[Federal Register Volume 66, Number 25 (Tuesday, February 6, 2001)]
[Rules and Regulations]
[Pages 9039-9048]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3046]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MM Docket No. 91-221, MM 87-8; FCC 00-431]


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

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document generally affirms the Commission's local TV 
multiple ownership rule, radio/TV cross-ownership rule, and 
grandfathering policies for conditional waivers of the previous radio/
TV cross-ownership rule and local marketing agreements. This document 
modifies, however, the TV stations that qualify toward the minimum 
number necessary to form a combination pursuant to the local TV 
multiple ownership rule and the radio/TV cross-ownership rule.

EFFECTIVE DATE: Effective April 9, 2001.

FOR FURTHER INFORMATION CONTACT: Eric J. Bash, Policy and Rules 
Division, Mass Media Bureau, (202) 418-2130 (voice), (202) 418-1169 
(TTY), or [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Memorandum Opinion 
and Second Order on Reconsideration (``MO&O'') in MM Docket Nos. MM 91-
221 and MM 87-8; FCC 00-431, adopted December 7, 2000; released January 
19, 2001. The full text of this decision is available for inspection 
and copying during regular business hours in the FCC Reference Center, 
445 Twelfth Street, SW, Room CY--A257, Washington DC, and also may be 
purchased from the Commission's copy contractor, International 
Transcription Service, (202) 857-3800, 445 Twelfth Street, SW, Room 
CY--B402, Washington DC. The complete text is also available under the 
file name fcc00431.pdf on the Commission's Internet site at 
www.fcc.gov.

Synopsis of Memorandum Opinion and Second Order on Reconsideration

I. Introduction

    1. In this MO&O, we resolve various petitions for reconsideration 
of the Report and Order (``R&O''), 64 FR 50651, September 17, 1999. We 
also clarify certain aspects of the R&O on our own motion.

Background

    2. This proceeding is a broad and complex one involving several of 
the Commission's policies and rules on the cross-ownership and multiple 
ownership of broadcast stations. In the proceeding, the Commission has 
attempted to balance two of its most fundamental goals in broadcast 
ownership--fostering competition in the markets in which broadcast 
stations compete, and preserving a diversity of information sources, 
especially at the local level--with the efficiencies of common 
ownership and increased competition in the media marketplace. 
Harmonizing these concerns in the R&O, we amended the local TV multiple 
ownership rule, the radio/TV cross-ownership rule, and our standards 
for presumptive waiver of these rules. We also grandfathered certain 
television local marketing agreements (LMAs) that we determined were 
attributable ownership interests, as well as certain radio/TV 
combinations that were formed pursuant to waivers conditioned on the 
outcome of this proceeding.

[[Page 9040]]

    3. The Commission's previous local television multiple ownership 
rule, or ``TV duopoly rule,'' prohibited common ownership of two TV 
stations when the Grade B contours of the stations overlapped. Our 
amended rule allows a party to own TV stations licensed to communities 
in different Designated Market Areas (DMAs) without regard to contour 
overlap. Our rule also permits a party to own two TV stations in the 
same DMA, if at least one of the stations is not among the four 
highest-ranked stations in the market, and at least eight independently 
owned and operating full-power broadcast TV stations would remain in 
the DMA after the proposed combination. In addition, we presume it is 
in the public interest to waive the amended rule if one of the stations 
in a proposed combination is a failed or failing station, or is not yet 
constructed. Once formed, whether pursuant to the amended duopoly rule 
or waiver standard, a combination may not be transferred unless it 
meets the rule or waiver standard in effect at the time of transfer.
    4. The Commission's previous radio/TV cross-ownership rule 
generally prohibited common ownership of a radio and TV station in the 
same geographic area. Our amended rule permits a party to own, in the 
same geographic area, one TV station (or two TV stations, if permitted 
by the duopoly rule) and: (a) Up to six radio stations, if at least 
twenty independently owned media ``voices'' would remain in the market 
post-combination (or one TV station and seven radio stations in 
circumstances where a party could own two TV stations and six radio 
stations); (b) up to four radio stations, if at least ten independently 
owned media voices would remain in the market post-combination; and (c) 
one radio station, without regard to the number of independently owned 
media voices that would remain in the market post-combination. For 
purposes of the new rule, we count the following as media voices in the 
market: (a) Radio stations, (b) TV stations, (c) cable systems, as one 
entity, if a cable system is generally available in the DMA, and (d) 
certain daily newspapers. We also presume it is in the public interest 
to waive the amended radio/TV cross-ownership rule if one of the 
stations in a proposed combination is a failed station. Once formed, 
whether pursuant to the amended radio/TV cross-ownership rule or waiver 
standard, a combination may not be transferred unless it satisfies the 
rule or waiver standard in effect at the time of transfer.
    5. In our companion Attribution R&O, 64 FR 50622, September 17, 
1999, we concluded that a same-market LMA constitutes an attributable 
ownership interest for the brokering station if that station brokers 
more than 15% of the brokered station's broadcast hours per week. 
Consistent with our proposal in the Second Further Notice of Proposed 
Rulemaking (``2FNPRM''), 61 FR 66978, December 19, 1996, in the R&O we 
grandfathered LMAs that do not comply with our TV duopoly rule, if 
entered into prior to the adoption date of the 2FNPRM. We grandfathered 
these LMAs through the conclusion of our 2004 biennial review. We 
required LMAs entered into on or after the adoption date of the 2FNPRM 
to comply with our new TV duopoly rule within two years of the adoption 
date of the R&O. We also grandfathered certain radio/TV combinations 
formed pursuant to waivers that were conditioned on the outcome of this 
proceeding, if the waivers were applied for on or before July 29, 1999, 
and ultimately approved by the Commission.
    6. We have received fourteen petitions for reconsideration of the 
R&O. These petitions seek reconsideration of both the TV duopoly rule 
and the radio/TV cross-ownership rule, as well as our grandfathering 
policies for television LMAs and waivers of the radio/TV cross-
ownership rule that were conditioned on the outcome of this proceeding.

