**DA 08-1273**

**Released: June 2, 2008**

Richard R. Zaragoza, Esq.

Pillsbury, Winthrop, Shaw, Pittman, LLP

2300 N Street, N.W.

Washington, DC 20037-1128

Meredith S. Senter, Esq.

Leventhal, Senter & Lerman, PLLC

2000 K Street, N.W.

Washington, DC 20006-1809

> Re: Assignment of License for
>
> KWBA(TV), Sierra Vista, AZ
>
> Facility ID No. 35095
>
> File No. BALCT-20080320AEY

Dear Counsel:

This is in reference to the application for consent to assign the
license for KWBA(TV), Channel 58 (CW), Sierra Vista, Arizona, from
Tucson Communications, L.L.C. (Tucson) to Journal Broadcast Corporation
(Journal). The application is unopposed. The application requests a
waiver of Section 73.3555(b)(2) of the Commission\'s rules, the
television duopoly rule, to permit Tucson, licensee of KGUN(TV), Channel
9 (ABC), Tucson, Arizona, to acquire KWBA. Both KGUN and KWBA are in the
same Nielsen Designated Market Area (DMA), Tucson (Sierra Vista) and
their Grade B contours overlap.

Under Section 73.3555(b)(2) of the Commission's rules currently in
effect, [^1] two television stations licensed in the same DMA that have
Grade B overlap may be commonly owned if: (i) at least one of the
stations is not ranked among the top four stations in the DMA; and (ii)
at least eight independently owned and operating, full-power commercial
and non-commercial educational television stations would remain in the
DMA after the merger. The Tucson (Sierra Vista) DMA would not have eight
independently owned and operated television stations post-merger. Thus,
the proposed common ownership of KGUN and KWBA would violate Section
73.3555(b)(2). The applicants request a waiver on the basis that KWBA is
a "failing station." [^2]

**Duopoly Waiver Request.** The Commission's *Local Ownership Order*
established the criteria for a waiver of the television duopoly rule for
a "failing station," defined as one which has been struggling for "an
extended period of time both in terms of its audience share and
financial performance." These criteria are:

> \(a\) One of the merging stations has had a low all-day audience share
> (*i.e.,* 4 percent or lower);
>
> \(b\) The financial condition of one of the merging stations is poor.
> "A waiver is more likely to be granted where one ...of the stations
> has had a negative cash flow for the previous three years;"
>
> \(c\) The merger will produce public interest benefits. "A waiver will
> be granted where the applicant demonstrates that the tangible and
> verifiable public interest benefits of the merger outweigh any harm to
> competition and diversity;" and
>
> \(d\) The in-market buyer is the only reasonably available candidate
> willing and able to acquire and operate the station; selling the
> station to an out-of-market buyer would result in an artificially
> depressed price. [^3]

If the applicant satisfies each criterion, a waiver of the rule will be
presumed to be in the public interest.

As part of its waiver request, the applicants attach a chart showing
Nielsen reported audience shares for the all-day share. The chart shows
that, over the period between February 2005 and November 2007, KWBA's
all-day share averaged 1.9 and was never higher than a 3 share. In 2007,
the station experienced a substantial decline in audience due to the
expiration of its programming contract with the Arizona Diamondbacks
professional baseball team and the movement of that programming to
another station in the market.

With respect to KWBA's financial condition, the applicants append
financial data intended to show negative cash flow and operating losses
for the three years preceding the filing of the instant application.[^4]
That information indicates that KWBA's financial posture has been
worsening during that time, and that the station has been monetizing
most of its major available assets, including the station's building and
all spare equipment, and deferring payments of various liabilities and
obligations to sustain its continued performance. KWBA's worsening
financial posture has hampered the ability of the current licensee to
provide more than minimal public interest benefits, and the station has
not broadcast any news programming since December 2005, and only minimal
amounts of public affairs programming. In addition, in a Declaration,
Tom Hettle, Chief Financial Officer of Tucson, asserts that there is no
hope of a change in the station's financial posture without the
efficiencies of joint operation.

To satisfy the third criterion, the applicants maintain that the
proposed assignment of KWBA will produce tangible and verifiable public
interest benefits that far outweigh any potential harm to competition
and diversity. Although KWBA currently maintains its main studio in
Tucson as permitted under the FCC's rules, most of the station's network
and other program distribution and production operations are located at
an out-of-state hub facility. The applicants state that Journal's
proposed ownership of the station will permit it to return KWBA's
operations to Tucson, where they will be collocated with the digital
high-tech production facilities of KGUN. They further assert that
Journal will maintain separate network affiliations for KWBA and KGUN.
They pledge that using the established news capabilities of KGUN,
Journal will initiate a 30-minute daily (Monday-Friday) newscast on
KWBA, which will also have access to its bilingual news staff members,
as well as allow the station to provide its viewers with important local
alerts regarding traffic, emergency and weather information.

