5 FCC Red No. 21 Federal Communications Commission Record FCC 90-313

Additionally, you note that Nacogdoches is a small Before the community of 31,252 persons, and is located in Federal Communications Commission Nacogdoches County having a population of 46,786. Al­ Washington, D.C. 20554 though located at the fringe, Nacogdoches is part of the Tyler-Longview-Jacksonville television market which the arbitron rating service lists as the nation's 124th largest. LETTER The_refore, you argue that the size of both the community September 18, 1990 of license and the marketplace to be served fall within the range of smaller non-urban television markets where the Released: October 11, 1990 Commission has authorized satellite operations. See e.g., B. G. S. Broadcasting, Inc., above; W. Russell Withers, Jr., 2 Mr. J.B. Doherty 8940-LJ FCC Red 3460 (1987); Sainte Ltd., 3 FCC Red 185 (1988). c/o Radnor Broadcasting Company, Inc. You claim further that the community of Nacogdoches cannot economically support a viable full-service televi­ Fidelity Court, Suite 200 sion station. In this regard, you point out that the area's 259 Radnor - Chester Road economy is stagnant and that retail sales have declined in Radnor, Pennsylvania 19087 recent years, as illustrated by the fact that sales tax re­ ceipts declined by 4.3% from 1986 to 1987. You also note Dear Mr. Doherty: that in 1985, Nacogdoches County had "a median effec­ tive buying income" of $16,402, and was ranked 14th out This refers to your application (BPCT-890209KF) for a of 21 counties in East Texas. Unemployment levels in the construction permit for a new commercial television sta­ area, you assert, have remained above the national aver­ tion to operate on channel 19 in Nacogdoches, Texas. In age; and that the unemployment rate for the "Lufkin­ your application, you state that you are the Chairman of Nacogdoches Trade Area" averaged 8.0% in 1987. Region 56 Television Network, Inc. (Region 56), licensee Moreover, you state, population growth in Nacogdoches of station KETK-TV, channel 56 (NBC), Jacksonville, County has not significantly changed in recent years with Texas, and the managing general partner of TDH II Limit­ "housing starts" dropping 61% in number and 70% in ed Partnership, which holds a 33-1/3% stock interest in dollar amount between 1984 and 1987. You also maintain Lone Star Broadcasting, Inc., the holding company of that Nacogdoches has been affected by the recent eco­ Region 56. The proposed operation of the new television nomic problems facing Texas and the southwest generally. station on channel 19 will result in the overlap of that You argue that these economic problems, together with station's predicted Grade B contour with that of KETK­ the presence of a VHF network affiliated satellite station TV which is inconsistent with Section 73.3555(a)(3) of the in the market, and the heavy cable penetration in Commission's Rules.' However, you propose to operate Nacogdoches County (61% of television households), channel 19 primarily as a satellite of KETK-TV and re­ reenforce your conclusion that the chance for a stand­ quest that your application be granted pursuant to Note 5 alone station to operate successfully in Nacogdoches is of Section 73.3555 of the Commission's Rules.2 problematic at best. In support of your request, you submitted an engineer­ Further, you claim that the condition of the economy ing report which shows that the predicted Grade B con­ has affected the performance of the other television sta­ tour of the proposed station on channel 19 would tions in the market. In this regard, you assert that KLMG­ encompass 3,005 square miles and a population of TV, the CBS affiliate in Longview, Texas, has been forced 124,966; and that the predicted Grade B contour of into bankruptcy. Over the past several years, you note, KETK-TV encompasses 8,472 square miles and a popula­ construction permits issued for channels 14 and 60 in tion of 499,354. The overlap area would encompass 1,089 Tyler, Texas, were deleted because the permittees were square miles and 59,869 persons which amounts to 36% unable to proceed with construction. You state that, more of the area and 48% of the population within the pro­ recently, in February 1989, the construction permit for posed Grade B area of channel 19, and 13% of the area KCKU(TV), channel 14, Tyler, Texas, was deleted. Except and 12% of the population within KETK-TV's Grade B for two brief periods (1957-58 and 1969-70), you aver, no area. Although not provided in your application, a staff party has been able to establish an ongoing operation on study shows that there would be a very slight overlap of channel ~9. You point out that in November, 1983, a the Grade A contours of the two stations, encompassing constructiOn permit for channel 19 was issued to East less than 25 square miles. Citing B. G. S. Broadcasting, Texas Television Network, Inc., but that the permit, after Inc., 2 FCC Red 107 (1987); and Pete J. Stathakas, 59 several delays and extensions, was deleted by the Commis­ RR2d 169 (1985), aff'd , 60 RR2d 1293 (1986), you claim sion on March 11, 1988. See East Texas Television Net­ that the degree of overlap of the Grade B contours of the work, Inc., 3 FCC Red 1783 (1988), recon. denied, 4 FCC proposed satellite station and KETK-TV is within the Red 363 (1989). range in which the Commission has approved the opera­ The station proposed here, you state, will be tion of stations as primarily satellites. You note that all or Nacogdoches' first local television station. You observe part of the overlap area receives service from seven full­ that Nacogdoches currently receives Grade B or better power television stations, including KTBS-TV, channel 3 service from only two full-power television stations­ (AB9, and KSLA-TV, channel 12 (CBS), Shreveport, KETK-TV, Jacksonville, and satellite station KTRE-TV l..oulSlana; KBTX-TV, channel 3 (CBS), Bryan, Texas; Lufkin, Texas. Furthermore, you assert, only four televi~ KLTV(TV), channel 7 (ABC), Tyler, Texas; KLMG-TV, sion stations are licensed to communities in the Tyler­ channel 51 (CBS), Longview, Texas; KTRE-TV, channel 9 Longview-Jacksonville market--KETK-TV, KLTV(TV), (ABC), ~ufkin, Texas; 3 and KETK-TV, channel 56 (NBC), KTRE-TV, and KLMG-TV. You believe that the small Jacksonville, Texas. number of local television services in the market may be

