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

In re ) ) Applications of ) Docket No. 03-15 ) Independence Public Media ofPhiladelphia, ) File No. BFRECT-20050210AKW Inc. and NBC Telemundo License Co. for ) File No. BFRECT-20050210ALF Digital Channel Elections and Approval of ) File No. BFREET-20050210ARR Negotiated Channel Election Agreement )

To: Secretary, Federal Communications Commission

Attn: Media Bureau

OBJECTION

Pursuant to the rules and procedures ofthe Federal Communications Commission

("FCC" or "Commission"),l ABC, Inc. ("ABC"), permittee ofdigital television ("DTV") station

WPVI-DT, Philadelphia, Pennsylvania, by its attorneys, submits this objection ("Objection") to the above-captioned digital channel election applications of, and the associated negotiated channel election agreement ("NCA") between, Independence Public Media ofPhiladelphia, Inc.

("Independence"), licensee ofDTV station WYBE-DT, Philadelphia, Pennsylvania and NBC

Telemundo License Co. ("NBC"), licensee ofDTV station WCAU-DT, Philadelphia,

1 See DTV Channel Election Issues - Proposed Negotiated Channel Election Arrangements and Procedures for Filing Associated Pleadings, Public Notice, DA 05-519 (reI. Mar. 1,2005) ("March Public Notice"); DTV Channel Election Issues - Negotiated Channel Arrangements, Establishment ofForm 382 Mailbox, Revisions to FCC Form 381 Certifications, and Notification to FCC ofFlash Cut Decisions, Public Notice, DA 05-273 (reI. Feb. 1,2005) ("February Public Notice").

1 Pennsylvania and permittee ofDTV station WNJU-DT, Linden, New Jersey (the "NBC NCA").

Contrary to the FCC's requirements, the NBC NCA will have an adverse impact on the channel election rights ofWPVI-DT, a station that is not a party to the NBC NCA. In addition, the NBC

NCA is contrary to the public interest because it: (i) would circumvent the Commission's public interest-based procedure for resolving channel election conflicts; (ii) does not further the public interest goal ofNCAs, and (iii) would result in anticompetitive effects. For these reasons, the

Commission should reject the NBC NCA.

I. BACKGROUND

ABC is the licensee ofstation WPVI-TV, Philadelphia, Pennsylvania and the permittee of

WPVI-DT, which together serve as the ABC affiliate in the Philadelphia Designated Market

Area ("DMA"). WPVI-TV's analog channel is 6 and its allotted DTV channel is 64. WPVI-DT has been on the air with a digital signal on channel 64 since November 1, 1998. WPVI-DT cannot operate permanently on channel 64, however, because channel 64 is outside the "core," and thus unavailable for post-transition DTV operation. Because ofthe well-known issues surrounding the suitability ofchannel 6 and other low-VHF channels for DTV operations/ ABC was compelled to forego making a channel election for WPVI-DT in round one ofthe

Commission's channel election procedure and instead elected to participate in the second round ofDTV channel elections.

2 See Second Periodic Review ofthe Commission's Rules and Policies Affecting the Conversion To Digital Television, Report and Order, 19 FCC Rcd 18279, n.129 (2004) ("Order").

2 Before making its election, ABC studied multiple alternative DTV channels for WPVI-

DT's post-transition operation. The channels ABC examined included, among others, the in- core channels allotted to Independence for WYBE-DT (channel 34) and WYBE(TV) (channel

35), one ofwhich would be available for selection by another licensee in round two. ABC's studies revealed that either ofthese channels could serve as a viable post-transition channel for

WPVI-DT.3 Shortly before the Commission's first round election deadline, ABC learned that

Independence had hired a media broker to solicit competing offers from other in-market stations for channel 34 or 35. 4 ABC infonned Independence's broker that it did not intend to participate in a competitive bidding process pursuant to which Independence expected to receive millions of dollars in exchange for its released channel.5

On February 10, 2005, Independence and NBC filed first-round digital channel elections for their respective stations.6 In each such fonn, Independence and NBC specified that they had entered into an NCA for the proposed assignment ofpost-transition DTV channels to their stations.7 The parties to the NBC NCA are: (i) Independence, in its capacity as licensee of

3 See Engineering Statement at 1 (attached as Exhibit A) (certifying that operation from channel 34 or channel 35 would be technically viable under circumstances similar to those agreed upon under the NBC NCA).

