*Pages 1--11 from Microsoft Word - 2252.doc* Federal Communications Commission FCC 00- 222 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of KORTES COMMUNICATIONS, INC. (ASSIGNOR) and STAFFORD BROADCASTING, L. L. C. (ASSIGNEE) For Consent to the Assignment of License of Stations WPLB( AM), Greenville, MI and WPLB- FM, Lakeview, MI ) ) ) ) ) ) ) ) ) File Nos. BAL- 990604GE BALH- 990604GF MEMORANDUM OPINION AND ORDER Adopted: June 20, 2000 Released: June 30, 2000 Before the Commission: 1. The Commission has under consideration: (1) the above- captioned applications for consent to assignment of licenses of Stations WPLB( AM), Greenville, Michigan and WPLB-FM, Lakeview, Michigan, from Kortes Communications, Inc. (“ Kortes”) to Stafford Broadcasting, L. L. C. (“ Stafford”); and (2) an unopposed request for a permanent waiver of the newspaper/ radio cross- ownership rule. 1 1 Section 73.3555( d) of the Commission's rules, 47 C. F. R. Section 73.3555( d), prohibits the grant of an AM broadcast station licensed 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 . . . [t] he predicted or measured 2 mV/ m contour of an AM station . . . encompassing the entire community in which such newspaper is published.” In 1996, the Commission initiated an inquiry concerning proposed changes to the newspaper/ radio cross- ownership waiver policy and invited public comment. See Newspaper/ Radio Cross-Ownership Waiver Policy, Notice of Inquiry, MM Docket No. 96- 197, 11 FCC Rcd 13003 (1996) (“ Newspaper/ Radio NOI”). The comments filed in that proceeding were considered in the Commission’s 1998 Biennial Regulatory Review, wherein we sought comment on whether the newspaper/ broadcast cross- ownership rule should be retained, modified or eliminated. See 1998 Biennial Regulatory Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Notice of Inquiry, 13 FCC Rcd 11276, 11288 (1998). On May 26, 2000, the Commission adopted the Biennial Review Report, in which we determined that, as a general matter, the rule should be retained because it continues to serve the public interest by furthering our important and substantial policy of viewpoint diversity. However, as we stated in the Biennial Review Report, “we believe that there may be circumstances in which the rule may not be necessary to achieve its intended public interest benefits. We, therefore, will initiate a (continued….) 1 Federal Communications Commission FCC 00- 222 2 2. The sole member of Stafford Broadcasting, L. L. C., the proposed assignee, is John B. Stafford, who is the publisher and Chairman of Greenville News, Inc. d/ b/ a Stafford Communications Group, which publishes The Daily News, an evening newspaper published in Greenville, Michigan. Mr. Stafford and his wife, Linda M. Stafford together own 100% of the voting stock of Greenville News Inc. Neither Mr. nor Mrs. Stafford currently has any broadcast interests. Stafford requests a waiver of the newspaper/ radio cross- ownership rule because the 2 mV/ m contour of WPLB( AM) encompasses the entire community of Greenville. The 1 mV/ m contour for WPLB- FM does not encompass Greenville. As such, no waiver is necessary in order for Stafford to acquire WPLB- FM. Greenville has a population of 8, 452, and Lakeview has a population of 1,235. 2 WPLB( AM) is a Class B AM station with an authorized power of 1,000 watts effective radiated power (“ ERP”) day (nondirectional) and 500 watts ERP nighttime (directional). WPLB- FM is a Class A FM station, operating with 3 kilowatts ERP at 100 meters HAAT nondirectional. 3. Stafford, in its waiver request, argues that due to significant financial problems that face the station, and its inability to compete effectively for advertising dollars, WPLB( AM) risks being taken dark if the Commission does not grant the assignment application allowing Stafford to acquire the stations. Stafford cites the current licensee’s previous unsuccessful attempts to sell the station to an entity that does not have a newspaper. Stafford argues that grant of the waiver will serve the public interest, including the twin goals of viewpoint diversity and economic competition. For the following reasons, we grant Stafford’s request for a permanent waiver. WAIVER REQUEST 4. Stafford asserts that a grant of a waiver would be consistent with the most recent case in which the Commission granted a waiver of the newspaper cross ownership rule, Columbia Montour Broadcasting Co., Inc., 13 FCC Rcd 13007 (1998) (“ Columbia Montour”). In that case we allowed a subsidiary of Press Enterprise, Inc., the publisher of a daily newspaper in Bloomsburg, PA, to acquire WCNR( AM), a standalone failing AM station there. 