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Application of Revitalization Partners to Assign KJOX(AM), Dismissed

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Released: July 29, 2011

Federal Communications Commission

Washington, D.C. 20554

July 29, 2011

DA 11-1320
In Reply Refer to:

1800B3-BSH
Released: July 29, 2011
Richard A. Helmick, Esq.
Cohn & Marks
1920 N Street NW, Suite 300
Washington, DC 20036-1622
M. Anne Swanson, Esq.
Dow Lohnes PLLC
1200 New Hampshire Avenue NW, Suite 800
Washington, DC 20036-6802
Dennis P. Corbett, Esq.
Lerman Senter PLLC
2000 K Street NW, Suite 600
Washington, DC 20006-1809
Peter Gutmann, Esq.
Womble Carlyle Sandridge & Rice PLLC
1401 I Street NW, Seventh Floor
Washington, DC 20005
Howard M. Liberman, Esq.
Drinker, Biddle & Reath, LLP
1500 K Street NW, Suite 1100
Washington, DC 20005
Mr. Allen N. Blum
14 Windmill Place
Armonk, NY 10504
In re:

KJOX(AM), Yakima, Washington

Facility ID No. 49875
File No. BAL-20101201APA

KARY-FM, Grandview, Washington

Facility ID No. 53674
File No. BALH-20101201APB

KBBO(AM), Selah, Washington

Facility ID No. 7918
File No. BALH-20101201APC

KHHK(FM), Yakima, Washington

Facility ID No. 36031
File No. BALH-20101201APD

KALE(AM), Richland, Washington

Facility ID No. 63359
File No. BALH-20101201APE

KIOK(FM), Richland, Washington

Facility ID No. 12455
File No. BALH-20101201APF

KKSR(FM), Walla Walla,
Washington

Facility ID No. 35717
File No. BALH-20101201APG

KOLW(FM), Basin City, Washington

Facility ID No. 51128
File No. BALH-20101201APJ

KEYW(FM), Pasco, Washington

Facility ID No. 68846
File No. BALH-20101201APK

KDBL(FM), Toppenish, Washington

Facility ID No. 64507
File No. BALH-20101201APL

KQMY(FM), Naches, Washington

Facility ID No. 88006
File No. BALH-20101201APM

KEGX(FM), Richland, Washington

Facility ID No. 53140
File No. BALH-20101201AOQ

KTCR(AM), Kennewick, Washington

Facility ID No. 53139
File No. BALH-20101201AOR

KUJ-FM, Burbank, Washington

Facility ID No. 77777
File No. BALH-20101201AOS

K232CB, Pendleton, Oregon

Facility ID No. 12456
File No. BALFT-20101201AOT
2

KRSE(FM), Yakima, Washington

Facility ID No. 49876
File No. BALH-20101201AOW

KXDD(FM), Yakima, Washington

Facility ID No. 7919
File No. BALH-20101201AOX

Applications for Assignment of
License
Petitions to Deny

Dear Counsel and Mr. Blum:
We have before us the above-captioned applications seeking approval for the proposed assignment of
license for: (1) Stations KJOX(AM), Yakima, Washington, KARY-FM, Grandview, Washington,
KBBO(AM), Selah, Washington, KHHK(FM), Yakima, Washington, KALE(AM), Richland, Washington,
KIOK(FM), Richland, Washington, and KKSR(FM), Walla Walla, Washington, from Revitalization Partners,
LLC, General Receiver ("Receiver") to The Tri-Cities/Yakima Divestiture Trust ("Divestiture Trust"); (2)
Stations KOLW(FM), Basin City, Washington, and KEYW(FM), Pasco, Washington, from Townsquare
Media Tri-Cities License, LLC ("TM Tri-Cities") to the Divestiture Trust; (3) Stations KDBL(FM),
Toppenish, Washington, and KQMY(FM), Naches, Washington, from Townsquare Media Yakima License,
LLC ("TM Yakima" and, collectively with TM Tri-Cities, "TM") to the Divestiture Trust; (4) Stations
KEGX(FM), Richland, Washington, KTCR(AM), Kennewick, Washington, KUJ-FM, Burbank, Washington,
and FM translator station K232CB, Pendleton, Oregon, from the Receiver to TM Tri-Cities; and (5) Stations
KRSE(FM), Yakima, Washington, and KXDD(FM), Yakima, Washington, from the Receiver to TM Yakima.
These five simultaneously filed applications are part of a single Asset Purchase Agreement for 12
stations, and comprise one proposed transaction ("Assignment Applications" or "Proposed Transaction").
The Assignment Applications, if granted, would result in: (a) 11 stations being licensed to the Divestiture
