FCC 94-341 Federal Communications Commission Record 10 FCC Red No. 3

Telemundo of Colorado, Before the Inc., Licensee of Federal Communications Commission K49CJ, Colorado Springs, CO BTCTTL-940822LG Washington, D.C. 20554 of Santa Fe, Inc., In re Applications of Licensee of K52BS, Santa Fe, NM BTCTTV-940822LH Telemimdo Group, Inc., Debtor in Possession WNJU License Corporation, (Transferor) Licensee of WNJU, Linden, NJ BTCCT-940822KW and Estrella License Corporation, Telemundo Group, Inc. Licensee of (Transferee) KVEA(TV), Corona, CA BTCCT-940822LC K57CD, San Diego, CA BTCTTL-940822LD For Transfer of Control of

Telemundo of Puerto Rico, MEMORANDUM OPINION AND ORDER Inc., Licensee of Adopted: December 23, 1994; Released: December 23, 1994 WKAQ-TV, San Juan, P.R. File Nos. BTCCT-940922KI W09AT, Fajardo, P.R. BTCTTV-940822KJ By the Commission: W32AJ, Utuado, P.R. BTCTT-940822KK W68BU, Adjuntas, P.R. BTCTT-940822KL 1. The Commission has before it for consideration the unopposed applications for transfer of control of the above- Telemundo of Florida, captioned licensees from Telemundo Group, Inc., Debtor Inc., Licensee of in Possession ("Debtor") to Telemundo Group, Inc. ("Re organized Telemundo"), the entity set to emerge from fed WSCV(TV), Fort Lauderdale, FL BTCTT-940822KM eral bankruptcy protection pursuant to a Chapter 11 plan of reorganization confirmed by the United States Bank Telemundo of Northern ruptcy Court for the Southern District of New York. See , Inc., Licensee of Order Pursuant to Section 1129 of the Bankruptcy Code KSTS(TV), San Jose, CA BTCCT-940822KN Confirming the Debtor©s Second Amended Chapter 11 Plan K15CU, Salinas, CA BTCTTL-940822KO of Reorganization (Bankruptcy Order), Case No. 93-B-42967 (Bankr. S.D. N.Y. July 20, 1994). Because principals or K52CK, Stockton/Lodi, CA BTCTTL-940822KP affiliates of some of the proposed attributable stockholders K47DQ, Sacramento, CA BTCTTL-940822KQ of Reorganized Telemundo hold conflicting attributable in K27EI, Santa Maria, CA BTCTTL-940822KR terests in other broadcast stations, as well as a K39DH, Ogden, UT BTCTT-940822KS nonattributable interest in a in the same K48EJ, Salt Lake City, UT BTCTTL-940822KT market as a Reorganized Telemundo television station, the applicants also request relief from the Commission©s mul W32AY, Boston, MA BTCTTL-940822KU tiple ownership rules and cross-interest policy. K61FI, Modesto, CA BTCTTL-940822KV

Telemundo of Galveston- BACKGROUND , Inc., Licensee 2. Debtor, a Delaware corporation, owns Telemundo, or Permittee of one of two major Hispanic broadcast television networks KTMD(TV), Galveston, TX BTCCT-940822KX serving the United States. Through its seven full power television stations and 19 low power television and K60EE, Odessa, TX BTCTTL-940822KY translator stations, according to Debtor, Telemundo serves K49CD, Odessa, TX BTCTTL-940822KZ more than 50 markets in the United States and Puerto K40DX, Abilene, TX BTCTTL-940822LA Rico, reaching more than 85 percent of all Hispanic house K36DV, Amarillo, TX BTCTTL-940822LB holds in the country. Additionally, Debtor produces Span ish-language programming, making available to its affiliates Telemundo of San Antonio, and owned and operated stations approximately 130 hours per week of such programming. Inc., Licensee of 3. For nearly three years, according to the applicants, KVDA(TV), San Antonio, TX BTCCT-940822LE Debtor has failed to make principal or interest payments on its outstanding debt. In August 1993, Telemundo peti Telemundo of Austin, Inc., tioned for Chapter 11 bankruptcy protection and thereafter Licensee of sought Commission approval for an involuntary transfer of K11SF, Austin, TX BTCTVL-940822LF control of its licensee subsidiaries to Debtor. See FCC File Nos. BTCTTV/BTCTT/BTCTTL-940810KF through KZ

