DA 04-4006

Released: December 21, 2004

Nexstar Broadcasting, Inc.

c/o Elizabeth Hammond, Esq.

Drinker Biddle & Reath LLP

1500 K Street, N.W.

Suite 1100

Washington, DC 20005-1209

> Re: Assignment of Licenses for
>
> KFTA-TV, Fort Smith, AR
>
> KNWA-TV, Rogers, AR
>
> Facility ID Nos. 29560 & 29557
>
> File Nos. BALCT-20031029ADF, BALCT-20031029ADG

Dear Ms. Hammond:

This is in reference to the applications to assign the licenses for
KFTA-TV, Fort Smith Arkansas, and KNWA-TV, Rogers, Arkansas, from J.D.G.
Television Inc. ("J.D.G.") to Nexstar Broadcasting, Inc.
("Nexstar").[^1] As part of the assignment applications, Nexstar
requests authorization to continue operating KNWA-TV as a satellite of
KFTA-TV pursuant to Note 5 of Section 73.3555 of the Commission's
Rules.[^2] On December 3, 2003, Ft. Smith 46, Inc. ("Ft. Smith 46"),
licensee of Fort Smith area low power and Class A television stations,
filed a petition to dismiss or deny contending that the assignee fails
to meet the requirements of the Commission's three-pronged showing to
allow it to operate KNWA-TV as a satellite of KFTA-TV. Consequently, the
petitioner contends that the application must be dismissed or denied
since the assignee's ownership of two full power stations will not
comply with the Commission's local television duopoly rule.

Pursuant to the Commission\'s television satellite policy, as set forth
in *Television Satellite Stations*, an applicant for satellite status is
entitled to a presumption that the proposed satellite operation is in
the public interest if it meets three criteria: (1) there is no City
Grade overlap 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 construct or to purchase and
operate the satellite as a full‑service station.[^3] Applications
meeting these criteria, when unrebutted, will be viewed favorably by the
Commission. If an applicant cannot qualify for the presumption, the
Commission will evaluate the proposal on an *ad hoc* basis, and grant
the application if there are compelling circumstances that warrant
approval.[^4]

With respect to the first criterion, Nexstar originally reported the
existence of slight City Grade overlap between KFTA-TV and KNWA-TV.
Subsequently, however, Nexstar filed a minor change application to
relocate KNWA-TV's NTSC transmitter site to its DTV transmitter site.
The application was granted to the current licensee, J.D.G., on October
19, 2004.[^5] Because this modification eliminated the City Grade
overlap between the two stations, Nexstar's continuing satellite request
now meets the first criterion. Regarding the second criterion, Nexstar
shows that its request meets the "transmission test", as it is the only
full‑service television station licensed to Rogers, Arkansas.

With respect to the third criterion, an applicant must show that no
alternative operator is ready and able to construct, or to purchase and
operate, the proposed satellite as a full‑service station.[^6] Nexstar
includes a letter from Brian E. Cobb ("Cobb"), Founder and President of
CobbCorp, LLC and a founder and former managing director of Media
Venture Partners, both media brokerage and appraisal firms. Cobb states
that if KNWA-TV were converted to a full service station, "it is highly
probable that it would be financially unsuccessful and at a significant
competitive disadvantage." According to Cobb, coverage maps of the
stations demonstrate that KNWA-TV's Grade B signal does not reach Fort
Smith, the key city in the Fort Smith DMA. Cobb opines that as a result
of an insufficient signal in the Fort Smith DMA, KNWA-TV could not
operate successfully as a stand-alone station. Cobb concludes that
KNWA-TV should continue to operate as a satellite of a viable sister
facility in order to survive and provide service to its communities.

Nexstar contends that although its request does not meet all three
criteria for a presumptive continued satellite exception, many of the
factors relevant to the Commission's original grant of a satellite
exception for KNWA-TV are applicable today.[^7] Nexstar argues that
continued satellite operations are necessary to allow Nexstar to compete
effectively with the other licensees in the Fort Smith DMA. Nexstar
maintains that because of mountainous terrain KFTA-TV's signal does not
reach the Fayetteville, Rogers and Springdale areas of the DMA, and that
KNWA-TV's satellite operations allow for the placement of a strong
signal over these portions of the market. Nexstar also asserts that it
is doubtful that the small population of Rogers would have an
advertising revenue sufficient to support a stand-alone station. Nexstar
adds that as a stand-alone station, KNWA-TV would experience substantial
programming costs and that without a satellite waiver, KNWA-TV would be
unable to compete effectively with other stations. Nexstar also argues
that a grant of a continued satellite waiver for KNWA-TV would serve the
public interest by facilitating each station's conversion to full-power
digital operations.

