FOX Television Stations INC

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

FOX TELEVISION STATIONS INC.

Licensee of Television Station

WNYW. New York. New York

Request for waiver of the

Broadcast-Newspaper Cross-Ownership

Rule.Relating to WNYW and

the New York Post

DECLARATORY RULING

Adopted: June 29, 1993;

Released: July 9, 1993

By the Commission: Chairman Quello issuing a separate

statement: Commissioner Barrett dissenting and issuing a

separate statement: Commissioner Duggan issuing a sepa-

rate statement.

Introduction

Background

Procedural Issues

Ripeness

Table of Contents

Commission jurisdiction

Substantive Issues

Waiver of Broadcast-Newspaper Rule

Fox's waiver re4uest

Comments

Discussion

Misrepresentation

Pleadings

Discussion

EEO Matters

Paragraph

1

3

13

18

20

21

27

37

58

66

76

1 Interested parties were given the opportunity to comment on

Fox's waiver request. with an initial deadline of April 26. 1993.

Public Notice, DA 93--B2. released April 12. 1993. That com-

ment deadline was extended to May 10. 1993 by Order, DA

93-.\58. released April lb, 1993, based upon our request to Fox

for further information and an extension request from Caucus

for Media Diversity. Replies were due on May 17. 1993. Al-

though we did not provide for the submission of further plead-

ings. several parties filed responses to Fox's May 17 reply

comments. In order that we may develop the fullest record

possible. we have elected to consider, over Fox·s objection. all

filings submitted in this proceeding, even those filed after the

5341

INTRODUCTION

1. The Commission has before it for consideration a

re4uest from Fox Television Stations Inc. (Fox) for perma-

nent waiver of the broadcast-newspaper cross-ownership

rule. Section 73.3555(d)(3) of the Commission·s Rules.

which generally proscribes common ownership of a broad-

cast station and a daily newspaper in the same market

n this proceeding, even those filed after the

5341

INTRODUCTION

1. The Commission has before it for consideration a

re4uest from Fox Television Stations Inc. (Fox) for perma-

nent waiver of the broadcast-newspaper cross-ownership

rule. Section 73.3555(d)(3) of the Commission·s Rules.

which generally proscribes common ownership of a broad-

cast station and a daily newspaper in the same market. Fox

seeks a waiver so that it may continue to hold the license

for television station WNYW. Channel 5. New York. New

York. following the ac4uisition of the New York Post by

NYP Acquisition Corp. (NYP). Both Fox and NYP. subsid-

iaries of The News Corporation Limited (News Corp.). are

controlled by K. Rupert Murdoch. Comments. reply com-

ments. and responses. as well as dozens of letters, were

submitted both in opposition to. and in support of. Fox's

request. 1

2. Of the ten parties submitting formal comments or

reply comments. seven. Caucus for Media Diversity (Cau-

cus).

Champion

Holding

Company

(Champion).

Fleischman & Walsh (Fleischman). Drs. Lenora Fulani.

Rafael Mendez. Fred Newman and the National Alliance

(Fulani). Metropolitan Council of National Association for

the Advancement of Colored People Branches and the New

'fork Ams1erdam Sews (NAACP). National Association of

Black Owned Broadcasters (NAUOB). National Black Me-

dia Coalition and the Committee to Lliminate Media Of-

fensive to African People ( NBMC). oppose Commission

grant of waiver to Fox. and two. the Official Committee of

Unsecured Creditors of the Ne1r York Post (Creditors) and

WLIG-TV. Inc. (WLIG). support such a grant. Media Ac-

cess Project and Washington Area Citizens Coalition Inter-

ested in Viewers· Constitutional Rights (MAP). while

taking no position on Fox\ re4uest. urge that in the event

a waiver is granted. the Commission narrowly tailor that

decision.

BACKGROUND

3. Upon Fox\ acquisition in LQ86 of WNYW. New York.

New York. Murdoch

Post (Creditors) and

WLIG-TV. Inc. (WLIG). support such a grant. Media Ac-

cess Project and Washington Area Citizens Coalition Inter-

ested in Viewers· Constitutional Rights (MAP). while

taking no position on Fox\ re4uest. urge that in the event

a waiver is granted. the Commission narrowly tailor that

decision.

BACKGROUND

3. Upon Fox\ acquisition in LQ86 of WNYW. New York.

New York. Murdoch. as principal of Fox.2 was granted a

two-year period in which to divest his direct or indirect

interests in the Sew York Pos1, which he had purchased in

1976. Jfetromedia Radio & Telei·ision, Inc., 102 F.C.C. 2d

1334 ( 1985).3 He did so in March L 988. assigning owner-

ship of the newspaper to real estate developer Peter S.

Kalikow. the current owner. Following acquisition of the

newspaper. Kalikow states. he was able to sustain the Post's

operations through his real estate holdings. but upon de-

claring personal bankruptcy in August 1991. "it became

evident" that his real estate company could no longer

function as the newspaper\ source of capital.

May 17 reply date.

2

At the time of this acqu1s1t1on Fox was known as News

America Television Incorporated and WNYW as WNEW-TV.

.\ This transaction, involving the assignment of WNYW to Fox.

also included. among others. WFLD-TV. a Chicago. Illinois

television station. Murdoch's then-ownership of the Chicago

Sun-Times created a second broadcast-new~paper cross-owner-

ship violation, which was also waived for a two-year period .

.'vletromedia Radio & Television, Inc.. 102 F.C.C. 2d at 1353.

Murdoch disposed of the Sun-Times shortly after obtaining the

temporary waiver. See Health and Jfcdicinc Policy Group v.

FCC. 807 F.2d 1038, W.\O n.3 (D.C. Cir. 1986).

. Murdoch's then-ownership of the Chicago

Sun-Times created a second broadcast-new~paper cross-owner-

ship violation, which was also waived for a two-year period .

.'vletromedia Radio & Television, Inc.. 102 F.C.C. 2d at 1353.

Murdoch disposed of the Sun-Times shortly after obtaining the

temporary waiver. See Health and Jfcdicinc Policy Group v.

FCC. 807 F.2d 1038, W.\O n.3 (D.C. Cir. 1986).

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

4. It was at this time that Murdoch·s interest in the Pos1

was apparently rekindled. but as a creditor rather than as a

potential buyer. Based upon the terms of the 1988 pur-

chase and sale agreement with Kalikow. according to News

Corp. executive vice president and group general counsel

Arthur M. Siskind. Kalikow and the Pos(s parent com-

pany. The New York Post Co .. Inc .. owned by Kalikow.

agreed to perform certain obligations for which News

America Publishing Incorpoqlted (News America). the

publishing unit of News Corp .. remained contingently lia-

ble. In addition. News America was granted a right of first

refusal to purchase the newspaper in the event Kalikow

proposed to dispose of it. As a wntingent creditor. there-

fore. News America became. and still remains. a member

of the creditors· committee in Kalikow's personal bank-

ruptcy, attending committee meetings and bankruptcy

hearings in Kalikow·s. and later the Pos(s. bankruptcy

proceedings.

5. In February 1992. Kalikow notes. he entered into

negotiations with Hollinger. Inc .. one of the world"s lead-

ing newspaper publishers. and its principal Conrad Black.

represented by broker Veronis. Suhler & Associates. Inc.

(VS&A). an investment banking firm serving the media

and communications industry. Hollinger sought a joint

venture arrangement with Kalikow in order co ac4uire the

New York Daily .Vews and to combine its operations with

those of the Post. Several meetings with Black and VS&A

ensued. but by the first part of April 1992 "we realized."

Kalikow states

y broker Veronis. Suhler & Associates. Inc.

(VS&A). an investment banking firm serving the media

and communications industry. Hollinger sought a joint

venture arrangement with Kalikow in order co ac4uire the

New York Daily .Vews and to combine its operations with

those of the Post. Several meetings with Black and VS&A

ensued. but by the first part of April 1992 "we realized."

Kalikow states. "that there was no way that we could do a

deal with Mr. Black .... " Discussions continued for a

short period thereafter.

6. By this time. however. according to Kalikow. prelimi-

nary conversations that had commenced between Kalikow

and Apollo Investment Fund as early as January 1992 had

intensified. Represented by Leon Black. John Hannan and

Jerry Finkelstein. Apollo. notes Kalikow. met with him

often to work out the details of a proposed two-part trans-

action: Apollo would enter into a joint venture with

Kalikow as to his real estate holdings and into a separate

joint venture withx Bankers Trust Company and Kalikow

as to the Post. These discussions. which apparently widened

to include the creditors· committee in Kalikow"s bank-

ruptcy proceeding. resulted in a series of "term sheets"

which described the proposed transactions. Nevertheless.

Kalikow states, Apollo and his creditors· committee "could

not come together" on the first part of the transaction. the

real estate holdings. but negotiations were maintained with

regard to the Post. In the meantime. Kalikow obtained a $3

million line of credit from Bankers Trust Company. en-

abling the Post to operate through 1992.

7. During July and August 1992. the Apollo-Bankers

Trust negotiations with Kalikow progressed while Kalikow

sought a separate deal with outside investors for his real

estate assets. In October ! 992. Kalikow notes, he was told

by Apollo and Bankers Trust that talks were advancing

well and he no longer needed to attend meetings. The

transaction, he states he was told

to operate through 1992.

7. During July and August 1992. the Apollo-Bankers

Trust negotiations with Kalikow progressed while Kalikow

sought a separate deal with outside investors for his real

estate assets. In October ! 992. Kalikow notes, he was told

by Apollo and Bankers Trust that talks were advancing

well and he no longer needed to attend meetings. The

transaction, he states he was told. was to be concluded in a

"short time." Despite "rumors" to the contrary. Kalikow

contends. he was assured in December 1992 by both Apol-

lo and Bankers Trust that a deal was in the offing. How-

ever, in early January 1993. the Apollo-Bankers Trust deal

"had broken down," Kalikow states. and the Bankers Trust

working capital loan was clearly inadequate to cover the

Post's operating costs. Although Bankers Trust "grudging-

ly" agreed to extend the term of the loan. according to

5342

Kalikow. it did so on two conditions: that operating losses

at the Post be eliminated and that a substitute source of

funds for the newspaper be found.

8. Efforts to comply with the first condition. Kalikow

states. resulted in increasing the Post's newsstand price

from 40 to 50 cents and securing. with cooperation from

the trade unions. a 20 percent reduction in labor costs. As

for the second condition. Kalikow indicates. he approached

"any possible investor who had previously expressed any

type of interest in either an outright purchase or a joint

venture with the .Vew York Post. " On January 19. 1993.

Kalikow met with representatives of Marvin Davis of Davis

Companies. Several other meetings occurred. including a

walk through the Post plant. but. Kalikow maintains. al-

though he made several follow-up telephone calls, he never

heard from Davis again. And on January 20. Kalikow met

with Dusty Rhodes of National Review, which also resulted

in no further action.

9. In need of a continuing line of credit during the

extended search for investors

vis

Companies. Several other meetings occurred. including a

walk through the Post plant. but. Kalikow maintains. al-

though he made several follow-up telephone calls, he never

heard from Davis again. And on January 20. Kalikow met

with Dusty Rhodes of National Review, which also resulted

in no further action.

9. In need of a continuing line of credit during the

extended search for investors. Kalikow entered around-

the-clock negotiations with Bankers Trust over the week-

end of January 23 and 24. 1993. No agreement was

reached. But while he was at the Pos(s offices on Sunday.

January 2-L to inform the staff that publication of the

newspaper would be suspended. Kalikow states. he received

a telephone call from Steven Hoffenberg. principal of

Towers Financial Corporation. Hoffenberg. who. Kalikow

notes. apparently had become interested in the Post

through the efforts of Governor Mario Cuomo "s staff in

locating a purchaser. agreed to assume the role of lender

while he arranged to purchase the Post and its real prop-

erty. That entailed. among other things. obtaining consent

of the bankruptcy court presiding over Kalikow"s personal

bankruptcy. However. a lawsuit stemming from a Securities

and Exchange Commission investigation of Hoffenberg re-

sulted in the freezing of Hoffenberg·s personal assets and

those of Towers Financial. effectively precluding him from

purchasing the Post. Undaunted. Hoffenberg. according to

Kalikow. sought to enlist other investors in the purchase of

the Post, eventually reaching an agreement in late February

with real estate developer Abraham Hirschfeld. After a

falling out with Hoffenberg in early March, Kalikow states.

Hirschfeld emerged as the sole potential purchaser of the

newspaper.

10. Because the contracts with both Hoffenberg and

Hirschfeld contained non-solicitation provisions

ught to enlist other investors in the purchase of

the Post, eventually reaching an agreement in late February

with real estate developer Abraham Hirschfeld. After a

falling out with Hoffenberg in early March, Kalikow states.

Hirschfeld emerged as the sole potential purchaser of the

newspaper.

10. Because the contracts with both Hoffenberg and

Hirschfeld contained non-solicitation provisions. Kalikow

terminated his search for other offers until the court in

Kalikow"s personal bankruptcy proceeding ordered the

recommencement of solicitation as a condition of its ap-

proval of the Hirschfeld contract. Several potential pur-

chasers emerged. according to Kalikow. including Lester

Ewell. who dispatched a signed contract to Kalikow. but

failed to demonstrate his good faith to the court. Kalikow

also met with. and provided information to, Ronald Lauder

of Estee Lauder. Leon Charney. Mortimer Zuckerman of

Boston Properties and owner of New York's Daily News,

James Nederlander. Kenneth Lipper of Lipper Company.

Inc .. and Thomas Tisch. all of whom. Kalikow states. "were

looking for assurances of a profitable investment which we

were not able to provide." On March 12. 1993, the court

granted Hirschfeld operational control of the Post, based in

part. according to the Creditors. on his pledge to invest at

least $3 million in the newspaper. Chaos followed. the

Creditors state: Hirschfeld fired the Post's editor-in-chief

and three other editors and columnists. triggering a "re-

volt" against Hirschfeld by the editorial staff.

ot able to provide." On March 12. 1993, the court

granted Hirschfeld operational control of the Post, based in

part. according to the Creditors. on his pledge to invest at

least $3 million in the newspaper. Chaos followed. the

Creditors state: Hirschfeld fired the Post's editor-in-chief

and three other editors and columnists. triggering a "re-

volt" against Hirschfeld by the editorial staff.

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

11. As the editorial situation deteriorated and it became

apparent. Kalikow states. that Hirschfeld also was unable to

complete the purchase. Kalikow. on March 15. 1993.

placed the Pos(s parent company. New York Post Co .. in

bankruptcy. The Pos(s overall conditions were dire. ac-

cording to Patrick Purcell. the newly appointed publisher

who held that post from 1987 until the sale to Kalikow in

1988. Not only was the editorial staff depleted of key

members and morale. Purcell states. but circulation. which

had hovered around 500.000 in early 1988. when Murdoch

disposed of the Post, now stood at 380.636 daily. Newsprint

and ink supplies. notes production director Al Palmer.

became scarce when the vendors of these products. after

three Post checks were returned for insufficient funds.

refused to deal with the newspaper on other than an

advance-payment basis. Advertisers, Purcell notes. became

reluctant to place advertisements in the Post following the

issuance of a 99-count criminal indictment against the

newspaper and some of its personnel for falsifying circula-

tion records and defrauding advertisers. They either aban-

doned the paper or enjoyed the free rebate program

imposed by the district attorney during the most lucrative

advertising months. from August to December 1992. While

the newspaper's revenues declined. Purcell adds. so did the

number of payments made by the Post: little beyond net

paychecks had been paid in the two weeks prior to March

29. Employee pension. welfare and 401K deductions went

unpaid. And

paper or enjoyed the free rebate program

imposed by the district attorney during the most lucrative

advertising months. from August to December 1992. While

the newspaper's revenues declined. Purcell adds. so did the

number of payments made by the Post: little beyond net

paychecks had been paid in the two weeks prior to March

29. Employee pension. welfare and 401K deductions went

unpaid. And. according to Purcell. the Pos(s failure to pay

federal withholding taxes resulted in a liability to the Inter-

nal Revenue Service of approximately $3 million. which

remained outstanding from the fourth quarter of 1992.

Moreover. providers of such basic services as cleaning.

securitv. cafeteria and maintenance had either refused to

contra~! with the Post or threatened to terminate those

services.

12. As a result. prior to the week of March 25. 1993.

News Corp.\ general counsel Siskind states. Murdoch re-

ceived numerous entreaties to purchase the Post: from New

York Governor Mario Cuomo. one of New York·s United

States senators. various community leaders. as well as from

Post suppliers. employees. and the employees· labor union

representatives. Aware of the substantial losses incurred by

the Post, the amount of working capital needed to sustain

its operations. and the improvements in the economies and

operations required to revitalize the paper. Murdoch. ac-

cording to Siskind. agreed to assume management of the

Post conditioned upon: his obtaining a permanent waiver

of the Commission·s cross-ownership rule and his making

an offer to purchase the Post's assets. which included his

negotiating new arrangements with the paper·s unions. On

March 29. 1993. NYP. a subsidiary of News America ex-

ecuted with the New York Post Co. a management agree-

ment approved

the

next day

by

the

United States

Bankruptcy Court for the Southern District of New York.

In re The Sew York Post Co., Inc. (Bankruptcy Order), No.

In that case

to purchase the Post's assets. which included his

negotiating new arrangements with the paper·s unions. On

March 29. 1993. NYP. a subsidiary of News America ex-

ecuted with the New York Post Co. a management agree-

ment approved

the

next day

by

the

United States

Bankruptcy Court for the Southern District of New York.

In re The Sew York Post Co., Inc. (Bankruptcy Order), No.