5851 FCC 90-313 Federal Communications Commission Record 5 FCC Red No. 21 attributed to the market's location at a mid-point between area and 12 percent of the population of the proposed the much larger television markets of Dallas-Fort Worth, parent. Compare Mary R. Kupris, FCC 90-275 released Texas (8th largest) to the west and Shreveport, Louisiana­ August 13 1990, appeal pending sub nom. WLOS TV, Inc. Texarkana, Texas (65th largest) to the east. v. FCC, No.90-1251 (D.C. Cir. 1990). Furthermore, In addition, you assert that the operation of channel 19 Nacogdoches currently receives only two Grade B signals primarily as a satellite of KETK-TV would enable you to one of which is itself a satellite station. Id. In this regard, achieve substantial economies of scale resulting in cost we also note that your proposal will provide approxi­ savings of nearly $500,000 annually in personnel costs mately 65,000 viewers with their first off-the-air NBC alone. You propose to use these cost savings and efficien­ network programming. cies to develop a substantial amount of local news and Finally, we are persuaded that the decline in retail sales public affairs programming for Nacogdoches. In this re­ and "housing starts," the high unemployment rate, and gard, you note that you plan to establish a full com­ the stagnant population, noted by you, also support your plement of local news and public service programming on assertions that the economic condition of the channel 19, independent of KETK-TV, the parent station. Nacogdoches market will not support a stand-alone, full­ Such programming, you contend, would be impossible service television station. This belief is further supported without the economies resulting from satellite operation. by the fact that KLMG-TV, also licensed to a designated Additionally, you pledge to use the savings realized from community in the Tyler-Longview-Jacksonville market, is satellite operation to establish an internship program for in bankruptcy, and that several other permittees have students in conjunction with the Stephen F. Austin State attempted, without success, to construct stations on chan­ University located in Nacogdoches. Lastly, you state that a nel 19 in Nacogdoches, and on two other channels in the grant of your request would provide approximately 65,000 market. In light of these facts, we believe that your pro­ persons with their first off-the-air NBC network program­ posal may offer the only opportunity for a viable local ming, since 52% of the population and 62% of the area television operation in Nacogdoches. within the proposed channel 19 service area do not pres­ For these reasons, we believe that operation of the ently receive off-the-air NBC network programming. proposed station on channel 19 "primarily" as a satellite In the past, we have authorized satellite stations in of KETK-TV would serve the public interest. Accordingly, situations where overlap would exist between the parent your application for a construction permit for a new and the satellite station as a means of providing television commercial television station to operate on channel 19, service to small communities having an insufficient eco­ Nacogdoches, Texas, IS GRANTED. nomic base to support a full-service television station. One means of carrying out the goal of bringing service to BY DIRECTION OF THE COMMISSION these communities is reflected in Note 5 to Section 73.3555(a)(3) of the Rules, which relaxes our multiple ownership rules for a station operating as a satellite or "primarily" as a satellite. When satellites were first consid­ ered, they were authorized only in communities having Donna R. Searcy no local off-the-air television station. Multiple Ownership Rules, 45 FCC 1728 (1964). Over the years, however, that Secretary standard has evolved in order to provide the public in smaller markets with a choice of programs. Additionally, we have stated that the economic justification for a sat­ FOOTNOTES ellite operation may be inferred from the small size of the 1 Section 73.3555(a)(3) of the Commission's Rules provides market or from the small size of the community of li­ that "no license for a television broadcast station shall be grant­ cense at the fringe of a larger market. Capitol Broadcasting ed to any party ... if such party dirctly or indirectly owns, Co., 54 RR2d at 814, n. 9; Pete J. Stathakas, 59 RR2d 169 operates or controls one or more television broadcast stations (1985), recon. denied, 60 RR2d 1293 ( 1986). What con­ and the grant of such license will result in any overlap of the stitutes a sufficient showing to warrant satellite operation, Grade B contours of the existing and proposed stations .... " How­ then, has been established by case law and involves a ever, Note 5 to Section 73.3555 states that "paragraphs (a) balance of various factors, including the degree of overlap through (d) of this Section will not be applied to cases involving between the parent and satellite stations, the capacity of television stations which are primarily satellite operations," and the market to support a full-service station, the level of "such cases will be considered on a case-by-case basis in order to service available in the market, and the financial determine whether common ownership, operation, or control of difficulties of stations involved, as well as other relevant the stations in question would be in the public interest." considerations. See Further Notice of Proposed Rule Mak­ 2 A 100-percent satellite station retransmits all of the pro­ ing in MM Docket No. 87-8, FCC 90-279 (released Sep­ gramming of its parent, while a station categorized as "primarily tember 18, 1990), paras. 2, 10. a satellite" airs most of its parent's program but may produce On the basis of the information before us, we find that up to 5 percent of its programming locally. See e.g., Amaturo a sufficient showing has been made to justify a satellite Group, Inc., 68 FCC2d 899 (1978). operation in Nacogdoches. There is moderate overlap of 3 KTRE-TV is operated primarily as a satellite of KL TV(TV), the stations' Grade B contours and very slight overlap of Tyler, Texas. the Grade A contours (less than 25 square miles) in an area which appears to be sparsely populated. In specific terms, the Grade B contour overlap in this case would encompass 1089 square miles and 59,869 persons, which amounts to 36 percent of the area and 48 percent of the population of the proposed satellite and 13 percent of the

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