Federal Communications Commission Record 10 FCC Red No

FCC 95-331 Federal Communications Commission Record 10 FCC Red No. 19

73.3555 note 6. The Times-Gazette is published five days Before the per week (Monday through Friday), is published in Eng Federal Communications Commission lish, and is circulated generally in Shelbyville and Bedford Washington, D.C. 20554 County. Daily circulation is 8,504 copies, and the Times- Gazette, according to Shelbyville Publishing, is an impor tant source of local news and, information. Furthermore, In re Application of the 2 rnV/m signal of WLIJ encompasses the entire com munity of Shelbyville, and approximately 70 percent of HOPKINS HALL BROADCASTING, INC. Bedford County. (Assignor) 3. The Commission contemplates permanent and tem porary waivers of the daily newspaper cross-ownership rule in four instances: (1) where there is an inability to dispose and File No. BAL-950123EB of an interest in order to conform to the rules; (2) where the only sale possible is at an artificially depressed price; SHELBYVILLE PUBLISHING CO., INC. (3) where separate ownership and operation of the news (Assignee) paper and station cannot be supported in the locality; and (4) where, for whatever reason, the purposes of the rule For Assignment of License of would be disserved by divestiture. Fox Television Stations, WLIJ(AM), Shelbyville, Tennessee Inc., 8 FCC Red 5341, 5348 (1993), aff©d sub nom. Metro politan Council of NAACP Branches v. FCC, 46 F.3d 1154 (D.C. Cir. 1995) ("Fox"); Multiple Ownership of Standard, MEMORANDUM OPINION AND ORDER FM, and Television Broadcast Stations, Second Report and Order, 50 FCC 2d 1046, 1085 (1975) ("Second Report and Adopted: July 31,1995; Released: September 5,1995 Order"), recon., 53 FCC 2d 589 (1975) ("Second Report and Order Recon."), aff©d sub nom. Federal Communications Commission v. National Citizens Committee for Broadcast By the Commission: Commissioner Quello concurring, ing, 436 U.S. 775 (1978). These waiver standards were issuing a separate statement. originally designed to govern divestiture of combinations formed prior to implementation of the rule, but they have 1. The Commission has under consideration the above- also been applied to "new" combinations such as the one captioned application for voluntary assignment of the li proposed here. Fox, 8 FCC Red at 5348 n.19. cense of WLIJ(AM), Shelbyville, Tennessee from Hopkins 4. Shelbyville Publishing requests a permanent waiver of Hall Broadcasting, Inc. ("Hopkins Hall") to Shelbyville the Commission©s rule, which entails a "considerably Publishing Co. ("Shelbyville Publishing"). Shelbyville Pub heavier" burden of justification than a temporary waiver. lishing owns and operates the Shelbyville Times-Gazette See Fox, 8 FCC Red at 5348 (citing News America Publish ("Times-Gazette"), a daily newspaper serving Shelbyville ing, Inc. v. FCC, 844 F.2d 800, 803 (D.C. Cir. 1988); Health and surrounding Bedford County, Tennessee. Since the 2 and Medicine Policy Research Group v. FCC, 807 F.2d 1038, mV/m contour of WLIJ encompasses the entire community 1042-43 (D.C. Cir. 1986)). The Commission has only grant in which the Times-Gazette is published, Shelbyville Pub ed permanent waivers of the rule in two instances, both lishing requests a permanent waiver of the Commission©s involving television stations. In each case, one of the cross- daily newspaper cross-ownership rule to permit common owned media properties faced substantial financial ownership of WLIJ and the Times-Gazette. A petition to difficulties and the Commission was acting to preserve a deny the assignment application was filed by the Cromwell media "voice." The Commission granted a permanent Group ("Cromwell") on March 1, 1995. Cromwell is the waiver to allow Field Enterprises, Inc., publisher of two licensee of Shelbyville©s only other AM station, WHAL, as daily newspapers in Chicago, to reacquire control of well as WYCQ, Shelbyville©s only FM station. Cromwell WFLD-TV, Chicago. Field Communications Corp., 65 FCC argues that Shelbyville Publishing has not provided suffi 2d 959, 961 (1977) ("Field"). The Commission held that cient justification for a permanent waiver of the daily Field©s reacquisition of the financially troubled station did newspaper cross-ownership rule. After consideration of all not constitute a new ownership pattern, and thus was pleadings in this matter, we find it is in the public interest similar to ownership patterns grandfathered under the daily to deny the waiver request and to deny the above-captioned newspaper cross-ownership rule. Id. The only other perma assignment application. nent waiver of the rule was granted to allow Rupert 2. Section 73.3555(d)(l) of the Commission©s rules pro Murdoch to continue to control the licensee of WNYW, vides that no license for an AM broadcast station will be New York, New York, after acquisition of the failing New granted to any party who owns, operates or controls a daily York Post. There was evidence that Murdoch©s ownership newspaper if the grant of such license would result in the might be "pivotal to the newspaper©s survival." Fox, 8 FCC predicted or measured 2 mV/m contour of the AM station Red at 5350. As in Field, Murdoch had previously con encompassing the entire community in which such news trolled the entity to be acquired, and had a continuing paper is published. A "daily" newspaper is published four financial interest in the property. See Fox, 8 FCC Red at or more days per week, in English, and is circulated gen 5342; Field, 65 FCC 2d at 961. erally in the community of publication. 47 C.F.R. Section