5. Financial Losses. According to Kortes’ 1998 corporate tax return and other financial information provided by Stafford and Kortes, the licensee has reported total operating losses for the combined operation of the two stations since at least 1995. In that year, the net loss was $1,508. In 1996, $55,167; in 1997, $51,311; in 1998, $28,759. By the end of 1998, the company’s accumulated losses had grown to $227,750. The company showed income of $122,667.96, and total expenses of $146,874.65, resulting in a loss of $20,206.69 for the first three quarters of 1999. 3 Jeffrey Kortes, the company’s president, represents that Kortes (Continued from previous page) rulemaking proceeding to consider tailoring the rule accordingly.” See Biennial Review Report, MM Docket 98-35, FCC 00- 191, at ¶ 88 (rel. June 20, 2000). 2 According to US Census Bureau population estimates as of July 1, 1998. 3 See letter to the Commission from Jeffrey Kortes, President of the Assignor, filed on November 17, 1999 (“ Kortes Letter”). 2 Federal Communications Commission FCC 00- 222 3 Communications can no longer afford to sustain the ongoing losses the stations have generated. 6. Kortes is a closely held corporation, owned by Jeffrey Kortes, his wife, and Mr. Kortes’ parents. According to Kortes, none of the stockholders has been paid any dividends since the corporation was formed, the stockholders have had loans to the company in excess of $42,500 outstanding since 1995, in addition to their initial aggregate investment of $60,000 in common stock and paid- in capital, and the stockholders have personally guaranteed at least $300,000 in mortgages held by Old Kent Bank. Jeffrey Kortes is the only stockholder on the company’s payroll, and his salary of $39,000 has not increased since 1993. The company operates both stations with a total staff of three full- time and one part- time employees. The stations have different programming formats. Stafford notes that the “AM station generates almost no stand-alone revenue (other than a small amount for broadcast of religious programs on Sunday mornings.)” 7. Efforts to Sell Stations. In July 1996, Mr. Fred Barr, representing a group interested in buying small radio stations in Michigan, approached Mr. Kortes about selling the stations. Mr. Kortes had several meetings with Mr. Barr regarding WPLB financials and possible acquisition of the station, but at the conclusion of the meetings, Mr. Barr’s group did not “have adequate capital to make the sale happen.” In April 1997, Mr. James McCluskey, who “headed a group that was interested in buying radio stations and making them broadcasting schools,” approached Mr. Kortes. However, after several meetings, Mr. McCluskey informed Mr. Kortes that his partners had “decided it was not monetarily possible for them to make the purchase.” In October 1998, Mr. Barr again approached Mr. Kortes, but he and his partners “could not see where a stand alone would be able to sustain itself and passed on the sale.” Mr. Kortes’ October 1998 listing of the station on “buysellradio. com”, an internet site that specializes in small market station sales, resulted in no offers or inquiries. Mr. Kortes approached Mr. McCluskey again in October 1998, to no avail. In November 1998, Mike St. Cyr, the former general manager of a Grand Rapids radio station which was being sold, approached Mr. Kortes about buying the stations. However, Mr. Cyr concluded “he would not be able to generate the revenue to run the station[ s] profitably.” 8. In December 1998, Mr. Kortes approached the president of Stafford about buying the stations. The parties agreed that the acquisition would benefit the two companies by permitting joint operation of the newspaper and the radio stations, and a purchase agreement was executed. However, knowing that the acquisition might not be permitted by the FCC because of the newspaper/ radio cross- ownership restriction, Mr. Kortes once more approached those individuals who had previously expressed an interest in the stations, but they declined because they “still were not certain a stand alone would survive in today’s market.” Mr. Kortes also spoke with a new potential buyer, but that group did not have adequate financing. 