Local Television Ownership Rules

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

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

Local Television Ownership Rules

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this Second Further NPRM, the Commission makes several

tentative conclusions and proposals concerning the modification of the

local television ownership rule and the radio-television cross-

ownership rule. Specifically, we invite comment on our tentative

conclusion to modify the local television ownership rule to a generally

less restrictive Designated Market Area (``DMA'') and Grade A signal

contour standard and on a number of specific waiver standards for the

local television ownership rule. We also seek comment as we reexamine

the radio-television cross-ownership rule in light of changes to the

radio-television cross-ownership waiver policy and local radio

ownership rules contemplated by the Telecommunications Act of 1996

(``1996 Act''). In addition, the Commission tentatively concludes that

it will establish the adoption date of this Second Further NPRM (i.e.,

November 5, 1996) as the grandfathering date for television local

marketing agreements (``LMAs'') in the event television LMAs are

considered attributable under our ownership rules. The purpose of this

Second Further Notice of Proposed Rulemaking is to invite additional

comments on our local television ownership rule, radio-television

cross-ownership rule, and the treatment of existing television LMAs in

light of the enactment of the 1996 Act.

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

by March 7, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W.,

Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Alan Baughcum (202) 418-2170 or Kim

Matthews (202) 418-2130 of the Policy and Rules Division, Mass Media

Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second

Further Notice of Proposed Rule Making in MM Docket Nos. 91-222 and 87-

8, adopted November 5, 1996, and released November 7, 1996. The full

text of this Commission decision is available for inspection and

copying during normal business hours in the FCC Dockets Branch (Room

239), 1919 M Street, N.W. Washington, D.C. 20554. The complete text of

this decision may also be purchased from the Commission's copy

contractor, International Transcription Services, (202) 857-3800, 2100

M Street, N.W., Suite 140, Washington, DC 20037.

Synopsis of Second Further Notice of Proposed Rulemaking

I. Background

1. Last year, the Commission adopted a broad-ranging Further Notice

of Proposed Rule Making in this docket (hereinafter TV Ownership

Further NPRM). In that item, the Commission proposed changes or

revisions to the national television ownership rule, the local

television ownership rule, and the radio-television cross-ownership

rule. In addition, the Commission requested comment as to whether

certain broadcast television local marketing agreements (``LMAs'')

should be considered to be an attributable interest in a manner similar

to radio LMAs.

2. On February 8, 1996, the Telecommunications Act of 1996 (the

``1996 Act'') was signed into law. Section 202 of the 1996 Act directs

the Commission to undertake significant and far-reaching revisions to

its broadcast media ownership rules, some of which--like the relaxation

of the national television ownership limit--were proposed in the TV

Ownership Further NPRM. Section 202 also requires us to review other

aspects of our local ownership rules which were also the subject of the

TV Ownership Further NPRM. In particular, Section 202 requires the

Commission to do the following: (1) to conduct a rulemaking proceeding

concerning the retention, modification or elimination of the television

duopoly rule; and (2) to extend the Top 25 market/30 independent voices

one-to-a-market waiver policy to the Top 50 markets, ``consistent with

the public interest, convenience, and necessity.'' Additionally, both

the Act and its legislative history contain statements regarding the

appropriate treatment of existing television local marketing agreements

(``LMAs'') under our ownership rules. Because our previous request for

comments occurred before the enactment of the 1996 Act, we believe

inviting additional comments pertaining to the duopoly rule, the radio-

television cross-ownership rule, and the treatment of existing

television LMAs is appropriate.

3. We confine this Second Further NPRM to issues related to our

local television ownership rule (the duopoly rule), the one-to-a-market

rule, and LMA grandfathering issues. Issues relating to the national

television ownership limit, which was specifically modified by the 1996

Act, were addressed in a previously released Order implementing these

modifications (See Order, FCC 96-991, 61 FR 10691 (March 15, 1996) and

are also discussed in a separate NPRM adopted contemporaneously with

this Second Further NPRM. In addition, issues related to the broadcast

attribution rules are the subject of a Further NPRM in our attribution

proceeding that is also being adopted today.

4. In the sections that follow, we invite comment on several

discrete issues prompted by the 1996 Act. We also take this opportunity

to solicit further comment in light of our review of comments filed in

this proceeding to date. Specifically, we invite comment on our

tentative conclusion to modify the local television ownership rule to a

generally less restrictive Designated Market Area (``DMA'') and Grade A

signal contour standard and on a number of specific waiver standards

for the local television ownership rule. We also seek comment as we

reexamine the radio-television cross-ownership rule in light of the

1996 Act. Finally, we seek comment on how, if we decide to make

television local marketing agreements (``LMAs'') attributable for

ownership purposes, existing LMAs should be treated under the Act and

the new rules.

II. The Local Television Ownership Rule

A. Background

5. Our local television ownership rule presently prohibits common

ownership of two television stations whose Grade B signal contours

overlap. The TV Ownership Further NPRM set out a comprehensive

analytical framework for reviewing this rule in light of three

principal goals. First, we seek through our local television ownership

rule to promote diversity, particularly program and viewpoint

diversity. Second, we intend to foster the competitive operation of

broadcast television stations' program distribution and advertising

markets. Finally, we seek to promote greater certainty by adopting

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generally applicable rules. We also recognize that the 1996 Act and

additional Commission proceedings may have a cumulative effect on the

ability of small stations or stations owned by minorities and women to

compete effectively in this new environment. We seek comment on what

aggregate effect these proposed rules may have on small stations, or

stations owned by minorities and women.

B. Geographic Scope of the Rule

6.The TV Ownership Further NPRM proposed to narrow the geographic

scope of the duopoly rule by prohibiting station overlaps on the basis

of Grade A contours (with a radius of approximately 30-45 miles) rather

than Grade B contours (with a radius of approximately 50-70 miles). We

also sought comment on whether Nielsen's DMA was a better measure of a

local television market than Grade B signal contours. While some

commenters opposed any change of the local ownership rule at all, most

advocated a relaxation of the rule, with many supporting some form of

the proposed Grade A test.

7. We continue to question whether the Grade B contour best

reflects the market in which a television station operates for purposes

of our local ownership rule. The TV Ownership Further NPRM indicated

that the area within the Grade B contour does not necessarily reflect

the station's ``core market,'' (i.e., the viewers the station is trying

to reach). It further pointed to a number of benefits, including

economies of scale, that could be gained by relaxing the rule. Various

parties have commented that the Grade B contour test should be relaxed

because stations with overlapping Grade B contours are generally

unlikely to have enough viewers in common to raise competition or

diversity concerns if the stations were jointly owned. Commenters also

pointed to the greater number of alternatives now afforded many viewers

with cable and other multichannel video program services.

8. While we believe the Grade B test may be overly restrictive, we

are concerned that the Grade A contour alone may not be the appropriate

measure to adopt in its place. We recognize that in the TV Ownership

Further NPRM, we indicated that the record at the time supported moving

to a Grade A approach. Upon further consideration of these issues and

of the comments submitted in response to the TV Ownership Further NPRM,

however, we believe a combination of the DMA and Grade A signal

contours may be a more appropriate measure of the geographic scope of

the local television ownership rule.