Trust, and only one additional station being licensed to TM; (b) TM holding an overall ownership interest
(including beneficial ownership of stations in the Divestiture Trust) in 12 out of 28 stations in the Yakima,
Washington, radio market, 11 out of 26 stations in the Richland-Kennewick-Pasco ("Tri-Cities"),
Washington, radio market, and 23 out of 54 stations in these two small, adjacent markets; and (c) an
unprecedented use of a divestiture trust to allow a group owner to re-shuffle its ownership interests by placing
currently-owned stations into the trust while adding other stations from a seller to form a combined group
with the maximum number of stations permitted by our local radio ownership limits.
On January 5, 2011, Sunnylands Broadcasting, LLC ("Sunnylands"), permittee of a new FM Station,
Union Gap, Washington,1 and CCR-Tri Cities IV, LLC ("CCR"), licensee of Stations KONA(AM), Richland-
Kennewick-Pasco, Washington, KONA-FM, Kennewick, Washington, and KZHR(FM), Dayton,
Washington,2 each filed a Petition to Deny the Assignment Applications.3 For the reasons stated below, we


1 Facility ID No. 183328. Union Gap is in the Yakima, Washington, radio market.
2 These CCR stations are in the Tri-Cities, Washington, radio market.
3

dismiss the Petitions to Deny as moot, and dismiss the Assignment Applications as inadvertently accepted for
filing, pursuant to Section 73.3566(a) of the Commission's Rules (the "Rules").4

Background.

On May 28, 2010, the Media Bureau (the "Bureau") granted consent to the
assignment of licenses of 31 New Northwest Broadcasters, LLC ("NNB") radio stations in Alaska,
Oregon, and Washington, to the Receiver following insolvency proceedings in the Superior Court for the
State of Washington for King County (the "Washington Court").5 The Assignment Applications request
consent to the Proposed Transaction, including approval of the Divestiture Trust,6 to enable the Receiver
to dispose of six Yakima, Washington, market and six Tri-Cities, Washington, market stations for the
benefit of NNB's creditors, pursuant to an order from the Court.7

TM Yakima is the current licensee of Stations KDBL(FM), Toppenish, Washington; KATS(FM),
Yakima, Washington; KFFM(FM), Yakima, Washington; KIT(AM), Yakima, Washington; KUTI(AM),
Yakima, Washington; and KQMY(FM), Naches, Washington, all in the Yakima, Washington, Arbitron
Metro. There are 28 stations listed in the Yakima, Washington, Arbitron Metro. In a radio market this
size, a single entity may own, operate or control up to six stations, no more than four in the same service.8
Thus, TM currently owns the maximum number of stations permissible in the Yakima, Washington, radio
market under the Commission's local radio ownership rule.9 TM Yakima proposes to acquire Stations
KRSE(FM) and KXDD(FM) from the Receiver. In order to comply with the local radio ownership rule,
TM Yakima proposes to assign currently owned Yakima market Stations KDBL(FM) and KQMY(FM) to
the Divestiture Trust.
The Assignment Applications also propose to assign six stations in the Yakima, Washington,
radio market to the Divestiture Trust. Thus, in addition to the two stations to be assigned by TM Yakima
to the Divestiture Trust, as noted above, the Receiver proposes to assign Yakima market Stations
KJOX(AM), KARY-FM, KBBO(AM), and KHHK(FM) to the Divestiture Trust.
TM Tri-Cities is the current licensee of Stations KEYW(FM), Pasco, Washington; KFLD(AM),
Pasco, Washington; KOLW(FM), Basin City, Washington; KORD-FM, Richland, Washington; and
KXRX(FM), Walla Walla, Washington, all in the Tri-Cities, Washington, Arbitron Metro. There are 26
stations listed in the Tri-Cities, Washington, Arbitron Metro. In a radio market this size, a single entity





