September 1, 2006

**DA 06-1741**

***In Reply Refer to:***

1800B3**-**TH

Released: September 1, 2006

David D. Oxenford, Esq.

Davis Wright Tremaine LLP

1500 K Street, N.W.

Suite 450

Washington, D.C. 20005-1272

In re: KEGK(FM), Wahpeton, ND

Facility ID No. 25533

**Petition for Waiver**

Dear Mr. Oxenford:

We have before us your "Petition for Waiver" ("Petition") filed on
February 26, 2006 on behalf of Triad Broadcasting Company, LLC and
Monterey Licenses, LLC[^1] (collectively, "Triad"). The waiver request
pertains to a Joint Sales Agreement ("JSA") involving KEGK(FM),
Wahpeton, North Dakota, which was not an attributable interest for Triad
when it commenced in 2002, but became an attributable interest under the
local radio ownership rule that went into effect on September 3,
2004.[^2] Triad requests a waiver of the Commission's requirement that
an attributable JSA that causes a party to exceed the Commission's local
radio ownership limits be terminated within two years (*i.e*., by
September 3, 2006). For the reasons set forth below, we grant a
temporary waiver as described below.

**Background.** KEGK(FM), licensed to Guderian Broadcasting, Inc., is
one of 15 operating commercial radio stations in the Fargo Market.[^3]
Since May 2002, Triad has purchased substantially all of the advertising
time on the station for resale in combination with its six other
stations in the Fargo Market.[^4] The *2002 Biennial Review Order*
determined that such an in-market JSA is an attributable interest.[^5]
In situations such as this one, where an attributable interest exceeded
the revised ownership limits being adopted, parties were given two years
from the effective date of the order to terminate the JSA or otherwise
come into compliance with the revised limits.[^6] Pursuant to the
*Prometheus Rehearing Order*, the revised rule became effective on
September 3, 2004. Under the revised rule, Triad holds attributable
interests in five FM stations and seven stations altogether.
Accordingly, absent a waiver, the JSA must be terminated or an
attributable interest in one of the FM stations must be divested so that
Triad will be within the allowed subcap of four FM stations and six
stations altogether for the Fargo Market. In response to the *2002
Biennial Review Order*, Triad filed a petition for reconsideration
regarding the attribution of radio JSAs and the termination requirement,
and then filed the instant Petition.

Triad states that the stations attributable to it accounted for 41.2% of
the radio revenue in the Fargo Market in 2005, of which approximately
2.7% was generated by KEGK(FM).[^7] The other principal competitor in
the Fargo Market is Clear Channel Communications, Inc. ("Clear
Channel"). Clear Channel, under the ownership limits in effect prior to
the *2002 Biennial Review Order*, acquired and currently holds
attributable interests in five FM stations and seven stations altogether
in the Fargo Market.[^8] However, the *2002 Biennial Review Order* did
not require divestiture of owned interests that exceed the revised local
radio ownership limits.[^9] Accordingly, Clear Channel is not required
to divest any of those interests. Triad states that Clear Channel's
stations generated 49.4% of the radio revenue in the Fargo Market in
2005.

Triad seeks a permanent waiver of the requirement in the *2002 Biennial
Review Order* that it come into compliance with the revised local radio
ownership limits in the Fargo Market by September 3, 2006. Triad argues
that the Commission's decision to require divestiture of an interest by
Triad, but not by Clear Channel, is unfair and contrary to the public
interest because it will diminish Triad's ability to compete against
Clear Channel in the Fargo Market.[^10] Triad argues that its position
is consistent with the *Prometheus* Court's critique of the methodology
supporting the revised local radio ownership rule.[^11]

**Discussion.** A party seeking a waiver \"faces a high hurdle\"[^12]
and must demonstrate that deviation from the general rule is warranted
by special circumstances and will serve the public interest.[^13] In
this case, we conclude that the competitive balance in the Fargo Market
is a special circumstance supporting a waiver. We further conclude that
granting a waiver will serve the public interest by maintaining the
current competitive balance while the Commission reviews the local radio
ownership rule in the pending rule making proceeding and reviews Triad's
petition for reconsideration of the *2002 Biennial Review Order*.