III. Discussion

A. Local Television Multiple Ownership Rule

1. Geographic Scope
    7. Background. As indicated, we concluded in the R&O to modify our 
rule that disallowed common ownership of two TV stations if their Grade 
B contours overlapped. Instead, we decided to permit common ownership 
of two TV stations if they are licensed to communities in different 
DMAs.
    8. Discussion. One petitioner asked us to reconsider our decision. 
Commenters have already fully debated the issue of the geographic scope 
of the duopoly rule, and we considered and resolved this issue in the 
R&O. We explained that DMAs reflect actual viewing patterns, and define 
the ``market'' in a manner that is widely accepted and used by the 
advertising and broadcasting industries. Nielsen Media Research 
collects viewing data from TV households four times a year, assigns a 
particular county to a DMA if a majority of the viewing in that county 
is of stations located in the DMA, and then uses the viewing data to 
compile DMA-based ratings for the TV shows. Advertisers use this data 
to make advertising purchasing decisions, and broadcasters use this 
data to make programming decisions. The DMA therefore properly reflects 
viewership patterns, and serves as the proper basis by which to define 
the geographic area for our TV duopoly rule. We recognize that a 
broadcast station may have an incentive to manipulate its DMA 
assignment in order to combine two stations, but Nielsen Media Research 
defines DMAs, and we believe that advertisers and competing 
broadcasters that rely on DMAs to make advertising and programming 
decisions have an incentive to ensure that DMA assignments are accurate 
and reliable. This does not mean that DMA assignments will not change, 
but will do so in response to marketplace changes. We believe that this 
is a desirable feature of our new rule. Accordingly, we reaffirm our 
decision to allow two broadcast TV stations to combine if they are 
located in different DMAs, without regard to contour overlap.
2. Market Rank/Eight Voice Test
    9. Background. As indicated above, our new TV duopoly rule permits 
one party to own two stations within the same DMA, if two conditions 
are satisfied. At least one of the stations must not be ranked among 
the top four stations in the DMA, as determined by all-day audience 
share at the time the application to combine is filed, and at least 
eight independently owned and operating full-power broadcast TV 
stations must remain post-combination.
    10. Discussion. Market Rank. One petitioner asked us to reconsider 
the requirement that at least one of the TV stations in a proposed 
duopoly not be among the top four stations in the DMA. The petitioner 
appears to argue that the requirement does not promote programming 
diversity. We are not persuaded that common ownership will have no 
adverse impact on program diversity. Moreover, the petitioner overlooks 
that we seek to promote both competition and diversity with the TV 
duopoly rule. As we explained in the R&O, ``[t]he `top four ranked 
station' component of this standard is designed to ensure that the 
largest stations in the market do not combine and create potential 
competition concerns. These stations generally have a large share of 
the audience and advertising market in their area, and requiring them 
to operate independently will promote competition.'' Because larger 
stations generally produce local news while smaller stations often do 
not, we also explained that the requirement that both stations not be 
among the top four ranked stations did not harm, and in

[[Page 9041]]

fact furthered, our diversity goal, if the combination made it possible 
for the smaller station to produce local news. We thus believe that our 
decision to require that at least one of the stations in a proposed 
duopoly not be among the top four ranked stations in the DMA properly 
harmonizes our competition and diversity goals.
    11. We also clarify how to resolve a tie for market rank. Nielsen 
Media Research often provides audience share in whole numbers, with the 
result that two stations have the same audience share. In such cases, 
duopoly applicants must submit more detailed information on audience 
share (i.e., estimates with a sufficient number of decimal places) to 
resolve the tie.
    12. Number of Broadcast TV Stations. A number of petitioners ask us 
to reconsider our decision to require that eight independently owned 
and operating broadcast TV voices remain in the DMA post-merger. No 
petitioner argues that we adopt a particular number other than eight, 
however.
    13. We reaffirm our decision to require that eight broadcast TV 
stations remain in the market post-combination. We explained our 
competition and diversity goals in some detail in the R&O, and stated 
that the requirement that eight TV broadcast stations remain in the DMA 
post-merger ``strikes what we believe to be an appropriate balance 
between permitting stations to take advantage of the efficiencies of 
television duopolies while at the same time ensuring a robust level of 
diversity.'' As we stated in the R&O, ``[o]ur decision today is an 
exercise in line drawing--perennially one of the most difficult yet 
inevitable challenges facing a government agency.'' We continue to 
believe that drawing the line at eight reasonably balances the 
competing interests at stake.
    14. We reject the argument that our requirement that eight 
broadcast TV stations remain in the DMA post-combination 
inappropriately or unfairly disadvantages stations in smaller markets 
because of an alleged impossibility of sustaining a full complement of 
stations in such markets due to economic realities. As discussed in the 
R&O, we recognize that stations in smaller markets will not be able to 
take advantage of our new rule. We explained, however, that ``we 
believe this is appropriate given that these markets start with fewer 
broadcast outlets, and thus a lower potential for providing robust 
diversity to viewers in such markets * * *. [I]t is in these small 
markets that consolidation of broadcast television ownership could most 
undermine our competition and diversity goals.'' Petitioners' concerns 
that stations in smaller markets are in danger of failing is addressed 
by our waiver policies, under which we presume it is in the public 
interest to waive the duopoly rule if a station fails or is in danger 
of failing. As we explained in the R&O, ``the three waiver standards we 
adopt today * * *. will, consistent with our competition and diversity 
goals, provide relief in a more tailored fashion for stations in 
smaller markets that are unable to compete effectively.'' Because we 
have concluded that a diversity ``floor'' of eight stations serves our 
competition and diversity goals, we likewise decline to adopt the 
sliding scale proposed by one petitioner, which would require a greater 
number of broadcast stations in DMAs with greater populations. We do 
not believe that certain populations should have more or less 
competition and diversity than other populations.
    15. While we generally affirm the use of DMAs in determining the 
number of stations in a particular market, we will modify our decision 
in one respect. Under the current rule, all independently owned and 
operating, full-power TV stations in a DMA (whether commercial or non-
commercial) count toward the eight-station minimum. There are some 
geographically large DMAs, however, where counting every stations in 
the DMA may produce results at odds with our goal of establishing a 
minimum level of independent voices in a particular community. For 
example, the Miami-Ft. Lauderdale DMA contains a total of fourteen 
independent full-power TV stations. But two of those stations are 
licensed to Key West, Florida, approximately 120 miles from Miami. In a 
situation such as this, we do not believe that the Key West stations 
constitute an independent ``voice'' to viewers in Key West. However, 
under our current rules, a single owner could own the only two TV 
stations serving Key West by relying on the twelve stations in Miami, 
even though a viewer in Key West could not receive any of the Miami 
signals. Similarly, a potential combination in the Miami areas could 
count Key West stations as ``voices'' in the Miami market even though 
neither of those stations reaches the Miami area.
    16. We therefore will modify our duopoly rule as follows. In 
counting the number of independently owned and operating, full-power 
stations in a market for purposes of our rule, we will count only those 
stations whose Grade B signal contour overlaps with the Grade B contour 
of at least one of the stations in the proposed combination. This new 
rule will help strengthen our eight-voice diversity floor in 
geographically large DMAs.
    17. This new rule is consistent with our overall duopoly rule, 
which has always permitted common ownership of stations with no Grade B 
overlap. Indeed, in the R&O, we held that even though we were moving to 
a duopoly prohibition based on DMAs rather than contour overlap, we 
would still permit combinations between stations in the same DMA, 
regardless of the number of voices available, so long as there was no 
Grade B overlap. Where there was no Grade B overlap, we found that 
permitting stations to combine would not threaten our goal of 
preserving a minimum level of competition and diversity. Having reached 
that conclusion, we believe that its converse is also valid: if two 
stations with no Grade B overlap have so little impact on competition 
and diversity in the other's market that they should be permitted to 
combine, then neither should they be able to rely on the other as a 
source of competition and diversity in proposing to combine with a 
third station.
    18. Finally, in the interest of consistency, we will adopt a 
similar modification of our one-to-a-market rule. Currently, we count 
all independently owned and operating, full-power TV stations in the 
same DMA as the TV station at issue as additional ``voices'' in the 
market. We will modify that rule to provide that only those 
independently owned and operating, full-power TV stations in the same 
DMA as the TV station(s) at issue, and that have a Grade B signal 
contour that overlaps with the Grade B contour of the TV station(s) at 
issue, will count as additional ``voices'' in the market.
    19. Exclusion of Media Other than Broadcast TV Stations. Many 
commenters ask that if we continue to require that eight independently 
owned ``voices'' remain in the DMA post-combination, we count a host of 
other media, or at a minimum cable systems, newspapers, and radio 
stations, consistent with our modified radio/TV cross-ownership rule. 
Another petitioner asks us not to count noncommercial stations.
    20. We first reaffirm that we will count both commercial and 
noncommercial operating TV stations in the DMA. Although noncommercial 
stations do not compete for advertising dollars, they do contribute to 
diversity. We recognize that the signal of noncommercial stations may 
not reach all over-the-air viewers in a DMA. The same may be said, 
however, of any broadcast TV station in a DMA. In addition, this 
argument overlooks the possible extension of the broadcast TV