1 Cf. Larry Ellis Reed, 73 RR 2d 502 (MMB 1993) (finding that nity©s media mix and was at best a secondary source of local a publication with a circulation of 160 was not circulated gen information, emphasizing community affairs rather than local erally because it was not an important fraction of the commu news).

9764 10 FCC Red No. 19 Federal Communications Commission Record FCC 95-331

5. Shelbyville Publishing requests a permanent waiver apply changes in, or to begin or continue a reexamination under the fourth category. A waiver is warranted under of the daily newspaper cross-ownership rule, except to this so-called "catch-all" provision when it can be shown amend policies with respect to waivers concerning cross- "for whatever reason," that the purposes of the rule would ownership of a daily newspaper and an AM or FM broad be better served by the proposed ownership pattern. Fox, 8 cast station. In introducing the exception for radio stations FCC Red at 5348. This waiver category countenances a in Fiscal Year 1994 legislation, (Pub. L. No. 103-121, 107 myriad of arguments pertinent to the exigencies of a par STAT. 1153, 1167 (1993)), Congress stated that in light of ticular situation, and we will consider all "special cir the Commission©s finding that circumstances in the radio cumstances" that applicants believe have a bearing on the market had changed significantly, the Commission would appropriateness of granting a waiver. Id.; Second Report be permitted to establish a more liberal policy concerning and Order, 50 FCC 2d at 1085 n.47. However, we have waivers allowing cross-ownership of newspaper and radio stated that we would not be favorably inclined to grant any stations in the top 25 markets where at least 30 individual request premised on views rejected when the rule was broadcast voices remain after the transfer is completed. adopted, as we do not intend to relitigate resolved issues. H.R. Conf. Rep. No. 293, 103d Cong., 1st Sess. 40 (1993). Second Report and Order, 50 FCC Red at 1085. See Fox, 8 Congress stated that the Commission retains the discretion FCC Red at 5348; Second Report and Order Recon., 53 FCC to examine requests for other waivers of the radio-news 2d at 593-94. paper cross-ownership rule on a case-by-case basis upon a 6. In support of its waiver request, Shelbyville Publishing showing that such a waiver would have "unique public© raises three main points: (1) combined ownership of WLIJ benefits." Id. and the Times-Gazette will result in the "unique public 8. Finally, Shelbyville Publishing claims that media di benefit" of improving WLIJ©s local news and public affairs versity will not be adversely affected in Shelbyville (and programming; (2) Congress has authorized the Commission surrounding Bedford County), which is located approxi to change its policies concerning newspaper and broadcast mately 50 miles southeast of Nashville, is in the Nashville station cross-ownership; and (3) the combined ownership area of dominant influence (ADI), and receives a wide of WLIJ and the Times-Gazette will not result in any variety of media from diverse sources. significant decrease in media diversity. Shelbyville Publish 9. In its petition to deny, Cromwell notes that its AM ing claims that WLIJ, a small, stand-alone AM station with station, WHAL, which is also licensed to Shelbyville, pro limited resources,2 cannot afford to provide local news vides local news and public affairs coverage without the coverage on its own, but that under co-ownership with the need for co-ownership with a local newspaper. Although Times-Gazette, WLIJ will be able to provide in-depth cov WHAL is owned in common with WYCQ, an FM station erage of local news and public affairs. Shelbyville