[Federal Register Volume 64, Number 220 (Tuesday, November 16, 1999)]
[Rules and Regulations]
[Pages 62123-62127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30019]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MM Docket No. 91-221, 87-8; FCC 99-343]


Review of the Commission's Regulations Governing Television 
Broadcasting; Television Satellite Stations Review of Policy and Rules

AGENCY: Federal Communications Commission.

ACTION: Interpretation.

-----------------------------------------------------------------------

SUMMARY: This document determines the procedures to be used to process 
applications filed pursuant to the local broadcast ownership 
proceeding. In that proceeding the Commission relaxed

[[Page 62124]]

these rules to reflect changes to the media marketplace. The purpose of 
this action is to resolve issues necessary to commence processing 
applications filed pursuant to our previously modified rules.

DATES: Effective November 16, 1999.

FOR FURTHER INFORMATION CONTACT: Mary Beth Murphy, (202) 418-2120, 
Policy and Rules Division, Mass Media Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
on Reconsideration (``Order''), FCC 99-343, adopted November 10, 1999, 
and released November 10, 1999. The full text of the Commission's Order 
is available for inspection and copying during normal business hours in 
the FCC Dockets Branch (Room TW-A306), 445 12 St. S.W., Washington, 
D.C. The complete text of this Order may also be purchased from the 
Commission's copy contractor, International Transcription Services 
(202) 857-3800, 1231 20th St., N.W., Washington, D.C. 20036.

Synopsis of Order on Reconsideration

I. Background

    1. In this Order, we determine the procedures to be used to process 
applications filed pursuant to the Report and Order (``Local Ownership 
Order''), 64 FR 50651 (September 17, 1999), adopted in the above-
captioned local broadcast ownership proceeding on August 5, 1999. In 
our Local Ownership Order, we relaxed our local broadcast ownership 
rules, specifically the TV duopoly rule and radio-television cross-
ownership rule, to reflect changes in the media marketplace. We stated 
that ``[a]pplications filed pursuant to this R&O will not be accepted 
by the Commission until the effective date'' of the order, which will 
be sixty days after publication in the Federal Register. We also said: 
``We realize that the rules adopted in this R&O could result in two or 
more applications being filed on the same day relating to stations in 
the same market and that due to the voice count all applications might 
not be able to be granted. We will address how to resolve such 
conflicts in a subsequent action.''
    2. On September 9, 1999, we released a Public Notice, FCC 99-240, 
soliciting comment on procedures for processing applications filed 
pursuant to the Local Ownership Order. We stated that one approach to 
resolving potential conflicts would be to process applications on a 
first-come, first-served basis. However, we noted that the difficulties 
inherent in a system that would require the Commission to determine 
whose application was filed first on a minute-by-minute--or indeed 
second-by-second--basis weighs against that approach. Instead, we 
stated our belief that the most prudent, easy to administer, and fair 
method for determining the order in which applications filed on the 
same day will be processed is by random selection. We sought comment on 
the use of random selection to determine processing order, including 
our authority to use that procedure in the context of applications for 
transfer or assignment of existing licenses. We also sought comment on 
alternative methods, such as auctions or first-come, first-served.
    3. After carefully reviewing the comments filed in response to the 
Public Notice, we have decided to use random selection to determine the 
order in which the Commission will processes applications filed on the 
same day pursuant to our revised local broadcast ownership rules. In 
addition, we determine herein which applications will be subject to 
random selection, and clarify how voices will be counted in a market 
(including LMAs, other attributable interests, and conditional waivers) 
for purposes of applying our rules. The purpose of this Order is to 
resolve only those issues necessary to commence processing applications 
filed pursuant to our modified rules. We have received a number of 
petitions for reconsideration of our Local Ownership Order raising 
other issues not addressed herein. We will address those issues in a 
subsequent order.