[[Page 9042]]

station's signal carriage by a multichannel video programming 
distributor, such as cable. Indeed, in modifying our duopoly rule, we 
explained that ``DMAs reflect the fact that a station's audience reach, 
and hence its ``local market,'' is not necessarily coextensive with the 
area of its broadcast signal coverage. For example, a station's over-
the-air reach can be extended by carriage on cable systems and other 
multichannel delivery systems, as well as through such means as 
satellite and translator stations.'' We thus believe that any 
categorical exclusion of noncommercial stations is unwarranted.
    21. We also reaffirm our decision not to count media other than 
broadcast TV stations. The issue of whether to count other media 
entities for purposes of the TV duopoly rule has been debated already, 
and was resolved in the R&O. We explained that we had decided to count 
only broadcast TV stations because these stations are the primary 
source of news and information for a majority of Americans, and also 
because the record was not clear on the extent to which other media are 
substitutes for broadcast TV. We reaffirm both our decision to count 
only broadcast TV stations, and our rationale for doing so. Broadcast 
TV has the power to influence and persuade unmatched by other media. In 
terms of our diversity goal, we emphasize that TV is the dominant 
source of news and information for Americans, and in the world of 
television, broadcast TV stations are the dominant source of local news 
and information. Other video programming distributors, such as cable 
and DBS, typically do not serve as independent sources of local 
information; most of any local programming they provide is originated 
by a broadcast station. We thus reaffirm that, in applying the eight 
voice standard, we will only count broadcast TV stations.
    22. One petitioner argues that, in counting broadcast TV stations 
in a DMA, we should include those not licensed in the DMA but with a 
reportable share in the DMA. To serve our competition goal, we have 
defined the geographic scope of our new duopoly rule with reference to 
DMAs only, because the DMA is the accepted measure of the market in the 
broadcast TV industry. Counting stations outside the DMA undercuts the 
rationale for our decision to adopt the market-based DMA approach. We 
believe it would be inconsistent with this approach to consider 
stations in different DMAs to be in separate markets for one purpose 
(i.e., the triggering circumstances of the duopoly rule), but consider 
them to be in the same market for another purpose (i.e., counting 
voices). We recognize that in counting radio stations for purposes of 
the radio/TV cross-ownership rule, we include those with a reportable 
share in the radio market. However, DMAs typically cover much larger 
geographic areas than radio markets, so that a TV station with a 
reportable share in a DMA may serve a much smaller portion of that 
market than a radio station with a reportable share in a radio market.
    23. In counting broadcast TV stations in the DMA, we also clarify 
on our own motion that we will not count low power TV (LPTV) stations, 
including our recently created Class A stations. On March 28, pursuant 
to the Community Broadcasters Protection Act of 1999, we adopted rules 
establishing the Class A TV service, which affords certain LPTV 
stations a form of ``primary'' status. Given the limited signal 
coverage of LPTV stations, including Class A stations, we do not 
believe that they have sufficient influence and power to qualify as a 
station for purposes of our requirement that eight broadcast TV 
stations remain in a market post-combination. We emphasize that the new 
duopoly rule requires that ``at least 8 independently owned and 
operating full-power commercial and noncommercial TV stations'' must 
remain in a DMA post-merger.
3. Waivers
    24. Background. In the R&O, we held that we would presume it would 
be in the public interest to waive our duopoly rule if one of the two 
TV stations was a ``failed'' station, a ``failing'' station, or an 
``unbuilt'' station. We explained that stations in such circumstances 
are not meaningful sources of competition and diversity in a given 
market, such that their combination with another station not only will 
not erode our competition and diversity goals, but perhaps will 
generate public interest benefits, such as additional programming. We 
held that applicants for all three of these presumptive waivers must 
demonstrate that the in-market buyer is the only reasonably available 
candidate willing and able to operate the station, such that selling a 
station to an out-of-market buyer would result in an artificially 
depressed price. In addition, we held that, to qualify for a ``failed'' 
station waiver, applicants must demonstrate that one of the stations 
has been dark for at least four months or involved in involuntary 
bankruptcy or insolvency proceedings. To qualify for a failing station 
waiver, applicants must demonstrate that one of the stations has a low 
all-day audience share and has a poor financial condition, such as 
negative cash flow for the past three years, and that the merger will 
produce public interest benefits. To qualify for an ``unbuilt'' station 
waiver, applicants must demonstrate that a combination would result in 
the construction of an authorized but as yet unconstructed station, and 
that the permittee has made reasonable efforts to construct, but has 
been unable to do so.
    25. Discussion. Several parties ask us to reconsider some of the 
elements of our presumptive waiver standards, suggesting that they are 
too burdensome and onerous. For example, some petitioners contend that 
our failed and failing waiver standards require too much degradation of 
service before we will permit duopolies. They also ask us to reconsider 
our requirement that the in-market buyer is the only reasonably 
available candidate willing and able to operate a station.
    26. We reaffirm the elements of our presumptive waiver standards. 
Given the importance of our competition and diversity goals, we believe 
it is important to ensure that waivers are available only when truly 
necessary. As we stated in the context of our failed station waiver, 
``we hope to limit the special relief awarded to failed stations to 
those situations where this relief is clearly needed.'' An essential 
element of proof for us to presume that a duopoly is in the public 
interest--in circumstances where less than eight independent broadcast 
TV stations will remain post-combination--is that one of the stations 
is in fact failed, failing, or unconstructed, for legitimate reasons, 
and that no out-of-market buyer is willing to operate the station, and 
that sale to such a buyer would result in an artificially depressed 
price. Were it otherwise, combinations would be permitted that would 
unnecessarily erode our competition and diversity goals. We do not 
believe that our requirement pertaining to out-of-market buyers amounts 
to an inappropriate comparison of potential buyers in violation of 
section 310(d). Rather, in view of the mechanics of the rule, the 
Commission is not reviewing possible buyers for a particular transfer. 
The Commission is simply establishing a bar that any licensee who 
wishes to waive past the eight voice/top four ranked standard must 
pass.
    27. We recognize that a duopoly waiver applicant that is a party to 
a several-year-old LMA may not, as a practical matter, now be able to 
show that at the time it entered into the LMA, it was the only buyer 
willing and able to operate or construct the failed, failing, or 
unbuilt station, and that sale of the station to an out-of-market buyer