Publish licensed to Shelbyville, Cromwell points out that AM-FM ing submits data showing that a team of local news combinations are permitted under the Commission©s rules, reporters and editors comparable to that of the Times- whereas broadcast-newspaper combinations are prohibited. Gazette would cost in excess of $200,000 per year.3 Cromwell asserts that if the Commission were to grant Shelbyville Publishing also submits data showing that 1994 Shelbyville Publishing©s request, it would "open the revenues for WLIJ totaled slightly more than $165,000, floodgates" for every newspaper in the country to acquire a which it claims would make it impossible for the station to radio station. Cromwell argues that the Congressional au provide in-depth local news coverage in the absence of a thority cited by Shelbyville Publishing does not apply to cross-ownership waiver. In fact, Shelbyville Publishing ar smaller markets such as the one at issue.4 Cromwell also gues that given its limited budget, it would not be able to submits that grant of the instant waiver would substantially afford a news staff costing one-half that of the Times- diminish diversity and competition in Shelbyville, which, Gazette (i.e., $100,000). at present, has only one newspaper and three radio sta 7. Shelbyville Publishing also argues that Congress has tions, two of which are co-owned. empowered the Commission to establish a more liberal policy with respect to the grant of waiver requests in connection with the daily newspaper/radio broadcast cross- DISCUSSION ownership rule. In recent appropriations measures, includ 10. The Commission©s long-standing prohibition against ing that covering Fiscal Year 1995, (Pub. L. No. 103-317, cross-ownership of newspapers and broadcast facilities is 108 STAT. 1724, 1738 (1994)), Congress has prohibited the designed to maximize the diversity of ownership and com Commission from using funds to repeal, to retroactively petition among media outlets in individual communities.5

2 WLIJ is authorized to operate at 1580 kHz at a power of 1.0 4 Although Bedford County is in the Nashville ADI, it is not kW daytime and 12 watts nighttime. located in the Arbitron-designated Nashville radio metro mar 3 Shelbyville Publishing©s estimate is based on the 1995 salaries ket. (Nashville is the 45th largest radio market in the country, of nine Times-Gazette editors and reporters who are primarily according to Arbitron Ratings Company, and the 33d largest responsible for gathering and reporting local news. Shelbyville ADI.) Publishing has not attempted to show that combined operation 5 Scripps-Howard Broadcasting Co., 8 FCC Red 8012, 8013 of the Times-Gazette with WLIJ would result in any financial (1993). The Commission©s statutory directive to find that the benefit to the newspaper. Shelbyville Publishing also does not grant of a broadcast license serves the public interest, conve provide an estimate of any operating efficiencies (such as ad nience, and necessity, 47 U.S.C. Section 309(a), encompasses ministrative, sales, etc.) to be gained by WLIJ from combined many factors, including "the widest possible dissemination of ownership other than those related to the news operation. information from diverse and antagonistic sources." Second Re Shelbyville Publishing simply maintains that in order to "du port and Order, 50 FCC 2d at 1048 (quoting Associated Press v. plicate the Times-Gazette ©s coverage," without common owner United States, 326 U.S. 1, 20 (1945)). The Supreme Court upheld ship, WLIJ needs to employ a similar number of journalists at the Commission©s diversity rationale on appeal, stating that the similar salary levels. Commission was "entitled to rely on its judgment, based on

