![](media/image1.png){width="1.25in" height="1.15in"}**FEDERAL
COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

**DA 07-1718**

**Released: April 24, 2007**

Bonten Media Group LLC

c/o Jennifer A. Johnson, Esquire

Covington & Burling, LLP

1201 Pennsylvania Avenue, NW

Washington, DC 20004-2401

BlueStone License Holdings, Inc.

c/o Mace J. Rosenstein, Esquire

Covington & Burling LLP

1201 Pennsylvania Avenue, NW

Washington, DC 20004

Marshall R. Noecker

c/o James P. Riley, Esquire

Fletcher, Heald & Hildreth, PLC

1300 North 17^th^ Street, 11^th^ Floor

Arlington, VA 22209

Re: Application for Transfer of Control of

> BlueStone License Holdings, Inc.
>
> Licensee of
>
> WCYB-TV, Bristol, VA
>
> BTCCT-20061127AJN, Fac. ID 2455
>
> KTXS-TV, Sweetwater, TX
>
> BTCCT-20061127AJO, Fac. ID 308
>
> KRCR-TV, Redding, CA
>
> BTCCT-20061127AJR, Fac. ID 8291
>
> KAEF(TV), Arcata, CA
>
> BTCCT-20061127AKI, Fac. ID 8263
>
> KECI-TV, Missoula, MT
>
> BTCCT-20061127AKO, Fac. ID 18084
>
> KCFW-TV, Kalispell, MT
>
> BTCCT-20061127AKS, Fac. ID 18079
>
> KTVM(TV), Butte, MT
>
> BTCCT-20061127AKU, Fac. ID 18066
>
> et al.
>
> to Bonten Media Group LLC

Dear Counsel:

This is in reference to the above-captioned application for transfer of
control of BlueStone License Holdings, Inc. ("BlueStone") from BlueStone
Television LLC to Bonten Media Group LLC ("Bonten"). On January 3, 2007,
Marshall R. Noecker ("Noecker") filed a petition to deny the application
concerning KCFW.[^1]

Among the stations licensed to BlueStone are KCFW-TV, Kalispell,
Montana, and KECI-TV, Missoula, Montana. The proposed transferee,
Bonten, requests authorization to continue operating KCFW as a satellite
of KECI pursuant to Note 5 of Section 73.3555 of the Commission's
Rules.[^2] Bonten points out that KCFW has been operating as a satellite
of KECI under Commission authority most recently granted in 2004.[^3]

**Waiver Request.** Pursuant to *Television Satellite Stations,* the
Commission presumes that a proposed satellite operation will serve the
public interest if: 1) no City Grade overlap exists between the parent
and the satellite; 2) the proposed satellite would provide service to an
underserved area; and 3) no alternative operator is ready and able to
purchase or operate the satellite as a full-service station.[^4] Bonten
concedes that KECI and KCFW have a small overlap of their City Grade
contours but argues that, under an *ad hoc* analysis, other compelling
circumstances warrant the continued authorization of KCFW to operate as
a satellite of KECI.[^5] Specifically, Bonten indicates that the overlap
encompasses 647 square kilometers and a population of 9,570,
representing 4.9% of the area and 7.1% of the population within the KECI
city-grade contour and 7.4% of the area and 10.6% of the population
within the KCFW city-grade contour.

Bonten states that KCFW continues to serve an underserved area. KCFW
remains the only commercial full-power television station licensed to
Kalispell, Montana. Moreover, 100% of the area within KCFW's Grade B
contour (but outside KECI's Grade B contour) receives four or fewer
television services, not including KCFW. Bonten points out that 93% of
Kalispell's Grade B contour (containing 97.5% of the population)
receives no full-power television service at all, other than from KCFW.

According to Bonten, KCFW has operated as a satellite of KECI since the
Kalispell station first began operating in 1968. Bonten posits that,
while small in population and in terms of television advertising
revenues, the Missoula Designated Market Area (\"DMA\") is
geographically dispersed over an extensive area which includes seven
large, mostly rural, sparsely-settled counties. Due to distance and
mountainous terrain, the four stations licensed to Missoula (the
economic center of the DMA) require satellites (full or low power
facilities) to provide over-the-air service to the northwest Montana
area bordering Canada which includes the distant community of Kalispell.

Bonten attaches an Economic Viability Study of Dr. Mark Fratrik, Vice
President of BIA Financial Network (\"2006 BIA Study\"). According to
Bonten, the 2006 BIA Study demonstrates that KCFW\'s coverage area does
not realistically provide the basis to support full-service, stand-alone
operations. The Kalispell station is licensed to a community more than
90 miles distant from the most populous community of Missoula, the
economic center of the market, where each of the four other full-power
stations are licensed. As the only full-power station licensed to a
community in the northern portion of the market, the KCFW Grade B
contour does not even reach the key Missoula area.