3 On January 28, 2011, TM and the Receiver each filed a Consolidated Opposition, and on February 9, 2011,
Sunnylands and CCR each filed a Reply.
4 47 C.F.R. 73.3566(a).
5 See File Nos. BAL-20100517ADY, et seq. Additionally, NNB assigned FM translator station K232CB to the
Receiver.
6 The parties submitted with the Assignment Applications a copy of the Trust Agreement and related Engagement
and Assignment Agreement. Allen N. Blum is the Designated Trustee.
7 See Assignment Applications, Exhibit 5, Agreements to Assignment.
8 See 47 C.F.R. 73.3555(a)(1)(iii).
9 47 C.F.R. 73.3555(a).
4

may own, operate or control up to six stations, no more than four in the same service.10 Thus, TM may
acquire one more AM station before reaching the maximum number of stations permissible in the Tri-
Cities, Washington, radio market under the Commission's local radio ownership rule. TM Tri-Cities
proposes to acquire Stations KEGX(FM) and KTCR(AM), and KUJ-FM from the Receiver. In order to
comply with the local radio ownership rule, TM Tri-Cities proposes to assign currently owned Stations
KEYW(FM) and KOLW(FM) to the Divestiture Trust.
The Assignment Applications also propose to assign five stations in the Tri-Cities, Washington,
radio market to the Divestiture Trust. In addition to the two stations to be assigned by TM Tri-Cities to
the Divestiture Trust, as noted above, the Receiver proposes to assign Tri-Cities market Stations
KKSR(FM), KIOK(FM), and KALE(AM) to the Divestiture Trust.
Petitioners argue that the Proposed Transaction fails to comply with long-established
Commission policy concerning the permissible use of divestiture trusts, and that the proposed structure of
the Divestiture Trust at issue is substantially different than those previously approved by the Commission.
CCR asserts that the Assignment Applications propose a "sea change" in the use of trusts11 that would
result in an "explosive extension of the Trust device, far exceeding anything previously sanctioned by the
FCC."12

Discussion.

As noted by the Receiver, "the Commission reviews divestiture trusts [on] a case-
by-case basis and considers their acceptability based on a totality of the circumstances."13 Our review is
informed by certain principles regarding trusts. First, "trusts are occasionally established specifically to
effect compliance with the Commission's rules for holdings which would violate the rules if held
outright."14 Because of our concern that divestiture trusts present a "potential for abuse,"15 that can "pose
unacceptable risks to competition,"16 we have consistently found that insulated divestiture trusts "should
be employed only where necessary, and then to as limited an extent as possible."17 Additionally, as noted
by TM, the "Commission's long-standing policy is to accommodate the actions of state courts unless a
public interest determination under the Communications Act would compel a different result."18 If,
however, the Commission, in fulfilling its licensing obligations, determines that an action made pursuant


10 See 47 C.F.R. 73.3555(a)(1)(iii).
11 CCR Petition at 6.
12 Id. at 10.
13 Receiver Opposition at 12 (citing Shareholders of AMFM, Inc., Memorandum Opinion and Order, 15 FCC Rcd
16062, 16073 (2000)) ("AMFM").
14 AMFM, 15 FCC Rcd at 16072 (citations omitted).
15 Id. at 16073.
16 Infinity Broadcasting Corporation, Memorandum Opinion and Order, 12 FCC Rcd 5012, 5041 (1996)
("Infinity").
17 AMFM, 15 FCC Rcd at 16073.
18 TM Opposition at 6 (citing Arecibo Radio Corporation, Memorandum Opinion and Order, 101 FCC 2d 545
(1985)).
5