II. Use of a Lottery

    4. Comments. A number of commenters expressed concern that 
processing applications by random selection alone would fail to protect 
certain pre-existing investments or contractual relationships, 
including existing Local Marketing Agreements (``LMAs) and other 
attributable interests.
    5. Several commenters also challenged the Commission's authority to 
use random selection to determine application processing order. 
Generally, these commenters argue that Section 309(i) of the 
Communications Act authorizes the Commission to use lotteries only to 
dispose of initial applications for license, not transfer applications. 
Moreover, these parties argue that even if 309(i) could be read to 
apply to transfer applications, Congress revoked any power the FCC had 
to use a lottery to award commercial broadcast licenses in Section 
309(i)(5)(A). Commenters also express the view that random selection is 
an abdication of the Commission's duty to make a public interest 
determination under Section 310(d) of the Communications Act.
    6. Discussion. After careful consideration of the alternatives, we 
conclude that random selection is the preferable method for determining 
processing order of applications filed on the same day. This approach 
gives equal treatment to similarly situated applicants in circumstances 
where not all applications will be able to be granted as a result of 
minimum voice counts. In addition, this method is relatively efficient 
and easy to administer, thereby reducing delays in Commission action. 
As we stated in the Public Notice, we believe random selection is 
preferable to a ``first-come, first-served'' approach, given the 
difficulties in determining which application was filed first. 
Moreover, a ``first-come, first-served'' system could initiate a 
``race'' to Mellon Bank to file applications, and result in filers 
camping out to be first in line at the filing counter. Commenters who 
addressed this approach agreed that it would be ill-advised. With 
respect to the concerns raised by parties regarding the treatment of 
existing LMAs and other interests under a random selection system, we 
address those concerns below in our discussion of how to calculate the 
number of voices in a market for purposes of applying the revised 
ownership rules.
    7. We also believe that random selection is preferable to the other 
approaches suggested by commenters. A ``first to contract'' system 
would require the Commission to define the types of contracts that 
would receive priority (e.g., written or verbal, preliminary or final 
agreements, etc.), raising issues of fairness and likely triggering 
legal challenges and lengthy delays. Both the point system proposed by 
UCC and the MMTC proposal to accord priority to applicants who spin off 
stations to disadvantaged small businesses would be difficult and time 
consuming to devise and apply, and would also result in potentially 
lengthy delays in processing applications and increase the potential 
for time-consuming legal challenges. Our goal in this order is to 
devise application processing procedures that permit rapid, fair 
implementation of the revised ownership rules. While the issues raised 
by UCC and MMTC, including the impact of consolidation on diversity and 
localism, are of critical importance, these issues have been considered 
by the Commission in this proceeding and addressed in the Local 
Ownership Order. Moreover, before approving any application under the 
random selection procedures adopted herein, the Commission must 
continue to make the

[[Page 62125]]

determination that grant of the application serves the public interest.
    8. Finally, we continue to believe that we have authority under 
Sections 310(d) and 4(i) of the Communications Act to use random 
selection to determine the order in which the Commission processes 
transfer and assignment applications. In acting on transfer and 
assignment applications, the Commission must make a determination under 
Section 310(d) whether the transfer would serve the public interest, 
and cannot make that determination if the transfer would violate the 
ownership rules. In carrying out our responsibilities under Section 
310(d), we have the authority to devise reasonable means to establish 
the processing order of transfer applications to allow us to make a 
public interest determination where our rules permit the grant of some 
but not all pending applications. Our random selection procedures to 
determine processing order, adopted herein, are necessary to permit the 
execution of our mandate under Section 310(d).
    8. We disagree with those commenters who argue that random 
selection is an abdication of our duty to make a public interest 
determination under Section 310(d). The fact that Congress has 
specifically permitted the use of lotteries in certain contexts clearly 
indicates it did not consider this approach incompatible with the 
Commission's public interest mandate. Moreover, our use of random 
selection is to assign processing order only; the Commission still must 
make a determination under Section 310(d) that grant of the application 
will serve the public interest.
    9. We also disagree with those commenters who argue that Section 
309(i)(5) of the Act revokes our authority to use lotteries in this 
context. Section 309(i)(5) provides that ``the Commission shall not 
issue any license or permit using a system of random selection under 
this paragraph after July 1, 1997,'' except with respect to 
noncommercial stations. By its terms, this provision applies only to 
use of random selection for the issuance of a license or permit, and is 
inapplicable to the use of a lottery for determining processing order 
of assignment and transfer applications. We also believe that the 
better reading of the 1997 amendment to Section 309(i) is that the 
amendment did not affect the paragraph's basic scope--situations where 
there is ``more than one application for any initial license or 
construction permit.'' In the current situation, the applications would 
be for transfer or assignment of an existing license, not for an 
initial license or permit. The fact that Congress acted in 1997 to 
limit Section 309(i) lotteries to noncommercial licenses does not 
restrict the Commission's authority to conduct a lottery pursuant to 
Sections 310(d) and 4(i).

