[Federal Register Volume 61, Number 245 (Thursday, December 19, 1996)]
[Proposed Rules]
[Pages 66978-66987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32140]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MM Docket Nos. 91-221 and 87-8; FCC 96-438]


Local Television Ownership Rules

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this Second Further NPRM, the Commission makes several 
tentative conclusions and proposals concerning the modification of the 
local television ownership rule and the radio-television cross-
ownership rule. Specifically, we invite comment on our tentative 
conclusion to modify the local television ownership rule to a generally 
less restrictive Designated Market Area (``DMA'') and Grade A signal 
contour standard and on a number of specific waiver standards for the 
local television ownership rule. We also seek comment as we reexamine 
the radio-television cross-ownership rule in light of changes to the 
radio-television cross-ownership waiver policy and local radio 
ownership rules contemplated by the Telecommunications Act of 1996 
(``1996 Act''). In addition, the Commission tentatively concludes that 
it will establish the adoption date of this Second Further NPRM (i.e., 
November 5, 1996) as the grandfathering date for television local 
marketing agreements (``LMAs'') in the event television LMAs are 
considered attributable under our ownership rules. The purpose of this 
Second Further Notice of Proposed Rulemaking is to invite additional 
comments on our local television ownership rule, radio-television 
cross-ownership rule, and the treatment of existing television LMAs in 
light of the enactment of the 1996 Act.

DATES: Comments are due by February 7, 1997, and reply comments are due 
by March 7, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W., 
Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Alan Baughcum (202) 418-2170 or Kim 
Matthews (202) 418-2130 of the Policy and Rules Division, Mass Media 
Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Further Notice of Proposed Rule Making in MM Docket Nos. 91-222 and 87-
8, adopted November 5, 1996, and released November 7, 1996. The full 
text of this Commission decision is available for inspection and 
copying during normal business hours in the FCC Dockets Branch (Room 
239), 1919 M Street, N.W. Washington, D.C. 20554. The complete text of 
this decision may also be purchased from the Commission's copy 
contractor, International Transcription Services, (202) 857-3800, 2100 
M Street, N.W., Suite 140, Washington, DC 20037.

Synopsis of Second Further Notice of Proposed Rulemaking

I. Background

    1. Last year, the Commission adopted a broad-ranging Further Notice 
of Proposed Rule Making in this docket (hereinafter TV Ownership 
Further NPRM). In that item, the Commission proposed changes or 
revisions to the national television ownership rule, the local 
television ownership rule, and the radio-television cross-ownership 
rule. In addition, the Commission requested comment as to whether 
certain broadcast television local marketing agreements (``LMAs'') 
should be considered to be an attributable interest in a manner similar 
to radio LMAs.
    2. On February 8, 1996, the Telecommunications Act of 1996 (the 
``1996 Act'') was signed into law. Section 202 of the 1996 Act directs 
the Commission to undertake significant and far-reaching revisions to 
its broadcast media ownership rules, some of which--like the relaxation 
of the national television ownership limit--were proposed in the TV 
Ownership Further NPRM. Section 202 also requires us to review other 
aspects of our local ownership rules which were also the subject of the 
TV Ownership Further NPRM. In particular, Section 202 requires the 
Commission to do the following: (1) to conduct a rulemaking proceeding 
concerning the retention, modification or elimination of the television 
duopoly rule; and (2) to extend the Top 25 market/30 independent voices 
one-to-a-market waiver policy to the Top 50 markets, ``consistent with 
the public interest, convenience, and necessity.'' Additionally, both 
the Act and its legislative history contain statements regarding the 
appropriate treatment of existing television local marketing agreements 
(``LMAs'') under our ownership rules. Because our previous request for 
comments occurred before the enactment of the 1996 Act, we believe 
inviting additional comments pertaining to the duopoly rule, the radio-
television cross-ownership rule, and the treatment of existing 
television LMAs is appropriate.
    3. We confine this Second Further NPRM to issues related to our 
local television ownership rule (the duopoly rule), the one-to-a-market 
rule, and LMA grandfathering issues. Issues relating to the national 
television ownership limit, which was specifically modified by the 1996 
Act, were addressed in a previously released Order implementing these 
modifications (See Order, FCC 96-991, 61 FR 10691 (March 15, 1996) and 
are also discussed in a separate NPRM adopted contemporaneously with 
this Second Further NPRM. In addition, issues related to the broadcast 
attribution rules are the subject of a Further NPRM in our attribution 
proceeding that is also being adopted today.
    4. In the sections that follow, we invite comment on several 
discrete issues prompted by the 1996 Act. We also take this opportunity 
to solicit further comment in light of our review of comments filed in 
this proceeding to date. Specifically, we invite comment on our 
tentative conclusion to modify the local television ownership rule to a 
generally less restrictive Designated Market Area (``DMA'') and Grade A 
signal contour standard and on a number of specific waiver standards 
for the local television ownership rule. We also seek comment as we 
reexamine the radio-television cross-ownership rule in light of the 
1996 Act. Finally, we seek comment on how, if we decide to make 
television local marketing agreements (``LMAs'') attributable for 
ownership purposes, existing LMAs should be treated under the Act and 
the new rules.

II. The Local Television Ownership Rule

A. Background

    5. Our local television ownership rule presently prohibits common 
ownership of two television stations whose Grade B signal contours 
overlap. The TV Ownership Further NPRM set out a comprehensive 
analytical framework for reviewing this rule in light of three 
principal goals. First, we seek through our local television ownership 
rule to promote diversity, particularly program and viewpoint 
diversity. Second, we intend to foster the competitive operation of 
broadcast television stations' program distribution and advertising 
markets. Finally, we seek to promote greater certainty by adopting

[[Page 66979]]

generally applicable rules. We also recognize that the 1996 Act and 
additional Commission proceedings may have a cumulative effect on the 
ability of small stations or stations owned by minorities and women to 
compete effectively in this new environment. We seek comment on what 
aggregate effect these proposed rules may have on small stations, or 
stations owned by minorities and women.