1104 10 FCC Red No. 3 Federal Communications Commission Record FCC 94-341

(granting transfer of control of the licensee subsidiaries requests involving radio and television station combinations from Telemundo Group, Inc. to Debtor). A second amend in the top 25 markets, as defined by Arbitron Ratings ed plan of reorganization (the "Plan") structured by Debtor Company, where at least 30 separately owned, operated and and accepted by those creditors entitled to vote thereon was controlled broadcast licensees, or "voices," will remain confirmed by the bankruptcy court on July 20, 1994. See after the proposed combination. In calculating.the number Bankruptcy Order, supra. Under the Plan, the claims of of broadcast stations in a particular market, we include all certain creditors are to be discharged in exchange for, commercial and noncommercial full-power television sta among other things, an equity stake in Reorganized tion licensees in the relevant ADI and all operating AM Telemundo. and FM radio station licensees in the relevant television 4. Upon consummation of the Plan, which is subject to metropolitan market. Id, The number of "voices" in a Commission approval, the capital stock of Reorganized given market is evaluated in accordance with the attribu Telemundo will consist entirely of voting common stock, tion provisions of our local ownership rules, in which whose holders will be: TLMD Partners II, L.L.C. (15.5%); persons have a "cognizable" interest in a broadcast station Reliance Insurance Company (10%); Bastion Capital Fund, if they serve as an officer, director, partner, or owner of at L.P. (up to approximately 16%); Leon Black (approxi least five percent of the voting stock of the licensee. Id.; see mately 2-8%);© and various rights holders and other credi also id. at 1759 n.87. tors, none of which individually will hold an attributable 8. In support of its waiver request, Debtor notes that Los 5% interest (approximately 50%). The composition of Re Angeles, the ADI within which each station is located, is organized Telemundo©s initial nine-member board of direc the second largest market in the country, as reported in tors results from negotiations among Debtor, its current Broadcasting & Cable Yearbook 1994. That market sustains majority stockholder, and the junior and senior creditors.2 21 full-service television stations and 79 AM and FM radio 5. With four exceptions, the corporate restructuring and stations. Of these broadcast stations, Debtor©s exhibit in the involvement of parties to this application are consistent dicates, at least 80 will be separately owned, operated and with the Commission©s ownership rules and policies, as controlled after consummation of the Plan. Accordingly, well as with the Communications Act. Those exceptions Debtor contends, its waiver request for the are as discussed below. Permanent waiver of the one-to- market satisfies the "top 25 markets/30 voices" presumptive a-market rule waiver standard set forth in Second Report and Order. 6. Daniel D. Villanueva is a co-trustee of the Daniel 9. Having reviewed the showing submitted by Debtor, we Villanueva Living Trust, which is the sole stockholder of find that Mr. Villanueva©s common ownership interests one of the two general partners of Bastion Partners which, will not result in fewer than 30 separately owned, operated in turn, serves as the sole general partner of Bastion and controlled broadcast stations in Los Angeles, the sec Capital Fund, L.P. ("Bastion Capital"). The potentially 16 ond largest market. Thus, Debtor has provided the neces percent of Telemundo stock owned by Bastion Capital is, sary documentation to meet the "top 25 markets/30 voices" therefore, attributable to Mr. Villanueva, who wholly owns standard with regard to the KVEA(TV)-KCTQ(AM) com BuenaVentura Communications, Inc., the licensee of bination.3 We conclude, therefore, that grant of the waiver KCTQ(AM), Thousand Oaks, California. Because the permitting Mr. Villanueva to hold interests in both stations Grade A signal of Debtor©s KVEA(TV), Corona, California, is in the public interest. encompasses the entire community of Thousand Oaks, Villanueva©s ownership of the radio station and his attrib utable interest in the television station would be inconsis Temporary waiver of the rule tent with the one-to-a-market rule. That rule bars common 10. Mr. Villanueva also wholly owns Villanueva Media, ownership of television and radio stations in the same Inc., which holds a 20% general partnership and 55% market. See 47 C.F.R. §73.3555(c). limited partnership interest in KSMS-TV, L.P., the licensee 7. In Second Report and Order in MM Docket No. 87-7, of KSMS-TV, Channel 67, Monterey, California. Because 4 F.C.C. Red 1741, 1751, reconsidered in part, 4 F.C.C. Red the Grade A contour of KSMS-TV overlaps with that of 6489 (1989), the Commission concluded that it will "look Reorganized Telemundo©s KSTS(TV), Channel 48, San favorably" upon, and will be "predisposed to grant," waiver Jose, California, Mr. Villanueva©s attributable interests in

