In the Matter of AMENDMENT OF SECTIONS 73.35, 73.240 AND 73.636 OF THE COMMISSION'S RULES RELATING TO MULTIPLE OWNERSHIP OF STANDARD, FM AND TELEVISION BROADCAST STATIONS
Docket No. 18110
FEDERAL COMMUNICATIONS COMMISSION
28 F.C.C.2d 662
RELEASE-NUMBER: FCC 71-211
March 2, 1971 Released
Adopted February 26, 1971
BY THE COMMISSION: COMMISSIONERS BURCH, CHAIRMAN; AND WELLS CONCURRING IN THE RESULT; COMMISSIONERS BARTLEY AND JOHNSON CONCURRING IN PART AND DISSENTING IN PART AND ISSUING STATEMENTS.
1. The Commission has before it petitions for reconsideration of a First Report and Order adopted in this proceeding on March 25, 1970, 22 F.C.C. 2d 306, in which it amended its multiple ownership rules so as, generally, to prohibit ownership, operation, or control of more than one broadcast station in the same market. n1 The rules do not require divestiture by any licensee of existing facilities; rather, they apply only to applications for new stations and for assignment of license or transfer of control (other than involuntary or pro forma assignments and transfers) of existing stations.
n1 Petitions for reconsideration were filed by the following parties: American Broadcasting Companies, Inc. (ABC); Badger Broadcasting Company, et al. (Badger); Bedford Broadcasting Corp., et al. (Bedford); Community Broadcasters Association, Inc. (Community); Cook Enterprises, Inc. (Cook); Golden West Broadcasters (Golden West); Kaiser Broadcasting Corporation (Kaiser); Knorr Broadcasting Corporation (Knorr); Lunde Corporation (Lunde); Meredith Corporation (Meredith); the National Association of Broadcasters (NAB); Salt Lake City Broadcasting Company (Salt Lake); 22 Corporation (222 Corp.); and Voice of Orange Empire, Ltd. (Orange Empire). Separate petitions for stay of the effective date of the rules were filed by Badger and by KAKE-TV and Radio, Inc. An opposition to the latter was filed by JACO, INC. In addition to the aforementioned filings, Rio Broadcasting Company filed a petition for reconsideration requesting relief based on special circumstances. That petition has already been acted on by the Commission (BAL-6863) and is not dealt with in the present document.
2. Some exceptions to the rules are: (1) the licensee of a Class IV AM station in a community under 10,000 population may obtain a license for an FM station in the same market; (2) the licensee of a daytime-only AM station may obtain a license for an FM station in the same market; (3) the licensee of an AM and a commonly owned FM station in the same market may, on a showing that the two stations cannot be separately sold and operated, sell both stations to a single party; (4) applications for UHF stations, grant of which would result in common ownership of UHF and full-time aural broadcast stations in the same market, are handled on a case-by-case basis.
[*663] 3. In addition to adopting the First Report and Order, the Commission on the same date adopted a Further Notice of Proposed Rule Making in this proceeding, 22 F.C.C. 2d 339, in which it proposed rules that would require divestiture, within 5 years, to reduce commonly owned media holdings in any market to one or more daily newspapers, or one television station, or an AM-FM combination. Not only would the proposed rules reduce common ownership by requiring divestiture as to existing combinations, but they would prevent the formation of new media combinations in the same market. Thus, for example, if a broadcast station were to buy one or more daily newspapers in a market, it would be required to dispose of any broadcast stations that it owned there within a year or by the time of the next license renewal date, whichever is longer. And no grants for broadcast station licenses would be made to owners of one or more daily newspapers in the same market.
4. Additionally, because of the Commission's view that FM should not be a mere adjunct of AM but that both AM and FM should be integral parts of a total aural service, the Further Notice invited comments on this subject generally, and specifically on whether divestire should be required with regard to existing AM-FM combinations.
Petitions for Reconsideration of First Report and Order
5. Arguments in the petitions for reconsideration fall into three categories, namely: (1) requests that the First Report and Order be vacated and the new rules consequently withdrawn; (2) requests that the First Report and Order be vacated (or that, if not vacated, the effectiveness of the new rules adopted therein be stayed) and the entire matter of ownership covered by that document and by the Further Notice of Proposed Rule Making be consolidated and handled in one final document; and (3) requests that the new rules be modified in one way or another, e.g., requests that all Class IV AM stations be permitted to obtain licenses for FM stations in the same market regardless of the size of the community of license of the Class IV stations. (The present rules, as stated above, only permit Class IV stations in communities under 10,000 population to obtain FM licenses in the same market.)
6. The present document, insofar as it deletes the rules pertaining to AM-FM combinations that were adopted in the First Report and Order, grants the requests in categories (1) and (2) above to that extent, and in other respects denies them. As for requests falling in the third category, the deletion of the rules pertaining to AM-FM combinations renders them moot with the exception of requests for modifications pertaining to applications involving UHF television broadcast stations, which are discussed hereafter.
7. Many of the arguments which fall in the first category are identical with those raised in the comments and reply comments and were given consideration by the Commission in issuing the First Report and Order. For this reason, they will not be dealt with again here. Examples of such arguments are those which maintain that the matter of diversity is such that it is better dealt with on and ad hoc basis [*664] rather than by rule, that no need for the rules has been demonstrated, that the rules would lock in existing combination owners and give them a competitive advantage over single owners, that owners of more than one station in a market do a better job of programming than owners of single stations, and that there is not a proper legal basis for adopting the rules.
8. On the other hand, some arguments in the petitions for reconsideration falling within the first category are directed against specific statements made or positions taken in the First Report and Order. They are dealt with in the immediately following paragraphs. Thereafter, arguments in the remaining two categories are discussed.
Arguments concerning specific matters
9. One such argument has to do with a statement made by the Commission concerning the question of optimum diversity. Some commenting parties had urged that there was no need for the rules, the principal purpose of which is to promote diversity of viewpoints over the air in the same area, because the number of "voices" -- including all media -- has grown greatly over the years and, as they variously stated, there is ample diversity in all markets, or in large markets, or in markets where the particular commenting party is licensed. Some had also urged that as a practical matter there is a limit to the number of different viewpoints possible and that there had been no showing that greater diversity in viewpoints or content would result if the number of separate owners in New York, for example, were increased by 10 or 15.
10. In response to arguments of the foregoing type we stated in the First Report and Order that in our opinion there is no optimum degree of diversification and that we do not feel competent to say or hold that any particular number of outlets of expression is "enough," and we observed that a proper objective is the maximum diversity of ownership that technology will allow in each area. In our view the fact that there has been an increase in broadcasting facilities over the years is not an argument for not adopting the rules. Rather, as we said in the First Report and Order, this increase forms the basis for the conclusion that it is no longer necessary to permit the licensing of combined operations in the same market.