4 In its letter to WPVI(TV), Independence and its broker stated: "As previously stated, there is at least one other party who is interested in purchasing [Independence's] digital channel rights and filing this decision in the upcoming election. We assume that a purchaser ofthe Company's digital channel rights will also cover all related equipment and out-of-pocket costs. Therefore, the only question is how much you are willing to pay in cash to the Company for their digital channel rights." Letter from Thomas J. Buono, BIA Capital, to Rebecca Campbell, WPVI(TV), at 2 (Jan. 24, 2005). 5 In an attachment to its letter, Independence's broker indicated that "a purchaser in this situation assuming a 1% audience loss would be willing to pay between $16 million and $19.2 million for WYBE's digital channel election rights." See id. at 4.

6 See File Nos. BFRECT-20050210AKW (for WCAU-DT); BFRECT-20050210ALF (for WNJU-DT); and BFRECT-2005021OARR (for WYBE-DT).

7 See id.

3 WYBE-DT, a non-commercial station assigned to the Philadelphia DMA; (ii) NBC Telemundo

License Co. ("NBC"), in its capacity as licensee ofDTV station WCAU-DT, assigned to the

Philadelphia DMA; and (iii) NBC, in its capacity as permittee ofDTV station WNJU-DT,

Linden, New Jersey, assigned to the New York DMA.

Although the parties did not submit a copy ofthe NBC NCA to the Commission,8 it appears from the election forms themselves that the parties proposed the following arrangement:

(i) WYBE-DT: use NTSC channel 35 for post-transition DTV operation, release DTV channel 34;

(ii) WCAU-DT: use WYBE-DT's released channel 34 for post-transition DTV operation, release NTSC channel 10 (and out-of-core DTV channel 67); and

(iii) WNJU-DT: use DTV channel 36 for post-transition DTV operation, release NTSC channel 47.

The NBC NCA did not include ABC as a party; to ABC's knowledge, the NBC NCA also failed to include any other potentially affected stations in the Philadelphia or New York DMAs.

II. ARGUMENT

The Commission has stated that all NCAs are subject to Commission approva1. 9 Under its approval standard, the Commission will reject an NCA if: (i) the NCA would have an "effect on the channel election rights,,10 ofa station that is not a party to the NCA, or (ii) the NCA "is

8 ABC requested a copy ofthe NCA from NBC's legal counsel but this request was refused. On March 4,2005, ABC submitted a letter to the Commission formally requesting that the Commission obtain a copy ofthe NCA and make it available for public inspection. NBC and Independence filed oppositions to this request on March 9, 2005. To date, the Commission has not acted onABC's request.

9 Order at -045 ("Such negotiated arrangements are subject to Commission approval, including particular consideration ofthe effect on the channel election rights of, and interference impact on, any licensee not a party to the negotiated channel election agreement.").

10 See id.

4 otherwise not in the public interest.,,11 The NBC NCA will have an adverse impact on the channel election rights ofWPVI-DT, a station that is not a party to the NCA. In addition, the

NBC NCA is contrary to the public interest because it: (i) would circumvent the Commission's public interest-based procedure for resolving channel election conflicts, (ii) would not further the public interest goal ofNCAs, and (iii) would result in anti-competitive effects. For these reasons, the Commission should reject the NBC NCA.

A. The NBC NCA Will Have an Adverse Impact on the Channel Election Rights ofWPVI-DT, a Station that is Not a Party to the NBC NCA

Under the first part ofits NCA review standard, the Commission will reject an NCA ifit has an "adverse impact" on a station that is not a party to the NCA. 12 This part ofthe

Commission's review will include "particular consideration ofthe effect on the channel election rights of. ..any licensee not a party to the negotiated channel election agreement."l3 In the instant case, the adverse impact on a non-party station's channel election rights is clear and direct. In the absence ofthe NBC NCA, one ofIndependence's channels would be available for selection in the second round by WPVI_DT. 14 With the NBC NCA, however, Independence's released channel automatically is assigned to WCAU-DT, and thus is not available for selection by

WPVI-DT. Plainly, the NBC NCA would have an "adverse impact" on the channel election interests ofWPVI-DT because it deprives WPVI-DT, a station with no current post-transition

11 See March Public Notice at 1 ("If, after review ofthe record, including but not limited to oppositions and replies, we find that the NCA reasonably could be construed to have an adverse impact on the interests ofa station not a party to the NCA, or is otherwise not in the public interest, the NCA will be rejected.").