Bonten states that, in addition to KCFW\'s disadvantaged market
coverage, the 2006 BIA Study examines in detail various other reasons
that the sole Kalispell station could not support a viable, stand-alone
operation. They include the level of competition in and sparse
advertising revenues of the small market, the unavailability of a major
network affiliation or an alternative one that could support
full-service operations from the distant Kalispell area, and the major
costs of converting the station to stand-alone operations, including the
significant costs of digital conversion.

**Petition to Deny.** *Standing.* Noecker claims standing to file the
petition to deny because he is ready and able to purchase KCFW and
operate it as a full-power station. He will have no opportunity to do so
if the Commission grants the continuing satellite waiver requested by
Bonten, and he posits that this will cause him direct harm.

While acknowledging that the Commission has found the City Grade overlap
between KECI and KCFW to be minimal, he insists that the overlap is not
*de minimis* and should therefore be weighed against the applicants.
Moreover, Noecker claims that the public interest rationale which
previously supported KCFW\'s authority to operate as a satellite is no
longer valid. Furthermore, he maintains that such authority cannot be
granted where an alternative operator, namely himself, is ready and able
to purchase and operate the station as a full-service station. Noecker
states that he has made multiple offers to purchase KCFW for operation
as a full-service station.

He appends a report by Robin V. Flynn, Senior Vice President of Kagan
Media Appraisals (\"Kagan Report\") which he claims shows that KCFW can
succeed as a full- service station. Although Noecker agrees that KCFW
operates in an underserved area, he argues that the Kagan Report points
to the fact that KCFW\'s is the only full-power television signal in the
rapidly developing northern portion of the Missoula DMA as one reason it
can succeed as a full-service station. According to Noecker, the Kagan
Report contends that such operation would succeed because of the
economic and demographic development in KCFW\'s viewing area. The Kagan
report finds that KCFW would have adequate advertising revenues, given
the level of economic activity in its primary coverage area. Based upon
the economic profile of the Kalispell area, the geography of the market,
and the size of the unduplicated service area, the Kagan Report opines
that KCFW would be able to secure syndicated programming and possibly a
network affiliation. It maintains that the concept of having two
stations in a geographically dispersed market with the same affiliation
serving two separate population centers is not new, and it cites a
number of examples.

The Kagan Report states that, although KCFW would not have the same
reach as the other Missoula market stations, those stations reach
similar areas and compete with each other for advertising revenues
across similar coverage areas. According to the Kagan Report, KCFW, as a
local Kalispell station, would not face the same level of competition
for local advertisers. Moreover, the Kagan Report posits that, because
Flathead County accounts for approximately 33% of the retail sales in
the Missoula DMA, with Lake County contributing another 7%, the
potential revenue base for a full-service station serving these counties
as its primary coverage area is significant, when compared to the other
stations in the DMA, which are oriented toward the Missoula area. The
Kagan Report maintains that other similarly-sized areas in small markets
have supported television stations for years. Finally, the Kagan Report
states that its opinion regarding KCFW\'s viability as a stand-alone
station assumes that the station would have adequate financing during
the initial phases of operation.

In a Joint Opposition filed by Bonten and BlueStone, the applicants
argue that Noecker lacks standing because he is not a *bona fide*
purchaser of KCFW. An attached declaration of Sandy DiPasquale,
President and CEO of BlueStone, states that Noecker\'s offers for the
station were unacceptable as to price and contained problematic
conditions. According to DiPasquale, these conditions included
Noecker\'s ability to acquire a network affiliation for KCFW as a
stand-alone station and BlueStone\'s agreement not to compete with KCFW
in Kalispell. In any event, the applicants point out that, if the
Commission\'s presumptive criteria are not met, the Commission is still
able, under a long-standing *ad hoc* analysis approach, to determine
whether overall circumstances justify satellite status.

The Joint Opposition maintains that, if KCFW is converted to stand-alone
operation, it would operate under a very serious competitive
disadvantage in market coverage. The applicants append a letter from the
author of the 2006 BIA Study, Mark Fratrik, reasserting his view that
KCFW could not sustain itself as a full-service stand-alone station.
Fratrik states that KCFW\'s coverage area is so much smaller than that
of the centrally located Missoula television stations in the market that
KCFW would be unable to compete with those stations. He disagrees with
the Kagan Report\'s comparison of KCFW with other stations in small
markets with similarly-sized areas, stating that those small-market
stations have limited, if any, competition. In nine markets, the
stations are the only commercial full-power stations in the market, in
seven there is only one other competitor, in another seven there are two
competitors and in three there are three competitors. By contrast, KCFW
would be the fifth stand-alone station in the market. Moreover, Fratrik
points out that the other stations in the market have Class A or low
power television satellites so that they reach, in total, more than
double the population reached by KCFW, and, because they have facilities
in the Kalispell area, their reach encompasses the entire market.