B. Geographic Scope of the Rule

    6.The TV Ownership Further NPRM proposed to narrow the geographic 
scope of the duopoly rule by prohibiting station overlaps on the basis 
of Grade A contours (with a radius of approximately 30-45 miles) rather 
than Grade B contours (with a radius of approximately 50-70 miles). We 
also sought comment on whether Nielsen's DMA was a better measure of a 
local television market than Grade B signal contours. While some 
commenters opposed any change of the local ownership rule at all, most 
advocated a relaxation of the rule, with many supporting some form of 
the proposed Grade A test.
    7. We continue to question whether the Grade B contour best 
reflects the market in which a television station operates for purposes 
of our local ownership rule. The TV Ownership Further NPRM indicated 
that the area within the Grade B contour does not necessarily reflect 
the station's ``core market,'' (i.e., the viewers the station is trying 
to reach). It further pointed to a number of benefits, including 
economies of scale, that could be gained by relaxing the rule. Various 
parties have commented that the Grade B contour test should be relaxed 
because stations with overlapping Grade B contours are generally 
unlikely to have enough viewers in common to raise competition or 
diversity concerns if the stations were jointly owned. Commenters also 
pointed to the greater number of alternatives now afforded many viewers 
with cable and other multichannel video program services.
    8. While we believe the Grade B test may be overly restrictive, we 
are concerned that the Grade A contour alone may not be the appropriate 
measure to adopt in its place. We recognize that in the TV Ownership 
Further NPRM, we indicated that the record at the time supported moving 
to a Grade A approach. Upon further consideration of these issues and 
of the comments submitted in response to the TV Ownership Further NPRM, 
however, we believe a combination of the DMA and Grade A signal 
contours may be a more appropriate measure of the geographic scope of 
the local television ownership rule.
    9. Our tentative conclusion is that the local television ownership 
rule should permit common ownership of television stations in different 
DMAs so long as their Grade A signal contours do not overlap. In this 
section, we set forth the reasons as to why this approach may more 
accurately reflect a television station's geographic market and may 
further our diversity and competition goals. We invite parties to 
comment on this tentative conclusion and how it might be superior or 
inferior to a standard that is based solely on signal contours or one 
that is based solely on DMAs.
    10. The Relevance of DMAs. The record indicates that the DMA 
provides, as a general matter, a reasonable proxy of a television 
station's geographic market. The Commission has previously noted that 
the benefit of the DMA definition is that it attempts to capture the 
actual television viewership patterns and each county is assigned to a 
unique television market, unlike the Grade A and B contour standards 
which ignore the carriage of broadcast signals over cable systems. 
Thus, DMAs are designed to reflect actual household viewing patterns 
and advertising markets--critical ingredients for determining a 
station's geographic market, both for competition and diversity 
purposes. In addition, the Commission traditionally has employed a 
similar geographic measure to the DMA in other rules. That geographic 
measure is the Area of Dominant Influence (``ADI''), used by the 
Arbitron Company to define a television station's geographic market 
according to audience viewing patterns.
    11. We thus invite parties to comment further upon whether the DMA 
provides a reasonable, general approximation of a television station's 
geographic market, and whether the DMA is an appropriate basis for 
application of our local ownership rules. Furthermore, we seek comment 
on the consistency of DMA classifications from year to year. We 
recognize that some degree of change in these classifications is 
inevitable as viewing patterns shift, but ask parties to address 
whether these changes are so frequent or of such significance that they 
would undermine our goal of crafting an ownership rule that provides 
certainty and consistency in its application. We also seek comment on 
the basis upon which changes in DMA boundaries are made, and on whether 
boundaries are changed at the request of local broadcast television 
stations.
    12. Supplementing the DMA Test with a Grade A Contour Standard. 
While it is our present view that DMAs may be better than either Grade 
B or Grade A signal contours as measures of the market, we also 
tentatively conclude that we should supplement our proposed DMA-based 
rule with a Grade A contour criterion. There are at least two reasons 
why we would include both the DMA and Grade A signal contours in the 
local television ownership rule. First, because the DMA is based on the 
preponderance, not necessarily the majority, of audience viewing, 
broadcast television stations in neighboring DMAs may in fact be such 
significant competitors that joint ownership should not be allowed. 
Broadcast television stations with overlapping Grade A signal contours, 
whether in the same DMA or not, may compete for viewers and advertising 
dollars. Second, the common ownership of two broadcast stations in 
different DMAs with overlapping Grade A signal contours may reduce 
voice and program diversity available to the viewers in the overlap 
area. Thus, we believe that a supplemental Grade A overlap criterion 
will serve to forestall potentially anti-competitive and diversity-
reducing mergers in the broadcast television industry.
    13. Total viewing for a particular broadcast television station may 
include viewing in counties both within and outside the station's DMA. 
Nielsen in fact examines all such viewing attributed to stations in 
counties in and outside the station's DMA and reports this viewing data 
under the heading ``Station Totals.'' The fact that there is viewing 
outside the DMA suggests that, at least in some instances, stations in 
neighboring DMAs may compete for some of the same audience. This may 
especially be the case in the eastern U.S. where counties and DMAs tend 
to be smaller than west of the Mississippi River. In these areas it may 
be that significant portions of an individual station's audience reside 
in adjacent DMAs, particularly for stations located near DMA 
boundaries. We seek comment on whether our composite DMA/Grade A rule 
will adequately address these concerns.
    14. The Commission recognizes that actual viewing patterns may not 
be limited to instances where stations in different DMAs find their 
Grade A signal contours overlapping. We believe, however, that the 
areas in which such Grade A signal contours overlap are likely to be 
among those where the competitive and diversity concerns raised by 
common ownership of the two stations would be greatest. This is because 
the Grade A contour represents

[[Page 66980]]

the core over-the-air market. We seek comment on this belief.
    15. A further reason we tentatively conclude that a composite DMA/
Grade A rule is advisable is because the DMA designation relies on 
ratings in both cable and non-cable households in describing the 
geographic reach and extent of television markets. We note, however, 
that slightly more than one-third of television viewers do not 
subscribe to cable. Thus, reliance on a DMA market definition may 
conceal the extent to which viewers that rely on free-over-the-air 
television might be harmed from a diversity perspective if the duopoly 
rule takes no independent account of the extent to which two stations 
serve the same viewers solely on an ``over-the-air'' basis.
    16. We ask for comment on whether there are any other such issues 
raised by reliance on DMA market designations which the Commission 
should consider. To the extent that such problems exist and are 
significant, will adding a Grade A component to the rule remedy them 
and thereby ease our competition and diversity concerns?
    17. Large DMAs and Counties. We believe that a DMA/Grade A approach 
will generally be less restrictive than the current Grade B signal 
contour test. There may be some situations, however, where this is not 
the case, particularly in some geographically large DMAs west of the 
Mississippi River. In these situations, the DMA may be large enough so 
that two stations could be situated in the DMA yet not have overlapping 
Grade B contours; common ownership of the two stations would be 
permitted under the existing rule but not under the DMA/Grade A 
approach. We note, however, that a preliminary review of station 
locations and Nielsen DMAs suggests that there are currently few 
stations within the same DMA that could be commonly owned under the 
existing Grade B signal contour standard that are not already jointly 
owned. We invite comment on whether parties agree with this assessment, 
and whether, as a practical matter, the issue is essentially mooted by 
our proposal to grandfather these existing arrangements. In the event 
this is not the case, we invite comment as to how we should address 
this issue in defining the local geographic market and implementing the 
television duopoly rule. One alternative would be to adopt a two-tiered 
rule under which we would permit common ownership both in cases where 
there is no DMA/Grade A overlap and in situations where there is no 
Grade B overlap. Such a rule would be no more restrictive than our 
current regulation and would not disrupt current ownership patterns. We 
seek comment on this approach.
    18. A related issue concerns the possibility that certain western 
counties are sufficiently large, measured by area, that populations in 
cities or towns at opposite ends of the same county watch stations in 
different DMAs. Nielsen's methodology for assigning counties would 
nonetheless award the county based on the preponderance of overall 
viewing in the county. This could, potentially, lead to a situation in 
which Nielsen assigns a significant portion of the viewing population 
of that county, say residents of town A, to a DMA with stations that 
are not viewed by those television households. Such assignment might 
occur because Nielsen relies on the preponderance of cable and non-
cable viewers in both town A and the larger town B at the opposite end 
of the county. As a result, under a DMA-based duopoly rule, stations 
licensed to towns A and B could not be commonly owned even if their 
Grade B contours do not overlap and they actually serve entirely 
different markets. Our preliminary analysis, however, indicates that 
the number of instances in which this might occur may be small. Indeed, 
we note that Nielsen has, in certain instances, split counties among 
different DMAs based on the disparate viewing habits of residents in 
various locations in the county. We seek comment on whether this 
assessment is accurate. What would be the appropriate response in the 
event the record shows that this issue in fact presents a significant 
problem?
    19. Grandfathering. As noted, recognizing that our proposal could 
disrupt existing ownership arrangements involving stations in the same 
DMA with no Grade B overlaps, we seek comment on whether we should, if 
we adopt a DMA/Grade A rule, grandfather existing joint ownership 
combinations that conform to our current Grade B test. We also seek 
comment on whether the grandfathered status we propose for existing 
joint ownership combinations in the same DMA should cease at the time 
an applicant seeks to assign or transfer a grandfathered station, or 
whether we should allow the grandfathered status to be transferred to a 
new owner. In the event we were to grandfather these combinations, the 
apparently more restrictive aspects of a DMA/Grade A duopoly approach 
would appear to have little effect on existing broadcasters, while the 
relaxation of the duopoly standard inherent in the change from a Grade 
B to a DMA/Grade A criterion would afford broadcasters significant 
opportunities to obtain the efficiencies which common ownership may 
offer. We tentatively conclude that, overall, our DMA/Grade A rule will 
make the local television rule less restrictive without harming our 
competition and diversity goals.