[Petition]{.underline}. Ft. Smith 46 argues that, in light of the number
of low power and television translator stations that provide service to
Rogers, it cannot be considered an "underserved" area. Further, despite
Cobb's statement regarding the lack of an alternate operator, Ft. Smith
46 states that it is interested in purchasing KNWA-TV as a stand-alone
station, if the price is reasonable. Adding that it has experience in
the Rogers market as a consequence of its low power operations, Ft.
Smith 46 disputes Cobb's assertion that a full power station cannot
operate effectively in the area.

In its opposition, responding to Ft. Smith 46's statement that it would
purchase KNWA-TV as a stand alone station, Nexstar argues that Ft. Smith
46 clearly would be acquiring the station as part of its already
existing network of LPTV, TV translator and Class A stations in the
market, not on a stand-alone basis. Moreover, Nexstar points out that
Ft. Smith 46 provided no analysis as to how KFTA-TV can be operated as a
stand-alone station. Nexstar also maintains that grant of the continuing
satellite exception will have no effect on the market, but will preserve
the status quo.

In reply, Ft. Smith 46 disagrees that granting the satellite exception
will preserve the status quo, and argues that several changes have
occurred in the Fort Smith DMA since the prior approval of satellite
status for KNWA-TV. Specifically, it points out that new networks have
been formed. Moreover, according to Ft. Smith 46, the population within
KFTA-TV's Grade B contour has increased to 508,129 persons, nearly 75%
since 1988. Further, Ft. Smith 46 maintains that the Grade B overlap
population between KFTA-TV and KNWA-TV has increased from 11,578 persons
in 1989 to 232,989 persons. Ft Smith 46 also points out that the
population of Rogers has increased from 17,429 in 1988 to 38,829. It
contends that when the satellite waiver was initially requested, there
was no independent full power television station licensed to a community
within the Fort Smith DMA. Ft. Smith 46 points to station KSBN-TV,
Springdale, Arkansas, which serves a smaller area than KNWA-TV, proving
that stand alone operation is possible in the Fort Smith DMA.

With respect to KNWA-TV's modification application, Ft. Smith 46 argues
that the Commission has previously held that it will not consider
applications to modify facilities for the purpose of avoiding overlap
problems under the Commission's multiple ownership rules.[^8] Ft. Smith
46 also maintains that its low power operations prove it has the track
record and ability to operate KNWA-TV as a stand alone full power
station.

On February 13, 2004, Nexstar filed a motion for leave to file and a
supplement to its opposition, notifying the Commission of additional
information related to its waiver request. Specifically, Nexstar
maintains that the modification application was not filed in order to
avoid overlap problems but rather to move KNWA-TV's analog facilities to
the tower from which KNWA-DT will operate. According to Nexstar, moving
KNWA-TV's analog facilities would reduce expenses through co-located
operations of KNWA-TV and KNWA-DT. In response to Ft. Smith 46's
assertion that KSBN-TV operates as a stand alone station in the Fort
Smith DMA, Nexstar argues that, as a religious broadcaster, KSBN-TV's
goals are not the same as other commercial broadcasters in the market.
Specifically, Nexstar contends that KSBN-TV does not provide local news
or other programming material specific to the Fort Smith DMA, and does
not depend solely on commercial revenues to support its operation.
Finally, Nexstar submits a further statement from Brian Cobb, who
indicates that KFTA-TV would be "materially handicapped" in the absence
of KNWA-TV supplementing coverage. Cobb also expresses doubt that
KNWA-TV "could be profitable or provide news or other meaningful service
to the community" if separated from KFTA-TV.

On February 27, 2004, Ft. Smith 46 opposed Nexstar's supplement claiming
that it should not be considered. Ft. Smith 46 argues that Cobb's
additional letter and the information concerning the operation of
KSBN-TV were available to Nexstar when it filed its opposition. Further,
Ft. Smith 46 avers that Cobb's attempts to provide an assessment on the
viability of KNWA-TV as a stand-alone station remain refuted by Ft.
Smith 46's willingness to buy KNWA-TV. Ft. Smith 46 includes a
declaration stating that it is willing to buy and operate KNWA-TV as a
stand-alone station for \$2 million, or \$8 million with the NBC
affiliation. With respect to Nexstar's argument that KSBN-TV does not
depend solely on commercial revenues, Ft Smith 46 responds that KSBN-TV
is a commercial station that competes with other stations in the market.
Finally, with respect to KNWA-TV's modification application, Ft. Smith
46 asserts that any benefits of collocation do not justify abandonment
of the Commission's principle of not granting a facilities modification
for the purpose of compliance with the multiple ownership rules.