Fratrik opines that the revenues for the Missoula market are so limited
that a new commercial station trying to share in that revenue would find
it extremely difficult. According to Fratrik, the smallest market with
five viable full-power competitors is the Odessa-Midland, Texas market,
whose estimated 2005 total market revenues are 45.5% larger than the
estimated revenues in the Missoula television market.

The Joint Opposition maintains that KCFW\'s stand-alone audience would
be so small that it would not be able to bid competitively for quality
syndicated programming, most of which is under contract to Missoula\'s
other stations. Moreover, it considers it unlikely that a major network
would choose to undercut an established affiliate in the market by
agreeing to affiliate with a second station. With respect to the Kagan
Report\'s examples of two same-market stations sharing affiliations, the
Joint Opposition claims that two are historical anomalies resulting from
market modifications, and two are unique common ownership situations.

Finally, the Joint Opposition alludes to the costs of purchasing KCFW,
of converting it to stand-alone operations, of making necessary digital
expenditures, of financing acquisition of programming, of creating a
full-service news department, and of funding on-going operations.

In his Reply, Noecker restates most of the arguments in his Petition. He
insists that his offers to purchase KCFW were *bona fide*, being not out
of line for an initial negotiating offer. He maintains that only a small
fraction of his net liquid assets are sufficient to provide the millions
of dollars required to acquire the station, expand facilities, complete
the digital transition, and underwrite potential operating losses.

**Discussion.** In assessing the merits of a petition to deny, we follow
a two-step analysis. First, we determine whether the petition makes
specific allegations of fact which, if true, would demonstrate that
grant of the application would be *prima facie* inconsistent with the
public interest. If so, we then proceed to examine and weigh all of the
material before us, including the applicant\'s submissions, to determine
whether there is a substantial and material question of fact requiring
resolution in a hearing.[^6] If the facts are not disputed, but
disposition turns on inferences and legal conclusions to be drawn from
facts already known, a hearing is unnecessary.[^7]

Petitioners have failed to raise a substantial and material question of
fact that grant of the subject applications would be inconsistent with
the public interest. Accordingly, Noecker's petition will be denied.

*Standing.* The applicants argue that Noecker lacks standing to file the
petition to deny. We need not reach this issue, however, because we
believe it is in the public interest to evaluate the merits of all of
the submissions in determining whether a continuation of KCFW\'s
satellite waiver is warranted in this case.

We conclude that a satellite waiver continues to be warranted here.
Bonten concedes that it does not meet the presumptive criteria for a
satellite waiver because the City Grade contours of KECI and KCFW
overlap. Noecker argues that Bonten does not meet the third presumptive
criterion because it cannot show that no alternative operator is ready
and able to purchase or operate the satellite as a full-service station.
Indeed, Noecker claims that he himself is willing to purchase and
operate the KCFW as a stand-alone station.

We agree that Bonten has not met the presumptive criteria. However, this
is not fatal to Bonten\'s waiver request because where, as here, the
satellite operation fails to meet all of the three presumptive criteria,
we will nevertheless evaluate the proposal on an *ad hoc* basis to
determine whether other compelling circumstances exist that warrant
satellite authority.[^8]

In 1998, in *Precht*, and then again in 2004, in *Eagle*, we found that
continuation of the satellite relationship of KECI and KCFW was
consistent with the policies set forth in *Television Satellite
Stations.* We conclude that the same is true now. Indeed, we are
persuaded that the factors upon which we based our previous satellite
authorization have not changed to such an extent that we should alter
the determination we made then. We conclude, therefore, that continued
operation of KCFW-TV as a satellite of KECI-TV would serve the public
interest.

The current degree of City Grade contour overlap between KECI-TV and
KCFW-TV is very similar to what existed when *Eagle* and *Precht* were
adopted, and we find here, as we did there, that it is not substantial
enough, taking the other factors shown into account, to warrant denial
of Eagle's request. The area is just as underserved now as it was in
*Eagle* and *Precht.* Additionally, the DMA is small in population and
geographically dispersed over an extensive, mostly rural area, and KCFW
is licensed to a community which is relatively distant from the DMA\'s
population center. Indeed, KCFW\'s Grade B contour does not reach those
key population centers.

