Federal Communications Commission FCC 98-328

Before the Federal Communications Commission Washington, D.C. 20554

In re Applications of ) ) Marion B. Brechner ) (Transferor) ) ) and ) File Nos. BTCCT-980622IB ) BTCITL-980622IC - ID Berl M. Brechner ) (Transferee) ) ) For Consent to the Transfer of Control of ) Northeast Broadcasting Service, Inc. ) Licensee of Television Stations ) KTKA-TV, Topeka, Kansas ) K39BR, Junction City, Kansas ) K58CX, Lawrence, Kansas )

MEMORANDUM OPINION AND ORDER

Adopted: December 10, 1998 Released: December 18, 1998

By the Commission: Commissioner Tristani dissenting and issuing a statement.

1. The Commission has before it the above-captioned, unopposed applications seeking consent to the transfer of control of Northeast Kansas Broadcasting Service, Inc. (Northeast), licensee of television station KTKA-TV, Channel 49 (ABC), Topeka, Kansas, and low power television stations K39BR, Junction City, Kansas, and K58CX, Lawrence, Kansas, from Marion B. Brechner who proposes to transfer her 51 % interest to her son, Berl M. Brechner (Brechner or Transferee), who is the existing 49% shareholder of Northeast.

2. Brechner, along with his mother, owns Kansas Capital Broadcasting, Inc. (KCB), the licensee of KTPK(FM), Topeka, Kansas. So that he may retain his KCB 51% interest, acquire a controlling interest in Northeast, and continue the joint operation ofKTKA-TV and KTPK(FM), Brechner requests a permanent waiver of 47 C.F.R. § 73.3555(c), the Commission's one-to-a­ market rule. 1 Although no new one-to-a-market combination will be created here, the proposed transfer of control of KTKA-TV requires a renewed one-to-a-market showing based on current market conditions. For the reasons stated below, we will grant the requested waiver and the

Section 73.3SS5(c) of our Rules prohibits the common ownership of radio and television stations in the same market if the 2 m V/m contour of an A!Vl station or the I m V /m contour of an FM station encompasses the entire community of license of a television station or, conversely, if the Grade A contour of a television station encompasses the entire community of license of an AM or FM station. 1266 Federal Communications Commission FCC 98-328 applications for transfer of control.

Request for Waiver of the One-to-a-Market Rule

3. In 1989, we set forth our standard for waivers of our one-to-a-market rule. See Second Report and Order in MM Docket 87-7, 4 FCC Red 1741 (1989) (Second Report and Order), recon. granted in part and denied in part, 4 FCC Red 6489 (1989) (Second Report and Order Recon.). We stated that we would presumptively favor waiver requests involving (a) stations serving the top 25 markets where at least 30 separately owned, operated and controlled stations will remain following the proposed combination (the "top 25 market/30 voice standard");2 or (b) "failed" stations, i.e., stations which have not been operating for a substantial period of time (four months or more) or are involved in bankruptcy proceedings. Because the stations in this case are located in Topeka, Kansas, the 139th largest Designated Market Area (DMA) and Northeast does not claim that either is a failed station, its waiver request must be evaluated under the more rigorous case-by-case standard. See 47 C.F.R. § 73.3555(c), Note 7.

4. Under the case-by-case approach, we make a public interest determination of whether to grant a waiver based upon the following criteria: (1) the potential public service benefits of 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 the joint operation is implemented. Second Report and Order, 4 FCC Red at 1753-54. We now evaluate Brechner's waiver request based upon these five criteria.

