7 FCC Red No. 3 Federal Communications Commission Record FCC 92-17

3. With respect to the first criterion needed to qualify Before the for the presumption, the applicant's engineering study Federal Communications Commission demonstrates that there will be no overlap of the City Washington, D.C. 20554 Grade contours of KMTR-TV and the facilities proposed for Channel 46. Thus, the satellite proposal meets the first component of the presumption. In re Application of 4. With respect to the second criterion, applicants can demonstrate that an area is underserved using one of two KMTR, Inc. BPCT-881021KG tests. The first is a "transmission test," whereby a pro­ posed satellite's community of license is considered For Construction permit for a new underserved if there are two or fewer full-service stations already licensed to it. Satellite Report and Order, 6 FCC Television station on Channel 46, Red at 4215. Our records show that there is only one Roseburg, Oregon primary-service television station licensed to Roseburg, Oregon, i.e., station KPIC(TV). a satellite of station KV AL-TV. Eugene, Oregon. In addition, an application MEMORANDUM OPINION AND ORDER for a construction permit for a new television station on channel 36, Roseburg, Oregon, was recently granted.2 As­ Adopted: January 15, 1992; Released: February 7, 1992 suming the new station proceeds successfully in becoming fully licensed, there will be two or fewer full-service By the Commission: stations licensed to Roseburg. Accordingly, the applicant's proposal meets the "transmission test" demonstrating that 1. The Commission has before it for consideration the the proposed satellite station will provide service to an above-captioned application of KMTR. Inc., for a con­ underserved area. struction permit for a new television station on channel 5. Finally, to qualify for the presumption, applicants 46, Roseburg, Oregon. 1 The applicant is the licensee of must demonstrate that no alternative operator is ready station KMTR-TV, channel 16 (NBC), Eugene, Oregon, and able to construct or to purchase and operate the and proposes to operate Channel 46 as a satellite of proposed satellite as a full-service station. In the case of KMTR-TV pursuant to the exception to the duopoly pro­ applicants for a new station seeking satellite authorization, hibition for satellite operations set forth in Note 5 to the an economic showing, such as a history of television Commission's multiple ownership rules. Section 73.3555. station failures in the market or other information in­ The satellite proposal is unopposed. dicating that a full-service station is not likely to survive 2. Recently, we revised our policy concerning television in that market, should be submitted. Here. the applicant satellite operations. See Television Smellite Stations, 6 FCC notes that Roseburg is a small community of 16.444 per­ Red 4212 (1991) (Satellite Report and Order) (petitions for sons and is located on the fringe of the Eugene. Oregon partial stay and reconsideration pending). Under the new Area of Dominant Influence (ADI). the 133rd largest policy. applicants for television satellite status will be market.3 It maintains that the Commission's general as­ entitled to a presumption that the proposed satellite op­ sumption with respect to the appropriateness of satellite eration is in the public interest if the applicants meet the stations for small markets has been specifically addressed following three criteria: ( 1) there is no City Grade overlap and confirmed with respect to the Roseburg market, between the parent and the satellite: (2) the proposed where the Commission has already authorized KPIC(TV) satellite would provide service to an underserved area: to operate as a satellite station. The applicant claims that and (3) no alternative operator is ready and able to con­ the failure of KPIC(TV) to evolve into a full-service sta­ struct or to purchase and operate the proposed satellite as tion after over 30 years of operation underscores the a full-service station. Satellite Report and Order, 6 FCC likelihood that its proposed station could not succeed as a Red at 4213-14. Applications that qualify for the pre­ full-service station. See Multiple Ownership Rules, 45 FCC sumption and are unrebutted by an opposing party will 1728, 1734 ( 1964). Additionally, it avers that the current be viewed favorably by the Commission. Id. at -1-214. Even economic conditions necessitate satellite operation of absent rebuttal, the Commission may. on its own motion. Channel 46. In this regard. the applicant states that set­ override the presumption and deny a satellite authoriza­ backs in the lumber industry, the area's principal busi­ tion request where it determines that the public interest ness, have resulted in a depressed local economy and very so requires. Id. For the reasons set forth below. we find dim prospects of any significant growth in either the size that the proposed operation of Channel 46 as a satellite of the population or the health of the economy in the station is consistent with our new policy. foreseeable future. Moreover, the applicant contends that the small size of the proposed service area of Channel 46 (3.050 square kilometers and a population of 66.966)