11. Badger, in its petition for reconsideration, argues that it is surprising to hear the Commission state that it lacks the competence to determine that any particular number of outlets of expression is "enough" since the Commission has a policy that more than "enough" programming outlets can produce adverse results. This policy, Badger avers, has been expressed in Carroll Broadcasting Co. v. FCC, 258 F. 2d 440 (1958), and in Docket No. 18397, 15 F.C.C. 2d 417 (1968), in which rules were proposed that would permit only one distant independent TV station to be carried on a CATV system in the 35-mile zone of a smaller TV station.
12. What we said in the First Report and Order is completely consistent with the policy expressed in Carroll and the proposed CATV rules. The concepts are basically quite different. In those situations, [*665] the question is, essentially, whether the addition of one or more stations to those already in a community or area will adversely affect the existing operations in a way contrary to the public interest, for example by reducing the revenue available to each station and thus impairing the quality of their operations. Here, on the other hand, the question is that of the ownership of the stations which are already in the community or area, or which are proposed to be licensed therein. For reasons stated in the First Report and Order, in the absence of considerations more substantial than anything shown in this proceeding, we are persuaded that separate ownership is desirable, to the extent we have acted to require it herein.
13. Another argument, set forth in detail in the petition of Golden West, concerns the matter of divestiture. In paragraphs 65-66 of the First Report and Order we adverted to the arguments made by some commenting parties that although the rules are intended to be prospective and not require divestiture, they might produce results contrary to the Commission's intent to "grandfather" existing licensees. This fear was based on the belief that the new rules establish a policy that it is contrary to the public interest for any licensee, prospective or existing, to own more than one station in a market. Therefore, so the argument ran, a flood of competing applications filed at renewal time by new applicants with no broadcast interests but having highly impressive traditional qualifications would prevail either at Commission level or on review by the courts, and the intent to grandfather would be thwarted.
14. In response to that argument we asserted that our policy statement of January 14, 1970, on comparative hearings involving regular renewal applicants, 22 F.C.C. 2d 424, covered the question. That statement provided that
... if the applicant for renewal of license shows in a hearing with a competing applicant that its program service during the preceding license term has been substantially attuned to meeting the needs and interests of its area, [footnote omitted] and the operation of the station has not otherwise been characterized by serious deficiencies, he will be preferred over the newcomer and his application for renewal will be granted. [ Id. at 425.]
The statement sought to balance two considerations -- the benefits to the public of a spur inherent in the fact that there can be a challenge at renewal time, and the need not to undermine the predictability and stability of broadcast operation.
15. Golden West now avers that whatever the dignity of a policy statement formally adopted by the Commission, in the First Report and Order formal rules were adopted to the effect that ownership of more than one station in a market is contrary to the public interest. It goes on to say that, without doubting the sincerity of the Commission in its intent to adhere to the principles enunciated in the policy statement, there is a substantial possibility that if the Commission were to prefer a renewal applicant to a competing applicant with no other broadcast interests in the market, and if the grant were appealed, the court might under some circumstances find merit to the claim that the grant is fatally inconsistent with the overriding one-to-a [*666] market policy established by the rules. The result, it is argued, would be not even a divestiture, but a confiscation and forfeiture. The consequences of this, according to Golden West, would be a great instability in the broadcast industry (and other concomitant evils) which the Commission found in the policy statement would be contrary to the public interest and sought to prevent. The argument culminates with the statement that there is no way in which the Commission can achieve absolute certainty that no court will adopt the line of reasoning mentioned above, and hence the rules should be vacated.
16. We disagree. In BEST et al., 21 F.C.C. 2d 355 (1970), adopted on the same date as the aforementioned January 14 policy statement, and in Comparative Hearings on Renewal Applicants, et al., 24 F.C.C. 2d 383 (1970), which denied petitions for reconsideration of the January 14 policy statement, we observed that the policy statement is not a rule and does not have the force or effect of a rule. We said, citing U.S. v. Storer Broadcasting Co., 351 U.S. 192 (1956), that a rule definitely controls a hearing, unless a case can be made for a waiver, and may even eliminate the need for a hearing. On the other hand, as to a policy statement, we pointed out that a party is always free to argue in a hearing that a policy should be changed or should be applied differently because of the facts of a particular situation.
17. However, the fact that a policy statement does not have the force and effect of a rule does not mean that the argument of Golden West is correct. If at separate times a policy statement and a conflicting rule were adopted and neither referred to the other at the time of adoption, it is conceivable, although we do not here decide, that in a hearing in which the two were placed in balance, the rule might outweigh the policy. However, where, as in the present case, a definite reference was made to the policy at the time that the rule was adopted and deference was given to the policy, the result must be otherwise. The First Report and Order found it in the public interest to adopt rules that are prospective only and that do not require divestiture. It also stated that in the comparative type of hearing postulated by Golden West, the policy statement would cover the question. This means that the Commission, in adopting the rules, has weighed the need for stability in the broadcasting industry against the value to the public of diversity of ownership and, consistent with its determination not to require divestiture, has found the public interest to be better served by letting the policy statement prevail in such circumstances.
18. NAB argues that recent events in the field of broadcasting regulation have neutralized any valid concern about diversity of voices which might have existed when this proceeding was initiated. In support thereof, it points to the decision in Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969), the community needs requirement of Sections IV-A and IV-B of the license renewal form, the policy statement on comparative hearings involving regular renewal applicants, mentioned above, and the additional diversity provided by noncommercial educational stations and programming.
[*667] 19. NAB maintains that Red Lion leads to the conclusion that all views will be heard over broadcast stations regardless of ownership. Sections IV-A and IV-B of the license renewal form, it is stated, set forth the duty of the licensee to be in touch with and respond to the needs and interests of the community it serves on a continuing basis. And the renewal policy statement, it is argued, establishes a policy that insures that the needs and interests of the community will be amply served. Finally, it is said that as noncommercial educational broadcasting grows, supported by the Corporation for Public Broadcasting, it will increase the total number of broadcast voices reaching the public.
20. The Commission was aware of all of the foregoing at the time that the First Report and Order was issued. Red Lion was decided months before. The Section IV-A and IV-B requirements of the application form had been in effect for years. The renewal statement of policy was issued several months previously. And noncommercial educational broadcasting and expected support from the Corporation for Public Broadcasting were matters of common knowledge. What we stated in paragraphs 16-22 of the First Report and Order expresses our views on the basis and purpose of the new rules and takes into account the factors mentioned by NAB -- factors which did not lessen our concern about diversity. We consider the content of those paragraphs an adequate answer to NAB, and see no useful purpose in repeating it here.
21. NAB also argues that the Commission has overlooked important empirical data provided by the Litwin report. n2 This study purported to demonstrate that common ownership of AM, FM, TV and/or newspapers in a single market is favorable to the public interest. In the First Report and Order we stated that this study had serious weaknesses and we found it of little value. NAB suggests that we now disregard Letwin's hypotheses and value judgments and again look at the empirical findings in the Litwin report.
n2 The Effects of Common Ownership on Media Content and Influence: A Research Evaluation of Media Ownership and the Public Interest, by George H. Litwin and William H. Wroth, prepared for and filed by NAB in this proceeding.
22. Empirical findings were based on two sets of interviews -- 68 with business and community leaders and 99 with media owners, managers and top professional staff. These interviews were made in six different cities, two chosen to represent large markets, two to represent medium sized markets and two to represent small markets. In each pair of cities, one had a much higher concentration of common ownership than the other so that comparisons might be drawn.
23. The business and community leaders were first asked whether they felt that the media can bring changes in public thought and/or behavior, and 53% reported they did. However, Litwin writes a complete chapter on previous behavioral research covering the period from World War I to 1967 proving that his business and community leaders believe in a "myth" and concludes that "there is little evidence that media communication can have a direct effect on thought and behavior." Here Litwin discards his own empirical findings.
[*668] 24. Next, the business and community leaders were asked to assess the "amount of diversity of viewpoint available through media" and the "validity and depth" of news coverage in their own cities, and Litwin attempts to quantify these subjective judgments. He finds that in the three cities with greater concentration of common owners the leaders interviewed score their cities slightly lower in "diversity" but higher in "validity in depth" than did the leaders in the other three cities. (He also makes the obvious finding that large markets have more diversity than do smaller ones.) We doubt whether concepts of greater or lesser diversity (so completely dependent on the background of the interviewee) can be quantified and totaled for a small sample of interviewees to accurately represent the extent of diversity or degree of validity of media in all U.S. markets or all markets of a given size. Moreover, there is no valid attempt to pinpoint the differences found as being due to differences in common ownership in the same market (as separate from group ownership, n3 revenue levels, profitability, or newspaper ownership, all factors which may be related to performance).
n3 By "group ownership" we here mean common ownership of media operating in different markets.
25. In order to evaluate station and newspaper performance, and compare performance of commonly owned vs. singly owned stations, Litwin interviewed the owners, managers and top professional staff (about 3 or 4 per station) of 30 selected stations and newspapers in the six selected cities. Each was asked about the performance of his own station, with respect to number of hours of news broadcast, size of news staff, hiring practices, extent of reliance on news service, degree of owner participation in formulating program policies, editorializing and the goals of the station. As we pointed out previously (First Report and Order, para. 37) the factual data would be more valuable if they were obtained from station records rather than interviews. The opinion questions on performance are susceptible to the bias that owners and managers present their station in the best possible light. If interviews were also obtained from lower level professional staff -- reporters, editors, cameramen, news and documentary writers, etc. -- more frank evaluations might have been obtained. Furthermore, the reply to questions, such as "What is the major goal of your station -- public service, sales, profit, news coverage or good entertainment?" would seem to be dependent on the financial and profit history of the station rather than on whether commonly or singly owned. Thus, when owners and managers at profitable stations ranked "news coverage" and "public service" far ahead of "good entertainment" and "profits" (as did the sample of commonly owned stations), this may simply reflect their lack of concern that profits would continue. To conclude from this that commonly owned stations have greater public interest objectives is invalid.
26. Since interviews were made in only 30 stations and newspapers out of the 108 existing in the six selected cities, it was imperative that the sample of stations selected to represent commonly owned operations and those to represent singly owned operations be balanced in every other respect. We find however that this was not done. In the [*669] sample representing large markets, for example, the sample selection was completely biased in favor of common owners. Using Baltimore and Houston n4 to represent all the large markets, Litwin had the following stations from which to select his sample to typify commonly owned vs. singly owned stations:
n4 Although the report uses fictitious code names, the cities have been identified in various articles, e.g. Barnett, Cable Televison and Media Concentration, Part I: Control of Cable Systems by Local Broadcasters, 22 Stanford L. Rev. 221 (1970). The report did not show the specific stations chosen as samples, but these were obtained by letter from Litwin. No. individual station data are being released as they were obtained by Litwin on a confidential basis.
Baltimore Sun, a Baltimore TV-FM-Newspaper combination. WMAR-TV is a highly profitable VHF network affiliate; group owner.
Hearst Corp., a Baltimore TV-AM-Newspaper combination. WBAL-TV is a highly profitable VHF network affiliate; group owner.
Houston Post, a Houston TV-AM-Newspaper combination. KPRC-TV is a highly profitable VHF network affiliate.
United Broadcasting Co., a Baltgimore TV-AM-FM combination. WMET-TV is a UHF independent operating at a loss; group owner.
11 AM-FM combinations in Baltimore and Houston.
Westinghouse Corp., WJZ-TV, a Baltimore highly profitable VHF network affiliate; group owner.
Corinthian Broadcasting, KHOU-TV, a Houston highly profitable VHF network affiate; loss; group owner.
TVue Assoc, KVV-TV, a Houston UHF independent operating at a loss (which has since ceased operation).
11 AM stations in Baltimore and Houston markets.
8 FM stations in Baltimore and Houston markets.
27. From the aforementioned group of stations, the following were selected for the Litwin sample: To represent common owners -- Baltimore Sun (WMAR), Hearst Corp. (WBAL), Houston Post (KPRC) and a Houston AM-FM radio station; To represent single owners -- Oklahoma Publishing (KHTV), TVue Assoc. (KVVV), 2 Baltimore AM stations, 1 Houston AM station. Obviously more favorable results could be expected from the profitable, group owned, VHF network could be expected from the profitable, group owned, VHF network affiliates than from UHF independents operating at a loss. If one wished to demonstrate that singly owned stations in these two markets are preferable, he could simply select this sample: To represent common owners -- United Broadcasting (WMET), a Baltimore AM-FM station and two Houston AMFM stations. To represent single owners -- Westinghouse (WJZ-TV), Corinthian (KHOU-TV), Capital Cities (KTRK-TV) and a Baltimore AM station.
28. For the reasons stated, we find that we cannot rely on Litwin's empirical findings.
29. In the First Report and Order we referred to the fact that ABC and several other parties had stated in their comments that the Notice of Proposed Rule Making in this proceeding did not mention minority cross-interests, that they assumed the present proceeding was not [*670] directed at broadening the duopoly rules to embrace such interests, and that if the Commission decides to take such a step they assumed they would be given a chance to comment pursuant to the provisions of the Administrative Procedure Act. We agreed that the Notice did not refer to minority cross-interests and stated that the rules which were being adopted contained no new language thereon. However, we announced that inasmuch as the new rules were an extension of the previously existing duopoly case would be carried over and applied in situations involving such interests under the new rules.
30. In its petition for reconsideration, ABC argues that extending past ad how minority cross-interest rulings with regard to duopoly situations involving broadcast stations in the same service to duopoly situations involving stations in different broadcast services contravenes the Administrative Procedure Act for comments thereon should have been invited. We cannot agree. The previous duopoly rules simply stated that a single party could not "own, operate, or control" stations in the same broadcast service with overlapping facilities. The language of the rules made no specific mention about minority cross-interests. However, over the years, the Commission has given an expansive construction to the rules in numerous cases where they were applied. n5 These constructions have often been referred to as the duop rules merely extend the concept of duopoly to cut cross service lines, so that a single party may not "own, operate, or control" any broadcast stations in the same market. We think it reasonable to apply the same duopoly policy under the new rules that we applied under the old rules. Moreover, to do so is consistent with settled law that permits an agency to regulate through the means of rule making or ad hoc development of policy. S.E.C. v. Chenery Corp., 332 U.S. 194 (1947).
n5 Some of the cases are cited in Radio Athens, Inc. v. FCC, 401 F. 2d 398, 402-3 (D.C. Cir. 1968). See also Multiple Ownership of AM, FM, and TV Stations, 1 F.C.C. 2d 393 n. 5 (1965); and Multiple Ownership of Standard, FM & TV Broadcast Stations, 22 F.C.C. 2d 306 n. 25 (1970).
31. AM and FM stations. Finally, we turn to the matter of common ownership of AM and FM stations in the same market. The arguments concerning this subject were set forth in paragraphs 45-62 of the First Report and Order. Among other things, opponents of the proposed rules urged that they would hinder FM development, that in many communities independent FM operation is not viable, that FM channels would lie fallow as the result of the rules, and that in selling AM-FM combinations often there would be no buyer for the FM station separately and the result would be that the FM station would go off the air. It was also urged that the AM-FM non-duplication rule recognized that AM-FM combinations in small markets are not in a position to program even 50% separately, yet the proposed rules would not only require 100% separate programming, but separate ownership as well.
32. Supporters of the proposal, on the other hand, argued that the effect of combined ownership in the same market is to lessen diversity of news and information sources available and to reduce the degree of [*671] competition for advertising, that separate ownership would require 100% separate programming with consequent greater diversity, that monthly owned stations, and that common ownership of AM and FM stations restricts FM development.
33. In arriving at our decision concerning AM and FM stations, we acknowledged the fact that in most cases existing AM-FM combinations in the same area may be economically and/or technically interdependent, and that financial data submitted to the Commission by independent FM stations indicated that they are generally losing money. We therefore adopted rules permitting the assignment or transfer of combined AM-FM stations to a single party if a showing was made that established the interdependence of such stations and the impracticability of selling and operating them as separate stations. In so doing, we observed that although this would not foster our objective of increasing diversity, it would prevent the possible closing down of many FM stations, which could only decrease diversity.
34. Although the rules did not require the breaking up of AM-FM combinations and made the aforementioned provisions for the sale of existing AM-FM combinations, they proscribed the formation of new combinations on the ground that there is no shortage of aural service. Two exceptions, based on special reasons mentioned in paragraphs 50-62 of the First Report and Order, were those set forth in (1) and (2) of paragraph 2 above.
35. The matter of common ownership of AM and FM stations in the same market is raised again in the petitions for reconsideration. Having consequently reviewed the subject once more, we are now of the opinion that although it is a close question, it is the better course to delete the rules pertaining thereto. Hence, there will be no rule barring the formation of new AM-FM combinations. And there will be no requirement of a special showing on the sale of such combinations. In other words, applications involving such matters will be treated in the same fashion as before the institution of this proceeding. The so-called one-to-a-market rules will thus apply only to combinations of VHF television stations with aural stations in the same market. (As indicated hereafter, combinations of UHF stations with aural stations will be handled on a case-by-case basis.) As a consequence, all conditional grants of applications for assignment of licenses, or transfer of control of licensees, of AM-FM combination in the same market made since this proceeding began will have the condition deleted. (See paragraph 50, infra.) n6
n6 Shortly after the issuance of the First Report and Order, a request for declaratory ruling was filed by the law firm of Pierson, Ball & Dowd asking that the Commission issue a declaratory ruling in the affirmative on the question of whether it will issue a tax certificate, pursuant to Section 1071 of the Internal Revenue Code, 26 U.S.C. 1071, in the case where a broadcast licensee owning interests inconsistent with the new policy established in the First Report and Order disposes of any such interests in order to come into compliance with the policy. In response to that request and to various informal inquiries on the subject, the Commission, in a Public Notice, FCC 70-774, dated July 16, 1970, announced that it would issue a tax certificate in such circumstances. It now announces that licensees disposing of interests inconsistent with the modified policy in order to come into compliance with that modified policy will be issued tax certificates.
36. We are deleting the rules concerning common ownership of AM and FM stations, partly because we intend to examine the matter [*672] further. Thus, attention is called to the fact that in the Further Notice of Proposed Rule Making issued in this proceeding, we stated, as we have on other occasions in recent yars, that FM should not be an adjunct or supplement of AM, but that both AM and FM should be integral parts of a total aural service. n7 Accordingly, in that document we invited comments on the subject generally, and specifically on whether divestiture should be required with regard to AM-FM combinations (see para. 4 supra). The record compiled as a result of that further notice may prove helpful in dealing with the AM-FM problem.
n7 We note in passing that at the time the First Report and Order was adopted herein, financial data for 1968 on file with the Commission indicated that only 34.18% of independent FM stations showed a profit. More recent data, for 1969, show that only 30.76% made a profit. This indicates that action that would require separate FM ownership might be undesirable at this time, until we have considered the matter further.
37. An additional reason for this deletion is that in the near future we intend to institute a rule making proceeding to explore the questions of whether the present non-duplication rule (Sec. 73.242) pertaining to permissible duplication of programming over commonly owned AM and FM stations in the same area should be amended in various ways so as to provide more non-duplicated programming, and whether and to what extent non-duplication rules can serve as an effective alternative to diversification of ownership.
