Armstrong Utilities, Inc., D/B/A ) CSR-5377-A Armstrong Cable Services ) ) for Modification of the ADI of ) WOAC-TV ) ) Complaint of Shop at Home, Inc

Federal Communications Commission DA 99-1260

Before the Federal Communications Commission Washington, D.C. 20554

In the Matter of: ) ) Armstrong Utilities, Inc., d/b/a ) CSR-5377-A Armstrong Cable Services ) ) For Modification of the ADI of ) WOAC-TV ) ) Complaint of Shop at Home, Inc. against ) CSR-5257-M Armstrong Utilities, Inc., d/b/a Armstrong ) Cable Services ) ) Petition for Reconsideration )

MEMORANDUM OPINION AND ORDER

Adopted: June 22, 1999 Released: June 28, 1999

By the Deputy Chief, Cable Services Bureau:

I. INTRODUCTION

1. Armstrong Utilities, Inc., d/b/a Armstrong Cable Services ("Armstrong") filed the above- captioned petition for special relief seeking to modify the Cleveland, Ohio Area of Dominant Influence ("ADI") relative to station WOAC-TV, Channel 67, Canton, Ohio. Specifically, Armstrong requests that WOAC-TV be excluded, for purposes of the cable television mandatory broadcast signal carriage rules, from the communities served by its Ashland, Ohio cable system. I An opposition to this petition was filed on behalf of SAH Acquisition Corp. II, a wholly-owned subsidiary of Shop At Home, Inc., licensee of WOAC-TV, to which Armstrong has replied. In addition, Armstrong has filed a petition for reconsideration in the above-captioned must carry complaint filed by WOAC-TV and involving the same communities.2 WOAC-TV opposed the petition and Armstrong has replied. We are consolidating these cases in order to determine the signal carriage rights of WOAC-TV in the communities served by Armstrong.

1The communities served by Armstrong include: Ashland, Blooming Grove, Butler, Hayesville, Mifflin Township, Milton Township, Montgomery Township, Orange Township, Sullivan Township, Troy Township, and Weller Township, Ohio.

2A request for stay was filed concurrently with this petition. In view of our action herein, however, we see no need to address the arguments relating to this request. 10454 Federal Communications Commission DA 99-1260

Il. BACKGROUND

2. Pursuant to Section 614 of the Communications Act and implementing rules adopted by the Commission in its Implementation ofthe Cable Television Consumer Protection and Competition Act of1992, Broadcast Signal Carriage Issues ("Must Carry Order''), 3 commercial television broadcast stations are entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market for this purpose is its "area of dominant influence," or ADI, as defined by the Arbitron audience research organization.4 An ADI is a geographic market designation that defines each television market exclusive of others, based on measured viewing patterns. Essentially, each county in the United States is allocated to a market based on which home-market stations receive a preponderance of total viewing hours in the county. For purposes of this calculation, both over-the-air and cable television viewing are included.5

3. Under the Act, however, the Commission is also directed to consider changes in market areas. Section 614(h)(l)(C) provides that the Commission may:

with respect to a particular television broadcast station, include additional communities within its television market or exclude communities from such station's television market to better effectuate the purposes of this section.

In considering such requests, the 1992 Cable Act provides that:

the Commission shall afford particular attention to the value of localism by taking into account such factors as -

38 FCC Red 2965, 2976-2977 (1993).

4Section 614(h)(l)(C) of the Communications Act, as amended by the Telecommunications Act of 1996, provides that a station's market shall be determined by the Commission by regulation or order using, where available, commercial publications which delineate television markets based on viewing patterns. See 47 U.S.C. §534(h)(l)(C). Section 76.55(e) of the Commission's rules provides that the ADls to be used for purposes of the initial implementation of the mandatory carriage rules are those published in Arbitron' s 1991-1992 Television Market Guide. The Commission recently concluded that it was appropriate to switch market definitions from ADls to Nielsen Media Research's designated market areas ("DMAs") for must-carry/retransmission consent elections. See Definition of Markets for Purposes of the Cable Television Mandatory Television Broadcast Signal Carriage Rules, Report and Order and Further Notice of Proposed Rule Making, CS Docket No. 95-178, 11 FCC Red 6201 (1996) ("Market Modification Report and Order'~. In its Market Modification Report and Order, the Commission decided to use Arbitron's 1991-1992 Television ADI Market Guide market designations for the 1996 election and postpone the switch to Nielsen's DMAs until the must-carry/retransmission consent election that is to take place on October 1, 1999. The Commission also issued a Further Notice in its Market Modification Report and Order to solicit additional information and provide parties an opportunity to further consider issues relating to the transition to market designations based on Nielsen's DMAs.