5. Waiver Showing. At the outset, Brechner maintains that this transfer of control application is largely "technical" in nature in that he already owns 49% of Northeast and is merely acquiring his mother's 51 % interest. Brechner represents that his mother intends to gift her 51 % interest to him to address tax and estate planning issues attending to her age (86) and her desire to place in her only child legal control and operation of KTKA-TV. Brechner maintains that the proposed transfer of control will accurately reflect his current active day-to-day management and supervision of KTKA-TV. He points out that there are no new owners and Mrs. Brechner will remain as an officer of the corporation. He notes that the Commission recently approved the common ownership of KTKA-TV and KTPK(FM) in May 1997. See Twenty First Century Broadcasting, Inc., 12 FCC Red 6974 (1997) (1997 Waiver Grant). He argues that the market is virtually unchanged since that time and requests that the Commission treat the instant waiver request in a cursory rather than plenary fashion and grant the waiver as well as the transfer of control applications.

Pursuant to the statutory directive "to extend its [one-to-a-market] waiver policy to any of the top 50 markets, consistent with the public interest, convenience and necessity" under the Telecommunications Act of 1996, Pub. L. No. 104-104, § 202(d), 110 Stat. 56 (1996) the Commission is considering a proposal to implement extension of the waiver policy in the Second Further Notice of Proposed Rulemaking, in MM Docket No. 91-221 and 87-8, 11 FCC Red 21655, 21685 (1996).

1267 Federal Communications Commission FCC 98-328

6. Public Service Benefits of Joint Operations. As to the first factor, the transferee maintains that common ownership and joint operation of these stations will result in significant cost savings, operational efficiencies and programming benefits. Since the 1997 Waiver Grant, Northeast has completed construction of a new building and joint studio for the stations which KTPK(FM) will move into no later than March 1999. At that time, the stations will be able to share the same facility and Brechner estimates that the stations will be able to realize a savings of approximately $105,000 annually. Specifically, Brechner states that combining the office and technical operations of the stations will save a minimum of $50,000 per year; $42,000 will be saved on lease payments; and $13,000 per year will be saved on reduced property taxes, insurance and building repairs. In addition, Brechner states that since the 1997 Waiver Grant, KTPK(FM) has been able to utilize the news resources ofKTKA-TV, including updates on major breaking stories, regular weather updates, immediate warning of severe weather, and regular morning news updates. Once the consolidation is complete, the stations' news and community service will be enhanced through more in-depth investigative reports, consumer affairs information and expanded coverage of local events. Finally, Brechner states that the stations have begun to take advantage of the ability to co-sponsor community events such as the Ridge County Fair, Fiesta Mexicana, Lake Shawnee Country Concert, United Way Topeka Tigers Kickoff Game, family-oriented entertainment shows at the Topeka Performing Arts Center, Shriner Circus Coloring Contest and the future Capper Foundation Charity Classic. Thus, Brechner submits that grant of its one-to-a-market waiver would continue to benefit the public in the Topeka area.

7. Types of Facilities/Other Media Outlets. Under factors two and three, the type of facilities involved and other media outlets owned, KTKA-TV is an ABC network affiliated UHF station operating on Channel 49 with 3,480 kilowatts and an antenna height above average terrain of 1,476 feet. Brechner maintains that KTKA-TV competes against three other television stations licensed to the Topeka DMA. These stations are: KSNT(TV), Channel 27 (NBC); KTWU(TV), Channel 11 (PBS); and WIBW(TV), Channel 13 (CBS); all of which are licensed to Topeka, Kansas. KTPK(FM) is a Class C station that operates on 106.9 MHz with an of 100 kilowatts from an antenna height of 1,210 feet above average terrain. Brechner points out that KTPK(FM) competes against three other Class C FM stations with facilities comparable to those of its facilities. Brechner concludes that a waiver would not present issues of market dominance inconsistent with the public interest because of the comparable FM and television broadcast stations in the market and because he neither directly nor indirectly holds any other media interests in the market.

8. Economic Status/Other Voices in the Market. Brechner does not claim, under the fourth factor, that either station is in financial distress. Under factor five, Brechner maintains the number of broadcast stations and independent voices has not changed since the issuance of the 1997 Waiver Grant. According to Brechner's calculations, the Topeka market continues to include 4 television stations, 2 VHF and 2 UHF (including KTKA-TV) and 13 radio stations, 9 FM and 4 AM (including KTPK(FM)). These 17 stations are licensed to 12 separate owners. Brechner also notes that the Topeka market is served by 10 low power television stations, 9 local

1268 Federal Communications Commission FCC 98-328 newspapers, and 16 cable systems with a cable penetration rate of73%. Brechner concludes that grant of the transfer of control application for KIKA-TV will not affect the number of stations in the market and is clearly consistent with the 1997 Waiver Grant.

