10 FCC Red No. 5 Federal Communications Commission Record FCC 94-361

2. KABC-AM Radio, Inc. is a wholly-owned subsidiary of Before the Cap Cities, which also owns the corporate licensees of Federal Communications Commission KABC(AM), KLOS(FM) and KABC-TV, all licensed to Los Washington, D.C. 20554 Angeles, .3 The Commission authorized Cap Cities to retain common ownership of these three stations in 1989 on the basis of Cap Cities© showing that the Los In re Application of Angeles market satisfied the Commission©s criteria for waiver of the one-to-a-market rule. See Capital Cities/ABC, Golden West Broadcasters Inc., 4 FCC Red 5498 (1989); see also In re Amendment of Section 73.3555 of the Commission©s Rules, the Broadcast (Assignor) Multiple Ownership Rules ("Second Report and Order"), 4 FCC Red 1741 (1989), recon. granted in part and denied in and File No. BAL-940503EA part ("Second Report and Order Recon."), 4 FCC Red 6489 (1989). Because the Grade A contour of KABC-TV encom KABC-AM Radio, Inc. passes all of , grant of the above-captioned (Assignee) application requires waiver of the one-to-a-market rule.4 3. Cap Cities bases its waiver request on the one-to- For Assignment of License of a-market waiver standards adopted in the Second Report KMPC(AM), Los Angeles, California and Order. Under these criteria, the Commission presump tively favors waiver requests involving station combinations serving the top 25 markets where there are at least 30 MEMORANDUM OPINION AND ORDER separately owned, operated and controlled broadcast li censees or "voices" after the proposed combination ("top Adopted: December 30, 1994; Released: February 21, 1995 25 market/30 voice standard"). See 47 C.F.R. §73.3555, n.7. It also favors requests involving "failed" broadcast stations, that is, stations that have not been operating for a substan By the Commission: tial period of time, e.g., four months, or that are involved in bankruptcy proceedings. Id. Other waiver requests are 1. The Commission has before it the above-captioned evaluated on a more rigorous case-by-case basis, as set forth application for assignment of license of KMPC(AM), Los in the Second Report and Order. While Cap Cities© waiver Angeles, California, from Golden West Broadcasters request meets the top 25 market/30 voice standard,5 it ("Golden West") to KABC-AM Radio, Inc., and a related nevertheless must be reviewed under the case-by-case stan request for waiver of 47 C.F.R. §73.3555(b), the Commis dard because, as noted, the proposed assignment of license sion©s one-to-a-market rule.1 On June 1, 1994, the Commis also relies upon the revised local radio ownership limits.6 sion received an informal objection to grant of the subject Under this standard, the Commission makes a public inter application from Thomas K. Van Amburg ("Van est determination based upon the following criteria: (1) the Amburg"). Van Amburg contends that the proposed assign potential public service benefits of joint operation of the ment of license contravenes prior Commission rulings re facilities; (2) the types of facilities involved; (3) the number garding ownership of local radio/television combinations by of media outlets owned by the applicant in the relevant KABC-AM Radio, Inc.©s parent corporation, Capital market; (4) the financial difficulties of the stations in Cities/ABC, Inc. ("Cap Cities"), as well as the "spirit and volved; and (5) the nature of the relevant" market in light intent" of the Commission©s radio ownership rule, 47 C.F.R. §73.3555(a)(l).2