5Because of the topography involved, certain counties are divided into more than one sampling unit. Also, in certain circumstances, a station may have its home county assigned to an ADI even though it receives less than a preponderance of the audience in that county. For a more complete description of how counties are allocated, see Arbitron's Description of Methodology.

10455 Federal Communications Commission DA 99-1260

(I) whether the station, or other stations located in the same area, have been historically carried on the cable system or systems within such community;

(II) whether the television station provides coverage or other local service to such community;

(III) whether any other television station that is eligible to be carried by a cable system in such community in fulfillment of the requirements of this section provides new coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; and

(IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community.6

4. The legislative history of this provision indicates that:

where the presumption in favor of ADI carriage would result in cable subscribers losing access to local stations because·they are outside the ADI in which a local cable system operates, the FCC may make an adjustment to include or exclude particular communities from a television station's market consistent with Congress' objective to ensure that television stations be carried in the areas in which they serve and which form their economic market.

* * * *

[This subsection] establishes certain criteria which the Commission shall consider in acting on requests to modify the geographic area in which stations have signal carriage rights. These factors are not intended to be exclusive, but may be used to demonstrate that a community is part of a particular station's market. 7

5. The Commission provided guidance in its Must Carry Order to aid decision making in these matters, as follows:

For example, the historical carriage of the station could be illustrated by the submission of documents listing the cable system's channel line-up (e.g., rate cards) for a period of years. To show that the station provides coverage or other local service to the cable community (factor 2), parties may_ demonstrate that the station places at least a Grade B coverage contour over the cable community or is located close to the community in terms of mileage. Coverage of news or other programming of interest to the community could be demon-

6Must Carry Order, 8 FCC Red 2965, 2976 (1993).

7H.R. Rep. 102-628, 102d Cong., 2d Sess 97 (1992).

10456 Federal Communications Commission DA 99-1260

strated by program logs or other descriptions of local program offerings. The final factor concerns viewing patterns in the cable community in cable and noncable homes. Audience data clearly provide appropriate evidence about this factor. In this regard, we note that surveys such as those used to demonstrate significantly viewed status could be useful. However, since this factor requires us to evaluate viewing on a community basis for cable and noncable homes, and significantly viewed surveys typically measure viewing only in noncable households, such surveys may need to be supplemented with additional data concerning viewing in cable homes.8

6. As for deletions of communities from a station's market, the legislative history of this provision indicates that:

The provisions of [this subsection] reflect a recognition that the Commission may conclude that a community within a station's ADI may be so far removed from the station that it cannot be deemed part of the station's market. It is not the Committee's intention that these provisions be used by cable systems to manipulate their carriage obligations to avoid compliance with the objectives of this section. Further, this section is not intended to permit a cable system to discriminate among several stations licensed to the same community. Unless a cable system can point to particularized evidence that its community is not part of one station's market, it should not be permitted to single out individual stations serving the same area and request that the cable system's community be deleted from the station's television market. 9

7. In adopting rules to implement this provision, the Commission indicated that requested changes should be considered on a community-by-community basis rather than on a county-by-county basis, and that they should be treated as specific to particular stations rather than applicable in common to all stations in the market. 10 The rules further provide, in accordance with the requirements of the 1992 Cable Act, that a station not be deleted from carriage during the pendency of an ADI change request. 11 ill. MODIFICATION ARGUMENTS

8. The cable communities served by Armstrong are located in Ashland and Richland Counties, Ohio and are considered to be part of the Cleveland, Ohio ADI. Canton, Ohio, the city of license of WOAC-TV, is also located within the Cleveland ADI and is, on average, approximately 50 miles from the cable communities.

