Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Definition of Radio Markets for Areas Not ) MB Docket 03-130 Located in an Arbitron Survey Area ) ) To: The Commission REPLY COMMENTS OF THE CROMWELL GROUP The Cromwell Group1 hereby submits its reply comments pursuant to the Notice of Proposed Rulemaking (“NPRM”), FCC 03-124, released July 2, 2003.2 In reply, the following is submitted: 1. Contour Based Ownership Limits Work. The Cromwell Group supports the position advanced by the National Association of Broadcasters (“NAB”) and others that the FCC's current plan of contour spacing has worked. While there are several public companies, much of the adverse attention has focused on one such large company. That public company with more than 1,200 stations (and a variety of other entertainment interests) has developed radio station clusters in both large and small communities. In the view of The Cromwell Group, that 1 The Cromwell Group, 100% owned by Bayard H. (“Bud”) Walters as small businessperson, is comprised of radio station groups in Tennessee, Illinois, Kentucky and Indiana. The stations include: WCTZ(AM), Clarksville, Tennessee; WBUZ(FM), LaVergne, Tennessee; WQZQ-FM, Dickson, Tennessee; WMCI(FM), Neoga, Illinois; WEJT(FM) Shelbyville, Illinois; WZUS(FM), Macon, Illinois; WZNX(FM), Sullivan, Illinois; WHQQ(FM), Neoga, Illinois; WWGO-FM, Charleston, Illinois; WYDS(FM), Decatur, Illinois; WCRA(AM), Effingham, Illinois; WCRC(FM), Effingham, Illinois; WCBH(FM), Casey, Illinois; WKCM(AM), Hawesville, Kentucky; WLME(FM), Cannelton, Indiana; WTCJ(AM), Tell City, Indiana; WTCJ-FM, Tell City, Indiana; WXCM(FM), Hawesville, Kentucky and WBIO(FM), Philpot, Kentucky. Most of these radio stations were built from original construction permits or upgraded through the construction permit process over the last 30 years commencing with WKCM(AM) in 1972. Many of these stations are in unrated markets. 2 The deadline date for Reply Comments, as extended in FCC Report No. DA-03-2639, is October 21, 2003. Accordingly, these Reply Comments are timely filed. - 1 - public company is a good licensee that may have had a few employees overstep prudent bounds, thus causing the FCC and others to focus adverse attention on them. The regulation of that public company and the regulation of the entire radio industry should not be premised upon a need for remedial measures due to unwise actions by a few of that public company’s employees. 2. The next six largest public companies in terms of numbers of radio stations are much smaller. Most of those public companies are not significant players in smaller unrated markets. The vast majority of radio station clusters in smaller unrated markets generally have been developed by independent companies preparing to defend their localism against satellite radio (200 channels owned by only two companies as authorized by the FCC)3, other media and potentially larger companies (not unlike smaller retailers trying to prepare for the coming of a Walmart store to their town). By and large, these smaller independent companies own fewer than 50 stations (most own fewer than 25 stations) and are concentrated on serving their local communities, as anticipated by the contour spacing ownership rules and the Communications Act since the beginning of radio regulation. 3. The FCC in the NPRM modified the contour overlap ownership rules to exclude from the calculation any station whose transmitter site is more than 92 kilometers (58 miles) from the area of common overlap of the stations being acquired. With this change, The Cromwell Group believes that the FCC has improved the contour overlap rules to the extent necessary to eliminate the primary opportunity for abuse that the FCC perceives. This adjustment to the contour 3 With respect to satellite radio (XM and Sirius), it should be noted that the FCC made a substantial logic error in its treatment of satellite radio vs. terrestrial broadcasting in this proceeding. The Commission concludes at Paragraph 245 of the NPRM that “satellite radio is not yet a good substitute for broadcast radio for most listeners”. This conclusion is based upon the fact that “the vast majority of the population does not subscribe to a satellite radio service” and the fact that “local radio stations reach approximately 94% of the U.S. population each week”. So, the FCC has defined the market for radio listening NOT upon what is available to listeners, but rather upon listener preference as to which product listeners prefer. The Commission should be embarrassed at this circular bootstrap reasoning. There is no showing that satellite radio is not available to any radio listener who wishes to purchase a satellite radio receiver. Rather, the availability of satellite radio is as ubiquitous as any other consumer product in today’s world which offers consumers a variety of means to purchase products including telephone orders, internet and traditional stores. Nor is there any showing that satellite radio is not available in the home, in the office or in vehicles. Rather, satellite radio is just as much a part of the radio market as terrestrial broadcast stations. Any ownership rules must take into account a radio market that includes satellite radio. - 2 - spacing rules was thoughtful, effective and basically eliminates the negative opportunities and anomalies that brought FCC focus on the largest public radio company. 