1 Earlier, the applicants had proposed that 24.5% of the voting interest of 6.8% to 9.4%, will total up to 16.6%. Black, who was common stock of Reorganized Telemundo would be owned by not originally scheduled to acquire an interest, will acquire TLMD Partners II, L.L.C. ("TLMD"), an entity composed ulti between 2% and 8% of that 9% TLMD stock interest. mately of members John J. Hannan and Michael D. Weiner, 2 The initial, bankruptcy court-approved board members of which would receive the stock pursuant to claims received from Reorganized Telemundo, all U.S. citizens, were designated by AIF II, L.P. ("AIF") and Artemis America III, L.L.C. ("Ar Debtor©s current management (Joaquin F. Blaya), Reliance In temis"). However, in amendments filed on December 19 and 20, surance Company (George E. Bello and Saul P. Steinberg), the 1994, the applicants represent that AIF and Artemis will com junior creditors (Alan Kolod), and the senior creditors (John J. prise the complete membership of TLMD, in lieu of intervening Hannan and Bruce H. Specter for TLMD Partners II, L.L.C, members TLMD partners IA, L.L.C. and TLMD partners IB, John Juran and Guillermo Bron for Bastion Capital Fund, L.P., L.L.C. and of ultimate members Hannan and Weiner. And and Leon Black for himself). TLMD will reduce its proposed interest in Reorganized 3 As Debtor contends, we note that the bankrupt status of Telemundo to approximately 15.5% of that company©s stock. KVEA(TV) entitles Debtor to qualify for a presumptive waiver The remaining 9% stock TLMD was to own will be acquired for on a second ground, the "failed station" standard, as detailed in cash separately by Bastion Capital and Leon Black, the specific Second Report and Order, 4 F.C.C. Red at 1752-53. percentages of which are not yet known. As stated in the amendments, Bastion Capital will acquire up to 7% of that 9% TLMD stock interest, which, when added to its initial proposed