III. Filing Procedures

    10. Comments. A number of commenters raised issues regarding which 
applications would be subject to the tiebreaking procedure selected by 
the Commission. Other commenters also would either give priority to 
certain combinations or exclude certain applications from any 
tiebreaking procedure ultimately adopted by the Commission.
Discussion
    11. Applications Subject to Random Selection. We will include in a 
lottery all transfer and assignment applications relating to stations 
in the same market that are filed on the same day and that must comply 
with a voice count under Secs. 73.3555, paragraphs (b) and (c), of our 
rules for grant. Such voice count dependent applications will be 
assigned, by random selection, a processing priority number. These 
applications will be processed in order of the date filed and, among 
applications filed on the same day, in order of their assigned 
processing priority number. We will not include in a lottery, and will 
not assign a processing number to, applications that are not voice 
dependent, such as those filed pursuant to the failed, failing, or 
unbuilt station waivers under the revised TV duopoly rule, those filed 
pursuant to the failed station waiver under the revised radio/TV cross 
ownership rule, applications for combinations of a single television 
station and a single radio station in a market, as well as radio-only 
combinations not implicating the radio/TV cross ownership rule. Such 
applications will be processed in due course.
    1. For each application filed with the Commission, it will be 
necessary to determine the relevant market, whether the application is 
voice dependent, and whether the application implicates the TV duopoly 
or radio/TV cross ownership rule. Assignment of processing priority 
numbers will proceed more rapidly if all of this information is stated 
in the application or transmittal letter. The Commission staff will 
issue a public notice with further details regarding the lottery, 
including the method by which numbers will be selected, as well as 
further information regarding application processing.
    13. Application Processing. In processing voice count dependent 
applications, the Commission will reduce the relevant voice count by: 
(1) all voice and non-voice count dependent applications pending or 
granted at the time the voice count dependent application is filed, and 
(2) all non-voice count dependent applications filed on the same day as 
the voice count dependent application. Thus, for example, in processing 
an application for a radio/TV combination filed November 16, 1999, the 
Commission will consider all radio-only applications filed prior to 
November 16, 1999 and still pending as of that date, all radio-only 
applications granted as of that date, as well as any radio-only 
application, any combination involving a single TV and a single radio 
station, or any failed, failing, or unbuilt station waiver filed on 
November 16 that implicates the same market. For purposes of processing 
the November 16 application, the staff will presume that all pending 
voice and non-voice count dependent applications and all non-voice 
count dependent applications filed the same day implicating the same 
market will be granted. If this presumption precludes grant of the 
November 16 voice count dependent application, that application will be 
held until final action on the conflicting application(s) has been 
taken. If the conflicting application(s) is ultimately denied, the 
staff will proceed to process the November 16 voice count dependent 
application. If more than one voice count dependent application was 
filed on November 16 and was held pending processing of the non-voice 
count dependent application(s), the Commission will use random 
selection to determine processing order for such applications.
    14. We believe that reducing the voice count by prior grants and 
applications, and by non-voice count dependent applications (e.g., 
those filed pursuant to the failed, failing, and unbuilt station 
waivers, applications for a single radio and single TV station 
combination, and radio-only applications not implicating the radio/TV 
cross ownership rule) filed on the same day as a voice count dependent 
application, best advances our goal in the Local Ownership Order of 
protecting competition and diversity by maintaining voice count floors 
(e.g., a minimum of 8 TV voices post-grant to obtain a TV duopoly and a 
minimum of 10 or 20, depending on the size of the combination, radio, 
TV, newspaper, and cable voices post-grant to obtain a radio/TV 
combination) in local markets.