1 Section 73.3555(b) of the Commission©s rules prohibits the §73.3555(a)(l). Cap Cities demonstrates that there are at least 15 common ownership of radio and television stations in the same radio stations whose contours overlap the contours of the pro market if the 2 mV/m contour of an AM station or the 1 mV/m posed commonly-owned stations. Because over 50 percent of contour of an FM station encompasses the entire community of principal community contour overlap of same service stations license of a commonly-owned television station, or, conversely, KABC(AM) and KMPC(AM) occurs within the Los Angeles, if the Grade A contour of a television station encompasses the California radio metre market, as defined by Arbitron, Inc., Cap entire community of license of a commonly-owned AM or FM Cities supplies audience share data from the most recent station. See 47 C.F.R. §73.3555(b). Arbitron survey available from that market at the time the 2 Van Amburg identifies himself as a member of a group of instant application was filed. See 47 C.F.R. §73.3555(a)(3)(iii). local broadcasters that unsuccessfully attempted to purchase Those data show that the combined audience share of KMPC(AM) from Golden West. Because Van Amburg©s opposi KABC(AM), KMPC(AM), and KLOS(FM) in the metro market tion was not served on the applicant and does not contain is 7.0 percent, and therefore below the 25 percent audience specific allegations of fact sufficient to show that Van Amburg is share limit set forth in the rule. a party in interest, his opposition will be considered as an 5 As set forth in paragraph 10, infra., the Los Angeles media informal objection pursuant to Section 73.3587 of the Commis market is the country©s second largest and contains 78 separate sion©s rules. See 47 C.F.R. §73.3587. broadcast "voices." 3 Cap Cities will hereafter be used to identify KABC-AM, " See In re Revision of Radio Rules and Policies, 1 FCC Red Radio, Inc., as well as the licensees of KABC(AM), KLOS-FM, 6387, 6394, n.40 (1992); see also Moosey Communications, Inc., 8 and KABC-TV. FCC Red 5247 (1993)(consideration of one-to-a-market waivers 4 Because the principal community contours of KMPC(AM) under the case-by-case standard still appropriate where new and KABC(AM) overlap. Cap Cities must also meet the require radio-TV combinations are created, pending the possible revi ments of the local radio ownership rule found in Section sion of the one-to-a-market rule in the outstanding TV owner 73.3555(a) of the Commission©s rules. See 47 C.F.R. ship proceeding in MM Docket No. 91-221).

2081 FCC 94-361 Federal Communications Commission Record 10 FCC Red No. 5

of the level of competition and diversity after the joint nighttime hours only. In support of its contention that the operation is implemented. See Second Report and Order, 4 subject facilities do not dominate the market, Cap Cities FCC Red at 1753-54. notes the presence of six other VHF television stations in 4. In support of its waiver request, Cap Cities submits a the Los Angeles market, as well as at least three other Class showing that addresses each of the five case-by-case factors.7 B FM stations and eleven AM stations with facilities com Cap Cities first asserts that the proposed combination of parable to KABC(AM) and KMPC(AM). KMPC(AM), KABC(AM), and KLOS(FM) will create effi 6. Third, with respect to the number of other media ciencies by combining management personnel, as well as outlets the applicant already owns in the relevant market, news, programming, and production staffs. Cap Cities con Cap Cities affirms it does not own any broadcast stations in tends that savings will be realized by consolidating radio the Los Angeles market other than KABC-TV, KLOS(FM), station sales offices, equipment sharing, and securing vol and KABC(AM). As previously noted, Cap Cities dem ume discounts on purchases of supplies and programming onstrates that for purposes of the Commission©s local radio services.8 Cap Cities also notes its intention to consolidate ownership rule, there are at least 15 radio stations whose its Los Angeles radio operations at the existing facilities of contours overlap the proposed commonly-owned radio sta KABC(AM) and KLOS(FM), reducing rent and utility ex tions and that the combined audience share of KLOS(FM), penses. With respect to benefits arising from its proposed KABC(AM), and KMPC(AM) in the Los Angeles metre ownership of KMPC(AM) and KABC-TV, Cap Cities main market is 7.0 percent. See note 4, supra. tains that although it intends to operate KMPC(AM) and 7. Fourth, with regard to the economic status of the KABC-TV separately, KMPC(AM)©s affiliation with KABC- stations involved in the proposed combination, Cap Cities TV will enable KMPC(AM) to avail itself of KABC-TV©s and Golden West state that KMPC(AM) sustained operating experience in the local employment market, particularly losses of $3.4 million in 1991, approximately $6.5 million KABC-TV©s access to recruitment sources and knowledge in 1992, and $6.9 million in 1993. Cap Cities and Golden of hiring conditions.9 Cap Cities further maintains that West also indicate that KMPC(AM)©s losses continued at a KMPC(AM)©s affiliation with Cap Cities© ABC Radio Net similar rate in 1994, and note that the station continued to work and the radio network©s affiliation with ABC Televi sustain losses notwithstanding Golden West©s implementa sion Network news operations will strengthen the news tion of a new program format in 1992. gathering resources of both KMPC(AM) and KABC-TV. In 8. The fifth factor relates to the nature of the relevant sum, Cap Cities estimates projected savings of $5.8 million market in light of the Commission©s concerns about diver annually from the proposed combination.- With respect to sity and competition. Relevant indicia include the number related public service and programming benefits, Cap of broadcast outlets, the number of separately-owned and Cities notes its intention to institute a format at operated "voices" in the market, and the presence of cable KMPC(AM) that would include enhanced public affairs and non-broadcast media. As to the number of broadcast programming analogous to that offered by KABC(AM), stations, the Commission has held that, in the context of a which Cap Cities indicates airs both daily public affairs one-to-a-market waiver, it will consider the "relevant TV programming and regular public service announcements.11 metro market for radio stations and the relevant ADI [Area Cap Cities further notes that combining KMPC(AM) with of Dominant Influence] TV market for TV stations." See KABC(AM) would enable KMPC(AM) to avail itself of Second Report and Order, 4 FCC Red at 1760, n. 101. Cap KABC(AM)©s community relations department, which Cap Cities represents that the Los Angeles ADI is ranked 2nd in Cities notes has received numerous awards for outstanding the country and contains 32 AM stations, 36 FM stations, public service. 24 TV stations, and over 30 daily newspapers. Cap Cities 5. Second, regarding the technical facilities involved, Cap further represents that the broadcast stations in the market Cities affirms that KABC-TV is a VHP television station are owned and operated by 73 different "voices." Addition operating on Channel 7 with 141 kW effective radiated ally, Cap Cities notes that the Los Angeles market is served power ("ERP") and an antenna height of 3210 feet above by 126 separate cable systems having a penetration rate of average terrain ("HAAT"). KLOS(FM) is a Class B FM 59 percent, and that over 81 percent of households have station operating on Channel 238 (95.5 MHz) with 50 kW VCRs. Cap Cities argues that viewpoint diversity in Los ERP and an antenna height of 1200 feet HAAT. Angeles exceeds that of any other market in the United KABC(AM) is a Class B AM station operating full time on States, and that the Los Angeles market has a greater 790 kHz with a power of 5 kW using a directional antenna number of independent broadcast "voices" than markets in system during nighttime hours only. KMPC(AM) is a Class which the Commission has recently granted requests for B AM station operating full time on 710 kHz with a power waiver of the one-to-a-market rule under the case-by-case of 50 kW during daytime hours and 10 kW during night- factors. 12 time hours using a directional antenna system during

