> 1800E1-DB

DA 01-1250

Univision Communications, Inc.

c/o Scott R. Flick, Esq.

# ShawPittman

2300 N Street, NW

Washington, D.C. 20037

Re: Applications for Transfer of Control

WQHS-TV, Cleveland, OH, *et al.*

BTCCT-20010123AAL-AAX

Dear Mr. Flick:

This is with regard to the above-referenced applications seeking consent
to the transfer of control of 13 licenses currently held by various
wholly owned subsidiaries of USA Broadcasting, Inc. (USA Broadcasting),
to Univision Communications, Inc. (Univision).[^1] On March 2, 2001,
Theodore M. White, Chief Executive Officer and sole voting shareholder
of Urban Broadcasting Corporation (Urban), the permittee of WTMW(TV),
Arlington, Virginia, filed a petition to deny.[^2] USA Broadcasting has
a nonvoting stock interest in and contractual relationship with Urban,
the substance of which the Commission addressed in *Roy M. Speer*, 11
FCC Rcd 18393 (1996) (*Speer III*). Although Univision challenges
Urban's standing, we will consider Urban's arguments. 47 C.F.R.
§73.3587. In connection with the transaction, Univision requests a
continued satellite exception pursuant to Note 5 of the television
duopoly rule, 47 C.F.R. §73.3555(b), in the New York, New York DMA.

**Petition to Deny.** The petition results from the collapse of the
business relationship between USA Broadcasting and Urban.[^3] A
predecessor-in-interest to USA Broadcasting loaned funds to Urban for
construction and operation of station WTMW(TV), while the Home Shopping
Network,[^4] entered into an affiliation agreement with Urban. Under the
affiliation agreement, Urban would be compensated at a fixed rate for
each hour the station carried Home Shopping Network programming, which
provided the income that Urban used to repay the loan. Pursuant to an
amendment to the original affiliation agreement, the parties agreed that
Urban would only be paid for those hours WTMW(TV) aired Home Shopping
Network programming at 50% or greater of its full licensed operating
power. WTMW(TV) has been unable to operate at 50% of the maximum ERP of
2880 kw as originally listed on the April 6, 1993 application for
license due to potential interference with police land mobile operations
in the District of Columbia. USA Broadcasting eventually filed suit for
breach of the loan agreement in the Arlington County Circuit Court.

Urban maintains that USA Broadcasting deliberately lacked candor in its
representations to the Circuit Court hearing the case, and requests that
the transfer of control applications either be designated for hearing on
appropriate issues or that a revocation proceeding be instituted.[^5]
USA Broadcasting responds that Urban's allegations involve a private
contractual dispute. USA Broadcasting further maintains that it did not
misrepresent facts to the Circuit Court and that, in any case, the
allegations involve the kind of unadjudicated non-FCC misconduct that
the Commission has determined is irrelevant in evaluating the character
qualifications of a licensee.

The Commission has long held that it is not the proper forum for the
resolution of private contractual disputes and that, in particular, it
will not arbitrate issues of contract interpretation not calling into
question a licensee's compliance with Commission rules. *See, e.g., Cope
Communications, Inc.*, 13 FCC Rcd 14564, 14567 (1998); *Speer III*, 11
FCC Rcd at 18413. The dispute between USA Broadcasting affiliates and
Urban involves the particular meaning of "authorized operating power" as
negotiated by the parties in their affiliation agreement. It does not
involve the proper definition or application of this phrase for
Commission-related purposes, such as compliance with our rules or
conditions. Consequently, the dispute over the interpretation of this
particular provision and, thereby compliance with the affiliation
agreement, is a private contractual matter that does not implicate a
Commission rule, and was being litigated in a local judicial forum. The
Commission has stated its willingness to honor the directives of local
courts in such contractual matters, and conserve the simultaneous
administration of both state and federal authority contemplated by the
Supreme Court in *Radio Station WOW, Inc. v. Johnson*, 323 US 120, 132
(1945). *See, e.g., Ninety-Two Point Seven Broadcasting, Inc.,* 55 RR 2d
607, 611 (1984). The Circuit Court has now ruled for USA Broadcasting on
this matter, and we see no reason to further address this matter.