88 FCC Red at 2977 (emphasis in original).

9H.R. Rep. 102-628, 102d Cong., 2d Sess. 97-98 (1992).

108 FCC Red at 1977 n. 139.

11 47 C.F.R. §76.59.

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9. In support of its request, Armstrong states that WO AC-TV fails to meet any of the four market criteria for localism. First, Armstrong points out that WOAC-TV has never been carried on its cable system, despite being on-the-air since 1982. Secondly, Armstrong indicates that WOAC-TV is geographically remote from the instant communities, with WOAC-TV' s city of license approximately 55. 7 miles from Armstrong's principal headend located in Ashland, Ohio. 12 Armstrong states that the individual communities requested for exclusion range from a distance of 48.6 miles to 63 miles from WOAC-TV's city of license. 13 In addition, Armstrong states that not only are all of the communities at issue located outside of WOAC-TV's Grade B contour, but it is undisputed that WOAC-TV fails to provide a good quality signal to the cable system headend. 14 Moreover, Armstrong contends that even if WOAC-TV's signal reached the cable system, WOAC-TV fails to provide any local programming specifically targeted to the instant communities. Indeed, Armstrong argues that, as a home shopping channel, it is not apparent how WOAC-TV preserves localism or fosters diversity of programming.

10. Armstrong argues with regard to the third factor that it carries numerous local stations which provide extensive local programming throughout each day to its subscribers which is targeted specifically to the communities. 15 Armstrong maintains that the addition of WOAC-TV to its channel line­ up would do nothing to enhance currently available programming choices in the communities. Finally, Armstrong points out that, according to Nielsen, WOAC-TV fails to garner any viewership in Ashland and Richland Counties, Ohio, where the communities are located. 16 For the foregoing reasons, Armstrong requests that the Commission grant its request:

11. In opposition, WOAC-TV maintains that the instant petition is but the latest in a long line of delays by Armstrong in preventing WOAC-TV's carriage on the Ashland system. WOAC-TV argues that the evidence demonstrates that it is properly considered local to the communities at issue and this fact has been affirmed by the Commission in its grant of WOAC-TV's previously-filed must carry complaint against Armstrong (CSR-5257-M). 17 WOAC-TV states that it is centrally located in the Cleveland ADI, places a Grade B signal over a large portion of the market and competes directly with other Cleveland area stations. WOAC-TV argues that by centering its case for modification around the arguments that WOAC­ TV is geographically remote and do~s not provide local programming, Armstrong mischaracterizes the reach of the station's signal, its distance from the communities, the specific programming it offers, and makes unsupported assertions with respect to the station's signal strength.

12. WOAC-TV argues that by carrying its VHF competitors, Armstrong is suggesting that the Cleveland area is the center of its market -- the same area from which WOAC-TV broadcasts. In any

12Petition at 6.

13Petition at Exhibit 1.

14See Complaint of Shop at Home, Inc. against Armstrong Utilities, Inc., 13 FCC Red 22415, 22419 (1998).

15Petition at Exhibit 3. Among the stations carried by Armstrong are the following: WEWS (ABC), WJW-TV (CBS), WKYC-TV (NBC) and WVIZ-TV (PBS), all Cleveland, Ohio; WUAB (Ind.), Lorain, Ohio; and WOIO (ABC), Ames, Ohio.

16Petition at 8.

17See Complaint of Shop at Home, Inc. against Armstrong Utilities, Inc., 13 FCC Red 22415 (1998).