Arguments for consolidated treatment
38. As mentioned in paragraph 4, some parties request that the First Report and Order be vacated (or that the effectiveness of the new rules adopted therein be stayed) and the entire matter of ownership covered by that document and by the Further Notice of Proposed Rule Making be consolidated and handled in one final document. Various arguments in support of this position are presented. It is said that adopting rules in the First Report and Order and proposing additional rules in the Further Notice of Proposed Rule Making is a piecemeal approach; that the subjects of the two documents are so closely intertwined that they should not be considered separately; that the approach used is dangerous since the adoption of rules in the First Report and Order might tend to prejudge the important problems being considered in the Further Notice; that this approach will have an unwarranted disruptive effect on the industry, including preventing consummation of transactions which will result in no greater concentration of control of broadcasting properties than before, and which could otherwise be shown to be beneficial to the public; and that the Commission’s official position is that the paramount problem is that of cross-ownership of television stations and newspapers, and that sound administrative efficiency and fairness require that this problem be dealt with before deciding whether cross-ownership of broadcasting facilities presents a substantial problem.
39. We are of the view that the approach we have used is a valid one. This proceeding was commenced by proposing rules aimed at producing more diversity of programming and viewpoints over the broadcast media. The proposed rules did not look toward divestiture [*673] of facilities by existing licensees, nor did they contemplate any action with regard to cross-ownership of newspapers and broadcasting facilities. However, the record which was developed raised substantial questions about divestiture and newspaper cross-ownership. As we stated in the First Report and Order (para. 68) and the Further Notice of Proposed Rule Making (paras. 6-7), these questions gave us pause. And, although it might have been legally permissible to adopt rules on those subjects at that juncture, we considered it the better course to issue a further notice concerning them because of the far-reaching ramifications of any rules that might be adopted on the subjects and in order to develop additional information about them. We also were of the view that adoption of the new rules was a reasonable start towards diversity and in the public interest.
40. We are not convinced that the rules adopted (and as modified herein) and those proposed are of such a nature that they must be dealt with simultaneously. The fundamental purpose of both is to produce diversity of programming and of viewpoints. The new rules do this, and, if adopted, the proposed rules will do even more; but there has been no showing that the former cannot be properly adopted prior to the latter or that our procedure will cause unwarranted disruption of the broadcast industry. (Nor do we view the adoption of rules as tending to prejudge problems in the Further Notice.) It is argued that the official position of the Commission is that the paramount problem is that of cross-ownership of television stations and newspapers and hence that that problem should be decided before any action, if any, is taken on cross-ownership of broadcast facilities. Those who make this argument cite the Commission's statement in paragraph 26 of the Further Notice which said: "It has now become clear that the most significant aspect of the problem is the common control of television stations and newspapers of general circulation." However, the quotation is taken out of context; the immediately preceding sentence states: "We have long been concerned with the particular problem of newspaper-broadcast joint control [footnote omitted] as an important factor in the overall attempt to secure diversity in the control of broadcast facilities." In other words, we were saying that as to cross-ownership of newspapers and broadcasting facilities, the problem of cross-ownership of newspapers and television stations is more significant than that of cross-ownership of newspapers and aural broadcasting facilities. However, this does not mean that there are not significant problems of cross-ownership of television stations and aural facilities.
41. It has been said that the new rules prevent consummation of transactions which will result in no greater concentration of control of broadcast properties than before and which can otherwise be shown to be beneficial to the public interest. To this we reply that in adopting the rules without requiring divestiture we have, in part relied on producing diversity gradually by breaking up station combinations in the same market upon sale; if it can be shown that sale of a combination to a single party would be in the public interest a waiver can be granted.
[*674] Modifications of the rules
42. We turn now to the third category of arguments raised in petitions for reconsideration -- suggestions for revision of the rules adopted in the First Report and Order. As mentioned in paragraph 6 above, all such arguments have been rendered moot except for a request for modification relating to UHF stations.
43. The Commission has long had a policy of fostering UHF development. Consistent with that policy, in the First Report and Order we stated that the licensee of an AM station, or an FM station, or an AM-FM combination would not be barred by rule from building or acquiring a UHF station in the same market. Rather, Note m to Section mo'lol adopted therein provides that applications for UHF stations by licensees or aural facilities in the same market will be handled on a case-by-case basis.
44. Kaiser, in its petition for reconsideration, argues that under the rules an AM or FM operator is eligible to acquire a Kaiser UHF station in its market and to continue combined radio-UHF ownership in that market indefinitely. However, it is argued, Kaiser, having spent millions of dollars in developing its UHF station, cannot create the same combined ownership by purchasing a radio station. It is urged that the policy of fostering UHF development applies as well to the situation in which a UHF station wishes to acquire a radio station as to the reverse. In fact, it is said, the case for permitting a UHF station to acquire a radio station that could lend financial stability to the UHF station would in many cases be stronger than the case for letting a radio station acquire a floundering UHF station. It is also said that potential UHF entrants would be more encouraged if the possibility of their subsequently acquiring a radio station in the same market were not foreclosed.
45. We agree with the foregoing argument and are accordingly amending the rules, as suggested by Kaiser, by adding new language to Note 7 of sections 73.35 and 73.240 to provide that applications of UHF licensees to build or acquire radio stations (AM, FM, or AM-FM combinations) in the same market will be handled on a case-by-case basis.
46. Oral argument. Several parties have requested that the subject of this proceeding be set for oral argument. Although we do not now commit ourselves on the matter, it may be that such a procedure could have value in connection with the later phase of the proceeding when we consider comments in response to the Further Notice. However, it appears that oral presentation at this time would serve no useful purpose.
47. In view of the foregoing, IT IS ORDERED, that the petitions for reconsideration listed in footnote 1, supra, ARE GRANTED insofar as they are consistent with the action taken herein, and in other respects ARE DENIED.
48. IT IS FURTHER ORDERED, that the requests for oral argument contained in the aforementioned petitions ARE DENIED.
[*675] 49. IT IS FURTHER ORDERED, that in view of the action taken herein, petitions for stay mentioned in footnote 1, supra, ARE MOOT.
50. IT IS FURTHER ORDERED, that as to all CONDITIONAL GRANTS OF APPLICATIONS FOR ASSIGNMENT OF LICENSES OR TRANSFER OF CONTROL OF LICENSEES OF AM-FM COMBINATIONS IN THE SAME MARKET, whether the conditional grants were made during the interim period between the commencement of this proceeding and the enactment of the rules in the First Report and Order or after enactment of the rules, THE CONDITIONS ARE DELETED. The following identify specifically the types of conditional grants to which this order refers: (1) Grants made during the interim period subject to the outcome of this proceeding. (2)Grants made during the interim period subject to the condition that if acquisition of the stations became inconsistent with the rules as finally adopted in this proceeding the assignee or transferee would divest itself of one of the two stations. (3) Grants made during the interim period subject to the condition that the transferee or assignee dispose of one of the two stations as soon as possible or within a specified period of time. (4) Grants made since the enactment of the rules subject to the condition that the assignee or transferee dispose of one of the two stations within a specified time. n8
n8 This order affects only conditional AM-FM grants. It does not affect conditional TV-radio grants.
