Federal Communications Commission Before the Federal Communications Commission Washington, D.C. 20554 in Re Application of R. St
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Federal Communications Commission DA 99-637 Before the Federal Communications Commission Washington, D.C. 20554 In re Application of ) ) R. Steven Hicks ) (Assignor) ) ) and ) File No. BAPH-98071 JGG ) Capstar TX Limited Partnership ) (Assignee) ) ) For Assignment of License of ) KFMK(FM). Round Rock, Texas ) MEMORANDUM OPINION AND ORDER Adopted: April 1, 1999 Released: April 1, 1999 By the Chief. Mass Media Bureau: I. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it: (I ) the above-captioned unopposed application for the assignment of the construction permit of KFMK(FM), 1 Round Rock, Texas from R. Steven Hicks to Capstar TX Limited Partnership ("Capstar TX'.); and (2) a related request for a conditional waiver of the Commission·s one-to-a-market rule, 47 C.F.R. §73.3555(c), which restricts common ownership of a radio station and a television station in the same market.1 For the reasons set forth below, we grant the assignment application and a temporary conditional waiver of our one-to-a-market rule.3 2. Capstar TX is controlled, through several intermediate subsidiaries. by Thomas 0. Hicks 1 KFMK(FM) has a pending license to cover the construction permit. File No. BLH-9808 I 8KB. = Section 73.3555(c) of the Commission's rules prohibits the common ownership of radio and television stations in the same market if the 2 mV/m contour of an AM station or the 1 mV/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. ; The Commission has delegated to the Mass Media Bureau authority to act on uncontested one-to-a-market waiver requests involving stations in the top 100 television markets and that present no new or novel issues. Louis C. DeArias. Receiver. 11 FCC Red 3662, 3667 (1996); see also Review ofthe Commission "s Regulations Governing Television Broadcast Ownership, Second Further Notice of Proposed Rule Making, MM Docket Nos. 91-221 and 87-8. 11 FCC Red 21655, 21689 n.130 (1996) C-'Second Further NPRM''). The instant waiver request presents no new or novel issues~ and the stations involved are located in the Austin Designated Market Area ("DMA "), the 60th largest DMA in the country. 4601 Federal Communications Commission DA 99-637 ("Hicks").4 Capstar TX is currently the licensee of KVET(AM), KVET-FM and KASE-FM. Austin. Texas.5 Hicks also ultimately controls LIN Television Corporation which. through intermediate subsidiaries. is the licensee of KXAN-TV (Channel 36, NBC), Austin, Texas. 0 LIN brokers UHF station KNV A(TV) (Channel 54, WB), Austin, Texas, pursuant to a local marketing agreement. Grant of the instant assignment application would create a new radio-television station combination because the Grade A contour of KXAN-TV entirely encompasses the community of license of KFMK(FM). Round Rock. Texas. Capstar TX's proposed acquisition of KFMK(FM) also implicates the local radio ownership rules. Consequently, Capstar TX has requested a conditional waiver of the one-to-a-market rule to add KFMK(FM) to its existing radio-television combination and to permit its ownership of one television station. one AM radio station and three FM radio stations in the Austin DMA. the 60th largest. Capstar TX has also submitted a showing to demonstrate that its acquisition of KFMK(FM) complies with the radio local ownership rules. One-to-a-Market Waiver Showing 3. Capstar TX bases its request for waiver of the one-to-a-market rule on the standards adopted in the Second Report and Order, MM Docket No. 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."). Under these criteria, the Commission presumptively favors waiver requests involving station combinations serving the top 25 markets where at least 30 separately owned, operated, and controlled broadcast licensees or "voices" will remain after the proposed combination.7 The Commission also favors waiver requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time or that are in bankruptcy proceedings. Otherwise. the requests must be evaluated under a more rigorous case-by-case approach. See 47 C.F.R. § 73.3555. note 7. 