9. Our tentative conclusion is that the local television ownership

rule should permit common ownership of television stations in different

DMAs so long as their Grade A signal contours do not overlap. In this

section, we set forth the reasons as to why this approach may more

accurately reflect a television station's geographic market and may

further our diversity and competition goals. We invite parties to

comment on this tentative conclusion and how it might be superior or

inferior to a standard that is based solely on signal contours or one

that is based solely on DMAs.

10. The Relevance of DMAs. The record indicates that the DMA

provides, as a general matter, a reasonable proxy of a television

station's geographic market. The Commission has previously noted that

the benefit of the DMA definition is that it attempts to capture the

actual television viewership patterns and each county is assigned to a

unique television market, unlike the Grade A and B contour standards

which ignore the carriage of broadcast signals over cable systems.

Thus, DMAs are designed to reflect actual household viewing patterns

and advertising markets--critical ingredients for determining a

station's geographic market, both for competition and diversity

purposes. In addition, the Commission traditionally has employed a

similar geographic measure to the DMA in other rules. That geographic

measure is the Area of Dominant Influence (``ADI''), used by the

Arbitron Company to define a television station's geographic market

according to audience viewing patterns.

11. We thus invite parties to comment further upon whether the DMA

provides a reasonable, general approximation of a television station's

geographic market, and whether the DMA is an appropriate basis for

application of our local ownership rules. Furthermore, we seek comment

on the consistency of DMA classifications from year to year. We

recognize that some degree of change in these classifications is

inevitable as viewing patterns shift, but ask parties to address

whether these changes are so frequent or of such significance that they

would undermine our goal of crafting an ownership rule that provides

certainty and consistency in its application. We also seek comment on

the basis upon which changes in DMA boundaries are made, and on whether

boundaries are changed at the request of local broadcast television

stations.

12. Supplementing the DMA Test with a Grade A Contour Standard.

While it is our present view that DMAs may be better than either Grade

B or Grade A signal contours as measures of the market, we also

tentatively conclude that we should supplement our proposed DMA-based

rule with a Grade A contour criterion. There are at least two reasons

why we would include both the DMA and Grade A signal contours in the

local television ownership rule. First, because the DMA is based on the

preponderance, not necessarily the majority, of audience viewing,

broadcast television stations in neighboring DMAs may in fact be such

significant competitors that joint ownership should not be allowed.

Broadcast television stations with overlapping Grade A signal contours,

whether in the same DMA or not, may compete for viewers and advertising

dollars. Second, the common ownership of two broadcast stations in

different DMAs with overlapping Grade A signal contours may reduce

voice and program diversity available to the viewers in the overlap

area. Thus, we believe that a supplemental Grade A overlap criterion

will serve to forestall potentially anti-competitive and diversity-

reducing mergers in the broadcast television industry.

13. Total viewing for a particular broadcast television station may

include viewing in counties both within and outside the station's DMA.

Nielsen in fact examines all such viewing attributed to stations in

counties in and outside the station's DMA and reports this viewing data

under the heading ``Station Totals.'' The fact that there is viewing

outside the DMA suggests that, at least in some instances, stations in

neighboring DMAs may compete for some of the same audience. This may

especially be the case in the eastern U.S. where counties and DMAs tend

to be smaller than west of the Mississippi River. In these areas it may

be that significant portions of an individual station's audience reside

in adjacent DMAs, particularly for stations located near DMA

boundaries. We seek comment on whether our composite DMA/Grade A rule

will adequately address these concerns.

14. The Commission recognizes that actual viewing patterns may not

be limited to instances where stations in different DMAs find their

Grade A signal contours overlapping. We believe, however, that the

areas in which such Grade A signal contours overlap are likely to be

among those where the competitive and diversity concerns raised by

common ownership of the two stations would be greatest. This is because

the Grade A contour represents

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the core over-the-air market. We seek comment on this belief.

15. A further reason we tentatively conclude that a composite DMA/

Grade A rule is advisable is because the DMA designation relies on

ratings in both cable and non-cable households in describing the

geographic reach and extent of television markets. We note, however,

that slightly more than one-third of television viewers do not

subscribe to cable. Thus, reliance on a DMA market definition may

conceal the extent to which viewers that rely on free-over-the-air

television might be harmed from a diversity perspective if the duopoly

rule takes no independent account of the extent to which two stations

serve the same viewers solely on an ``over-the-air'' basis.

16. We ask for comment on whether there are any other such issues

raised by reliance on DMA market designations which the Commission

should consider. To the extent that such problems exist and are

significant, will adding a Grade A component to the rule remedy them

and thereby ease our competition and diversity concerns?

17. Large DMAs and Counties. We believe that a DMA/Grade A approach

will generally be less restrictive than the current Grade B signal

contour test. There may be some situations, however, where this is not

the case, particularly in some geographically large DMAs west of the

Mississippi River. In these situations, the DMA may be large enough so

that two stations could be situated in the DMA yet not have overlapping

Grade B contours; common ownership of the two stations would be

permitted under the existing rule but not under the DMA/Grade A

approach. We note, however, that a preliminary review of station

locations and Nielsen DMAs suggests that there are currently few

stations within the same DMA that could be commonly owned under the

existing Grade B signal contour standard that are not already jointly

owned. We invite comment on whether parties agree with this assessment,

and whether, as a practical matter, the issue is essentially mooted by

our proposal to grandfather these existing arrangements. In the event

this is not the case, we invite comment as to how we should address

this issue in defining the local geographic market and implementing the

television duopoly rule. One alternative would be to adopt a two-tiered

rule under which we would permit common ownership both in cases where

there is no DMA/Grade A overlap and in situations where there is no

Grade B overlap. Such a rule would be no more restrictive than our

current regulation and would not disrupt current ownership patterns. We

seek comment on this approach.

18. A related issue concerns the possibility that certain western

counties are sufficiently large, measured by area, that populations in

cities or towns at opposite ends of the same county watch stations in

different DMAs. Nielsen's methodology for assigning counties would

nonetheless award the county based on the preponderance of overall

viewing in the county. This could, potentially, lead to a situation in

which Nielsen assigns a significant portion of the viewing population

of that county, say residents of town A, to a DMA with stations that

are not viewed by those television households. Such assignment might

occur because Nielsen relies on the preponderance of cable and non-

cable viewers in both town A and the larger town B at the opposite end

of the county. As a result, under a DMA-based duopoly rule, stations

licensed to towns A and B could not be commonly owned even if their

Grade B contours do not overlap and they actually serve entirely

different markets. Our preliminary analysis, however, indicates that

the number of instances in which this might occur may be small. Indeed,

we note that Nielsen has, in certain instances, split counties among

different DMAs based on the disparate viewing habits of residents in

various locations in the county. We seek comment on whether this

assessment is accurate. What would be the appropriate response in the

event the record shows that this issue in fact presents a significant

problem?