On July 8, 2004, the Video Division sent a letter of inquiry to Nexstar,
requesting additional information to aid in determining whether grant of
a continued satellite exemption would be in the public interest. In its
July 28, 2004 response, Nexstar argues that the continued satellite
exemption is justified because the Fort Smith DMA is a large geographic
area and Fort Smith and Rogers are more than 65 miles apart. Nexstar
repeats its claim that there are no network affiliations available in
the DMA for KNWA-TV as a stand-alone station. While Nexstar concedes
that the population of Rogers has grown, it maintains that the
population remains insufficient to support a stand-alone TV station.
With respect to whether the Rogers area is likely to have a sufficient
advertising base to support KNWA-TV as a stand-alone station, Nexstar
indicates that since October 2003 when it began programming
KFTA-TV/KNWA-TV under a time brokerage agreement ("TBA"), it has
received very few inquiries from northwest Arkansas area businesses
seeking to advertise on KNWA-TV only. Nexstar states that, based on the
revenues generated from Rogers area businesses, it estimates that such
revenues will amount to \$147,000 during the 2004 calendar year.
Regarding separate statements of cash flow for KNWA-TV, Nexstar states
that such statements are not available because J.D.G. did not keep
separate records for the stations, nor does Nexstar under the TBA.

On August 11, 2004, Ft. Smith 46 filed comments. Ft. Smith 46 avers that
Nexstar's characterization of the Fort Smith DMA as a large geographic
area is inconsistent with the approach it took in its initial filings.
Moreover, Ft. Smith 46 contends that it is "disingenuous" for Nexstar to
claim that its advertising revenue base would be limited to businesses
in Rogers; it argues that the station serves other cities in the DMA
with larger populations and businesses, including the corporate
headquarters of Wal-Mart.

[Discussion]{.underline}. Having failed to raise a substantial and
material question of fact that grant of the subject applications would
be inconsistent with the public interest, Ft. Smith 46's petition will
be denied.[^9] Regarding the first criterion, Nexstar has supplied an
engineering exhibit demonstrating that, with KNWA-TV's modified
facilities, no City Grade overlap exists between KFTA-TV and KNWA-TV.
Our engineering review confirms that no predicted overlap remains
between the two stations. While Ft. Smith disputes Nexstar's
characterization of the extent of the overlap existing prior to the
facilities modification, it fails to show any specific intent by Nexstar
to misrepresent facts. Ft. Smith 46 additionally argues that the
Commission has held that it will not entertain applications for
modification of facilities that resolve multiple ownership situations.
However, the Commission has held that grant of an application for
modification of facilities is appropriate where grant of the application
would not result in the loss of service to existing viewers.[^10]
Although the engineering exhibit shows a loss of service resulting from
the KNWA-TV modification, we note that all persons losing service from
KNWA-TV will continue to receive NBC service from one other NBC
affiliate, the parent, KFTA-TV. Moreover, we note that the modification
application was filed to move KNWA-TV's analog facilities to the tower
from which KNWA-DT's digital facility will operate, for the purpose of
reducing expenses through co-located operations. The Commission has
specifically encouraged the co-location of analog and digital facilities
in order to enhance and accelerate the transition to digital television.
Therefore, we reject Ft. Smith 46's argument regarding the first
criterion.

For the purposes of the second criterion, an area is deemed underserved
if, under the "transmission test," there are two or fewer full-service
television stations already licensed to the proposed satellite community
of license, or, under the "reception test," 25 percent or more of the
area within the proposed satellite's Grade B contour, but outside the
parent's Grade B contour, receives four or fewer television services,
not including the proposed satellite service.[^11] Here, we agree with
Nexstar that KNWA-TV meets the second presumptive criterion, as it is
the only station licensed to Rogers. We are not persuaded by Ft. Smith
46's arguments that because a number of low power stations provide
service, Rogers is not an underserved area. As stated above, the
Commission considers an area underserved if an applicant demonstrates
that it meets the requirements of the "transmission test" or the
"reception test\". Nexstar meets the transmission test notwithstanding
the fact that low power stations operate in the area. Having adopted the
presumptive satellite test in a rulemaking proceeding, the Commission is
not required to reexamine and justify its requirements in each case.
Petitioner's arguments, which are more akin to an argument against the
test itself, do not persuade us to depart from the Commission's
standard.

With respect to the third criterion, an applicant must show that no
alternative operator is ready and able to construct, or to purchase and
operate, the proposed satellite as a full-service station.[^12] While we
do not find that Nexstar's request meets the third criterion, we believe
that its overall showing is sufficient to justify operation under our
*ad hoc* analysis.[^13] Specifically, as explained above, Nexstar
submits letters from Cobb indicating that if KNWA-TV were converted to a
full service station, it would likely be financially unsuccessful. Cobb
indicates that due to an insufficient signal in the Fort Smith DMA,
KNWA-TV could not operate successfully as a stand-alone station.
Moreover, Nexstar contends that Rogers' small population is unlikely to
provide a sufficient advertising revenue base to support a stand-alone
station. Nexstar also points out that KNWA-TV would experience
substantial programming costs as a stand-alone station.