1 Hereafter. we will refer to the proposed station as Channel 3 The Eugene. Oregon, ADI is served by five television sta­ 46. tions: KEZl(TV), channel 9 (ABC), KVAL-TV, channel 13 2 On January 16, 1992, a construction permit was issued to (CBS). and KMTR(TV). channel 16 (NBC), Eugene. Oregon: Metrocom of Oregon, Inc. to operate a modest facility on chan­ KPIC(TV), channel -l. Roseburg, Oregon; and KCBY-TV. chan­ nel 36 with a maximum ERP of 42.7 kW and a height above nel 11, Coos Bay. Oregon. Both KPIC(TV) and KCBY-TV are average terrain of 211 meters. We note that the technical facility satellites of KV AL-TV. of the newly authorized full-service proposal for Roseburg is only slightly more ambitious than this satellite proposal.

1025 FCC 92-17 Federal Communications Commission Record 7 FCC Red No. 3 limits the station's revenue potential.4 The coverage limi­ That KMTR, Inc. shall construct and maintain a tations besetting Channel 46, the applicant asserts, are of main studio within twelve (12) months after the particular concern in view of the heavy cable penetration date of commencement of program test authority. (67 percent) in the City of Roseburg and in view of the fact that the rights of television stations to demand car­ 9. The Mass Media Bureau shall send copies of this riage on local cable systems have been invalidated. Memorandum Opinion and Order to the applicant by 6. The applicant estimates that the satellite facility it Certified Mail -- Return Receipt Requested. proposes could be operated at a cost of approximately $150,000 per year (including the amortized capital cost of FEDERAL COMMUNICATIONS COMMISSION construction) and that revenues from the insertion of local advertising spots will rise from zero for the first six months of operation to approximately $17.500 per month by year six. Based upon these estimates. it projects that a low overhead satellite station could reach the break-even Donna R. Searcy point within four years of operation. In comparison, the applicant estimates that construction costs for a similarly Secretary modest full-service station would be at least twice as high and operational costs approximately three times as high as that of a satellite station. Therefore. it believes that a full-service station would not reach the break-even point until year 9 of operation. and recovery of the initial capital investment would probably never be realized.5 We believe that the applicant has satisfied the third criterion. While this case is somewhat unusual. in that not long before the grant of this satellite authorization we have issued a construction permit on channel 36 in Roseburg for a full-service operation, we do not believe that this fact undermines the validity of the applicant's showing concerning the ability of the market to support the type of operations it proposes. We note that both the full­ service station and the satellite station propose technical facilities which are substantially below the maximum available under our Rules. It appears that these modest facilities reflect the small economic base that the ap­ plicants would face in the market. Moreover. given the fact that the new full-service station will further draw upon the apparent limited revenue base in the market. we conclude that the Roseburg market is not likely to sup­ port another full-service station. 7. Therefore. we find that the applicant is entitled to the presumption that the proposed satellite operation of Channel 46 in Roseburg. Oregon. is in the public interest. In addition. no showing has been provided to rebut the presumption and we find no reason to override the pre­ sumption on our own motion. We will. however. in ac­ cordance with our general policy of not authorizing 100 percent satellites in areas served substantially by stations that qualify as conventional television operations. require that the proposed stat:on shall construct a main studio within twelve ( 12) months after the date of commence­ ment of program test authority. In view of the foregoing, having determined that the applicant is qualified in all other respects. we find that grant of the application would serve the public interest. 8. Accordingly, IT IS ORDERED. That the above-cap­ tioned application (BPCT-881021KG) for a construction permit for a new television station on channel 46, Roseburg, Oregon. IS GRANTED, subject to the follow­ ing condition:

~ The applicant maintains that since Roseburg is located on the ciates, Inc. incurred debts of over $300,000 while operating low fringe of the Eugene ADI. the proposed Grade B contour of power stations K31AE. Roseburg, and KlllAD, Tri-City, Oregon Channel 46 does not cover the most populous area of that ADI. for approximately three years and has now declared bankruptcy. 5 The applicant notes that Cascade Pacific Television Assa-

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