C. Exceptions and Waivers to the DMA/Grade A Approach

    20. The TV Ownership Further NPRM invited comment on whether, in at 
least some situations, we should allow a company to acquire stations 
within the same geographic market. We asked parties to address a number 
of possible exceptions to a ``one station'' local ownership rule, such 
as (1) permitting combinations of two UHF stations located in the same 
market or permitting combinations of one UHF station and one VHF 
station located in the same market, and (2) permitting such 
combinations only if a certain number of independently-owned broadcast 
television stations remain after the transaction. We also sought 
comment on the criteria to be used in a case-by-case waiver approach. 
In response, a number of parties opposed any relaxation of our current 
rules, while other commenters urged us to modify our rules to permit 
same-market combinations in certain circumstances.
    21. We invite parties to update the record on the general issue of 
whether we should permit television duopolies in certain circumstances 
by rule or waiver. We also seek additional comment on a specific 
exception and on specific waiver criteria for the local station 
ownership rule.
    22. In addition, we seek further evidence regarding the 
relationship between ownership and diversity. Greater ownership 
concentration traditionally has been thought to reduce diversity. We 
seek comment, analysis and evidence on whether it reduces viewpoint and 
program diversity. For example, would a single owner of two stations be 
less likely to present diverse opinions, and less likely to serve 
diverse audiences, than would two unaffiliated owners? Conversely, 
would an owner of two stations in a market be more likely to 
counterprogram and thereby serve the interests and views of more 
viewers? With respect to these questions, what can we learn from the 
waivers of local television ownership rules that we have already 
granted? Have they led to a decrease or an increase in programming or 
viewpoint diversity? Similarly, taking account of the important 
differences between television and radio, what can we learn from 
``radio duopolies,'' which have been permissible since 1992?

[[Page 66981]]

1. Exceptions
a. Distinguishing Between UHF and VHF Stations
    23. In response to the TV Ownership Further NPRM, several parties 
raised a threshold issue in arguing that local television station 
combinations involving UHF stations should receive more favorable 
treatment than those involving VHF stations. We invite parties to 
comment on the extent to which we should explicitly distinguish between 
UHF and VHF stations in determining whether to allow common ownership 
of stations in the same market. In particular, should we treat the 
common ownership of UHF stations in the same DMA or even in the same 
city more favorably than that of non-UHF stations? As several parties 
noted, some UHF stations are major network affiliates with large market 
shares, but many are not. These parties therefore raise a question as 
to the continuing validity of the need for differential treatment of 
UHFs.
b. Satellite Stations
    24. Television satellite stations are authorized under Part 73 of 
the Commission's Rules to retransmit all or part of the programming of 
a parent station. The two stations are ordinarily commonly owned. 
Satellite stations are generally exempt from our broadcast ownership 
restrictions. An application for television satellite status will be 
presumed to be in the public interest if the applicant meets three 
criteria: (1) there is no City Grade overlap between the parent and the 
satellite; (2) the proposed satellite would provide service to an 
underserved area; and (3) no alternative operator is ready and able to 
construct or to purchase and operate the satellite as a full-service 
station.
    25. We presently see no reason to alter our current policy 
exempting satellite stations from our local ownership rules. Our 
satellite station policy, resting in significant part on the satellite 
station's questionable financial viability as a stand-alone operation, 
has furthered our ownership policies by adding additional voices to 
local television markets where otherwise no additional voices might 
have emerged. The criteria we utilize to evaluate requests for 
satellite status--including service to underserved areas and a 
demonstrated unwillingness by potential buyers to operate the station 
on a stand-alone basis--ensure that satellite operations are consistent 
with our underlying goals of promoting diversity and competition. Under 
these circumstances, we believe that continued exception of satellite 
stations from the local ownership rules is appropriate. We invite 
comment on this conclusion.
2. Waivers
    The Commission seeks comment on a number of specific waiver 
criteria for allowing common ownership of stations within the same 
local market.
a. UHF/VHF
    27. We have discussed, as a possible exception to the local 
television ownership rule, exempting certain UHF combinations from the 
application of the local television ownership rule. Another approach 
toward the same end would be to create waiver criteria by which the 
Commission might waive the application of the rule for certain UHF 
combinations. Many of the comments from parties on possible criteria to 
be used in permitting common ownership of stations within the same 
local market focussed on permitting combinations involving UHF 
stations.
    28. Given these comments, we request additional comment on whether 
we should treat UHF station combinations differently from VHF 
combinations with respect to local ownership and, if so, how. 
Commenters citing disadvantages that they believe UHF stations continue 
to suffer should also list very specific criteria for waiving the 
duopoly rule that would correspond to those disadvantages, e.g., small 
audience share or limited area of signal coverage. We ask parties to 
comment on the use of such criteria in granting waivers in light of our 
competition and diversity goals. In addition, while the 1996 Act itself 
is silent on the question, the Conference Report to the Act states that 
``[i]t is the intention of the conferees that, if the Commission 
revises the multiple ownership rules, it shall permit VHF-VHF 
combinations only in compelling circumstances.'' Thus, we seek comment 
on whether there are particular locations (such as Alaska or Hawaii) 
where there are such compelling circumstances that the Commission might 
allow some VHF/VHF combinations for reasons analogous to those cited in 
support of UHF combinations. Commenters supporting this view should 
describe the nature of the showing that should be required and the 
effect of any such waivers on diversity and competition in these 
markets.
b. Failed Station
    29. We invite comment on whether, if an applicant can show that it 
is the only viable suitor for a failed station, the Commission should 
grant the application regardless of contour overlap or DMA 
designations. A ``failed'' broadcast station for purposes of our one-
to-a-market rule waiver standard is a station that has not been 
operated for a substantial period of time, e.g., four months, or that 
is involved in bankruptcy proceedings. We ask whether this failed 
station standard would be appropriate in evaluating a potential duopoly 
application. We invite comment on whether it is preferable to have two 
operating stations with a single owner than to have one operating and 
one dark station. The Commission also invites comment on whether any 
such standard should be relatively strict or generous. For example, 
should only failed stations qualify, or should we consider failing 
stations as well? If so, what is the appropriate definition of a 
failing station? Should applicants be required to demonstrate that they 
are the only qualified and viable purchaser for the failed stations? We 
seek comment on whether this standard is appropriate, on how a 
demonstration that a station has ``failed'' or is failing might be 
accomplished.
c. Vacant and New Channel Allotments
    30. In our recent Sixth Further Notice of Proposed Rule Making 
(``Sixth FNPRM''), 61 FR 43209 (August 21, 1996) in the DTV proceeding, 
we proposed to delete all vacant TV allotments in order to provide 
existing television stations with DTV allotments with comparable 
coverage. In the Sixth FNPRM, however, we indicated that ``in some 
communities--mainly rural areas--unused channels may remain even after 
all existing broadcasters receive allotments.''
    31. We invite comment on whether we should entertain a waiver 
request to the local television ownership rule to enable a local 
broadcast television licensee to apply for a channel allotment that has 
long remained vacant or unused, e.g., five years. We believe that it 
may not be in the public interest to have allotted broadcast channels 
lie fallow--particularly in markets where it might be possible to allow 
additional NTSC stations to come on the air without adversely impacting 
the proposed DTV allotment table and the transition to digital 
television. Evidence that an allotment has remained vacant for five 
years, or evidence of a pattern of failure in applications for that 
allotment, may suggest that the operation of another television station 
on a stand-alone basis in the community in question is not economically 
viable. In those circumstances, the public interest in diversity may be 
advanced by permitting an existing station in the market to acquire the 
station, rather