19. Grandfathering. As noted, recognizing that our proposal could

disrupt existing ownership arrangements involving stations in the same

DMA with no Grade B overlaps, we seek comment on whether we should, if

we adopt a DMA/Grade A rule, grandfather existing joint ownership

combinations that conform to our current Grade B test. We also seek

comment on whether the grandfathered status we propose for existing

joint ownership combinations in the same DMA should cease at the time

an applicant seeks to assign or transfer a grandfathered station, or

whether we should allow the grandfathered status to be transferred to a

new owner. In the event we were to grandfather these combinations, the

apparently more restrictive aspects of a DMA/Grade A duopoly approach

would appear to have little effect on existing broadcasters, while the

relaxation of the duopoly standard inherent in the change from a Grade

B to a DMA/Grade A criterion would afford broadcasters significant

opportunities to obtain the efficiencies which common ownership may

offer. We tentatively conclude that, overall, our DMA/Grade A rule will

make the local television rule less restrictive without harming our

competition and diversity goals.

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

20. The TV Ownership Further NPRM invited comment on whether, in at

least some situations, we should allow a company to acquire stations

within the same geographic market. We asked parties to address a number

of possible exceptions to a ``one station'' local ownership rule, such

as (1) permitting combinations of two UHF stations located in the same

market or permitting combinations of one UHF station and one VHF

station located in the same market, and (2) permitting such

combinations only if a certain number of independently-owned broadcast

television stations remain after the transaction. We also sought

comment on the criteria to be used in a case-by-case waiver approach.

In response, a number of parties opposed any relaxation of our current

rules, while other commenters urged us to modify our rules to permit

same-market combinations in certain circumstances.

21. We invite parties to update the record on the general issue of

whether we should permit television duopolies in certain circumstances

by rule or waiver. We also seek additional comment on a specific

exception and on specific waiver criteria for the local station

ownership rule.

22. In addition, we seek further evidence regarding the

relationship between ownership and diversity. Greater ownership

concentration traditionally has been thought to reduce diversity. We

seek comment, analysis and evidence on whether it reduces viewpoint and

program diversity. For example, would a single owner of two stations be

less likely to present diverse opinions, and less likely to serve

diverse audiences, than would two unaffiliated owners? Conversely,

would an owner of two stations in a market be more likely to

counterprogram and thereby serve the interests and views of more

viewers? With respect to these questions, what can we learn from the

waivers of local television ownership rules that we have already

granted? Have they led to a decrease or an increase in programming or

viewpoint diversity? Similarly, taking account of the important

differences between television and radio, what can we learn from

``radio duopolies,'' which have been permissible since 1992?

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1. Exceptions

a. Distinguishing Between UHF and VHF Stations

23. In response to the TV Ownership Further NPRM, several parties

raised a threshold issue in arguing that local television station

combinations involving UHF stations should receive more favorable

treatment than those involving VHF stations. We invite parties to

comment on the extent to which we should explicitly distinguish between

UHF and VHF stations in determining whether to allow common ownership

of stations in the same market. In particular, should we treat the

common ownership of UHF stations in the same DMA or even in the same

city more favorably than that of non-UHF stations? As several parties

noted, some UHF stations are major network affiliates with large market

shares, but many are not. These parties therefore raise a question as

to the continuing validity of the need for differential treatment of

UHFs.

b. Satellite Stations

24. Television satellite stations are authorized under Part 73 of

the Commission's Rules to retransmit all or part of the programming of

a parent station. The two stations are ordinarily commonly owned.

Satellite stations are generally exempt from our broadcast ownership

restrictions. An application for television satellite status will be

presumed to be in the public interest if the applicant meets three

criteria: (1) there is no City Grade overlap between the parent and the

satellite; (2) the proposed satellite would provide service to an

underserved area; and (3) no alternative operator is ready and able to

construct or to purchase and operate the satellite as a full-service

station.

25. We presently see no reason to alter our current policy

exempting satellite stations from our local ownership rules. Our

satellite station policy, resting in significant part on the satellite

station's questionable financial viability as a stand-alone operation,

has furthered our ownership policies by adding additional voices to

local television markets where otherwise no additional voices might

have emerged. The criteria we utilize to evaluate requests for

satellite status--including service to underserved areas and a

demonstrated unwillingness by potential buyers to operate the station

on a stand-alone basis--ensure that satellite operations are consistent

with our underlying goals of promoting diversity and competition. Under

these circumstances, we believe that continued exception of satellite

stations from the local ownership rules is appropriate. We invite

comment on this conclusion.

2. Waivers

The Commission seeks comment on a number of specific waiver

criteria for allowing common ownership of stations within the same

local market.

a. UHF/VHF

27. We have discussed, as a possible exception to the local

television ownership rule, exempting certain UHF combinations from the

application of the local television ownership rule. Another approach

toward the same end would be to create waiver criteria by which the

Commission might waive the application of the rule for certain UHF

combinations. Many of the comments from parties on possible criteria to

be used in permitting common ownership of stations within the same

local market focussed on permitting combinations involving UHF

stations.

28. Given these comments, we request additional comment on whether

we should treat UHF station combinations differently from VHF

combinations with respect to local ownership and, if so, how.

Commenters citing disadvantages that they believe UHF stations continue

to suffer should also list very specific criteria for waiving the

duopoly rule that would correspond to those disadvantages, e.g., small

audience share or limited area of signal coverage. We ask parties to

comment on the use of such criteria in granting waivers in light of our

competition and diversity goals. In addition, while the 1996 Act itself

is silent on the question, the Conference Report to the Act states that

``[i]t is the intention of the conferees that, if the Commission

revises the multiple ownership rules, it shall permit VHF-VHF

combinations only in compelling circumstances.'' Thus, we seek comment

on whether there are particular locations (such as Alaska or Hawaii)

where there are such compelling circumstances that the Commission might

allow some VHF/VHF combinations for reasons analogous to those cited in

support of UHF combinations. Commenters supporting this view should

describe the nature of the showing that should be required and the

effect of any such waivers on diversity and competition in these

markets.

b. Failed Station

29. We invite comment on whether, if an applicant can show that it

is the only viable suitor for a failed station, the Commission should

grant the application regardless of contour overlap or DMA

designations. A ``failed'' broadcast station for purposes of our one-

to-a-market rule waiver standard is a station that has not been

operated for a substantial period of time, e.g., four months, or that

is involved in bankruptcy proceedings. We ask whether this failed

station standard would be appropriate in evaluating a potential duopoly

application. We invite comment on whether it is preferable to have two

operating stations with a single owner than to have one operating and

one dark station. The Commission also invites comment on whether any

such standard should be relatively strict or generous. For example,

should only failed stations qualify, or should we consider failing

stations as well? If so, what is the appropriate definition of a

failing station? Should applicants be required to demonstrate that they

are the only qualified and viable purchaser for the failed stations? We

seek comment on whether this standard is appropriate, on how a

demonstration that a station has ``failed'' or is failing might be

accomplished.

c. Vacant and New Channel Allotments

30. In our recent Sixth Further Notice of Proposed Rule Making

(``Sixth FNPRM''), 61 FR 43209 (August 21, 1996) in the DTV proceeding,

we proposed to delete all vacant TV allotments in order to provide

existing television stations with DTV allotments with comparable

coverage. In the Sixth FNPRM, however, we indicated that ``in some

communities--mainly rural areas--unused channels may remain even after

all existing broadcasters receive allotments.''

31. We invite comment on whether we should entertain a waiver

request to the local television ownership rule to enable a local

broadcast television licensee to apply for a channel allotment that has

long remained vacant or unused, e.g., five years. We believe that it

may not be in the public interest to have allotted broadcast channels

lie fallow--particularly in markets where it might be possible to allow

additional NTSC stations to come on the air without adversely impacting

the proposed DTV allotment table and the transition to digital

television. Evidence that an allotment has remained vacant for five

years, or evidence of a pattern of failure in applications for that

allotment, may suggest that the operation of another television station

on a stand-alone basis in the community in question is not economically

viable. In those circumstances, the public interest in diversity may be

advanced by permitting an existing station in the market to acquire the

station, rather

[[Page 66982]]

than allowing the channel to remain unused. Similarly, if it is

possible to create new channel allotments in a market without

interfering with nearby channels and without adversely impacting the

proposed new DTV allotment table, we seek comment on whether the

Commission should entertain applications by an incumbent television

licensee to establish a new channel in a market. We note that there

currently is a freeze placed on new applications as the result of our

DTV proceeding. We anticipate that, in the event we adopt a vacant

channel waiver criterion, it would not apply until a DTV table of

allotments is finalized in that proceeding. Advanced Television Systems

and their Impact Upon the Existing Television Broadcast Service, Sixth

FNPRM, 61 FR 43209 (August 21, 1996). We seek comment on this issue,

including whether there may be circumstances where it would be

appropriate to consider such waiver requests before DTV allotments are

finalized.

32. A vacant channel waiver criterion is analogous to waivers for

failed stations. We believe that granting waivers for failed stations

and vacant allotments would be consistent with our objective to advance

diversity and competition. We therefore seek comment on whether these

failed and vacant channel waiver proposals increase the amount and

diversity of programming and viewpoints available in the market.

Similarly, we seek comment on a possible competitive or economic

efficiency rationale for prohibiting existing broadcasters from

expanding their capacity into unused broadcast spectrum that no other

person wants to use. Specifically, we ask commenters to discuss the

rationale that unassigned channels might need to be preserved for new

broadcasters to accommodate future growth in demand for local

television broadcasting. We solicit comment on these observations and

especially upon the feasibility of this proposal given the proposed new

DTV allotment table.

d. Small Market Share/Minimum Number of Voices

33. In addition, the Commission seeks comment on whether it should

entertain waivers to allow joint ownership of stations that (1) have

very small audience or advertising market shares and (2) are located in

a very large market where (3) a specified minimum number of

independently owned voices remain post-merger. The purpose of such a

waiver standard would be to enhance competition in the local market by

allowing small stations to share costs and thereby compete more

effectively. It could also increase the availability of programming

and, perhaps, program diversity were such stations to use their

economic savings to produce new and better-quality programming or

related enhancements. Such advantages may be particularly helpful to

small and independent UHF stations.

34. Market Share. We seek comment as to the size of market shares

that would be sufficiently low to meet this standard. We also seek

comment on whether a small market share waiver standard would tend to

limit the application of this waiver standard, either absolutely or

generally, to UHF stations and to independent stations not affiliated

with any major network. In addition, if after a duopoly waiver is

granted, such joint ownership results in the previously struggling

stations developing large shares of the viewing audience, should the

Commission terminate the waiver for joint ownership in the event the

owner seeks to assign or transfer the stations' licenses?

35. Minimum Number of Voices. The TV Ownership Further NPRM

discussed whether waivers would be appropriate where a sufficient

number of independently owned broadcast television voices remained in

the market post-merger. Several parties argued for variations on

similar waiver standards.

36. We have previously sought comment on whether a minimum of six

independently owned broadcast television stations in an ADI is an

appropriate standard in light of our competition and diversity goals.

The Commission's 1995 TV Ownership Further NPRM raised numerous

questions about the extent to which other video and non-video products

and services were competitive or diversity substitutes for broadcast

television. We noted the lack of unanimity among the parties as to

which products and services are substitutes and which are not. Given

the many changes that are taking place in the television industry and

the lack of consensus in the record, we ask here for comment on whether

we should, until we observe further marketplace developments, focus

only on broadcast television outlets in counting voices for this

proposed waiver. Or, for example, should we give consideration to cable

television systems when cable has a very high penetration level in the

market? If so, how should a cable system be counted for these purposes?

In view of recent developments regarding DBS, Open Video Systems (OVS),

and on-line services, we also seek comment on whether and how these

services should be counted as voices. For a given minimum number of

independently owned broadcast television voices, an approach that

counted only broadcast television voices would establish a more

difficult standard for station owners in most markets to meet as

compared to an approach that included a broader array of media as

independent voices. Indeed, such an approach might limit waivers under

this criteria to only the very largest markets. However, based on

experience gained from granting waivers in these circumstances, we

could then consider relaxing the rule further as part of a future

biennial review of our ownership rules.

37. Market Size. We also invite comment on whether, if we adopt a

small market share and minimum number of voices waiver policy, we

should add a market size test. In other words, we might limit waivers

based on a minimum number of television voices in the very largest

markets. We invite comment on whether the largest markets already have

sufficiently numerous competing broadcast television outlets to

safeguard our competition and diversity concerns. Or, are there so few

such large markets that development of a waiver criterion is not an

efficient means to promote diversity? Parties are also asked to comment

on the appropriate minimum number of voices under such an approach. For

example, should this standard require a minimum number of

independently-owned broadcast television stations (including both

commercial and non-commercial stations) licensed to communities in the

DMA after the proposed transaction? The Commission seeks comment on

alternative standards, and whether waivers based on these criteria

should be limited, at least for the time being, to only the largest

markets.

e. Public Interest and Unmet Needs

38. Finally, we seek comment on the circumstances in which the

Commission should grant a waiver if the applicant demonstrates that the

public interest benefits that will flow from a waiver would include

public interest programming that would not be provided were the

stations owned separately. The Commission has on numerous occasions

taken into account an applicant's programming enhancements in granting

permanent and temporary waivers of the television duopoly rule although

these waivers typically involved only limited amounts of contour

overlap between the stations. We also seek comment on how, if this

waiver criterion were adopted, programming benefits would fit into our

analysis of the public interest. Should we rely only on types of

programming

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that the Commission has traditionally considered ``public interest''

programming, such as children's educational programming, news, public

affairs and access of political candidates to the airwaves? Should we

permit broadcasters to identify additional types of programming that

would support a waiver, such as programming that serves the needs of an

underserved segment of the local market or underprovided public

interest programming? Should we follow up on the representations made

by licensees in their waiver requests? Finally, we seek comment on

whether it would be preferable to consider this waiver criterion, if at

all, only in conjunction with one or more of the other criteria

discussed above.

3. Waivers Pending the Outcome of This Proceeding

39. There has been an increase in broadcast transactions since the

passage of the 1996 Act, with a number of these involving requests for

waiver of our ownership rules. Our current television duopoly rule

will, of course, remain in place pending the outcome of this

proceeding, but we take this opportunity to provide parties guidance

regarding our policy in waiving the rule during this interim period. We

hope that doing so will facilitate planning for these transactions as

well as staff processing of license transfer and assignment

applications.

40. During this interim period, we will generally grant waivers of

the television duopoly rule, conditioned on coming into compliance with

the requirements ultimately adopted in this proceeding within six

months of its conclusion, where the television stations seeking common

ownership are in different DMAs with no overlapping Grade A signal

contours. Commission staff will have delegated authority to act on

applications seeking such waivers as long as the applications do not

raise new or novel issues. We have tentatively concluded that the

record in this proceeding supports relaxation of the geographic scope

of the duopoly rule from its current Grade B overlap standard to a

standard based on DMAs supplemented with a Grade A overlap criterion.

While we are providing an opportunity for comment on this tentative

conclusion, we do not believe granting waivers satisfying the proposed

standard, and conditioning them on the outcome of this proceeding, will

adversely affect our competition and diversity goals in the interim. It

will also have the benefit of providing parties some flexibility in

moving forward on merger transactions that do not comply with the

current duopoly rule.

41. We will be disinclined to grant waiver requests not falling in

this category (i.e., those involving stations in the same DMA or with

overlapping Grade A signal contours), absent extraordinary

circumstances. These types of waiver requests will be acted upon by the

full Commission.

III. Radio-Television Cross-Ownership Rule

42. The radio-television cross-ownership rule, or the one-to-a-

market rule, generally forbids joint ownership of a radio and a

television station in the same local market. The rule seeks to promote

competition as well as viewpoint and programming diversity in

broadcasting. In 1989, we amended the rule to permit, on a waiver

basis, radio-television mergers in the Top 25 television markets if,

post-merger, at least 30 independently owned broadcast voices remained,

or if the merger involved a failed station or if the merger satisfied a

group of five other criteria. Waivers premised on the first two

criteria--large market size or financial failure--were presumed to be

in the public interest, while waivers based on the ``five factors''

were evaluated based on the strength of the applicant's individual

showings.

43. In the TV Ownership Further NPRM, we proposed to eliminate the

cross-ownership restriction in its entirety or replace it with an

approach under which cross-ownership would be permitted where a minimum

number of post-acquisition, independently owned broadcast voices

remained in the relevant market. We tentatively concluded that there

were two alternative approaches towards modifying the one-to-a-market

rule. If radio stations and television stations do not compete in the

same local advertising, program delivery or diversity markets, we

proposed to eliminate this rule entirely and rely on our local

ownership rules to ensure competition and diversity at the local level.

Under the local radio ownership rules in effect at that time, this

would have permitted entities to own one AM, one FM, and one television

station in small markets. In large markets, one entity would have been

able to own up to 2 AMs, 2 FMs, and 1 television station. If, on the

other hand, radio and television did compete in some or all of the same

local markets, then we proposed to modify the one-to-a-market rule to

allow radio-television combinations (AM-TV, FM-TV, or AM-FM-TV) in

those markets that have a sufficient number of remaining alternative

suppliers/outlets as to ensure sufficient diversity and competition.

44. Commenting parties responded with a variety of positions

ranging from recommending repeal of the rule, to relaxation of the

rule, to retention of the rule. Since those comments were received,

Congress passed the 1996 Act. The 1996 Act affects our radio-television

cross-ownership rule in at least two ways. First, Section 202(d) of

that Act directs the Commission to extend our radio-television cross-

ownership waiver policy to the Top 50 rather than the top 25 television

markets ``* * * consistent with the public interest, convenience and

necessity.'' Second, the 1996 Act significantly liberalized the local

radio ownership rules. Prior to the 1996 Act, the largest number of

radio stations one firm could own in any market was four--two AM and

two FM stations. As modified by the 1996 Act, however, our rules now

allow one party to own up to 8 commercial radio stations in radio

markets with 45 or more commercial radio stations. One party can own up

to 7 commercial radio stations in radio markets with 30-44 commercial

radio stations and as many as 6 commercial radio stations in radio

markets with 15-29 commercial radio stations. For radio markets with 14

or fewer commercial radio stations, one party can own up to 5

commercial radio stations (provided that no party may own, operate or

control more than 50% of the stations in the market).

45. We consider the recent statutory changes to the local radio

ownership rules to be significant enough to warrant further comment on

our radio-television cross-ownership rule proposals outlined in the TV

Ownership Further NPRM. First, can the rule be eliminated based on a

finding that radio and television stations are not substitutes? Second,

even if we eventually consider television and radio stations

substitutes, can the rule be eliminated because the respective radio

and television ownership rules alone can be relied upon to ensure

sufficient diversity and competition in the local market?

46. We also seek to update the record on options for modifying, but

not eliminating, the radio-television cross ownership rule.

Accordingly, we invite comment on whether any easing of the cross-

ownership rule should take the form of modifying the rule itself or

modifying our presumptive waiver policy.

47. Consistent with Section 202(d) of the 1996 Act, we propose, at

a minimum, to extend the Top 25 market/30 voice waiver policy to the

Top 50 markets. The 30 independently owned

[[Page 66984]]

voices test has proven effective in safeguarding our diversity and

competition objectives in the Top 25 markets. Our experience in

processing waiver requests beyond these markets further indicates that

application of the 30 independently owned voices test to the Top 50

markets should also be sufficient to safeguard diversity and

competition in markets 26-50. We consequently tentatively conclude that

extending this test to the Top 50 markets would be consistent with the

public interest, convenience and necessity. Thus, an applicant would be

presumptively entitled to a waiver to obtain one AM, one FM, and one

television station in a Top 50 market as long as 30 independently owned

voices remained after the merger. The TV Ownership Further NPRM made a

similar proposal and most parties were in apparent agreement with at

least taking this step. We regard this as a minor change in our rules

because the independently owned 30 voice requirement would remain the

primary restraint on radio-television mergers.

48. We also invite comment, however, on the following four

options--most of which were discussed in the previous NPRM--to change

the rule beyond that contemplated by the 1996 Act. First, should we

extend the presumptive waiver policy to any television market that

satisfies the minimum independent voice test? Second, should we extend

the presumptive waiver policy to entities that seek to own more than

one FM and/or AM radio station? Third, should we reduce the number of

required independently owned voices that must remain after a

transaction? And fourth, should our ``five factors'' test be changed or

refined to be more effective in protecting competition and diversity?