In that case. the court rejected the contention that the

Commission's issuance of a declaratory order was premature

and unwarranted because state agencies were merely threatening

to impose restrictions affecting communications equipment and

had not as yet adopted such provisions. In the case before us.

however. the waiver request is based on more than mere specu-

lation and hypothesis: Fox has represented to the Commission

Murdoch's intentions

to

permanently acquire

the

Post;

Murdoch has assumed control of the newspaper pursuant to a

5343

93-8-41306 (Bankr. S.D. N.Y. March 30. 199.))(interim

order authorizing debtor New York Post Co. to enter into

management agreement with NYP). The agreement pro-

vides for termination of the later of June 1. 1993 or 60

days from March 29. 1993. the date the agreement was

executed. NYP has the right. "in its sole discretion." ac-

cording; to the agreement. to extend the termination date

for an additional 30 days in the event it has not ohtained a

waiver from the Commission by that date.

PROCEDURAL ISSUES

13. Ripeness. Many of the commenters challenging Fox·s

waiver request assert that the request is not "ripe" for

Commission adjudication because Murdoch has neither ac-

quired the Post nor made a commitment toward that end.

Nor. they note. has the bankruptcy court made a final

determination as to whether a sale to Murdoch would

benefit

the

dehtor

and

its

creditors.

Further.

the

commenters note. and Fox concedes. Murdoch may not

even prevail before the court. Murdoch. in essence.

NAACP argues. is asking for an "advance declaratory rul-

ing." and although

red the Post nor made a commitment toward that end.

Nor. they note. has the bankruptcy court made a final

determination as to whether a sale to Murdoch would

benefit

the

dehtor

and

its

creditors.

Further.

the

commenters note. and Fox concedes. Murdoch may not

even prevail before the court. Murdoch. in essence.

NAACP argues. is asking for an "advance declaratory rul-

ing." and although. it acknowledges. an agency may issue a

declaratory ruling. administrative practice "prefers" case-

or-controversy adjudication. NAACP suggests. therefore.

that we hold this matter in abeyance until bidding for the

Post is completed. Otherwise. it adds. Commission grant of

the cross-ownership waiver would confer its "imprimatur."

thereby giving Murdoch the "inside track" to becoming the

ultimate huyer.

14. We recognize that the Fox waiver request hefore us

does. in fact. lack a definitive purchase agreement or court-

approved long-term plan. As NAACP notes. a request for

declaratory ruling is not restricted. as are proceedings of

federal courts. to "cases and controversies" within the

meaning of Article III of the Constitution. Sortlz Carolina

Utilities Commission l'. FCC, 537 F.2d 787. 790 n.2 (4th

Cir.). cert. denied, 429 U.S. 1027 ( 1976).: ~Indeed. Sections

4(i) and (j) of the Communications Act. 47 C.F.R. § 154.

bestow upon the Commission the broad power ro issue

orders consistent with the Act "as may be necessary in the

execution of its functions." And Section 554( e) of the

Administrative Procedure Act. 5 U.S.C. §554(e). provides

that the Commission "may issue a declaratory order to

terminate a controversy or remove uncertainty." See also

47 C.F.R. §1.2. Although the Commission is not required

to issue a declaratory order "merely hecause a broadcaster

asks for one." it is clearly within the discretion of the

Commission to issue such order on a licensee's proposal.

Yale Broadcasting Company i•. FCC, 4 78 F.2d 594. 602

(D.C. Cir. 1973).

15

y issue a declaratory order to

terminate a controversy or remove uncertainty." See also

47 C.F.R. §1.2. Although the Commission is not required

to issue a declaratory order "merely hecause a broadcaster

asks for one." it is clearly within the discretion of the

Commission to issue such order on a licensee's proposal.

Yale Broadcasting Company i•. FCC, 4 78 F.2d 594. 602

(D.C. Cir. 1973).

15. The unique and severe financial situation of the Post

that apparently confronts the bankruptcy court in the case

before us. as described above. warrants our immediate at-

tention.5 Moreover. we reject Fleischman·s and NAACP"s

court-approved management agreement: and the bankruptcy

court granted NYP shared exclusivity with the debtor-New York

Post Co. to file a plan of reorganization and solicit acceptances

thereto. Bankruptcy Order, supra, at'5.:

5 Although we are free to issue a declaratory ruling even as to

a hypothetical situation. we are persuaded here that Murdoch's

request is not hypothetical. We

refer in this regard to

Murdoch's financial contributions under the interim manage-

ment agreement, totalling $4.224 million in the first six weeks

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

attempts to draw parallels between Fox·s request and an

assignment application. the latter of which requires submis-

sion of a definitive. executed purchase and sale agreement."

The request before us does not involve the acquisition of a

broadcast station. whose transactional structure. unlike that

of a newspaper. must comport with statutory and regula-

tory restrictions. including reversionary. future and alien

ownership interests. as well as unauthorized transfers of

control. Contrary to some commenters· suggestions. the

submission of an executed agreement by parties to a long-

form application provides no guarantees that consumma-

tion will result: our grant of such application is permissive

and nothmandatory. Additionally. as discussed further be-

low

ions. including reversionary. future and alien

ownership interests. as well as unauthorized transfers of

control. Contrary to some commenters· suggestions. the

submission of an executed agreement by parties to a long-

form application provides no guarantees that consumma-

tion will result: our grant of such application is permissive

and nothmandatory. Additionally. as discussed further be-

low. under our public interest mandate. we have an obliga-

tion to consider a variety of factors. including the national

policy underlying other federal laws. such as the bank-

ruptcy laws pertinent to the case before us. See LaRose v.

FCC, 4CJ4 F.2d 1145. 1146 n.2 (D.C. Cir. 1974). We believe

that a decision to act now on Fox·s request would fulfill

that obligation by minimizing any conflict with the

tripartite policy objective of bankruptcy law: equality of

distribution among creditors. a fresh start for debtors. and

the efficient and economical administration of cases. See

Report of the Commission on the Bankruptcy Li11rs of the

United Swtes, H.R. Doc. No. 93-13 7. 93d. Cong .. 1st Sess ..

Pts. I and II. chapter 3 ( 1973)."

16. Under the Bankruptcy Code. the assets of a Chapter

11 entity. such as the Pos(s parent company. may be sold

pursuant to a Section 363( b) sale. 11 U .S.C. §363( b ). or

transferred to a third party under a plan of reorganization.

11 U.S.C. §1101 et seq. Whichever mechanism is employed.

according to the Creditors. Champion. a commenter which

maintains it has pursued acquisition of the Post since

March 15. and other interested parties will be given notice

and the opportunity to present offers because "lslerious

competing bids will help to increase the ultimate recovery

for unsecured creditors."' Commission action today. there-

fore. regardless of the outcome. will remove the "uncer-

tainty" of Murdoch·s eligibility under the Commission\

alone. combined with his broad publishing experience. his past

ownership of the Post

es will be given notice

and the opportunity to present offers because "lslerious

competing bids will help to increase the ultimate recovery

for unsecured creditors."' Commission action today. there-

fore. regardless of the outcome. will remove the "uncer-

tainty" of Murdoch·s eligibility under the Commission\

alone. combined with his broad publishing experience. his past

ownership of the Post. and his existing contractual contingent

liabilities associa\ed with the newspaper. Champion attempts to

diminish the risk assumed hy Murdoch in advancing millions of

dollars to the Post during the interim management agreement.

characterizing the funds as debtor-in-possession financing.

which have superpriority under bankruptcy law. We note. how-

ever. that the March 30 bankruptcy court order states that

Murdoch\ lien and 'ecurity interest on Post assets is expressly

subordinated

to

those

previously granted

to

Hoffenberg.

Hirschfeld and the Internal Revenue Service. Bankruptcv Order.

supra. at 7. Murdoch's financing of the Post in the interim.

therefore. does not appear to be risk-free.

° Caucus and NAACP argue. citing l'nited States \'. Storer

Broadcasting Co .. 351 U.S. 192 ( 1956), New Orleans Channel :!fl.

Inc. v. FCC. 830 F.2d 361 (D.C. Cir. 1987). and Rio Grande

Radio Fc//ow1hip. Inc. v. FCC. -Wb F.2d 664 (D.C. Cir. 1%X).

that because there is no "deal" before us. we have an incomplete

basis for reaching an informed decision. Yet. the common defect

in those cases. regarding, respectively. national ownership lim-

its, additional time with which to construct. and the clear

channel policy. were the applicants' utter failures to set forth

specific reasons. sufficient if true. to justify grant of the re-

quests. In contrast. as discussed below. Fox has provided specific

and detailed evidence that supports our grant of its waiver

request.

-

Fleischman and NAACP contend that Fox's reliance on

Channel 33, Inc .. 114 R.R

al time with which to construct. and the clear

channel policy. were the applicants' utter failures to set forth

specific reasons. sufficient if true. to justify grant of the re-

quests. In contrast. as discussed below. Fox has provided specific

and detailed evidence that supports our grant of its waiver

request.

-

Fleischman and NAACP contend that Fox's reliance on

Channel 33, Inc .. 114 R.R. 2d 1705 ( 1988), for the proposition that

5344

rules and regulations to permanently acquire the Post,

thereby permitting the court. the creditors. the debtor and

any other interested parties to proceed with the disposition

of the newspaper. Accordingly. for the reasons discussed

below. we believe the public interest isbest served by our

consideration of Murdoch's permanent waiver request at

this time. so that the court has before it the full com-

plement of eligible bidders.

17. The Commission takes no position on whether

Murdoch is the newspaper's only viable buyer. as Fox

alleges. Our action is not intended to suggest any Commis-

sion or regulatory preference for Murdoch or in any other

way to influence the bankruptcy court in its disposal of the

Post. However. to exclude Murdoch as a potential pur-

chaser may well ultimately disserve the underlying diver-

sity purposes of the cross-ownership rule and would not

accord appropriate deference to the policies and objectives

of bankruptcy law.

18. Commission Jurisdiction. Fleischman argues that be-

cause Commission jurisdiction is limited to matters relating

to "communication by wire and radio." quoting Section I

of the Act. 4 7 U .S.C. § 151. the preservation and economic

well-being of daily newspapers lies outside its statutory

authority. The Commission·s jurisdiction. Fleischman con-

cedes. does empower the Commission to preclude licensees

from owning collocated daily newspapers. as established in

Jiultiple Ownership - Second Report and Order in Docket

.Vo. 18110 (Second Report and Order), 50 F.C.C. 2d 1046.

on recon

.C. § 151. the preservation and economic

well-being of daily newspapers lies outside its statutory

authority. The Commission·s jurisdiction. Fleischman con-

cedes. does empower the Commission to preclude licensees

from owning collocated daily newspapers. as established in

Jiultiple Ownership - Second Report and Order in Docket

.Vo. 18110 (Second Report and Order), 50 F.C.C. 2d 1046.

on recon. (Second Report and Order Recoil.), 53 F.C.C. 2d

58CJ ( 1975). i1ff'd sub nom. FCC l'. Saiional Citizens Com-

mittee

for

Broadcasting,

436

U.S.

775

(1CJ78).

Yet.

Fleischman contends. although it may he appropriate for

the Commission to consider the financial health of a televi-

sion station when presented with a request for waiver of

the broadcast-newspaper cross-ownership rule. the Com-

mission may not. conversely. consider the financial situ-

ation of a daily newspaper. To do so. Fleischman and

the Commission give weight to bankruptcy court findings. is

misplaced. The applicants seeking waiver of the duopoly rule in

that case were creditors of a bankrupt licensee whose plan of

reorganization had been reviewed and approved by the bank-

ruptcy court. However. the bankruptcy court in the case before

us. Fleischman argues. has yet to reach a determination as to

whether a sale to Murdoch "would serve other federal policies."

We disagree with Fleischman's premise. The instruction to the

Commission in l.aRose v. FCC. 494 F.2d at l 1411 n.2. that we

"constantly be alert to determine whether lourl policies might

conflict with other federal policies and whether such conflict

can be minimized." did not limit such accommodation to only

the final stage of the bankruptcy proceeding. See also Seraphim

Corporation. 4 F.C.C. Red 8819, 8821 ( 1989)(Commission grant

of transfer of contrnl conditioned on bankruptcy court's ap-

proval of plan of reorganization upon which transfer is based).

In the case before us, where it is the newspaper and not the

broadcast stGtion that is in bankruptcy

." did not limit such accommodation to only

the final stage of the bankruptcy proceeding. See also Seraphim

Corporation. 4 F.C.C. Red 8819, 8821 ( 1989)(Commission grant

of transfer of contrnl conditioned on bankruptcy court's ap-

proval of plan of reorganization upon which transfer is based).

In the case before us, where it is the newspaper and not the

broadcast stGtion that is in bankruptcy. we believe we are able

to make the appropriate public interest determinations at this

stage of the court proceedings, without detriment to our own

processes and in furtherance of minimizing potential conflicts

with the federal bankruptcy laws' policy of resolving cases in an

impartial. expert and speedy manner. See Report of the Commis-

1ion on the Bankruptcy Laws of the l"nitcd States. supra.

><

Champion subsequently removed itself from consideration as

a bidder for the Post. after it concluded that its acquisition

proposal was not viable. See Letter from Michael D. Brofman to

Howard Seife (filed with the Commission on June 29, 1993).

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

NAACP assert. would allow the failing newspaper to sur-

vive by siphoning funds from the strong. commonly

owned. collocated television station.

19. In affirming the cross-ownership rules. the Supreme

Court noted that it was not inconsistent with the statutory

scheme for the Commission to conclude that "maximum

benefit to the "public interest" would follow from allocation

of broadcast licenses so as to promote diversification of the

mass media as a whole." FCC l'. NCCB, .f36 U.S. at 798.

While the Commission has no authority to regulate news-

papers per se, it has authority under the statute to limit a

broadcast licensee·s ownership of such media. It follows,

therefore. that if the Commission has authority to restrict a

broadcaster's ownership of a collocated newspaper in the

public interest. it also has authority to waive such a restric-

tion in the public interest. Indeed

.

While the Commission has no authority to regulate news-

papers per se, it has authority under the statute to limit a

broadcast licensee·s ownership of such media. It follows,

therefore. that if the Commission has authority to restrict a

broadcaster's ownership of a collocated newspaper in the

public interest. it also has authority to waive such a restric-

tion in the public interest. Indeed. the Supreme Court

found that the "reasonableness" of the cross-ownership reg-

ulations as a means for achieving diversification was under-

scored by the fact that waivers are available from both the

prospective and the divestiture rules. Id. at 802 n.20. The

court. in Health & Jfedicine Policy Research Group v. FCC,

807 F.2d 1038. 1045 (D.C. Cir 1986). expressly recognized

the Commission's authority to consider. in evaluating a

waiver request. the ""harsh realities· facing newspapers

competing against a dominant paper.

""

WAIVER OF BROADCAST-NEWSPAPER

CROSS-OWNERSHIP RULE

20. Murdoch's control of the Pos/.

111 even absent his

ultimate acquisition of that newspaper. and his concomi-

tant control of Fox. the licensee of WNYW. come within

the ambit of Section 73.3555(d )( 3 ). the television broadcast-

newspaper cross-ownership rule. That rule provides that

"lnlo license for laJ ... TV broadcast station shall be

granted to any party (including all parties under common

control) if such party directly or indirectly owns. operates.

or controls a daily newspaper and the grant of such license

will result in" the Grade A contour of that television

station encompassing the entire community in which such

newspaper is published. However. if a broadcast licensee

acquires a daily newspaper in the same market. the rule

effectively provides for an automatic temporary waiver in

that the licensee must dispose of the broadcast station

within one year or by the time of its next renewal. which-

ever is longer. Second Report and Order, 50 F.C.C. 2d at

1076 n.25. Here

the entire community in which such

newspaper is published. However. if a broadcast licensee

acquires a daily newspaper in the same market. the rule

effectively provides for an automatic temporary waiver in

that the licensee must dispose of the broadcast station

within one year or by the time of its next renewal. which-

ever is longer. Second Report and Order, 50 F.C.C. 2d at

1076 n.25. Here. because the renewal period for WNYW

does not expire until June 1. 1994. Murdoch is operating

under a temporary waiver of the rule. and its management

of. and financing for. the Post, as Fox correctly notes. does

not require Commission approval at this time.

21. Fox's waiver reques1. A permanent waiver of the

broadcast-newspaper cross-ownership rule is sought at this

time. according to Fox. because it is an "essential initial

step" in a long process of wooing advertisers and readers.

" The court further stated: "We believe it was not unreason-

able. and certainly not 'arbitrary" or 'capricious,' for the Com-

mission to deem this affidavit !regarding the inability to obtain

a fair price!. together wiih the FCC\ earlier recognition lin

Crosby :V. Boyd, 57 F.C.C. 2d .fi5 ( 1976)1 of newspaper market

realities. an appropriate showing' of an inability to sell at any-

thing but an artificially depressed price.'" lfcaltlz & Medicine

Policy Research Group v. FCC. 807 F.2d at IO.f5.

5345

who will not return. notes News Corp. general counsel

Siskind. "unless and until" they are assured of the long-

term viability of the Post. And until the Commission acts,

guaranteeing that Murdoch will not have to once again

divest the Post, Fox argues. it will not be possible to

conclude negotiations "in a meaningful manner" with the

labor unions representing the newspaper\ employees.

22. Fox's request rests primarily on two grounds. First. it

argues that no other "viable" purchaser. other than

Murdoch. has demonstrated a willingness to undertake the

financial burden of stabilizing and revitalizing the Post

in

divest the Post, Fox argues. it will not be possible to

conclude negotiations "in a meaningful manner" with the

labor unions representing the newspaper\ employees.

22. Fox's request rests primarily on two grounds. First. it

argues that no other "viable" purchaser. other than

Murdoch. has demonstrated a willingness to undertake the

financial burden of stabilizing and revitalizing the Post.

Murdoch "s commitment to operate the troubled newspaper

during the term of the management plan. Fox notes. will

have amounted to a cash infusion of up to $350.000 per

week. nearly $100.000 more per week than anticipated. for

a total of several million dollars. 11 But beyond serving as

financier, Fox argues. Murdoch brings to the Post the

managerial. technical and editorial skills required to op-

erate in New York City"s highly competitive news environ-

ment. In short. Fox contends. temporary measures "will

not suffice to remedy problems that have been years in the

making." and NYP cannot "undertake the enormous com-

mitment of time and human and financial capital" re-

quired to revitalize the Post without the certainty of a

permanent waiver of the cross-ownership rule.

23. Second. Fox asserts that application of the newspaper

cross-ownership rule to the Post's situation would disserve

the underlying policy of diversity. resulting instead in the

elimination of an important competitive voice and source

of viewpoint. According to Fox. the New York City area of

dominant influence (ADI). comprising 29 counties in New

York. New Jersey and Connecticut. has 20 television sta-

tions. 97 AM and FM radio stations. 62 percent cable

penetration and cable systems providing at least 56 dif-

ferent satellite-delivered program services. 36 daily news-

papers with an average aggregate daily circulation of 4.5

million. and 338 weekly newspapers. Murdoch\ ownership

of the Posl and WNYW. therefore. Fox contends. will

result in no "meaningful" diminution in diversity

vision sta-

tions. 97 AM and FM radio stations. 62 percent cable

penetration and cable systems providing at least 56 dif-

ferent satellite-delivered program services. 36 daily news-

papers with an average aggregate daily circulation of 4.5

million. and 338 weekly newspapers. Murdoch\ ownership

of the Posl and WNYW. therefore. Fox contends. will

result in no "meaningful" diminution in diversity. but will

preserve it by rescuing "an important competitive voice

and source of viewpoint diversity."

2.f. Given New York City"s diversity of voices. Fox as-

serts. joint ownership of the Posl and WNYW will neither

effect an undue concentration of media control nor confer

competitive advantage on Murdoch's media properties. Of

the four daily newspapers in the city of New York. the

.Vew York Post ·s average daily and Saturday circulations

rank last. fox notes. based on Audit Bureau of Circulation

figures. and has declined significantly since the close of the

1991 audit year. For the week ended March 20. 1993.

average daily circulation was 380.636. down 2.f percent

from

September

1991. and Saturday circulation was

326.184. down 18 percent in the same period. The Post

does not publish a Sunday edition. Advertising sales for the

Post in 1992. whether measured in ad inches or ad pages.

111

Pursuant to the terms of the management agreement, NYP

is authorized to operate the Pmt\ business, with full business

and editorial control.

11

Since assuming control of the !'mt on March 29, until

mid-May. according to News Corp·s Siskind. NYP has provided

$.f.22.f million. $2.367 million of which represented working

capital. The balance, $1.857 million, has been applied

to

underwriting the $309,oOO average weekly losses incurred since

the end of March.

to operate the Pmt\ business, with full business

and editorial control.

11

Since assuming control of the !'mt on March 29, until

mid-May. according to News Corp·s Siskind. NYP has provided

$.f.22.f million. $2.367 million of which represented working

capital. The balance, $1.857 million, has been applied

to

underwriting the $309,oOO average weekly losses incurred since

the end of March.

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

according to the Audit Bureau of Circulation. were the

lowest of the city"s four dailies. reaching only two-thirds

the sales level of third-ranked New York Times and ap-

proximately one-fourth that of the top-ranked Newsday.

25. Accordingly. states William Shew. director of Eco-

nomic Studies at Arthur Andersen Economic Consulting.

the New York Post's 1992 advertising revenue of $32.8

million represents only one percent of the New York

advertising market of slightly more than $3 billion and

WNYW"s 1992 advertising revenue of $151.7 million repre-

sents less than five percent. The combined six-percent share

under Murdoch"s ownership of the two media may be even

smaller. Shew notes. because his study of the New York

advertising market, based upon data compiled by Leading

National Advertisers (LNA). a source widely used for such

studies. excludes many media outlets. LNA"s data universe

is com.posed of only 10 of the more than 350 daily and

weekly newspapers. six of the 13 commercial television

stations, 24 of the 52 commercial radio stations. and the

outdoor advertising of selected operators in nine areas.

Cable television and periodicals. including local publica-

tions such as New York Maga:.ine, The New Yorker and

Cranes, are entirely excluded from LNA"s market construc-

tion.1~

26. Fox concludes that the Commission never before

been presented with such a "uniquely compelling" case for

permanent waiver of the cross-ownership rule. Murdoch.

according to Fox

f selected operators in nine areas.

Cable television and periodicals. including local publica-

tions such as New York Maga:.ine, The New Yorker and

Cranes, are entirely excluded from LNA"s market construc-

tion.1~

26. Fox concludes that the Commission never before

been presented with such a "uniquely compelling" case for

permanent waiver of the cross-ownership rule. Murdoch.

according to Fox. has agreed to furnish the funds and

expertise necessary to resuscitate the Posl, and permanent

waiver will permit him to implement a plan to save a

major daily newspaper, thereby advancing the diversity

objective of the rule.

27. Commen1s. At the outset. some of the commenters

question whether the Commission has the authority to

grant permanent waivers to allow a newly created news-

paper-television

combination.

From

the

beginning.

Fleischman argues. the order promulgating the cross-own-

ership rule. Second Repon and Order, 50 F.C.C. 2d at I 085.

provided only for waivers of "reasonable duration" and.

according to Caucus. waivers were contemplated only to

continue a current combination where appropriate. not to

create new combinations. 13 Nor. most of the commenters

assert. has the Commission ever granted a permanent waiv-

er for a new combination. Grant of a permanent waiver.

then. according to NAACP. would depart suhstantially

from precedent.

28. Further militating against Fox·s obtaining a perma-

nent waiver. according to several of the commenters. is the

Congressional mandate. in Public Law 102-395. 106 Stat.

1846 (1992). "ltlhat none of the funds appropriated hy this

!Appropriations! Act may he used to repeal. to retroac-

tively apply changes in. or to begin or continue a

reexamination of the rules and the policies established to

administer" the broadcast-newspaper cross-ownership rule.

Because it is not Commission policy to grant permanent

,,aivers of that rule. Fleischman and NAACP assert. such a

12

Moreover

lhat none of the funds appropriated hy this

!Appropriations! Act may he used to repeal. to retroac-

tively apply changes in. or to begin or continue a

reexamination of the rules and the policies established to

administer" the broadcast-newspaper cross-ownership rule.

Because it is not Commission policy to grant permanent

,,aivers of that rule. Fleischman and NAACP assert. such a

12

Moreover. LNA includes in its tally only those advertisers

with total ad expenditures for the year exceeding $10,000 on a

media category. Thus. Shew indicates, expenditures hy a given

advertiser of $5,000 on radio would not be reflected in the LNA

totals.

l.l Yet Caucus does not argue that there are no circumstances

5346

waiver could not be granted without "radical revision" and

"reexamination" of existing policy, actions barred by Con-

gress.

29. Assuming that it is appropriate for the Commission

to consider the waiver request. the commenters contend.

Fox's request. even as supplemented on April 20 in re-

sponse to the Commission's inquiries. fails to sustain the

heavy burden required of applicants seeking a permanent

waiver of the cross-ownership rule. Foremost. as support

for its contention that the Post is on the brink of failure.

Fox. Fleischman asserts. relies entirely upon newspaper

accounts. of which the Commission may not take official

notice. and upon anecdotal accounts of Posl employees.

which are "equally devoid of relevant facts." Now that

Murdoch controls the Post, Fleischman argues. Fox should

submit audited financial statements. balance sheets. income

and expense ledgers. and other data "before it can be heard

to complain about the economic well-being of the Post. "

Until then. the financial data submitted in Washing/On Star,

a broadcast-newspaper cross-ownership case in which an

evidentiary hearing was ordered. "far exceed" Fox·s show-

ing here. Caucus asserts. Moreover. Washington Star, ac-

cording

to

Fleischman

balance sheets. income

and expense ledgers. and other data "before it can be heard

to complain about the economic well-being of the Post. "

Until then. the financial data submitted in Washing/On Star,

a broadcast-newspaper cross-ownership case in which an

evidentiary hearing was ordered. "far exceed" Fox·s show-

ing here. Caucus asserts. Moreover. Washington Star, ac-

cording

to

Fleischman.

involved

a

daily

newspaper

confronted with financial problems "at least as dire" as

those alleged with regard to the Pos1. And Kalikow's anec-

dotal descriptions of the "purported" efforts to sell.

Fleischman contends. are "strikingly similar" to those be-

fore the Commission in that early case. in which the

Commission found attempts to sell. Fleischman argues. as

"sadly wanting." Accordingly. commenters urge. a hearing

is equally warranted in connection with Fox's waiver re-

quest.

30. With regard to Fox's assertion that Murdoch signifies

the only viable route for revival of the Posl, Champion. in

its comments to the Commission. provides a chronological

narrative of its attempts to acquire the faltering newspaper.

Headquartered in Greenwich. Connecticut. Champion. a

private company owned by Mahmoud A. Wahba and Su-

zanne Patterson Wahba. states that it attended a March 19.

1993 hearing in the Post bankruptcy proceeding and. bear-

ing a certified check for $1 million. "attempted to apprise

the court" of its interest in the newspaper. However.

Champion notes. its proposal was not addressed because

the offers of other bidders was not a matter before the

court. On March 22. Champion states. it informed by letter

the bankruptcy court judge. the U.S. Trustee and counsel

for the Posl of its continuing interest in obtaining the

newspaper. The next day. on March 23. it entered into a

memorandum of understanding regarding purchase of the

assets of the Posl with the New York Post Co .. signed hy

the company's vice president and controller Stephen

Bumbaca

On March 22. Champion states. it informed by letter

the bankruptcy court judge. the U.S. Trustee and counsel

for the Posl of its continuing interest in obtaining the

newspaper. The next day. on March 23. it entered into a

memorandum of understanding regarding purchase of the

assets of the Posl with the New York Post Co .. signed hy

the company's vice president and controller Stephen

Bumbaca. Execution of an associated asset purchase agree-

ment was subject to the approval of the Posl creditors·

committee and the proffering of evidence that Bumbaca or

"other authorized official" was empowered to execute the

agreement on behalf of the New York Post Co.

under which the grant of a permanent waiver of the cross-

ownership rule might he appropriate. What it does argue, how-

ever. is that such a grant would permit "the world's largest

media company" to own both a VHF "network" television

station and a daily newspaper in the same media market. there-

by eviscerating the "continued viability" of the rule.

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

31. Champion presented its offer to the creditors· com-

mittee on March 25. again bearing a certified check for $1

million as evidence of good faith. The Creditors. however.

in their comments to the Commission. state that Cham-

pion's offer was rejected as "unacceptable" for several rea-

sons. including a "deficient" purchase price. "unrealistic"

union concessions. the lack of provisions for assuming the

Post's liabilities. and insufficient amounts of working

capital. Accordingly. on March.26 and May 12. according

to the Creditors, their counsel informed Champion that

they were not interested in Champion's offer.

32. Shortly after Champion's presentation to the credi-

tors· committee on March 25. the bankruptcy court held a

telephonic conference with representatives of that commit-

tee. as well as with then-court-approved Post manager

Hirschfeld and a Murdoch representative

rch.26 and May 12. according

to the Creditors, their counsel informed Champion that

they were not interested in Champion's offer.

32. Shortly after Champion's presentation to the credi-

tors· committee on March 25. the bankruptcy court held a

telephonic conference with representatives of that commit-

tee. as well as with then-court-approved Post manager

Hirschfeld and a Murdoch representative. The conference

resulted in preliminary approval of Murdoch's manage-

ment agreement and Hirschfeld\ eventual withdrawal.

However. Champion. it notes. was not "invited" to the

conference that day or to any other conferences or hearings

thereafter. Nevertheless. Champion notified the creditors·

committee in writing on March 26. April 23 and April 28

of its continuing interest in the Post. In sum. Champion.

which claims total revenues of about $100 million through

its affiliates in. among other things. real estate. petroleum

storage terminals and oil distribution. states that it also

remains a "viable buyer" of the Post. Champion maintains

it was offered the "full cooperation" of the Post's editorial

hoard. administrative management and the unions. and that

it has a plan to restore financial vitality to the newspaper.1i

33. Additionally. some commenters argue that allowing

further expansion of Murdoch\ media holdings would be

inconsistent with the Commission goal of promoting diver-

sity.15 Rather than engender diversity. they add. Fox's ac-

4uisition of the Post would combine two previously

independent voices. that of the Post and that of WNYW.

The reassignment of journalists from other of Murdoch\

News Corp. operations around the country. as described in

Fox's waiver re4uest. Fleischman contends. confirms the

loss of the Post's independence. As for Fox's assertion that

the New York media marketplace is "uni4uely competi-

tive." Fleischman asserts. the Commission did not predicate

grant of permanent waivers on the level of competitiveness

of the media in a particular city. Furthermore

News Corp. operations around the country. as described in

Fox's waiver re4uest. Fleischman contends. confirms the

loss of the Post's independence. As for Fox's assertion that

the New York media marketplace is "uni4uely competi-

tive." Fleischman asserts. the Commission did not predicate

grant of permanent waivers on the level of competitiveness

of the media in a particular city. Furthermore. Fox\ litany

M the numerous and various media available in the New

York ADI. Fleischman argues. are irrelevant in that the

Commission concluded in Second Report and Order and

Second Report and Order Recon. that nothing but the num-

ber of local daily newspapers and city-grade television sig-

nals has any bearing on the diversity issue.

34. Moreover. Fox's definition of "diversity" among the

daily newspapers in New York City. in which 60 percent of

the residents are people of color. Fulani asserts. involves

merely "nuances" of difference among white corporate

owners and not "genuine" diversity. The death of the Post,

according to Fulani and a large numher of the letters

submitted in this proceeding. would free up tens of mil-

IJ But see Comments of Creditors at -l-h; sec also note 8. supra.

15

Murdoch controls Fox, the licensee of television stations in

eight major markets: KTTV. Los Angeles: WTTG. Washington.

D.C.; WFLD. Chicago; WNYW. New York City; KDAF. Dallas;

KRIV. Houston; KSTU. Salt Lake City; and WATL. Atlanta.

Murdoch also controls News America Publishing Inc .. the pub-

lisher of the Boston Herald, the l.ondon Times. and 7V Guide.

5347

lions of dollars of advertising potential for minority-owned

newspapers. However. even if the Commission denies Fox's

waiver request. the Post's demise. many commenters con-

tend, is not a certainty. Indeed. denying Fox's request,

Caucus suggests. would create an opportunity for minority

newspaper owners and businesspersons to purchase. or

merge with. the Post.

35. Additionally

Guide.

5347

lions of dollars of advertising potential for minority-owned

newspapers. However. even if the Commission denies Fox's

waiver request. the Post's demise. many commenters con-

tend, is not a certainty. Indeed. denying Fox's request,

Caucus suggests. would create an opportunity for minority

newspaper owners and businesspersons to purchase. or

merge with. the Post.

35. Additionally. NBMC and the majority of letter-writ-

ers note their concerns that Murdoch will continue what

they term the Post's "policies" of attacking and denigrating

African-Americans. their institutions and community. This

is a policy. many letters claim. Murdoch practiced when he

previously published the newspaper. Thus. NABOB con-

tends. the collapse of the Post, perceived as a racist news-

paper by some African-American leaders, might yield a

"positive benefit."

36. Finally. in the event the Commission does grant

Fox's request for permanent waiver. the anticompetitive

effects of Murdoch's ownership of both WNYW and of the

Post should be guarded against. contend many commenters.

For example. both Fleischman and NAACP note. the Com-

mission could re4uire that the two commonly held media

maintain separate editorial. reportorial and sales staffs. as

well as refrain from combination advertising and discrimi-

nation against media competitors. Abbreviating WNYW's

license term to three. instead of five. years. according to

MAP. and.'or conditioning any grant are other avenues for

properly "delimiting an "open-ended" permanent waiver.

Such conditions. MAP asserts. might include re4uiring that

Fox. as part of the WNYW license renewal application. file

a "special report" reviewing any changed circumstances.

and that the renewal be acted upon hy the full Commission

rather than the staff. 10 Additionally. Fleischman states that

the Commission should require that the collocated news-

paper carry "fair" program listings of all television stations.

WLIG. however

t include re4uiring that

Fox. as part of the WNYW license renewal application. file

a "special report" reviewing any changed circumstances.

and that the renewal be acted upon hy the full Commission

rather than the staff. 10 Additionally. Fleischman states that

the Commission should require that the collocated news-

paper carry "fair" program listings of all television stations.

WLIG. however. contends that its recent experience with

the Murdoch-controlled Post, in successfully gaining inclu-

sion in the newspaper's listing grid for its Channel 55 in

Riverhead. New York. "demonstrates that Fox does not

intend to misuse" cross-ownership of WNYW and the Post.

37. Discussion. The proscription against common owner-

ship interests in collocated newspapers and broadcast sta-

tions emanated from the twin fundamental principles

underlying the Commission\ multiple ownership rules: the

promotion of maximum diversification of program and

service viewpoints and the prevention of undue concentra-

tion of economic power. Second Report and Order, 50

F.C.C. 2d at 107..f. In establishing the broadcast-newspaper

cross-ownership rule, however. the Commission noted that

these objectives are not coe4ual in that the policy of com-

petition must sometimes yield to "the even higher goals of

diversity and the delivery of 4uality broadcasting service to

the American people." Second Report and Order, 50 F.C.C.

2d at 107..f. The rule was thus crafted to "grandfather" most

10 Alternatively. or in addition. MAP suggests. the Commission

could require Fox to file annual or semi-annual reports. to

include. among other things. the competitive viability of the

Post as a "stand-alone" property and the state of competition in

the New York City market. In this way. MAP contends. the

Commission could order corrective action or consider those

issues in WNYW·s renewal proceeding.

atively. or in addition. MAP suggests. the Commission

could require Fox to file annual or semi-annual reports. to

include. among other things. the competitive viability of the

Post as a "stand-alone" property and the state of competition in

the New York City market. In this way. MAP contends. the

Commission could order corrective action or consider those

issues in WNYW·s renewal proceeding.

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

then-existing combinations 17 and to apply prospectively to

new ownership patterns however created. whether by ini-

tial application and construction or by acquisition through

assignment or transfer of control. 18 Id. at 1076.

38. Despite the broad nature of the rule. or because of it.

the Commission expressly contemplated waivers for new

cross-ownership patterns. as a "protection" in cases where

application would be "unduly harsh." Id. at 1077: FCC 1•.

NCCB, 436 U.S. at 786 n.9. Waivers were devised to ac-

commodate four such situations: ( 1) where there is an

inability to dispose of an interest to conform to the rules:

(2) where the only sale possible is at an artificially de-

pressed price: (3) where separate ownership and operation

of the newspaper and station cannot be supported in the

locality; and ( 4) where. for whatever reason. the ,purposes

of the rule would be disserved by divestiture. 1

Second

Report and Order, 50 F.C.C. 2d at 1084-85. From the rule·s

inception. the Commission envisioned waivers of perma-

nent. as well as. temporary duration. Id. at 1085: News

America Publishing, Inc. v. FCC, 844 F.2d 800. 803 (D.C.

Cir. 1988).

39. Corresponding to each of the four categories is the

level of showing required of an applicant seeking a waiver.

With regard to the first category

cond

Report and Order, 50 F.C.C. 2d at 1084-85. From the rule·s

inception. the Commission envisioned waivers of perma-

nent. as well as. temporary duration. Id. at 1085: News

America Publishing, Inc. v. FCC, 844 F.2d 800. 803 (D.C.

Cir. 1988).

39. Corresponding to each of the four categories is the

level of showing required of an applicant seeking a waiver.

With regard to the first category. the Commission delin-

eated a tripartite showing: ( 1) a full description of the

effort made to sell that interest: (2) the price at which it

was listed: and (3) a certification of a newspaper (or broad-

cast station) broker that in his or her view this price is

consistent with the fair market value of the property in

question. Id. at 1084. An applicant invoking the second

waiver category. where the only sale possible is at an

artificially depressed price. must accompany its request

1-

Divestiture of existing combinations was limited to onlv

"the most egregious cases." those in which there was commo~

ownership of the only daily newspaper and of either the lone

radio or television station encompassing the newspaper commu-

nity with a city-grade signal. Second Report and Order. 50

F.C.C. 2d at 1080-1084. Appendix D, Appendix F. (for a list of

the In then-existing broadcast-newspaper combinations nation-

wide which the Commission specified as "egregious" cases and

subject to divestiture). In other words. divestiture was ordered

where the same party owned the only daily newspaper and the

only broadcast station. whether television or radio. serving a

community. However. common ownership of the sole daily and

the sole radio station was exempted so long as a television

station served the community. But a combination involving the

daily and the only television station. regardless of the presence

of a radio station. was subject to divestiture. Yet even those

licensees targeted for divestiture were given approximately five

tears. until 1980. to do so. Id. at 1084

ommon ownership of the sole daily and

the sole radio station was exempted so long as a television

station served the community. But a combination involving the

daily and the only television station. regardless of the presence

of a radio station. was subject to divestiture. Yet even those

licensees targeted for divestiture were given approximately five

tears. until 1980. to do so. Id. at 1084.

s Exempt from prospective application of the rule are applica-

tions for assignment or transfer of control to heirs or legatees or

those for proforma changes in ownership. Second Report and

Order. 50 F.C.C. 2d at 1076.

10 Although these four grounds were established in the context

of our divestiture requirement. the Commission. -;ix months

after promulgating the cross-ownership rule. in Washington Star

Communications. Inc .. 54 F.C.C. 2d 6119, 673 ( 1975). and later. in

Crosby S. Bovd. 57 F.C.C. 2d 475. 483-84 ( 19711). deemed them

e4ualiy applicable to "other aspects of our broadcast-newspaper

prohibitions." including new ownership patterns. such as the

one before the Commission in those cases. We recognize that

those cases involved transfer of a previously grandfathered com-

bination. Subsequently. however, the Commission applied the

second category in granting a temporary waiver under cir-

cumstances involving a new. not previously grandfathered com-

bination. thereby acknowledging that the waiver standards are.

5348

with an "appropriate showing" of the fair value and the

inability to obtain such a price. Id. at 1085 n.46. With

regard to the third category. that separate ownership and

operation of the newspaper and station cannot be sup-

ported in the locality. the Commission provided no specific

guidance at that time on the showing required. As to the

fourth category. "a catch-all provision." Health & Medicine

Policy Research Group v. FCC, 807 F.2d at 1042. the Com-

mission specified that if it could be shown

With

regard to the third category. that separate ownership and

operation of the newspaper and station cannot be sup-

ported in the locality. the Commission provided no specific

guidance at that time on the showing required. As to the

fourth category. "a catch-all provision." Health & Medicine

Policy Research Group v. FCC, 807 F.2d at 1042. the Com-

mission specified that if it could be shown. "for whatever

reason." that the purposes of the rule would be better

served by the proposed ownership pattern. waiver then

would be warranted. Second Report and Order, 50 F.C.C.

2d at 1085. This waiver category countenances a myriad of

arguments pertinent to the exigencies of a particular situ-

ation. so long as applicants requesting waiver refrain from

relitigating issues previously resolved in the Second Report

and Order. Id.; Second Report and Order Recon., 53 F.C.C.

2d at 593-94. All "other special circumstances they think

have a bearing on the appropriateness of granting waiver,"

therefore. are proper. Second Report and Order, 50 F.C.C.

2d at 1085 n.47.

40. Finally. the burden on an applicant such as Fox.

which requests a permanent waiver for a new television-

ncwspaper combination.20 is "considerably heavier." Sews

America Publishing. Inc.

1·. FCC, 844 F.2d at 803 (citing

Health & Medicine Policy Research Croup v. FCC, 807 F.2d

at 1042-·B). In the only request for permanent waiver.

prior to the one before us. involving ownership of a new

broadcast-newspaper combination. the Commission em-

ployed the three-part standard corresponding to the inabil-

ity-to-sell waiver category. 21 Washington Star Communica-

tions, Inc., 54 F.C.C. 2d 669 ( 1975). The Commission des-

ignated that case for hearing because it was unable to

in fact. applicable to "new" combinations. See .\letrumedia Ra-

dio & Television. Inc .. 102 F.C.C. 2d 1334 ( lll85). aff'd flea/th

and .Wedicine Policy Research Group v. FCC 807 F.2d 1038

(D.C. Cir. 1980).

20

NAACP. citing Jfegamedia. 67 F.C.C. 2d 1527. 1528 ( 1978)

ar Communica-

tions, Inc., 54 F.C.C. 2d 669 ( 1975). The Commission des-

ignated that case for hearing because it was unable to

in fact. applicable to "new" combinations. See .\letrumedia Ra-

dio & Television. Inc .. 102 F.C.C. 2d 1334 ( lll85). aff'd flea/th

and .Wedicine Policy Research Group v. FCC 807 F.2d 1038

(D.C. Cir. 1980).

20

NAACP. citing Jfegamedia. 67 F.C.C. 2d 1527. 1528 ( 1978).

maintains that an essential element of "any" waiver request is a

showing that less drastic alternatives are unavailable. That case.

however. involved a re4uest for waiver of the minimum dis-

tance rule. the standard for which expressly requires dem-

onstration of the unsuitability of other fully -;paced sites. See.

e.g .. Caloosa Television Corporation. 3 F.C.C. Red 3656. 3657

( 1988). recon. denied. 4 F.C.C. Red 4762 ( 1989). The issue before

us. whether to grant a waiver of the broadcast-newspaper cross-

ownership rule. implicates a completely different standard. as

srecified supra.

2

In a later case, Field Communications Corporation. 65 F.C.C.

2d 959 ( lll79) the Commission granted the only permanent

waiver since promulgation of the television-newspaper broadcast

rule. That case involved the transfer of control of Kaiser Broad-

casting Corporation, licensee of five television stations. includ-

ing Chicago station WFLD-TV. to Field. holder of a 22.5

percent interest in the licensee and publisher of two Chicago

daily newspapers. Alluding to the '\pecial circumstances" lan-

guage of the catch-all waiver category. the Commission held

that Field's reacquisition of the Chicago -;tation comtituted. in

essence

Kaiser Broad-

casting Corporation, licensee of five television stations. includ-

ing Chicago station WFLD-TV. to Field. holder of a 22.5

percent interest in the licensee and publisher of two Chicago

daily newspapers. Alluding to the '\pecial circumstances" lan-

guage of the catch-all waiver category. the Commission held

that Field's reacquisition of the Chicago -;tation comtituted. in

essence. an existing ownership pattern exempt from the cro-;s-

ownership rules: Field had controlled the original permittee and

license of WFLD-TV prior to adoption of the broadcast-news-

paper cross-ownership proscription: was responsible for con-

struction and commencement of operation of the station: had

previously assigned its controlling interest to its partner so as to

ensure the economic viability of the station: had retained the

right to make the first offer to reacquire the remaining 77.5

percent interest; and had continued to play a -;ignificant role in

the affairs of the station. Id. at %1.

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

ascertain from the record that reasonable. good faith efforts

had been made to dispose of the Washington !D.C.! Star-

News so as to comport with the cross-ownership rule. The

applicants subsequently amended their request, seeking a

waiver of a maximum of three years in duration. and the

Commission so granted that request based upon the fourth

waiver category. Crosby .V. Boyd, 57 F.C.C. 2d 475 .. mo.

484 (1976).

41. In view of the circumstances in this case. we believe

it is appropriate to evaluate Fox\ waiver request under the

criteria of the fourth waiver category. Given the bankrupt

status of the Post, the inability-to-sell waiver category that

was addressed in Washington Star is inapplicable. in that

the bankruptcy court has yet to approve the plan of any

purchaser, including Murdoch. The question intrinsic to

the first category. the inability to sell the newspaperat all. is

one to be addressed by the bankruptcy court

a of the fourth waiver category. Given the bankrupt

status of the Post, the inability-to-sell waiver category that

was addressed in Washington Star is inapplicable. in that

the bankruptcy court has yet to approve the plan of any

purchaser, including Murdoch. The question intrinsic to

the first category. the inability to sell the newspaperat all. is

one to be addressed by the bankruptcy court. the final

arbiter as to whether Murdoch is the only viable purchaser.

We do not intend by our decision here to interfere with

the court"s ongoing deliberative process. including its con-

sideration of the possible existence of other buyers of the

Post. Commission action in this regard is in accord with

the directive of LaRose \'. FCC, 494 F.2d at 1146 n.2

( 1974). that we minimize. to the extent possible. any con-

flict between Commission policy and that of federal bank-

ruptcy law. Our task at this stage of the bankruptcy

proceeding. therefore. is to determine whether Murdoch's

ownership of WNYW and the Post. in the event his plan is

approved hy the court. would be in the public interest. 22

Accordingly. the fourth category's "special circumstances"

~tandard. in tandem with an evaluation of the diversity and

competitiveness of the New York City market. also clearly

implicated by the fourth category. provide an appropriate

framework for assessment of the waiver request before us.

22

Fleischman\ urging, therefore. that we now require a solici-

tation process. similar to the one the court ordered Kalikow to

engage in after the Hoffenberg contract terminated. is a matter

within the court's jurisdiction and we need not consider it as an

alternative in this forum. r\ccordingly. we leave to the bank-

ruptcy court the determination of whether there are other

potential purchasers and which of the proposals offers the best

"price" and chances of viability for the Post.

2·

The bankruptcy court

ikow to

engage in after the Hoffenberg contract terminated. is a matter

within the court's jurisdiction and we need not consider it as an

alternative in this forum. r\ccordingly. we leave to the bank-

ruptcy court the determination of whether there are other

potential purchasers and which of the proposals offers the best

"price" and chances of viability for the Post.

2·

The bankruptcy court. in approving the NYP management

agreement, stated that the Post "does not have funds sufficient

to meet expenses necessary for the continued operation of its

business." Bankruptcy Order. rnpra. at 3. thereby affirming the

dire financial condition of the daily. lt appears. therefore. that

the Post was not placed in bankruptcy in order to evade the

Commission's cross-owner'ihip rule. hut because its parent com-

pany was unable to continue its operations. Whether corrup-

tion. poor management or internal auditing procedures were

the causes

of the

Poll's current financial

troubles. as

Fleischman and NAACP speculate. is irrelevant to our deter-

mination here. These are factors which the bankruptcy court

may consider in reaching its decision with respect to the Post.

2 ~ Fleischman attacks the validity of VS&A's testimony, argu-

ing that it is unsupported by affidavit. provides no indication as

to how it obtained information regarding the Pmt. and includes

no audited financial 'itatemeEt "or other necessary details."

Moreover, Fleischman contends, the information YS&A submits

is "vague and conclusory" and based on financial data last seen

in late 1992. We note that VS&A's professional relationship

with the Post dates from 1990. when the investment hanking

and brokerage firm was retained by Kalikow to provide advice

in connection with the newspaper's activities and financial con-

5349

42. We conclude. under the "special circumstances" be-

fore us. that permanent waiver is warranted. First

" and based on financial data last seen

in late 1992. We note that VS&A's professional relationship

with the Post dates from 1990. when the investment hanking

and brokerage firm was retained by Kalikow to provide advice

in connection with the newspaper's activities and financial con-

5349

42. We conclude. under the "special circumstances" be-

fore us. that permanent waiver is warranted. First. we are

persuaded that the risk to the viability of the Post, should

we decline to grant Fox's request, thereby eliminating

Murdoch as a potential bidder before the bankruptcy court.

is very substantial. We believe that our interest in diversity

would not be well served hy taking that risk. Second. we

conclude that grant of a permanent waiver is an appro-

priate accommodation

between communications-related

policies and bankruptcy-related policies. In this regard. our

decision will facilitate the task of the debtor. the creditors

and the bankruptcy court hy removing any uncertainties

arising from the existence of our cross-owner~hip rule.

43. We believe there is a substantial basis for reaching

our conclusions. Not only is the Post now insolvent.23 as

Fox asserts. hut. absent a waiver. its future is in doubt.

VS&A. the investment. banking firm and media broker

which earlier performed an analysis of the Post and later

represented Hollinger. Inc. in its 1992 efforts to negotiate a

joint venture with Kalikow. concludes thatpthe newspaper's

survival is dubious. In view of the substantial funds needed

for capital improvements and for continuing operating

losses. according to VS&A. "the issue is whether anyone

would he willing to accept the risk of future liabilities of

such magnitude" given the Post's past performance and

prospects.

2

~ Approximately $.+5 million. as well as expertise

in the newspaper business. YS&A notes. are required to

stabilize

the

staffing

situation.

attract

readers

and

advertisers. deal effectively with the trade unions. and im-

prove production quality

whether anyone

would he willing to accept the risk of future liabilities of

such magnitude" given the Post's past performance and

prospects.

2

~ Approximately $.+5 million. as well as expertise

in the newspaper business. YS&A notes. are required to

stabilize

the

staffing

situation.

attract

readers

and

advertisers. deal effectively with the trade unions. and im-

prove production quality. And an additional $30 million

investment will he needed for rudimentary color equip-

ment in order to compete with !\lew York's other dailies.

which. VS&r\ contends. plan to utilize color reproduction.

Indeed. the Pos1 was placed into bankruptcy only after

Kalikow·s more-than-lo-month. good faith search 2, for a

purchaser or investor willing to assume the newspaper's

dition. This valuation assignment continued until the personal

bankruptcy of Kalikow in August 1991. Subsequently. VS&A

states. it remained in contact with POlt management. but did

not engage in investment banking activities during that period.

From February through r\pril 1492. VS&A. as the representa-

tive of Hollinger, inc .. which 'iought a joint venture with the

Pou and the Daily .\ews. again became intimately familiar with

the Post''i financial situation. it is apparent from the record

before us. as confirmed by the now bankrupt status of the Prm,

that the newspaper's financial condition deteriorated after 1992.

a year in which. according to YS&r\ 's then-personal working

knowledge. the newspaper was operating "significantly below

break-even." We find. therefore. that VS&A's information was

derived from valid. first-hand knowledge and sufficiently de-

tailed to provide us with a basis for determining the financial

condition of the !'mt.

25

NAACP argues that Kalikow's and fox's failure. or refusal.

to provide the Commission with a 'ipecific dollar amount and/or

financial terms with regard to the asking price for the Post

should result in the dismissal of Fox\ waiver request due to

insufficient information

nd knowledge and sufficiently de-

tailed to provide us with a basis for determining the financial

condition of the !'mt.

25

NAACP argues that Kalikow's and fox's failure. or refusal.

to provide the Commission with a 'ipecific dollar amount and/or

financial terms with regard to the asking price for the Post

should result in the dismissal of Fox\ waiver request due to

insufficient information. Unlike the applicants dismissed in the

cases cited by NAr\CP. Apple Communications. 7 F.C.C. Red

1467 ( l992)(dismissal for failure to submit a full scale transmit-

ter site map pursuant to Ft-I "hard look" processing standards).

Rita A. Capobianchi. (1 F.C.C. Red -lh3l (l99l)(refusal to submit

requested financial amendment). /,orraine Walker Arms. 5

F.C.C. Red 701.3 ( 1990)(refusal to appear at hearing for cross

examination). and Beth Knight. 7 F.C.C. Red 1889 (Rev. Bd.

l992)(refusal to produce requested relevant documents). Fox has

provided the Commission with information relevant to our

inquiry regarding the

purported sale

price of the

Post.

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

liabilities. 26 Kalikow's exhaustion of a long list of potential

purchasers/investors2: and the Pos(s precarious financial

condition have apparently resulted in a small pool of po-

tential purchasers. To our knowledge. only Murdoch and

Champion have indicated a continuing interest in resusci-

tating the bankrupt Post. 28

-+4. That the Commission has the authority to consider

the "harsh realities" confronting newspapers was expressly

recognized by the court in Health & Medicine Policy Re-

search Group v. FCC, 807 F.2d at 1045. From the outset of

the cross-ownership rules. we have made clear that. where

our rules operated as an impediment to the survival of

newspapers. that factor was an appropriate circumstance

for waiver. 29 In the case before us

ity to consider

the "harsh realities" confronting newspapers was expressly

recognized by the court in Health & Medicine Policy Re-

search Group v. FCC, 807 F.2d at 1045. From the outset of

the cross-ownership rules. we have made clear that. where

our rules operated as an impediment to the survival of

newspapers. that factor was an appropriate circumstance

for waiver. 29 In the case before us. due in part to the

shortage of potential

buyers, there

is

evidence

that

Murdoch's ownership may be pivotal to the newspaper's

survival. 30 Because of that. if the bankruptcy court were

also to make a determination that Murdoch is the best

qualified bidder. we think that a waiver would not be in

conflict with our longstanding policies. especially in view

of our determination. infra, that the purposes of the rule

would not be disserved by a waiver:11 Accordingly, our

decision in this instance to afford a waiver in order to

accommodate the policies underlying the federal hank-

Kalikow's response. that he sought a purchaser willing only to

assume the Post's liabilities. confirmed by VS&A as consistent

with the newspaper's value. satisfies the rationale behind our

request for that information: to demonstrate that good faith

efforts were made to dispose of the newspaper.

20

In an apparent attempt to demonstrate that Kalikow rejected

offers from those who would comply with the cross-ownership

rule, Caucus attaches a letter purportedly sent to Zuckerman.

the current owner of the Daily .Vews. from Richard Emery. who

claims to have had "direct discussions" with Kalikow on

Zuckerman 's behalf. Emery's letter indicates his attempts to

obtain financial data which, it claims. Kalikow was "apparently

providing to other prospective purchasers of the Post." In re-

sponse, Kalikow states that he repeatedly requested. but never

received.

validation of Emery's agency relationship with

Zuckerman. In fact. Kalikow notes. at all times he now claims

to have represented Zuckerman

man 's behalf. Emery's letter indicates his attempts to

obtain financial data which, it claims. Kalikow was "apparently

providing to other prospective purchasers of the Post." In re-

sponse, Kalikow states that he repeatedly requested. but never

received.

validation of Emery's agency relationship with

Zuckerman. In fact. Kalikow notes. at all times he now claims

to have represented Zuckerman. Emery was the attorney of

record of Peter Hamill, a former editor of the Post. Zuckerman,

in a separate letter to the Commission. confirms that Emery

acted as his agent. but does nut say that that relationship was

ever made known to Kalikow. That Kalikow refused to provide

specific financial information to an agent of an uncertain prin-

cipal does not constitute an unwillingness to transfer the news-

paper to a party in compliance with Commission rules. We also

find it persuasive that Kalikow. as owner of the Post. even if he

believed Emery represented Zuckerman. would be hesitant to

disclose financial details to Zuckerman. owner of a competing

New York City daily newspaper. who had not, according to

Kalikow. "given any reason to believe" that he wanted the

information in connection with a bona fide offer.

2-

Kalikow's efforts were catalogued in t\vo letters addressed to

Chairman Ouello and placed in the record in this proceeding.

We view them as representations to the Commission based on

Kalikow's personal knowledge. There is no requirement. as

some commenters suggest. that the Commission must disregard

such facts unless presented in a sworn affidavit. See. e.g., ~7

C.F.R. §§1.2. Ul (1992).

2s NAACP, asserting that Murdoch may intend to acquire the

Post only to terminate its publication so that it may obtain the

newspaper's real estate, maintains we should compel Murdoch

to produce his business plan for the Post. Any concerns regard-

ing Murdoch's blueprint for the Post's future should be as-

suaged

in

that

confirmation

of

a

proposed

plan

of

5350

ruptcy laws

Ul (1992).

2s NAACP, asserting that Murdoch may intend to acquire the

Post only to terminate its publication so that it may obtain the

newspaper's real estate, maintains we should compel Murdoch

to produce his business plan for the Post. Any concerns regard-

ing Murdoch's blueprint for the Post's future should be as-

suaged

in

that

confirmation

of

a

proposed

plan

of

5350

ruptcy laws. is consistent with, and does not disserve. the

Commission's own policies and the matters that are com-

mitted to our responsibility and jurisdiction.

45. For similar reasons, we think a permanent. rather

than a temporary, waiver is justified in this case. In cir-

cumstances in which a waiver is based on factual issues.

such as those supporting the first three waiver standards.

the Commission's general policy is to grant temporary

waivers. See Metromedia Radio & Telei·ision, Inc., 59 R.R.

2d 1196 ( 1985). aff'd Heallh & Medicine Policy Research

Group v. FCC, 807 F.2d 1038 (D.C. Cir. 1986): see also

Crosby N. Boyd, 57 F.C.C. 2d 475 (1976). 32 We have not

specifically addressed the range of "special circumstances"

in which a permanent waiver might be granted under the

fourth waiver category.33 In this particular instance. we

conclude that a permanent waiver is justified. Murdoch has

stated that unless a permanent waiver is authorized. he

does not intend to pursue his bid for the Post in the

bankruptcy proceeding. Further. he has offered persuasive

reasons why. as a matter of business judgment. that posi-

tion is reasonable. As Fox notes. a permanent waiver is an

indispensable vehicle for effectuating a long-term stratagem

for the Pos(s survival and enables Murdoch to negotiate

with the labor unions. -;uppliers. distrihuwrs and other

creditors.-u In addition. whether or not there may be other

reorganization, under the Bankruptcy Code. can go forward

only if the plan "has been proposed in good faith." 11 U.S.C

e. As Fox notes. a permanent waiver is an

indispensable vehicle for effectuating a long-term stratagem

for the Pos(s survival and enables Murdoch to negotiate

with the labor unions. -;uppliers. distrihuwrs and other

creditors.-u In addition. whether or not there may be other

reorganization, under the Bankruptcy Code. can go forward

only if the plan "has been proposed in good faith." 11 U.S.C.

§1129(a)(3), and meets the feasibility requirement, that it "is not

likely to be followed by the liquidation. or the need for further

financial reorganization ... unless such liquidation or reorgani-

zation is proposed in the plan." 11 U.S.C. § l 129(a)( 11 ). In this

regard. we proceed on the assumption that Fox will carry out

its repeated representations that Murdoch seeks to "salvage the

newspaper." "repair the damage." "resuscitate a newspaper that

was on the brink of failure." and "implement its plan to save a

major daily newspaper." See Sew) lntemational PLC. 97 F.C.C.

2d 349. 356 ( 198~)("1llt is not appropriate to infer. in the ab-

sence of information to the contrary" that Jan applicantJ will

not faithfully carry out its representations las to future con-

~.!1ctJ: ... ").

•

-Second Report and Order at l07h n.2~; see also llcaltlz &

Medicine Policy Research Group v. FCC. x07 F.2d !038. 1044

(D.C. Cir. 1987), where the court of appeals noted. in reviewing

an earlier waiver grant. the Commission's "expressed grave con-

cern lest JitsJ cross-ownership rule misguidedly sound a news-

riaper's death knell."

• 11

See the information submitted by VS & A. discussed supra,

noting that expertise in the newspaper business is required to

stabilize the staffing situation. attract readers and advertisers.

and deal effectively with the trade unions; 1ee alrn. note 8,

supra. indicating that Champion has rescinded its bid for the

Post.

·31

In paragraphs ~6-51, infra. we expressly conclude that a

waiver would not seriously endanger the diversity and competi-

tion aims underlying the rule. We emphasize

aper business is required to

stabilize the staffing situation. attract readers and advertisers.

and deal effectively with the trade unions; 1ee alrn. note 8,

supra. indicating that Champion has rescinded its bid for the

Post.

·31

In paragraphs ~6-51, infra. we expressly conclude that a

waiver would not seriously endanger the diversity and competi-

tion aims underlying the rule. We emphasize. moreover. that

waiver here is not based simply on the state of the New York

market but also on our responsibility to accommodate. if possi-

ble, other federal policies and on the other factors discussed

herein .

.ll

Cro1by Boyd. although also based upon the fourth waiver

category. did not involve a bankrupt media outlet. Thus. that

case is distinguishable in that the facts did not call upon our

duty to harmonize, to the extent possible. our rules with other

federal policies .

. l.l But lf. Field Communications Corp .. 65 F.C.C. 2d 959 ( 1977).

~ranting permanent waiver due to "special circumstances."

· 4

NAACP contends that these reasons for seeking a permanent

waiver, without further specific information. such as the nor-

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

viable bidders for the Post, it is evident from the record

that the field of acceptable purchasers is extremely limited.

Accordingly, if Murdoch withdraws his bid, the bankruptcy

court could well be left with few. and perhaps no. viable

offers to consider. In addition, that result would be in-

consistent with our independent interest in ensuring that

our rules are not enforced in a manner that jeopardizes the

survival of a newspaper. In these special circumstances. we

think that a permanent waiver should be authorized to

enable the court to carry out its responsibilities. Grant of a

permanent waiver will avoid an unnecessary encumbrance

on the court's ability to transfer the station to Murdoch if

the court concludes that Murdoch is the only viable buyer.

And. as indicated below

t jeopardizes the

survival of a newspaper. In these special circumstances. we

think that a permanent waiver should be authorized to

enable the court to carry out its responsibilities. Grant of a

permanent waiver will avoid an unnecessary encumbrance

on the court's ability to transfer the station to Murdoch if

the court concludes that Murdoch is the only viable buyer.

And. as indicated below. a waiver in this instance is un-

likely to have a significant impact on our diversity and

competition concerns underlying the cross-ownership rule.

Therefore, our efforts in this case to accommodate the

federal policies underlying the bankruptcy laws by au-

thorizing a permanent waiver are particularly appropriate.

46. The final scrutiny of our analysis under the fourth

category. as noted above. requires that the requester dem-

onstrate. "for whatever reason." that purposes of the broad-

cast-newspaper cross-ownership rule would he disserved by

its strict enforcement. Second Report and Order, 50 F.C.C.

2d at lll85. Of the two fundamental principles of the rule.

diversity of viewpoint and economic competition. diversity

is controlling. so long as it is measured "in terms of

providing the best practicable service to the American pub-

lic." id. at 107-L a goal to which the Commission has

always accorded weight and which has heen8 ""specifically

approved" by the Supreme Court. FCC v. SCCB, 436 U.S.

at 803-804. 810 (ci1ing FCC I'. Sanders Bros. Radio Station,

309 U.S. 470. 475 (1940)).

mal length of labor union and supplier contracts. leaves the

Commission with no "rational basis" for concluding that a

permanent. rather than a temporary. waiver is necessary or

appropriate. Moreover. NAACP argues. because the Post credi-

tors are "amply protected" by the reportedly" $15 million value

of the newspaper's building. the Post will become "a going

concern in a reasonable time." We are persuaded that a perma-

nent waiver is warranted

ves the

Commission with no "rational basis" for concluding that a

permanent. rather than a temporary. waiver is necessary or

appropriate. Moreover. NAACP argues. because the Post credi-

tors are "amply protected" by the reportedly" $15 million value

of the newspaper's building. the Post will become "a going

concern in a reasonable time." We are persuaded that a perma-

nent waiver is warranted. based upon the Pmt's history of

financial losses and the Creditors' assertion that what the news-

paper needs. "and needs desperately, is financial stability." Ac-

cording to the Creditors. only then can management address

severe operating losses. ameliorate employee morale and reverse

declining circulation and advertising trends. \\·e note. addition-

ally. that the Post's building. which is the personal property of

Kalikow and not of the New York Post Co .. according to Fox. is

encumbered by a ii25 million mortgage. an amount greater than

the value NAACP assigns to that real property.

35

In determining which existing broadcast-newspaper com-

binations necessitated divestiture. the Commission calculated

only the number of daily newspapers and either the television

or radio services within a locale. Second Report and Order. 50

F.C.C. 2d at 1083-84. the method Fleischman urges us to utilize

here. In promulgating the rule. however. the Commission in-

dicated greater flexibility would be utilized in evaluating a

waiver request predicated on the fourth waiver category. the

standard which implicates diversity and the concomitant num-

ber-of-voices analysis. Id. at 1085 nA7 ("Among others that

parties may wish to bring to our attention are local access or

origination on the community's cable television system or other

special circumstances they think have a bearing on the appro-

priateness of granting waiver."); see also Second Report and

Order Recon .. 53 F.C.C

standard which implicates diversity and the concomitant num-

ber-of-voices analysis. Id. at 1085 nA7 ("Among others that

parties may wish to bring to our attention are local access or

origination on the community's cable television system or other

special circumstances they think have a bearing on the appro-

priateness of granting waiver."); see also Second Report and

Order Recon .. 53 F.C.C. 2d at 5'18 ("To the extent that these or

any other matters !pertaining to the number of voices! dem-

onstrate that the situation in a particular area so differs from

5351

47. In examining the diversity of viewpoints in the case

before us. we focus upon those media voices available in

the city of New York which are responsive to the local

problems and needs of the residents there.35 Second Report

and Order, 50 F.C.C. 2d at 1080-84; Second Report and

Order Recon., 53 F.C.C. 2d at 598. Our diversification

policy. as we noted in fashioning the cross-ownership rule.

evolved primarily from the First Amendment cornerstone

that the "widest possible dissemination of information from

diverse and antagonistic sources" is essential to the welfare

of the public. Second Report and Order, 50 F.C.C. 2d at

1050 (quoting Associated Press I'. United Sia1es, 326 U.S. I.

20 (1945)). New York City itself is encompassed by the

city-grade signals of at least 10 full-power television stations

other than WNYW and it is the community of license of

24 AM and FM radio stations. Eight cable systems serve

the five boroughs of New York City. providing between 28

and 78 channels. And New York. which has four general

interest daily newspapers. is the only city in the nation to

support more than two dailies. Moreover. 22 weekly news-

papers. many of which cater primarily to local news. are

published in the city. 16

48. Given the wide array of voices in New York City.

any detriment to diversity caused by common ownership of

the two media outlets would he negligible

els. And New York. which has four general

interest daily newspapers. is the only city in the nation to

support more than two dailies. Moreover. 22 weekly news-

papers. many of which cater primarily to local news. are

published in the city. 16

48. Given the wide array of voices in New York City.

any detriment to diversity caused by common ownership of

the two media outlets would he negligible. even if we look

only to its full-service television 'itations and four dailtes .. i-

Indeed.

Murdoch's

potential

for

amassing an

undue

amount of control in the marketplace of ideas is unlikely

in that the Post, according to VS&A. serves merely as a

"second read" for most people: more than 80 percent of

the Pos(s readers also rely upon another daily for their

news.

the norm so as to arguably support waiver on that basis. parties

are free to so allege."). Further. we belie\e that in the context

of a new ownership pattern. as opposed to one involving forced

divestiture of an "egregious" situation. for which the standard

was devised. reliance on only television stations and daily new'i-

papers would be unnecessarily rigid. Yet. we emphasize that our

reliance on the diversity in New York. however measured. is

not the sole basis in this case for our decision to grant perma-

nent waiver.

·10

We need not. as Fleischman argues. compare the number of

television stations and newspapers available in New York City

in 1'175. when the rule was adopted. with those available today

in order that we not "relitigate resohed issues." an admonition

of Second Report and Order, 50 F.C.C. 2d at 1085. We note that

"resolved issues" referred not to the number of voices in a

specific community in 1'175 but to "basic premises." such as the

Commission's decision to employ encompassment by a city-

grade signal. in lieu of a Grade A or (irade B contour. Second

Report and Order Recon .. 53 F.C.C. 2d at 593-'14

tigate resohed issues." an admonition

of Second Report and Order, 50 F.C.C. 2d at 1085. We note that

"resolved issues" referred not to the number of voices in a

specific community in 1'175 but to "basic premises." such as the

Commission's decision to employ encompassment by a city-

grade signal. in lieu of a Grade A or (irade B contour. Second

Report and Order Recon .. 53 F.C.C. 2d at 593-'14. Thus, a

comparison of the New York media market in 1'175 with that of

today is not' controlling in our analysis of the fourth waiver

category. whether. "for whatever reason." the purposes of the

rule would be disserved by its application to a particular situ-

ation. Second Report and Order, 50 F.C.C. 2d at 1085. What we

do rely upon. however, is the composition of the relevant

market and how diversity in that market might be affected by

the merger proposal before us in conjunction with the "special

circumstances" discussed above.

r

Fleischman's assertion that grant of Fox's waiver would

carve out an exemption of the cross-ownership rule for the New

York market is incorrect. Indeed. with regard to diversity con-

cerns. we view the number of voices present in the market at

the time the proposal is submitted as only one factor in our

analysis.