[[Page 9043]]

would result in an artificially depressed price. In the R&O, we 
intended to permit parties to an LMA to make a waiver showing based on 
the circumstances that existed just prior to their entering into the 
LMA. We therefore will not require a duopoly waiver applicant that 
seeks to acquire a station with which it formed an LMA in the past 
(i.e., prior to the adoption date of the R&O, in which we announced our 
new policy) to prove that it was the only buyer willing and able to 
operate the station, and that sale of the station to an out-of-market 
buyer would result in an artificially depressed price. We expect such 
waiver applicants, to prove the other elements of the relevant waiver 
standard.
    28. Two petitioners ask that we adopt a special waiver standard to 
allow holders of existing LMAs, especially grandfathered LMAs, to 
convert those arrangements to duopolies. We reject this proposal. Based 
on the fact that some parties entered into TV LMAs when the Commission 
had not expressed any unequivocal policy on them, we believed the 
equities justified affording certain parties some relief and so 
grandfathered some LMAs to permit them to remain in existence until at 
least 2004. These equity concerns have no place, however, in 
considering whether to grant LMAs special dispensation to convert to 
duopolies, because the parties never had any reasonable expectation of 
being able to do so, given the Commission's flat prohibition on 
duopolies.
    29. Another petitioner asks us to clarify that a station's 
demonstrated inability to fund the build-out of its DTV facilities on 
its own is, standing alone, satisfactory evidence that the station is 
failing. As indicated, all of our waiver standards require duopoly 
applicants to show that one of the stations is the only entity ready, 
willing, and able to operate the other station, and that sale to 
another buyer would result in an artificially depressed price. In 
addition, our failing station standard requires applicants to show that 
one of the stations has an all-day audience share of no more than four 
per cent and has had negative cash flow for three consecutive years 
immediately prior to the application, and that consolidation of the 
stations would result in tangible and verifiable public interest 
benefits that outweigh any harm to competition and diversity. We 
clarify that DTV transition costs are relevant to our consideration of 
whether a station is failing, in that we will consider how these costs 
have affected a station's cash flow, and whether consolidation with 
another in-market station would result in demonstrable public interest 
benefits, such as expedited and improved DTV service. This is 
consistent with our standards for re-evaluation of grandfathered LMAs 
in 2004, which include consideration of ``the extent to which one 
station has enabled the other to convert to digital operations, and 
whether joint operation has expedited that conversion, as well as 
produced more over-the-air programming using digital transmission.'' We 
decline, however, to adopt a policy holding that a station's difficulty 
in funding its DTV transition is tantamount to its failing under all 
circumstances. The other elements of our waiver standards are necessary 
to protect our competition and diversity goals.
    30. A petitioner asks us to permit combinations without a waiver 
where the duopoly involves an authorized but unconstructed station. We 
decline to do so. Given the fact-intensive nature of the criteria for 
waiver, we continue to believe that duopolies should be permitted 
without regard to voice counts not by rule, but by waiver.
    31. Public interest groups ask that we reconsider our presumptive 
waiver standards as well. One petitioner asked that we eliminate our 
failing and unbuilt station standards for waiver of our duopoly rule, 
since among other reasons these standards are not available for waiver 
of our radio/TV cross-ownership rule. We reaffirm our decision. As we 
explained in the R&O, we amended our duopoly and radio/TV cross-
ownership rules to differing degrees, and our standards for presumptive 
waiver vary accordingly. We amended our duopoly rule to a lesser extent 
than our radio/TV cross-ownership rule, but offered more standards for 
presumptive waiver of our duopoly rule than for our radio/TV cross-
ownership rule. Our overall approach to the duopoly and radio/TV cross-
ownership policies is consistent. We have simply struck the balance 
between combinations allowable by rule and those allowable by waiver at 
different points. Agencies have the discretion to decide whether to 
establish their policies through a case-by-case method or through 
rulemaking, and thus we have struck the balance between these two 
methods in the manner that we believe best serves the public interest.
    32. Another public interest group also asks that we require 
applicants for duopoly waivers to provide ``socially and economically 
disadvantaged small business concerns'' (SDBs) with reasonable notice 
of a station's availability, or offer expedited processing to duopoly-
eligible licensees that voluntarily marketed to SDBs. We decline to do 
so. While we are concerned about minority ownership, we believe, as we 
stated in the R&O, initiatives to enhance minority ownership should 
await the evaluation of various studies sponsored by the Commission.
4. Transferability
    33. Background. In the R&O, we stated that, once formed, a duopoly 
could not be transferred unless it complies with the duopoly rule or 
waiver standard in effect at the time of transfer. This is the case 
whether the combination was formed in the first instance pursuant to 
the duopoly rule or waiver.
    34. Several petitioners ask us to eliminate our restrictions on 
transfer, claiming that the transfer of these previously-approved 
combinations cannot affect our competition and diversity goals, and 
that restrictions may interfere with investment in broadcast stations. 
One petitioner asks that we eliminate the restrictions for smaller 
markets. Others ask that we permit the transfer of duopolies on certain 
conditions.
    35. We reaffirm our decision not to permit the transfer of a 
duopoly, unless it meets a rule or waiver standard in effect at the 
time of transfer. Petitioners are correct that we would not have 
permitted these combinations in the first instance unless we concluded 
that they did not compromise our competition and diversity goals at 
that time. But marketplace factors change over time. For example, 
suppose that a TV station seeks to buy a second station, pursuant to a 
failed station waiver, in a DMA where there are six independently owned 
TV stations. We approve the transaction, such that five independent TV 
stations remain. A TV station in the DMA then goes off the air, with 
the result that there are four independent stations in the DMA. Several 
years later, the combination has rehabilitated the previously failed 
station, and a station group with a national presence but no stations 
in the same market as the combination seeks to acquire the combination. 
Section 309(d) requires us to evaluate whether this transfer serves the 
public interest, convenience, and necessity. We believe the answer to 
this statutorily-mandated inquiry is more complicated than simply 
acknowledging that we approved the combination in the past, at a time 
when the marketplace was significantly different. We recognize that the 
mere transfer of a combination may or may not adversely affect the 
competition and diversity dynamics in the market. We believe that

