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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 Application of ) ) Spectrum Radio, Inc. ) (Assignor) ) ) and ) File No. BAL -951211EA ) PolarComm Corp. ) (Assignee) ) ) For Assignment of License of ) Station WKIZ(AM), Key West, Florida) ) ) MEMORANDUM OPINION AND ORDER Adopted: January 21, 1997 Released: February 4, 1997 By the Commission: 1. The Commission has before it: (1) the above-captioned application for assignment of license of WKIZ(AM), Key West, Florida, from Spectrum Radio, Inc. ("Spectrum") to PolarComm Corp. ("PolarComm"); and (2) a related request for a temporary waiver of the Commission's one-to- a-market rule, which restricts common radio and television station ownership in the same market. 2. The principals of PolarComm have attributable ownership interests in WEYS Television Corporation ("WTC"), the licensee of independent UHF television station WEYS, Key West, Florida. Grant of the instant assignment application would create a new radio-television combination because the Grade A contour of WEYS(TV) encompasses the entire community of license of WKIZ(AM). In light of PolarComm's ongoing negotiations with a large multiple owner for the sale of WEYS(TV), PolarComm seeks a temporary twelve-month waiver of the Commission's one-to-a-market rule to allow for the sale of WEYS(TV). The application is unopposed. For the reasons stated below, we will grant the temporary waiver request and the assignment application. Request for Waiver of the One-to-a-Market Rule 3. Section 73.3555(c) of the Commission's rules, the one-to-a market rule, generally proscribes common ownership of a television and radio station in the same market. In the Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 ("Second Report and Order"), recon. granted in part, 4 FCC Rcd 6489 (1989)("Second Report and Order Recon."), the Commission established three standards for waiver of the rule. First, under the "top 25 markets/30 voices" standard, 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. Second, under the "failed station" standard, the Commission presumes that the public interest also will be served in cases involving acquisition of "failed" broadcast stations. That is, stations that have not been operating for a substantial period of time or that are in bankruptcy. Second Report and Order, 4 FCC Rcd at 1752- 53. Third, under the more rigorous "case-by-case" standard, the Commission evaluates the waiver request by weighing five factors: (1) the public service benefits that will arise from the joint operation of the facilities such as 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 joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753. 4. In requesting a temporary twelve-month waiver of the one-to-a-market rule to allow for the sale of WEYS(TV), PolarComm first asserts that it is entitled to a presumptive waiver under the "failed station" standard and/or the "top 25 markets/30 voices" standard. First, PolarComm argues that WKIZ(AM) meets the "failed station" standard because the station has been off the air since December 6, 1994. PolarComm asserts that two of the station's three towers were destroyed and that the station could no longer be operated with the one remaining tower. PolarComm also provides information regarding the present costs to reconstruct the station's three tower directional array, which PolarComm estimates to be between $250,000 and $350,000. Additionally, PolarComm alleges that Spectrum is financially unable to reconstruct the station's authorized facilities. Second, PolarComm claims that it also is entitled to a presumptive waiver under the "top 25 markets/30 voices" standard because Key West is included in the Miami/Ft. Lauderdale DMA, which is ranked as the 16th television market. 5. Alternatively, PolarComm addresses the five case-by-case factors used to evaluate waiver requests that do not meet the "failed station" or "top 25 markets/30 voices" standards. First, regarding the public service benefits, PolarComm contends that in addition to local programming, it will provide Spanish language programming to Key West's large Cuban-American community, which currently does not receive such programming on any other AM or FM station. PolarComm notes that it will provide the Spanish language programming, which originates in Miami, using a fiber optic link between Miami and Key West that PolarComm currently uses in connection with the operation of WEYS(TV). As a result, PolarComm indicates that it will incur very few programming costs. PolarComm also asserts that it will achieve enormous economic benefits by using personnel and studio space currently used in the operation of WEYS(TV). PolarComm claims that together these savings justify the expenditure of the funds necessary to reconstruct WKIZ(AM). 6. Second, regarding the technical facilities involved, PolarComm states that WKIZ(AM) operates directionally daytime and nighttime on 1500 kHz at 250 watts. PolarComm contends that the only other AM station in Key West, WKWF, operates on 1600 kHz at 500 watts daytime and nighttime. PolarComm further indicates that WEYS(TV) is an independent UHF station that operates with an effective radiated power of 11.2 kW and a height above average terrain of 203 feet and thus operates with a very limited range. PolarComm notes that the other television station licensed to Key West is WWFD, an independent VHF station. 