1105 FCC 94-341 Federal Communications Commission Record 10 FCC Red No. 3

these stations would violate the Commission©s duopoly Possession, 3 F.C.C. Red 900 (1988), (one-year temporary rule, Section 73.3555(b). The duopoly rule prohibits com waiver of duopoly granted to party holding a 5.7% to mon ownership of television stations whose Grade B con 12.1% attributable interest in one Cincinnati television tours overlap. Accordingly, in its application, Debtor station and proposing to hold an 8.5% to 12.6% attrib requests a temporary, twelve-month waiver of the duopoly utable interest in another Cincinnati television station rule "to permit an orderly disposition" of KSMS-TV. To through a bankruptcy organization). that end, Debtor notes in its November 2, 1994 amendment 13. Specifically, we are cognizant of our obligation under that an application for the assignment of KSMS-TV to the public interest mandate to consider the national policy California Heartland Broadcasting, Inc. was filed with the underlying other federal laws, such as the bankruptcy laws Commission on September 23, 1994. FCC File No. pertinent here. See LaRose v. FCC, 494 F.2d 1145, 1146 n.2 BALCT-940913KX." (D.C. Cir. 1974). As the Commission has noted in a pre 11. In evaluating requests for waiver of the duopoly rule, vious case, the objectives underlying the bankruptcy law whether on a permanent or temporary basis, the Commis are three-fold: equality of distribution among creditors, a sion looks to several factors: (1) the size of the overlap area fresh start for debtors, and the efficient and economical and the population within that geographic area; (2) the administration of cases. , Inc., 8 separateness of the markets within which the two stations F.C.C. Red 5341, 5343-44, recon. denied, 8 F.C.C. Red 8744 are located; (3) the diversity of voices available to the (1993), appeal pending sub nom. Metropolitan Council of population residing within the overlap area; (4) the result NAACP Branches v. FCC, Case No. 93-1471 (D.C. Cir. July ing concentration of economic power; (5) the indepen 26, 1993) (citing Report of the Commission on the Bank dence of the stations© operations; and (6) any public ruptcy Laws of the United States, H.R. Doc. No. 93-137, 93d interest benefits emanating from the proposed combina Cong., 1st Sess., Pts. I and II, chapter 3 (1973)); see also tion. See, e.g., Iowa State University Broadcasting Corpora Channel 33, Inc., 4 F.C.C. Red 7674, 7680 (1988) (waiver of tion, 9 F.C.C. Red 481 (1993)(permanent waiver); Citadel duopoly rule "premised largely on accommodating policies Communications Co., Ltd., 5 F.C.C. Red 3842 (1990)(tem- underlying the bankruptcy laws and the protection of in porary waiver). Although some of the elements present in nocent creditors . . ."). We believe that we can accom this case deviate in part from past waiver cases, given the modate those bankruptcy policies here without bankrupt status of Debtor and its KSTS(TV), we find, for countervailing harm to the policies supporting our own the reasons discussed below, that a temporary, twelve multiple ownership rules: by permitting implementation of month waiver of the duopoly rule is warranted. the Plan so carefully crafted by the creditors; by permitting 12. Preliminarily, we note that the degree of overlap of Debtor to emerge from bankruptcy with only half of its the Grade B contours of the two television stations in this former debt and decreased interest rates on remaining debt; case exceeds that existing in most of our past duopoly and by facilitating effectuation of the Plan by acting expedi- waiver cases. Here, the predicted overlap area of the two tiously in granting waiver of our rules.5 stations, according to Telemundo©s engineering exhibit, in 14. Equally important to our determination is the fact dicates that the overlap area of 7,007 square kilometers, that grant of the temporary waiver request would promote inhabited by 1.8 million persons, represents 51 percent of the Commission©s enduring goal of advancing diversity via the geographic area and 91.5 percent of the population increased minority ownership. See, e.g., Notice of Proposed within the Grade B contour of KSMS-TV and 50 percent Rulemaking in MM Docket No. 94-149 and 91-140, adopted of the geographic area and 31.3 percent of the population December 15, 1994 (proposes to increase minority owner within the Grade B contour of KSTS(TV). However, as the ship); Statement of Policy on Minority Ownership of Broad Commission noted in Family Television Corp., 59 R.R. 2d casting Facilities, 68 F.C.C. 2d 979 (1978)(established tax 1344, 1348 (1986), the size of the proposed overlap has certificate and distress sale "policies); Commission Policy been of "more critical concern" in cases involving requests Regarding the Advancement of Minority Ownership in Broad for a permanent waiver of our rules and we are not con casting, 92 F.C.C. 2d 849 (1982), proceeding terminated, 99 strained from granting a temporary waiver where circum F.C.C. 2d 1249 (1985) (clarified tax certificate policy and stances "will not significantly frustrate the policies extended policy to cable). The Plan, which can-be con underlying the multiple ownership rules." Moreover, we summated only if we grant this temporary waiver, provides have long been guided by the directive that we entertain not only for ownership of approximately 16% of waiver requests as a "safety valve procedure for consider Telemundo by Bastion Capital, whose controlling princi ation of an application for exemption based on special pals and 20-percent equity owners are Guillermo Bron and circumstances." WAIT Radio v. FCC," 418 F.2d 1153, 1157 Mr. Villanueva, both Hispanic Americans, but for manage (D.C. Cir. 1969). In this case, we believe that furtherance ment of the reorganized company by Joaquin Blaya, an of the Plan and the vitalization of the Reorganized Hispanic American slated to serve as Reorganized Telemundo would be compatible with the diversity and Telemundo©s president and chief executive officer. economic competition policies the duopoly rule is designed 15. We also find that grant of a temporary waiver would to promote. Thus, the magnitude of the temporary overlap not disserve the policies of diversity and economic com in this case is not fatal to Debtor©s waiver request, and our petition which undergird our duopoly rule. As to the grant of that request provides the requisite "safety valve" separateness of the markets served by the two television under these "special circumstances" of a Debtor emerging stations, we note that KSMS-TV, Monterey, is located in from Chapter 11. See Channel 64 Joint Venture, Debtor in the Salinas-Monterey area of dominant influence ("ADI"),

4 An informal objection has been filed against that application. Plan. The settlement agreement will discharge a proof of claim 5 Here, the Plan, according to Debtor, must be consummated filed with the bankruptcy court against Debtor for approxi on or before December 31, 1994 in order to implement a litiga mately $158 million in connection with a New York court tion settlement agreement that is integral to the viability of the action. See Plan at 1.

