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 Kansas 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 effective radiated power 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.