We have considered Noecker\'s arguments that the portion of the DMA
where KCFW is located is rapidly growing and that the fact that the
station is the only station in the area would position it to compete
favorably for local advertising. Nevertheless, even the Kagan report
submitted by Noecker concedes that only 40% of the retail sales in the
Missoula DMA are generated in counties near KCFW.

At the same time, given KCFW\'s much smaller coverage area, we are not
persuaded that KCFW has been shown to be able to successfully compete
with the other, centrally-located stations in the Missoula DMA. For the
same reason, it does not appear that it would be likely to be able to
compete for quality syndicated programming. We find Noecker\'s argument
that KCFW would be able to secure a network affiliation speculative,
particularly when such an affiliation would tend to undercut an
established, existing affiliate in the same market.

With respect to Noecker\'s comparison of KCFW with stand-alone stations
in small markets in similar areas, we agree with the applicants that
such comparisons are not instructive because those other stations face
limited, if any, competition. In contrast, KCFW would be the fifth
stand-alone station in the market. We note that, according to the
applicants\' expert, the smallest market with five viable full-service
stations has total market revenues exceeding Missoula\'s by more than
half. Even KCFW\'s competitors have Class A or low power television
satellites. This illustrates not only the need for such satellite
combinations in the dispersed DMA but the fact that KCFW would be
competing with stations whose reach, in total, is more than double that
of KCFW.

The Kagan report submitted by Noecker in support of KCFW\'s viability as
a stand-alone station assumes that the station would have adequate
financing. The applicants correctly allude to the costs of purchasing
KCFW, converting it to stand-alone operations, including digital
conversion, and funding on-going operations, including programming.
Noecker responds that he has more than enough assets to cover these
expenses and to underwrite potential operating losses. However, whether
Noecker has the necessary finances is irrelevant because his application
is not before us. What concerns the Commission is whether KCFW would
succeed as a stand-alone station because an unsuccessful station cannot
easily serve the market in a way that the public interest warrants.

On balance, given the history of this market and the fact that we have
granted this station satellite status twice before, we find that the
satellite waiver should be continued. In *Precht* and again in *Eagle*
we questioned the viability of KCFW as a stand-alone station because of
the level of competition in the DMA, the station\'s likely high
operating expenses, its coverage, and its low revenue potential. We
believe that the factors that persuaded us in *Eagle* and *Precht*
continue to argue in favor of a satellite waiver.

Accordingly, Bonten's request for continued television satellite
authorization, pursuant to Note 5 of Section 73.3555 of the Commission's
Rules, to enable KCFW-TV to operate as a satellite of KECI-TV, IS
GRANTED. Furthermore, the petition to deny filed by Marshall R. Noecker,
IS DENIED.

Having determined that the applicants are qualified in all other
respects, the above-captioned applications to transfer control of
BlueStone (File Nos. BTCCT-20061127AJN, BTCCT-20061127AJO,
BTCCT-20061127AJR, BTCCT-20061127AKI, BTCCT-20061127AKO,
BTCCT-20061127AKS, and BTCCT-20061127AKU) ARE GRANTED.

> Sincerely,

Barbara A. Kreisman

Chief, Video Division

Media Bureau

[^1]: On January 18, 2007, and January 30, 2007, respectively, the
    applicants filed a Joint Opposition and Noecker filed a Reply.

[^2]: 47 C.F.R. §73.3555, Note 5.

[^3]: *See* *Letter to Eagle Communications, Inc. from Barbara A.
    Kreisman, Chief, Video Division, Media Bureau,* April 29, 2004
    (*\"Eagle\"*). Authority to operate KCFW-TV as a satellite of
    KECI-TV was also given in 1998. *See* *Precht Communications, Inc.,*
    13 FCC Rcd 8659 (MMB 1998) (\"*Precht\")*.

[^4]: ^?^ 6 FCC Rcd 4212, 4213-4214 (1991) (subsequent history omitted).

[^5]: The Commission noted a similar degree of Grade B overlap in both
    *Eagle* and *Precht*, considering it minimal. Both decisions went on
    to analyze the waiver requests under an *ad hoc* analysis, rather
    than relying on the presumptive criteria of *Television Satellite
    Stations*

[^6]: *See* 47 U.S.C. Sections 309(d)(1) and (2), as explained in
    *Astroline Communications Co. v. FCC*, 857 F.2d 1556 (D.C.Cir.
    1988).

[^7]: *Stone v. FCC*, 466 F.2d 316, 323 (D.C.Cir. 1972).

[^8]: *Television Satellite Stations,* 6 FCC Rcd at 4214.