Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Promoting Diversification of Ownership ) MB Docket No. 07-294 In the Broadcasting Services ) ) 2006 Quadrennial Regulatory Review – Review ) MB Docket No. 06-121 of the Commission’s Broadcast Ownership ) Rules and Other Rules Adopted Pursuant to ) Section 202 of the Telecommunications Act of ) 1996 ) ) MB Docket No. 02-277 2002 Biennial Regulatory Review – Review of ) the Commission’s Broadcast Ownership Rules ) and Other Rules Adopted Pursuant to Section ) 202 of the Telecommunications Act of 1996 ) ) MM Docket No. 01-235 Cross-Ownership of Broadcast Stations and ) Newspapers ) ) MM Docket No. 01-317 Rules and Policies Concerning Multiple ) Ownership of Radio Broadcast Stations in Local ) Markets ) MM Docket No. 00-244 ) Definition of Radio Markets ) MB Docket No. 04-228 To: The Commission EX PARTE COMMENTS OF RAAD BROADCASTING CORPORATION RAAD Broadcasting Corporation (RAAD), by counsel, hereby respectfully submits its comments in the above-captioned proceedings, relative to the single issue of the radio market definition properly applicable to the Commonwealth of Puerto Rico. Specifically, RAAD wishes to address the pending Petition for Reconsideration of Arso Radio Corporation (Arso) relative to the Commission’s 2002 Biennial Review Order1 as it pertains to radio market definition in Puerto Rico and as well to those comments filed by Arso in response to the Further Notice of Proposed Rule Making 2 in the above docket proceedings. The Further Notice asked that the record be refreshed with respect to, inter alia, the issue of market definitions. RAAD states as follows: 1. RAAD is the licensee of FM Broadcast Station WXYX, Bayamon, Puerto Rico, and is the parent corporation for the licensees of FM Station WXLX, Lajas, Puerto Rico and WKSA-FM, Isabela, Puerto Rico. RAAD’s interest in this proceeding is from the perspective of a radio broadcast licensee in Puerto Rico attempting to compete for audience share and advertising revenues with, in essence, three owners of multiple stations with dominant and optimum island coverage. The Commission is being led down a very damaging path by one of those three dominant multiple station owners in this proceeding. The effort of that licensee is to further increase its already considerable market dominance in Puerto Rico and to stifle competition for advertising revenues. Unless this effort is recognized for what it is and brought to a halt, any rule change with respect to market definition in Puerto Rico will lead inevitably to continued and expanded market dominance by a very few licensees, and the stifling of competition in the market from smaller broadcast entities such as RAAD. 1 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules, Report and Order and Notice of Proposed Rulemaking, 18 FCC Rcd 13620, 13724-37 (2003) (“2002 Biennial Review Order ”), aff’d in part and remanded in part, Prometheus Radio Project v. FCC, 373 F3d 372 (3d Cir 2004) (“Prometheus Remand Order”), cert. denied, 545 US 1123 (2005). See also Prometheus Radio Project, et al. v. FCC, No. 03-3388 (3d Cir Sept. 3, 2004) (lifting stay with respect to new local radio ownership rule)., 18 FCC Rcd at 13712, 13733-34, ¶¶ 239, 294 (2002). 2 See, FCC 06-93, released July 24, 2006 (the “Further Notice”) at Paragraph 36. 2 2. In its 2002 Biennial Review Order, 3 the Commission retained the local radio numerical limits and the AM/FM service caps that Congress adopted in the 1996 Telecommunications Act. The Commission determined, however, that its contour- overlap methodology for defining radio markets and for counting stations in the market was flawed as a means to protect competition in local radio markets.4 The Commission therefore modified the definition of a local radio market by replacing the contour-overlap approach with an Arbitron Metro market definition where Arbitron markets exist.5 The Commission has since denied petitions for reconsideration of its decision to use Arbitron Metro markets to define local radio markets. The Third Circuit, in Prometheus Radio Project v. FCC, 373 F. 3d 372 (3d Cir. 2004) found that the decision to adopt the Arbitron Metro market definition was in the public interest and was supported by reasoned analysis. When the Commission adopted its bright-line, geography-based radio rule for Arbitron- rated markets, it concluded that “[b]y applying the numerical limits of the local radio ownership rule to a more rational market definition, we believe that, in virtually all cases, the rule will protect against excessive concentration levels in local radio markets that might otherwise threaten the public interest.”6 3. In adopting the Arbitron market definition, the Commission’s Report and Order reasoned 8 that “[w]here a commercially accepted and recognized definition of a radio market exists, it seems sensible to us to rely on that market definition…” (emphasis added). That is quite clearly an appropriate recognition of market realities. Recognizing 3 See Footnote #1. 