12 See id; Order at ~ 45.

13 Order at ~ 45.

14 Order at ~ 46. Either channel 34 or 35 is a technically viable option for WPVI-DT. See Engineering Statement at 1.

5 channel, ofthe opportunity to select channel 34 or 35. 15 Despite this direct and significant adverse impact on WPVI-DT, the NBC NCA fails to include ABC as a party. 16 Accordingly, the

Commission must reject the NBC NCA.

B. The NBC NCA Is Contrary to the Public Interest

Under the second part ofthe applicable NCA review standard, the Commission may reject an NCA ifit "is otherwise not in the public interest.,,17 Further, the Commission has stated that it "will review all agreements to assure compliance with the public interest.,,18 As set forth below, the NBC NCA is contrary to the public interest in three critical ways. Therefore, the

Commission must reject the NBC NCA.

1. The NBC NCA Would Circumvent the Commission's Public Interest­ Based Procedure for Resolving Channel Election Conflicts

In the Order, the Commission established channel election procedures, the adherence to which would ensure that post-transition DTV channels were assigned in the public interest.

Under this procedure, iftwo or more stations elect the same channel in the second round, and again in the third round, in each case without negotiating a settlement agreement, the

Commission will resolve the conflict pursuant to certain public interest criteria. 19 Commission

15 Because WPVI-DT could have to serve fewer households from a channel other than channel 34 or 35, the NBC NCA also results in a potential loss ofservice for WPVI-DT.

16 Order at ~ 45.

17 March Public Notice at 1.

18 Order at ~ 45.

19 Order at ~ 61 and n.125 ("We note that where more than one station elects the same channel and those stations cannot negotiate a settlement agreement, the subject channel will become unavailable for selection in the second round and licensees will have the opportunity to select that channel in the third round...[and] the Commission will resolve third round conflicts pursuant to certain criteria.").

6 action on conflicting channel elections based on public interest criteriazo is intended to guarantee

that the Commission complies with its "statutory obligation" under 47 U.S.c. § 307(b) to "make

such distribution oflicenses, frequencies, hours ofoperation, and power among the several States

and communities as to provide a fair, efficient, and equitable distribution ofradio service to each

ofthe same."ZI

Approval ofthe NBC NCA would permit Independence and NBC, through a private

, agreement protecting only their private interests, to circumvent the Commission's public interest-

based criteria for resolving conflicts, as required by Section 307(b). Both NBC and ABC have

indicated their interest in selecting Independence's released channel for their post-transition

DTV operations, NBC through its WCAU-DT channel election, and ABC through the instant

objection. Absent the NBC NCA, both WCAU-DT and WPVI-DT would have the right under

the Commission's rules to select the channel released by Independence, and the Commission

would have to determine which station election best served the public interest. Through the

privately-negotiated NBC NCA, however, NBC attempts to circumvent this statutorily-mandated

public interest analysis.zz The Commission should reject the NBC NCA because the public

interest is disserved by allowing private interests to circumvent application ofthe public interest

test adopted to address this precise situation.

20 Order at ~ 61.

21 See id.

22 This analysis also would be avoided ifan NCA included all affected stations as parties; however, that type ofNCA presumably would result in a more "fair, efficient, and equitable" distribution ofservice than the NBC NCA, which is inherently unfair and inequitable due to its failure to include WPVI as a party.

7 2. The NBC NCA Does Not Further the Public Interest Goal of NCAs

In the Order, the Commission pennitted NCAs because "'channel swapping' is an existing practice with beneficial results for the marketplace and consumers, and these channel election arrangements are similar in nature to them.,,23 The NBC NCA does not further this public interest goal because it does not involve a "channel swap" and does not benefit the marketplace or consumers in the way intended by the Commission.