7 It should be noted that "(njot all of the factors mentioned in the same market even if the stations will be operated sepa will be relevant in every case." See Second Report and Order rately. Recon., 4 FCC Red at 6491, para. 18. 10 Cap Cities estimates that annual savings would include $1.7 8 Cap Cities also observes that KMPC(AM) would realize the million in personnel costs, $367,000 in rent and utility expenses, benefits of Cap Cities© corporate personnel, financial, account and $175,000 in programming expenses such as ratings service ing, engineering, and legal services currently provided to each subscriptions and association dues. of its Los Angeles broadcast stations. 11 Cap Cities asserts that, under its ownership, KMPC(AM) 9 Cap Cities cites the Commission©s decision in Guy Gannett would air a format complementing that aired by Publishing Co., 1 FCC Red 1787 (1992), in support of its conten KABC(AM), which Cap Cities notes airs regular programming tion that the Commission recognizes that, in evaluating requests addressing issues facing the Los Angeles community. for waiver of the one-to-a-market rule, efficiency benefits may 12 In support of its contentions, Cap Cities cites recent Com result from common ownership of radio and television stations mission actions granting one-to-a-market rule waivers in

2082 10 FCC Red No. 5 Federal Communications Commission Record FCC 94-361

9. Van Amburg asserts that he offered to purchase programming, as well as its ability to assess the needs of KMPC(AM) from Golden West for $15 million, $2.5 mil listeners in the Los Angeles community. Additionally, the lion less than the purchase price agreed upon between affiliation of KMPC(AM) with Cap Cities© ABC Radio Net Golden West and Cap Cities. Van Amburg contends that work and the radio network©s affiliation with ABC Televi had the Commission enforced its previous rulings, which sion Network news operations could strengthen the news originally required Cap Cities to divest itself of radio sta gathering resources of KMPC(AM), enabling KMPC(AM) tion ownership in markets in which it also owns television to better serve its community. Moreover, Cap Cities affirms stations, Cap Cities would be otherwise precluded from that the proposed combination enhances prospects for prof increasing its radio ownership in the subject market. 13 Van itable operation of KMPC(AM), which Cap Cities and Amburg further contends that radio ownership rules Golden West note has incurred operating losses during permitting common ownership of same-market radio sta each of the past three years under its present ownership. tions conferred an "unfair advantage" on Cap Cities in Cap Cities also demonstrates that the proposed combina structuring its offer to purchase KMPC(AM) by enabling tion will not create any undue concentration of ownership Cap Cities to base it valuation of the radio station on or control of broadcast media in the Los Angeles market, projected joint operating efficiencies unavailable to pro which comprises the country©s second largest ADI. Follow spective buyers such as Van Amburg who own no other ing the proposed acquisition of KMPC(AM), the market media outlets in the market. will be served by 67 radio stations and 26 television sta 10. Discussion. In evaluating a request for waiver of the tions. 16 Those 93 stations will be owned and operated by 78 one-to-a-market rule, the Commission©s goal "is to permit separate entities.17 Other "voices" in the market include at the public to benefit from such efficiencies of operation as least four major daily newspapers and cable television, may be achieved through the use of common facilities and which has a penetration rate of 58.9 percent. While the staff, consistent with the maintenance of diversity and vi technical facilities of the stations involved are significant, gorous competition within the market areas involved." See we note that the proposed combination does not present Second Report and Order Recon., 4 FCC Red at 6491. We issues of market concentration inconsistent with the public conclude that Cap Cities© showing in support of a waiver of interest given the highly competitive environment in the the one-to-a-market rules meets the Commission©s case-by Los Angeles market, both in terms of the number of other case criteria, and that a waiver in this instance is consistent broadcast stations and the relevant market shares of the with the public interest and would not have an adverse stations involved in this transaction. 