4 Id. 18 FCC Rcd. at 13712, 13717-24, ¶¶ 239, 250-72. 5 Id. at 13712, 13724-28, ¶¶ 239, 273-81. 6 Id., at 13813.(emphasis in original) 8 Id, at 13724. 3 that there could be some existing combinations of broadcast stations that would exceed the revised ownership limits after the adoption of the Arbitron market definitions, the Commission grandfathered existing combinations of radio stations and of radio and television stations. Arso, and its associated, co-owned broadcasting companies (all owned and controlled by the Soto family of Puerto Rico) had, at the time the Arbitron market definition was adopted, thirteen radio stations throughout Puerto Rico, five more than the eight that would have been permitted by strict application of the multiple ownership limits. The Soto family now has control of a total of 14 radio stations in Puerto Rico, through several companies. 9 It has now pending an application to acquire by assignment a fifteenth station, which would require another multiple ownership waiver. 4. As stated above, the Commission has upheld its Order adopting the Arbitron market definition by denying several petitions for reconsideration of its decision to use Arbitron Metro markets to define local radio markets. The Third Circuit United States Court of Appeals has found that the Commission’s unqualified decision to adopt the Arbitron Metro market definition where such markets exist was in the public interest and was supported by reasoned analysis.10 The Commission subsequently held that it had been successfully applying the new definition for over three years and saw no need to revisit its use, and so denied the petitions for reconsideration, save for that of Arso, which 9 Arso is currently the licensee of eight stations in its own name: WPRM-FM, San Juan; WIVA-FM, Aguadilla/Mayaguez; WRIO-FM, Ponce; WORA-AM, Mayaguez; WPRP-AM, Ponce; WFDT-FM, Aguada; WUNO-AM, San Juan, and most recently, WMIO in Cabo Rojo. The WMIO acquisition was made pursuant to a duopoly waiver granted by the Commission, discussed hereinbelow. Arso principals Jesus Soto and Luis A. Soto are also principals of: (1) Madifide, Inc., the licensee of WFID-FM, Rio Piedras; (2) Uno Radio of Ponce, Inc., the licensee of WLEO-AM and WZAR-FM, both Ponce; and (3) Turabo Radio Corporation, licensee of WNEL-AM, Caguas. In addition, Caribbean Broadcasting Corporation, the licensee of WCMN AM/FM, Arecibo, is a wholly-owned subsidiary of Uno Radio of Ponce, Inc. The Sotos also have an application pending to acquire WIAC-FM, San Juan, Puerto Rico from the current licensee, MDG Radio, Inc. through a subsidiary known as WIAC-FM, Inc. 10 See Prometheus, 373 F.3d at 425 4 sought to carve out a unique exception for the Commonwealth of Puerto Rico with a different radio market definition than that of Arbitron; a different market definition, which would allow the three largest broadcast licensees in Puerto Rico to acquire even more licenses with optimum island coverage, and thus substantially decrease competition and further reduce the number of independently owned radio stations in the market. 11 5. After repeated, consistent and well-reasoned holdings of the Commission that the Arbitron market definition worked well, and fairly across the board, and after having that decision validated by the United States Court of Appeals for the Third Circuit, the Commission granted the largest single broadcasting entity in Puerto Rico a waiver, so that it could acquire a fourteenth radio station in Puerto Rico, despite the fact that it already owned five more stations than the multiple ownership rules permitted. We respectfully submit that the Commission acted arbitrarily and without a substantive factual predicate, although the waiver request was uncontested at the time. See, WMIO(FM), Cabo Rojo, PR, 22 FCC Rcd. 2549, 40 CR 512 (2007). In support of its waiver request, and to enable Arso to acquire more than thirteen radio stations in Puerto Rico (of the then 99 stations on the Island) Arso argued in essence that because, according to the U.S. Census Bureau, Puerto Rico has eight Metropolitan Statistical Areas (MSAs) and because Arbitron defines markets based on Metropolitan Areas (MAs), Puerto Rico, with its eight MSAs and three Combined Statistical Areas (combinations of Metropolitan Statistical Areas) should be considered to be three 11 The Commission’s justification for adopting the Abitron market definition generally applies poignantly to Puerto