10458 Federal Communications Commission DA 99-1260 event, WOAC-TV states that Armstrong has offered no justification as to why it should be considered remote while the Cleveland-area stations it considers local are similarly situated, particularly when it is located as close or closer to the cable communities than are some of the stations Armstrong points to as providing local programming. 18 Further, WOAC-TV asserts that it also provides local affairs programming designed to meet the needs and interests of the residents of the communities. 19 As a result, WOAC-TV maintains that its carriage would not only be a valuable asset, but it would be able to solidify its viewership and strengthen its financial viability and its local programming offerings. Inde~d, WOAC-TV states that the fact that many residents in the communities are receiving WOAC-TV over-the-air and ordering products from Shop at Home strongly suggests that WOAC-TV fills a programming need which is currently unmet.

13. Further, while it does not subscribe to a ratings service, WO AC-TV states that it can track its viewership through the phone calls it receives to order products. WOAC-TV argues. that these calls confirm that it has over-the-air viewership in the cable communities herein, thus rendering them part of WOAC-TV's economic market. In any event, WOAC-TV points out that Congress has deliberately rejected viewership as the standard for granting a modification request, particularly for struggling independent stations.20 While WOAC-TV concedes that it has no historic carriage on Armstrong's cable system, it points out that it is carried by other cable systems serving communities proximate to the Ashland system. 21 WOAC~TV states that the Commission has held that carriage on nearby or adjacent cable systems can be an indicator that a statio11 is local to a particular community.22

14. In reply, Armstrong contends that WOAC-TV's argument that it cannot be considered remote if the cable system carries other stations as far away in mileage is baseless and irrelevant. Armstrong points out that the stations to which WOAC-TV refers are the Cleveland NBC, ABC, CBS, Fox, PBS and UPN affiliates which have been historically carried in the communities since the inception of the Ashland cable system. Moreover, Armstrong states, all of the network affiliated stations place a Grade B signal over the cable communities in question, provide specifically-targeted local programming, and, unlike WOAC-TV, have established a strong nexus in the communities. Therefore, Armstrong asserts that the Cleveland stations' geographic distance to the Ashland headend is a non-issue. With regard to WOAC-TV, however, Armstrong states that, not only is WO AC-TV geographically remote from the cable system headend and the individual communities, but its Grade B contour fails to encompass any of the communities. Although WOAC-TV has tried to downplay this failing, Armstrong argues that the

18WOAC-TV points out that its city oflicense, Canton, and its transmitter site, Akron, are both closer to Ashland at 50 and 44 miles, respectively, than is Cleveland, Ohio, and its transmitter site of Parma at 54 and 47 miles, respectively.

190pposition at 5.

20See Greater Worcester Cablevision, 10 FCC Red 12569, 12572 (1995).

21 WOAC-TV indicates that it is carried in the communities of Lodi and Wooster, Ohio which are located in Medina and Wayne Counties, Ohio, respectively.

22See, e.g., Erie County Cablevision, Inc., 13 FCC Red 6403 (1998); DeSoto Broadcasting, Inc;, 13 FCC Red 2769 (1998); and Paxson Communications Corporation, 1998 FCC Lexis 4798 (1998).

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Commission considers Grade B coverage a very important factor in ADI modification decisions. 23 Armstrong contends that this factor becomes even more relevant when the station has a specialized format, such as WOAC-TV. Indeed, Armstrong states that in a recent ADI decision, involving another Shop at Home station, WRAY-TV, the Commission granted a request for exclusion due to the station's geographic distance of 70-90 miles and its failure to place a Grade B signal over all but two of the communities involved. 24

15. With regard to WOAC-TV's carriage on nearby cable systems, Armstrong states that WOAC-TV fails to point out that it places a Grade B signal over both Lodi in Medina County, and Wooster in Wayne County, and that both communities are considerably closer to Canton, WOAC-TV's city of license. While WOAC-TV attempts to discredit the importance of its lack of historical carriage and the cable system's carriage of other local stations, Armstrong argues that both are relevant modification factors which should be given appropriate weight in the context of this proceeding. Further, Armstrong states that the local program "Dialogue" which WOAC-TV refers to appears to address issues germane, in the most part, to the City of Cleveland, and therefore it fails to serve the needs of residents in the communities at issue. For instance, Armstrong states that in Time Warner Cable, the Commission found that Shop at Home's provision of only one Saturday morning half-hour public affairs program to be insufficient to be consider~d local.25 Finally, Armstrong argues that WOAC-TV's attempts to prove viewership utilizing postal zip codes from call-in customers is not a reliable measure of viewing audience information and the Commission should not give much weight to information gathered in such a manner.

