Federal Communications Commission DA 99-109

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

In re Applications of ) ) Melinda Boucher Read ) (Assignor) ) ) and ) ) QueenB Radio, Inc. ) (Assignee) ) ) For Assignment of License of ) KEZE(FM), Spokane, Washington ) File No. BALH-980818GG

MEMORANDUM OPINION AND ORDER

Adopted: January 5, 1999 Released: January 12, 1999

By the Chief, Mass Media Bureau:

1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority,1 has before it the above-captioned application for assignment of license of KEZE(FM), Spokane, Washington, from Melinda Boucher Read ("Read") to QueenB Radio, Inc. ("QueenB"). We also have on file QueenB's related request for a conditional waiver of 47 C.F.R. § 73.3555(c), the Commission's one-to-a-market rule, which restricts common radio and television ownership in the same market.2 The application and waiver request are unopposed. For the reasons set forth below, we grant the assignment application and the request for conditional waiver of our one-to-a-market rule.3

1 The Commission has delegated to the Mass Media Bureau authority to act on uncontested one-to-a-market waiver requests that involve stations in the top 100 television markets and that present no new or novel issues. Louis C. DeArias, Receiver ("DeArias"), 11 FCC Rcd 3662, 3667 (1996); see also Review of the Commission's Regulations Governing Television Broadcast Ownership, Second Further Notice of Proposed Rule Making ("Second Further NPRM"), MM Docket Nos 91-221 and 87-8, 11 FCC Rcd 21655, 21689 (1996) ("Second Further NPRM"). No new or novel issues are presented here, and the stations involved are located in the Spokane Designated Market Area ("DMA"), which is ranked 73rd in the country.

2 The one-to-a-market rule prohibits the common ownership of radio and television stations in the same market if the 2 mV/m of an AM station or the 1 mV/m contour of an FM station encompasses the entire community of license of a television station, or conversely, if the Grade A contour of a television station encompasses the entire community of license of an AM or FM station.

3 The proposed subject assignment is part of a transaction between Queen B and Read in which QueenB will acquire the subject station and Read will acquire KTRW(AM), Spokane, Washington, from QueenB. Because grant of the application to assign KTRW(AM) from QueenB to Read (File No. BAL-980818GH) does not require any waiver of the Commission's rules and is otherwise grantable, the staff will grant that application simultaneously with the release of this Order.

Federal Communications Commission DA 99-109

2. QueenB is wholly-owned by Spokane Television, Inc., which through its subsidiaries controls VHF Television station KXLY-TV (ABC Affiliate), KZZU-FM, KXLY-FM, KTRW(AM), and KXLY(AM), all Spokane, Washington; KKPL(AM), Opportunity, Washington; KHTQ(FM), Hayden, Idaho; and KVNI(AM), Coeur d'Alene, Idaho. QueenB has already been granted waivers of the one-to-a-market rule in the Spokane market. See DeArias, 11 FCC Rcd at 3667 (permanent waiver of one-to-a-market rule to add KZZU-FM and KTRW(AM) to existing radio-television combination of KXLY-TV, KXLY(AM) and KXLY-FM); Concrete River Associates, L.P., 12 FCC Rcd 6614, 6622 (MMB 1997) (conditional temporary waiver of one-to-a-market rule to add KKPL(AM) to Spokane radio-television combination); North Idaho Broadcasting Co., 13 FCC Rcd 9489, 9496 (MMB 1998) (conditional temporary waiver to add KHTQ(FM) and KVNI(AM) to Spokane radio-television combination). Because QueenB's proposed acquisition of KEZE(FM) also implicates the radio local ownership rule, QueenB has submitted a showing to demonstrate that acquisition of KEZE(FM) complies with the radio local ownership rules and has requested a conditional waiver of the one-to-a-market rule to permit common ownership of one TV, four FM, and three AM stations in the Spokane DMA.4

One-to-a-Market Waiver Showing

3. QueenB bases its request on the one-to-a-market waiver standards adopted in the Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 (1989) ("Second Report and Order"), recon. granted in part and denied in part, 4 FCC Rcd 6489 (1989) ("Second Report and Order Recon"). Under these criteria, the Commission presumptively favors waiver requests involving station combinations serving the top 25 markets where there are at least 30 separately owned, operated, and controlled broadcast licensees or "voices" after the proposed combination ("top 25 market/30 voice standard").5 The Commission also favors waiver requests involving "failed" broadcast stations, i.e., stations that have not been operating for a substantial period of time or that are in bankruptcy proceedings. Otherwise, the requests must be evaluated under a case-by-case approach. See 47 C.F.R. § 73.3555, n.7.