To assist our consideration of these alternatives, we seek comment on

the effects of waivers we have granted in the past on competition in

local markets and on viewpoint and program diversity. We request that

commenters provide as specific data as possible in describing their

conclusions.

49. To the extent the Commission finds that it is necessary to

consider market share information in reviewing matters of common

ownership, we also ask for comment on how to establish the appropriate

definition of the relevant advertising market for our consideration.

For example, we seek comment on whether we should view the relevant

market as focusing on advertising in radio and television.

Alternatively, is the relevant market in this context more

appropriately defined as local advertising media for radio, television,

newspaper, cable, and others, or should certain media segments be

excluded? In this regard, we also seek comment on the level of data on

market shares that firms should be required to provide in order to

demonstrate that common ownership would meet market share criteria. In

particular, should they provide market share of radio and television

local revenue independently, as well as the combined share of all

advertising?

50. We seek comment on the above options as well as other possible

means of revising the radio-television cross ownership rule,

particularly in light of the changes resulting from the 1996 Act. We

seek to safeguard our competition and diversity goals while at the same

time allowing parties to take advantage of the efficiencies that may

result from permitting cross ownership of radio and television stations

in the same market. As to the latter, we urge parties to provide more

detailed evidence of these efficiencies. Can the same level of

efficiencies be achieved in the cross-ownership situation as when the

common ownership involves stations within the same service? Do these

efficiencies diminish as the number of commonly owned stations

increases?

51. We note that our current radio-television cross-ownership rule

will remain in place pending the resolution of this proceeding. Waiver

requests submitted in the interim will be processed pursuant to our

current criteria for evaluating such requests. The Chief of the Mass

Media Bureau will continue to have delegated authority to rule on

uncontested one-to-a-market waiver requests that involve stations in

the Top 100 television markets that are clearly consistent with prior

Commission precedent, i.e., which present no new or novel issues. One-

to-a-market waiver requests not falling in this category will be

referred to the Commission. We expect that waivers falling in this

latter category that are granted by the Commission will be conditioned

on the outcome of this proceeding.

IV. Television Local Marketing Agreements

52. A television local marketing agreement (``LMA'') is a type of

contract in which the licensee leases blocks of its broadcast time to a

broker who then supplies the programming to fill that time and sells

the commercial spot announcements to support the programming.

Currently, the Commission does not attribute television LMAs for local

and national ownership purposes and so these relationships are not

subject to our ownership rules. However, in the radio context, radio

station ownership is attributed to any radio licensee who enters into

an LMA with another radio station in the same market if the agreement

involves the brokering of more than 15% of the station's weekly

broadcast hours.

53. In the previous NPRM, the Commission suggested that guidelines

similar to those governing radio LMAs may be necessary with regard to

television LMAs. We also determined that such agreements, subject to

some general Commission guidelines, can provide competitive and

diversity benefits to both the brokering parties and to the public. We

tentatively proposed to treat LMAs involving television stations in the

same basic manner as we did for radio stations. That is, time brokerage

of another television station in the same market for more than 15% of

the brokered station's weekly broadcast hours would result in counting

the brokered station toward the brokering licensee's national and local

ownership limits. Further, television LMAs would be required to be

filed with the Commission in addition to the existing requirement that

they be kept at the stations involved in an LMA. Finally, we indicated

that our television LMA guidelines would allow for ``grandfathering''

television LMAs entered into before the adoption date of the TV

Ownership Further NPRM, subject to renewability and transferability

guidelines similar to those governing radio LMAs as described more

fully below in paragraphs 90 and 91.

54. These proposed guidelines primarily concern the circumstances

under which a television LMA should be attributed to the brokering

entity for purposes of the broadcast ownership rules. We will

consequently incorporate the issue of whether to adopt these

guidelines, or some variation of them, into our companion proceeding

regarding our broadcast attribution rules. In our companion Attribution

Further NPRM, we tentatively conclude that we should treat time

brokerage of another television station in the same market for more

than 15 percent of the brokered station's weekly broadcast hours as

being attributable, and therefore as counting toward the brokered

licensee's multiple ownership limits.

55. We will, however, decide in this proceeding how to treat

existing television LMAs under any guidelines that are adopted that

would attribute television LMAs to the brokering station. These

television LMA grandfathering and transition issues will be especially

significant issues if we do

[[Page 66985]]

not modify our television duopoly rule, because such an attribution

provision would preclude television LMAs in any market where the time

broker owns or has an attributable interest in another television

station.

56. In this regard, Section 202(g) of the 1996 Act states that

``[n]othing in this section shall be construed to prohibit the

origination, continuation, or renewal of any television local marketing

agreement that is in compliance with the regulations of the

Commission.'' We interpret this provision as clearly stating no more

than that Section 202 of the 1996 Act shall not be construed to

prohibit any television LMA that is in compliance with the Commission's

rules. We do not regard Section 202(g) as limiting our ability to

promulgate attribution rules under Title I and Title III affecting the

status of television LMAs. As a result, we do not see Section 202(g) of

the 1996 Act as posing a legal restraint on our questions in the TV

Ownership Further NPRM as to (1) whether television LMAs in which a

broker obtains the ability to program 15% or more of a broadcast

television station's weekly broadcast output should be deemed an

attributable interest (which will be decided in the attribution

proceeding); and (2) whether grandfathering existing television LMAs

from any applicable ownership rules that would follow from that

attribution decision is appropriate.

57. We recognize, however, that the language in the Conference

Report to the 1996 Act appears to interpret Section 202(g) of the 1996

Act in a different manner with regard to television LMAs that predate

February 8, 1996, the date of enactment of this legislation. The

Conference Report states--``[Section 202(g)] grandfathers LMAs

currently in existence upon enactment of this legislation and allows

LMAs in the future, consistent with the Commission's rules. The

conferees note the positive contributions of television LMAs and this

subsection assures that this legislation does not deprive the public of

the benefits of existing LMAs that were otherwise in compliance with

Commission regulations on the date of enactment.'' The Conference

Report suggests that the conferees intended to ``grandfather'' existing

television LMAs. Although we do not interpret the statute as requiring

that outcome, we believe that existing television LMAs entered into on

reliance of the Commission's current policy should not be disrupted

during the remainder of the current contract term. Indeed, we had a

similar concern at the time of the TV Ownership Further NPRM and so

asked a series of questions as to whether television LMAs entered into

before the adoption date of the TV Ownership Further NPRM should be

grandfathered with respect to ownership regulations.

58. We wish to provide an additional opportunity for comment on

these grandfathering and transition issues. In particular, in order to

devise a fair and efficient method to bring licensees into compliance

with our ownership rules, in the event television LMAs are

attributable, we request specific comments concerning the number of

television LMAs that are in effect on the date of the adoption of this

NPRM, the market that each LMA covers, the length of the contractual

relationship, and any other data concerning television LMA

relationships that would have a bearing on bringing parties to an LMA

into compliance with our ownership rules. This data will allow us to

assess the need for grandfathering existing LMAs in the event they are

deemed attributable, and the form this grandfathering should take. We

wish to minimize undue and inequitable disruption to existing

contractual relationships, and consequently seek comment on allowing

television stations to come into compliance with our ownership rules

within a reasonable period of time.