4. The 35-Mile Market Radius Proposal. If the FCC simply refuses to keep the well defined contour overlap rule in place, then the only realistic, sustainable, and definable market proposal is the proposal of Independent Broadcasters for Ownership Reform4 to have a 35 mile market radius from a station’s transmitter site.5 For all the reasons cited by Independent Broadcasters for Ownership Reform, this 35 mile market radius proposal has merit above all others except for contour overlap. 5. The Fallacy of Using Arbitron Market Definitions. The Commission in the NPRM shrugged off broadcaster concerns that Arbitron market definitions are not reliable enough to use as radio market definitions.6 Yet, recent events factually illustrate better than any argument that could be made that Arbitron market definitions have no consistency or longevity. Simply put, Arbitron market definitions and market sizes change based not upon any rational definition of the market, but rather to suit the customers of Arbitron for strictly business related purposes. 6. For example, Arbitron recently deleted Springfield, Illinois, the Illinois state capitol, from its list of rated markets even though there are fourteen stations licensed to Springfield itself. Springfield is a city with a population of 111,454 (Source: 2000 U.S. Census). Thus, presumably radio stations serving Springfield will now be regarded under whatever system the Commission adopts in this NPRM for unrated markets. This strains credulity. 7. Last year, Owensboro, Kentucky was deleted from Arbitron’s list of rated markets. The Cromwell Group, through an affiliated licensee corporation, was an Arbitron subscriber in Owensboro and given no choice to remain rated as part of this separate market. Now Owensboro 4 The Cromwell Group is one of the 12 broadcasters who are part of Independent Broadcasters for Ownership Reform. 5 See Comments of Independent Broadcasters for Ownership Reform, submitted October 6, 2003 in this proceeding. 6 See Paragraphs 277-278 of the NPRM. - 3 - is part of the Evansville Total Survey Area but not its Metro Survey Area (which the FCC plans on using for market definitions). 8. Arbitron, taking actions for its own business reasons which are wholly unrelated to definitions of radio markets, is thus affecting basic FCC determinations of what stations may be owned by whom. This is totally unacceptable from a regulatory or moral standpoint. In the United Stations, there are approximately 250 radio markets rated by Arbitron. There are many more radio markets, including some large communities, which are not part of Arbitron markets. Those communities that are not part of Arbitron markets, and those that are rated which are subject to county and area adjustment by Arbitron, create significant anomalies because of how Arbitron does business. Those anomalies should not be the determinative factor of FCC regulatory decisions as to who may own radio stations and in what combinations such radio stations may be owned. 9. It is important to note that the FCC’s other proposals of using micropolitan markets, rural cell phone markets, or other variations, have no bearing on the local community patterns of smaller market areas. Smaller market clusters form around community patterns and local affinity areas. Micropolitan markets, rural cell phone markets, and other similar variations, do not have community patterns in mind and have no bearing on listenership patterns of broadcast voices. 10. Transferability of Existing Clusters. Transferability of existing radio station clusters should be assured by any change in the rules. Most independent and smaller market broadcasters risked personal funds and efforts to comply with existing rules in the face of pending and looming competition. Now that many such clusters are established, those clusters should be permitted on-going transferability without being subject to break-up. To do otherwise would be unfair to all and counter to regulatory policy as licensees understood that policy. 11. Conclusion. The Cromwell Group supports the continuance of the contour overlap method of determining the radio market and the number of stations in the radio market, as modified to limit stations considered to 58 miles from the overlap area. In the alternative, if - 4 - the contour overlap method will be jettisoned by the FCC, The Cromwell Group supports the 35- mile market radius proposal of Independent Broadcasters for Ownership Reform. WHEREFORE, for the reasons above, The Cromwell Group supports the continued use of the contour overlap method now in use by the Commission in unrated markets.