9. Effect of Waiver on Competition and Diversity. Stafford provides a study prepared by its consultant to establish that media diversity and competition would not be harmed by the common ownership of WPLB( AM), WPLB- FM, and The Daily News. The study indicates 3 Federal Communications Commission FCC 00- 222 4 that a total of 67 broadcast stations provide service 4 to at least a portion of the area within the WPLB( AM) 2 mV/ m contour. That total includes 19 AM stations, 29 FM stations and 19 television stations. According to Stafford, 43 different licensees own those 67 stations. Stafford also provides a study showing that 24 stations (6 AMs, 9 FMs and 9 TVs), including WPLB (AM) and -FM, place a principal community signal over all or some portion of WPLB’s 2 mV/ m service area. In terms of cable service, Stafford notes that Greenville and the surrounding areas are served by a 35- channel cable television system, which sells local advertising. As of October 31, 1996, the system was listed as having 5,992 subscribers and passing 9,814 homes. Stafford notes that grant of the assignment application will not result in any reduction in the number of broadcast licensees because Stafford, which currently holds no broadcast licenses, will be replacing Kortes as licensee of WPLB( AM) and WPLB- FM. 10. With regard to newspapers, Stafford submits that The Daily News faces significant competition from other daily and weekly newspapers. 5 Including The Daily News, a daily newspaper is published in each of the three counties that fall within the WPLB( AM) 2.0 mV/ m contour. The Grand Rapids Press is published daily and Sunday in Kent County, and the Sentinel-Standard is published daily in Ionia County. Additionally, Stafford submits that there are at least four weekly newspapers published in Kent, Ionia and Montcalm counties. This does not include “shoppers” without news content. Other daily newspapers circulated in the area include the Lansing State Journal, the Detroit Free Press and The Detroit News, as well as such national papers as The New York Times, The Wall Street Journal and USA Today. 11. The Daily News has an average paid circulation of approximately 9,000, the great bulk of which is in Montcalm County. According to an independent audit supplied by Stafford, The Daily News had an average paid circulation as of June 20, 1998 of 7,162 in Montcalm County, 1,136 in Ionia County and 323 in Kent County. According to a report of the Audit Bureau of Circulations, released May 1998, The Grand Rapids Press’ circulation in Montcalm County was 2,992 daily and 5,575 on Sunday. The Grand Rapids Press’ overall daily circulation was 138,818, more than 15 times that of The Daily News. In addition, the Grand Rapids Press enjoys a Sunday circulation of 191,518, seventy percent of which are circulated in the three-county area. 6 The Daily News publishes on Saturday mornings, but has no Sunday edition. 12. With regard to the licensee’s financial condition and competitive position, Stafford submits that between 1995 and 1998, gross receipts for both stations dropped sharply from 4 Stafford determined the number of stations providing service within the overlap area based on the use of stations’ protected contours: for AM stations, the 2 mV/ m contour was used; for FMs, the 1. 0 mV/ m contour was used; and for TV, the Grade B contour was used. Both commercial and non- commercial stations were counted. Waiver request at n. 7. In its waiver request, Stafford also notes the number of stations whose principal community contours overlap the relevant market. 5 The Daily News and its largest competitor, The Grand Rapids Press, are both evening papers during the week. Stafford notes that it publishes a weekly newspaper in Carson City, Michigan, which is outside of the 2 mV/ m for WPLB( AM). 6 Audit Bureau of Circulation statistics for period ending December 31, 1997, released May 1998, p. 5 4 Federal Communications Commission FCC 00- 222 5 $331,774 to $243,268. This represents a revenue decrease of 26.7% over three years. The decline continued into 1999, with the company showing income of $122,667.96 for the first three quarters of 1999, and expenses of $146,874.65, resulting in a loss of $20,206.69 for that time period. In contrast to Kortes’ declining revenues between 1995 and 1998, the Grand Rapids radio market enjoyed revenue growth of 27.3% during that time. According to Stafford, the 1998 BIA Research Inc. Yearbook lists 31 radio stations as competing in the Grand Rapids market, and The M Street Journal lists 36 radio stations (12 AM and 24 FM) in the Grand Rapids market. Both sources include WODJ( FM), Greenville, Michigan, the only broadcast station other than WPLB( AM) and –FM licensed to Montcalm County. However, WPLB( AM) is not included in either the BIA or M Street Journal listings. 