18 Thus, we are per effect on diversity and competition in the Los Angeles suaded that the public benefits of common ownership and market. 14 Cap Cities has shown that common ownership of joint operation of KMPC(AM), KABC(AM), KLOS(FM), KMPC(AM), KABC(AM), KLOS(FM), and KABC-TV will and KABC-TV outweigh any negative effect on diversity create efficiencies resulting in significant cost savings and and competition in the Los Angeles market that the com the potential for enhanced programming and service bene bination might engender. As Cap Cities observes, the Com fits. In particular, joint operation of KMPC(AM) and mission has granted waivers of the one-to-a-market rule KABC(AM) will enable KMPC(AM) to avail itself of under similar circumstances. See note 12, supra. KABC(AM)©s public affairs programming and community 11. We find no merit to Van Amburg©s contention that relations department, resources that could enhance the Commission©s "failure" to enforce prior divestiture KMPC(AM)©s ability to air public service and public affairs conditions with respect to Cap Cities© ownership of radio

KVI(AM), 9 FCC Red 1330 (1994); BREM Broadcasting, 9 FCC and Policies, 1 FCC Red at 6394, n.40. Red 1333 (1994); and Moosey Communications, Inc., 8 FCC Red 15 Notwithstanding its contention that the proposed combina 5247 (1993). tion would result in projected savings of $5.8 million annually, 13 In 1985, the Commission approved the merger of Capital Cap Cities only identifies specific savings of $2.24 million. See Cities Communications and American Broadcasting Companies, note 10, supra. We nonetheless find the projected savings to be Inc., and granted a temporary waiver of the one-to-a-market significant. rule to permit the new entity to retain common ownership of 16 Although Cap Cities relies upon March 1989 data concern KABC(AM), KLOS(FM), and KABC-TV for a period of 18 ing the number of broadcast outlets and independent "voices" months following consummation of the merger. Capital Cities in the Los Angeles market, we find that the market continues Communications, Inc., 59 RR 2d 451 (1985). Prior to the re to be sufficiently diverse notwithstanding ownership and facili quired divestiture date, however, the Commission instituted a ties changes during the intervening five years. See Broadcasting rulemaking proceeding in which it proposed to amend the & Cable Yearbook (1994); see also M Street Radio Directory multiple ownership rules and permit common ownership of (1995). Our conclusion, however, does not excuse applicants television and radio stations in the larger television markets. See from their obligation to document waiver showings with in In re Amendment of Section 73.3555 of the Commission©s Rules, formation most recently available at the time of filing of their the Broadcast Multiple Ownership Rules, 2 FCC Red 1138 (1987). applications. In view of the then-pending rulemaking. Cap Cities requested l* Notwithstanding Cap Cities© assertion that following the that the Commission extend the divestiture requirement for a proposed transaction the Los Angeles market would be served period of up to six months after the effective date of the by 92 broadcast stations owned and operated by 73 separate Commission©s action in that proceeding. See Capital Cities/ABC, entities, analysis by the Commission©s staff indicates that follow Inc., 2 FCC Red 2539 (1987). Cap Cities subsequently availed ing the transaction the relevant market will be served by 93 itself of the "top 25 market/30 voice standard" for one-to- broadcast stations owned and operated by 78 separate entities. a-market rule waivers adopted by the Commission in the Sec 18 As documented by Cap Cities, in the Winter 1994 Arbitron ond Report and Order in order to retain ownership of the Local Market Report for the Los Angeles Survey Area, subject stations. See Capital Cities/ABC, Inc., 4 FCC Red 5498 KMPC(AM) was tied for a ranking of thirty-fifth with a 0.5 (1989). share, KABC(AM) ranked fifth with a 3.8 share, and KLOS(FM) 14 Our conclusion takes into account the public interest in a ranked sixteenth with a 2.7 share. See KVI, Inc., 9 FCC Red strengthened radio service made possible by waiver of the one- 1330, n.8(1994). to-a-market rule in this case. See In re Revision of Radio Rules