In pennitting NCAs, the Commission anticipated an actual channel swap, e.g., an arrangement pursuant to which Station A would agree to release one ofits channels to Station B, and in exchange, Station B would release one ofits channels to Station A. The Commission pennitted this kind ofprivately-negotiated "give and take" because it could result in a mutually agreeable channel solution that the Commission itselfcould not impose or integrate into the unilateral channel election process. The Commission cannot force a licensee to choose one channel over the other and assign that channel to another licensee, but private parties could accomplish this potentially beneficial exchange through an NCA. The NBC NCA, however, does not involve an exchange ofchannels. Instead, Independence assigns its released channel to

NBC and, in exchange, receives some other type ofconsideration. This same result could be achieved without an NCA under the FCC's existing channel election procedures-Independence would release one ifits channels, and WCAU-DT or another station would select it. Therefore, the NBC NCA does not further the public interest goal that motivated the Commission to pennit

NCAs. Accordingly, the Commission should reject the NBC NCA.

23 Order at ~ 45, n.90 (citing Advanced Television Systems and Their Impact Upon the Existing Television Broadcast Service, Sixth Report and Order, 12 FCC Rcd 14588, 14655 (1997); 47 C.ER. § 73.623(g)).

8 3. The NBC NCA Could Result in Anticompetitive Effects

The Commission also stated that it will consider anticompetitive effects in its review of

NCAs.24 The NBC NCA could result in anti-competitive effects because it could negatively impact the future operations ofWPVI-DT, WCAU-DT's primary competitor, in an already spectrum-constrained geographic area. 25 WPVI-TV and WCAU(TV) are direct competitors in the Philadelphia DMA, the 4th largest DMA in the country. WPVI-TV, the number one rated station in Philadelphia, is the ABC network's "flagship" station; similarly, WCAU(TV) is the number two rated station in the market, and is owned by the NBC network.26 For years, WPVI-

TV and WCAU(TV) have competed with comparable channel positions, WPVI-TV on channel

6, and WCAU(TV) on channel 10. Neither station can operate post-transition from its out of core DTV channel, and neither station believes it can operate digitally on its current analog channel. Thus, ABC and NBC face a similar problem. Not surprisingly, both station licensees presently have identified the same potential solution-post-transition DTV operation from

Independence's released channel. Given their respective positions, approval ofWCAU-DT's privately-negotiated acquisition ofchannel 34 has the potential to provide WCAU-DT with an unfair advantage over WPVI-DT. In this respect, Commission approval ofthe NBC NCA could result in anti-competitive effects. The Commission should not allow WCAU-DT to gain a

24 Order at ~ 45 ("We do not anticipate that channel election arrangements are likely to have anti-competitive effects. We will, however, review them for such effects.").

25 As the Commission is well-aware, there is a serious lack ofavailable, let alone desirable, channels in the Northeast corridor. Philadelphia, in particular, is geographically squeezed from all directions by some ofthe largest markets in the country-New York, Washington and Baltimore-in addition to nearby small markets, like Harrisburg and Hagerstown.

26 The Monday-Sunday 2 a.m.-6 a.m. sign on/sign offratings averages for the top three stations in the Philadelphia market, based on the last seven books (Feb. '04, Mar. '04, May '04, July '04, Oct. '04, Nov. '04 and Jan '05), are: (i) WPVI-TV - 6.50 HH rating; (ii) WCAU - 4.60 HH rating; (iii) WKYW - 4.59 HH rating.

9 competitive advantage by privately securing a channel also sought by its competitor. Instead, the

Commission should reject the NBC NCA.

III. CONCLUSION

As further set forth herein, the NBC NCA would have an adverse impact on the channel election rights ofWPVI-DT, a station that is not a party to the NCA, and otherwise is contrary to the public interest. Accordingly, the Commission should reject the NBC NCA.

Respectfully submitted,

ABC, Inc. ~ By:7~~

Susan L. Fox, Esq. Vice President, Government Relations THE WALT DISNEY COMPANY 1150 17th St., N.W., Suite 400 Washington, DC 20036 (202) 222-4700

Torn W. Davidson, Esq. AKIN GUMP STRAUSS HAUER & FELD LLP 1333 New Hampshire Ave., N.W. Suite 400 Washington, DC 20036 (202) 887-4011

March 15,2005 Its Attorneys

10 Exhibit A _~'CARL T. JONES. :=:=:·::=·'" _..__ ._._ CORPORATION _._ .. _ _.

Engineering Statement WPVI-DT, Philadelphia, Pennsylvania Initial Allotment Channel 64 1000 KW 332 M HAAT Present Operation Channel 64 500 KW 390 M HAAT

Introduction

ABC, Inc. is the licensee of Television Station WPVI, Philadelphia,

Pennsylvania. WPVI is licensed to operate on channel 6 with analog NTSC transmission, and holds an out-of-core initial allotment for DTV operation on

Channel 64. WPVI-DT volunteered to be an early adopter and began DTV transmission on channel 64 on November 1, 1998.

Because channel 64 is out of core and channel 6 is contained in the low

VHF band, WPVI authorized this office to study alternative channels that would be suitable for use after the DTV transition. The present DTV operation on channel 64 is a 'checklist-like' facility and closely replicates the service that would evince from the operating parameters found in the Initial Allotment for WPVI-DT of 1000 KW at 332 m HAAT.

In-core channels that are presently used in Philadelphia were studied.

Among these were the channels presently occupied by WYBE and WYBE-DT.

WYBE operates its NTSC facilities on channel 35 and its DTV operation is on channel 34. The study was done with the expectation that after the first round choices were made and tentative post-transition channel designations were Statement of Alfred E. Resnick WPVI-DT - Philadelphia, Pennsylvania Page 2 made, either channel 34 or channel 35 would be available for use by WYBE in

Philadelphia, and the remaining channel would be available for selection by stations participating in the second round of channel elections.

On this basis, the DTV allotment on channel 34 was studied using the method described by Commission staff to develop a replication facility on a channel other than one where a DTV initial allotment was operating. The results of this stUdy indicate that this channel could serve as a viable, in-core, post- transition channel for WPVI-DT.

WYBE elected channel 35 as its post transition channel pursuant to a negotiated channel election agreement with WCAU and WNJU. It submitted facilities that propose use of a directional antenna and an ERP that differs from its DTV allotment. A quick review of the proposed facilities specified by WYBE in

BFRCET-20050304ABO indicates that channel 35 also could serve as a viable, in-core, post-transition channel for use by WPVI-DT in Philadelphia.

Conclusion

DTV operation by WPVI-DT on channel 34 and channel 35 was studied.

The results of these studies indicate that: (i) on channel 34, WPVI-DT could provide coverage without creating impermissible interference, assuming that

WPIX, New York, receives its indicated election of channel 11 as its post- transition DTV channel; and (ii) on channel 35, WPVI-DT could satisfy the same threshold requirements under circumstances identical or similar to those Statement of Alfred E. Resnick WPVI-DT - Philadelphia, Pennsylvania Page 3 proposed in the WYBE filing, BFRCET-20050304ABO. Based on the information presently available, either channel 34 or channel 35 would be a realistic, viable option for post-transition DTV operation by WPVI-DT in Philadelphia.

DATED: March 15, 2005

Alfred Re.:micko P. E. CERTIFICATE OF SERVICE

I, Dayle Jones, hereby certify that true and correct copies ofthe foregoing Objection have been forwarded by express U.S. Mail, postage prepaid, except as otherwise noted, on the 15 th day ofMarch, 2005 to the following parties:

NBC Telemundo License Co. Independence Public Media ofPhiladelphia, Inc. Attn: F. William LeBeau 8200 Ridge Avenue 1299 Pennsylvania Ave. N.W. Philadelphia, PA 19128 Washington, DC 20004 [email protected] Licensee ofWYBE(TV)

Licensee ofWCAU(TV) and WNJU(TV)

Howard M. Liberman, Esq. Margaret L. Tobey, Esq. Elizabeth Hammond, Esq. Morrison & Foerster LLP Drinker Biddle & Reath LLP 2000 Pennsylvania Ave. 1500 K Street, NW, Suite 1100 Washington, DC 20006-1888 Washington, DC 20005 [email protected] [email protected] ehammond@dbLcom Counselfor NBC Telemundo License Co., Licensee ofWCAU(TV) and WNJU(TV) Counselfor Independence Public Media of Philadelphia, Inc., Licensee ofWYBE(TV)

Nazifa Sawez, Esq.* Rick Chessen, Esq.* Media Bureau Media Bureau Federal Communications Commission Federal Communications Commission Room2-A726 445 12th Street, SW 445 12th Street, SW Washington, DC 20554 Washington, DC 20554 [email protected] [email protected]

* Denotes hand delivery

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