[[Page 62126]]

While we envisioned in the Local Ownership Order that voice counts 
could drop below the floor as a result, for example, of combinations 
involving failed, failing, or unbuilt stations, by accounting for the 
potential impact of these non-voice count dependent applications on the 
number of voices in the market the voice count floors are more likely 
to be maintained. We believe that these processing procedures strike an 
appropriate balance between maintaining a minimum number of voices in 
the market and establishing certainty with respect to the number of 
stations available in the market at a given time. Combinations of a 
single TV and a single radio, which can be obtained in any market and 
are not voice count dependent, also would reduce the voice count for 
same-day or subsequently filed voice count dependent applications. We 
stated in our Local Ownership Order that the service benefits and 
efficiencies achieved from the joint ownership and operation of a 
single television/single radio combination in local markets further the 
public interest and outweigh the cost to diversity in these instances; 
thus, we allowed these combinations in all markets regardless of voice 
count.
    15. Calculation of Voices. The FCC's forms require applicants for 
transfer or assignment of license to certify that, at the time of 
filing, the application complies with all multiple ownership rules. In 
order to certify compliance with the voice count components of our 
revised ownership rules, applicants should determine ownership of 
relevant media and the existence of any pending applications affecting 
their market by consulting FCC records and widely recognized, 
commercially available data sources such as Nielsen Media Research, 
Arbitron, BIA Companies, Broadcasting & Cable Yearbook, TV Factbook, 
and Bacon's media directories. Applicants should deviate from the data 
supplied by these sources only where they have actual knowledge, or 
could reasonably be charged with knowledge, that the data are in error 
or are incomplete or outdated in a material respect. Applicants must 
make a reasonable effort to verify the accuracy of this information and 
to resolve any conflict in data obtained from different sources.
    17. TV LMAs and Conditional Radio/TV Waivers. Any LMA attributable 
under our rules in effect on November 16, 1999, and that was entered 
into prior to August 5, 1999, the adoption date of the Local Ownership 
Order, will be considered to be attributable to the owner of the 
brokering station for purposes of the voice count determination. These 
two stations will thus be considered as a single voice in the market. 
The effect of this determination is that stations involved in a TV LMA 
will have the first chance to convert to a duopoly in the market, ahead 
of any other voice count dependent application. This result is 
consistent with our determination in the Local Ownership Order not to 
include in our count of independently owned broadcast stations those 
that are brokered pursuant to an attributable same-market LMA. We 
concluded that the brokering station has a significant degree of 
influence over the brokered station's operations and programming such 
that the latter should not be counted as an independent source of 
viewpoint diversity.
    18. Although applications to convert a TV LMA to ownership will be 
considered ahead of any voice count dependent application in the same 
market filed on the same day, the Commission will consider first, 
before such applications, the impact on the number of voices of any 
non-voice count dependent application filed for the same market on the 
same day. In addition, as with other voice count dependent 
applications, the Commission will also consider first the impact on the 
number of voices in the market of any previously filed voice or non-
voice count dependent application, and any previous grant. As we stated 
above, we believe that prior consideration of such applications and 
grants is consistent with our goal in the Local Ownership Order to 
preserve the voice count floors in local markets in order to preserve 
competition and diversity.
    19. In some cases, parties to an LMA may not be able to make the 
requisite voice count showing to convert the LMA to ownership if the 
number of voices in the market is below the voice count minimum under 
our revised rules. This result is consistent with our determination in 
the Local Ownership Order that stations involved in TV LMAs may apply 
for a duopoly, but must comply with our revised rules. Where TV LMAs 
cannot make the requisite voice count showing to convert to ownership, 
the LMA may be able to convert pursuant to one of the waiver criteria 
adopted in the Local Ownership Order. Where conversion to ownership is 
not possible, TV LMAs may take advantage of the grandfathering and 
transitional relief accorded in the order.
    20. TV LMAs entered into on or after August 5, 1999, and on or 
before November 16, 1999, will not be considered to reduce the number 
of voices in a market. As a number of commenters pointed out, giving 
priority in processing to TV LMAs entered into after adoption of our 
new rules but before their effective date would unfairly prejudice 
entities required to wait until the effective date of the rules to file 
assignment and transfer applications. Entities with such interests may 
file an application to convert to ownership on or after the effective 
date of the rules. If such applications are filed on the same day as 
other voice count dependent applications in the same market, the 
Commission will use random selection to determine the processing order. 
Interests not converted to ownership will be considered to have been 
created as of the effective date of the new rules. Where such interests 
do not comply with our revised rules, entities will be given a year 
from the effective date of our new rules (November 16, 1999) to divest.
    21. Stations commonly owned by a single entity under a conditional 
waiver of the radio/TV cross ownership rule will also be considered as 
a single voice in the market. Thus, as with TV LMAs, entities with a 
conditional waiver will have the first chance to convert to ownership 
in the market, ahead of any other voice count dependent application. In 
our Local Ownership Order, we directed conditional waiver grantees to 
file with the Commission within sixty days of publication of the order 
in the Federal Register, that is by November 16, 1999, a showing 
sufficient to demonstrate their compliance or non-compliance with our 
revised radio/TV cross ownership rule. We will treat such showings 
demonstrating compliance as applications to convert the waiver to 
permanent ownership, and will treat any filings made before November 
16, 1999 as filed on November 16, 1999. Conditional waiver grantees 
will be treated in the same fashion as parties to a TV LMA entered into 
prior to August 5, 1999. Thus, although applications to convert 
conditional waivers to ownership will be considered ahead of any voice 
count dependent application in the same market filed on the same day, 
the Commission will consider first, before applications seeking to 
convert conditional waivers to ownership, the impact on the number of 
voices of any non-voice count dependent application filed for the same 
market on the same day. In addition, as with other voice count 
dependent applications, the Commission will also consider first the 
impact on the number of voices in the market of any previously filed 
voice or non-voice dependent application, and