13. The waiver request included a Declaration from Robert F. Ottaway, past president of the Michigan Association of Broadcasters, who has worked in the radio industry in Michigan as an owner, consultant or broker since 1982, and is very familiar with the Grand Rapids market and surrounding areas, including Montcalm County. Ottaway states that Montcalm County is in the Total Survey Area for the Grand Rapids Arbitron market, but that WPLB( AM) does not have a measurable audience share in the market. In contrast, he notes that WODJ( FM) does have a significant audience share. The 1998 Arbitron Radio County Coverage for Montcalm County reports 26 stations as having a measurable listening audience in Montcalm County, but WPLB is not among them. According to Ottaway, “the fact WPLB had no measurable audience share or listening cume puts it at a significant competitive disadvantage in the solicitation of advertising.” Ottaway’s experience suggests that it is “extremely unlikely that WPLB could be sold as a stand-alone station for anything other than a “fire sale” price and certainly not for a price anywhere near what Kortes Communications, Inc. paid for the station in 1992, approximately $185,000.” Ottaway concludes that there is a high likelihood WPLB will fail and go off the air unless it is sold to an entity that (a) can effectuate operational efficiencies by running the station in combination with other media outlets and (b) has a strong interest in the community of Greenville itself. 14. According to Mr. Kortes, competition in the region has become more intense since 1995, as the market has become more consolidated. Stafford notes that three group owners (Goodrich Marketing, Capstar TX LP and Clear Channel Communications) own 12 stations in the market. 7 Kortes has not only lost revenues but has lost key employees because of the consolidation. Stafford states that Kortes cannot offer the benefits that the consolidated groups can, and that the lack of sales personnel has severely hampered the company's ability to generate revenue. Mr. Kortes notes that it is very difficult for a stand alone in a small market to survive, and insists that no independent group will be able to operate WPLB profitably; that the only options are to allow Stafford to acquire the station or to take WPLB dark. 7 We note that since the WPLB assignment application was filed, WODJ( FM) was acquired by Michigan Media, Inc., and an application to assign WODJ( FM) to Citadel Broadcasting Co. was granted on April 7, 2000 (FCC File No. BALH- 20000315ABC). In addition, there is pending an application proposing the transfer of control of AMFM, Inc. (including Capstar stations) to Clear Channel. The transfer of control application indicates, however, that Clear Channel will be required to divest stations in order to comply with the multiple ownership rules. 5 Federal Communications Commission FCC 00- 222 6 Discussion 15. In adopting the 1975 rule that generally prohibited the common ownership of a newspaper and broadcast station serving the same community, we made it clear that fostering diverse viewpoints from antagonistic sources is at the heart of our licensing responsibility. 8 We concluded that granting a broadcast license to an entity in the same community as that in which the entity also publishes a newspaper could harm local diversity. 9 At the same time, we noted our expectation that there could be meritorious waiver requests and specified four circumstances in which waivers would be warranted: (1) where a licensee is unable to sell a station; (2) where the only sale possible would be at an artificially depressed price; (3) where separate ownership and operation of the newspaper and the broadcast station could not be supported in the locality; or (4) where, for whatever reason, the purposes of the rule would be disserved by its application. 10 In examining waiver requests under the fourth category, the Commission will consider any “special circumstances” advanced by a party as having bearing on the appropriateness of granting a waiver. 11 These waiver standards were originally designed to govern divestiture of combinations formed prior to implementation of the rule, but they have also been applied to “new” combinations such as the one proposed here. 12 Because Stafford requests a permanent waiver of the Commission’s rule, it faces a “considerably heavier” burden of justification than if it sought a temporary waiver. 