five year authorization term. For this reason, Fox will be required to show in any renewal application whether XETV has met the issue-responsive requirement during the term of the initial authorization. This is consistent with our decision in ABC 1972, in which the Commission evaluated at the time of renewal whether the applicant provided issue-responsive programming. We will evaluate at the time of renewal whether the programming broadcast by XETV to the San Diego community has met the Commission's issue responsive programming and generally serves the public interest, convenience and necessity consistent with Section 309. 25. Under NAFTA, the Commission is prohibited from conducting Section 325 proceedings in a manner that would constitute an unnecessary restriction on trade. Channel 51 at 1190. By conditioning grant of the Section 325 authorization upon XETV's provision of programming that meets the Commission's issue responsive requirement applicable to domestic licensees, we apply the same issue responsive programming requirement applicable to domestic stations and thus do not discriminate or impose an "unnecessary" restriction on trade in violation of NAFTA. By applying the same criteria here we use for domestic stations and by not considering whether it is possible or desirable to require Fox to affiliate with any U.S. station as as alternative to XETV, we also do not violate the provision of NAFTA recognized by the Court that we are "prohibited from considering a foreign station's nationality for purposes of favoring a competing United States station." Channel 51 at 1190. 26. In view of all of the foregoing,, we find that grant of Fox's application for Section 325 authority, subject to the condition that XETV provide prorgramming in accordance with the provisions of paragraph 24 supra, would serve the public interest, convenience, and necessity. Ordering Clauses 27. Accordingly, IT IS ORDERED That the Application of Fox Television Stations, Inc. for Section 325(c) authority to transmit program material to Mexican station XETV, Tijuana, IS HEREBY GRANTED subject to the condition specified herein. 28. IT IS FURTHER ORDERED That the Petition to Deny filed by Channel 51 of San Diego, Inc. IS GRANTED IN PART and OTHERWISE DENIED. 29. IT IS FURTHERED ORDERED that the action taken herein shall become effective upon release of this Order. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary