**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In re Application of )

)

**Michael Radio Group,** )

**Assignor** )

)

and ) File No. BAPH-20001101ABD

)

**Clear Channel Broadcasting Licenses, Inc.,** )

**Assignee** )

)

For Assignment of the Construction Permit )

of Station KDAM(FM),[^1] Hope, North Dakota ) Facility ID No. 88502

**MEMORANDUM OPINION AND ORDER**

**Adopted: September 30, 2004 Released: December 2, 2004**

By the Commission: Commissioners Copps and Adelstein dissenting and
issuing a joint statement.

1\. The Commission has before it an Application for Review filed by
Monterey Licenses, L.L.C. ("Monterey") on June 25, 2001. Monterey seeks
review of the May 24, 2001, decision by the Media Bureau ("Bureau")
denying Monterey's petition to deny and granting an application to
assign the construction permit of station KDAM(FM) (at the time,
KCHY(FM)), Hope, North Dakota, from Michael Radio Group ("MRG") to Clear
Channel Broadcasting Licensees, Inc. ("Clear Channel").[^2] On July 12,
2001, Clear Channel filed an Opposition to the Application for Review,
to which Monterey filed a Reply on July 20, 2001. The Commission also
has before it Monterey's January 15, 2002, motion to stay the
effectiveness of the Staff Decision and Clear Channel's January 22,
2002, Opposition to the motion. For the reasons set forth below, we deny
the Application for Review and dismiss the Motion for Stay as moot.[^3]

2\. Monterey is the licensee of several radio stations that compete with
Clear Channel's stations in the Fargo, North Dakota, market.[^4]
Monterey reiterates the arguments it made to the staff, as follows: (1)
in the Fargo, North Dakota-Moorhead, Minnesota metropolitan area as
defined by Arbitron (the "Fargo Metro"), Clear Channel controlled six of
the market's fourteen stations, including station KRVI(FM), Detroit
Lakes, Minnesota, and was thus already at its statutory ownership
limit;[^5] (2) an alternative prediction methodology to plot the contour
for KRVI(FM) is justified by the anomalous terrain in the area and
results in KRVI(FM) being counted against Clear Channel's ownership
limit; (3) Clear Channel already controlled 53.2% of the advertising
revenue in the Fargo Metro, and thus *any* increase in Clear Channel's
market share when KDAM(FM) commenced operations would be problematic;
and (4) the Commission's definition of a "radio market" does not comport
with economic reality and the KDAM(FM) application should be deferred
until the Commission has completed its rule making on defining radio
markets.[^6] In its Application for Review, Monterey requests that the
Commission "reverse the Bureau's decision and deny the MRG/Clear Channel
assignment application or at a minimum defer action on the application
until the Commission resolves \[the issues raised in *Market Definition
NPRM*\]."

3\. The staff correctly rejected Monterey's contention that the KDAM(FM)
acquisition violates the numerical limits contained in the Commission's
local radio ownership rule. Under the ownership rules then in effect,
both the definition of a "radio market" and the number of stations
counted as being in that market were based on signal contours, not on an
Arbitron-based or other geographic-based methodology. As in its Petition
to Deny, Monterey argues that the transaction's compliance with the
ownership limits should be evaluated in the context of the Fargo
Arbitron Metro, where only 14 commercial stations are listed as "home."
In a 14-station market, Clear Channel may only own up to five stations,
with up to three in the same service. Monterey's reliance on the
Arbitron-defined Fargo Metro to calculate the number of stations in the
market is simply misplaced, however. Although the Commission adopted in
mid-2003 a geographic-based methodology for stations in Arbitron rated
markets,[^7] it did not do so until long after the staff had approved
(on May 24, 2001) and the parties had consummated (on January 22, 2002)
the sale of KDAM(FM). We do not generally apply changes in ownership
rules retroactively so as to require divestiture of existing
combinations, as suggested by Monterey, and we did not do so when we
revised the local radio rule.[^8] Thus, examining the subject
transaction under the contour-based methodology set forth in the local
radio ownership rule in effect at the time of the staff decision, we
confirm the staff's finding that the KDAM(FM) acquisition complied with
that rule.

4\. At the same time that Monterey argues for use of the Arbitron Metro,
it reiterates that the Commission should apply an alternative signal
contour prediction methodology for one station because the terrain at
issue differs widely from that assumed by the normal prediction
methodology.[^9] Monterey acknowledges that, under the Commission's
definition of a "radio market" in effect at the time the subject
application was analyzed, Clear Channel's KRVI(FM), Detroit Lakes,
Minnesota, is not counted as one of the stations Clear Channel owns in
the same market as the subject stations.[^10] Use of the alternative
methodology, Monterey contends, demonstrates that the principal
community contour of KRVI(FM) overlaps that of KDAM(FM) and, thus, that
the two stations are in the same "market." Consequently, Monterey
argues, Clear Channel's acquisition of KDAM(FM) will exceed both the
total number of stations and the number of FM stations permitted under
Section 73.3555(a).

5\. In declining to consider Monterey's use of an alternative prediction
methodology to demonstrate that KRVI(FM) should be considered part of
the subject "market" here \-- a methodology that would carry Clear
Channel over the number of FM stations, but not over the total number of
stations, it can own in the market \-- the staff stated that it had
previously rejected the use of supplemental engineering showings in the
context of multiple ownership compliance demonstrations, whether from
petitioners[^11] or from applicants.[^12] Consistent with that
precedent, the staff was not persuaded that a departure from the
standard prediction methodology was warranted for KRVI(FM). Monterey
argues that the staff decisions cited by the Bureau, such as *Battle
Ground,*[^13] can be afforded little or no weight in light of the
Commission's acceptance of alternative contour-prediction methodologies
to demonstrate that television stations' signals do not overlap for
purposes of applying the multiple ownership rules. Monterey cites three
Commission decisions in cases involving television stations \--
*Heritage Media Services, Inc.*, *John H. Phipps, Inc.*, and *Southern
Oregon Broadcasting Co.*[^14] \-- in support of its position.

6\. It is our current and express policy not to apply an alternative
prediction methodology in the context of evaluating compliance with the
local radio ownership rule.[^15] In the *Technical Streamlining NPRM,*
discussing specifically the point-to-point ("PTP") alternative
prediction methodology, we explained our position as follows:

> In instances involving major radio markets, multiple ownership studies
> often involve dozens of stations. Selective application of the PTP
> method to some, but not all, stations in a relevant market would
> invite disputes where contradictory results would occur. Conversely,
> in light of the sometimes radical differences between PTP calculations
> and standard predicted contours, utilizing the PTP method for all
> stations could affect these ownership studies in ways not anticipated
> when the current multiple ownership rules were adopted. We believe
> that, in most instances, the use of the PTP methodology could
> significantly alter the definition of stations included in a
> particular market and use of this methodology in this context would
> serve no useful function in administering our ownership policies.[^16]

We are unpersuaded that, because we accepted the use of an alternative
prediction methodology in the context of the television duopoly rules in
*Heritage, Phipps,* and *Southern Oregon,*[^17] we must or should do so
here. In each of the cases cited by Monterey, the Commission accepted
and analyzed an alternative contour prediction showing to determine
whether or not there was overlap between two television stations. To
determine how many stations are "in" a radio market using alternative
contours, we would need to study those contours for dozens of
stations.[^18] As we stated in the *Technical Streamlining NPRM*, this
could affect radio ownership studies in ways not anticipated when the
current ownership rules were adopted.[^19] We therefore agree with the
staff's conclusion that it was not appropriate to accept Monterey's
supplemental engineering study demonstrating overlap between KDAM(FM)
and KRVI(FM) based on an alternative contour-prediction model.[^20]

7\. We also disagree with Monterey's claim that the transaction raised
antitrust concerns warranting denial or deferral of action on the
application. The staff's independent analysis at the time[^21] indicated
that Clear Channel already controlled stations in the Fargo Metro
garnering 53.6% of the advertising revenue share, and that the combined
revenue share of Clear Channel and Monterey, the second largest radio
owner in the market, was 92.6%. The staff further noted that the
post-transaction revenue shares would remain the same: as an unbuilt
station, KDAM(FM) had no reported revenue share. Rather, KDAM(FM)
constituted new capacity in the Fargo Metro that would provide new
choices for listeners and advertisers.

8\. Since grant of the subject assignment application, Clear Channel's
advertising revenue share has fallen to 50.1%, notwithstanding the
addition of KDAM(FM) to its station group in the Fargo Metro, and the
combined revenue share of Clear Channel and Monterey has decreased to
90.4%.[^22] Although Clear Channel maintains a significant market
position in the Metro today, it appears, according to the BIA data base,
that Forum Communications, Tom Ingstad, Triad Broadcasting, and Vision
Media offer sufficient alternative sources so that advertisers can "buy
around" a number of the formats offered by Clear Channel. These
opportunities should constrain the ability of Clear Channel to exercise
market power against advertisers in the Fargo Metro. Additionally, the
rivalry offered by the non-Clear Channel stations should provide an
incentive for Clear Channel to compete by pricing its advertising
efficiently. Such rivalry may also result in Clear Channel's
introduction of innovative advertising services and packages that will
improve the overall quality of radio advertising services available in
the Fargo Metro. In view of these conclusions, we find that Monterey has
not raised a substantial and material question of fact warranting
further inquiry on this issue.

9\. Monterey's final claim is that staff action on the application was
contrary to our pronouncements on deferral in the *Market Definition
NPRM*. In support, Monterey cites, *inter alia,* to the following
excerpt:

As a general matter, we will continue to process applications under the
existing standards, unless and until they are changed in this
proceeding. In cases raising concerns about how we count the number of
stations a party owns in a market, however, we will defer decision
pending resolution of that issue in this proceeding. As we concluded in
the 1998 Biennial Review Report, the "shifting market definition" in our
counting methodology "appears illogical and contrary to Congress'
intent."[^23]

Monterey argues that the cited language indicates that we will defer
action on any case in which, for example, the Commission's computation
of the number of stations in a "market" differs from the count listed by
Arbitron or BIA.[^24] This is incorrect. As explained in the Staff
Decision,[^25] pending the conclusion of the radio market rule making
proceeding, the Commission will defer acting on applications if
compliance with the local radio ownership rule depends on the inclusion
of certain attributable station interests of the applicant in the total
count of stations in the market.[^26] There is no such issue in this
case.

10\. Accordingly, the June 25, 2001, Application for Review filed by
Monterey Licenses, L.L.C. IS DENIED, and its January 15, 2002, Motion
for Stay IS DISMISSED AS MOOT.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

DISSENTING STATEMENT OF

COMMISSIONERS MICHAEL J. COPPS AND JONATHAN S. ADELSTEIN

*Re:* *Michael Radio Group, Assignor and Clear Channel Broadcasting
Licenses, Inc., Assignee For Assignment of Construction Permit of
Station KDAM(FM), Hope, North Dakota*

In this case, the majority approves Clear Channel's acquisition of a
radio station in a market in which Clear Channel already controls over
50 percent of the market and Clear Channel and the next largest owner
together control over 90 percent. Given this extreme level of market
concentration, we cannot support grant of this transfer absent
additional information on the public interest benefits of the
transaction. Yet, here, the majority has not even considered the public
interest benefits or harms. We are troubled by the trend toward greater
and greater consolidation of the media, particularly in smaller radio
markets, and this Commission's acceptance of such levels of
concentration with hardly any analysis. For a robust marketplace of
ideas to survive, every community deserves to have a diversity of
sources of information available to its members - not just those who
live in the largest cities. We find that the amount of concentration at
issue here is potentially very harmful to competition, to the listening
public and to America\'s deeply held values of localism and diversity.