9. Discussion. In evaluating a request for waiver of the one-to-a-market rule, our goal "is to permit the public to benefit from such efficiencies of operation as may be achieved through the use of common facilities and staff, consistent with the maintenance of diversity and vigorous competition within the market areas involved." Second Report and Order Re con., 4 FCC R~d at 6491. We do not require that all five case-by-case criteria be satisfied as a precondition to a waiver, but rather that the overall consideration of these factors weigh in favor of the public interest. Id at 6493; Second Report and Order, 4 FCC Red at 1753. The Commission has recognized that "[i]n smaller markets, where competition is usually more limited, of particular importance would be demonstrated financial difficulties and the practical question of whether a waiver grant ... would in fact increase or decrease the vigor of competition and diversity in the market." Second Report and Order Recon., 4 FCC Red at 6491-2. Thus, in determining whether the public interest would be served by grant of a one-to-market-waiver, the Commission makes an independent evaltiation and balances other specific factors against its long-standing interest in maximizing competition and promoting diversity. Kargo Broadcasting, Inc., 5 FCC Red 3442, 3443 (1990). We find that, on balance, the showing in support of the request for continuation of Northeast's one-to-a-market waiver meets our case-by-case criteria, and that a waiver in this case would not adversely affect competition and diversity in the relevant market.

10. Brechner has demonstrated that co11tinued joint ownership of KIKA-TV and KTPK(FM) will enable Northeast to realize significant cost savings and operational efficiencies that will result in public interest benefits such as enhanced news and weather coverage and increased community service. We find that, since the 1997 Waiver Grant, Northeast has taken significant steps towards realizing these cost savings and operational efficiencies. Most notably, since the 1997 Waiver Grant, Northeast has completed construction of the stations' new building and studio and expects to consolidate the stations' operations in March 1999. Brechner now estimates that such collocation will produce annual operational efficiency savings of at least $105,000. We find that such construction is an important step to enable Northeast to create the cost savings and operational efficiencies previously pledged in support of its earlier waiver request. As Northeast promised it would, KTPK(FM)'s utilization of the resources of KIKA-TV has already enhanced the FM station's news operations. KTPK(FM) is already enjoying increased access to KTKA-TV's news and weather resources which has translated into better news and weather reporting for the Topeka market. We expect that the upcoming consolidation of the stations' facilities will result in even greater news and weather reporting on the part of both stations. Furthermore, as Northeast previously predicted, the stations are taking advantage of common ownership to co-sponsor community events which continue to benefit the public in the Topeka area. Thus, we find that continued common ownership of the stations vvill result in further enhanced programming and community .service benefits for the Topeka market.

11. With respect to the types of facilities involved, the Commission endeavors to predict and avoid any significant adverse effect on diversity or competition from too powerful a radio-

1269 Federal Communications Commission FCC 98-328 television combination. Second Report and Order, 4 FCC Red at 6349. While KTPK(FM) is a powerful Class C FM station, we find that.there continues to be a sufficient number of other competing stations in the relevant market With facilities that are equal or superior to the facilities of both KTPK(FM) and KTKA-TV. For example, there is another commercial television station in the market competing with UHF station KTKA-TV. While KTPK(FM) is a Class C station, it must compete with 12 other radio stations, of which 3 are also Class C FM stations with facilities comparable to those ofKTPK(FM). We conclude that the combination proposed in this case does not present issues of market dominance inconsistent with the public interest.

12. While it is not claimed that any of the stations are experiencing financial difficulties, that fact does not preclude a grant of the waiver request. We have permitted one-to-a-market waivers in a number of cases where neither station was experiencing financial difficulties. See, e.g., S.E. Licensee G.P., 11 FCC Red 16727 (1996); Alta Gulf FM, Inc., IO FCC Red 7750 (1995); Secret Communications, L.P., IO FCC Red 6874 (1995).

13. With respect to diversity and competition, we find that there are a sufficient number of media voices serving the Topeka market such that the continued common ownership and operation of these stations will not have a negative impact on these factors. We have independently examined the television stations in the relevant Nielsen DMA and radio stations in the relevant television metro market. 3 In this case, there are 4 full service television stations serving the Topeka DMA (including KTKA-TV), as well as 13 radio stations (including KTPK(FM)). Therefore, the proposed combination will continue to compete in a market that has a total of 17 broadcast stations licensed to 12 separate owners. In addition, we find that there are a substantial number of other media available in the market, including 9 local newspapers and 16 cable systems with a combined 73% penetration rate.

14. Finally, our independent analysis also indicates that in the Topeka DMA, KTPK(FM) receives 16. 7% of the radio advertising revenue and that KTKA-TV receives 19% of the television advertising revenue.4 Together KTPK(FM) and KTPK-TV receive a combined television and radio station advertising share of 18%. KTKA-TV is the lowest ranked of the 3 full service commercial television stations in the Topeka market and KTPK(FM) is the second ranked FM station behind WIBW-FM, Topeka, Kansas. We conclude that the proposed combination will not create any undue concentration of ownership or control of broadcast media in the Topeka market.

We previously counted the nwnber of broadcast stations in the relevant TV metro market for radio stations and the relevant Arbitron Area of Dominant Influence (ADI) TV market for TV stations. See Second Report and Order, 4 FCC Red at 1760 n.101. Since Arbitron no longer compiles ADI data, we now accept showings using the Nielsen DMA in determining the nwnber of broadcast "voices" in the relevant market. See Media/Communications L.P., IO FCC Red 8116 n.3 (1995).

4 Advertising revenue data is obtained from BIA Publications, Inc.'s Radio Master Access and Television Master Access data bases.

1270 Federal Communications Commission FCC 98-328

15. We conclude that, when examined in its totality, Brechner's showing meets our case- .by-case waiver criteria. Brechner has shown that economic efficiencies will be maintained and gained and has represented that these savings will resul~ in various public service benefits. In addition, the continued common ownership and joint operation ofKTKA-TV and KTPK(FM) will not diminish competition or diversity in the Topeka market, which is served by a number of competing broadcast and other media voices. Moreover, th~ Commission, as recently as May 1997, granted the Brechners a permanent waiver to permit common ownership and joint operation of these stations and this subsequent review of the permanent waiver is necessary only because of a proposed intra-family ownership transfer of Mrs. Brechner's interest to her son. Therefore, grant of the requested waiver is justified in this case.

16. In view of the foregoing, and having determined that the parties are qualified, we find that a grant of these applications will serve the public interest, convenience and necessity.

17. Accordingly, IT IS ORDERED, That the request for permanent waiver of the Commission's one-to-a-market rule, 47 C.F.R. § 73.3555(c), to permit common ownership of station KTKA-TV, Topeka, Kansas, and KTPK(FM), Topeka, Kansas, IS GRANTED.

18. IT IS FURTHER ORDERED, That the applications (File Nos. BTCCT-980622IB, and BTCTTL-980622IC - ID) for transfer of control of Northeast Kansas Broadcasting Service, Inc., from Marion B. Brechner to Berl M. Brechner, ARE GRANTED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas Secretary

1271 Federal Communications Commission FCC 98-328

DISSENTING STATEMENT OF COMMISSIONER GLORIA TRISTAN!

In re Applications of Brechner _and Brechner, File Nos. BTCCT-980622IB and BTCTTL-980622IC - ID

For reasons similar to those set forth in my dissenting statement in Wabash Valley Broadcasting (FCC 98-260, rel. Oct. 6, 1998), I respectfully dissent.

1272