[[Page 66982]]

than allowing the channel to remain unused. Similarly, if it is 
possible to create new channel allotments in a market without 
interfering with nearby channels and without adversely impacting the 
proposed new DTV allotment table, we seek comment on whether the 
Commission should entertain applications by an incumbent television 
licensee to establish a new channel in a market. We note that there 
currently is a freeze placed on new applications as the result of our 
DTV proceeding. We anticipate that, in the event we adopt a vacant 
channel waiver criterion, it would not apply until a DTV table of 
allotments is finalized in that proceeding. Advanced Television Systems 
and their Impact Upon the Existing Television Broadcast Service, Sixth 
FNPRM, 61 FR 43209 (August 21, 1996). We seek comment on this issue, 
including whether there may be circumstances where it would be 
appropriate to consider such waiver requests before DTV allotments are 
finalized.
    32. A vacant channel waiver criterion is analogous to waivers for 
failed stations. We believe that granting waivers for failed stations 
and vacant allotments would be consistent with our objective to advance 
diversity and competition. We therefore seek comment on whether these 
failed and vacant channel waiver proposals increase the amount and 
diversity of programming and viewpoints available in the market. 
Similarly, we seek comment on a possible competitive or economic 
efficiency rationale for prohibiting existing broadcasters from 
expanding their capacity into unused broadcast spectrum that no other 
person wants to use. Specifically, we ask commenters to discuss the 
rationale that unassigned channels might need to be preserved for new 
broadcasters to accommodate future growth in demand for local 
television broadcasting. We solicit comment on these observations and 
especially upon the feasibility of this proposal given the proposed new 
DTV allotment table.
d. Small Market Share/Minimum Number of Voices
    33. In addition, the Commission seeks comment on whether it should 
entertain waivers to allow joint ownership of stations that (1) have 
very small audience or advertising market shares and (2) are located in 
a very large market where (3) a specified minimum number of 
independently owned voices remain post-merger. The purpose of such a 
waiver standard would be to enhance competition in the local market by 
allowing small stations to share costs and thereby compete more 
effectively. It could also increase the availability of programming 
and, perhaps, program diversity were such stations to use their 
economic savings to produce new and better-quality programming or 
related enhancements. Such advantages may be particularly helpful to 
small and independent UHF stations.
    34. Market Share. We seek comment as to the size of market shares 
that would be sufficiently low to meet this standard. We also seek 
comment on whether a small market share waiver standard would tend to 
limit the application of this waiver standard, either absolutely or 
generally, to UHF stations and to independent stations not affiliated 
with any major network. In addition, if after a duopoly waiver is 
granted, such joint ownership results in the previously struggling 
stations developing large shares of the viewing audience, should the 
Commission terminate the waiver for joint ownership in the event the 
owner seeks to assign or transfer the stations' licenses?
    35. Minimum Number of Voices. The TV Ownership Further NPRM 
discussed whether waivers would be appropriate where a sufficient 
number of independently owned broadcast television voices remained in 
the market post-merger. Several parties argued for variations on 
similar waiver standards.
    36. We have previously sought comment on whether a minimum of six 
independently owned broadcast television stations in an ADI is an 
appropriate standard in light of our competition and diversity goals. 
The Commission's 1995 TV Ownership Further NPRM raised numerous 
questions about the extent to which other video and non-video products 
and services were competitive or diversity substitutes for broadcast 
television. We noted the lack of unanimity among the parties as to 
which products and services are substitutes and which are not. Given 
the many changes that are taking place in the television industry and 
the lack of consensus in the record, we ask here for comment on whether 
we should, until we observe further marketplace developments, focus 
only on broadcast television outlets in counting voices for this 
proposed waiver. Or, for example, should we give consideration to cable 
television systems when cable has a very high penetration level in the 
market? If so, how should a cable system be counted for these purposes? 
In view of recent developments regarding DBS, Open Video Systems (OVS), 
and on-line services, we also seek comment on whether and how these 
services should be counted as voices. For a given minimum number of 
independently owned broadcast television voices, an approach that 
counted only broadcast television voices would establish a more 
difficult standard for station owners in most markets to meet as 
compared to an approach that included a broader array of media as 
independent voices. Indeed, such an approach might limit waivers under 
this criteria to only the very largest markets. However, based on 
experience gained from granting waivers in these circumstances, we 
could then consider relaxing the rule further as part of a future 
biennial review of our ownership rules.
    37. Market Size. We also invite comment on whether, if we adopt a 
small market share and minimum number of voices waiver policy, we 
should add a market size test. In other words, we might limit waivers 
based on a minimum number of television voices in the very largest 
markets. We invite comment on whether the largest markets already have 
sufficiently numerous competing broadcast television outlets to 
safeguard our competition and diversity concerns. Or, are there so few 
such large markets that development of a waiver criterion is not an 
efficient means to promote diversity? Parties are also asked to comment 
on the appropriate minimum number of voices under such an approach. For 
example, should this standard require a minimum number of 
independently-owned broadcast television stations (including both 
commercial and non-commercial stations) licensed to communities in the 
DMA after the proposed transaction? The Commission seeks comment on 
alternative standards, and whether waivers based on these criteria 
should be limited, at least for the time being, to only the largest 
markets.
e. Public Interest and Unmet Needs
    38. Finally, we seek comment on the circumstances in which the 
Commission should grant a waiver if the applicant demonstrates that the 
public interest benefits that will flow from a waiver would include 
public interest programming that would not be provided were the 
stations owned separately. The Commission has on numerous occasions 
taken into account an applicant's programming enhancements in granting 
permanent and temporary waivers of the television duopoly rule although 
these waivers typically involved only limited amounts of contour 
overlap between the stations. We also seek comment on how, if this 
waiver criterion were adopted, programming benefits would fit into our 
analysis of the public interest. Should we rely only on types of 
programming