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

49. Any cost to diversity in the New York market. how-

ever. will be outweighed by preservation of the Post, whose

bankrupt status threatens the very existence of an alter-

native media voice. Such an eventuality would undermine

the fundamental objective of the cross-ownership rule.

founded on First Amendment principles. of promoting the

widest dissemination of information and of expanding the

marketplace of ideas. Indeed. the rule. predicated upon the

presumption that the creation. of a new television-news-

paper combination "raises a problem" as to diversity. was

not intended to result in the net loss of a media outlet.

Second Report and Order, 50 F.C.C. 2d at 1077.

50

ounded on First Amendment principles. of promoting the

widest dissemination of information and of expanding the

marketplace of ideas. Indeed. the rule. predicated upon the

presumption that the creation. of a new television-news-

paper combination "raises a problem" as to diversity. was

not intended to result in the net loss of a media outlet.

Second Report and Order, 50 F.C.C. 2d at 1077.

50. As to the rule's twin purpose. that of economic

competition, we may consider antitrust policies in making

public interest determinations. FCC v. NCCB, 436 U.S. at

795-96 ( citing United States v. Radio Corp. of America, 358

U.S. 334. 351 (1959): National Broadcasting Co. v. United

States, 319 U.S. 190. 222-224 ( 1943). but we are not em-

powered to enforce the antitrust laws. Here. we are con-

fronted with the potential common ownership of WNYW.

whose advertising revenues of $151.7 million comprise less

than five percent of the $3.1 billion LNA assigns to the

NAACP contends that the New York market should be

defined in terms of the number of readers and viewers rather

than advertising revenues. However. because such revenues are

a function of circulation and viewership. we believe the amount

of advertising is a sound basis for analyzing market share.

·1"

NAACP indicates that the one percent attributed to the Post

may be greater in that the daily, according to the newspaper's

publisher. Patrick Purcell. suffered a steep decline in paid ad-

vertising after the "circulation scandal" of August 1992. During

the "biggest" advertising period of the year,'&Purcell states. "the

Post was forced to give away pages." Although we do not

attempt here to numerically define the maximum allowable

market share under our public interest standard, we note that

an applicant's media holdings must "be viewed functionally in

the context of the particular market involved. its structure.

history and probable future." Stauffer Publicazions, Inc.. 59

F.C.C. 2d 83b. 847 ( 1976) ( quoiing U.S. v. Conzinental Can Co .

es." Although we do not

attempt here to numerically define the maximum allowable

market share under our public interest standard, we note that

an applicant's media holdings must "be viewed functionally in

the context of the particular market involved. its structure.

history and probable future." Stauffer Publicazions, Inc.. 59

F.C.C. 2d 83b. 847 ( 1976) ( quoiing U.S. v. Conzinental Can Co ..

378 U.S. 441. 458 (1964)). In the case before us. the New York

media market has neither a history of. nor indicated a trend

toward. concentration. And even assuming the Pos(s normal

advertising revenues would have been twice the $32.8 million

LNA claims. or even three times that amount. we still would

conclude that our goal of preventing undue concentration of

economic power in the New York market would not be

disserved by common ownership.

.io

NAACP asserts that Murdoch's current ownership of n·

Guide. which. it alleges. is the second largest circulated periodi-

cal in the market. has "serious implications" for Murdoch's

media influence. Yet. NAACP provides no specific support for

that premise. In contrast. the advertising market presented by

Fox, as described by William Shew of Arthur Andersen Eco-

nomic Consulting. is predicated only upon commercial televi-

sion.

commercial

radio.

daily

newspaper

and

outdoor

advertising in the New York ADI. and omits all periodicals.

which would. if included, dilute the perceived strength of TV

Guide. We have no factual basis. therefore. for believing that IV

Guide garners a percentage of the market substantial enough to

trigger anticompetitive concerns. Indeed, upon Murdoch's ac-

quisition of TV Guide. the Department of Justice and the Fed-

eral Trade Commission had the opportunity to prevent the sale

if they believed Murdoch was amassing an undue amount of

economic control. but declined to do so. Nor has the Depart-

ment of Justice intervened in the proceeding before us.

41

Caucus refers to two civil lawsuits filed against Fox

tive concerns. Indeed, upon Murdoch's ac-

quisition of TV Guide. the Department of Justice and the Fed-

eral Trade Commission had the opportunity to prevent the sale

if they believed Murdoch was amassing an undue amount of

economic control. but declined to do so. Nor has the Depart-

ment of Justice intervened in the proceeding before us.

41

Caucus refers to two civil lawsuits filed against Fox. one

involving allegations that Fox and its television station. KTTV-

TV. Los Angeles, California. unlawfully scheduled Fox Film

5352

New York market.38 and of the Post, whose advertising

revenue of $32.8 million in 1992 comprise one percent of

that market.·19 We believe that a one-percent augmentation

in Murdoch's already five percent share of the New York

market, defined by LNA as only a fraction of the media

outlets available there. does not endanger Commission poli-

cy

of preventing

undue concentration of economic

power.40

51. It is noteworthy that antitrust implications of the

potential common ownership of WNYW and the Post do

not terminate with this proceeding.JI Pursuant)to the Clay-

ton Act.42 the Department of Justice and the Federal Trade

Commission. which generally have primary jurisdiction

with regard to antitrust concerns in most major mergers

and acquisitions, may ultimately pass upon the proposed

purchase of the Post, if Murdoch is selected by the bank-

ruptcy court. to determine if it may go forward.J.l Addition-

ally, allegations of undue concentration of ownership. sup-

ported by an adjudication of economic monopolization in

violation of the Sherman Act.14 under changed market

conditions.JS as well as those regarding specific abuses un-

der common ownership.Jo also specifically supported. can

advertisements and the other. brought by the Disney Company,

involving allegations of antitrust violations by Fox and other

Murdoch companies

tration of ownership. sup-

ported by an adjudication of economic monopolization in

violation of the Sherman Act.14 under changed market

conditions.JS as well as those regarding specific abuses un-

der common ownership.Jo also specifically supported. can

advertisements and the other. brought by the Disney Company,

involving allegations of antitrust violations by Fox and other

Murdoch companies. to argue that Fox "is hardly the ideal

candidate for a permanenz waiver of a rule that is designed to be

the FCC's major bulwark against anti-competitive activity."

However. both suits ended in settlement. and settlement agree-

ments. like consent decrees. do not constitute "adjudicated mis-

conduct" and are. therefore. not probative of an applicant's

character.

even

though

they

involve

broadcast-related

businesses. Policy Regarding Character Qualifications in Broad-

casi Licensing. 102 F.C.C. 2d 1179. 1201. 1205 (19811). on recon ..

l F.C.C. Red -121 ( 198b). appeal dismiHed rnb 1zom . .\ational

Associalion for Belter Broadcasting v. FCC. No. Xll-1179 ( D.C.

Cir. 1987); see also Policy Regarding C/zaracter Qualificatium in

Broadcasl Licensing, 5 F.C.C. Red 3252 ( 1990). recon. denied. b

F .C.C. Red 3-1-18, 3-1-18--19 ( 199 I). further re con. "(pending.

42

15 U.S.C. §l8a.

4:l

Although. as Caucus indicates. the Department of Justice

intervened in the rule making proceeding in support of im-

plementation of the broadcast-ne\vspaper cross-ownership rule.

Further .\otice of Proposed Rule .\faking in Docket :Vo. 18110. 22

F.C.C. 2d 339. 344 ( 1970). it has expressed no objection to the

permanent waiver request now before us. Commenters and

other parties are free. of course. to present their arguments

regarding economic concentration to the Department of Justice .

.14

Section I of the Sherman Act. 15 U.S.C. §1. forbids con-

tracts or conspiracies in restraint of trade or commerce. and

Section 2. 15 U.S.C. §2. addresses the actions of single firms that

monopolize or attempt to monopolize

ver request now before us. Commenters and

other parties are free. of course. to present their arguments

regarding economic concentration to the Department of Justice .

.14

Section I of the Sherman Act. 15 U.S.C. §1. forbids con-

tracts or conspiracies in restraint of trade or commerce. and

Section 2. 15 U.S.C. §2. addresses the actions of single firms that

monopolize or attempt to monopolize. as well as conspiracies

and combinations to monopolize.

JS That is not to say, however, that we will actually determine

whether antitrust laws have been violated. Those are matters for

the Department of Justice. Cahill and Kaswell. 37 R.R. 2d 197.

199 ( 1976).

40

Examples of specific abuse include preferential treatment

received by a station in the commonly owned newspaper, such

as out-of-sequence listing of the television station's program-

ming, :\'ewhouse Broadcasting Corp., 73 F.C.C. 2d !Xii. 190-191

( 1979), or the "consistent featuring" by text m photograph in

the newspaper of the co-owned television station's program-

ming, WGAL-Television, Inc., 62 F.C.C. 2d 527. 531-32 ( 1976),

and licensee conduct resulting in artificially established prices

for local advertising. KSL. Inc .. 39 R.R. 2d 249. 253 ( 1(176).

Specific allegations of abuse. however. will be designated for

hearing "only if the abuse was so detrimental to the public or to

the licensee's competitors that when balanced against the degree

ogram-

ming, WGAL-Television, Inc., 62 F.C.C. 2d 527. 531-32 ( 1976),

and licensee conduct resulting in artificially established prices

for local advertising. KSL. Inc .. 39 R.R. 2d 249. 253 ( 1(176).

Specific allegations of abuse. however. will be designated for

hearing "only if the abuse was so detrimental to the public or to

the licensee's competitors that when balanced against the degree

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

be considered in WNYW's renewal proceeding. Second Re-

port and Order, 50 F.C.C. 2d at 1080 n.29, 1088. Such

review should provide an adequate deterrent to the poten-

tial for abuses of common ownership.47 Accordingly, we

decline commenters· suggestions as to further behavioral

safeguards.48 Having assessed the New York City market. as

well as the particular circumstances involved in this re-

quest. we believe that Murdoch's common ownership com-

ports with our dual goals of diversity and economic

competition.

52. In conclusion. although this is the first time we have

been faced with a sufficiently persuasive case to grant a

permanent waiver of our cross-ownership rule for the cre-

ation of a "new" broadcast-newspaper combination under

existing waiver criteria.49 we find that Fox has amply jus-

tified its request. lcomporting with the high burden neces-

sary to warrant grant of a waiver of such duration. In light

of the limited field of potential purchasers of the insolvent

newspaper. we believe that grant of a permanent waiver

does not disserve our policies and concomitantly accom-

modates bankruptcy law policies -- equality of distribution

among creditors. a fresh start for debtors. and the efficient

and economical administration of cases--by ensuring that

that field is not unduly diminished. We note. however. our

grant today is personal to Murdoch and News Corp .. as

controlling entities of both WNYW and. possibly. the Post

sserve our policies and concomitantly accom-

modates bankruptcy law policies -- equality of distribution

among creditors. a fresh start for debtors. and the efficient

and economical administration of cases--by ensuring that

that field is not unduly diminished. We note. however. our

grant today is personal to Murdoch and News Corp .. as

controlling entities of both WNYW and. possibly. the Post.

of media concentration a substantial and material question is

raised whether continued license renewal would be in the pub-

lic interest." KHQ. Inc .. 87 F.C.C. 2d 705. 713 (1981).

4-

Caucus, Fulani and one letter-writer allege that the com-

petitive advantages common ownership yield have been, as

Fulani states. "blatantly displayed" since Murdoch's assumption

of control of the Post in late March: on'. April 5, the newspaper

featured a page-three "Post Exclusive," a promotion for that

evening's edition of "A Current Affair," a Fox program to have

been aired on WNYW: and on April 23. the Post ran five

"plugs" for WNYW and Fox in page-six and -seven feature

stories or columns. However. six references to a commonly

owned media outlet do not amount to abuse. particularly where

there is no indication that the same would not have occurred

were the two media separately owned.

4"

Caucus points to then-Commissioner Ouello's separate state-

ment. at the time the cross-ownership rule was adopted. that

the Commission require operational separation of a commonly

owned broadcast station and daily newspaper. We note. how-

ever, that Commissioner Ouello argued. in the alternative, for

"extreme vigilance on a case-by-case basis." The ability of inter-

ested parties to bring evidence of any misconduct arising from

the common ownership of WNYW and the Post to the Commis-

sion's attention at renewal time, as well as Fox's obligation

under Section l.65(c) of the Commission's Rules to disclose any

adverse adjudications bearing upon its character qualifications.

p.rovide such oversight

eme vigilance on a case-by-case basis." The ability of inter-

ested parties to bring evidence of any misconduct arising from

the common ownership of WNYW and the Post to the Commis-

sion's attention at renewal time, as well as Fox's obligation

under Section l.65(c) of the Commission's Rules to disclose any

adverse adjudications bearing upon its character qualifications.

p.rovide such oversight.

9

Indeed, we note that while NAACP is correct in its conten-

tion that "the normal time period" for past Commission \\aiver

grants has been 18 months to three years, in virtually every past

cross-ownership waiver case, all of which involved new com-

binations, we actually granted the duration of time the ap-

plicants requested. E.g.. The Evening New.1 Association. 102

F.C.C. 2d 1263, 1265 n.2 ( 1986)(request of a divestiture deadline

of October I, 1989 granted): Metromedia Radio & Television.

Inc .. 102 F.C.C. 2d 1334, 1337 ( 1986)(request of two years grant-

ed); Twentieth Holdings. Inc., I F.C.C. Red 1201 ( 1986)(request

of 18 months granted): Golden West Associates. L.P., 59 R.R. 2d

125, 127 (1985)(request of 18 months granted): Stauffer Publica-

tions. Inc., 66 F.C.C. 2d 653, 654 (1977)(request of three years

granted), but cf.. Twentieth Holdings Corp .. 4 F.C.C. Red 4052

( 1989)(request for approval of permanent insulated trust as

5353

Consequently. waiver of the cross-ownership rule termi-

nates upon a long-form transfer of control of either entity

or assignment of either media outlet.

53. NAACP's suggestion that Murdoch hold the Post for

a one-and-a-half-year period in what would be essentially a

caretaker capacity. with the singular aim of reviving the

paper until a minority-controlled entity has arranged fi-

nancing.so finds no support in either our minority owner-

ship policies or the cross-ownership rule.s 1 Although we

have implemented policies to encourage licensees to sell to

minority-controlled businesses. such as those cited by

NAACP. ,\finority Ownership in Broadcasting, 92 F.C.C

taker capacity. with the singular aim of reviving the

paper until a minority-controlled entity has arranged fi-

nancing.so finds no support in either our minority owner-

ship policies or the cross-ownership rule.s 1 Although we

have implemented policies to encourage licensees to sell to

minority-controlled businesses. such as those cited by

NAACP. ,\finority Ownership in Broadcasting, 92 F.C.C. 2d

849 (1982), and Report on .\1inority Ownership in the Broad-

casting Industry, F.C.C. Office of Public Affairs ( 1978), we

have never adopted a policy that would mandate such sales.

Moreover. we have no jurisdiction over the employment

practices of newspapers. 2 and. as stated previously. bank-

ruptcy court is the forum in which purported04purchasers.

minority-controlled or otherwise. should now present their

proposals.

54. Similarly. we cannot deny grant of a waiver based on

allegations. even if true. that Murdoch will practice. as he

purportedly did under his former ownership of the Post,

racist and inflammatory journalism. That is because we are

proscribed from interfering with a newspaper's exercise of

freedom of expression. Near v .. Winnesota, 283 U.S. 697

grounds for new combination granted with conditions); Owosso

Broadcasting Co., (1() R.R. 2d 99 ( l98b)(alternative request by

"egregious" newspaper-AM-FM combination. operating under

the divestiture order in Seco11d Report and Order. for waiver

until March l, 1987 granted in lieu of indefinite stay).

In contrast. Fox has requested neither Commission approval

of a temporary insulated trust. as it did for its Boston media

outlets in Twentieth Holdings. Inc.. l F.C.C. Red 1201 ( l9H6), or

a temporary waiver, as NAACP would prefer we grant here

today. Instead. Fox seeks a permanent waiver for a new com-

bination. Thus, we emphasize here. as we stated in Washington

Star, 54 F.C.C. 2d at 675-07<1. "ltlhat other courses of action

might be available. that other measures might be possible. and

that other media interests might be disposable

ldings. Inc.. l F.C.C. Red 1201 ( l9H6), or

a temporary waiver, as NAACP would prefer we grant here

today. Instead. Fox seeks a permanent waiver for a new com-

bination. Thus, we emphasize here. as we stated in Washington

Star, 54 F.C.C. 2d at 675-07<1. "ltlhat other courses of action

might be available. that other measures might be possible. and

that other media interests might be disposable. may be matters

properly the subject of our scrutiny. Here. however. our pri-

mary concern lies with the alternative chosen by the licensee.

." That no applicant since Washington Star has formally re-

quested a permanent waiver apparently demonstrates the per-

ceived inability of potential applicants to bear the requisite

heavy burden rather than. as Caucus surmises. the "perceived

unavailability of such extraordinary relief."

so

Salt City Communications. Inc .. 8 F.C.C. Red 6H3. 686 n.15

(1993), invoked by NAACP in this regard, does not support its

proposition. In that case we held only that an applicant's reli-

ance on a properly organized and experienced minority enter-

prise

small

business

investment

company.

or

MESBlC.

constitutes reasonable assurance of financial qualification, an

issue not present here.