4. We shall review QueenB's waiver request under the case-by-case standard because Spokane is the 73rd largest DMA in the country and there is no claim that KEZE(FM) is a "failed station," as defined by the Commission. Moreover, evaluation of the waiver request under the case-by-case standard is appropriate because the proposed transaction involves common control of more than one same-service radio station with a television station. See Memorandum Opinion and Order, MM Docket 91-140, 7 FCC Rcd 6387, 6394, n.40 (1992).

5. Under the case-by-case standard, the Commission makes a public interest determination based upon the following five criteria: (1) the potential public service benefits of joint operation of the facilities such as the economies of scale, cost savings and programming and service benefits; (2) the types of facilities involved; (3) the number of media outlets owned by the applicant in the relevant

4 The Grade A contour of KXLY-TV encompasses the communities of license for each of the stations in QueenB's current and proposed combinations (i.e., Spokane, Washington; Opportunity, Washington; Hayden, Idaho; and Coeur d'Alene, Idaho).

5 Pursuant to the statutory directive "to extend its [one-to-a-market] waiver policy to any of the top 50 markets, consistent with the public interest, convenience and necessity," under the Telecommunications Act of 1996, Pub. L. No. 104-104, §202(d), 110 Stat 56 (1996), the Commission is considering a proposal to implement extension of the waiver policy in the Second Further NPRM, 11 FCC Rcd at 21685.

2 Federal Communications Commission DA 99-109 market; (4) the financial difficulties of the stations involved; and (5) the nature of the relevant market in light of the level of competition and diversity after the joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753-54. In enunciating the five factors to be considered under the case-by-case standard, the Commission noted that not all five factors must be satisfied in each case, but rather the overall consideration of these factors must weigh in favor of granting the waiver request. Second Report and Order Recon, 4 FCC Rcd at 6491. In support of its waiver request, QueenB submits a showing which addresses each of the five factors.

6. Public Service Benefits of Joint Operation. QueenB contends that the addition of KEZE(FM) to its existing combination of stations will create efficiencies that would result in annual savings of $150,000, not including a one-time capital savings of $50,000. QueenB states that it will realize a $90,000 savings by consolidating KEZE(FM)'s professional and clerical staff with QueenB's existing staff; $30,000 from savings earned as a multiple station owner for Arbitron ratings and services, professional organization fees, traffic systems, and music license fees; $12,000 by permitting KEZE(FM) to utilize QueenB's existing news/weather/traffic facilities; $12,000 by permitting its current full-time promotional staff to perform services for KEZE(FM); and $6,000 from substantial discounts for KEZE(FM) for long distance/cellular phone rates, office supply purchases, engineering supplies, and programming supplies. QueenB claims that approval of the proposed transaction will enable it to upgrade KEZE(FM)'s service to the Spokane community "at lower cost than an outside company coming into the Spokane market." For instance, QueenB states that it will be able post-transaction to provide access for KEZE(FM) to QueenB's award winning radio and television stations' news and weather resources and to add KEZE(FM) to its "powerful community charity campaign efforts" (Coats for Kids, Child Abuse Prevention Day, Christmas Wish Campaign, Children's Miracle Network Telethon Benefit for Spokane-based children's hospitals).6 Noting that KEZE(FM) currently operates "on a satellite format with only part-time staff," QueenB states that it intends to add a daily morning program to KEZE(FM) "dedicated to local news, traffic and weather as well as arts and entertainment." QueenB also indicates that it will broadcast "numerous one-minute informational segments throughout the KEZE(FM) broadcast week which will address cultural events in the Spokane area." Finally, QueenB "intends to increase the effectiveness of the KEZE EAS system by utilizing [QueenB]'s engineering staff and live local talent to provide accurate and reliable EAS service to the station's listeners."

7. Types of Facilities. Regarding the station QueenB proposes to acquire in this transaction, KEZE(FM) is a Class C3 FM station that operates on 96.9 MHz with an effective radiated power ("ERP") of 9.8 kW from an antenna height above average terrain ("HAAT") of 162 meters. With respect to the radio stations already controlled by QueenB or through its subsidiaries, KHTQ(FM) is a Class C FM station that operates on 94.5 MHz with an ERP of 100 kW from an antenna HAAT of 574 meters; KXLY-FM is a Class C FM station that operates on 99.9 MHz with an ERP of 37 kW from an antenna HAAT of 914 meters; KZZU-FM is a Class C FM station that operates on 92.9 MHz with an ERP of 85 kW from an antenna HAAT of 634 meters; KKPL(AM) is a Class B AM station that operates 630 kHz with a daytime transmitted power of 0.53 kW and a night-time transmitted power of 0.53 kW; KVNI(AM) is a Class B AM station that operates on 1080 kHz with a daytime transmitted power of 10 kW and a night-time transmitted power of 1 kW; KXLY(AM) is a Class B AM station that operates on 920 kHz with a transmitted power of 5 kW; and KXLY-TV is a VHF station, operating on Channel 4 as an ABC affiliate, and broadcasts with 47.9 kW authorized power from