4. We shall review Capstar TX's waiver request under the case-by-case standard because Austin is the 60th largest OMA in the country and Capstar TX has not claimed that KFMK(FM). is a "failed station." Moreover, evaluation of the waiver request under the case-by-case standard is appropriate because the proposed transaction involves the common ownership of more than one same-service radio station with a television station. See Memorandum Opinion and Order, MM Docket 91-140. 7 FCC Red Thomas 0. Hicks and R. Steven Hicks are brothers. ' On May 26. 1998. the Commission granted the assignment of license ofKVET(AM). KVET-FM and KASE FM to SFXTX. L.P. from Butler Broadcasting Co., Ltd., and a conditional waiver of the one-to-a-market rule to allow common ownership by Hicks of KXAN-TV and the three Austin radio stations and also a TV LMA with KNVA(TV). The grant was also conditioned on the outcome of the attribution rulemaking proceeding with respect to the LMA with KNVA(TV). See Butler Broadcasting Co., Ltd, I3 FCC Red I2410 (MMB 1998) ("Butler"). On June 15, 1998. the Commission was notified of the licensee name change from SFXTX. LP. to Capstar TX. L.P. for KVET(AM). KVET-FM and KASE-FM. " On March 2. 1998, the Commission granted consent to transfer control of LIN Television Corp. licensee of KXAN-TV. Austin. Texas. KXAM-TV, Llano, Texas, 7 other TV stations, and 17 low power and television translator stations from AT&T Corp. to LIN Holdings Corp. See AT&T Corp., I3 FCC Red 4633 (MMB I998). 7 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 I 996, Pub. L. No. 104-104. §202(d), I IO Stat. 56 (I996), the Commission is considering a proposal to implement extension of the waiver policy in the Second Further NPRM, I I FCC Red at 2I685. 4602 - Federal Communications Commission DA 99-637 6387. 6394 n. 40 (1992). Under the case-by-case standard, the Commission makes a public interest determination based upon the following five criteria: (l) the potential public service benefits that will arise from the joint operation of the facilities involved, 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 Red at 1753-54. In enunciating the five factors to be considered under the case-by-case standard, the Commission has noted that although not all five factors must be satisfied in each case, the overall consideration of these factors must weigh in favor of granting the waiver request. Second Report and Order Recon., 4 FCC Red at 6491. In support of its waiver request. Capstar TX submits a showing which addresses each of the five factors. 5. Public Service Benefits of Joint Operation. In Butler, Capstar TX reported that the proposed combination of KVET(AM), KVET-FM, KASE-FM, and KXAN-TV would result in cost savings totaling $316.906. These savings will be derived from the consolidation of staff and facilities. joint advertising, and cross promotions. Specifically, Capstar TX estimates that as a result of consolidation of programming services. it will save approximately $207,714 in personnel costs. Additionally, Capstar TX projects $47.334 in annual savings to be derived from the radio stations shifting their television advertising to KXAN-TV and an additional $21,400 annual savings in reduced television advertising costs derived from the radio stations' use of KXAN-TV's production facilities. Capstar TX states that it will save approximately $1.800 in credit and collection agency costs. Additionally, Capstar TX states that KXAN TV will save approximately $9,600 per year in its cost of producing promotional announcements by using Capstar TX's radio announcers to do the voice-overs for the TV announcements. Also. Capstar TX estimates savings of $17, 700 per year in advertising agency commissions and production costs for radio advertising placed directly on the radio stations and produced using the radio production facilities. Cost savings also include approximately $11,358 per year from the utilization of one traffic airplane by the TV and radio stations instead of using separate outside services for traffic coverage of special events throughout the year. Capstar TX now reports that the addition of KFMK(FM) to that combination would result in additional cost savings of $207,600 and this would increase the total annual cost savings to approximately $524.506. With regard to specific cost savings for KFMK(FM). Capstar TX estimates that KFMK(FM) will save $188,000 by using the services of some of the employees. such as engineers, receptionists, and a promotion director, employed by the other stations. It will save an additional $9,600 on rent by using some of the facilities of the other Capstar TX radio stations.