[^1]: The call sign of the subject station was changed from KCHY(FM) to
    KDAM(FM) effective October 8, 2002.

[^2]: *See Letter to Paul A. Cicelski, Esq. and Christopher L. Robbins,
    Esq.* (MMB May 24, 2001) ("Staff Decision").

[^3]: Monterey moves that we stay the effectiveness of the Staff
    Decision to preserve the *status quo* and prevent any "irreparable
    injury" resulting from Clear Channel's acquisition of KDAM(FM)
    pending final action on the Application for Review. Given our action
    here denying the Application for Review, we need not reach the
    motion for stay. *See Rebecca Radio of Marco*, 5 FCC Rcd 2913, 2914
    n.5 (1990).

[^4]: Monterey is the licensee of stations KQWB(FM) and KVOX(FM),
    Moorhead, Minnesota; KLTA(FM), Breckenridge, Minnesota; KPFX(FM),
    Fargo, North Dakota; and KQJD(AM) and KQWB(AM), West Fargo, North
    Dakota. Clear Channel is the licensee of three radio stations
    licensed to Fargo (KFGO(AM)/-FM and WDAY-FM) as well as three
    stations licensed to nearby communities: KVOX(AM), Moorhead,
    Minnesota, KULW(FM), Kindred, North Dakota, and KRVI(FM), Detroit
    Lakes, Minnesota.

[^5]: *See* 47 C.F.R. § 73.3555(a) (promulgated pursuant to Section
    202(b)(1) of the Telecommunications Act of 1996).

[^6]: When Monterey filed its Petition to Deny, the Commission's rule
    making proceeding focusing on radio market definition was pending.
    *See Definition of Radio Markets*, MM Docket No. 00-224, 15 FCC Rcd
    25077 (2000) ("*Market Definition NPRM*"). That proceeding was
    subsequently incorporated into an omnibus rule making addressing
    various broadcast cross-ownership and multiple ownership rules. The
    Commission released its Order in that omnibus proceeding on July 2,
    2003. *See* *2002 Biennial Regulatory Review, (\"Ownership Report
    and Order\"),* 18 FCC Rcd 13620 (2003), *aff\'d in part and remanded
    in part, Prometheus Radio Project, et al. v. FCC,*  373 F.3d 372
    (2004) (*\"Prometheus Remand Order\"*), *stay modified on
    rehearing*, No. 03-3388 (3d Cir. Sept. 3, 2004)
    (*\"Prometheus Rehearing Order\"*). The *Notice of Proposed Rule
    Making* included in the *Ownership Report and Order* sought comment
    on developing a geographic-based methodology to evaluate local radio
    ownership in markets not rated by Arbitron, and that proceeding
    remains pending. On September 3, 2003, the United States Court of
    Appeals for the Third Circuit, which is hearing the consolidated
    appeals of the *Ownership Report and Order*, granted a stay of the
    effective date of the new ownership rules adopted in that *Order,*
    stating that "the prior ownership rules remain in effect pending
    resolution of those proceedings." *Prometheus Radio Project, et al.
    v. F.C.C.*, No. 03-3388, slip op. at 3 (3d Cir. Sept. 3, 2003) (*per
    curiam*). In the *Prometheus Rehearing Order*, however, the Court of
    Appeals lifted the stay for the local radio ownership rule
    revisions, including using Arbitron Metro markets to define local
    markets.

[^7]: *See Ownership Report and Order, supra,* 18 FCC Rcd at 13725-30 ¶¶
    273-86.

[^8]: *See, e.g., id.* at 13807-09 ¶¶ 482-86 (grandfathering existing
    station combinations). *See also FCC v. National Citizens Committee
    for Broadcasting*, 436 U.S. 775, 802-815 (1978) (upholding
    Commission decision to require divestiture of newspaper/broadcast
    combinations only in egregious cases).

[^9]: Monterey indicates that the subject terrain is "quite flat,"
    sloping from the transmitter site to the Red River Valley in which
    Fargo lies.

[^10]: Clear Channel's multiple ownership study, using the Commission's
    prescribed contour-prediction methodology, demonstrates that the
    contour for KRVI(FM) does not overlap that of any other station
    proposed to be commonly owned by Clear Channel as a result of this
    transaction. Clear Channel therefore did not include KRVI(FM) in the
    defined radio market in this case. Monterey correctly notes that the
    contours of KDAM(FM) and KRVI(FM), computed according to the
    standard prediction methodology set forth in 47 C.F.R. § 73.313, are
    separated by 0.2 kilometers.

[^11]: *See WIIZ(FM), Battle Ground, Indiana*, 10 FCC Rcd 3159 (MMB
    1995) ("*Battle Ground*").

[^12]: *See WZNY(FM), Augusta, Georgia*, 13 FCC Rcd 9467 (MMB 1998)
    ("*Augusta*").

[^13]: *See supra* note 11.

[^14]: *Heritage Media Services, Inc.*, 13 FCC Rcd 5644 (1998); *John H.
    Phipps, Inc.*, 11 FCC Rcd 13053 (1996); *Southern Oregon
    Broadcasting Co.*, 9 F.C.C.2d 241 (1967).

[^15]: *See 1998 Biennial Regulatory Review -- Streamlining of Radio
    Technical Rules in Parts 73 and 74 of the Commission's Rules*,
    *Notice of Proposed Rule Making and Order,* 13 FCC Rcd 14849, 14865
    (1998) ("*Technical Streamlining NPRM*") (seeking comment on a
    supplemental point-to-point ("PTP") prediction model designed to
    provide a more accurate prediction of FM radio interfering signal
    contours and stating our proposal not to allow use of the PTP
    methodology in multiple ownership showings).

[^16]: *Id*. In a subsequent order, we deferred adoption of our proposed
    PTP methodology on the basis of comments raising issues regarding
    the accuracy and reliability of the proposed signal propagation
    prediction model. *See 1998 Biennial Regulatory Review --
    Streamlining of Radio Technical Rules in Parts 73 and 74 of the
    Commission's Rules*, *Second Report and Order*, 15 FCC Rcd 21649,
    21652-53 ¶¶ 7-9 (2000).

[^17]: *See supra* note 14.

[^18]: Monterey proposes the use of an alternative contour analysis only
    with respect to KRVI(FM). That is exactly the kind of "selective"
    use which the staff appropriately rejected in *Augusta, supra* note
    13.

[^19]: T*echnical Streamlining NPRM*, 13 FCC Rcd at 14865.

[^20]: In refusing to accept Monterey's supplemental showing, we do not
    intend to give premature effect to the proposal in our *Technical
    Streamlining NPRM* but merely to emphasize that rule making's
    recognition of existing practice. *See supra* note 15 and
    accompanying text.

[^21]: The Commission had not yet adopted the *Order* in which it
    announced an "Interim Policy" establishing a specific framework for
    evaluating the competition aspects of proposed radio transactions.
    *See Rules and Policies Concerning Multiple Ownership of Radio
    Broadcast Stations in Local Markets*, 16 FCC Rcd 19861, 19894-97 ¶¶
    84-89 (2001).

[^22]: A number of factors may explain Clear Channel\'s reduced revenue
    share, such as, for example, Tom Ingstad\'s new station KDJZ-FM,
    which began its operations in the Fargo Metro in 2001, and the
    improved performance of Forum Communications\' WDAY(AM), which rose
    to become the fourth-highest rated station in the latest ratings
    period.

[^23]: *Market Definition NPRM,* 15 FCC Rcd at 25082 ¶ 14.

[^24]: Application for Review at 8.

[^25]: *See* Staff Decision at 6.

[^26]: *E.g., Pine Bluff Radio, Inc.,* 14 FCC Rcd 6594 (1999).