6 QueenB notes that KXLY AM/FM and KXLY-TV received national Edward R. Murrow awards in 1988, 1992, and 1998, national IRIS awards in 1989 and 1992, and numerous regional Emmys in 1993, 1995, 1996, and 1997.

3 Federal Communications Commission DA 99-109 an antenna HAAT of 933 meters.

8. While QueenB acknowledges that its commonly-owned stations are not insignificant from a technical standpoint, it claims that its facilities are comparable to other stations in the market, as defined for purposes of the one-to-a-market rule.7 QueenB states that four of the market's Class C FM stations are technically comparable to KHTQ(FM), the most powerful FM in QueenB's combination, that three AM stations in the Spokane market have facilities equal or superior to KXLY(AM), the most powerful AM in the assignee's combination. QueenB also notes that two VHF TV stations, CBS-affiliate KREM-TV and NBC-affiliate KHQ-TV, have technical facilities comparable to KXLY-TV.

9. Other Media Outlets. Following consummation of the proposed transfers of control, QueenB would own one TV, three AM, and four FM stations in the Spokane TV market. QueenB does not own other broadcast or media interests in this market.

10.. Economic Status. QueenB states that KEZE(FM) is not in financial distress, and notes that the Commission has granted waiver requests in many instances where there was no showing of financial distress. See, e.g., NewCity Communications, Inc., 12 FCC Rcd 3929, 3950 (1997); DeArias, supra; Henry Broadcasting Co., 11 FCC Rcd 1175 (1995).

11. Competition and Diversity in the Market. The final factor in QueenB's showing is the nature of the relevant market in light of the Commission's concerns about diversity and competition. QueenB states that there are ten commercial and noncommercial television stations licensed in the Spokane DMA, and that these ten stations are licensed to nine separate owners. Further, QueenB indicates that there are a total of 14 AM and 19 FM stations licensed in the Spokane market and that these 33 commercial and noncommercial radio stations will be licensed to 16 separate owners following approval of the proposed combination. Additionally, QueenB emphasizes that there is abundant non- broadcast media in the Spokane market, including two daily newspapers and two weekly/bi-weekly newspapers, as well as one wireless cable system that reaches 62% of the TV households in the Spokane DMA.

Discussion

12. Radio Ownership Rules. We turn first to QueenB's compliance with our local ownership rules, 47 C.F.R. § 73.3555(a)(1). Our analysis of the data submitted indicates that KEZE(FM)'s principal community contour overlaps with each of the stations currently owned by the assignee in the Spokane DMA. Thus, QueenB's proposed common ownership of KEZE(FM) creates one radio market under the Commission's rules. This market is defined by the principal community contours of seven stations: Spokane, Washington stations KEZE(FM), KXLY(AM), KZZU-FM, and KXLY-FM; Opportunity, Washington AM station KKPL(AM); Hayden, Idaho FM station KHTQ(FM); and Coeur d'Alene, Idaho AM station KVNI(AM). We have confirmed that there are more than 30 commercial radio stations in this market. Therefore the proposal complies with the Commission's numerical local ownership caps for overall and same-service radio ownership. See 47 C.F.R. §73.3555(a)(1)(ii) (In a radio market with between 30 and 44 commercial

7 We note that although KEZE(FM), KKPL(AM), and KXLY(AM) have pending applications (File Nos. BPH- 980819IE, BP-981014AA, and BP 981014AB, respectively) to modify their facilities and KHTQ(FM) has an outstanding construction permit (File No. BPH-980616IC), we have independently verified that these will not result in significant improvement to the technical facilities of the stations.

4 Federal Communications Commission DA 99-109 radio stations, a party may own, operate, or control up to 7 commercial radio stations, not more than 4 of which are in the same service). Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of the

5 Federal Communications Commission DA 99-109 applications under the radio ownership rules. We conclude that, with respect to local radio ownership, QueenB's acquisition of KEZE(FM) would serve the public interest.

