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Before the Iowa State University ) Broadcasting Corporation

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Before the Iowa State University ) Broadcasting Corporation Before the FBDKRAL COMMUNICATIONS COMMISSION FCC 93-548 Washington, D.C. 20554 In re Application of ) > Iowa State University ) Broadcasting Corporation ) BALCT-921006KF (Assignor) ) } and ) ) Capital Communications ) Company, Inc. ) (Assignee) ) ) For Assignment of License of ) Television Station WOI-TV, ) Ames, Iowa ) MEMORANDUM OPINION AND ORDHR Adopted: December 15, 1993 Released: December 15, 1993 By the Commission: Chairman Hundt not participating; Commissioners Barrett and Duggan concurring and issuing separate statements. 1. The Commission has before it for consideration: (a) an application to assign the license of station WOI-TV (Channel 5, ABC), Ames, Iowa, from Iowa State University Broadcasting Corporation (Iowa State) to Capital Communications Company, Inc. (Capital); (b) a petition to deny filed by Neil Harl, President, lowans for WOI-TV, Inc. (petitioner); (c) a joint opposition filed by Iowa State and Capital; and (d) other responsive pleadings. Capital is controlled by Philip Lombardo (Lombardo), who also controls Citadel Communications; Ltd., the licensee of television station KCAU-TV (channel 9, ABC), Sioux City, Iowa. Because the Grade B contours of the television stations overlap, Capital has requested waiver of Section 73.3555(b) of the Commission©s Rules, the duopoly rule, which generally prohibits common ownership of television stations when their respective Grade B contours overlap. Petition to Deny 2. In assessing the merits of a Petition to Deny, the Commission is guided by Section 309(d)(1) and (2) of the Communications Act, as analyzed in Astroline Citadel is also the licensee of television stations WVNY, Burlington, Vermont; KCAN, Albion, Nebraska; and WMGC, Binghampton, New York. 481 Communications Co. v. F.C.C.. 857 P.2d 1556 (D.C. Cir. 1988). First the Commission determines whether the petitioner has made specific allegations of fact that, if true, would demonstrate that grant of the application would be prima facie inconsistent with the public interest. If so, then the Commission proceeds to examine and weigh all of the material before it, including information provided by the applicants, to determine whether there is a substantial and material question of fact requiring resolution in a hearing. Finally, the Commission must determine whether grant or denial of the application would serve the public interest. 3. In the petition to deny, the petitioner argues that if the sale were to be approved, Iowa State University and its students would be deprived of valuable educational experiences in broadcast journalism, meteorology education, electronic media studies, advertising, theatre and engineering. The petitioner notes, in that regard, that Capital will not provide the studio time and production experience that the television station routinely has made available for these activities. The petitioner also points out that the revenues the station produces would be lost to the University. 4. In their joint opposition, Iowa State and Capital assert that the petitioner©s concern that the University will lose valuable support for its educational programs is not within the province of the Commission, nor does the Commission determine whether a sale of a broadcast station to a qualified buyer should be denied so that the current licensee may be forced to continue its operation on the assumption that it will continue to provide a superior nonbroadcast service than the proposed buyer. Further, they state that Section 310(d) of the Act specifically precludes the Commission from considering any party other than the proposed purchaser. MMM Holdings. Inc., 4 FCC Red 8243, 8244 (1989). In any event, the applicants note, as disclosed in their asset purchase agreement, Capital has made commitments to continue a variety of programs for the benefit of the University and its students. Discussion 5. While it appears that the operations of WOI-TV will not be as closely associated with the activities and programs of the University, we find that chis fact does not raise a prima facie question as to whether a grant of the instant application would deserve the public interest. We agree with Iowa State and Capital that the loss or gain of educational opportunities for University students or the loss of financial assistance to the University as a Initially, the petitioner noted that the Iowa District Court of Judicial District 2B held that the contract for the sale of WOI-TV was null and void and ordered that the action taken by the Iowa State Board of Regents regarding the sale be reversed and that the agreement be stricken. However, the District Court©s ruling was appealed to and, on November 24, 1993, was reversed by the Iowa Supreme Court. Accordingly, the State©s legal ability to sell WOI-TV is not in question here. 482 result of the subject sale are matters beyond the scope of relevant issues in this proceeding. 