[[Page 66983]]

that the Commission has traditionally considered ``public interest'' 
programming, such as children's educational programming, news, public 
affairs and access of political candidates to the airwaves? Should we 
permit broadcasters to identify additional types of programming that 
would support a waiver, such as programming that serves the needs of an 
underserved segment of the local market or underprovided public 
interest programming? Should we follow up on the representations made 
by licensees in their waiver requests? Finally, we seek comment on 
whether it would be preferable to consider this waiver criterion, if at 
all, only in conjunction with one or more of the other criteria 
discussed above.
3. Waivers Pending the Outcome of This Proceeding
    39. There has been an increase in broadcast transactions since the 
passage of the 1996 Act, with a number of these involving requests for 
waiver of our ownership rules. Our current television duopoly rule 
will, of course, remain in place pending the outcome of this 
proceeding, but we take this opportunity to provide parties guidance 
regarding our policy in waiving the rule during this interim period. We 
hope that doing so will facilitate planning for these transactions as 
well as staff processing of license transfer and assignment 
applications.
    40. During this interim period, we will generally grant waivers of 
the television duopoly rule, conditioned on coming into compliance with 
the requirements ultimately adopted in this proceeding within six 
months of its conclusion, where the television stations seeking common 
ownership are in different DMAs with no overlapping Grade A signal 
contours. Commission staff will have delegated authority to act on 
applications seeking such waivers as long as the applications do not 
raise new or novel issues. We have tentatively concluded that the 
record in this proceeding supports relaxation of the geographic scope 
of the duopoly rule from its current Grade B overlap standard to a 
standard based on DMAs supplemented with a Grade A overlap criterion. 
While we are providing an opportunity for comment on this tentative 
conclusion, we do not believe granting waivers satisfying the proposed 
standard, and conditioning them on the outcome of this proceeding, will 
adversely affect our competition and diversity goals in the interim. It 
will also have the benefit of providing parties some flexibility in 
moving forward on merger transactions that do not comply with the 
current duopoly rule.
    41. We will be disinclined to grant waiver requests not falling in 
this category (i.e., those involving stations in the same DMA or with 
overlapping Grade A signal contours), absent extraordinary 
circumstances. These types of waiver requests will be acted upon by the 
full Commission.

III. Radio-Television Cross-Ownership Rule

    42. The radio-television cross-ownership rule, or the one-to-a-
market rule, generally forbids joint ownership of a radio and a 
television station in the same local market. The rule seeks to promote 
competition as well as viewpoint and programming diversity in 
broadcasting. In 1989, we amended the rule to permit, on a waiver 
basis, radio-television mergers in the Top 25 television markets if, 
post-merger, at least 30 independently owned broadcast voices remained, 
or if the merger involved a failed station or if the merger satisfied a 
group of five other criteria. Waivers premised on the first two 
criteria--large market size or financial failure--were presumed to be 
in the public interest, while waivers based on the ``five factors'' 
were evaluated based on the strength of the applicant's individual 
showings.
    43. In the TV Ownership Further NPRM, we proposed to eliminate the 
cross-ownership restriction in its entirety or replace it with an 
approach under which cross-ownership would be permitted where a minimum 
number of post-acquisition, independently owned broadcast voices 
remained in the relevant market. We tentatively concluded that there 
were two alternative approaches towards modifying the one-to-a-market 
rule. If radio stations and television stations do not compete in the 
same local advertising, program delivery or diversity markets, we 
proposed to eliminate this rule entirely and rely on our local 
ownership rules to ensure competition and diversity at the local level. 
Under the local radio ownership rules in effect at that time, this 
would have permitted entities to own one AM, one FM, and one television 
station in small markets. In large markets, one entity would have been 
able to own up to 2 AMs, 2 FMs, and 1 television station. If, on the 
other hand, radio and television did compete in some or all of the same 
local markets, then we proposed to modify the one-to-a-market rule to 
allow radio-television combinations (AM-TV, FM-TV, or AM-FM-TV) in 
those markets that have a sufficient number of remaining alternative 
suppliers/outlets as to ensure sufficient diversity and competition.
    44. Commenting parties responded with a variety of positions 
ranging from recommending repeal of the rule, to relaxation of the 
rule, to retention of the rule. Since those comments were received, 
Congress passed the 1996 Act. The 1996 Act affects our radio-television 
cross-ownership rule in at least two ways. First, Section 202(d) of 
that Act directs the Commission to extend our radio-television cross-
ownership waiver policy to the Top 50 rather than the top 25 television 
markets ``* * * consistent with the public interest, convenience and 
necessity.'' Second, the 1996 Act significantly liberalized the local 
radio ownership rules. Prior to the 1996 Act, the largest number of 
radio stations one firm could own in any market was four--two AM and 
two FM stations. As modified by the 1996 Act, however, our rules now 
allow one party to own up to 8 commercial radio stations in radio 
markets with 45 or more commercial radio stations. One party can own up 
to 7 commercial radio stations in radio markets with 30-44 commercial 
radio stations and as many as 6 commercial radio stations in radio 
markets with 15-29 commercial radio stations. For radio markets with 14 
or fewer commercial radio stations, one party can own up to 5 
commercial radio stations (provided that no party may own, operate or 
control more than 50% of the stations in the market).
    45. We consider the recent statutory changes to the local radio 
ownership rules to be significant enough to warrant further comment on 
our radio-television cross-ownership rule proposals outlined in the TV 
Ownership Further NPRM. First, can the rule be eliminated based on a 
finding that radio and television stations are not substitutes? Second, 
even if we eventually consider television and radio stations 
substitutes, can the rule be eliminated because the respective radio 
and television ownership rules alone can be relied upon to ensure 
sufficient diversity and competition in the local market?
    46. We also seek to update the record on options for modifying, but 
not eliminating, the radio-television cross ownership rule. 
Accordingly, we invite comment on whether any easing of the cross-
ownership rule should take the form of modifying the rule itself or 
modifying our presumptive waiver policy.
    47. Consistent with Section 202(d) of the 1996 Act, we propose, at 
a minimum, to extend the Top 25 market/30 voice waiver policy to the 
Top 50 markets. The 30 independently owned

[[Page 66984]]