51. Inasmuch as the amendments of the rules adopted herein relieve a restriction, they are, consistent with the provisions of Section 4 of the Administrative Procedure Act (5 U.S.C. § 553 (Supp. V, 1970)), being made effective sooner than thirty days after publication in the Federal Register. Accordingly, IT IS FURTHER ORDERED, that Part 73 of the Commission's Rules and Regulations, IS AMENDED, effective March 9, 1971, as set forth in the attached Appendix.
52. Authority for the adoption of the rules herein is contained in Section 4(i) and (j), 303, and 405 of the Communications Act of 1934, as amended.
FEDERAL COMMUNICATIONS COMMISSION BEN F. WAPLE, Secretary.
CONCURBY: BARTLEY (IN PART); JOHNSON (In Part)
DISSENTBY: BARTLEY (IN PART); JOHNSON (In Part)
STATEMENT OF COMMISSIONER ROBERT T. BARTLEY CONCURRING IN PART AND DISSENTING IN PART
I concur except I would apply to UHF the same restriction against ownership of aural stations (AM & FM) in the same market as is applied to VHF.
The Commission has today boldly confronted the problem of the growing concentration of control of the mass media in America.
It has responded by shuffling sideways, taking one timid step forward, and turning tail and running backwards.
I concur in the one small step for mankind -- because it is such a giant step for the FCC. I dissent to the rest.
There are a number of analytically separable conditions of media concentration -- only a small slice of which is before us here.
(1) A conglomerate corporation which owns any media may be tempted to use it to serve its other corporate interests. See, e.g., ABC-ITT Merger, 9 F.C.C. 2d 546, 581 (1967) (dissenting opinion of Commissioners Bartley, Cox and Johnson).
[*679] (2) A multi-media owner is one that owns more than one kind of media; perhaps a combination of television program production, network contracts, television and radio stations, talent, record companies, film production, athletic clubs, book, magazine and newspaper publishing companies, syndication services, cable television companies, and so forth. Such combinations can have local, regional, or national implications, depending upon their economic size and location. They may raise traditional antitrust issues regarding unfair competition, tendency to monoply, and restraints of trade. They may also raise concerns about diversity in the marketplace of ideas -- inhibitions to diversity of opinion and the creativity of individual artists.
(3) A multiple owner owns more than one outlet of a given type of media (newspapers or radio stations). This always creates the consequences of absentee ownership -- whether good or ill. It may also create a measure of national or regional media power, depending upon where the outlets are located, and the size of the market reached.
(4) A regional media concentration may arise whenever a multimedia or multiple owner controls outlets in a portion of a state, or region of the country, that gives it a predominant power (or, rarely, an absolute monopoly) in its area.
(5) Local concentration occurs when a given owner exercises media power in a given city or market area. It is local concentration that is involved in the rules before us.
The Commission's present rules limit multiple ownership to seven television stations (no more than five VHF), and seven AM radio stations, and seven FM radio stations. 47 C.F.R. § § 73.35(b), 73.240(a)(2), 73.636(a)(2)(1970). The Commission limits local concentration through "duopoly" rules which prohibit overlapping signals of (1) AM stations, or (2) FM stations, or (3) VHF and/or UHF television stations. 47 C.F.R. § § 73.35(a), 73.240(a)(1), 73.636(a)(1) (1970). Thus, a single owner can own a VHF-AM-FM combination, in a single market.
II. THE ONE-TO-A-MARKET PROPOSAL
One March 25, 1970, this Commission adopted an amendment to its multiple ownership rules, and "proposed" additional amendments for future rulemaking after receiving comments and making revisions.
The amendment adopted provided that, prospectively only, the Commission would not approve applications for construction permits or transfers of licenses where more than one full time broadcasting outlet would be owned or controlled by the same owner in the same market. The rule was, in effect, a logical extension of our duopoly rules. It is difficult to justify a rule that a single owner cannot have two AM stations or two FM stations in the same market because of "concentration," but permit the ownership of a TV-AM-FM combination in a single community. The Commission is here dealing with petitions for reconsideration of that March 1970 rule.
It is easy to see that the Commission is only dealing with a small part of the potential media concentration problems outlined in the beginning of this opinion. It is dealing with local media power only. It is dealing with broadcast station ownership only (not newspapers and other media), and then only on a prospective basis. Some of the [*680] other potential problems are being dealt with in other proceedings; See Dkt. Nos. 18499 (conglomerate ownership); 18891 (CATV ownership) and 12782 (network television). Others, such as standards for regional concentration are not being addressed at all. Greater Kentucky Broadcasting Corp., -- F.C.C. 2d -- (1971), FCC Public Notice 64035, Feb. 9, 1971.
I believe we have made some real -- though modest -- progress with these rules in the area of local media concentration, by requiring the prospective separation of ownership of VHF television stations and radio stations in the same markets. But we have failed to deal with newspaper-station joint ownership and divestiture.
The concerns that were expressed about our adopting rules have not materialized, and the positive benefits of going ahead have been demonstrated by the limited deconcentration that has already occurred. As a matter of fact, in a number of cases the applicants themselves have touted the benefits of deconcentration as a reason for Commission approval. There is a usefulness of rules that apply across the board to situations where objective facts are the sole criterion of agency action. Eliminating the circumstances under which the Commission attempts to distinguish "good" mergers from "bad" mergers on some "compelling affirmative showing" has also been demonstrated.
III. AM-FM COMBINATIONS
There is one area where some additional comment is warranted, and that is the AM-FM combination rules. I am wholly unsatisfied with the Commission's present disposition of this problem, and want to take this opportunity to explain my present position.
The Commission's current duopoly rules do not permit ownership of two small AM stations in any market by the same owner. They do permit AM-FM joint ownership. We have now decided, without persuasive reasons, to retreat from our proposal to bar joint ownership of AM-FM stations.
In large markets, so the argument goes, there is so much competition that there should be no concern over AM-FM combinations, and they should be permitted in all circumstances. In addition, the characteristics of the market are such that an independent FM cannot survive. On closer examination, these arguments may not stand up.
While it is true that there is more competition in larger radio markets, it is also the case that available channels in these markets are generally exhausted. There are numerous groups in our society, particularly minority groups, that feel themselves cut off from ownership of broadcast properties, and are interested in getting into media ownership and operation. For example, roughly 2/10 of 1% of the national's 7500 radio and television stations are owned by blacks. The concentration of black population is in the very cities where the Commission is going to continue joint ownership and where all available construction permits for new stations are exhausted. So long as those circumstances continue to exist, it is hard to justify continued AM-FM combinations in the largest markets -- where additional potential owners are pounding on the door. The situation would be better if those groups that want to enter broadcasting could do so.
[*681] So far as the economic viability of FM broadcasting is concerned, the statistics are mixed, but there is at least some evidence that the number of viable FM stations is increasing. More importantly, there are businessmen willing to risk capital in independent FM operations. This fact, it seems to me, ought to be dispositive of the question of whether FM stations can make a go of it in large markets.
In small markets the considerations are somewhat different. Here the argument is primarily that economic viability is so unlikely, and FM so necessary to augment the limited nighttime operation of many AM stations, that AM-FM combinations should be permitted, and even encouraged. But again the Commission must be careful to weigh the competing policy considerations. In small markets, where the only AM, with or without a newspaper, gets the only FM, this combination is in a strong position to frustrate new competitive entry from independent FM. The economies of scale in an AM-FM operation are significant, full non-duplication (even if it were imposed) would not exhaust these economies, and the market power conferred in small markets may be substantial where an AM-FM exists. Many small market FM's, in AM-FM combinations, are not, in fact, being operated to provide nighttime operation well beyond the hours of the daytime AM's anyway. Of course, early institution of FM service may depend on AM operation as a backstop, and FM operation may encourage the purchase of FM receivers which will make the small market more conducive to new entry. At the same time, the Commission should recognize that it is today granting FM construction permits to applicants proposing to serve quite small communities. There are businessmen who apparently believe that FM can be viable in the smallest of markets. It should also be noted that the AM "freeze" implicitly is an encouragement to seek in FM an alternative means of inaugurating new radio service. And the Commission should bear in mind the complaints of independent FM operators that they face unfair competition where AM-FM combinations are permitted. While full non-duplication in programming would be helpful, it still would not overcome this competitive disadvantage.
There remains only the question of whether the Commission can appropriately and efficiently examine the necessity for AM-FM splits on a case-by-case basis. Until now the Commission has attempted to make these decisions on little more than self-serving statements of applicants. In no instance has there been any discussion of the price at which these facilities have been offered for sale. But ignoring price makes the determination academic. For if an AM-FM combination confers any monopoly power, or is associated with any economies of scale, one would expect that the stations "cannot be sold" separately at the price they will bring together. To ignore price is to ignore the issue, and yet that is what the Commission has done up to now.
My own preference would be to continue to require divestiture of AM-FM combinations, except for those involving daytime-only AM stations. I would require a showing by any AM-FM applicant who would seek waiver of the rules that the stations were generally known to be for sale separately, and a full report on the offers that were made for each station. Only if the prices offered for the stations separately were significantly lower than a fair price for the stations in combination [*682] should combinations be permitted to continue. Similarly, when new applications were presented to form combinations of AM and FM stations by construction of new stations I would permit them only after full inquiry into alternatives. And I would require a reexamination of the question of divestiture in the future.
I also have some concerns about the Commission's new standards of permissible overlapping ownership. Only if the stations are in the same market is joint ownership prohibited. Signals can overlap. This is a substantially weaker standard than our contour-defined duopoly rules.
I fully expect parties in the further proceedings in this docket to address fully the AM-FM ownership question, and perhaps the Commission will find today's retreat unwise.
Finally, I would have like to see some discussion in the Commission's action of the concepts of "market shares" and "measures of concentration," as well as a reaffirmation of the general principle that the maximum number of voices in a community should be separately owned. Our discussions have focused on what we mean by "competition" in local markets, and the dangers of concentration as defined in traditional antitrust or industrial organization terms.
It is no doubt of interest to some people now many copies of the New York Times circulate in a small Montana town, or how many AM and FM radio stations put signals over Chicago, must as it may be of some academic interest to know how many Pierce-Arrow cars are now being built in some small company's workshop. But the number of Pierce-Arrows doesn't tell us much about competition in the automobile industry, and similar comments can be made about some of the "voice-counting" that has apparently caught present fact. I would expect that experts with competence in the fields of antitrust and the analysis of competition would move the discussion beyond this current avoidance of meaningful measures of economic and ideological impact.
1. Section 73.35 of the Commission's Rules and Regulations is amended by revising paragraph (a), Note 7, and Note 8 to read as follows:
§ 73.35 Multiple ownership.
* * *
(a) Such party directly or indirectly owns, operates, or controls: one or more standard broadcast stations and the grant of such license will result in any overlap of the predicted or measured 1 mv/m groundwave contours of the existing and proposed stations, computed in accordance with § 73.183 or § 73.186; or one or more television broadcast stations and the grant of such license will result in the predicted or measured 2 mv/m groundwave contour of the proposed station, computed in accordance with § 73.183 or § 73.186, encompassing the entire community of license of one of the television broadcast stations or will result in the Grade A (contours) of the television broadcast (stations), computed in accordance with § 73.684, encompassing the entire community of license of the proposed station; or
* * *
NOTE 7: Paragraph (a) of this section will not be applied so as to require divestiture, by any licensee, of existing facilities. Said paragraph will not apply to applications for increased power for Class IV stations; to applications for assignment of license or transfer of control filed in accordance with § § 1.540(b) or 1.541(b) of this chapter, or to applications for assignment of license or transfer of control to heirs or legatees by will or intestacy if no new or increased overlap would be created between commonly owned, operated, or controlled standard broadcast stations and if no new encompassment of communities proscribed in paragraph (a) of this section as to commonly owned, operated, or controlled standard broadcast stations and television broadcast stations would result. Said paragraph will apply to all applications for new stations, to all other applications for assignment or transfer, and to all applications for major changes in existing stations except major changes that will result in overlap of contours of standard broadcast stations with each other no greater than that already existing. (The resulting areas of overlap of contours of standard broadcast stations with each other in such major change cases may consist partly or entirely of new terrain. However, if the population in the resulting overlap areas substantially exceeds that in the previously existing overlap areas, the Commission will not grant the applications if it finds that to do so would be against the public interest, convenience, and necessity.) Paragraph (a) of this section will not apply to any application by a party who directly or indirectly owns, operates or controls a UHF television broadcast station where grant of such application would result in the Grade A contour of the UHF station encompassing the entire community of license of a commonly owned, operated, or controlled standard broadcast station or would result in the entire community of license of such UHF station being encompassed by the 2 mv/m contour of such standard broadcast station. Such community encompassment cases will be handled on a case-by-case basis in order to determine whether common ownership, operation or control of the stations in question would be in the public interest. Commonly owned, operated, or controlled broadcast stations with overlapping contours or with community-encompassing contours prohibited by paragraph (a) of this section may not be assigned or transferred to a single person, group, or entity, except as provided above in this note.