7. Third, with respect to the number of other media outlets PolarComm already owns, PolarComm reports that aside from WEYS(TV), it has no other media interests in Key West. With regard to the fourth factor, which concerns the economic status of the stations in the proposed combination, PolarComm relies on the information provided in support of its "failed station" claim. See supra paragraph 4. 8. The final factor is the nature of the relevant market in light of the Commission's concerns about diversity and competition. PolarComm states that there are two AM stations, seven FM stations and two television stations licensed to Key West. In addition, PolarComm asserts that competition and diversity in Key West would be enhanced by the grant of the instant waiver request because Spectrum currently owns an FM station in Key West and provides programming to an AM/FM station combination in the market pursuant to a time brokerage agreement. PolarComm argues that were Spectrum to retain ownership of WKIZ(AM), it would hold attributable ownership interests in four broadcast stations in the Key West market. In contrast, PolarComm argues, if the instant waiver request were granted, WKIZ(AM) could aggressively compete with the stations currently owned or programmed by Spectrum. Discussion 9. In evaluating a request for temporary waiver of the one-to-a-market rule, "[o]ur primary concern, in the end, is how diversity will be affected in the market involved and the public interest benefits advanced by the applicant to offset any adverse impact on diversity." Stockholder of CBS, Inc., 11 FCC Rcd 3733, 3769 (1996); see also Knoxville Channel 8 Limited Partnership, 4 FCC Rcd 4760, 4761 (1989). While we conclude here that, on balance, a grant of a temporary waiver of the one-to-a-market rule will not unduly affect diversity in the relevant market, we first address our basis for concluding that PolarComm is not entitled to a presumptive waiver under either the "failed station" standard or the "top 25 markets/30 voices" standard. 10. PolarComm claims that it is entitled to a presumptive waiver under the "failed station" standard on the grounds that the station has been off the air since December 6, 1994 and that the current licensee is not in a position to reconstruct the station. The Commission has stated that it will be predisposed to grant one-to-a-market waivers where waiver of the rule would allow: (1) a radio or television station that has not been operating "for a substantial period of time" to resume broadcast operations; or (b) a radio or television station that is involved in voluntary or involuntary bankruptcy proceedings to continue broadcast operations. Second Report and Order, 4 FCC Rcd at 1752. To support a waiver request under the "failed station" standard, the Commission stated that applicants "would first be required to provide relevant documentation, i.e., proof of the length of time that the station has been off-air, or proof that it is involved in bankruptcy proceedings." Second Report and Order, 4 FCC Rcd at 1752. 11. With respect to a station that has not been operating, the Commission declined to define specifically what constitutes a "substantial period of time," but indicated that it did not believe this criteria would be satisfied unless the station had been off the air for at least several months, e.g., four months. Second Report and Order, 4 FCC Rcd at 1760 n. 98. The Commission also stated that "[w]e believe that it is unlikely that a station would remain off the air for such a length of time absent serious financial difficulties." Id. In this regard, the Commission also stated that it did not expect that any broadcaster would undergo the financial hardships of filing for bankruptcy or taking a station off the air to qualify for a presumptive one-to-a-market waiver under the "failed station" standard. Id. at 1753. 12. Although WKIZ(AM) has been off the air for almost two years, there is evidence in the record that the station's silent status was not the result of financial difficulties. In its first request for special temporary authority ("STA") to remain silent, Spectrum stated that the continuing deterioration of the station's facilities necessitated taking the station off the air and that it was conducting studies to determine whether the station's transmission facilities could be moved to another location. In its second STA extension request, Spectrum stated that a potential transmitter site had been identified and that its engineers were studying the feasibility of relocating the station to this site. In its third STA extension request, Spectrum reported that shortly after filing its request, its engineers discontinued their study of the alternative transmitter site in light of Spectrum's negotiations with a buyer for the sale of the station. Spectrum stated that the negotiations had failed and that its engineers had been instructed to return to the study of the alternative transmitter site, which Spectrum noted was the site of its other station in the market, WEOW(FM). In its fourth request, Spectrum stated that it had listed the station for sale with a broker and needed time to locate a buyer. Finally, Spectrum reported that it had located a buyer. The instant assignment application was then filed. 