Finally, although Ft. Smith 46 states that it is ready and able to
purchase KNWA-TV as a stand-alone station, it does not provide any
persuasive economic data to refute Cobb's analysis. In any event, we do
not consider Ft. Smith 46's self-serving offer to buy the station, since
it is not a qualified buyer itself. On October 15, 2004, its
commonly-owned affiliate acquired full service station KWBM (TV),
Harrison, Arkansas, located in the Fort Smith DMA.

Ft. Smith 46 argues that the population of Rogers has increased and that
in addition to providing service to Rogers, KNWA-TV provides service to
Fayetteville, Springdale, and Bentonville. However, we do not believe
that these factors alone establish that the Rogers area would be able to
support a stand-alone station. Moreover, Ft. Smith 46 does not provide
data to support its statement that Rogers and the surrounding area have
a sufficient advertising revenue base to support a stand-alone station.
Finally, we do not agree that Nexstar's supplement raises doubts as to
the representations it has made in this proceeding. Given the facts
presented in this case, including Cobb's statement that it is unlikely
that KNWA-TV would be financially successful and that KNWA-TV would be
at a competitive disadvantage as a full service station, we believe that
approval of Nexstar's request for continuing satellite status is
warranted and would serve the public interest. [^14]

Having found the applicants fully qualified, we conclude that grant of
the subject applications would serve the public interest. Accordingly,
the petition to dismiss or deny filed by Ft. Smith 46, Inc. IS DENIED,
and Nexstar Finance, L.L.C.'s request for continued authorization to
operate KNWA-TV, Rogers, Arkansas as a satellite of KFTA-TV, Fort Smith,
Arkansas IS GRANTED.

Further, the applications for consent to assignment of licenses of
KFTA-TV, (File No. BALCT-20031029ADF) Fort Smith, Arkansas, and KNWA-TV
(File No. BALCT-20031029ADG), Rogers, Arkansas, ARE GRANTED.

Sincerely,

Barbara A. Kreisman

Chief, Video Division

Media Bureau

cc: Marvin Rosenberg, Esq. -- Counsel for J.D.G. Television, Inc.

Peter Tannenwald, Esq. -- Counsel for Ft. Smith 46, Inc.

[^1]: The original assignee was Nexstar Finance, L.L.C. It subsequently
    amended the application to substitute its affiliate, Nexstar
    Broadcasting, Inc., as the proposed assignee.

    On August 13, 2004, KPOM-TV changed its call sign to KFTA-TV and
    KFAA changed its call sign to KNWA-TV.

[^2]: 47 C.F.R. § 73.3555, Note 5.

[^3]: *Television Satellite Stations*, 6 FCC Rcd 4212, 4213‑4214 (1991)
    (subsequent citations omitted).

[^4]: *Id*. at 4214.

[^5]: File No. BPCT-20040121ADD. Although J.D.G. granted Nexstar
    permission to file the application, on October 7, 2004, J.D.G.
    amended the application to substitute itself as the applicant.

[^6]: *Television Satellite Stations*, 6 FCC Rcd at 4215.

[^7]: The original satellite exemption was granted in 1988 prior to
    adoption of the Commission's current three part test. *John
    McCutcheon d/b/a MCC Communications*, 4 FCC Rcd 2079 (1989).

[^8]: *Stockholders of Renaissance Communications Corp.*, 12 FCC Rcd
    11,866 (1997) ("*Renaissance*"); *James T. Sudbury*, 4 RR 2d 679
    (1965).

[^9]: In order to provide a full record, we will exercise our discretion
    and consider the substantive matters raised by Nexstar in its
    supplements.

[^10]: *Renaissance*, 12 FCC Rcd 11866 at 11876.

[^11]: *Television Satellite Stations*, 6 FCC Rcd at 4215.

[^12]: *Id*.

[^13]: *See, e.g., Red River Broadcast Corp.*, 12 FCC Rcd 2548 (1997);
    *Plains Television Partnership*, 9 FCC Rcd 4435 (1994).

[^14]: Ft. Smith 46's arguments regarding the relationship between
    Nexstar and Mission lack merit. Specifically, Ft. Smith 46's
    reference to a newspaper article cannot provide a basis for denying
    the satellite waiver request, since the Commission has held that
    allegations based on newspaper articles are hearsay. *American
    Mobile Radio Corporation*, 16 FCC Rcd 21431, 21436 (2001). Moreover,
    Ft. Smith 46's concerns about the relationship between Nexstar and
    Mission, and its claims that Nexstar's ownership of KNWA-TV and
    KFTA-TV will create further media concentration, are speculative.