13. One-to-a-Market Waiver. Turning to the substance of QueenB's one-to-a-market waiver request, we will follow the policy established in recent one-to-a-market waiver cases where the radio component to a proposed combination exceeds those permitted prior to the adoption of the Telecommunications Act of 1996. See Maximum Media, Inc., 12 FCC Rcd 3391, 3395-96 (1997); see also, S.E. Licensee G.P., 11 FCC Rcd 16727, 16732-33 (1996); Shareholders of Citicasters, Inc. ("Citicasters"), 11 FCC Rcd 19135, 19143 (1996). In such cases, the Commission declined to grant permanent waivers until related issues raised in the television ownership rulemaking proceeding are resolved. Second Further NPRM, 11 FCC Rcd at 21689. Similarly, we conclude that a permanent, unconditional waiver would not be appropriate here. QueenB has, however, demonstrated sufficient grounds for us to grant a temporary waiver conditioned on the outcome of the rulemaking proceeding.

14. As to the first criterion, the potential public service benefits of joint ownership, the Commission considers the public service benefits that could result from the proposed radio-television combination, such as projected economies of scale, cost savings, program and service benefits. Second Report and Order, 4 FCC Rcd at 1753. QueenB has demonstrated that combining KEZE(FM) with its existing stations will result in substantial annual cost savings of approximately $150,000. These cost savings will translate not only in technological improvements to KEZE(FM)'s facilities but in programming improvements such as the proposed new daily morning program and numerous one- minute informational segments for the station to dedicate to local news, weather, and cultural events. In addition, QueenB has pledged to increase the effectiveness of KEZE(FM)'s EAS system, including using live reports to provide more accurate and reliable EAS service to the station's listeners. Finally, QueenB has established that the proposed transaction will enable KEZE(FM) to strengthen its public service benefits to several key Spokane-area charities.

15. The second criterion in our analysis concerns the types of facilities that the merged entity will own in each of these markets. In this regard, we must "consider such factors as whether the proposed radio-television combination involves a UHF or VHF television station or an AM or FM radio station as well as the size or class of the stations involved." Second Report and Order, 4 FCC Rcd at 1753. The Commission's interest in the strength of the technical facilities of the stations at issue reflects a continuing concern with the potential impact that the proposed station combination may have on diversity and competition in the affected market. See, e.g., Great American Television and radio Co., Inc., 4 FCC Rcd 6347, 6349-50 (1989). In this transaction, QueenB proposes to add KEZE(FM), a Class C3 station operating with a licensed ERP of 9.8 kW, to its combination of three Class C stations. While the only other Class C3 station in the Spokane market, KAZZ(FM), operates with lesser facilities than KEZE(FM), our analysis reveals that ten separately-owned FM stations operate with comparable or superior facilities to KEZE(FM), the fourth largest from a technical standpoint of QueenB's proposed four station FM combination. With respect to QueenB's other FM facilities, our analysis reveals that one FM station, KISC(FM), operates with facilities superior to KXLY-FM, the most powerful of QueenB's FM stations, and that KISC(FM) and KAEP(FM) operate with facilities comparable or superior to KZZU(FM), the second most powerful in the assignee's combination. Further, seven separately-owned FM stations operate with comparable or superior facilities to KHTQ(FM), the third largest of QueenB's proposed FM combination. With regard to the AM stations in the proposed combination, QueenB's existing stations include Class B Stations KVNI(AM) and KXLY(AM) as well as Class D Station KKPL(AM). As recently discussed, North Idaho Broadcasting Co., 13 FCC Rcd at 9494, there are at least three additional AM stations in the Spokane

6 Federal Communications Commission DA 99-109 market with facilities technically comparable to QueenB's most powerful AM station. Finally, at least two VHF stations (CBS affiliate KREM-TV and NBC affiliate KHQ-TV) operate with technical facilities comparable to QueenB's KXLY-TV. Thus, although QueenB's commonly owned facilities will be significant in technical terms, our analysis verifies that there are competing stations with comparable facilities, including stations operated by at least 2 other multiple station group owners. Moreover, as discussed below, the Spokane market is served by a substantial number of competing stations that represent a significant number of independent voices. The Commission has recognized that, as the level of diversity and competition in the market increases, [the Commission's] concerns grounded in the technical strength of the combining facilities decreases." DeArias, 11 FCC Rcd at 3666.