13. These requests reveal that Spectrum was undecided about whether to reconstruct the station at its present facilities, to relocate the station to a new transmitter site or to sell the station. We believe that such behavior, particularly the search for an alternative transmitter site, is inconsistent with a station that is suffering from financial difficulties. At no point in its requests to remain silent does Spectrum indicate that financial difficulties or even financial concerns are a factor in its failure to resume broadcast operations. Moreover, when presented with an opportunity to provide additional information in connection with the instant waiver request, Spectrum merely stated that it "is not in a position" to reconstruct WKIZ(AM)'s authorized facilities "at this time." In addition, Spectrum not only owns an FM station in the market, but also provides programming to an AM/FM station combination in the market pursuant to a time brokerage agreement. We believe that these factors, when taken together, are inconsistent with PolarComm's allegation that WKIZ(AM) is a "failed" station, within the intended meaning of the rule. When an applicant seeks a presumptive waiver of our one-to-a-market rule under the "failed station" claim based on the station's silent status, we ordinarily do not require additional evidence. However, when, as here, there is clear evidence in the record that the station's silent status was the result of a decision to sell the station for reasons other than financial difficulties, we will not grant a presumptive waiver merely because a station has been off the air for a substantial period of time. We conclude that WKIZ(AM)'s silent status is the result of a decision to sell the station rather then reconstruct the station, not the result of the financial inability to resume operations, and therefore PolarComm is not entitled to a presumptive waiver under the "failed station" standard. 14. We likewise conclude that PolarComm is not entitled to a presumptive waiver under the "top 25 markets/30 voices" standard. Under this standard, we will grant a presumptive waiver where the proposed combination of stations is in one of the top 25 markets and where at least 30 separately owned, operated and controlled broadcast licensees will remain after the proposed combination. Second Report and Order, 4 FCC Rcd at 1751-52. The stations at issue here are licensed to Key West, which is located in the 16th-ranked Miami/Ft. Lauderdale DMA. However, where the DMA covers a large area and the stations at issue compete only in the local community, we have focused our analysis on the local community rather than the DMA. Burt H. Oliphant, 10 FCC Rcd 2708, 2711 (1995), citing Duane J. Polich, 4 FCC Rcd 5596, 5597 (1989). In the instant case, no AM, FM or television station licensed to Miami or Ft. Lauderdale provides principal community service to Key West. We conclude that the relevant market here is Key West and therefore PolarComm is not entitled to a presumptive waiver under the "top 25 markets/30 voices" standard. 15. We previously have determined that when the proposed combination at issue is one which, in the context of a request for a permanent waiver, would require application of the five factor case-by-case approach, we shall be guided by those factors when reviewing temporary waiver requests as well. See Stockholders of CBS, Inc., 11 FCC Rcd at 3769 (1996). Moreover, because PolarComm is not seeking a permanent waiver and has set forth explicit divestiture plans, we believe consideration of the factors based on the temporary waiver request is appropriate. Accordingly, we will not require as detailed a showing under each factor and the weight accorded each factor will vary. We also note that an applicant is not required to satisfy all five factors in the context of either a temporary or a permanent waiver. Id. 16. With respect to the potential public service benefits, PolarComm has demonstrated programming benefits and economic benefits to be derived from joint ownership of WKIZ(AM) and WEYS(TV), even if such ownership is for a brief period of time. PolarComm intends to broadcast Spanish language programming, which currently is not available to the Key West community. Furthermore, while PolarComm does not quantify specific cost savings, PolarComm has indicated that the low costs associated with bringing the Spanish language programming to Key West, coupled with PolarComm's ability to use WEYS(TV)'s personnel and studio space to operate WKIZ(AM) in Key West, will enable PolarComm to expend the funds necessary to reconstruct the station. 