As to whether USA Broadcasting lacked candor in the Circuit Court
proceeding, the Commission does not *per se* evaluate
misrepresentation/lack of candor in non-Commission proceedings. Instead,
the Commission will only evaluate allegations of *adjudicated* non-FCC
misconduct involving fraudulent representations to government agencies,
criminal false statements or dishonesty, and broadcast-related
violations of antitrust laws or other laws concerning competition.
*Policy Regarding Character Qualifications in Broadcast Licensing*, 102
FCC at 1195-1203 (1986). The one exception involves circumstances that
are "so egregious as to shock the conscience and evoke almost universal
disapprobation." *Id.* at 1205, n.60. The arguments raised by Urban do
not involve any of the specified non-FCC misconduct considered by the
Commission in determining whether an applicant has the requisite
character qualifications to be a Commission licensee, and the alleged
misconduct falls short of "egregious" as defined by Commission
precedent. *See, e.g., Contemporary Media, Inc.*, 10 FCC Rcd 13685,
13687 n.9 (1995) (alleged pattern of child sexual abuse and assault may
constitute "egregious misconduct"); and *Williamsburg County
Broadcasting Corp.*, 5 FCC Rcd 3034, 3035 (1990) (allegations of drug
trafficking may constitute "egregious misconduct").

**Continued Satellite Exception.** Following grant of the transfer of
control applications, Univision will control two full-service television
stations in the New York DMA, WXTV(TV), Channel 47 (UNI), Paterson, New
Jersey, and WHSE-TV, Channel 68 (HSN), Newark, New Jersey, as well as
WHSI-TV, Channel 67 (HSN), Smithtown, New York, which operates as a
satellite of WHSE-TV. The Commission originally granted authority to
operate WHSI-TV as a satellite of WHSE-TV in December 1979. *Robert
Rosen, et al.,* 83 FCC 2d 359 (1980). The Commission has since reviewed,
and granted, continued satellite operation for WHSI-TV in 1984, 1986 and
1996. *Wometco Enterprises, Inc.*, 55 RR 2d 1545 (MMB 1984), *rev.
denied*, 57 RR 2d (1986); and *Roy M. Speer*, 11 FCC Rcd 14147 (1996).
Univision asserts that the material circumstances underlying the
original grant of satellite authority have not changed.

Univision bases its continued satellite exception request on the
standards adopted in *Television Satellite Stations*, 6 FCC Rcd 4212,
4215 (1991) (subsequent citations omitted). Under that standard,
applicants acquiring satellite stations must show that the stations meet
our satellite policy at the time of the assignment or transfer. However,
an applicant will be entitled to a presumption that satellite operation
is in the public interest if it meets three criteria: (1) no City Grade
contour overlap exists between the parent and the satellite; (2) the
satellite would provide service to an underserved area; and (3) no
alternative operator is ready and able either to construct or to
purchase and operate the satellite as a full-service station. *Id.* at
4212. If an applicant cannot qualify for the presumption, we will
evaluate the proposal on an *ad hoc* basis to determine whether other
compelling circumstances warrant satellite status. *Id.* at 4214.

The satellite meets the first criterion as Univision has supplied an
engineering showing demonstrating that no City Grade overlap exists
between WHSI-TV and WHSE-TV. With respect to the second criterion,
Univision has demonstrated that WHSI-TV provides service to an
underserved area by using our "transmission test." That test is met if
there are two or fewer full-service stations licensed to a proposed
satellite's community of license. No other television station is
licensed to WHSI-TV's community of license, Smithtown, New York.

As to the third criterion, Univision argues that "WHSI-TV's established
history as a satellite, combined with the highly competitive nature of
the New York television market, conclusively demonstrates that WHSI-TV
is not capable of operating as a stand-alone facility and that
consequently no operator" is ready and able to purchase and operate the
station as such. Univision further submits the declaration of Brian
Cobb, a media broker and Managing Director of Media Venture Partners,
who states that WHSI-TV could not survive as a stand-alone facility
because it does not provide a signal over New York City, and does not
have strong financial credentials. He further states that, even were
WHSI-TV able to cover New York City, it would not be able to enter into
an affiliation agreement with any of the existing networks. He concludes
that, given the large number of independent stations that already
broadcast in the New York market, the chances of WHSI-TV's survival as
an independent station would be slim.

While we do not believe that this showing meets the third criterion of
our "presumptive" satellite standard, we do believe that the showing is
strong enough to justify continued satellite status under our *ad hoc*
satellite procedures. We agree that, given the facts shown and the
nature of the relevant market, it does not appear likely that an
alternative operator would be willing to operate WHSI-TV as a
full-service station. Although the station does not meet the
"presumptive" satellite standard, its long history as a satellite, and
its inability to serve large portions of the New York DMA, constitute
"compelling circumstances" warranting satellite status. Thus, we
conclude, continued operation of WHSI-TV as a satellite of WHSE-TV would
serve the public interest.

Accordingly, the request for continued operation of WHSI-TV as a
satellite of WHSE-TV pursuant to the satellite exception to Section
73.3555 of the Commission's Rules, IS GRANTED. IT IS FURTHER ORDERED,
That the "petition to deny" filed by Theodore M. White, IS DISMISSED,
and, when considered as an informal objection, IS DENIED. Upon finding
the applicants fully qualified and that the public interest would be
served thereby, the applications to transfer control of USA Broadcasting
stations WQHS-TV, Cleveland, OH, *et al.* (File Nos.
BTCCT-20010123AAL-AAX) ARE GRANTED.

Sincerely,

Roy J. Stewart

Chief, Mass Media Bureau

cc: Jacqueline P. Cleary, Esq.

Bruce A. Eisen, Esq.

[^1]: A complete list of the applications filed and the licenses to be
    transferred is attached as Exhibit A. In addition to the 13 stations
    Univision proposes to acquire in this proceeding, Univision will
    also acquire USA Broadcasting's interests in four additional
    stations: WHSL(TV), East St. Louis, MO; KTVJ(TV), Boulder, CO;
    KPST-TV, Vallejo, CA; and WTMW(TV), Arlington, VA. On April 11,
    2001, Urban, as debtor-in-possession, filed an application assigning
    the license of WTMW(TV) to a wholly owned subsidiary of Univision.
    File No. BAPCT-20010411AAX.

[^2]: On March 23, 2001, Dan L. and Betty Jo Johnson filed "comments"
    alleging that USA Broadcasting failed to disclose an adverse final
    decision finding antitrust violations by the predecessor-in-interest
    to Universal Television Enterprises, Inc. (Universal), which they
    claim has an attributable interest in the parent of USA
    Broadcasting. USA Broadcasting disputes Urban's allegation that
    Universal's interest is attributable. Moreover, USA Broadcasting has
    demonstrated that even if Universal were deemed to have an
    attributable interest, there is no close ongoing relationship
    between USA Broadcasting and Universal and, therefore, the decision
    did not need to be disclosed. *Policy Regarding Character
    Qualifications*, 102 FCC 2d 1179, 1219 (1985).

[^3]: USA Broadcasting is a wholly owned subsidiary of USA Networks,
    Inc. (USA Networks), which was previously incorporated under the
    name Silver King Communications, Inc. (Silver King). Silver King, in
    turn, was originally a subsidiary of Home Shopping Network, Inc
    (HSN), but following a merger, HSN became a separate Silver King
    subsidiary.

[^4]: In *Speer III*, Silver King alleged that HSN was a separate,
    independent company. *Speer III*, 11 FCC Rcd 18410.

[^5]: Urban further alleges that USA Broadcasting has failed to reform
    certain provisions in the loan agreement and affiliation agreement
    as mandated by the Commission in *Speer III*. *See Speer III*, 11
    FCC Rcd at 18432-34. USA Broadcasting contends that it has attempted
    to comply with the Commission directive to reform certain contract
    provisions between it and Urban, but that Urban had refused to
    cooperate. Given the intervening changes in our television duopoly
    rule, the interests held by USA Broadcasting no longer appear to
    present a violation of our rules and policies. Moreover, Urban has
    recently filed an application to assign its license to Univision.
    *See* n.1, *supra*. In these circumstances, we do not believe
    further consideration of this issue is warranted.