1106 10 FCC Red No. 3 Federal Communications Commission Record FCC 94-341 one of four full-service commercial television stations li 19. The cross-interest p.olicy was developed to scrutinize censed to that market, the 103rd largest in the country. In relationships not proscribed by the multiple ownership contrast, KSTS(TV), San Jose, is located in the San Fran rules but which nevertheless triggered Commission con cisco-Oakland-San Jose ADI, the nation©s fifth largest mar cerns for full competition and diversity of viewpoint. See ket, and is one of 17 full-service, commercial television Minnesota Broadcasting Corp., 13 F.C.C. 672 (1949); United stations licensed to that market. Community Enterprises, Inc., 37 F.C.C. 2d 953 (Rev. Bd. 16. With regard to the diversity of voices present in the 1972). Although the policy is currently the subject of a temporary overlap area, Debtor©s engineering exhibit in rulemaking proceeding, Notice of Inquiry, 2 F.C.C. Red dicates that there are 28 television stations providing Grade 3699 (1987), Further Notice of Inquiry/Notice of Proposed B service to all or part of the Grade B overlap area, Rulemaking, 4 F.C.C. Red 2035 (1989), Further Notice of yielding a multitude of voices, including three affiliates Proposed Rulemaking, FCC 94-150, adopted December 15, each of the four networks, ABC, CBS, NBC, and Fox, one 1994, until modified, we shall abide by our case-by-case Home Shopping , one affiliate, approach for addressing cross-interest situations. eight independents, and six noncommercial stations. 20. The applicants set forth several reasons, which 17. Finally, Debtor contends that because the stations are collectively support our finding that Apollo©s interest in not direct competitors, the proposed temporary overlap KVEA(TV) and its concurrent potential influence over will not "diminish" the economic competition in the mar KZK,I(TV), via its nonvoting interest, are unlikely to di ket. To assuage any concern that KSMS-TV and KSTS(TV), minish arm©s length competition or diversity, the govern which are affiliates of rival Spanish-language networks, ing concerns of the cross-interest policy. First, the level of Univision and Telemundo, respectively, will not engage in Apollo©s cross interests in KZKI(TV) and KVEA(TV) are robust competition, Mr. Villanueva has personally pledged consistent with that permitted by the Commission in past to operate KSMS-TV "wholly independently" of the Debt cases. E.g., Television Corp., 91 F.C.C. 2d 1129 or©s KSTS(TV) by recusing himself "from any participation (Rev. Bd.), rev. denied, FCC 83-235 (May 18, 1983), aff©d in the management or operation" of KSTS(TV). We shall sub nom. Cleveland Television Corp. v. FCC, 732 F.2d 962 rely on that representation as a means for maintaining the (D.C. Cir. 1984)(nearly sole ownership of the licensee of independence of the stations, the fifth factor in evaluating a an AM/FM combination and a one-third nonattributable waiver request. To that end, we specifically will require interest in the licensee of a television station in the same Mr. Villanueva to refrain from all discussions and involve market); Metromedia Broadcasting Corp., 1 F.C.C. Red 1022 ment regarding the Telemundo network, as well as (1986)(attributable 20% interest in the licensee of one tele KSTS(TV), with any Bastion Capital or Telemundo officer, vision station and an nonattributable 17.39% voting inter director, as well as any employee with access to informa est in a single-majority-shareholder-owned licensee of tion pertinent to those subjects, until the station is sold. In another television station in the same market). sum, we find that grant of a temporary, twelve-month, 21. Second, the Los Angeles ADI, the nation©s second waiver of the duopoly rule, under the circumstances and largest, is a highly competitive broadcast market, sustaining based on the representations made herein, will inure to the 21 full-service television stations and 79 AM and FM radio public interest. stations, all owned by 80 separate "voices." Moreover, KZKI(TV), an independent English-language television sta Analysis of the cross-interest policy tion, and KVEA(TV), a Telemundo-affiliated Spanish-lan 18. Apollo Advisors, L.P. ("Apollo Advisors") is the guage television station, do not compete directly for managing general partner of AIF II, L.P., one of two viewers or advertisers in the Los Angeles market. members of TLMD II, L.L.C ("TLMD"). Accordingly, 22. Third, it is represented that the two stations will TLMD©s 15.5% stock interest in Reorganized Telemundo is continue to be operated separately "in all respects," includ deemed attributable to Apollo, as well as to Leon Black ing programming, sales and employment. Nor will Reorga and John J. Hannan, proposed board members of Reorga nized Telemundo or its Apollo-affiliated directors Black nized Telemundo who are also principals of the general and Hannan, according to the applicants, have any "direct partner of Apollo Advisors.6 Through an investment fund it or indirect material involvement" in the management or manages, Apollo Advisors has, via the holdings of Astrum operation of KZKI(TV). International Corporation ("Astrum"), a 20 percent, 23. Finally, the applicants note that a contract for sale of nonvoting interest in Sandino Telecasters, Inc., the KZKI(TV) has been executed and an application for assign permittee of KZKI(TV), San Bernardino, California. That ment of the permit soon will be filed with the Commis interest, according to the applicants, was acquired as "an sion. In view of the foregoing, we conclude that the incidental asset" of Astrum©s predecessor corporation pur objectives supporting the cross-interest policy are not suant to a Chapter 11 reorganization resulting in a debt- threatened by Apollo©s interests in KZKI(TV) and to-equity conversion. While the nonvoting interest in the KVEA(TV). licensee of that station, currently operating pursuant to program test authority,7 is not attributable to Apollo for purposes of the Commission©s multiple ownership rules, Exemption from attribution of Apollo principal that interest does implicate our cross-interest policy in that 24. Marc Rowan is a vice president of Apollo Capital Apollo holds an attributable interest in Reorganized Management, Inc. ("Apollo Capital"), the general partner Telemundo©s KVEA(TV), Corona. Both KZKI(TV) and of Apollo Advisors, which serves as the managing general KVEA(TV) are located in the Los Angeles ADI. partner of AIF, one of the two members of TLMD. a