The applicants state that Journal will significantly increase KWBA's
community outreach efforts. Journal and KGUN already devote significant
staff and other resources to public service events such as holiday food
drives and the collection of phone cards for military personnel to call
relatives back home, and it will include KWBA in such events. In
addition, the applicants assert that KWBA's similar audience
demographics makes it a natural partner for Journal's KGMG(FM), which is
regularly involved in Tucson community programs, such as an annual
holiday party for underprivileged youth and operates a Shoes for School
program that recently collected more than 1,000 pairs of shoes for
Tucson District school children. Journal also plans to redesign KWBA's
online website to increase the station's outreach and enhance its
interactive capabilities. Through KWBA's present affiliation with Latino
Alternative Television, a bilingual music and entertainment multicast
program service, Journal intends to make significant community outreach
efforts on the station's multicast channel to provide additional
benefits to Tucson's growing Latino audience.

As to the final criterion for the requested waiver, the applicants state
that Tucson retained Patrick Communications (Patrick), a leading media
brokerage and investment banking firm, to market the sale of KWBA. Larry
Patrick, President of Patrick states that the firm made vigorous efforts
to solicit offers from out-of-market entities and approached more than
35 prospective buyers, but found no interest in the station. The only
offer to purchase KWBA was made by Journal, and Mr. Patrick notes that
Tucson will suffer significant losses as a result of the proposed sale.

**Discussion.** We will grant the parties\' request for a waiver of the
television duopoly rule, and we will grant the assignment application.
On balance, based upon the showings submitted under the waiver criteria
established by the Commission in the *Local Ownership Order*, we are
persuaded that grant of a waiver is warranted on grounds that KWBA is a
"failing station."

Specifically, the parties have demonstrated that KWBA has a sufficiently
low audience share for the last three years. Furthermore, the financial
documentation submitted by the parties shows that KWBA's financial
condition is poor. In reviewing the financial information submitted by
the parties, we are persuaded that KWBA is failing to such an extent
that its ability to be a viable voice in the Tucson market is severely
hampered, placing it at a competitive disadvantage.

Given these operational circumstances, it is not surprising that little
news, public affairs, or other public interest programming is currently
being provided by the station.[^5] The proposed merger would address
these shortcomings, and we find important public interest benefits will
accrue from the combined operation of KWBA and KGUN. For example,
Journal has pledged to improve KWBA's weather and emergency announcement
capabilities, as well as its community outreach capabilities. Finally,
the parties have established that Journal is the only reasonably
available buyer for station KWBA.

Consistent with the *Local Ownership Order*, we find that the combined
operation of KWBA and KGUN will pose minimal harm to our diversity and
competition goals because KWBA\'s financial situation hampers its
ability to be a viable voice in its market. Under these circumstances,
allowing KWBA to be operated by a stronger station in the market will
result in a definite improvement in facilities and programming, an
outcome which clearly benefits the public interest.[^6]

Having found the applicants fully qualified, we find that grant of the
KWBA assignment application would serve the public interest.

Accordingly, IT IS ORDERED, That the request for a "failing station"
waiver of the television duopoly rule, Section 73.3555(b)(2), to permit
Journal to own and operate both KWBA and KGUN, IS GRANTED.

IT IS FURTHER ORDERED, That the application for assignment of license
(File No. BALCT-20080320AEY) of Station KWBA(TV), Sierra Vista, Arizona,
IS GRANTED.

Sincerely,

Barbara A. Kreisman

> Chief, Video Division
>
> Media Bureau

[^1]: *2006 Quadrennial Regulatory Review---Review of the Commission's
    Broadcast Ownership Rules and Other Rules Adopted Pursuant to
    Section 202 of the Telecommunications Act of 1996; 2002 Biennial
    Regulatory Review---Review of the Commission's Broadcast Ownership
    Rules and Other Rules Adopted Pursuant to Section 202 of the
    Telecommunications Act of 1996; Cross-Ownership of Broadcast
    Stations and Newspapers; Rules and Policies Concerning Multiple
    Ownership of Radio Broadcast Stations in Local Markets; Definition
    of Radio Markets, Ways to Further Section 257 Mandate and To Build
    on Earlier Studies; and Public Interest Obligations of TV Broadcast
    Licensees, Report and Order on Reconsideration,* 23 F.C.C.R. 2010
    (2008)("*2007 Ownership Order"*).  

[^2]: *See* 47 C.F.R. § 73.3555, Note 7. *See also Review of the
    Commission's Regulations Governing Television Broadcasting*, 14 FCC
    Rcd 12903, 12935-40 (1999) (*"Local Ownership Order"*), *recon.
    granted in part,* 16 FCC Rcd 1067 (2001).

[^3]: *Local Ownership Order*, 14 FCC Rcd at 12939.

[^4]: The applicants' requested confidential treatment for this material
    pursuant to Sections 0.457 and 0.459(a) of the Commission's rules.

[^5]: As the *Local Ownership Order* indicated, failing stations
    \"rarely have the resources to provide local news programming, and
    often struggle to provide significant local programming at all.\"
    *Local Ownership* Order, 14 FCC Rcd at 12939.

[^6]: *Local Ownership* Order, 14 FCC Rcd at 12939; s*ee also WCNW LLC*,
    21 FCC Rcd 13522 (MB 2006); *KSMO Licensee, Inc.*, 20 FCC Rcd 15254
    (MB 2005).