IV. DISCUSSION

16. We grant Armstrong's modification request. Based on geography and other relevant information, we believe that the cable system herein is sufficiently removed from WOAC-TV that the communities ought not be deemed part of the station's market for mandatory carriage purposes.

17. As an initial matter, we note that, according to the legislative history of the 1992 Cable Act, the use of ADI market areas is intended "to ensure that television stations be carried in the areas which they service and which form their economic market. "26 Changes may be sought and granted by the Commission "to better effectuate the purposes" of the mandatory carriage requirements.27 The market change process incorporated into the Communications Act, however, is not intended to be a process whereby cable operators may seek relief from the mandatory signal carriage obligations apart from the question of whether a change in the market area involved is warranted. When viewed against this backdrop and considering all of the relevant factual circumstances in the record, we believe that Armstrong's deletion petition appears to be a legitimate request to redraw ADI boundaries to make them

23See Comcast Cablevision of Santa Maria, Inc., 13 FCC Red 24200, 24206 (1998).

24See Time Warner Entertainment-Advance/Newhouse Partnership, dlb/a Time Warner Cable, DA 99-615 (released April 1, 1999).

25See Time Warner Cable, DA 99-615 at paragraph 15.

26H.R. Rep. 102-628, 102d Cong., 2d Sess. 97 (1992).

2747 U.S. §534(h).

10460 Federal Communications Commission DA 99-1260 congruous under the 1992 Cable Act and the Commission's rules, and do not evidence a pattern of discriminatory conduct against the station. 28

A. Historic Carriage.

18. WOAC-TV began operation in 1982. Despite being on-the-air for 17 years, it has no history of carriage on the Ashland cable system. While there is some sporadic carriage .of WOAC-TV on systems in neighboring counties, we note that the cable communities involved are geographically closer to WOAC-TV's city of license than are the Ashland communities. We find unconvincing WOAC-TV's attempt to equate its carriage on Armstrong's system to that of the Cleveland stations. Not only are Cleveland and Canton separated by almost 60 miles but the Grade B contours of the Cleveland stations carried by Armstrong encompass the Ashland cable system and have significant over-the-air viewership. Given the statutory directive, weight must be given to this factor, but that must be done bearing in mind that the objective of the Section 614(h) process is to "better effectuate the purposes" of the broadcast signal carriage scheme. Thus, with respect to the question of historical carriage patterns, attention must be paid to the circumstances from which such patterns developed. Some stations have not had the opportunity to build a record of historical carriage for specific reasons that do not necessarily reflect a judgment as to the geography of the market involved. We note here, however, that WOAC-TV has been broadcasting for many years . ,• B. Grade· B Coverage/Local Service

19. A station's local service to cable communities is one of the relevant factors to consider in this particular case that is not influenced by the type or age of the station involved or historical carriage. Service may be measured through geographic means: by examining the distance between the station and the cable communities subject to the deletion request and taking into account natural phenomena such as waterways, mountains and valleys which tend to separate communities. A station's broadcast of local programming, which has a distinct nexus to the cable communities, is also evidence of local service. Finally, a station's Grade A or Grade B contour coverage is an additional indicator of local service and we will weigh the presence or absence of such technical coverage accordingly.29 In the instant case, WOAC-TV, which broadcasts primarily home shopping programming, cites an example of locally­ oriented programming, but this example is not sufficient to conclude that WOAC-TV has a specific nexus to the Ashland area. Further, the cable communities involved lie outside ofWOAC-TV's predicted Grade B contour and are, on average, approximately 50 miles from WOAC-TV's city of license.

28Indeed, Armstrong states in its reply that it is carrying WOAC-TV on its Medina County cable system due to the station's proximity and its Grade B signal. Reply at 6.