[[Page 9044]]

we struck the appropriate balance in harmonizing marketplace changes 
with our bedrock competition and diversity goals by not requiring 
combinations to divest stations with the ebb and flow of the market, 
but requiring them to comply with our rules and waiver policies at the 
time of transfer. We are especially concerned with maintaining a 
competition and diversity ``floor'' in smaller markets, and thus 
decline to adopt the suggestion that we allow parties to transfer 
duopolies in those markets without regard to our rules or waiver 
policies. We reaffirm our decision to prohibit transfers of duopolies, 
unless they comply with our rule or waiver policies at the time of 
transfer.
    36. Several commenters ask us to adopt additional exceptions to our 
transfer policy, on the same bases commenters asked us to adopt 
additional exceptions to our waiver policies. Against the backdrop of 
reaffirming our duopoly rule, standards for presumptive waiver, and 
transfer policy, we do not believe that it is appropriate to carve out 
any additional exceptions to the transfer policy. Rather, we believe 
that these exceptions, if they have merit, are better examined on a 
case-by-case basis. However, as request by one petitioner, we do wish 
to clarify the answer to the question of whether duopolies created from 
LMAs may be transferred through 2004, as the LMAs can be. We clarify 
that such a duopoly, like any other duopoly, may not be transferred 
unless it satisfies the rule or waiver standard at the time of 
transfer. As explained, in the context of our waiver policies, we 
extended certain relief to grandfathered LMAs, based on the equities of 
their situation. Parties to grandfathered LMAs formed these 
arrangements and may have made significant investments in them before 
the Commission had given clear notice that it intended to attribute 
LMAs in certain circumstances. These parties could not have formed a 
reasonable expectation that they could have converted these LMAs to 
duopolies, since the Commission prohibited duopolies at the time. 
Accordingly, the equity arguments for maintaining and transferring LMAs 
do not extend to converting or transferring duopolies created from 
those LMAs.

B. Radio/TV Cross-Ownership Rule

    37. We turn next to petitions for reconsideration of our amended 
radio/TV cross-ownership rule. As with the TV duopoly rule, petitioners 
have asked us to reconsider many aspects of our policy, including the 
circumstances that trigger our rule, the application of our voice 
counts, our standards for presumptive waiver, and our transfer policy.
1. Circumstances That Trigger the Rule
    38. Background. In amending the R&O, we did not change the 
circumstances that trigger our radio/TV cross-ownership rule. Rather, 
we stated that ``[t]he current one-to-a-market rule, and the rule we 
adopt today, is triggered by the degree of contour overlap among the 
stations involved.'' Thus, the rule is triggered when the Grade A 
contour of a TV station encompasses the entire community of license of 
an AM or FM radio station, or when the 2 mV\m contour of an AM radio 
station, or the 1 mV\m contour of an FM radio station, encompasses the 
entire community of license of a TV station.
    39. Discussion. Several parties ask us to clarify the application 
of the rule. Parties ask us to clarify that radio stations, even if 
encompassed by the Grade A contour of a TV station, do not trigger 
radio/TV cross-ownership analysis if they are located in separate DMAs 
from the TV station. Parties also ask us to clarify that overlapping 
contours of a single TV station and several radio stations, if the 
radio stations are in separate radio markets, constitute several 
distinct radio/TV combinations, each deserving independent analysis.
    40. We clarify as follows. Although the radio/TV cross-ownership 
rule continues to be triggered by contour encompassment, we generally 
do not count stations assigned to different markets toward the limits 
of the rule when applying it. Thus, for purposes of the radio/TV cross-
ownership rule, we generally do not count radio stations located in one 
Arbitron radio market toward the limits on the number of radio stations 
a party may own in another Arbitron radio market, even when the radio 
stations in the different markets fall within the Grade A contour of a 
commonly owned TV station. For example, the recent application to 
transfer control of CBS Corp. to Viacom, Inc. involved a TV station 
located in the Baltimore DMA and Arbitron radio metro, the Grade A 
contour of which encompassed the entire communities of license of 
several radio stations located in the Washington, DC DMA and Arbitron 
radio metro. We did not count these several radio stations toward CBS/
Viacom's radio/TV ownership limits in the Baltimore market because the 
stations are not assigned to that market. We do count, however, a radio 
station assigned to one Arbitron radio market toward an entity's 
ownership limits in a distant market when the contour of the radio 
station triggers the rule, because the rule continues to be triggered 
by contour encompassment, and such a radio station has a presence for 
competition and diversity purposes in the distant market. For example, 
the recent CBS/Viacom transaction also involved a radio station 
assigned to the San Francisco DMA and Arbitron radio metro, the 2mV\m 
contour of which encompassed the entire community of license of a 
proposed co-owned TV station located in the Sacramento DMA. We counted 
that San Francisco-based radio station toward CBS/Viacom's radio/TV 
ownership limits in the Sacramento market because the contour of that 
radio station triggered the rule. In sum, we clarify that, generally, 
we do not count toward an entity's radio/TV ownership limits in one 
market those radio stations assigned to an Arbitron radio market other 
than the one in which a commonly owned TV station is located. However, 
we will count toward an entity's radio/TV cross-ownership limits any 
radio station assigned to an Arbitron radio market other than the one 
in which a commonly owned TV station is located, if the contour of the 
radio station triggers the radio/TV cross-ownership rule. Given that 
contour encompassment continues to trigger the radio/TV cross-ownership 
rule, we believe it is necessary to recognize that radio stations 
located in one market in fact have a presence in a distant market, if 
their contours reach into the distant market and trigger the rule.
2. Application of the Voice Counts
    41. Background. In the R&O, we decided to permit common ownership 
of one TV station (or two, if permitted by the duopoly rule) and a 
varying number of radio stations, depending on the number of certain 
independently owned media voices that would remain in a given market 
post-combination. Specifically, pursuant to the amended rule, we allow 
the common ownership of one (or two) TV stations and six radio stations 
in the same market, if at least twenty independently owned media voices 
would remain in the market post-combination. In circumstances where we 
allow common ownership of two TV and six radio stations, we also allow 
common ownership of one TV and seven radio stations. Under our new 
rule, we allow common ownership of one (or two) TV stations and four 
radio stations in the same market, if at least ten independently owned 
media voices would remain in the market post-combination. We also allow 
common ownership of one (or two) TV stations and one radio station in 
the same market, without regard to the number of