59. We note that such a transition would not involve grandfathering

permanent ownership arrangements that would violate our rules given

that LMAs typically involve, by their nature, more temporary

relationships that have set contractual terms. We thus are inclined to

institute a grandfathering policy to provide that in the event

television LMAs become attributable pursuant to the broadcast

attribution proceeding, television LMAs entered into prior to a

specific date, and that are otherwise in compliance with applicable

rules and policies, would be permitted to continue in force without

disruption until the original term in the LMA expires. However, if a

grandfathered television LMA results in violation of any Commission

ownership rule, a party would be required to seek a waiver from the

Commission prior to transferring the station or renewing the

grandfathered television LMA. By specifying this date at this time, we

provide notice that television LMAs entered into after the

grandfathering date will not be grandfathered if television LMAs are

ultimately found to be attributable. Additionally, we hope to provide

certainty to television licensees who wish to make business decisions

concerning television LMAs until the attribution issue is resolved. We

consequently believe this grandfathering approach would be appropriate.

We reserve the right, however, to invalidate an otherwise grandfathered

LMA in circumstances that raise particular competition and diversity

concerns, such as those that might be presented in very small markets.

60. With respect to specifying a particular grandfathering date in

the event we determine television LMAs should be attributable under our

local ownership rules, we are inclined to grandfather all television

LMAs entered into before the adoption date of this NPRM for purposes of

compliance with our ownership rules. Thus, such television LMAs will

not be disturbed during the pendency of the original term of the LMA in

the event the cognizability of the LMA would result in violation of an

ownership rule. However, television LMAs entered into on or after the

adoption date of this NPRM would be entered into at the risk of the

contracting parties. Consequently, if these latter television LMAs

result in violation of any Commission ownership rule, they would not be

grandfathered and would be accorded only a brief period in which to

terminate.

61. We generally propose to limit the transferability and

renewability of grandfathered television LMAs as we did with respect to

radio LMAs. In transfer situations wherein the television LMA was

entered into before the grandfather date, we generally propose to

permit the new station owner to retain the LMA for the duration of the

initial term of the television LMA even if it would otherwise violate

our local ownership rules, under our new attribution criteria for

television LMAs. We invite comment, however, as to whether there should

be some absolute limit, such as three years, on such grandfathering. In

transfer situations wherein the television LMA was entered into on or

after the grandfather date, we propose to allow the new station owner a

minimum amount of time to terminate the contractual relationship. In

the television LMA renewal context, we propose to permit renewal or

extension of television LMAs only if the extension or renewal took

place before the relevant grandfathering date. We seek comments on

these proposals.

V. Administrative Matters

62. Pursuant to applicable procedures set forth in Sections 1.415

and 1.419 of the Commission's Rules, 47 CFR Secs. 1.415 and 1.419,

interested parties may file comments on or before February 7, 1997 and

reply comments on or before March 7, 1997. To file formally in this

proceeding, you must file an original plus four copies of all comments,

reply comments, and

[[Page 66986]]

supporting comments. If you want each Commissioner to receive a copy of

your comments, you must file an original plus nine copies. If you want

to file identical documents in more than one docketed rulemaking

proceeding, you must file two additional copies of any such document

for each additional docket. You should send comments and reply comments

to Office of the Secretary, Federal Communications Commission,

Washington, D.C. 20554. Comments and reply comments will be available

for public inspection during regular business hours in the FCC

Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C.

20554.

63. This is a non-restricted notice and comment rulemaking

proceeding. Ex parte presentations are permitted, except during the

Sunshine Agenda period, provided they are disclosed as provided in the

Commission Rules. See generally 47 CFR Secs. 1.1202, 1.1203, and

1.1206(a).

64. Additional Information: For additional information on this

proceeding, please contact Alan Baughcum (202) 418-2170 or Kim Matthews

(202) 418-2130 of the Policy and Rules Division, Mass Media Bureau.

VI. Initial Paperwork Reduction Act of 1995 Analysis

65. The rules proposed in this Second Further Notice of Proposed

Rulemaking have been analyzed with respect to the Paperwork Reduction

Act of 1995 and contain no changes from our earlier proposals in this

rule-making proceeding related to new or modified form, information

collection and/or record keeping, labeling, disclosure or record

retention requirements. These proposed rules would not increase or

decrease burden hours imposed on the public.

VII. Initial Regulatory Flexibility Analysis

66. With respect to this Second Further NPRM, an Initial Regulatory

Flexibility Analysis (IRFA) is contained below. As required by Section

603 of the Regulatory Flexibility Act, the Commission has prepared an

IRFA of the expected impact on small entities of the proposals

suggested in this document. Written public comments are requested on

the IRFA. In order to fulfill the mandate of the Contract with America

Advancement Act of 1996 regarding the Final Regulatory Flexibility

Analysis, we ask a number of questions in our IRFA regarding the

prevalence of small businesses in the radio and television broadcasting

industries. Comments on the IRFA must be filed in accordance with the

same filing deadlines as comments on the Second Further NPRM, but they

must have a separate and distinct heading designating them as responses

to the IRFA. The Secretary shall send a copy of this Second Further

NPRM, including the IRFA, to the Chief Counsel for Advocacy of the

Small Business Administration in accordance with paragraph 603(a) of

the Regulatory Flexibility Act.

Initial Regulatory Flexibility Analysis Regulatory Flexibility Act

As required by Section 603 of the Regulatory Flexibility Act, 5 U.S.C.

Sec. 603, the Commission is incorporating an Initial Regulatory

Flexibility Analysis (IRFA) of the expected impact on small entities of

the policies and proposals in this Second Further NPRM. Written public

comments concerning the effect of the proposals in the Second Further

NPRM, including the IRFA, on small businesses are requested. Comments

must be identified as responses to the IRFA and must be filed by the

deadlines for comments on the Second Further NPRM provided in Paragraph

94. The Secretary shall send a copy of this Second Further NPRM,

including the IRFA, to the Chief Counsel for Advocacy of the Small

Business Administration in accordance with paragraph 603(a) of the

Regulatory Flexibility Act. Reason and Objectives for Second Further

NPRM: After the issuance of the Television Ownership Further NPRM in

this docket, the Telecommunications Act of 1996 (``1996 Act'') was

signed into law. The Second Further NPRM seeks to update the record in

this proceeding on the effect of the 1996 Act and to review other

aspects of our local ownership rules which were also the subject of the

Television Ownership Further NPRM.