6 Black is president and Hannan is vice president and director 7 An application seeking license to cover the construction of Apollo Capital Management, Inc., the general partner of permit for KZKl(TV) is pending before the Commission. FCC Apollo Advisors. File No. BLCT-940124KF.

1107 FCC 94-341 Federal Communications Commission Record 10 FCC Red No. 3

proposed 15.5 percent voting stockholder in Reorganized as to whether Apollo and Lion qualify as multi-faceted Telemundo. Rowan is also vice president of Lion Capital companies, we believe that their apparently singular busi Management, Inc. ("Lion Capital"), an affiliate of Apollo ness as investment companies can be divided into discrete Capital and the parent company of Lion Advisors, L.P. investment activities. We find, therefore, that the diversified ("Lion Advisors"), which serves as the investment manager nature of Apollo©s and Lion©s investments lends itself to and attorney-in-fact of Artemis America, L.L.C. ("Arte our granting "narrow" relief to Rowan, that is, not allow mis"), the other member of TLMD. Additionally, Rowan is ing disclaimer of his positional interests "as a matter of a limited partner of Apollo Advisors and Lion Advisors. course." Attribution of Ownership Interests, 97 F.C.C. 2d Despite the applicants© contention to the contrary, by vir 997, 1025 (1984). Further, the recusal procedures in place tue of these positional and ownership interests, Rowan is at Apollo Capital and Lion Capital insure that Rowan©s deemed to have an attributable interest, through TLMD, in recusal will be bona fide. See Craig O. McCaw, 9 F.C.C. Reorganized Telemundo. This interest conflicts with Row Red at 5916. We caution Rowan that he must strictly an©s seat on the board of directors of New World Commu observe his pledge to recuse himself completely from all nications Group, Incorporated ("New World"), the parent Reorganized Telemundo matters, either those relating to of the licensees of eleven television stations, one of which the network or to the owned and operated television sta is KNSD(TV), San Diego.8 Reorganized Telemundo will be tions. We require that such recusal also applies to all the parent company of the licensees of seven television Apollo and/or Lion investment activities that involve stations, one being KVEA(TV), Corona, whose Grade B and/or implicate any of Reorganized Telemundo©s contour overlaps with that of KNSD(TV). Rowan©s dual businesses. Based on the applicants© representations and so positional interests, therefore, potentially violate the Com long as these proscriptions are followed, we deem Rowan mission©s twelve-station rule, Section 73.3555(e), and the to hold a noncognizable interest in Reorganized duopoly rule, Section 73.3555(b). Telemundo. 25. Reorganized Telemundo requests, pursuant to Note 2(h) of Section 73.3555, that Rowan be relieved of attribu tion of the Telemundo stations, thereby avoiding violations CONCLUSION of the Commission©s rules. To that end, the applicants 27. In conclusion, we find the applicants qualified to be indicate that Rowan©s responsibilities at Apollo and Lion, licensees in all other respects. We have reviewed the ap whose investments range from furniture and luggage to plications and find that grant of the transfer of-control of footwear, apparel and supermarkets, as well as communica the licensees from Debtor to Reorganized Telemundo will tions, relate to investment management. Accordingly, Row serve the public interest, convenience and necessity. an pledges to recuse himself "from any matters that may 