[[Page 62127]]

any previous grant. Where conditional waivers can be converted to 
ownership, the Mass Media Bureau will replace the conditional waiver 
with permanent approval of the relevant assignment or transfer of 
license. Where a showing based on voice counts does not qualify for 
ownership, entities with a conditional waiver may also apply for a 
failed station waiver and may also take advantage of the grandfathering 
relief accorded in the Local Ownership Order.
    22. Settlement. The Commission will issue a public notice for each 
market listing all voice count dependent applications filed on the same 
day that propose station combinations in the market. Applicants will be 
given a limited period in which to identify for the staff any other 
application eligible to be included on the list (e.g., any other 
application filed on the same day as those listed in the notice that 
proposes a combination implicating the same market). The public notice 
will also specify a period during which applicants on the list may 
reach a universal settlement; that is, a settlement that results in 
grant or dismissal of all applications identified as eligible to 
participate in the lottery. Any such settlement agreement must comply 
with all Commission regulations. If no universal settlement is reached 
during the settlement period, applications for that market will be 
assigned a processing priority number by random selection. We believe 
that permitting universal settlements will serve the public interest by 
permitting processing of an application(s) without random selection, 
thereby speeding Commission action on the application. We will not 
accept settlements involving fewer than all eligible applicants for the 
market. Partial settlements do not facilitate processing as random 
selection is still required to determine the processing order.

IV. Administrative Matters

    23. Paperwork Reduction Act of 1995 Analysis. This Order on 
Reconsideration has been analyzed with respect to the Paperwork 
Reduction Act of 1995 and found to impose no new reporting requirements 
on the public.
    24. Supplemental Final Regulatory Flexibility Act Analysis. 
Pursuant to the Regulatory Flexibility Act of 1980, as amended, 5 
U.S.C. 601 et seq., the Commission's Final Regulatory Flexibility Act 
Analysis (FRFA) in the August 5, 1999 Local Ownership Order was 
attached as Appendix A to that order. This Order on Reconsideration has 
no significant economic impact on small entities beyond that described 
in the discussion of voice tests in the August 5, 1999 FRFA.
    25. Ordering Clauses. Accordingly, pursuant to the authority 
contained in Sections 4 (i) & (j), 303(r), 308, 310 and 403 of the 
Communications Act of 1934, 47 U.S.C. 154 (i) & (j), 303(r), 308, 310 
and 403, as amended, this Order on Reconsideration is adopted.
    26. As the issues resolved herein affect applications that will be 
filed on November 16, 1999, the effective date of the Local Ownership 
Order, pursuant to 5 U.S.C. 553(d)(3), upon good cause shown, this 
Order on Reconsideration will become effective November 16, 1999.

List of Subjects in 47 CFR Part 73

    Television broadcasting.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 99-30019 Filed 11-15-99; 8:45 am]
BILLING CODE 6712-01-p