[[Page 9045]]

media voices that would remain post-combination. For purposes of the 
new radio/TV cross-ownership rule, we include as independently owned 
media voices in the market all independently owned and operating radio 
stations in the market, all independently owned and operating full-
power TV stations in the market, independently owned cable systems (as 
one voice, if generally available in the TV station's DMA), and 
independently owned daily newspapers for which the circulation exceeds 
5% of the households in the DMA.
    42. Discussion. Petitioners raise a number of concerns about the 
application of our voice counts. As a preliminary matter, one 
petitioner suggests that the R&O was not clear about the circumstances 
pursuant to which one entity may own one TV station and seven radio 
stations. To the extent the R&O was unclear, we clarify that an entity 
may own such a combination only if it could own two TV stations and six 
radio stations, i.e., only if it could satisfy the TV duopoly 
requirement that eight full-power independently owned and operating 
broadcast TV stations would remain in the DMA post-combination. We 
believe that construction of the rule to allow a combination of 1 TV/7 
radio stations only where a combination of 2 TV/6 radio is possible 
best serves our competition and diversity goals. We believe that a 
combination of eight broadcast outlets should be permissible only under 
such circumstances where the more stringent duopoly test can be 
satisfied.
    43. Broadcast Stations Counts. One petitioner asks us not to count 
noncommercial broadcast stations, and that we count only those 
broadcast stations with a certain level of viewership in a DMA. We 
reaffirm that we will count noncommercial stations, for the same 
reasons we stated above in the context of our duopoly rule. We also 
will not require broadcast stations to have a certain level of 
viewership before counting them. We believe that the assignment of a 
broadcast station to a particular market, and its continued success as 
a going concern, demonstrates that a station is a source of viable 
competition and diversity in a given market, and therefore should be 
counted.
    44. Consistent with our decision not to count in the duopoly 
context Class A or LPTV stations for purposes of satisfying the 
requirement that eight independent TV broadcast stations must remain in 
the DMA post-merger, we wish to clarify on our own motion that we will 
not count in the radio/TV cross-ownership context either LPTV stations, 
including Class A stations, or low power FM (LPFM) stations for 
purposes of satisfying the requirement that a certain number of media 
entities must remain in the market post-combination. As we explained 
above in the duopoly context, LPTV stations, given their limited signal 
coverage, do not have sufficient influence and power to qualify as a 
station for purposes of our policy that a certain minimum number of 
stations must remain in a market post-combination. Likewise, the LPFM 
service is designed to serve small, localized communities; the strict 
limitation on their signal reach means that their programming will not 
be available to most of the market at issue in a proposed radio/TV 
combination. Therefore, LPFM stations will not be counted in 
determining compliance with the requirement that a specified number of 
independently owned media voices must survive the formation of the 
combination at issue.
    45. Newspapers Counts. Pursuant to our new rule, we include daily 
newspapers in our count of independently owned media voices if they are 
published in the DMA at issue and if they have a circulation in excess 
of 5% of the households in the DMA. One petitioner asks us to include a 
newspaper that owns a number of daily newspapers that have an aggregate 
circulation equal to or greater than 5% of the households in the DMA. 
We decline to do so, because it is not consistent with our rationale 
for limiting the number of newspapers we include in our count of 
``media voices'' to those with a circulation of at least 5% of the 
households in the DMA. As we explained in the R&O, ``[o]ur intent in 
this regard is to include those newspapers that are widely available 
throughout the DMA and that provide coverage of issues of interest to a 
sizeable percentage of the population. Although we recognize that other 
publications also provide a source of diversity and competition, many 
of these are only targeted to particular communities and are not 
accessible to, or relied upon by, the population throughout the local 
market.'' We reaffirm both our decision and our rationale.
3. Waivers
    46. In the R&O, we held that we would presume it is in the public 
interest to waive the radio/TV cross-ownership rule if one of the 
stations is a failed station. One petitioner asks that we also presume 
that waiver of the radio/TV cross-ownership rule is in the public 
interest if one of the stations is failing or not yet constructed, as 
we did in the context of the duopoly rule. As we have explained, we 
revised our duopoly rule to a lesser extent than our radio/TV cross-
ownership rule. We believe that a waiver is another form of 
liberalizing a rule, and thus that we struck the appropriate balance in 
our duopoly and radio/TV cross-ownership policies, in terms of our 
rules and presumptive waiver policies. We reaffirm our approach to our 
revised radio/TV cross-ownership policy ``by amending the rule to 
provide a greater degree of common ownership of radio and television 
stations while at the same time limiting waivers of this new rule to 
only extraordinary circumstances.''
    47. In the R&O, we also decided to grandfather any radio/TV 
combination formed pursuant to a waiver conditioned on the outcome of 
this proceeding, if applied for on or before July 29, 1999 (the 
``sunshine'' notice for the R&O, and ultimately approved by the 
Commission. We grandfathered these combinations through our 2004 
biennial review, during which the Commission will review the radio/TV 
cross-ownership rule, and the conditional waivers. One petitioner asks 
us to reconsider our grandfathering decision, and require all radio/TV 
combinations to comply with our new rules and waiver policies. As we 
explained in the R&O, although the conditional waiver grantees knew 
that the continuation of any combinations they formed was subject to 
the outcome of this proceeding, we believed it was appropriate to 
grandfather the specified combinations because in many cases a 
significant period of time had passed since the grantees formed and 
made investments in their combinations. We reaffirm both our decision 
and our rationale.
4. Transferability
    48. In the R&O, we stated that, once formed, whether pursuant to 
the amended rule or waiver standard, a radio/TV combination could not 
be transferred unless it complies with the radio/TV cross-ownership 
rule or waiver standard in effect at the time of transfer. Some parties 
ask us to reconsider our decision, for reasons similar to those they 
asked us to reconsider our same decision in the duopoly context. We 
explained that we believe that we have properly harmonized changes in 
the marketplace with our competition and diversity goals by, on the one 
hand, not requiring combinations to divest broadcast stations when the 
market changes such that those combinations no longer comply with our 
rules and waiver policies, and, on the other hand,

[[Page 9046]]

requiring combinations to comply with these rules and waiver policies 
at the time of transfer. We reaffirm our decision.