First, this Second Further NPRM proposes to modify the geographic

scope of the duopoly rule to eliminate the Grade B contour overlap

standard and replace it with a DMA/Grade A contour standard. Second,

this NPRM proposes to modify the radio-television cross ownership rule

to conform to Section 202 of the 1996 Act. Accordingly, we propose to

extend our 30 voices waiver policy to the Top 50 markets. We also seek

comment on a number of other options for revising the radio-television

cross-ownership rule and the waiver policy for this rule. Finally, this

NPRM proposes to institute a grandfathering policy in the event

television LMAs become attributable pursuant to the accompanying

broadcast attribution proceeding.

Legal Basis: Authority for the actions proposed in this Second

Further NPRM may be found in Sections 4(i), 303(r), and 307(a) of the

Communications Act of 1934, as amended, 47 U.S.C. Secs. 154, 303(r),

and 307(a) and Sections 202(c)(2), 202(d), 202(g), and 257 of the

Telecommunications Act of 1996.

Description and Estimate of the Number of Small Entities to Which

the Proposed Rule Will Apply: The proposed rules and policies will

concern full power television broadcasting licensees, radio

broadcasting licensees and potential licensees of either service. The

Small Business Administration (SBA) defines a television broadcasting

station that has no more than $10.5 million in annual receipts as a

small business. Television broadcasting stations consist of

establishments primarily engaged in broadcasting visual programs by

television to the public, except cable and other pay television

services. Included in this industry are commercial, religious,

educational, and other television stations. Also included are

establishments primarily engaged in television broadcasting and which

produce taped television program materials. Separate establishments

primarily engaged in producing taped television program materials are

classified in Services, Industry 7812. There were 1,509 television

stations operating in the nation in 1992. That number has remained

fairly constant as indicated by the approximately 1,550 operating

television broadcasting stations in the nation at the end of August

1996. For 1992 the number of television stations that produced less

than $10.0 million in revenue was 1,155 establishments.

Additionally, the SBA defines a radio broadcasting station that has

no more than $5 million in annual receipts as a small business. A radio

broadcasting station is an establishment primarily engaged in

broadcasting aural programs by radio to the public. Included in this

industry are commercial, religious, educational, and other radio

stations. Radio broadcasting stations which primarily are engaged in

radio broadcasting and which produce radio program materials are

similarly included. However, radio stations which are separate

establishments and are primarily engaged in producing radio program

material are classified in Services, Industry 7922. The 1992 Census

indicates that 96% (5,861 of 6,127) radio station establishments

produced less than $5 million in revenue in 1992. Official Commission

records indicate that 11,334 individual radio stations were operating

in 1992. For 1996, official Commission records indicate that 12,088

radio stations were operating. Thus, the proposed rules will affect

approximately 1,550 television

[[Page 66987]]

stations, approximately 1,194 of those stations are considered small

businesses. Additionally, the proposed rules will affect 12,088 radio

stations, approximately 11,605 are small businesses. These estimates

may overstate the number of small entities since the revenue figures on

which they are based do not include or aggregate revenues from non-

television or non-radio affiliated companies. We recognize that the

proposed rules may also impact minority and women owned stations, some

of which may be small entities. In 1995, minorities owned and

controlled 37 (3.0%) of 1,221 commercial television stations and 293

(2.9%) of the commercial radio stations in the United States. According

to the U.S. Bureau of the Census, in 1987 women owned and controlled 27

(1.9%) of 1,342 commercial and non-commercial television stations and

394 (3.8%) of 10,244 commercial and non-commercial radio stations in

the United States. We recognize that the numbers of minority and women

broadcast owners may have changed due to an increase in license

transfers and assignments since the passage of the 1996 Act. We seek

comment on the current numbers of minority and women owned broadcast

properties and the numbers of these that qualify as small entities. To

assist us with our responsibilities under the amended Regulatory

Flexibility Act, we specifically request comments concerning our

assessment of the number of small businesses that will be impacted by

this rulemaking proceeding, the type or form of impact, and the

advantages and disadvantages of the impact. In addition to owners of

operating radio and television stations, any entity who seeks or

desires to obtain a television or radio broadcast license may be

affected by the proposals contained in this item. The number of

entities that may seek to obtain a television or radio broadcast

license is unknown. We invite comment as to such number.

Description of Projected Recording, Recordkeeping, and Other

Compliance Requirements: No new recording, recordkeeping or other

compliance requirements are noted in this Second Further Notice of

Proposed Rulemaking.

Federal Rules That Overlap, Duplicate, or Conflict With the

Proposed Rules: The Commission's broadcast-newspaper, television

broadcast-cable, local radio ownership, and national television

ownership rules also promote the same goals as the rules discussed in

this item, however, they do not overlap, duplicate or conflict with the

proposed rules.

Significant Alternatives to the Proposed Rule Which Minimizes the

Significant Economic Impact on Small Entities and Accomplish the Stated

Objectives: The Commission seeks to minimize the impact of any changes

in the television local ownership rules upon small entities while

preserving competition and diversity in our local markets. Any

significant alternatives consistent with the stated objectives

presented in the comments will be considered. We urge parties to

support their proposals with specific evidence and analysis.

Local Ownership Rule: In this NPRM we tentatively conclude that a

combination of the DMA and Grade A signal contours may be a better

measure of the geographic scope of the duopoly rule. We also seek

comment on whether to grandfather existing common ownership

combinations that conform to our current Grade B test and whether we

should permit television duopolies in certain circumstances by rule or

wavier.

Radio-Television Cross-Ownership Rule: In the Television Ownership

Further Notice of Proposed Rulemaking, we received a large array of

comments recommending a variety of positions ranging from repeal, to

relaxation, to retention of the rule. We request comment and specific

data to support the commenters positions concerning: (1) extending the

presumptive waiver policy to any television market that satisfies the

minimum independent voice test; (2) extending the presumptive waiver

policy to entities that seek to own more than one FM and/or AM radio

station; (3) reducing the number of required independently owned voices

that must remain after a transaction; and (4) whether the ``five

factor'' waiver policy should be changed or refined to be more

effective in protecting competition and diversity.

Television Local Marketing Agreements: To minimize undue and

inequitable disruption to existing contractual relationships, we

propose a grandfathering policy which allows television stations to

come into compliance with our ownership rules within a reasonable

period of time.

We seek comment concerning the significant economic impact of each

of the above mentioned proposals on a substantial number of small

stations.

Issues Raised by the Public Comments in Response to the Initial

Regulatory Flexibility Analysis: There were no comments submitted

specifically in response to the IRFA that was included in the

Television Ownership Further Notice of Proposed Rulemaking. We have,

however, taken into account all issues raised by the public in response

to the proposals raised in this proceeding. We received conflicting

comments concerning the impact of joint ownership on broadcast

stations. Several commenters advocated the modification or elimination

of the local ownership rules in order to permit station owners to take

advantage of the economies of scale that will result from joint

ownership. On the other side, several commenters argued that the

ability of station owners to take advantage of the economies of scale

resulting from joint ownership will drive up the price of stations

which will make it more difficult for new entrants, including

minorities and women, to finance the purchase of stations.

List of Subjects in 47 CFR Part 73

Television broadcasting.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 96-32140 Filed 12-18-96; 8:45 am]

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