13 16. As we stated in the Newspaper/ Radio NOI, “there may be markets in which allowing waiver of the cross- ownership restriction would be healthy for the maintenance of diversity. This could occur, for example, in markets where a newspaper is failing and the only prospective purchaser is the owner of a local radio station.” 14 The Commission has only granted permanent waivers of the rule in three instances, two involving television stations, and one involving a radio station. Each of those waivers was granted under the fourth “catch all” waiver 8 Multiple Ownership of Standard, FM, and Television Broadcast Stations, Second Report and Order, 50 FCC 2d 1046, 1079 (1975) (“ Second Report and Order”), recon., 53 FCC 2d 589 (1975) (“ Recon. Order”), aff’d sub. nom. Federal Communications Commission v. National Citizens Committee for Broadcasting, 436 U. S. 775 (1978). 9 Second Report and Order, 50 FCC 2d at 1075. 10 Second Report and Order, 50 FCC 2d at 1085. 11 See Columbia Montour, 13 FCC Rcd at 13012. 12 See Columbia Montour, 13 FCC Rcd at 13012; Fox 8 FCC Rcd at 5348 & n. 19; Newspaper/ Radio NOI, 11 FCC Rcd at 13004- 05. 13 See Fox Television Stations, Inc., 8 FCC Rcd. 5341, 5348 (1993) aff’d sub nom. Metropolitan Council of NAACP Branches v. FCC, 46 F. 3d 1154 (D. C. Cir. 1995) (“ Fox”) (citing News America Publishing, Inc. v. FCC, 844 F. 2d 800, 803 (D. C. Cir. 1988); Health and Medicine Policy Research Group v. FCC, 807 F. 2d 1038, 1042- 43 (D. C. Cir. 1986). 14 Newspaper/ Radio NOI, 11 FCC Rcd at 13009. 6 Federal Communications Commission FCC 00- 222 7 category listed above. In Field Communications Corporation (“ Field), 15 the Commission granted a permanent waiver to allow Field Enterprises, Inc., publisher of two daily newspapers in Chicago, to reacquire control of WFLD- TV, Chicago. The Commission held that Field’s reacquisition of the station did not constitute a new ownership pattern, and thus was similar to ownership patterns grandfathered under the daily newspaper cross- ownership rule. Additionally, the Commission perceived the need for the UHF station to be maintained as part of a five- station group of UHF stations (that was being assigned to Field) in order to ensure the financial viability of the entire group. 16 In Fox, The Commission also granted a permanent waiver of the rule to allow Rupert Murdoch to continue to control the licensee of WNYW, New York, New York, after acquiring the failing New York Post in a bankruptcy proceeding. 17 There was evidence that Murdoch’s ownership might be “pivotal to the newspaper’s survival.” 18 As in Field, Murdoch had previously controlled the entity to be acquired, and had a continuing financial interest in the property. 19 17. Lastly, in Columbia Montour, we granted a permanent waiver of the rule to allow a subsidiary of Press Enterprise, Inc., to acquire WCNR( AM), Bloomsburg, Pennsylvania. We were persuaded that a waiver was warranted based upon: (1) the applicant’s documentation of its unsuccessful efforts to sell WCNR( AM); (2) the financially troubled status of the small AM station; (3) the fact that the proposed common ownership involved a newspaper and a single AM station; (4) the relatively high level of media diversity in the market where the facilities to be commonly owned were located; (5) the fact that the AM station was not a significant competitive force in the market; and (6) our determination that the proposed newspaper/ small AM combination was unlikely to have an adverse effect on media competition in the market. 20 Stafford compares its situation to that in Columbia Montour, and argues that the six factors that resulted in grant of a waiver in Columbia Montour are equally applicable in the instant case. 18. We agree. As in the case of WCNR, the combination of factors suggests that a review of the waiver request under the fourth waiver criteria is more appropriate than review under the first three criteria. We are cognizant that The Daily News is the only paper published in Montcalm County on a daily basis, and that granting a waiver necessarily decreases the count of media voices by one in this market. However, we find that the twin purposes of the newspaper/ radio cross- ownership rule – promoting media diversity and competition – would be disserved by denial of Stafford’s request. The record suggests that failure to grant a waiver in this instance would likely lead to a diminution in the level of competition and diversity among media outlets in Montcalm County, Michigan, and the surrounding counties, as well as the loss of a broadcast outlet providing service to its local community, because WPLB( AM) would probably 15 Field Communications Corp., 65 FCC 2d 959 (1977)(“ Field”). 