C. Television Local Marketing Agreements

    49. Background. In our Attribution R&O, we adopted ``a new rule to 
per se attribute television LMAs, or time brokerage of another 
television station in the same market, for more than fifteen percent of 
the brokered station's broadcast hours per week and to count such LMAs 
toward the brokering licensee's local ownership limits.'' In the R&O in 
this proceeding, we concluded, as we proposed in the 2FNPRM, to 
grandfather LMAs entered into before the adoption date of that notice 
(November 5, 1996) through the conclusion of our 2004 biennial review, 
and to require LMAs entered into on or after that date to comply with 
our TV duopoly rule within two years of the adoption date of the R&O 
(August 5, 1999).
    50. Discussion. Several petitioners contend that we should have 
grandfathered all LMAs, and that our decision not to do so is contrary 
to section 202(g) of the Telecommunications Act of 1996. This issue was 
already fully briefed and developed in the record that led to the R&O, 
and we see no reason to disturb our decision or revisit our analysis in 
detail here. Section 202(g) 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.'' As we explained in 
the R&O, the express terms of the language indicate what section 202 
was not intended to do, i.e., prohibit LMAs, but it does not indicate 
what if anything else the section was intended to do. We recognize that 
the Conference Report to the 1996 Act states that ``[s]ubsection (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 the Commission regulations on the date of 
enactment.'' We believe that this language at best indicates that 
Congress intended the Commission to grandfather LMAs that were in 
existence as of the date of enactment, i.e., February 8, 1996. We have 
grandfathered those LMAs, as well as those entered into almost nine 
months later when the Commission adopted the 2FNPRM. Thus, we reject 
the argument that section 202(g) compels us to grandfather all LMAs 
entered into prior to the effective date of our new rules.
    51. Our decision not to grandfather LMAs entered into on or after 
the adoption date of the 2FNPRM does not constitute retroactive 
rulemaking. As the Supreme Court has stated, ``[a] statute does not 
operate `retrospectively' merely because it is applied in a case 
arising from conduct antedating the statute's enactment * * * or upsets 
expectations based on prior law.'' Likewise, as the U.S. Court of 
Appeals for the District of Columbia Circuit has stated, ``[i]t is 
often the case that a business will undertake a certain course of 
conduct based on the current law, and will then find its expectations 
frustrated when the law changes. This has never been thought to 
constitute retroactive rulemaking, and indeed most economic regulation 
would be unworkable if all laws disrupting prior expectations were 
deemed suspect.'' In any event, parties to the non-grandfathered LMAs 
could not have had a reasonable expectation that their agreements and 
investments would be permissible, since when the Commission adopted the 
2FNPRM, it gave explicit notice of its proposal not to grandfather non-
compliant LMAs entered into on or after that date. We have not assessed 
a forfeiture or other penalty on parties to the non-grandfathered LMAs. 
We have not altered any reasonable expectations they had when they 
entered into these LMAs, or imposed any new duties on the parties to 
the LMAs. Rather, we held, after giving explicit notice of our proposal 
to do so, that non-compliant LMAs entered into on or after the date of 
that notice will not be grandfathered.
    52. Nor does our decision not to grandfather LMAs entered into on 
or after the adoption date of the 2FNPRM constitute an unconstitutional 
taking of property in violation of the Fifth Amendment. As a 
preliminary matter, it is doubtful whether an LMA constitutes a 
cognizable ``property'' interest for takings purposes. Yet even 
assuming that the parties to LMAs could satisfy the threshold question 
of whether they have a property interest, our decision not to 
grandfather LMAs entered into after the 2FNPRM does not constitute a 
taking. Parties to nongrandfathered LMAs entered them after the 
Commission made the following statements in the 2FNPRM: ``[T]elevision 
LMAs entered into on or after [November 5, 1996] would be entered into 
at the risk of the contracting parties. Consequently, if these latter 
television LMAs result in a violation of any Commission ownership rule, 
they would not be grandfathered and would be accorded only a brief 
period in which to terminate.'' Any party that subsequently chose to 
enter into an LMA cannot now be heard to argue that the Commission's 
action--which is well within our authority--interfered with their 
reasonable investment-backed expectations. Indeed, we gave these 
parties an ample two-year period in which to terminate their LMAs in 
order ``to avoid undue disruption of existing arrangements and [to] 
allow the holders of LMAs to order their affairs.''
    53. A public interest group requests that we eliminate 
grandfathered LMAs if by 2004 minority or SDB ownership has fallen by 
10%. We decline to do so, and reaffirm our approach in the R&O to 
decide the status of grandfathered LMAs in tandem with, or not later 
than, our 2004 biennial review of our broadcast cross-ownership rules.

D. First Amendment Arguments

    54. Background. In the R&O, we explained that ``[a]ll of our 
broadcast cross-ownership and multiple ownership rules, including the 
`TV duopoly' and `one-to-a-market' rules at issue in this proceeding, 
are based on the `twin goals' of competition and diversity.'' Our 
competition goal seeks to ensure that broadcasters do not obtain market 
power, to the detriment of advertisers, other competitors, and the 
public. Our diversity goal seeks to ensure that the public has access 
to information from a variety of diverse and antagonistic sources.
    55. Discussion. One petitioner contends that our diversity 
rationale violates the First Amendment, for a variety of reasons. In 
essence, the petitioner argues that our diversity goal, ``standing 
alone'' and without a scarcity of video programming alternatives, 
cannot sustain our cross-ownership and multiple ownership rules, and 
that even if this goal were sufficiently important for First Amendment 
purposes, our ownership rules are not sufficiently tailored to achieve 
that goal.
    56. We disagree. Aside from the fact that the petitioner ignores 
the competition basis for our rules, our diversity goal and means of 
promoting that goal are consistent with the First Amendment. To the 
extent our ownership rules implicate First Amendment concerns, the 
Supreme Court has noted that they are content-neutral. According to the 
applicable test, ``[a] content-neutral regulation will be sustained 
under the First

[[Page 9047]]

Amendment if it advances important governmental interests unrelated to 
the suppression of free speech, and does not burden substantially more 
speech than necessary to further those interests.'' In the R&O, we 
explained at length the basis for our conclusion that our ownership 
rules advance the important governmental interests of competition and 
diversity, and do so in a particularly nonburdensome way for purposes 
of the First Amendment. The petitioner has not provided any reason for 
us to reconsider that conclusion. We also note that, in order for the 
rules to apply to entities and individuals, those entities or 
individuals must already own a broadcast outlet in the same market. Our 
rules and waiver policies are designed to ensure that others have an 
opportunity to own an outlet in the market before an entity or 
individual with one or more outlets already in a given market obtains 
another one. Our rules thus foster, rather than impede, the values 
underlying the First Amendment, as the Supreme Court has recognized.

IV. Administrative Matters

    57. Authority for issuance of this MO&O is contained in sections 
4(i), 303(r), 403, and 405 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 303(r), 403, and 405.
    58. Paperwork Reduction Act Analysis. The actions taken in this 
MO&O have been analyzed with respect to the Paperwork Reduction Act of 
1995, and found to impose no new or modified reporting and record-
keeping requirements or burdens on the public.
    59. Supplemental Final Regulatory Flexibility Analysis. As required 
by the Regulatory Flexibility Act, the Commission has prepared a 
Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) 
of the possible impact on small entities of the rules adopted in this 
MO&O. The Supplemental FRFA is set forth below.

V. Ordering Clauses

    60. The petitions for reconsideration or clarification are granted 
to the extent provided herein and otherwise are denied in part pursuant 
to sections 4(i), 303(r), 403, and 405 of the Communications Act, as 
amended, 47 U.S.C. 154(i), 303(r), 403, and 405, and 1.429 of the 
Commission's rules, 47 CFR 1.429(i).
    61. Pursuant to sections 4(i) & (j), 303(r), 307, 308, and 309 of 
the Communications Act of 1934, as amended, 47 U.S.C. 154(i) & (j), 
303(r), 307, 308, and 309, part 73 of the Commission's rules, 47 CFR 
part 73, is amended as set forth in the rule changes.
    62. Pursuant to the Contract with America Advancement Act of 1996, 
the rule amendments set forth shall become effective April 9, 2001.
    63. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of this MO&O in MM Docket Nos. 
91-221 and 87-8, including the Supplemental Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.
    64. This proceeding is terminated.