to court authority is contrary to Commission policy, the Commission is not bound to accommodate such
action.19 As discussed below, consistent with our obligation to make such determinations, based on the
totality of circumstances, we find that the Proposed Transaction is against the public interest because it is
patently not in accord with our policy concerning the acceptable use of divestiture trusts.
Incidental Nature of Trust - TM "submits that the use of a divestiture trust in this transaction is, in
fact, incidental to a larger transaction and, therefore, entirely appropriate."20 We find, however, that the
proposed use of this Divestiture Trust is not incidental to a larger transaction. Initially, the Receiver does
not claim that grant of the Assignment Applications will facilitate the disposition of the 19 Oregon and
Alaska radio stations that the Receiver had previously been assigned by NNB. Furthermore, the
Assignment Applications' proposed disposition of 12 stations in Washington will result in 11 stations
being licensed to the Divestiture Trust and only one additional station being licensed to TM in a manner
compliant with the multiple ownership rule. Such use of a divestiture trust is neither incidental nor
consistent with precedent. Moreover, even the use of the Divestiture Trust for the assignment of 11 of the
31 stations would be unprecedented.21
Competition/Scale. Commission policy has consistently held that a licensee's compliance with
the local radio ownership numerical limits in a market where it owns the maximum number of stations
and also holds a beneficial interest in additional stations through a trust, does not alleviate our concern
regarding competition in that market.22 Furthermore, the two cases provided in the Assignment
Applications as support for the Proposed Transaction certainly do not diminish our competition concerns
with respect to the instant proposal. In Nassau Broadcasting II, L.L.C.,23 a case that encompassed 52
radio stations in 24 markets, we approved the use of a divestiture trust when an existing licensee lost its
grandfathered rights in two markets because of a transfer of control. The trust became the licensee of
three stations in two separate markets, a limited scenario that did not pose a similar threat to competition.
In Applications of Regent Trust to the Fort Collins/Lafayette Divestiture Trust,24 we approved an
unopposed application for assignment of one Louisiana station and one Wyoming station to a divestiture
trust as part of a bankruptcy court-supervised restructuring that encompassed 63 radio stations in eleven
markets. Such precedent simply does not support the Assignment Applications' request for approval of
TM's combined ownership interest in 12 out of 28 stations in one market, 11 out of 26 stations in another
market, and a combined ownership interest in 23 out of 54 stations in two small, adjacent markets. 25


19 Charles W. Cherry, II, Receiver, Letter, 24 FCC Rcd 2894, 2896 (MB 2009).
20 TM Opposition at 6.
21 See infra nn. 23 & 24, and accompanying text.
22 See Infinity, 12 FCC Rcd at 5041 (although trusts may be effective in avoiding the influence which would trigger
attribution, there could be an effect on competition in the relevant markets); see also Jacor Communications, Inc.,
Memorandum Opinion and Order, 14 FCC Rcd 6867, 6894-95 (MB 1999) ("Jacor") (use of trusts does not alleviate
competitive concerns because it allows a station owner to own maximum number of stations at the same time that it
holds beneficial interest in additional stations through trust); AMFM, 15 FCC Rcd at 16072.
23 25 FCC Rcd 1851 (MB 2010).
24 See File Nos. BALH-20100323AIF, et seq. (granted June 30, 2010).
25 The Tri-Cities market is ranked 190, and the Yakima market is ranked 201 by Arbitron.
6

Once-Removed Transaction. The Receiver argues that the circumstances for the proposed use of
the Trust to acquire four stations that are currently licensed to TM "are substantially similar" to the
circumstances in Jacor - - the one instance cited by the applicants where we approved "the use of a
divestiture trust for transactions that are once-removed from a larger transaction."26 We disagree and find
that the proposed use of the Divestiture Trust to allow TM to selectively replace its own stations is
unprecedented and unacceptable. In Jacor, the Bureau found that placing two stations in the Louisville,
Kentucky, radio market that were licensed to Cox Radio, Inc. ("Cox") in a divestiture trust was a
necessary component of a much broader transaction, which ultimately allowed for the disposition of 234
radio stations located throughout the country.27 Although the Bureau found that the use of that divestiture
trust "raised competitive concerns," it allowed Cox to acquire two Jacor stations and to place two stations
licensed to Cox in trust. The Bureau justified the use of a divestiture trust in a situation where Cox had
"recently secured a buyer for its two Louisville stations" but that "waiting for the necessary FCC
approvals would require postponement of the merger closing."28 The Bureau concluded that "based on
the totality of the circumstances presented here, including the scale of the proposed merger" and "the
merging entities' showing of the need for the proposed Cox trust" that "approval of the Cox trust
application is appropriate for the limited purpose of facilitating this transaction."29 We find that the
circumstances in Jacor are clearly distinguishable from those in the Proposed Transaction, and, in fact,
support our conclusion that grant of the Assignment Applications would not serve the public interest. We
have never allowed a station owner to use a divestiture trust to re-shuffle its radio station portfolio as
proposed here. This aspect of the Proposed Transaction presents even greater concerns about the
competitive impact on these small radio markets.