6. Additionally, the petitioner contends that a major source of funds for Capital©s purchase of WOI-TV is reported to be Mario Gabelli, a media investor who is the subject of a Federal Communications Commission proceeding. Since the petitioner is unsure of the precise nature of Mr. Gabelli©s ownership in Capital, it believes that Mr. Gabelli©s involvement with Capital in conjunction with the Commission©s proceeding raising questions concerning whether his present ownership interests violate the multiple ownership rules in turn raise serious questions regarding the financial and character qualifications of the applicant. 7. in response, the applicants contend that the petitioners have cited no rule or statute that demonstrates that there would be a violation of federal law by Mr. Gabelli. With respect to his involvement in the acquisition of WOI-TV, they note that Mr. Gabelli is minority shareholder in Capital by virtue of his interest as an officer, director and shareholder of Lynch Corporation, which owns Lynch Entertainment Corporation II, which in turn will own 49 percent of Capital. They state that the controlling 51-percent interest in Capital will be held by Lombardo Communications, which is 100 percent owned by Philip Lombardo. As a result, they maintain that Mr. Gabelli©s interest is nonattributable pursuant to Note 2 (b) of Section 73.3555 of the Commission©s Rules, no matter the outcome of the Commission©s investigation of Mr. Gabelli. 8. Regarding Mr. Gabelli, we note that he was the subject of a Commission proceeding concerning his attributable ownership interests in broadcast media that exceed limitations imposed by the Commission©s multiple ownership rules. Pinelands. Inc.. 7 FCC Red 6058 (1992); Mario Gabelli. Order to Show Cause, 7 FCC Red 5594 (1992). However, that proceeding has been terminated based on a Memorandum of Understanding entered into by the Mass Media Bureau and Mr. Gabelli and approved by the presiding Administrative Law Judge. That memorandum required Mr. Gabelli to come into compliance with the Commission©s Rules by September of 1993. Mario Gabelli. MM Docket No. 92-201, FCC 92M- 1066 and FCC 92M-1067. By letter dated September 7, 1993,. counsel for Mr.Gabelli informed the Mass-Media Bureau that he and his respective investment funds now were in compliance with the Commission©s multiple ownership rules. 9. Further, the petitioner has not set forth any facts suggesting that Mr. Gabelli©s existing media interests are not in full compliance with our rules. Moreover, we find that the acquisition of WOI-TV by Capital is not prohibited We note, nonetheless, that Capital has agreed in the contract of purchase to continue to provide the facilities of WOI-TV for training internships and educational opportunities to graduate and undergraduate students of the University. Capital has also represented that it and the University will meet no less than annually to review the effectiveness of these activities and make any changes or improvements that might be beneficial to Capital and the University. 483 because of Mr. Gabelli©s proposed minority stock interest in Capital. In amending the Commission©s multiple ownership rules in 1984, the Commission determined that when there is a single majority shareholder that controls a corporate applicant for a broadcast license, the minority shareholder©s or shareholders© interests are not considered attributable for multiple ownership purposes. Note 2(b) of Section 73.3555 of the Commission©s Rules. The Commission concluded that in these circumstances the minority shareholder or shareholders, even acting together, would not be able to direct the affairs or activities of the licensee. Attribution of Ownership Interests. 97 FCC2d 997, 1008-9 (1984), recon. in part, 58 RR2d 604, 621-22 (1985), further recon., 1 FCC Red 802 (1986). Waiver of the Duopoly Rule, Section 73.3555 10. Capital requests waiver of Section 73.3555(b) of the Commission©? Rules, the duopoly rule. As noted above, KCAU-TV (Channel 9, ABC), Sioux City, Iowa and WOI-TV (Channel 5, ABC) Ames, Iowa, will be commonly controlled by Lombardo if Capital©s acquisition of WOI-TV is approved. Capital notes that the Grade B contours of KCAU-TV and WOI-TV overlap and that Section 73.3555(b) of the Commission©s Rules prohibits ownership of television stations when their respective Grade B contours overlap. Capital asserts that because the nature of the overlap is de minimis.and because the requested assignment would increase the diversity of broadcast voices in Ames, waiver of the rule is appropriate, citing Shareholders of Storer Communications, Inc.. 59 RR2d 611 (1985); Thomas J. Flatlev. 7 FCC Red 4242 (1992). 11. In support of its request for waiver, Capital has submitted an engineering study demonstrating that the stations are licensed to communities that are approximately J.65 miles apart, that the overlap area is more than 60 miles from the community of license of each television station, that the overlap area only encompasses 236 square miles (1.3% of the area within KCAU- TV 1 s Grade B contour, and.
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