16 Field, 65 FCC 2d at 961. 17 Fox, 8 FCC Rcd 5341. 18 Fox, 8 FCC Rcd at 5350. 19 See Fox, 8 FCC Rcd at 5342; Field, 65 FCC 2d at 961. 20 Columbia Montour, 13 FCC Rcd at 13013. 7 Federal Communications Commission FCC 00- 222 8 be taken off the air. We note that a 5 kW AM station licensed to nearby Ionia, Michigan, was placed in the hands of a Receiver in March 1998. 21 Mr. Stafford has a strong interest in the community of Greenville, and in preserving WPLB as an outlet for local news and information. To accomplish this, his company is willing to invest the money, time and energy necessary to revive WPLB( AM), including the implementation of certain organizational efficiencies to reduce the operating costs for the station. 19. Montcalm County is located within the Arbitron Total Survey Area for the Grand Rapids Michigan market, but WPLB( AM) has no measurable audience share therein, in contrast to WODJ( FM), which has a significant audience share in the market. The 1998 Arbitron Radio County Coverage for Montcalm County report lists 26 stations as having a measurable listening audience in Montcalm County, but WPLB( AM), which is one of only three stations licensed to Montcalm County, is not listed. Although Montcalm County is not located within the Grand Rapids Arbitron Radio Metro Market, WODJ( FM) had a 4.3 share of that market’s audience during the Summer 1999 reporting period, 22 and 4.2% of the market revenues for 1998. 23 Neither WPLB( AM) nor WPLB- FM appear in BIA’s or Arbitron's research for the Metro Market. 24 20. Kortes has been struggling financially in recent years with declining sales revenues, at the same time that radio revenues in the nearby market have increased. Kortes’ accumulated losses stood at $227,750 in its 1998 tax return, and those losses continued into 1999. Jeffrey Kortes, the licensee’s president has not had an increase in his $39,000 annual salary since 1993. The two stations are operated with a bare- bones staff of just three full- time and one part time employees, who are running two 24- hour radio stations with different formats licensed to communities approximately 20 miles apart. None of the stockholders has been paid any dividends since the corporation was formed, and the stockholders have had loans to the corporation in excess of $42,500 outstanding since prior to 1995. They have personally guaranteed at least $300,000 of the corporation’s mortgages with Old Kent Bank. 25 Moreover, the inability to attract any interested buyer in several years underscores the economically precarious position of WPLB( AM). Given Kortes’ dire financial situation, combined with its inability to compete for listeners and advertisers, we believe there is a high probability that WPLB is faced with going dark. 21 See BAL- 980511GF (involuntary assignment from Rhoden Enterprises, Inc. to Agricultural Resource Group, Inc., Receiver, granted May 21, 1998). Stafford notes that WION should have been in a better position to prosper than WPLB( AM), because of WION’s superior authorized daytime power of 5 kW. WION’s authorized nighttime power was 330 watts, slightly below WPLB’s authorized 500 watts. See waiver request at 10 & n. 19. 22 Duncan’s Summer 1999 ratings report. 23 Investing in Radio 1999, 1 st edition. Copyright 1999 BIA Research, Inc. 24 Investing in Radio 1999, 1 st edition. Copyright 1999 BIA Research, Inc. 25 Contrast Kortes’ failing financial situation with lack of such a showing in Hopkins Hall, wherein we stated “there was no question concerning the financial viability of any of the media properties.” Hopkins Hall Broadcasting, Inc., 10 FCC 9764, 9766 (1995). 8 Federal Communications Commission FCC 00- 222 9 21. The Commission has determined in cases such as this that the relevant market for analyzing the effects of a newspaper/ radio cross- ownership waiver on diversity and competition is the common area served by the newspaper and the 2 mV/ m contour of the AM station. 26 According to Stafford’s engineering analysis, WPLB’s 2 mV/ m contour encompasses approximately half of each of the three counties of Montcalm, Ionia and Kent, and The Daily News is circulated to homes within each of those counties. Because we are convinced that The Daily News serves portions of all three counties, we accept the applicant’s characterization of the relevant geographic market. 27 22. For its diversity analysis, Stafford has counted the number of radio and television stations providing service to the area within WPLB( AM) ’s 2 mV/ m daytime contour, and asserts that this area has a wealth of broadcast services. Although Greenville is located in the Grand Rapids DMA, Stafford limits the count of television stations that serve the relevant market to those which provide service to the overlap area. 28 Considering the impact of the proposed combination on local diversity, our analysis indicates that the relevant market is served by a wide variety of media. Specifically, Stafford has shown that all eight of the commercial television stations licensed to the Grand Rapids- Kalamazoo- Battle Creek DMA clearly place a Grade A signal over substantial portions of WPLB’s 2 mV/ m contour area, given that they each provide a City Grade signal to that area. In Columbia Montour, all four of the commercial television stations licensed to the Wilkes- Barre DMA provided Grade A service to the relevant market (Columbia County). According to Stafford, an additional ten television stations provide Grade B service to the overlap area, and some of those stations likely provide Grade A service, as well. Aural service to the overlap area is also substantial. Stafford has shown that at least 14 radio stations (including WPLB( AM) and -FM) place a principal community contour over a portion of the area within the WPLB 2 mV/ m contour. In Columbia Montour, 11 radio stations (including WCNR) placed a principal community contour over at least a portion of Columbia County. 29 According to Stafford, 24 broadcast stations, representing 18 different “voices,” provide City Grade service (in the case of television) or principal community service (in the case of radio) to at 26 See Columbia Montour, 13 FCC Rcd at 13015. Also see Newspaper/ Radio NOI, 11 FCC Rcd at 13011; Capital Cities/ ABC, Inc., 11 FCC Rcd 5841, 5890 (1996); Hopkins Hall Broadcasting, Inc., 10 FCC Rcd at 9766. 27 This is consistent with our decision in Columbia Montour, wherein we accepted the applicant’s description of Columbia County, Pennsylvania, as being the relevant market because the boundaries of Columbia County approximated the common area served by the newspaper and the 2 mV/ m contour of WCNR. Similarly, in Stockholders of Renaissance Communications Corporation, we concurred in the applicants’ contention that the relevant geographic market was Dade, Broward and Palm Beach counties, because WDZL( TV) ’s Grade A contour (the relevant contour when testing a newspaper/ television cross ownership waiver) included portions of each of these counties, and the Sun- Sentinel was distributed in each county. Stockholders of Renaissance Communications Corporation, 12 FCC Rcd 11866 (1997). 28 In contrast to the instant case, the applicant in Capital Cities/ ABC, Inc. sought to include in its count of “voices” all of the television stations in the DMA. However, we rejected this attempt, stating “the relevant market for our diversity and competition analyses remains the common areas served by the newspaper and the 2 mV/ m and 1mV/ m of the AM and FM stations, respectively, not the DMA.” 11 FCC Rcd 5841, 5891 (1996). 29 Columbia Montour, 13 FCC Rcd at 13015. 9 Federal Communications Commission FCC 00- 222 10 least a portion of the area within WPLB’s 2 mV/ m contour. This number exceeds the number of voices that provided comparable service in Columbia Montour. We also note that even the portions of WPLB’s 2 mV/ m contour which are furthest away from Grand Rapids (the source of most of the voices referred to herein), receive protected service from five or more additional radio stations, which is our traditional measure of a well- served area. 30 Given this information, we are satisfied that there is substantial diversity of viewpoint within the relevant market. 23. Cable television penetration throughout the Grand Rapids- Kalamazoo- Battle Creek DMA is 61%. 31 There are 6 cable television systems serving communities in the three counties of Kent, Montcalm and Ionia, and two cable systems serve Montcalm County. 32 The 35- channel system serving Greenville has 6, 174 subscribers and passes 9,814 homes. The system sells local advertising, and serves all three counties. 33 24. Stafford has also shown that there are 9 daily newspapers circulated within the 2 mV/ m contour. The Grand Rapids Press’ overall daily circulation is 138,818, more than 15 times that of the Daily News’ circulation. 34 Within Greenville alone, the Grand Rapids Press was distributed to 25.95% of the homes on weekdays, and 45.30% on Sundays. 35 The Daily News is circulated to 62 % of the households within the Greenville corporate limits, and to 33. 