voices test has proven effective in safeguarding our diversity and 
competition objectives in the Top 25 markets. Our experience in 
processing waiver requests beyond these markets further indicates that 
application of the 30 independently owned voices test to the Top 50 
markets should also be sufficient to safeguard diversity and 
competition in markets 26-50. We consequently tentatively conclude that 
extending this test to the Top 50 markets would be consistent with the 
public interest, convenience and necessity. Thus, an applicant would be 
presumptively entitled to a waiver to obtain one AM, one FM, and one 
television station in a Top 50 market as long as 30 independently owned 
voices remained after the merger. The TV Ownership Further NPRM made a 
similar proposal and most parties were in apparent agreement with at 
least taking this step. We regard this as a minor change in our rules 
because the independently owned 30 voice requirement would remain the 
primary restraint on radio-television mergers.
    48. We also invite comment, however, on the following four 
options--most of which were discussed in the previous NPRM--to change 
the rule beyond that contemplated by the 1996 Act. First, should we 
extend the presumptive waiver policy to any television market that 
satisfies the minimum independent voice test? Second, should we extend 
the presumptive waiver policy to entities that seek to own more than 
one FM and/or AM radio station? Third, should we reduce the number of 
required independently owned voices that must remain after a 
transaction? And fourth, should our ``five factors'' test be changed or 
refined to be more effective in protecting competition and diversity? 
To assist our consideration of these alternatives, we seek comment on 
the effects of waivers we have granted in the past on competition in 
local markets and on viewpoint and program diversity. We request that 
commenters provide as specific data as possible in describing their 
conclusions.
    49. To the extent the Commission finds that it is necessary to 
consider market share information in reviewing matters of common 
ownership, we also ask for comment on how to establish the appropriate 
definition of the relevant advertising market for our consideration. 
For example, we seek comment on whether we should view the relevant 
market as focusing on advertising in radio and television. 
Alternatively, is the relevant market in this context more 
appropriately defined as local advertising media for radio, television, 
newspaper, cable, and others, or should certain media segments be 
excluded? In this regard, we also seek comment on the level of data on 
market shares that firms should be required to provide in order to 
demonstrate that common ownership would meet market share criteria. In 
particular, should they provide market share of radio and television 
local revenue independently, as well as the combined share of all 
advertising?
    50. We seek comment on the above options as well as other possible 
means of revising the radio-television cross ownership rule, 
particularly in light of the changes resulting from the 1996 Act. We 
seek to safeguard our competition and diversity goals while at the same 
time allowing parties to take advantage of the efficiencies that may 
result from permitting cross ownership of radio and television stations 
in the same market. As to the latter, we urge parties to provide more 
detailed evidence of these efficiencies. Can the same level of 
efficiencies be achieved in the cross-ownership situation as when the 
common ownership involves stations within the same service? Do these 
efficiencies diminish as the number of commonly owned stations 
increases?
    51. We note that our current radio-television cross-ownership rule 
will remain in place pending the resolution of this proceeding. Waiver 
requests submitted in the interim will be processed pursuant to our 
current criteria for evaluating such requests. The Chief of the Mass 
Media Bureau will continue to have delegated authority to rule on 
uncontested one-to-a-market waiver requests that involve stations in 
the Top 100 television markets that are clearly consistent with prior 
Commission precedent, i.e., which present no new or novel issues. One-
to-a-market waiver requests not falling in this category will be 
referred to the Commission. We expect that waivers falling in this 
latter category that are granted by the Commission will be conditioned 
on the outcome of this proceeding.

IV. Television Local Marketing Agreements

    52. A television local marketing agreement (``LMA'') is a type of 
contract in which the licensee leases blocks of its broadcast time to a 
broker who then supplies the programming to fill that time and sells 
the commercial spot announcements to support the programming. 
Currently, the Commission does not attribute television LMAs for local 
and national ownership purposes and so these relationships are not 
subject to our ownership rules. However, in the radio context, radio 
station ownership is attributed to any radio licensee who enters into 
an LMA with another radio station in the same market if the agreement 
involves the brokering of more than 15% of the station's weekly 
broadcast hours.
    53. In the previous NPRM, the Commission suggested that guidelines 
similar to those governing radio LMAs may be necessary with regard to 
television LMAs. We also determined that such agreements, subject to 
some general Commission guidelines, can provide competitive and 
diversity benefits to both the brokering parties and to the public. We 
tentatively proposed to treat LMAs involving television stations in the 
same basic manner as we did for radio stations. That is, time brokerage 
of another television station in the same market for more than 15% of 
the brokered station's weekly broadcast hours would result in counting 
the brokered station toward the brokering licensee's national and local 
ownership limits. Further, television LMAs would be required to be 
filed with the Commission in addition to the existing requirement that 
they be kept at the stations involved in an LMA. Finally, we indicated 
that our television LMA guidelines would allow for ``grandfathering'' 
television LMAs entered into before the adoption date of the TV 
Ownership Further NPRM, subject to renewability and transferability 
guidelines similar to those governing radio LMAs as described more 
fully below in paragraphs 90 and 91.
    54. These proposed guidelines primarily concern the circumstances 
under which a television LMA should be attributed to the brokering 
entity for purposes of the broadcast ownership rules. We will 
consequently incorporate the issue of whether to adopt these 
guidelines, or some variation of them, into our companion proceeding 
regarding our broadcast attribution rules. In our companion Attribution 
Further NPRM, we tentatively conclude that we should treat time 
brokerage of another television station in the same market for more 
than 15 percent of the brokered station's weekly broadcast hours as 
being attributable, and therefore as counting toward the brokered 
licensee's multiple ownership limits.
    55. We will, however, decide in this proceeding how to treat 
existing television LMAs under any guidelines that are adopted that 
would attribute television LMAs to the brokering station. These 
television LMA grandfathering and transition issues will be especially 
significant issues if we do

[[Page 66985]]