Conclusion/Actions

. Based on the above, we find that the Assignment Applications were
inadvertently accepted for filing, pursuant to Section 73.3566(a) of the Rules. Accordingly, IT IS
ORDERED, That the Petition to Deny filed by Sunnylands Broadcasting, LLC IS DISMISSED AS MOOT
and the Petition to Deny filed by CCR-Tri Cities IV, LLC IS DISMISSED AS MOOT.
IT IS FURTHER ORDERED That the applications for approval to assign the licenses for Stations
KJOX(AM), Yakima, Washington (File No. BAL-20101201APA), KARY-FM, Grandview, Washington (File
No. BALH-20101201APB), KBBO(AM), Selah, Washington (File No. BAL-20101201APC), KHHK(FM),
Yakima, Washington (File No. BALH-20101201APD), KALE(AM), Richland, Washington (File No. BAL-
20101201APE), KIOK(FM), Richland, Washington (File No. BALH-20101201APF), and KKSR(FM), Walla
Walla, Washington (File No. BALH-20101201APG), from Revitalization Partners, LLC, General Receiver to
The Tri-Cities/Yakima Divestiture Trust ARE DISMISSED as inadvertently accepted for filing, pursuant to
Section 73.3566(a) of the Rules.
IT IS FURTHER ORDERED That the applications for approval to assign the licenses for Stations
KOLW(FM), Basin City, Washington (File No. BALH-20101201APJ), and KEYW(FM), Pasco, Washington
(File No. BALH-20101201APK), from Townsquare Media Tri-Cities License, LLC to The Tri-Cities/Yakima


26 Receiver Opposition at 13. Receiver uses the term "once-removed" to describe the Proposed Transactions' use of
the Trust as a "spin off" receptacle for stations currently licensed to TM.
27 Jacor, 14 FCC Rcd at 6897-98.
28 Id.
29 Id. at 6898.
7

Divestiture Trust ARE DISMISSED as inadvertently accepted for filing, pursuant to Section 73.3566(a) of the
Rules.
IT IS FURTHER ORDERED That the applications for approval to assign the licenses for Stations
KDBL(FM), Toppenish, Washington (File No. BALH-20101201APL), and KQMY(FM), Naches,
Washington (File No. BALH-20101201APM), from Townsquare Media Yakima License, LLC to The Tri-
Cities/Yakima Divestiture Trust ARE DISMISSED as inadvertently accepted for filing, pursuant to Section
73.3566(a) of the Rules.
IT IS FURTHER ORDERED That the applications for approval to assign the licenses for Stations
KEGX(FM), Richland, Washington (File No. BALH-20101201AOQ), KTCR(AM), Kennewick, Washington
(File No. BAL-20101201AOR), KUJ-FM, Burbank, Washington (File No. BALH-20101201AOS), and FM
translator station K232CB, Pendleton, Oregon (File No. BALFT-20101201AOT), from Revitalization
Partners, LLC, General Receiver to Townsquare Media Tri-Cities License, LLC ARE DISMISSED as
inadvertently accepted for filing, pursuant to Section 73.3566(a) of the Rules.
IT IS FURTHER ORDERED That the applications for approval to assign the licenses for Stations
KRSE(FM), Yakima, Washington (File No. BALH-20101201AOW), and KXDD(FM), Yakima, Washington
(File No. BALH-20101201AOX), from Revitalization Partners, LLC, General Receiver to Townsquare Media
Yakima License, LLC ARE DISMISSED as inadvertently accepted for filing, pursuant to Section 73.3566(a)
of the Rules.

Sincerely,
Peter H. Doyle
Chief, Audio Division
Media Bureau
8

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