29As a general matter, Grade B coverage demonstrates service to cable communities and serves as a measure of a station's natural economic market. See Broadcast Signal Carriage Issues, 8 FCC Red at 2977. See also Amendment ofSection 76.51 (Orlando-Daytona Beach-Melbourne, and Cocoa, Florida), 102 FCC 2d at 1070 ("We believe that television stations actually do or logically can rely on the area within their Grade B contours for economic support.").

10461 Federal Communications Commission DA 99-1260

C. Carriage of Other Stations

20. We also believe that Armstrong's carriage of other local television stations provides support for the action requested. Where a cable operator is seeking to delete a station's mandatory carriage rights in certain communities, the issue of local coverage by other stations becomes a factor to which we will give greater weight than in cases where a party is seeking to add communities. In this case, the Cleveland stations carried by Armstrong have a closer nexus to the Ashland cable sy!?tem.

D. Viewership

21. Armstrong also shows that WOAC-TV has no audience in Ashland and Richland Counties, Ohio. Moreover, the A.C. Nielsen 1997 County/Coverage Survey for these three counties does not even list WOAC-TV. This dearth of viewership is of evidentiary significance when combined with the lack of both historical carriage and Grade B coverage. We note that the Commission has recognized that specialty stations, such as WOAC-TV, typically attract limited audiences even in the communities to which they are licensed so that the absolute level of audience in the cable communities involved may be of limited significance in considering the scope of the market involved.

Summary

22. We have carefully considered each statutory factor in the context of the circumstances presented here. Given the evidence as to the lack of Grade B coverage, the lack of viewership in Ashland and Richland Counties, the lack of carriage of WOAC-TV by any other cable system in these counties, and the minimal local programming, we conclude that it is logical and consistent with the objective of Section 614 of the Communications Act to delete Armstrong's cable system from WO AC-TV's market for mandatory carriage purposes.

·V. MUST CARRY RECONSIDERATION

23. Our decision to grant the market modification petition is dispositive of the petition for reconsideration as well as the underlying must carry complaint. As a result of the market modification order we issue herein, the communities served by Armstrong's cable system are excluded from WOAC­ TV's television market, within the meaning of Section 614(h)(l)(C) of the Communications Act.30 Therefore, WOAC-TV no longer qualifies as a "local commercial television station" for must carry purposes with respect to Armstrong's cable system.

24. We note in addition, that WOAC-TV's right to carriage under the earlier decision was conditioned on its provision of a good quality signal at the cable system headend involved. We find nothing presented by WOAC-TV in response to the petition for reconsideration which requires us to reach a different result here, or supports a finding that WOAC-TV is a "local" station within the meaning of Section 614(h)(l)(A) entitling WOAC-TV to carriage on Armstrong's cable system herein.31 ·

3047 U.S.C. §534(h)(l)(C).

3147 U.S.C. §534(h)(l)(A).

10462 Federal Communications Commission DA 99-1260

VI. ORDERING CLAUSES

25. Accordingly, IT IS ORDERED, pursuant to Section 614(h)(l)(C) of the Communications Act of 1934, as amended (47 U.S.C. §534(h)(l)(C)) and Section 76.59 of the Commission's rules (47 C.F .R. §76.59), that the petition for special relief filed by Armstrong Utilities, Inc. d/b/a Armstrong Cable Services (CSR-5377-A) IS GRANTED.

26. IT IS FURTHER ORDERED that the Memorandum Opinion and Order {DA 98-2228), released November 4, 1998 in CSR-5257-M IS VACATED, and the complaint filed June 15, 1998 in CSR-5257-M by Shop. at Home, Inc. IS DISMISSED as moot.

27. IT IS FURTHER ORDERED that the Petition for Reconsideration filed by Armstrong Utilities, Inc. IS DISMISSED.

28. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules.32

FEDERAL COMMUNICATIONS COMMISSION

William H. Johnson, Deputy Chief Cable Services Bureau

3247 C.F.R. §0.321.

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