not modify our television duopoly rule, because such an attribution 
provision would preclude television LMAs in any market where the time 
broker owns or has an attributable interest in another television 
station.
    56. In this regard, Section 202(g) of the 1996 Act states that 
``[n]othing in this section shall be construed to prohibit the 
origination, continuation, or renewal of any television local marketing 
agreement that is in compliance with the regulations of the 
Commission.'' We interpret this provision as clearly stating no more 
than that Section 202 of the 1996 Act shall not be construed to 
prohibit any television LMA that is in compliance with the Commission's 
rules. We do not regard Section 202(g) as limiting our ability to 
promulgate attribution rules under Title I and Title III affecting the 
status of television LMAs. As a result, we do not see Section 202(g) of 
the 1996 Act as posing a legal restraint on our questions in the TV 
Ownership Further NPRM as to (1) whether television LMAs in which a 
broker obtains the ability to program 15% or more of a broadcast 
television station's weekly broadcast output should be deemed an 
attributable interest (which will be decided in the attribution 
proceeding); and (2) whether grandfathering existing television LMAs 
from any applicable ownership rules that would follow from that 
attribution decision is appropriate.
    57. We recognize, however, that the language in the Conference 
Report to the 1996 Act appears to interpret Section 202(g) of the 1996 
Act in a different manner with regard to television LMAs that predate 
February 8, 1996, the date of enactment of this legislation. The 
Conference Report states--``[Section 202(g)] grandfathers LMAs 
currently in existence upon enactment of this legislation and allows 
LMAs in the future, consistent with the Commission's rules. The 
conferees note the positive contributions of television LMAs and this 
subsection assures that this legislation does not deprive the public of 
the benefits of existing LMAs that were otherwise in compliance with 
Commission regulations on the date of enactment.'' The Conference 
Report suggests that the conferees intended to ``grandfather'' existing 
television LMAs. Although we do not interpret the statute as requiring 
that outcome, we believe that existing television LMAs entered into on 
reliance of the Commission's current policy should not be disrupted 
during the remainder of the current contract term. Indeed, we had a 
similar concern at the time of the TV Ownership Further NPRM and so 
asked a series of questions as to whether television LMAs entered into 
before the adoption date of the TV Ownership Further NPRM should be 
grandfathered with respect to ownership regulations.
    58. We wish to provide an additional opportunity for comment on 
these grandfathering and transition issues. In particular, in order to 
devise a fair and efficient method to bring licensees into compliance 
with our ownership rules, in the event television LMAs are 
attributable, we request specific comments concerning the number of 
television LMAs that are in effect on the date of the adoption of this 
NPRM, the market that each LMA covers, the length of the contractual 
relationship, and any other data concerning television LMA 
relationships that would have a bearing on bringing parties to an LMA 
into compliance with our ownership rules. This data will allow us to 
assess the need for grandfathering existing LMAs in the event they are 
deemed attributable, and the form this grandfathering should take. We 
wish to minimize undue and inequitable disruption to existing 
contractual relationships, and consequently seek comment on allowing 
television stations to come into compliance with our ownership rules 
within a reasonable period of time.
    59. We note that such a transition would not involve grandfathering 
permanent ownership arrangements that would violate our rules given 
that LMAs typically involve, by their nature, more temporary 
relationships that have set contractual terms. We thus are inclined to 
institute a grandfathering policy to provide that in the event 
television LMAs become attributable pursuant to the broadcast 
attribution proceeding, television LMAs entered into prior to a 
specific date, and that are otherwise in compliance with applicable 
rules and policies, would be permitted to continue in force without 
disruption until the original term in the LMA expires. However, if a 
grandfathered television LMA results in violation of any Commission 
ownership rule, a party would be required to seek a waiver from the 
Commission prior to transferring the station or renewing the 
grandfathered television LMA. By specifying this date at this time, we 
provide notice that television LMAs entered into after the 
grandfathering date will not be grandfathered if television LMAs are 
ultimately found to be attributable. Additionally, we hope to provide 
certainty to television licensees who wish to make business decisions 
concerning television LMAs until the attribution issue is resolved. We 
consequently believe this grandfathering approach would be appropriate. 
We reserve the right, however, to invalidate an otherwise grandfathered 
LMA in circumstances that raise particular competition and diversity 
concerns, such as those that might be presented in very small markets.
    60. With respect to specifying a particular grandfathering date in 
the event we determine television LMAs should be attributable under our 
local ownership rules, we are inclined to grandfather all television 
LMAs entered into before the adoption date of this NPRM for purposes of 
compliance with our ownership rules. Thus, such television LMAs will 
not be disturbed during the pendency of the original term of the LMA in 
the event the cognizability of the LMA would result in violation of an 
ownership rule. However, television LMAs entered into on or after the 
adoption date of this NPRM would be entered into at the risk of the 
contracting parties. Consequently, if these latter television LMAs 
result in violation of any Commission ownership rule, they would not be 
grandfathered and would be accorded only a brief period in which to 
terminate.
    61. We generally propose to limit the transferability and 
renewability of grandfathered television LMAs as we did with respect to 
radio LMAs. In transfer situations wherein the television LMA was 
entered into before the grandfather date, we generally propose to 
permit the new station owner to retain the LMA for the duration of the 
initial term of the television LMA even if it would otherwise violate 
our local ownership rules, under our new attribution criteria for 
television LMAs. We invite comment, however, as to whether there should 
be some absolute limit, such as three years, on such grandfathering. In 
transfer situations wherein the television LMA was entered into on or 
after the grandfather date, we propose to allow the new station owner a 
minimum amount of time to terminate the contractual relationship. In 
the television LMA renewal context, we propose to permit renewal or 
extension of television LMAs only if the extension or renewal took 
place before the relevant grandfathering date. We seek comments on 
these proposals.

V. Administrative Matters

    62. Pursuant to applicable procedures set forth in Sections 1.415 
and 1.419 of the Commission's Rules, 47 CFR Secs. 1.415 and 1.419, 
interested parties may file comments on or before February 7, 1997 and 
reply comments on or before March 7, 1997. To file formally in this 
proceeding, you must file an original plus four copies of all comments, 
reply comments, and

[[Page 66986]]

supporting comments. If you want each Commissioner to receive a copy of 
your comments, you must file an original plus nine copies. If you want 
to file identical documents in more than one docketed rulemaking 
proceeding, you must file two additional copies of any such document 
for each additional docket. You should send comments and reply comments 
to Office of the Secretary, Federal Communications Commission, 
Washington, D.C. 20554. Comments and reply comments will be available 
for public inspection during regular business hours in the FCC 
Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C. 
20554.
    63. This is a non-restricted notice and comment rulemaking 
proceeding. Ex parte presentations are permitted, except during the 
Sunshine Agenda period, provided they are disclosed as provided in the 
Commission Rules. See generally 47 CFR Secs. 1.1202, 1.1203, and 
1.1206(a).
    64. Additional Information: For additional information on this 
proceeding, please contact Alan Baughcum (202) 418-2170 or Kim Matthews 
(202) 418-2130 of the Policy and Rules Division, Mass Media Bureau.

VI. Initial Paperwork Reduction Act of 1995 Analysis

    65. The rules proposed in this Second Further Notice of Proposed 
Rulemaking have been analyzed with respect to the Paperwork Reduction 
Act of 1995 and contain no changes from our earlier proposals in this 
rule-making proceeding related to new or modified form, information 
collection and/or record keeping, labeling, disclosure or record 
retention requirements. These proposed rules would not increase or 
decrease burden hours imposed on the public.