9765 FCC 95-331 Federal Communications Commission Record 10 FCC Red No. 19

We have allowed for waivers of this rule upon a showing serve the market receiving service from WLIJ and the that strict enforcement of the rule would disserve these newspaper. The owner of the only newspaper published in purposes. See Fox, 8 FCC Red at 5348; Second Report and Shelbyville requests a waiver of the Commission©s rules to Order, 50 FCC 2d at 1085. In analyzing the impact of a allow it to purchase the third radio station licensed to waiver on competition and diversity, it is necessary to first Shelbyville, which is independently owned at present. determine the relevant market. Thus, the impact in Shelbyville will be to decrease com 11. Shelbyville Publishing contends that such analysis petition and diversity by reducing the number of indepen should include weighing the benefits of improved service dent media owners competing for advertising and in local terms against any resulting decrease in diversity in audience/readers, and the number of independent voices, terms of the Nashville ADI, which it claims is served by 17 from three to two. Contrary to the applicant©s assertion, we television stations, 68 AM and FM radio stations, eight do not find such a reduction to be "de minimis" in nature. daily newspapers, 33 weekly newspapers, and cable systems In the absence of any showing that this decrease will not with 53.8% penetration. In the context of this request for significantly affect the community of Shelbyville in terms waiver of the newspaper/radio cross-ownership rule, the of competition and diversity, we find that Shelbyville Pub relevant market for analyzing the effects on diversity and lishing has failed to justify the requested waiver. competition of the proposed waiver is not the Nashville 14. Shelbyville Publishing asserts that the unique public ADI, which relates to television stations, but rather the benefit of improved local news coverage on WLIJ area in which the predicted or measured 2 mV/m contour outweighs any decrease in diversity as a consequence of the of the AM station encompasses the entire community in combined ownership of WLIJ and the Times-Gazette. How which the newspaper is published. See 47 C.F.R. Section ever, we have previously held that we will not relitigate in 73.3555(d)(l); see also Second Report and Order, 50 FCC 2d waiver cases issues that were settled by the Second Report at 1081 (assigning limited weight to publications and and Order. All of the arguments raised by Shelbyville Pub broadcast media originating outside a community for pur lishing concerning improved news coverage, expertise, and poses of analyzing diversity because such sources often deal operating efficiencies were considered and rejected in the exclusively with regional or national issues and ignore rulemaking that led to passage of the present rule.9 issues important to the receiving community). This area of Shelbyville Publishing has not met its burden of showing "overlap" between radio broadcast signal and newspaper that unique public benefits warrant a waiver of the daily circulation occurs, in this case, in Shelbyville and sur newspaper/radio cross-ownership rule. See WAIT Radio v. rounding Bedford County, which is not in the Nashville FCC, 418 F.2d 1153 (D.C. Cir. 1969), cert, denied, 409 U.S. radio metro market. Shelbyville, with a population of 1027 (1972). 14,049, is also outside the Nashville Metropolitan Statistical 15. The Commission has granted a permanent waiver of Area (MSA).6 Shelbyville is the county seat of Bedford the broadcast/daily newspaper cross-ownership rule only County, which has an estimated population of 32,400, liv twice in the past twenty years, each involving major market ing in 12,500 households.7 With a daily circulation of 8,504 television stations Chicago and New York City. The throughout Bedford County, the Times-Gazette can reason exigencies of those particular cases (i.e., a struggling UHF ably be expected to serve approximately two-thirds of the station in Chicago; a bankrupt newspaper in New York) households in Bedford County. are not present in this case. No evidence has been pre 12. While the influence of some Nashville media outlets sented that either WLIJ or the Times-Gazette is suffering is certainly one factor to be considered, it is obvious that financially. Likewise, there is no former relationship and many of these "voices" do not compete against WL1J or the no financial tie between the property to be acquired and Times-Gazette for advertisers or audience/circulation. As the buyer, as there was in Fox and in Field. Furthermore, noted, Shelbyville and Bedford County are not within the the asserted jmblic benefit is one that was considered be Nashville radio metro market. It is also clear that many fore and rejected when we adopted the present rule. The county newspapers and many broadcast stations licensed to fact that Congress has given us the flexibility to change our distant communities in the Nashville ADI, such as policy does not suggest that we should grant waivers in Cookeville, Hendersonville, and Hopkinsville, Kentucky, cases where, as here, an applicant has not demonstrated do not contribute to coverage of issues of local concern in that competition and diversity would be preserved or en Shelbyville and Bedford County, issues that are at the heart hanced as a result. of the Commission©s concern with diversity.8 16. In conclusion, we find that the asserted public bene 13. Shelbyville is the community of license of three radio fit of improved local news coverage on WLIJ does not stations, two of which are owned by Cromwell, and accord outweigh the cost to diversity of removing one of three ing to Shelbyville Publishing, target listeners who live independent voices in the community of Shelbyville, espe north- of Shelbyville, closer to Nashville. Shelbyville Pub- cially where there is no question concerning the financial lishing©s waiver request relies upon the Nashville ADI as viability of any of the media properties. the relevant market and does not indicate which news papers, radio stations and other media sources actually