St

It is noteworthy, for example. that the Commission consid-

ered and rejected a proposed requirement that ownership of any

divested station under the cross-ownership rule should pass to

minority group control. See Second Report and Order. 50 F.C.C.

2d at 1086.

52

We have no regulatory power. contrary to the belief of some

commenters. with regard to employment practices at the Post

or at any commonly owned newspaper. Thus. it is inappropriate

for NAACP. citing Gulf Dunes Broadcasting, Inc., 7 F.C.C. Red

1593 ( 1992). to analogize Kaliknw's possible transfer of the Post

to the transfer of a television station in which we may compel

transferees to implement certain EEO reporting conditions.

o the belief of some

commenters. with regard to employment practices at the Post

or at any commonly owned newspaper. Thus. it is inappropriate

for NAACP. citing Gulf Dunes Broadcasting, Inc., 7 F.C.C. Red

1593 ( 1992). to analogize Kaliknw's possible transfer of the Post

to the transfer of a television station in which we may compel

transferees to implement certain EEO reporting conditions.

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

( 1931 ). SJ Even if such allegations were directed at WNYW,

a broadcast station over whose content we do have a limit-

ed role. see, e.g., FCC v. Pacifica Foundation, 438 U.S. 726.

74 7 (1978). both the First Amendment and Section 326 of

the Act forbid us from censoring subject matter and opin-

ions relating to religious beliefs. race or national back-

ground, regardless of how offensive they may he. e.g.,

Thaddeus L. Kowalski, 46 F.C.C. 2d 124 ( 1974 ). aff'd sub

nom. Polish American Congress v. FCC. 520 F.2d 1248 (7th

Cir. 1975), cert. denied, 424 U.S. 927 (1976). and from

curbing expression. outside narrowly defined classes of

speech, such as indecency. that does not involve "a clear

and present danger of a serious substantive evil that rises

far above public inconvenience. annoyance. or unrest."

Anti-Defamation League of B Nai B rith, 4 F.C.C. 2d 190.

191 ( 1966). aff'd, 403 F.2d 169 (D.C. Cir. 1968). cert.

denied, 394 U.S. 930 (1969)( quoting Terminiello v. Chicago,

337 U.S. 1, 4 (1949); Chaplinsky v. New Hampshire, 315

U.S. 568 (1942)).

55. Finally. our decision here today is consistent with the

Congressional directive that the Commission refrain from

the use of appropriations "to repeal. to retroactively apply

changes in. or to hegin or continue a reexamination of the

rules and the policies established to administer" the broad-

cast-newspaper cross-ownership rule. Waivers for new tele-

vision-daily newspaper combinations

).

55. Finally. our decision here today is consistent with the

Congressional directive that the Commission refrain from

the use of appropriations "to repeal. to retroactively apply

changes in. or to hegin or continue a reexamination of the

rules and the policies established to administer" the broad-

cast-newspaper cross-ownership rule. Waivers for new tele-

vision-daily newspaper combinations. "in the event that in

a particular case our approach could he unduly harsh."

were contemplated from the time of the rule's adoption.

Second Report and Order. 50 F.C.C. 2d at 1077. Our action

today, with regard to a case of first impression. reflects

adherence to the standards originally developed for evalu-

ation of waiver requests and provides the requisite "safety

valve procedure for consideration of an application for

exemption based on special circumstances." WAIT Radio v.

FCC, 418 F.2d 1153. 1157 (D.C. Cir. 1969). And contrary

to NAACP's assertion. the policies underlying the cross-

ownership rule are not contravened by virtue of our grant

SJ

Nor. as one letter-writer requests. can we compel Murdoch

to publish, as a quid pro quo for grant of the waiver. a full page

of letters to the editor each day. See. e.g. Jfiami Herald Publish-

ing Co. v. Tomi/lo, -118 U.S. 2-11. 256 ( 197-1).

s~ NAACP. citing Northeast Cellular Telephone Company. L.P.

v. FCC, 847 F.2d l lo-1 (D.C. Cir. J<J<IO). argues that policy is

inherently implicated with the decision to waive the rule. The

court in that case remanded our grant of a waiver where. it

held, the Commission did not articulate "any standard by which

!the court! can determine the policy underlying its waiver." Id.

at 1166. In the case before us. however. the waiver ~tandard was

cast at the time of the rule's adoption and we are acting in

accord with the :\'ortheast Cellular court"s"5instruction: granting

waiver "only pursuant to a relevant standard ... !which isl best

expressed in a rule that obviates discriminatory approaches." Id

which

!the court! can determine the policy underlying its waiver." Id.

at 1166. In the case before us. however. the waiver ~tandard was

cast at the time of the rule's adoption and we are acting in

accord with the :\'ortheast Cellular court"s"5instruction: granting

waiver "only pursuant to a relevant standard ... !which isl best

expressed in a rule that obviates discriminatory approaches." Id.

(~1wting WAIT Radio v. FCC -118 F.2d at 115<1).

5

Thus. the contention of Fleischman and NAACP, that Com-

mission grant of a waiver here triggers the rule making guide-

lines of Section 553 of the Administrative Procedure Act. is

misplaced.

Sh

Caucus appears to suggest that the Commission must order

an evidentiary hearing in this case because the proposed cross-

ownership is "voluntary." To support this proposition. Caucus

cites Washington Star. 5-1 F.C.C. 2d at 675, where the Commis-

sion ordered a hearing because of what Caucus characterizes as

the "voluntary decision of the licensee to seek to retain the

broadcast properties and the newspaper." But the cited refer-

ence in Washington Star is a different context. There, the Com-

mission was merely disaffirming the applicant"s suggestion that

5354

of a waiver, hecause "ltlhe very essence of waiver is the

assumed validity of the general rule. and also the ap-

plicant's violation unless waiver is granted." Id. at 1158.54

Indeed.

in

upholding

the

cross-ownership

rule.

the6Supreme Court found that its "reasonableness" as a

means of achieving diversification is "underscored by the

fact that waivers are potentially available from both the

prospective and the divestiture rules .... " FCC v. NCCB,

436 U.S. at 802 n.20_7ss

56. Because there are no suhstantial and material issues

of fact to be resolved regarding Fox·s compliance with the

fourth waiver category, an evidentiary hearing is not war-

ranted. 56 See Second Report and Order, 50 F.C.C

cation is "underscored by the

fact that waivers are potentially available from both the

prospective and the divestiture rules .... " FCC v. NCCB,

436 U.S. at 802 n.20_7ss

56. Because there are no suhstantial and material issues

of fact to be resolved regarding Fox·s compliance with the

fourth waiver category, an evidentiary hearing is not war-

ranted. 56 See Second Report and Order, 50 F.C.C. 2d at

1086 ("There is no requirement for the holding of an

evidentiary hearing imposed by law absent the raising of

substantial factual issues and we shall not take on a point-

less task."): see also 47 U.S.C. §309(e)(hearing required

only when there is a substantial and material question of

fact or the Commission is unable to make the finding

specified). 57

57. Accordingly. in the event the hankruptcy court. the

final decision-maker with regard to the Pos(s disposition.

does. in fact. approve Murdoch as the newspaper's new

owner. we find that it is in the puhlic interest to waive the

cross-ownership rule in order that Murdoch may indefi-

nitely control hoth the Post and WNYW. In this regard. as

discussed helow. we find that allegations of misrepresenta-

tion and EEO violations against Fox are groundless and

present no impediment.

MISREPRESENTATION

58. Pfe,1dings. In its Request to Specify Misrepresentation

Issues Against Murdoch and Fox. filed May 6. I Q93 (Re-

quest to Specify). Caucus alleges that Fox made two mis-

representations of

material

fact

to

the

Commission

regarding its waiver request.s~ According to Caucus. the

the transaction was exempt from the rule because the proposed

transfer was "not a truly voluntary action." but was instead

precipitated by the financial problems besetting the Star-:Vews.

Id. at 673. Yet. we held in that case. as we do here, that the

cross-ownership rule applies to situations involving severe eco-

nomic distress and bankruptcy. hut that waiver may be had if

appropriate. Sec id. at 675.

Moreover, this case is distinguishable from Washington Swr

r was "not a truly voluntary action." but was instead

precipitated by the financial problems besetting the Star-:Vews.

Id. at 673. Yet. we held in that case. as we do here, that the

cross-ownership rule applies to situations involving severe eco-

nomic distress and bankruptcy. hut that waiver may be had if

appropriate. Sec id. at 675.

Moreover, this case is distinguishable from Washington Swr. a

case in which the Commission designated for hearing the issue

of whether a permanent waiver should be granted under the

first waiver standard. because the applicant had not made a

sufficient factual showing of inability to find another buyer for

the Star-News. In contrast. we have sufficient facts before us

here to grant a waiver under the fourth standard.

s7

We also reject Caucus' request that the Commission itself

hold a two-hour oral argument on the subject of granting Fox a

waiver request. In marked contrast to ABC-ITT .itcrger. 7 F.C.C.

Red 2-15 ( 1967). a case Caucus cites in support of its request for

oral argument and in which there were no adversary parties, id.

at 2-17. the bulk of the record before us contains adversarial

comments regarding fact and law. The procedure employed in

this proceeding, inviting and permitting intervention without a

showing of standing or interest, has yielded a fully developed

record. comprising more than 350 pages of8pleadings. nearly

half that amount of exhibits. and dozens of letters, upon which

we are able to reach a reasoned decision.

5 ~ As an additional matter. NAACP also seeks the designation

of issues against Fox. The NAACP asserts that Fox made untrue

ng and permitting intervention without a

showing of standing or interest, has yielded a fully developed

record. comprising more than 350 pages of8pleadings. nearly

half that amount of exhibits. and dozens of letters, upon which

we are able to reach a reasoned decision.

5 ~ As an additional matter. NAACP also seeks the designation

of issues against Fox. The NAACP asserts that Fox made untrue

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

Commission should therefore designate issues to determine

whether Fox is "basically qualified" to receive a waiver. 50

Request to Specify at 2. 17-18. Additionally. Caucus sug-

gests that the Commission should designate the license of

WNYW for an early renewal hearing.00

59. Caucus first asserts that Fox falsely told the Commis-

sion. in its waiver request. that it was imperative that the

Commission act by June l. 1993. because the interim

management agreement had a termination date of June l.

Caucus accuses Fox of concealing the fact that the manage-

ment agreement actually provided for a 30-day extension.

until July l. and that Murdoch had already informed the

bankruptcy court that the management agreement would

be extended 30 days if necessary to obtain a grant of the

waiver request. Caucus contends that Fox's alleged mis-

representation was intended to pressure the Commission

into hasty action on the waiver request by exaggerating the

danger that delayed action would lead to the collapse of the

Post.

60. Caucus next asserts that Fox misrepresented to the

Commission that News Corp. was the only serious potential

purchaser of the Post. Caucus claims that the circum-

stances detailed at paragraphs 29-30. above. establish that

Champion has been a serious bidder for the Post since at

least March 19. 1993. and that Champion would probably

have acquired the Post except for Murdoch's preemptive

involvement. According to Caucus. despite Murdoch's in-

volvement. Champion has indicated a continued willing-

ness to purchase the Posl

. Caucus claims that the circum-

stances detailed at paragraphs 29-30. above. establish that

Champion has been a serious bidder for the Post since at

least March 19. 1993. and that Champion would probably

have acquired the Post except for Murdoch's preemptive

involvement. According to Caucus. despite Murdoch's in-

volvement. Champion has indicated a continued willing-

ness to purchase the Posl. Additionally. Caucus asserts that

there are other potential purchasers of the Posl, including

media owner. Mortimer Zuckerman. 01

6 l. Fox denies that it misrepresented any material facts

to the Commission. Fox accuses Caucus· attorney of pursu-

ing a pattern of baseless allegations against Fox.

62. Fox maintains that it did not mislead the Commis-

sion in urging expeditious action on the waiver request.

Fox asserts that it accurately told the Commission in the

waiver request that Murdoch had agreed to manage and

provide financing to Posl until "at least June 1. 1993."

Request for Waiver at 7. Fox also observes that shortly after

filing the waiver re4uest it submitted a copy of the manage-

ment agreement (which set forth the termination and ex-

tension

provisions) and

the

bankruptcy court order

approving it. on April 12. 1993. Fox asserts that it never

represented that June 1. 1993 was a court-imposed (as

opposed to contractual) deadline and contends that it al-

ways made clear that it was merely attempting to limit the

extreme burden of managing the Posl on an interim basis.

statements to the Commission and that Fox used statements

supporting the waiver request to argue that the Commission

should grant a permanent waiver. when the individuals who

made the statements did not advocate that the waiver should be

permanent. We find no prima facie basis in these allegations to

conclude that Fox committed serious misconduct. The NAACP

expressly declines to assert that the allegedly untrue statements

were intentional misrepresentations. Petition to Deny. filed May

10, 1993. at 8. Moreover

ld grant a permanent waiver. when the individuals who

made the statements did not advocate that the waiver should be

permanent. We find no prima facie basis in these allegations to

conclude that Fox committed serious misconduct. The NAACP

expressly declines to assert that the allegedly untrue statements

were intentional misrepresentations. Petition to Deny. filed May

10, 1993. at 8. Moreover. while the NAACP observes that the

statements supporting the waiver do not distinguish between a

permanent or temporary waiver. this does not establish that the

statements were fabricated. fraudulently obtained. or otherwise

irregular.

59

We understand this as an assertion that Fox seeks a waiver

with "unclean hands." See WKAT. Inc. v. FCC. 2% F.2d 375.

383 (D.C. Cir. 1%1).

0° Caucus contends that the misrepresentations alleged here

5355

Moreover. Fox rejects the suggestion that it sought to pres-

sure the Commission into making an inappropriate de-

cision.

63. Fox also maintains that its statements regarding other

potential purchasers were not misleading. Fox denies that it

claimed that Murdoch was the only potential purchaser of

the Post. Rather. Fox insists that it argued only that pur-

chase by Murdoch was the only "viable" plan for saving

the Post.02

64. Fox accuses Caucus of exaggerating Champion ·s sta-

tus as a potential purchaser of the Post. Fox submits an

analysis of Champion ·s proposal by VS&A. which con-

cludes that Champion lacks both the experience and a

realistic financial plan to operate the Post. The Creditors

similarly note that Champion's proposal was deficient.

65. Fox also takes issue with Caucus· description of

Champion's activities and disclaims the suggestion that Fox

must have known about them. Fox explains that although

Champion ·s attorney appeared at the March 19

. which con-

cludes that Champion lacks both the experience and a

realistic financial plan to operate the Post. The Creditors

similarly note that Champion's proposal was deficient.

65. Fox also takes issue with Caucus· description of

Champion's activities and disclaims the suggestion that Fox

must have known about them. Fox explains that although

Champion ·s attorney appeared at the March 19. 1993 hear-

ing session: ( 1) Champion was not identified as the party

being represented: (2) the bankruptcy judge declined to

take up Champion's proposal: and (3) no $1 million check

was presented to the judge. According to Fox. News Corp."s

general counsel. Siskind. was told by Peter Faris. a Post

vice president. of Champion's interest in acquiring the Posi

but was also told that. as of March 2-L 1993. Faris believed

that Champion was no longer interested. Fox points out

that Champion did not appear at subsequent sessions of the

bankruptcy court03 and denies that Fox had any contem-

poraneous knowledge of Champion ·s memorandum of un-

derstanding.

In

any

event.

Fox

asserts

that

the

memorandum of understanding reflected no real agreement

between Champion and the Post and that Champion's pro-

posal was rejected by the creditors· committee. Fox submits

statements by Kalikow. explaining why he did not deal

with Mortimer Zuckerman and others.

66. Discussion. Although Section 309(d) of the Commu-

nications Act. .+7 U.S.C. * 309(d) does not technically

apply to a waiver proceeding or a re4uest to call up an

early renewal application. we have nevertheless examined

Caucus· allegations and Fox·s responses under the Section

309(d) standards for designating a hearing issue in connec-

tion with a pending application. See Asiroline Communica-

lions Company Limiled Partnership v. FCC, 857 F.2d 1556.

1561-62 (D.C. Cir. 1988). We find that the totality of the

evidence before us does not raise a substantial and material

question of fact that would justify further inquiry

allegations and Fox·s responses under the Section

309(d) standards for designating a hearing issue in connec-

tion with a pending application. See Asiroline Communica-

lions Company Limiled Partnership v. FCC, 857 F.2d 1556.

1561-62 (D.C. Cir. 1988). We find that the totality of the

evidence before us does not raise a substantial and material

question of fact that would justify further inquiry. Our

focus is a narrow one: whether. on the hasis of the plead-

should be considered in conjunction with alleged misconduct

adjudicated in the comparative renewal proceeding involving

Fox's station KTTV in Los Angeles. California. That proceeding

has not. however, resulted in any finding that Fox committed

disqualifying misconduct and is not yet ripe for consideration.

See Fox Television Stations, Inc.. 8 FCC Red 23ol (Rev. Bd.

llJlJ3), rev. pending.

01

Among other media interests. Zuckerman owns the \"cw

York Dailv Sews.

" 2 In this regard, other commenters seconded Fox's claim that

Murdoch was the only viable purcha>cr. See Comments of

Creditors at 2--l. 7-8.

03

Champion claims that it was not aware of or invited to

subsequent bankruptcy court conferences. Reply to Consolidated

Reply Comments of Fox Television Stations. Inc. ("Fox") Dated

May 17. llJ93, filed May 25. 1993 by Champion (Champion

Reply) at 8.