NOTE 8: Paragraph (a) of this section will not be applied to cases involving television stations which are primarily "satellite" operations. Such cases will be considered on a case-by-case basis in order to determine whether common ownership, operation, or control of the stations in question would be in the public interest. Whether or not a particular television broadcast station which does not present a substantial amount of locally originated programming is primarily a "satellite" operation will be determined on the facts of the particular case. An authorized and operating "satellite" television station the Grade A contour of which completely encompasses the community of license of a commonly owned, operated, or controlled standard broadcast station, or the community of license which is completely encompassed by the 2 mv/m contour of such a standard broadcast station may subsequently become a "non-satellite" station with local studios and locally originated programming. However, such commonly owned, operated, or controlled standard and "non-satellite" television stations may not be transferred or assigned to a single person, group, or entity except as provided in Note 7.
2. Section 73.240 of the Commission's Rules and Regulations is amended by revising subparagraph (1) of paragraph (a), NOTE 7, and NOTE 8 to read as follows:
§ 73.240 Multiple ownership.
(a) * * *
(1) Such party directly or indirectly owns, operates or controls: one or more FM broadcast stations and the grant of such license will result in any overlap of the predicted 1 mv/m contours of the existing and proposed stations, computed in accordance with § 73.313; or one or more television broadcast stations and the grant of such license will result in the predicted 1 mv/m contour of the proposed station, computed in accordance with § 73.313, encompassing the entire community of license of one of the television broadcast stations or will result in the Grade A (contours) of the television broadcast (stations), computed in accordance with § 73.684, encompassing the entire community of license of the proposed station; or
* * *
NOTE 7: Paragraph (a)(1) of this section will not be applied so as to require divestiture, by any licensee, of existing facilities. Said paragraph will not apply to applications for assignment of license or transfer of control filed in accordance with § § 1.540(b) or 1.541(b) of this chapter, or to applications for assignment of license or transfer of control to heirs or legatees by will or intestacy if no new or increased overlap would be created between commonly owned, operated, or controlled FM broadcast stations and if no new encompassment of communities proscribed in paragraph (a)(1) of this section as to commonly owned, operated, or controlled FM broadcast stations and television broadcast stations would result. Said paragraph will apply to all applications for new stations, to all other applications for assignment or transfer, and to all applications for major changes in existing stations except major changes that will result in overlap of contours of FM broadcast stations with each other no greater than that already existing. (The resulting areas of overlap of contours of FM broadcast stations with each other in such major change cases may consist partly or entirely of new terrain. However, if the population in the resulting overlap areas substantially exceeds that in the previously existing overlap areas, the Commission will not grant the application if it finds that to do so would be against the public interest, convenience, or necessity.) Paragraph (a) of this section will not apply to any application by a party who directly or indirectly owns, operates or controls a UHF television broadcast station where grant of such application would result in the Grade A contour of the UHF station encompassing the entire community of license of a commonly owned, operated, or controlled FM broadcast station or would result in the entire community of license of such UHF station being encompassed by the 1 mv/m contour of such FM broadcast station. Such community encompassment cases will ve handled on a case-by-case basis in order to determine whether common ownership, operation or control of the stations in question would be in the public interest. Commonly owned, operated, or controlled FM broadcast stations with overlapping contours or community-encompassing contours prohibited by paragraph (a)(1) of this section may not be assigned or transferred to a single person, group, or entity, except as provided above in this note.
NOTE 8: Paragraph (a)(1) of this section will not be applied to cases involving television stations which are primarily "satellite" operations. Such cases will be considered on a case-by-case basis in order to determine whether common ownership, operation, or control of the stations in question would be in the public interest. Whether or not a particular television broadcast station which does not present a substantial amount of locally originated programming is primarily a "satellite" operation will be determined on the facts of the particular case. An authorized and operating "satellite" television station the Grade A contour of which completely encompasses the community of license of a commonly owned, operated, or controlled FM broadcast station, or the community of license of which is completely encompassed by the 1 mv/m contour of such an FM broadcast station may subsequently become a "non-satellite" station with local studios and locally originated programming. However, such commonly owned, operated, or controlled FM and "non-satellite" television stations may not be transferred or assigned to a single person, group, or entity except as provided in Note 7.
3. Section 73.636 of the Commission's Rules and Regulations is amended by revising subparagraph (1) of paragraph (a) and Note 8 to read as follows:
§ 73.636 Multiple ownership.
(a) * * *
(1) Such party directly or indirectly owns, operates, or controls: one or more television broadcast stations and the grant of such license will result in any overlap of the Grade B contours of the existing and proposed stations, computed in accordance with § 73.684; or one or more standard broadcast stations and the grant of such license will result in the Grade A contour of the proposed station, computed in accordance with § 73.684, encompassing the entire community of license of one of the standard broadcast stations, or will result in the predicted or measured 2 mv/m groundwave (contours) of the standard broadcast (stations), computed in accordance with § 73.183 or § 73.186, encompassing the entire community of license of the proposed station; or one or more FM broadcast stations and the grant of such license will result in the Grade A contour of the proposed station, computed in accordance with § 73.684, encompassing the entire community of license of one of the FM broadcast stations, or will result in the predicted 1 mv/m contour of the FM broadcast (stations), computed in accordance with § 73.313, encompassing the entire community of license of the proposed station; or
* * *
NOTE 8: Paragraph (a)(1) of this section will not be applied to cases involving television stations which are primarily "satellite" operations. Such cases will be considered on a case-by-case basis in order to determine whether common ownership, operation, or control of the stations in question would be in the public interest. Whether or not a particular television broadcast station which does not present a substantial amount of locally originated programming is primarily a "satellite" operation will be determined on the facts of the particular case. An authorized and operating "satellite" television sation the Grade B contour of which overlaps that of a commonly owned, operated, or controlled "non-satellite" parent television station, or the Grade A contour of which completely encompasses the community of license of a commonly owned, operated, or controlled standard or FM broadcast station, or the community of license of which is completely encompassed by the 2 mv/m contour of such a standard broadcast station, or the 1 mv/m contour of such an FM broadcast station, may subsequently become a "non-satellite" station with local studios and locally originated programming. However, such commonly owned, operated, or controlled "non-satellite" television stations with Grade B overlap, or such commonly owned, operated, or controlled "non-satellite" television stations and standard or FM stations with the aforementioned community encompassment, may not be transferred or assigned to a single person, group, or entity except as provided in Note 7.