experience, that it is unrealistic to expect true diversity from a 7 Id. commonly owned station-newspaper combination. The diver B See Second Report and Order, 50 FCC 2d at 1081. gency of their viewpoints cannot be expected to be the same as g See id. at 1064-65. We acknowledged that co-ownership of if they were antagonistically run.©" Federal Communications newspapers and broadcast stations had a positive effect on the Commission v. National Citizens Committee for Broadcasting, 436 early growth of FM and TV service. See id. at 1064. However, U.S. 775, 797 (1978) (quoting Second Report and Order, 50 FCC with the maturation of these services, we found that the cost to 2d at 1079-80). diversity of allowing co-ownership was no longer justifiable. Id. 6 Rand McNally 1995 Commercial Atlas and Marketing Guide at 1075. (1/1/94 estimated population).

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17. Accordingly, IT IS ORDERED, That the Petition to Deny filed by the Cromwell Group IS GRANTED, That Shelbyville Publishing Co., Inc.©s request for a permanent waiver of the daily newspaper cross-ownership rule IS DE NIED, and That the application to assign the license of WLIJ(AM), Shelbyville, Tennessee from Hopkins Hall Broadcasting, Inc. to Shelbyville Publishing Co., Inc. IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

William F. Caton Acting Secretary

9767 FCC 95-331 Federal Communications Commission Record 10 FCC Red NO. 19

Separate Statement of Commissioner James H. Quello

RE: Assignment of License (Shelbyville, Tennessee)

Twenty years ago, the Commission addressed the need for diversity in broadcasting by ruling that no entity could own both a daily newspaper and a broadcast station in the same market. At a time when competition from other media was a futuristic vision, this rule served a useful purpose. As I have noted before, today©s broadcasters confront a reality featuring increased cable penetration, emerging MMDS systems, and nationwide DBS. Soon to come are satellite DARS and video dialtone.

I believe that this prohibition should be reexamined as part of the overall reevaluation of our multiple ownership rules. We must ensure that broadcasters can continue to compete in today©s increasingly competitive atmosphere. Allowing a newspaper to devote its reporting resources to the enhancement of a station©s broadcast news programming could be an economical way of expanding local programming. At the same time, we must be cognizant of the need to enhance diversity, particularly in small markets with fewer media voices. In any event, expansion of our waiver policy is not the proper mechanism for changing this rule -- particularly a rule that can only be changed through Congressional action.

I therefore concur in this Memorandum Opinion and Order to deny Shelbyville Publishing©s request for waiver and the application to assign WLIJ.

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