16. Under the third criterion, QueenB will not own media outlets other than those at issue in its waiver request. With respect to financial conditions, under the fourth criterion, as stated earlier, KEZE(FM) is not a failed station, nor has QueenB claimed financial distress. However, we previously indicated that not all five factors need be present to justify grant of a one-to-market waiver. Second Report and Order Recon., 4 FCC Rcd at 6491. We have granted a number of one-to-a-market waivers where there was no finding that any of the stations was in financial distress. See, e.g., DeArias, 11 FCC Rcd at 3662; Alta Gulf FM, Inc., 10 FCC Rcd 7750, 7751 (1995); Henry Broadcasting Co., 11 FCC Rcd 1175 (1995); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 9495 (1995); Secret Communications Ltd., 10 FCC Rcd 6874 (1995).

17. Regarding QueenB's media holdings under the final criterion, we find that the proposed combination would not create undue concentration of ownership and control in the Spokane market, the 73rd largest DMA. We have verified that there are at least 19 FM stations and 14 AM stations licensed in the Spokane television metro market. In addition, there are 6 VHF-TV, and 3 UHF-TV stations licensed in the Spokane DMA. These 33 radio stations and 9 television stations will be licensed to 23 separate owners following consummation of the proposed transaction. A wide variety of other media are available, including a cable system, which reaches 62 percent of total TV households, and at least two daily newspapers and two weekly/bi-weekly newspapers.8 We conclude that this level of diversity is consistent with levels approved in previous conditional waiver requests. See, e.g., Butler Broadcasting Co., Ltd., 13 FCC Rcd 12410 (MMB 1998)(20 "voices" in 60th ranked market); Friendship Broadcasting, LLC, 13 FCC Rcd 7876 (MMB 1997)(23 "voices" in 59th ranked market).

18. With respect to economic concentration and competition, our independent analysis indicates that KXLY-TV garners 28% of television advertising revenue and QueenB's existing radio stations earn 23.5% of the radio advertising revenues in the market. Together, QueenB's combined existing share of the radio and television advertising revenues in Spokane is 27.1%. The acquisition of KEZE(FM) and the divestiture of KTRW(AM) will result, in fact, in a slight decrease of QueenB's share of radio advertising revenues in the Spokane market to 23.2% and a corresponding dip in its share of the combined radio and television revenues to 26.99%. Although this figure still constitutes a significant percentage of radio advertising revenue in the Spokane market, we granted QueenB's current combination based on similar percentages. See North Idaho Broadcasting Co., 13 FCC Rcd at 9495 (26.8% of combined television and radio advertising revenues in the 73rd ranked market). Further, the combined television and radio advertising revenue figures are consistent with one-to-a-market waivers

8 These include the following publications (listed with approximate circulations): The Spokesman Review (118,770 daily, 147,328 Sunday) and the Coeur d'Alene [Idaho] Press (19,045 daily/30,600 Sunday).

7 Federal Communications Commission DA 99-109 previously granted. See, e.g., S.E. Licensee, G.P., 11 FCC Rcd 16727 (1996)(29% of combined television and radio advertising reveneues in 42nd ranked market); Citicasters, 11 FCC Rcd at 19146 (32.03% of combined television and radio advertising revenues in 29th ranked market).

19. Based on the record, we conclude that grant of the conditional waiver to permit QueenB to add KEZE(FM) to its existing radio-television combination in the Spokane DMA will result in economic efficiencies and enhanced public interest programming without having an undue adverse effect on competition or diversity in the Spokane market. In addition, we find that the applicants are fully qualified and that our approval of the proposed transfer of control would serve the public interest.

Ordering Clauses

20. Accordingly, IT IS ORDERED that a temporary conditional waiver of the one-to-a-market rule, 47 C.F.R. § 73.3555(c), to permit common ownership of stations KXLY-TV, KEZE(FM), KZZU-FM, KXLY-FM, KXLY(AM), Spokane, Washington; KKPL(AM), Opportunity, Washington; KVNI(AM), Coeur d'Alene, Idaho; and KHTQ-FM, Hayden, Idaho IS HEREBY GRANTED, subject to the outcome in the pending television ownership rulemaking proceeding, Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 & 87-8, 11 FCC Rcd 21655 (1996). Should divestiture be required as a result of that proceeding, QueenB Radio, Inc., or its appropriate subsidiary, is directed to file an application for Commission consent to sell the necessary station(s) within six months from the release of the Orders in those proceedings. Any request to extend this conditional waiver should be filed 45 days prior to the end of the six-month period and would be closely scrutinized.

21. IT IS FURTHER ORDERED, that, having found the applicants fully qualified and that grant of the application would serve the public interest, the application (File No. BALH-980818GG) for assignment of license of KEZE(FM), Spokane, Washington, from Melinda Boucher Read to QueenB Radio, Inc. IS HEREBY GRANTED.

FEDERAL COMMUNICATIONS COMMISSION

Roy J. Stewart Chief, Mass Media Bureau

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