17. With respect to the type of facilities involved, the Commission aims to predict and avoid any significant adverse effects on diversity or competition from too powerful a combination. Great American Television and Radio Co., Inc., 4 FCC Rcd 6347, 6349 (1989). WKIZ(AM) is authorized to operate with an effective radiated power of 250 watts. In contrast, the only other AM station licensed to Key West operates at an effective radiated power of 500 watts -- twice the power of WKIZ(AM). Furthermore, while WEYS(TV) is a UHF station, the only other television station licensed to Key West is a more powerful VHF station. In enunciating the standards for reviewing one-to-a-market waiver requests, the Commission stated that "combinations involving UHF TV, small AM, or class A FM stations may provide relatively greater public interest benefits and impose relatively fewer public interest costs." Second Report and Order, 4 FCC Rcd at 1753. Because the proposed combination involves a silent AM station and a UHF station, we find that the proposed combination does not present issues of market dominance inconsistent with the public interest. In addition, aside from WEYS(TV), PolarComm holds no other broadcast interests in Key West. 18. With regard to the economic status of the broadcast stations involved, PolarComm has not demonstrated that either WKIZ(AM) or WEYS(TV) is in financial distress. As noted above, PolarComm relies solely on WKIZ(AM)'s silent status as evidence of the station's financial difficulties and we have concluded (see supra paragraphs 10-12 ) that WKIZ(AM)'s silent status is the result of an independent business judgment, not the result of financial difficulties. However, as we previously have stated, "[n]ot all of the factors mentioned will be relevant in every case." Second Report and Order Recon., 9 FCC Rcd at 6491. Indeed, one-to-a-market waivers have been granted in the absence of financial difficulties. See, e.g., Louis C. DeArias, Receiver, 11 FCC Rcd 3662 (1996); Henry Broadcasting Co., 11 FCC Rcd 1175 (1995); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 1175 (1995); Secret Communications Ltd., 10 FCC Rcd 6874 (1995). 19. Finally, PolarComm has shown that the proposed combination will not create any undue concentration of ownership or control of the broadcast media in Key West. We independently have verified that in addition to WKIZ(AM), there are one AM station, seven FM stations and two television stations licensed to Key West. After the proposed combination, these eleven broadcast stations will be licensed to nine separate owners. In addition, we independently have verified that one cable system serves Key West (Television and Cable Factbook (1996) at D-272) and that Monroe County, which is composed almost exclusively of Key West, has 94% cable penetration (Nielsen Station Index County Coverage Study (1995)). We also have verified that one local newspaper serves Key West (Gale Directory of Publications and Broadcast Media (1996) at 443). Although the relevant market here is small, we have granted a permanent one-to-a-market waiver in which a similar number of voices remained following the proposed station combination. Glendive Broadcasting Corp., 10 FCC Rcd 2708, 2711 (1995)(8 "voices" in 152nd ranked market). While we recognize that the station being acquired in Glendive was suffering severe financial difficulties, a circumstance not present here, we nevertheless find that on balance, a grant of a temporary waiver to give PolarComm an opportunity to return WKIZ(AM) to the air will serve the public interest. The linchpin in our conclusion that a grant of the instant waiver request will serve the public interest is the preservation of a second AM station in the Key West market. 20. For all these reasons, we find that during the limited period necessary to allow PolarComm time to implement its plans for divestiture of WEYS(TV), the temporary combination will not have an undue adverse impact on diversity and competition in the Key West market. We therefore will grant the requested temporary waiver for a period of twelve months. See, e.g., Multimedia, Inc., 11 FCC Rcd 4883, 4885 (1995)("As a general rule, a temporary waiver of twelve months from the date of consummation . . . is ample time to locate potential purchasers and to negotiate purchase agreements for the stations to be divested."); See also Capital Cities/ABC, Inc., 11 FCC Rcd 5841, 5895 (1996); Stockholders of CBS, Inc., 11 FCC Rcd 3733, 3755-56 (1996). 21. Accordingly, IT IS ORDERED, that the request for waiver of the Commission's one-to- a-market rule, 47 C.F.R. Section 73.3555(c), to permit common ownership of WKIZ(AM), Key West Florida and WEYS(TV), Key West, Florida, IS HEREBY GRANTED, subject to the condition that within twelve months of the date of consummation of the proposed assignment of WKIZ(AM), Key West, Florida, from Spectrum Radio, Inc. to PolarComm Corp, PolarComm files an application for Commission consent to assign WEYS(TV) to a new party. 22. IT IS FURTHER ORDERED that the application for assignment of license (BAL- 951211EA) of WKIZ(AM), Key West, Florida from Spectrum Radio, Inc. to PolarComm Corp. IS HEREBY GRANTED. 23. IT IS FURTHER ORDERED, that PolarComm Corp, is GRANTED six (6) months from the date hereof to return WKIZ(AM) to its fully authorized facilities. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary