Federal Communications Commission DA 99-279

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

In re Petition of: ) ) Blue Ridge Cable Technologies, Inc. ) CSR-5313-A ) For Modification of Market of Station ) WXTV, Channel 41, Paterson, NJ )

MEMORANDUM OPINION AND ORDER

Adopted: February 2, 1999 Released: February 4, 1999

By the Deputy Chief, Cable Services Bureau:

I. INTRODUCTION

1. In the above-captioned proceeding, Blue Ridge Cable Technologies ("Blue Ridge") has asked the Commission to exclude certain Pennsylvania cable communities from the area of dominant influence ("ADI") of television broadcast station WXTV (Ch. 41--Paterson, New Jersey), for must-carry purposes. 1 · WXTV filed an opposition to this petition to which Blue Ridge filed a reply.

II. BACKGROUND

2. Pursuant to Section 614 of the Communications Act and implementing rules adopted by the Commission in its Implementation of the Consumer Protection and Competition Act of 1992, Broadcast Signal Issues ("Must Carry Order"),2 a commercial television broadcast station is entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market for this purpose is its "area of dominant influence," or ADI, as defined by the Arbitron audience research organization.3 An ADI is a geographic market designation that defines each television market exclusive of others, based on measured viewing patterns. Essentially, each county in the United States is allocated to a market based on which home-market stations receive a preponderance of total

1The f~llowing Pennsylvania cable systems and communities are subject to the market modification: (I) Milford Headend (Serving Milford Borough, Milford Township, Dingman's Township, Lehman Township, and Delaware Township; (2) Shohola Headend (Serving Lackawaxen Township, Shohola Township, Blooming Grove Township, and Porter Township; and (3) Hemlock Farms Headend (Serving Hemlock Farms). Blue Ridge Petition at Exhibit 1.

28 FCC Red 2965, 2976-2977 (1993).

3Section 76.55(e) of the Commission's Rules provides that the ADis to be used for purposes of the initial implementation of the mandatory carriage rules are those published in Arbitron' s 1991-1992 Television Market Guide. 2320 Federal Communications Commission DA 99-279

viewing hours in the county. For purposes of this calculation, both over-t~e-air and cable television viewing are included.4

3. Under the Act, however, the Commission is also directed to consider changes in market areas. Section 614(h)(l)(C) provides that the Commission may:

with respect to a particular television broadcast station, include additional communities within its television market or exclude communities from such station's television market to better effectuate the purposes of this section.5

In considering such requests, the Act provides that:

the Commission shall afford particular attention to the value of localism by . taking into account such factors as -

(I) whether the station, or other stations located in the same area, have been historically carried on the cable system or systems within such community;

(II) whether the provides coverage or other local service to such community;

(III) whether any other television station that is eligible to be carried by a cable system in such community in fulfillment of the requirements of this section · provides news coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; and

(IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community.6

4. The legislative history of this provision indicates that:

where the presumption in favor of ADI carriage would result in cable subscribers losing access to local stations because they are outside the ADI in which a local cable system operates, the FCC may make an adjustment to include or exclude particular communities from a television station's market consistent with Congress' objective to ensure that television stations be carried in the areas in which they

4Because of the topography involved, certain counties are divided into more than one sampling unit. Also, in certain circumstances, a station may have its home county assigned to an ADI even though it receives less than a preponderance of the audience in that county. For a more complete description of how counties are allocated, see Arbitron's Description of Methodology.

547 U.S.C. §534(h)(l)(C).

6Communications Act of 1934, as amended, §614(h)(l)(C)(ii), 47 U.S.C. §534(h)(l)(C)(ii).

2321 Federal Communications Commission DA 99-279

serve arid which form their economic market.

* * * *

[This subsection] establishes certain criteria which the Commission shall consider in acting on requests to modify the geographic area in which stations have signal carriage rights. These factors are not intended to be exclusive, but may be used to demonstrate that a community is part of a particular station's market. 7

5. The Commission provided guidance in its Must Carry Order, to aid decision making in these matters, as follows:

For example, the historical carriage of the station could be illustrated by the submission of documents listing the cable system's channel line-up (e.g., rate cards) for a period of years. To show that the station provides coverage or other local service to the cable community (factor 2), parties may demonstrate that the station places at least a Grade B coverage contour over the cable community or is located close to the community in terms of mileage. Coverage of news or other programming of interest to the community could be demon­ strated by program logs or other descriptions of local program offerings. The final factor concerns viewing patterns in the cable community in cable and noncable homes. Audience data clearly provide appropriate evidence about this factor. In this regard, we note that surveys such as those used to demonstrate significantly viewed status could be useful. However, since this factor requires us to evaluate viewing on a community basis for cable and noncable homes, and significantly viewed surveys typically measure viewing only in noncable households, such surveys may need to be supplemented with additional data concerning viewing in cable homes. 8

6. As for deletions of communities from a station's market, the legislative history of this provision indicates that:

The provisions of [this subsection] reflect a recognition that the Commission may conclude that a community within a station's ADI may be so far removed from the station that it cannot be deemed part of the station's market. It is not the Committee's inten!ion that these provisions be used by cable systems to manipulate their carriage obligations to avoid compliance with the objectives of this section. Further, this section is not intended to permit a cable system to discriminate among several stations licensed to the same community. Unless a cable system can point to particularized evidence that its community is not part of one station's market, it should not be permitted to single out individual stations

7H.R. Rep. No. 102-628, 102d Cong., 2d Sess. at 97 (1992).

88 FCC Red at 2977 (emphasis in original).

2322 Federal Communications Commission DA 99-279

serving the same area and request that the cable system's community be deleted from the station's television market. 9

7. In adopting rules to implement this provision, the Commission indicated that changes requested should be considered on a community-by-community basis rather than on a county-by-county basis, and that they should be treated as specific to particular stations rather than applicable in common to all stations in the market. 10 The rules further provide, in accordance with the requirements of the Act, that a station not be deleted from carriage during the pendency of an ADI change request. 11

ID. MARKET FACTS AND THE PARTIES' ARGUMENTS

8. Blue Ridge requests that WXTV's market be modified to exclude the communities served by its Pike County, Pennsylvania area cable systems. Blue Ridge states that Pike County is the only Pennsylvania county encompassed by the widespread New York market and is separated from the rest of the ADI by the Delaware river. 12 Blue Ridge also states that WXTV commenced operations in August, 1968, and broadcasts from the Empire State Building in New York City. 13

9. Blue Ridge argues that the statutory factors for market modification weigh in favor of deleting the cable communities from WXTV's market. Blue Ridge asserts that the station has no history of carriage on its systems even though it has been on-the-air for thirty years; according to the operator, the absence of WXTV from· the Pike County systems is attributable to the fact that the communities served by the headends are distant from the television station. 14 Blue Ridge also asserts that WXTV is not carried by any other cable system operating in Pike County and is not carried by the Sussex County, New Jersey cable system that serves the communities of Montague, Hainesville, and Layton, which are located on the New Jersey side of the Delaware River. 15 With regard to local coverage, Blue Ridge asserts that the station's Grade B contour does not cover any of the cable communities and the distances between Paterson and the cable communities are no less than 43 miles away. 16 Blue Ridge also asserts that there is no nexus between the station's Spanish language programming and the cable communities; to support this conclusion, the operator states that the TV Guide available in Pike County does not list WXTV and only 3% of the population in Pike County are Hispanic. 17 As for coverage by other qualified television stations,

9 H.R. Rep. No. 102-628, supra, at 97-98.

I08 FCC Red at 2977 n. 139.

11 47 C.F.R. §76.59.

12Petition at 2.

13/d. at 3.

14/d. at 5.

15/d. atn. 15.

16/d. at 6.

17/d. at 7.

2323 Federal Communications Commission DA 99-279

Blue Ridge asserts that it carries nearby Wilkes-Barre and Scranton, Pennsylvania television stations which air local newscasts and programming geared to the cable communities. 18 Finally, Blue Ridge asserts that while it does not have access to Nielsen viewership data for WXTV in Pike County, the Commission may assume that there is little likelihood of any reported viewing of the station in the cable communities at issue because of the distances involved and the lack of local coverage. 19

10. In opposition, WXTV generally argues that the requested modification unjustifiably seeks to deny WXTV the right to carriage on Blue Ridge's systems and has been made in retaliation for WXTV's attempts to enforce its must carry rights on those systems. 20 WXTV explains that it initially sought carriage in Pike County via its must carry election letters sent to Blue Ridge prior to the October 1, 1996 deadline; when carriage did not commence, the station contacted Blue Ridge.21 According to WXTV, Blue Ridge system General Manager, Richard Semmel, informed the station that it would not be carried on the system because the station was not in their ADI. The station informed Blue Ridge that it had hired a consulting engineer to conduct signal strength measurements at the cable headends which were not carrying the station.22 WXTV states that it tested the station's signal strength at Blue Ridge's headends and the results showed that a good quality signal was present.23 WXTV claims that, rather than commence carriage of the station as required, Blue Ridge filed this petition.

11. WXTV asserts that Blue Ridge erroneously contends that its Grade B contour does not encompass any portion of Sussex County, New Jersey; WXTV rebuts this point by attaching a Grade B contour map illustrating that its contour envelops almost all of Sussex County and reaches the border of Pike County.24 WXTV further asserts that, given the terrain in the area, it is anticipated that the station would provide Grade B coverage to points within Pike County, particularly at higher elevations; to buttress this assertion, WXTV states that the signal strength measurements taken at Blue Ridge's Milford and Hemlock Farms systems show that the station provides an adequate strength signal to qualify as a must carry station on those systems.25

12. WXTV argues that Blue Ridge's mileage argument is disingenuous because it carries other local television stations that are further away from the systems. The station states that Blue Ridge carries WABC, WNBC, WCBS, WNYW, and WPIX, which operate from the World Trade Center in New York

18ld. at 7-8.

19ld. at 8.

20WXTV opposition at 2.

21 1d. at 2.

23 Id. at 3. WXTV notes that while the signal strength at the Shohola headend does not currently meet the required signal strength, a good quality viewable picture was nevertheless received demonstrating that the station provides over-the-air coverage of the communities served by Blue Ridge.

24ld at 3.

251d at4.

2324 Federal Communications Commission DA 99-279

City, a short distance from the Empire State Building, where its transmitter is sited.26 In addition, WXTV notes that Blue Ridge carries WWOR, which is licensed to Secaucus, New Jersey, a community which is further from Pike County than Paterson, NJ, its community of license. WXTV argues that if the operator carries these stations, it should carry WXTV's signal as well. WXTV also states that, according to a Pike County survey on commuter activities, New Jersey is the principal destination for 94.5% of Pike County commuters; the other 5.5% of commuters travel to New York City. 27 Drawing on these data, WXTV claims that Pike County citizens have a need and interest in the programming generated by it and other New York area stations.

13. WXTV argues that while 3 .1 % of Pike County residents are of Hispanic origin, these viewers are not expendable, and they should have access to the Spanish language programming the station airs.28 WXTV further argues that Blue Ridge should not be allowed to discriminate against members of the community it serves simply because they are minorities. The station requests that the Commission "reaffirm ·that minority programming is important. "29

14. WXTV argues that its lack of historical carriage on Blue Ridge's cable systems should not count against the station because to do so would reward the operator for its failure to comply with the law. WXTV argues that it has no history on the systems precisely because of Blue Ridge's discriminatory refusal to carry its signal.30 WXTV also asserts that its failure to demonstrate an audience should not be a significant factor in the analysis because it is a specialty station.31

15. In reply, Blue Ridge generally states that the four statutory factors fully support modification of WXTV's market. Blue Ridge first argues that it has not abused the Commission's processes by filing its market modification petition, as WXTV implies, but rather has initiated a process that it is statutorily entitled to pursue.32 With regard to the historical carriage factor, Blue Ridge asserts that WXTV is not carried by any other cable system in Pike County or by the nearby cable system that serves the Sussex County, New Jersey communities located across the Delaware River.33 Blue Ridge also contends that WXTV, being on the air for over thirty years, cannot claim discrimination based on its age

26/d at 5.

27/d at 6 citing Transportation Issues, Pike County Comprehensive Plan, April 1992.

28/d. at 6.

31 /d at 8. The station notes that per station ratings for Pike County cannot be developed by Nielsen because the number of diaries is too small.

32Blue Ridge Reply at 3.

33 /d at 4.

2325 Federal Communications Commission DA 99-279

as newer television stations have done in other market modification proceedings.34 Blue Ridge also asserts that WXTV is unable to show any viewing of the station in Pike County.35

16. With regard to the local service factor, Blue Ridge asserts the station's Grade B service contour fails to cover any of the cable communities at issue in this proceeding, strongly indicating that WXTV does not provide service to Pike County. Blue Ridge acknowledges that its Pike County systems carry W ABC, WNBC, WCBS, WNYW and WPIX as well as WWOR; the operator states that all of these stations transmit from the World Trade Center in New York City and these stations have been carried since cable television service commenced in the Pike County communities.36 Blue Ridge adds that it does not carry New York City station WPXN or Spanish language New Jersey station WNJU which also have transmitter sites atop of the World Trade Center nor does it carry New Jersey station WHSE, which is licensed to Newark, NJ, and transmits from the Empire State Building, as does WXTV. 37 As for the commuter report submitted by WXTV, Blue Ridge asserts that the data in the report is not only stale (being 6 112 years old) but the evidence fails to establish the existence of any specific ties between Pike County and Paterson, NJ, or between WXTV and Pike County.38 Finally, Blue Ridge argues that the station does not air programming specifically targeted to the cable communities and its Spanish language programming should not be accorded credit in the analysis under the factual circumstances.39

IV. ANALYSIS AND DECISION

17. We will grant Blue Ridge's modification request. Based on the four statutory factors and the station's physical characteristics, we believe that the cable systems herein are sufficiently removed from WXTV that the communities ought not to be deemed part of the station's market for mandatory carriage purposes. 40 As an initial matter, we note that, according to the legislative history of the 1992 Cable Act, the use of ADI market areas is intended "to ensure that television stations be carried in the areas which they service and which form their economic market. "41 Changes may be sought and granted by the Commission "to better effectuate the purposes" of the mandatory carriage requirements.42 The market change process incorporated into the Communications Act, however, is not intended to be a process whereby cable operators may seek relief from the mandatory signal carriage obligations apart from the question of whether a change in the market area involved is warranted. When viewed against this

35 /d at 9.

36/d. at 6.

38/d. at 8.

39/d at 9.

40H.R. Rep. 102-628, at 97-98.

41 H.R. Rep. 102-628, 102d Cong., 2d Sess. 97 (1992).

4247 U.S.C. §534(h).

2326 Federal Communications Commission DA 99-279 backdrop, and considering all of the relevant factual circumstances in the record, we believe that Blue Ridge's deletion petition appears to be a legitimate request to redraw ADI boundaries to make them congruous with market realities. Blue Ridge's actions do not reflect an intention to avoid its signal carriage responsibilities under the 1992 Cable Act and the Commission's rules, nor do they evidence a pattern of discriminatory conduct against the station.

A. Historic Carriage

18. WXTV began operation in 1968. Despite being on-the-air for over thirty years, it has no history of carriage on Blue Ridge's systems. Given the statutory directive, weight must be given to this factor, but that must be done bearing in mind that the objective of the Section 614(h) process is to "better effectuate the purposes" of the broadcast signal carriage scheme. Thus, with respect to the question of historical carriage patterns, attention must be paid to the circumstances from which such patterns . developed. In this case, we find that WXTV's lack of historical carriage weighs in favor of excluding the cable communities from its market because the station has never had a cable audience even though it has been broadcasting for over three . The absence of a cable audience on Blue Ridge's systems is circumstantial evidence that the station does not have a connection to Pike County cable subscribers. That other cable systems in the general vicinity of Blue Ridge' systems have not carried WXTV further demonstrates that the station lacks historical ties to the far western part of the New York market.

B. Grade B Coverage/Local Service

19. A station's local service to cable communities is one of the relevant factors to consider in this particular case. Service may be· measured through geographic means: by examining the distance between the station and the cable communities subject to the deletion request and taking into account natural phenomena such as waterways, mountains and valleys w~ich tend to separate communities. A station's broadcast of local programming, which has a distinct nexus to the cable communities, is also evidence of local service. Finally, a sta~ion's Grade A or Grade B contour coverage is an additional indicator of local service and we will weigh the presence or absence of such technical coverage accordingly.

20. In the instant case, WXTV does not satisfy any of the local coverage elements we find important in the market modification analysis. WXTV does not air programming that could be considered "local" to the cable communities at issue. While 3.1% of Pike County residents are of Hispanic origin, this does not necessarily mean that WXTV's programming is targeted to interests that are specific to Hispanic residents in the cable communities. It is also significant that all of the cable communities involved lie outside of WXTV's predicted Grade B contour. The Commission, in its Broadcast Signal Carriage Issues Report and Order, stated that "to show that the station provides coverage or other local service to the cable communities, parties may demonstrate that the station places at least a Grade B coverage contour over the cable community. "43 Blue Ridge has sufficiently demonstrated the absence of such coverage in this instance. We also find that Paterson, New Jersey, the of WXTV, is

438 FCC Red at 2976-2977.

2327 Federal Communications Commission DA 99-279

distant, in terms of mileage, located no less than 43 miles from the cable communities.44 This distance, coupled with the intervention of the Delaware River, attenuates any ties between the station and the cable communities. The commuter report submitted by WXTV proves no different. We agree with Blue Ridge that the data in the report fails to establish the existence of any specific connection between Pike County and Paterson, NJ, or between WXTV and Pike County.

21. We recognize that Blue Ridge carries stations W ABC, WNBC, WCBS, WNYW and WPIX from New York as well as WWOR, which is licensed to Secaucus, New Jersey. Carriage of these stations by Blue Ridge, but not WXTV, is not indicative of discriminatory treatment by the cable operator. First, the five New York stations all broadcast from the World Trade Center while WXTV broadcasts from an entirely separate transmitter farm on the Empire State Building. Second, Blue Ridge does not carry New York City station WPXN or Spanish language New Jersey station WNJU, which also have transmitter sites atop of the World Trade Center. Finally, the operator does not carry New Jersey station WHSE, which is licensed to Newark, NJ, or noncommercial television station WNYE, the only other two television stations in the New York market transmitting from the Empire State Building. These facts demonstrate that WXTV was not unfairly singled out for deletion by Blue Ridge from the many other television stations in the New York market.

C. Carriage of Other Stations

22. We also believe that Blue Ridge's carriage of other local television stations provides support for the action requested. Where a cable operator is seeking to delete a station's mandatory carriage rights in certain communities, the issue of local coverage by other stations becomes a factor to which we will give greater weight than in cases where a party is seeking to add communities. In this case, we find that the five New York stations, as well as WWOR, carried by Blue Ridge have long provided local broadcast service to the cable communities, while WXTV has not. These market facts, coupled with WXTV's lack of historical carriage and local service, supports Blue Ridge' arguments under the third factor.

D. Viewership

23. There is no indication that WXTV has an audience in the cable communities at issue. In fact, WXTV is not even listed in the regional TV Guide. This failure to demonstrate viewership is of evidentiary significance when tied with the lack of both historical carriage and Grade B coverage. The absence of any over-the-air audience further supports the operator's market modification petition.

E. Other Factors

44The legislative history of Section 6 l 4(h) specifically notes that when making its market determinations, the Commission may conclude that a community within a station's ADI may be "so far removed" from the station that it cannot be deemed to be part of the station's market. H.R. Rep. No. 628, 102d Cong., 2d Sess.at 97-98. ("Subsection (h)(3)((B) establishes certain criteria which the Commission shall consider in acting on requests to modify the geographic area in which stations have signal carriage rights. These factors are not intended to be exclusive, but may be used to demonstrate that a community is part of a particular station's market ....The provisions of subsection (h)(3)(B) [also] reflect a recognition that the Commission may conclude that a community within a station's ADI may be so far removed from the station that it cannot be deemed part of the station's market.")

2328 Federal Communications Commission DA 99-279

24. An important consideration in our determination, outside the scope of the statutory factors, is the fact that Pike County, and television viewers therein, have considerable ties with markets to its west, in the state of Pennsylvania. In fact, Nielsen Media Research had reassigned Pike County to the Wilkes­ Barre/Scranton designated market area ("DMA") in its 1997-98 DMA Market and Demographic Rank Report. This factor is noteworthy because the Commission has decided to shift to DMAs from ADis for the next must carry/retransmission consent election cycle commencing on January 1, 2000, and will use Nielsen's 1997-98 Rank Report to determine markets for broadcast signal carriage purposes.45 As such, Blue Ridge will soon be under no obligation to carry WXTV because Pike County will no longer be included in the New York market for must carry purposes. In addition, we note that Blue Ridge is voluntarily carrying 5, out of a possible 7, Wilkes-Barre/Scranton ADI television stations.46 On the other hand, Blue Ridge is carrying only 8, out of a possible 22, New York ADI television stations.47 This evidence demonstrates that Blue Ridge cable subscribers, as well as Pike County television yiewers, more readily align themselves with communities in Wilkes-Barre/Scranton and surrounding areas.

V. CONCLUSION

25. We note that the arguments raised in this proceeding are analogous to those addressed at length in the Commission's New York ADI Appeals Memorandum Opinion and Order, (''New York ADI Order'').48 In that case, the Commission generally affirmed the Cable Services Bureau's decision to retain certain communities and to delete other communities in the New York ADI with regard to certain local broadcast television stations, based on the four statutory factors, and other evidentiary considerations. WLNY, WHAI, and WRNN, three television stations involved in the New York ADI Order, filed a court appeal of the Commission's ruling in late 1997.49 The stations argued that the Commission's decision to modify their market areas, based on Grade B contour coverage, mileage, and other factors, was contrary to the Act's must cariy provisions and was arbitrary and capricious decisionmaking under the Administrative Procedure Act. The United States Court of Appeals for Second Circuit held that the Commission "properly applied the statute by considering the four factors in the statute as well as others not enumerated in order to preserve local programming."50 The Court rearticulated the Commission's approach stating that, in deciding market deletion cases, the Commission should:

"(I) observe the presumption that a broadcast station's market is the ADI in which it is located; (2) consider the four statutory factors in an exclusion proceeding to evaluate

45See 47 C.F.R. §76.55(e)(2).

46The stations currently carried are WBRE, WNEP, WYOU, WOLF, and WVIA.

47These stations are WCBS, WNBC, WABC, WWOR, WPIX, WNYW, WNET, and WMBC.

48See 12 FCC Red 12262 (1997). This Order disposed of 26 separate must carry/market modification appeals involving seven New York ADI cable operators and five New York ADI television stations.

49 The case, WLNY-TV. Inc. et. al. v. FCC and USA, was heard in the United States Court of Appeals for the Second Circuit. On December 21, 1998, the Second Circuit, in a unanimous decision, affirmed the Commission's Order. WLNY-TV, Inc. et. al. v. FCC, _ F. 3d _, 1998 WL 887054, (2d Cir. 1998).

sold.

2329 Federal Communications Commission DA 99-279

particularized evidence of local origination of programming; and (3) if the four factors alone would trigger widespread exclusion, consider Grade B contours, distance, geographical and political boundaries, and other unenumerated factors to limit the scope of exclusion. "51

The Court's opinion fully endorsed the Commission's approach to market modifications and agreed that the Commission's careful balancing of the enumerated statutory factors, and other unenumerated factors, was entirely consistent with the language and intent of the Act.

26. Following Commission precedent, and cognizant of the Second Circuit's holding, we have carefully considered each statutory factor, as well as other market indicators, in the context of the circumstances presented here. Given the evidence as to Pike County's DMA status, the lack of Grade B coverage, the lack of viewership in the cable communities at issue, the lack of carriage of WXTV on Blue Ridge' cable systems, and the absence of local programming, we conclude that it is logical and consistent with the objective of Section 614 of the Communications Act to delete Blue Ridge' cable communities from WXTV's market for mandatory carriage purposes.

VI. ORDERING CLAUSES

27. Accordingly, IT IS ORDERED, pursuant to § 614(h) of the Communications Act of 1934, as amended (47 U.S.C. § 534(h)) and § 76.59 of the Commission's Rules, 47 C.F.R. § 76.59, that the captioned petition for special relief filed September 30, 1998 by Blue Ridge Cable Technologies IS GRANTED.

28. This action is taken pursuant to § 0.321 of the Commission's Rules.52

FEDERAL COMMUNICATIONS COMMISSION

William H. Johnson, Deputy Chief Cable Services Bureau

5247 C.F.R. § 0.321.

2330