VII. Initial Regulatory Flexibility Analysis

    66. With respect to this Second Further NPRM, an Initial Regulatory 
Flexibility Analysis (IRFA) is contained below. As required by Section 
603 of the Regulatory Flexibility Act, the Commission has prepared an 
IRFA of the expected impact on small entities of the proposals 
suggested in this document. Written public comments are requested on 
the IRFA. In order to fulfill the mandate of the Contract with America 
Advancement Act of 1996 regarding the Final Regulatory Flexibility 
Analysis, we ask a number of questions in our IRFA regarding the 
prevalence of small businesses in the radio and television broadcasting 
industries. Comments on the IRFA must be filed in accordance with the 
same filing deadlines as comments on the Second Further NPRM, but they 
must have a separate and distinct heading designating them as responses 
to the IRFA. The Secretary shall send a copy of this Second Further 
NPRM, including the IRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration in accordance with paragraph 603(a) of 
the Regulatory Flexibility Act.
    Initial Regulatory Flexibility Analysis Regulatory Flexibility Act 
As required by Section 603 of the Regulatory Flexibility Act, 5 U.S.C. 
Sec. 603, the Commission is incorporating an Initial Regulatory 
Flexibility Analysis (IRFA) of the expected impact on small entities of 
the policies and proposals in this Second Further NPRM. Written public 
comments concerning the effect of the proposals in the Second Further 
NPRM, including the IRFA, on small businesses are requested. Comments 
must be identified as responses to the IRFA and must be filed by the 
deadlines for comments on the Second Further NPRM provided in Paragraph 
94. The Secretary shall send a copy of this Second Further NPRM, 
including the IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration in accordance with paragraph 603(a) of the 
Regulatory Flexibility Act. Reason and Objectives for Second Further 
NPRM: After the issuance of the Television Ownership Further NPRM in 
this docket, the Telecommunications Act of 1996 (``1996 Act'') was 
signed into law. The Second Further NPRM seeks to update the record in 
this proceeding on the effect of the 1996 Act and to review other 
aspects of our local ownership rules which were also the subject of the 
Television Ownership Further NPRM.
    First, this Second Further NPRM proposes to modify the geographic 
scope of the duopoly rule to eliminate the Grade B contour overlap 
standard and replace it with a DMA/Grade A contour standard. Second, 
this NPRM proposes to modify the radio-television cross ownership rule 
to conform to Section 202 of the 1996 Act. Accordingly, we propose to 
extend our 30 voices waiver policy to the Top 50 markets. We also seek 
comment on a number of other options for revising the radio-television 
cross-ownership rule and the waiver policy for this rule. Finally, this 
NPRM proposes to institute a grandfathering policy in the event 
television LMAs become attributable pursuant to the accompanying 
broadcast attribution proceeding.
    Legal Basis: Authority for the actions proposed in this Second 
Further NPRM may be found in Sections 4(i), 303(r), and 307(a) of the 
Communications Act of 1934, as amended, 47 U.S.C. Secs. 154, 303(r), 
and 307(a) and Sections 202(c)(2), 202(d), 202(g), and 257 of the 
Telecommunications Act of 1996.
    Description and Estimate of the Number of Small Entities to Which 
the Proposed Rule Will Apply: The proposed rules and policies will 
concern full power television broadcasting licensees, radio 
broadcasting licensees and potential licensees of either service. The 
Small Business Administration (SBA) defines a television broadcasting 
station that has no more than $10.5 million in annual receipts as a 
small business. Television broadcasting stations consist of 
establishments primarily engaged in broadcasting visual programs by 
television to the public, except cable and other pay television 
services. Included in this industry are commercial, religious, 
educational, and other television stations. Also included are 
establishments primarily engaged in television broadcasting and which 
produce taped television program materials. Separate establishments 
primarily engaged in producing taped television program materials are 
classified in Services, Industry 7812. There were 1,509 television 
stations operating in the nation in 1992. That number has remained 
fairly constant as indicated by the approximately 1,550 operating 
television broadcasting stations in the nation at the end of August 
1996. For 1992 the number of television stations that produced less 
than $10.0 million in revenue was 1,155 establishments.
    Additionally, the SBA defines a radio broadcasting station that has 
no more than $5 million in annual receipts as a small business. A radio 
broadcasting station is an establishment primarily engaged in 
broadcasting aural programs by radio to the public. Included in this 
industry are commercial, religious, educational, and other radio 
stations. Radio broadcasting stations which primarily are engaged in 
radio broadcasting and which produce radio program materials are 
similarly included. However, radio stations which are separate 
establishments and are primarily engaged in producing radio program 
material are classified in Services, Industry 7922. The 1992 Census 
indicates that 96% (5,861 of 6,127) radio station establishments 
produced less than $5 million in revenue in 1992. Official Commission 
records indicate that 11,334 individual radio stations were operating 
in 1992. For 1996, official Commission records indicate that 12,088 
radio stations were operating. Thus, the proposed rules will affect 
approximately 1,550 television

[[Page 66987]]

stations, approximately 1,194 of those stations are considered small 
businesses. Additionally, the proposed rules will affect 12,088 radio 
stations, approximately 11,605 are small businesses. These estimates 
may overstate the number of small entities since the revenue figures on 
which they are based do not include or aggregate revenues from non-
television or non-radio affiliated companies. We recognize that the 
proposed rules may also impact minority and women owned stations, some 
of which may be small entities. In 1995, minorities owned and 
controlled 37 (3.0%) of 1,221 commercial television stations and 293 
(2.9%) of the commercial radio stations in the United States. According 
to the U.S. Bureau of the Census, in 1987 women owned and controlled 27 
(1.9%) of 1,342 commercial and non-commercial television stations and 
394 (3.8%) of 10,244 commercial and non-commercial radio stations in 
the United States. We recognize that the numbers of minority and women 
broadcast owners may have changed due to an increase in license 
transfers and assignments since the passage of the 1996 Act. We seek 
comment on the current numbers of minority and women owned broadcast 
properties and the numbers of these that qualify as small entities. To 
assist us with our responsibilities under the amended Regulatory 
Flexibility Act, we specifically request comments concerning our 
assessment of the number of small businesses that will be impacted by 
this rulemaking proceeding, the type or form of impact, and the 
advantages and disadvantages of the impact. In addition to owners of 
operating radio and television stations, any entity who seeks or 
desires to obtain a television or radio broadcast license may be 
affected by the proposals contained in this item. The number of 
entities that may seek to obtain a television or radio broadcast 
license is unknown. We invite comment as to such number.
    Description of Projected Recording, Recordkeeping, and Other 
Compliance Requirements: No new recording, recordkeeping or other 
compliance requirements are noted in this Second Further Notice of 
Proposed Rulemaking.
    Federal Rules That Overlap, Duplicate, or Conflict With the 
Proposed Rules: The Commission's broadcast-newspaper, television 
broadcast-cable, local radio ownership, and national television 
ownership rules also promote the same goals as the rules discussed in 
this item, however, they do not overlap, duplicate or conflict with the 
proposed rules.
    Significant Alternatives to the Proposed Rule Which Minimizes the 
Significant Economic Impact on Small Entities and Accomplish the Stated 
Objectives: The Commission seeks to minimize the impact of any changes 
in the television local ownership rules upon small entities while 
preserving competition and diversity in our local markets. Any 
significant alternatives consistent with the stated objectives 
presented in the comments will be considered. We urge parties to 
support their proposals with specific evidence and analysis.
    Local Ownership Rule: In this NPRM we tentatively conclude that a 
combination of the DMA and Grade A signal contours may be a better 
measure of the geographic scope of the duopoly rule. We also seek 
comment on whether to grandfather existing common ownership 
combinations that conform to our current Grade B test and whether we 
should permit television duopolies in certain circumstances by rule or 
wavier.
    Radio-Television Cross-Ownership Rule: In the Television Ownership 
Further Notice of Proposed Rulemaking, we received a large array of 
comments recommending a variety of positions ranging from repeal, to 
relaxation, to retention of the rule. We request comment and specific 
data to support the commenters positions concerning: (1) extending the 
presumptive waiver policy to any television market that satisfies the 
minimum independent voice test; (2) extending the presumptive waiver 
policy to entities that seek to own more than one FM and/or AM radio 
station; (3) reducing the number of required independently owned voices 
that must remain after a transaction; and (4) whether the ``five 
factor'' waiver policy should be changed or refined to be more 
effective in protecting competition and diversity.
    Television Local Marketing Agreements: To minimize undue and 
inequitable disruption to existing contractual relationships, we 
propose a grandfathering policy which allows television stations to 
come into compliance with our ownership rules within a reasonable 
period of time.
    We seek comment concerning the significant economic impact of each 
of the above mentioned proposals on a substantial number of small 
stations.
    Issues Raised by the Public Comments in Response to the Initial 
Regulatory Flexibility Analysis: There were no comments submitted 
specifically in response to the IRFA that was included in the 
Television Ownership Further Notice of Proposed Rulemaking. We have, 
however, taken into account all issues raised by the public in response 
to the proposals raised in this proceeding. We received conflicting 
comments concerning the impact of joint ownership on broadcast 
stations. Several commenters advocated the modification or elimination 
of the local ownership rules in order to permit station owners to take 
advantage of the economies of scale that will result from joint 
ownership. On the other side, several commenters argued that the 
ability of station owners to take advantage of the economies of scale 
resulting from joint ownership will drive up the price of stations 
which will make it more difficult for new entrants, including 
minorities and women, to finance the purchase of stations.

List of Subjects in 47 CFR Part 73

    Television broadcasting.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-32140 Filed 12-18-96; 8:45 am]
BILLING CODE 6712-01-P