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

ings filed or other matters of which we may take official

notice, the evidence arouses a sufficient doubt as to wheth-

er Fox intended a factual deception of the Commission to

warrant further inquiry. See Astroline, 857 F.2d at 1561-62:

Fox River Broadcasting, Inc., 93 FCC 2d 127. 129 ~ 6

( 1983).

67. With this in mind. we turn first to the representa-

tions Fox made in connection with its request that the

Commission act by June l, 1993. As outlined below. we

find that the totality of the evidence raises no substantial

and material question that Fox attempted to deceive the

Commission

y. See Astroline, 857 F.2d at 1561-62:

Fox River Broadcasting, Inc., 93 FCC 2d 127. 129 ~ 6

( 1983).

67. With this in mind. we turn first to the representa-

tions Fox made in connection with its request that the

Commission act by June l, 1993. As outlined below. we

find that the totality of the evidence raises no substantial

and material question that Fox attempted to deceive the

Commission. although some statements made by Fox in· its

waiver request. filed April 7. 1993, while technically ac-

curate. are potentially misleading. For example. Fox stated

without qualification: "[T[he management agreement ap-

proved by the Court has a termination date of June l,

1993 .. · .. It is therefore imperative that the Commission

act as expeditiously as possible and in any event prior to

June 1. 1993." Waiver Request at 8. The statement that the

management agreement has a June 1 termination date is

literally true. However. it is not fully revealing since .the

management agreement also provided for a 30-day exten-

sion at Murdoch's sole discretion. Request to Specify. Ap-

pendix B at 5. Moreover. Siskind represented to the

bankruptcy court. on March 25. 1993. that Murdoch was

"prepared to extend that sixty-day period to ninety days if

the extension is required to obtain the FCC waiver." Id.,

Appendix A at Tr. 63. Thus. the claim that action by June

1 was "imperative" might be considered an overstatement.

Similarly. Fox's characterization. without qualification. of

June 1. 1993 as a "deadline" was potentially misleading for

the same reason. Waiver Request at !I 7. In this regard. the

Commission's public notice setting the period for public

comment specifically noted that: "The termination date of

the court-approved management agreement is June 1.

1993." Public Notice, note 1. above.

68. Other evidence. however. rebuts these inferences and

indicates that there is no substantial and material question

of deceptive intent. In contrast to the statements cited

above

ard. the

Commission's public notice setting the period for public

comment specifically noted that: "The termination date of

the court-approved management agreement is June 1.

1993." Public Notice, note 1. above.

68. Other evidence. however. rebuts these inferences and

indicates that there is no substantial and material question

of deceptive intent. In contrast to the statements cited

above. another statement in the waiver re4uest plainly

appears to contemplate the possibility of operation beyond

June 1. Fox said: "under [the management agreement[ NYP

agreed to manage and provide financing to the newspaper

until at least June 1. 1993." Waiver Request at 7 (Emphasis

added.) This language underscores that although Fox urged

the Commission in extreme terms to act by June 1. it did

not conceal the fact that the "deadline" was self-imposed

and thus subject to being extended, if Murdoch so

desired.M Conversely. despite the extension provision.

Murdoch was contractually obligated to manage the Post

04

As a collateral matter, there is no basis for Caucus' allega-

tion that: "The Agreement provides for a 30-day extension, if

necessary. A FACT NEVER DISCLOSED TO THE FCC." Re-

quest to Specify at 6 (Emphasis in the original.) it is not true

that the extension was never disclosed. Fox submitted the agree-

ment, which contains the termination provision, at the request

of the Mass Media Bureau. shortly after filing the waiver re-

quest. before any oppositions were filed. See Letter from Hogan

& Hartson to Barbara Kreisman (Chief, Video Services Di-

vision) (Apr. 12. llJ93)

hS

See. e.g .. the analysis by VS&A. Consolidated Reply Com-

ments, filed May 17. 1993. by Fox (Consolidated Reply). Appen-

dix C. See also Comments of Creditors at -1-6 and the discussion

5356

only through June 1. Thus, Fox could truthfully tell the

Commission that there was a potential risk that Murdoch

would abandon the Post, if as of June 1, it did not appear

that favorable Commission action was likely

the analysis by VS&A. Consolidated Reply Com-

ments, filed May 17. 1993. by Fox (Consolidated Reply). Appen-

dix C. See also Comments of Creditors at -1-6 and the discussion

5356

only through June 1. Thus, Fox could truthfully tell the

Commission that there was a potential risk that Murdoch

would abandon the Post, if as of June 1, it did not appear

that favorable Commission action was likely. Under these

circumstances. although Fox's language was intemperate. it

did not materially distort the facts. Thus. there is no sub-

stantial and material question of intent to mislead.

69. As to Fox's representations regarding other potential

purchasers of the Post, we find that most of statements

made in this regard state simply that there are no other

"viable" purchasers of the Post. For example, Fox stated:

"[Operation by Murdoch! is the only viable way to pre-

serve New York's fourth major daily printed voice." Waiv-

er Request at 12. Whether a potential purchaser is "viable"

is by its very nature a question of opinion. and. indeed,

(see paragraph 38, above). we required Fox to make a

detailed showing in support of this generalization. Thus, we

find no prima facie question of misrepresentation based on

such statements. In any event. our own review of the

materials before us suggested that the question of Cham-

pion's viability was far from clear cut, and doubts about its

proposal were borne out by subse4uent events.h5 Thus there

is no substantial and material question of fact regarding

misrepresentation or lack of candor.

70. Two statements. 11owever. are more troublesome. Fox

represented that:

... [Njo other potential purchaser came hefore the

Bankruptcy Court to propose any interim plan to

save the Sew York Post. Thus. no viahle purchaser

other than NYP has demonstrated a willingness to

take on the enormous challenge and cost of stabiliz-

ing. much less revitalizing, the newspaper.

Waiver Request at 5. Similarly. Fox stated: "In fact

. are more troublesome. Fox

represented that:

... [Njo other potential purchaser came hefore the

Bankruptcy Court to propose any interim plan to

save the Sew York Post. Thus. no viahle purchaser

other than NYP has demonstrated a willingness to

take on the enormous challenge and cost of stabiliz-

ing. much less revitalizing, the newspaper.

Waiver Request at 5. Similarly. Fox stated: "In fact. neither

the Court nor any other party has been willing to 'itep in

and assume management responsibilities given the incredi-

bly difficult circumstances present at the newspaper." Op-

position to "Request to Modify Prrn.:edural Schedule," filed

April 16. 1993. by Fox at 4. These statements are literally

true since no other purchaser in fact presented an alter-

native plan to the bankruptcy court. However. they appear

potentially misleading since. as set forth in paragraphs

29-30. above. Champion apparently attempted to come be-

fore the bankruptcy court on March 19. l 993on and dem-

onstrate its willingness to purchase and manage the Post

and thereafter pursued discussions with Post officials and

the creditors· committee to perfect its proposal.h-

below. See note 8, supra. In any event, we would not have had

to resolve the question of Champion\ viability in ruling on

Fox's waiver request.

oh The transcript of the bankruptcy hearing does not. however.

support Caucus' statement that "Champion presented the bank-

ruptcy judge with a certified $1,000,000 check at a March 19,

llJ93 hearing session as proof both of Champion's serious inter-

est and its financial wherewithal." Request to Specify at 10. The

transcript indicates that the judge did not take up the subject of

Champion's proposal. Consolidated Reply. Appendix B., Exh. at

Tr. 11 l.

0 ~ In this regard, the Commission\ April lo, llJ93 order di-

rected Fox to provide a description of "efforts !subsequent to

the newspaper's bankruptcy! by the bankruptcy court to dispose

of the newspaper I.

al wherewithal." Request to Specify at 10. The

transcript indicates that the judge did not take up the subject of

Champion's proposal. Consolidated Reply. Appendix B., Exh. at

Tr. 11 l.

0 ~ In this regard, the Commission\ April lo, llJ93 order di-

rected Fox to provide a description of "efforts !subsequent to

the newspaper's bankruptcy! by the bankruptcy court to dispose

of the newspaper I.

8 FCC Red No. 16

Federal Communications Commission Record

FCC 93-340

71. The totality of the evidence before us. however. raises

no substantial and material question that Fox knew of

Champion·s continuing efforts at the time it made these

statements. and without such knowledge there could have

been no intent to deceive. Siskind admits that Post vice

president Faris discussed with him Champion ·s interest in

the Post, between March 22-25, 1993. after Champion's

attempted appearance at the March 19 bankruptcy hearing

and before the filing of the .waiver request. But both

Siskind and Faris indicate that, prior to Fox·s April 7

waiver request. Faris told Siskind that Champion would

not pursue its interest in the Post and that Faris did not

inform him of the memorandum of understanding. Id.,

Appendix B at 3, Appendix F at 4.08 Thus. in the con-

textOof Fox's belief that Champion was no longer pursuing

its interest, the above-quoted statements raise no substantial

and material questions of fact suggesting an intent to

deceive the Commission.

72. In addition, the evidence also does not support the

contention that. subsequent to the discussions between

Siskind and Faris. Fox would "presumably" have found out

about Champion·s proposal at the March 25 creditors·

committee meeting. See Champion Reply at 8. Siskind

acknowledges that the creditors· committee contained News

Corp. representatives. Consolidated Reply. Appendix B at

4. However. Siskind states that those representatives were

excluded from the March 25. 1993 meeting before Cham-

pion presented its proposal. Id.

73. Siskind 's claim that

t

about Champion·s proposal at the March 25 creditors·

committee meeting. See Champion Reply at 8. Siskind

acknowledges that the creditors· committee contained News

Corp. representatives. Consolidated Reply. Appendix B at

4. However. Siskind states that those representatives were

excluded from the March 25. 1993 meeting before Cham-

pion presented its proposal. Id.

73. Siskind 's claim that. after he spoke to Faris. he was

not informed of Champion's subsequent efforts to pursue

its proposal is consistent with the evidence. which indicates

that Champion was not successful in interesting either the

Post's management or the creditors· committee in its pro-

posal.09 In this regard, the evidence does not suggest that

the memorandum of understanding reflected substantial

interest on the part of the Post. Bumbaca. who executed

the agreement on behalf of the Post, explained the cir-

cumstances of its execution. Bumbaca stated that. although

he did not consider Champion ·s proposal realistic. he

signed the memorandum of understanding only so that

Champion would have the opportunity it wanted to present

the proposal to the creditors· committee.-0 Id. Bumbaca

explained that the memorandum did not reflect any nego-

tiation between Champion and the Post and that Bumbaca

did not discuss it with Post officials other than bankruptcy

h 8 Faris stated that soon after the March 19 bankruptcy hearing

he came to believe that Champion was not a viable buyer. He

further stated that. on March 22. 1993, when he told Cham-

pion's owner. Wahba. that Murdoch was interested in bidding

on the Post. Wahba said that he would step aside. Faris states

that, based on several conversations with Wahba, he believed

that Champion had ceased bidding on the Post. Faris states that,

although he knew that Wahba intended to meet with Post

official Bumbaca, he was not aware. at the time, that Bumbaca

had signed a memorandum of understanding with Champion.

Consolidated Reply, Appendix F at 2-5

e Post. Wahba said that he would step aside. Faris states

that, based on several conversations with Wahba, he believed

that Champion had ceased bidding on the Post. Faris states that,

although he knew that Wahba intended to meet with Post

official Bumbaca, he was not aware. at the time, that Bumbaca

had signed a memorandum of understanding with Champion.

Consolidated Reply, Appendix F at 2-5.

h 9

As discussed at note 27, above. it is also apparent that there

is no viable relationship between the Post and Zuckerman.

Zuckerman and Kalikow disagree as to the reasons for the

breakdown of their negotiations. Letter from Hogan & Hartson

to The Secretary, FCC (Apr. 20, 1993); Request to Specify.

Appendix M; Consolidated Reply, Appendix E; Letter from

Mortimer B. Zuckerman to Chairman James H. Quello (May

20, 1993).

5357

counsel. Marilyn Simon. who had instructed Bumbaca to

cooperate with Champion.: 1 Consolidated Reply. Appendix

G at 1-3.

74. Similarly, the evidence indicates that Champion

made no headway with the creditors· committee. See gen-

erally Comments of Creditors. A representative of the

creditors' committee states that the committee notified

Champion by telephone after the meeting that it did not

find Champion's proposal to be the basis for serious nego-

tiation and declined to accept Champion's $1 million

check. Id. at 6, Exh. C. Champion admits that the credi-

tors' committee has shown no interest in further negotia-

tion with Champion. Champion Reply at

11. These

circumstances do not suggest any reason that Fox would

have been apprised of Champion's proposals either on the

basis of Champion's subsequent contacts with the Post or

with the creditors' committee.

75. Accordingly. we find no substantial and material

questions of fact regarding misrepresentation or lack of

candor.

EEO MATTERS

76. NBMC contends that neither WNYW nor the Post

employ African-Americans in managerial or executive posi-

tions. Furthermore. NBMC contends

hampion's proposals either on the

basis of Champion's subsequent contacts with the Post or

with the creditors' committee.

75. Accordingly. we find no substantial and material

questions of fact regarding misrepresentation or lack of

candor.

EEO MATTERS

76. NBMC contends that neither WNYW nor the Post

employ African-Americans in managerial or executive posi-

tions. Furthermore. NBMC contends. African-American

employees at WNYW have filed employment discrimina-

tion complaints with the U.S. Equal Employment Op-

portunity Commission. violations. it claims. are sufficient

to trigger a review of WNYW under Section 73.2080 of the

Commission ·s Rules.

77. With regard to WNYW. Fox notes. 37.5 percent of its

employees are minorities. 22.4 of which are African-Ameri-

cans and 11.8 percent of which are Hispanic.- 2 Of the

top-four job categories at WNYW. Fox further states. 32.5

percent are held by minorities. of which 17.3 percent are

African-Americans and 11.8 percent are Hispanics.

78. Generally. our review of a broadcast licensee·s im-

plementation of its EEO program occurs at renewal time

or in connection with a license assignment or transfer of

control application.- 3 With respect to complaints filed with

the EEOC. resolution of such matters are initially within

the province of that agency pursuant to Memorandum of

-o

As noted at paragraph 30, above. the memorandum of

understanding states on its face that its provisions are contin-

gent on evidence of authorization by the Post to become effec-

tive. Request to Specify. Appendix F.

'I Kalikow, states that the reason he omitted Champion from a

list of potential buyers, requested by the Commission and sub-

mitted on April 20, 1993, is that he had no contact with

Champion. Consolidated Reply, Appendix E at 2. See Letter

from Hogan & Hartson to The Secretary. FCC (Apr. 20, 1993).

R

,,

The New York Metropolitan Statistical Area is approxi-

mately -18

percent minorities

F.

'I Kalikow, states that the reason he omitted Champion from a

list of potential buyers, requested by the Commission and sub-

mitted on April 20, 1993, is that he had no contact with

Champion. Consolidated Reply, Appendix E at 2. See Letter

from Hogan & Hartson to The Secretary. FCC (Apr. 20, 1993).

R

,,

The New York Metropolitan Statistical Area is approxi-

mately -18

percent minorities. 22.2 percent of which are

African-American and 18.5 percent of which are Hispanic.

73

Moreover. we have consistently stated that we will not look

at individual job categories in assessing EEO performance.

Rather, we look to a station's overall employment. including

the upper level job categories as a group. not to specific manage-

rial or executive positions. as NBMC would has us do. Carolina

Christian Broadcasting. Inc., 3 F.C.C. Red 1907. 1909 (1988).

FCC 93-340

Federal Communications Commission Record

8 FCC Red No. 16

Understanding Between the FCC and the EEOC, 70 F.C.C.

2d 2320. 2330 ( 1978). Under these circumstances. further

consideration of these allegations is not warranted. 74

CONCLUSION

79. We find that the commenters have failed to establish

a substantial and material question of fact. Consequently,

there is no need for a hearing under Section 309(d) of the

Act. We also find that grant of Fox's request for waiver of

Section 73.3555(d)(3) will serve the public interest.

80. Accordingly, IT IS ORDERED. that the comments

objecting to Fox's request for a waiver of the broadcast-

newspaper cross-ownership rule ARE DENIED. IT IS

FURTHER ORDERED, THAT the Request to Specify Mis-

representation Issues Against Rupert Murdoch and Fox,

filed May 6, 1993, by the Caucus for Media Diversity IS

DENIED, and that Fox's request for waiver of Section

73.3555(d)(3) IS GRANTED. contingent upon the bank-

ruptcy court's approval of Murdoch's bid or plan of reorga-

nization.

81

oadcast-

newspaper cross-ownership rule ARE DENIED. IT IS

FURTHER ORDERED, THAT the Request to Specify Mis-

representation Issues Against Rupert Murdoch and Fox,

filed May 6, 1993, by the Caucus for Media Diversity IS

DENIED, and that Fox's request for waiver of Section

73.3555(d)(3) IS GRANTED. contingent upon the bank-

ruptcy court's approval of Murdoch's bid or plan of reorga-

nization.

81. The staff of the Mass Media Bureau is directed to

send copies of this declaratory ruling to the parties filing

formal comments by certified mail. return receipt request-

ed.

FEDERAL COMMUNICATIONS COMMISSION

William F. Caton

Acting Secretary

' 4

Employment practices of the newspaper are not relevant to

the Commission's inquiry, and. in any event, the current mi-

nority employment profile at the Post is not attributable to

Murdoch. Nevertheless, Fox indicates in response to NBMC"s

allegations, under Murdoch's ownership of the Post. from Janu-

5358

ary l,

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