28. Accordingly, IT IS ORDERED, that the applications pertain, directly or indirectly, to Telemundo." Rowan also for transfer of control of the licensees cited in the caption represents that he will have not, "and will have no ability above, from Telemundo Group, Inc., Debtor in Possession to, exercise authority or influence over Telemundo, and to Telemundo Group, Inc., ARE GRANTED. will not participate in any discussion, policy-making role, 29. IT IS FURTHER ORDERED, that the request for or oversight function related in any manner to Telemundo permanent waiver of the one-to-a-market rule, Section or any of the stations licensed to it." Specifically, it is 73.3555(c) of the Commission©s rules, to permit common represented that Apollo Capital and Lion Capital will im ownership by Daniel D. Villanueva of KCTQ(AM), Thou plement mechanisms to insure Rowan©s recusal: matters sand Oaks, California, and KVEA(TV), Corona, California, involving Reorganized Telemundo will be discussed sepa IS GRANTED. rately at all meetings, allowing ample opportunity for Row an to refrain from participation; the financial reports for 30. IT IS FURTHER ORDERED, that the request for Apollo Capital and Lion Capital will be sufficiently ag temporary waiver of the television duopoly rule, Section gregated so that Telemundo©s performance figures are not 73.3555(b) of the Commission©s rules, to permit common separately displayed; reports containing any discrete in ownership by Daniel D. Villanueva of television stations formation regarding Reorganized Telemundo will be KSMS-TV, Monterey, California, and KSTS(TV), San Jose, redacted before distribution to Rowan; and all Apollo California, IS GRANTED, for a period not to exceed Capital and Lion Capital officers and directors, as well as twelve months from the date of consummation of the any employee with access to Reorganized Telemundo will instant transaction. be informed at least quarterly of Rowan©s recusal. 26. The Commission recently recognized director recusal from a multi-faceted corporation©s television business as a predicate for relief from attribution. Craig O. McCaw, 9 F.C.C. Red 5836, 5915-16 (1994); Viacom, Inc., 9 F.C.C. Red 1577, 1579 (1994). While we make no determination

8 While Rowan personally is deemed to hold an attributable lib and IHb, Weyerhaeuser Company Master Pension Trust, interest in New World, we do not find that interest attributable TCW Special Credits Trust, Inland Steel Industries Pension to Apollo or Lion or to any of its affiliates. We base this finding Trust, The Common Fund for Bond Investments, TCW Special on the applicants© representation in their December 19, 1994 Credits Trust Illb, and the Delaware State Employees© Retire amendment that Rowan acceded to the board of New World by ment Fund. Apollo is ineligible to vote, nominate or designate a a vote of the so-called "Type 2" holders of New World common director because it holds New World preferred stock and war stock, which are entitled to select two New World directors. rants, not common stock. Only if Apollo were to exercise its Those Type 2 holders are: Kodak Retirement Income Plan Trust warrants would it be a Type 2 holder. Until Apollo converts its Fund, Fidelity Capital & Income Fund, Fidelity Equity-Income warrants, we shall not deem Rowan©s directorate at New World Fund, Fidelity Magellan Fund, TCW Special Credits Funds II, to be attributable to Apollo.

1108 10 FCC Red NO. 3 Federal Communications Commission Record FCC 94-341

FEDERAL COMMUNICATIONS COMMISSION

William F. Caton Acting Secretary

1109