94% of the households within Montcalm County. 36 Overall, the Grand Rapids Press’ circulation, expressed as a percentage of households, in the three counties is as follows: Montcalm, 14.45% evenings, 26.93% Sunday; Kent, 48.75% evenings, 62.74% Sundays; and Ionia, 14.86% evenings, 25.04% Sundays. 37 There are no morning dailies published in Montcalm County. Similar to the situation in Columbia Montour, the Daily News is the only locally- based daily newspaper published in its home county, where its daily circulation exceeds its closest competitor. However, the Press-Enterprise had a daily circulation in Columbia County of 58%; the Daily News has a daily circulation in Montcalm County of only 34%. In Columbia Montour, the Press- Enterprise faced competition in Columbia County from approximately 10 competing newspapers with a combined daily circulation of 10% of households, and Sunday circulation of 22%. In contrast, the Grand Rapids Press is circulated to 14.45% of the households in Montcalm County, and at least six 30 See 1998 Biennial Regulatory Review -- Streamlining of Radio Technical Rules in Parts 73 and 74 of the Commission’s Rules, Notice of Proposed Rulemaking, 13 FCC Rcd 14849, 14857 (1998) citing Table of Allotments, FM Broadcast Stations, Bay City, Texas, 10 FCC Rcd 3337( 1995) (in which we stated that the Commission considers areas receiving at least five aural services to be adequate service). 31 Television & Cable Factbook 1999, Cable Vol. at D- 753. 32 Warren Publishing 1999 Cable and Station Coverage Atlas, pp. 302- 306. 33 Television & Cable Factbook 1999, Cable Vol. at D- 753. 34 Audit Bureau of Circulation statistics for the period ending December 31, 1997, p. 5. The Grand Rapids Press’ Sunday circulation is 191,518. 35 Audit Bureau of Circulation statistics for period ending December 31, 1997, page 16. 36 Audit Bureau of Circulation statistics for the period ending June 30, 1998, page 5. 37 Audit Bureau of Circulation statistics for the period ending December 31, 1997, p. 5. 10 Federal Communications Commission FCC 00- 222 11 other papers are circulated therein. We also note that, unlike the situation in Columbia Montour, the Daily News is not published on Sundays, a day on which the Grand Rapids Press faces no competition in Montcalm County. In sum, we find that the Daily News faces substantial competition from the Grand Rapids Press. 25. Although a waiver is not required to allow Stafford to acquire WPLB- FM, we think it important to consider this station, given that the result of our action is to allow a single entity to own an AM, FM and a daily newspaper in the same area. We do not believe that this makes the instant situation so different from Columbia Montour or other cases in which waivers have been granted, as to warrant denying the request. Notwithstanding the efficiencies that the licensee has achieved through joint station operations, the financial condition of Kortes continues to deteriorate. In addition, WPLB- FM faces substantial competition from stations licensed to the Grand Rapids Metro Market, but does not currently garner a measurable share in that market. Lastly, a waiver is not required to allow Stafford to own WPLB- FM. For these reasons, we find that grant of the assignment of WPLB- FM to Stafford is in the public interest. 26. In conclusion, we believe that grant of the requested waiver is in the public interest as it ensures that WPLB will remain on the air and continue to serve the needs of the community of Greenville and the surrounding areas. Any impact on competition will be minimal, given both stations’ inability to garner any measurable share in the Grand Rapids market, as well as the diversity of media outlets serving the newspaper/ radio overlap area. Finally, Stafford appears to be a financially viable company with the ability to infuse needed resources into the operation of these stations and to maintain their service to Greenville. 27. Accordingly, IT IS ORDERED, That a permanent waiver of the Newspaper/ radio cross- ownership rule, 47 C. F. R. Section 73.3555( d)( 2), IS HEREBY GRANTED to Stafford Broadcasting, L. L. C., to permit common ownership of WPLB( AM), Greenville, Michigan, and The Daily News. 28. IT IS FURTHER ORDERED, That, having found the parties fully qualified, the application to assign the licenses of WPLB( AM), Greenville, Michigan, and WPLB- FM, Lakeview, Michigan, from Kortes Communications, Inc., to Stafford Broadcasting, L. L. C., is HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary 11