2083 FCC 94-361 Federal Communications Commission Record 10 FCC Red No. 5

stations in the Los Angeles market should preclude the FEDERAL COMMUNICATIONS COMMISSION proposed acquisition. As previously indicated, the Commis sion authorized Cap Cities to retain common ownership of KABC-TV, KABC(AM), and KLOS(FM) following a 1985 merger between Capital Cities Communications, Inc. and American Broadcasting Companies, Inc., on the basis of William F. Caton Cap Cities© prior showing that the proposed combination qualified for waiver of the one-to-a-market rule under the Acting Secretary "top 25 market/30 voices" waiver standard adopted by the Commission in 1989. See note 13, supra. Van Amburg©s contention that operating efficiencies available to multiple station owners such as Cap Cities enable such owners to value radio stations within their respective markets higher than prospective owners who do not currently own a sta tion in the relevant market may be true, but we do not see this as a reason to deny this waiver request. Rather, as explained above, in this context, where there will be 77 other "voices" in the market following the proposed sale of KMPC(AM), we find the efficiencies created by this com bination will result in tangible public service benefits. In deed, in both the one-to-a-market rulemaking proceeding and the radio ownership rulemaking proceeding, the Com mission expressly determined that combinational efficien cies derived from common ownership of radio and television stations in local broadcast markets and from common ownership of same service radio stations in local markets were presumptively beneficial and would strength en the competitive standing of combined stations, a cir cumstance that would enhance the quality of viewpoint diversity by enabling such stations to invest additional re sources in programming and other service benefits pro vided to the public. As noted, Cap Cities has demonstrated that its proposed ownership of radio stations in the Los Angeles market complies with the Commission©s radio ownership rules in all relevant respects, and Van Amburg has submitted no evidence to the contrary.19 12. Accordingly, IT IS ORDERED, That the informal objection to grant of the above-captioned application filed by Thomas K. Van Amburg IS DENIED. Further, the request for a waiver of the Commission©s one-to-a-market rule, 47 C.F.R. §73.3555(b), IS HEREBY GRANTED, and, having found the parties thereto otherwise qualified, the application (BAL-940503EA) for assignment of license of KMPC(AM), Los Angeles, California, from Golden West Broadcasters to KABC-AM Radio, Inc. IS HEREBY GRANTED.20

19 With respect to Van Amburg©s contention that he should be and Order, September 3, 1993), judgment further modified, provided the opportunity to purchase KMPC(AM), we note that (Memorandum Opinion in Support of Final Judgment, June 13, Section 310(d) of the Communications Act of 1934, as amended, 1994), notice of appeal docketed, July 7, 1994, constituting an provides, in relevant part, that in acting on any application for adverse finding or adverse final action "taken by any court . . . assignment of license the Commission may not consider wheth with respect to the applicant or parties to this application in a er the public interest, convenience, and necessity might be civil . . . proceeding, brought under the provision of any law served by the assignment of the license to a person or entity related to ... fraudulent statements to another governmental other than the proposed assignee. See 47 U.S.C. §310(d). Con unit . . . ." The Shepard decision, which includes findings of sequently, in the present case, we are precluded from consider litigation-related misconduct against Cap Cities© subsidiary ing the qualifications of anyone other than Cap Cities. American Broadcasting Companies, Inc., is presently under ap 20 In response to Question 14 of Assignee©s section of the peal. Our action here granting the above-captioned application above-captioned application for assignment of license, Capital is without prejudice to whatever action, if any, the Commission Cities/ABC, Inc. has reported a decision in Shepard v. American may deem appropriate in connection with the Shepard findings, Broadcasting Companies, Inc., No. 88-954, (Memorandum Opin which are presently under review in connection with pending ion and Order, D.D.C. April 15, 1992), motion for reconsider applications for renewal of license filed by Cap Cities and its ation granted in part and denied in part, (Memorandum Opinion subsidiaries.

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