VI. Supplemental Final Regulatory Flexibility Analysis

    65. As required by the Regulatory Flexibility Act (RFA), an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice 
of Proposed Rulemaking (``NPRM''), 57 FR 28163, June 24, 1992; the 
Further Notice of Proposed Rulemaking (``FNPRM''), 60 FR 6490, February 
2, 1995; and the 2FNPRM in this proceeding. The Commission sought 
written public comment on the proposals in the NPRM, the FNPRM, and the 
2FNPRM, including comment on the IRFAs. The comments received were 
discussed in the Final Regulatory Flexibility Analysis (FRFA) contained 
in the R&O in this proceeding. As described, this MO&O grants 
reconsideration of some actions taken in the R&O, and provides 
clarification of other issues. This associated Supplemental Final 
Regulatory Flexibility Analysis (Supplemental FRFA) addresses the rule 
modifications on reconsideration and conforms to the RFA.

Need for, and Objectives of, the Memorandum Opinion and Second Order on 
Reconsideration

    66. In the R&O, the Commission revised its local television 
ownership rules--the local television multiple ownership rule, or TV 
duopoly rule, and the radio/TV cross-ownership rule--and also adopted 
grandfathering policies for certain television local marketing 
agreements and radio/TV combinations. The Commission received fourteen 
petitions for reconsideration of the new rules and grandfathering 
policies. The MO&O resolves these petitions and associated pleadings, 
consistent with the Commission's overall goals in the proceeding. These 
Commission's goals were to balance two of its most fundamental goals in 
broadcast ownership--fostering competition in the markets in which 
broadcast stations compete, and preserving a diversity of information 
sources, especially at the local level--with the efficiencies of common 
ownership and increased competition in the media marketplace.

Summary of Significant Issues Raised by the Public

    67. The comments in response to the IRFAs that addressed small 
business issues were discussed in the FRFA contained in the R&O in this 
proceeding. The Commission received no petitions for reconsideration in 
direct response to the FRFA.

Description and Estimate of the Number of Small Entities to Which the 
Rules Will Apply

    68. The rules revisions contained in this MO&O will apply to 
commercial television and radio broadcast licensees, and potential 
licensees and permittees. These entities are discussed in detail in the 
FRFA contained in the R&O at Section III.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    69. No new recording, recordkeeping or other compliance 
requirements are adopted.

Steps Taken To Minimize Significant Economic Impact on Small Entities 
and Significant Alternatives Considered

    70. The MO&O generally affirms and clarifies the R&O, but it also 
modifies the TV duopoly and radio/TV cross-ownership rule. As explained 
below, this change relates to the standard the Commission uses to 
determine if the necessary circumstances are present to approve a 
particular combination. As also explained below, the Commission has 
considered how this change affects small entities, and taken steps to 
minimize significant economic impact on them.
    71. The duopoly rule, as revised in the R&O, permits common 
ownership of two TV stations in the same market, defined by Designated 
Market Areas (DMAs), if, among other things, eight independently owned 
and operating full-power TV stations would remain post-merger in the 
DMA in which the communities of license of the TV stations in question 
are located.
    72. The rules as revised in the MO&O strike what we believe to be 
the appropriate balance between allowing broadcast stations to realize 
the efficiencies of combined operations, and furthering our policy 
goals of competition and diversity. The rules tighten the showing 
necessary for common ownership, and thereby prevent stations in the 
market from obtaining and exercising market power

[[Page 9048]]

at the expense of smaller stations. For example, consider a DMA that 
includes nine TV stations, six of which broadcast from hypothetical 
City A, and the other three of which broadcast from hypothetical City 
B. The signal contours of the stations in City A do not reach viewers 
in City B, and vice versa. The rule, as revised in the R&O, would 
permit two of the three stations in City B to combine, with the 
possible result that they could obtain and exercise market power at the 
expense of the third station in City B. The rule as revised in the MO&O 
would not permit any of the stations in City B to combine with each 
other. (It would, however, permit one station in City A to combine with 
one station in City B, leaving eight TV stations in the DMA.) Thus, the 
alternative considered of affirming the rule as revised in the R&O 
could have enabled a smaller station's competitors to obtain and 
exercise market power.
    73. In tightening the circumstances under which two stations can 
combine, we recognize that our new rule may not just protect smaller 
stations, but instead may hamper their ability to combine, reduce 
costs, and compete more effectively. We note, however, that the rules, 
as revised in the R&O, and affirmed in the MO&O, permit struggling 
stations to combine when one of them has failed or is failing, or the 
combination of the two would result in the construction of an 
authorized but as yet unconstructed station.
    74. For the above reasons, we believe that the Commission has taken 
steps to minimize significant economic impact on a substantial number 
of small entities.

Report to Congress

    75. The Commission will send a copy of this MO&O, including this 
Supplemental FRFA, in a report to be sent to Congress pursuant to the 
Congressional Review Act. In addition, the Commission will send a copy 
of this MO&O, including this Supplemental FRFA, to the Chief Counsel 
for Advocacy of the Small Business Administration. A copy of this MO&O 
and Supplemental FRFA (or summaries thereof) will also be published in 
the Federal Register.

List of Subjects in 47 CFR Part 73

    Television broadcasting.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 73 as follows:

PART 73--RADIO BROADCAST SERVICES

    1. The authority citation for part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334 and 336.
    2. Section 73.3555 is amended by revising paragraphs (b)(2)(ii) and 
(c)(3)(i) to read as follows:


Sec. 73.3555  Multiple Ownership.

* * * * *
    (b) * * *
    (2) * * *
    (ii) at least 8 independently owned and operating, full-power 
commercial and noncommercial TV stations would remain post-merger in 
the DMA in which the communities of license of the TV stations in 
question are located. Count only those stations the Grade B signal 
contours of which overlap with the Grade B signal contour of at least 
one of the stations in the proposed combination. In areas where there 
is no Nielsen DMA, count the TV stations present in an area that would 
be the functional equivalent of a TV market. Count only those TV 
stations the Grade B signal contours of which overlap with the Grade B 
signal contour of at least one of the stations in the proposed 
combination.
* * * * *
    (c) * * *
    (3) * * *
    (i) TV stations: independently owned and operating full-power 
broadcast TV stations within the DMA of the TV station's (or stations') 
community (or communities) of license that have Grade B signal contours 
that overlap with the Grade B signal contour(s) of the TV station(s) at 
issue;
* * * * *
[FR Doc. 01-3046 Filed 2-5-01; 8:45 am]
BILLING CODE 6712-01-P