When the Commission addressed the grandfathering situation in the *2002
Biennial Review Order*, it recognized that, as with all grandfathering
decisions, "some disparity will exist between grandfathered and
non-grandfathered owners \[but we\] do not believe this fact outweighs
the equitable considerations that persuade us to grandfather existing
combinations."[^14] The Commission noted several equitable
considerations warranting grandfathering of existing combinations that
exceed the revised rule. First, the Commission noted that requiring
divestiture would unfairly penalize parties who bought stations in good
faith in accordance with the existing rules.[^15] Second, the Commission
stated that licensees of current combinations should be afforded an
opportunity to retain the value of their investments made in reliance on
the Commission's rules and orders.[^16] Third, the Commission stated
that required divestiture would be too disruptive to the industry.[^17]
In contrast, JSAs did not present similar concerns because JSAs do not
involve investments in stations, can be unwound more easily than
purchases, and were not so widespread as to present an issue of
disruption to the industry.

While the distinction between grandfathered ownership situations and
non-grandfathered JSAs is clear as a general matter, the particular
circumstances of the Fargo Market support a temporary waiver. This is
not a situation where the JSA provides Triad with an unfair competitive
advantage. In fact, termination of the KEGK(FM) JSA could diminish
Triad's ability to compete in the Fargo Market, given the existence of a
competitor with a greater share of market revenue. Therefore, we
conclude that waiver of the termination requirement until six months
after the date on which the Commission addresses Triad's Petition for
Reconsideration serves the public interest.

Accordingly, IT IS ORDERED that the Commission's requirement that Triad
Broadcasting Company, LLC either terminate its Joint Sales Agreement
with Guderian Broadcasting, Inc. with respect to KEGK(FM), Wahpeton,
North Dakota, or otherwise come into compliance with Section
§73.3555(a)(1)(iii) of the Commission's rules[^18] in the Fargo, North
Dakota -- Moorhead, Minnesota radio market by September 3, 2006, IS
WAIVED for a period terminating on the date which is six (6) months
after the date on which the

Commission releases its decision on the Petition for Reconsideration of
the *2002 Biennial Review Order* filed by Triad Broadcasting Company,
LLC.

Sincerely,

Peter H. Doyle

Chief, Audio Division

Media Bureau

cc: Guderian Broadcasting, Inc.

[^1]: Monterey Licenses, LLC, which is 100% owned by Triad Broadcasting
    Company, LLC, is the licensee of two AM stations and four FM
    stations in the Fargo, North Dakota -- Moorhead, Minnesota radio
    market (the "Fargo Market"): KQWB(FM) and KVOX(FM), Moorhead,
    Minnesota, KBMW(AM) and KLTA(FM), Breckenridge, Minnesota, KPFX(FM),
    Fargo, North Dakota, and KQWB(AM), West Fargo, North Dakota.

[^2]: *See* 47 C.F.R. § 73.3555(a)(1)(iii) (in a market with between 15
    and 29 full-power radio stations, no party may hold attributable
    interests in more than six commercial radio stations in total or
    more than four commercial radio stations in the same service (AM or
    FM) and Notes 1 and 2(k) (a joint sales agreement is an attributable
    interest if it permits a party with an attributable interest in
    another radio station in the same market to sell more than 15
    percent of the station's advertising time per week). This standard
    was adopted by the Commission in 2003, temporarily stayed on appeal,
    and then released from the stay on September 3, 2004. *See 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*, 18 FCC Rcd 13620, 13711-47
    (2003) ("*2002 Biennial Review Order*"), *aff'd in part and remanded
    in part, Prometheus Radio Project, et al. v. FCC*, 373 F.3d 372
    (2004) ("*Prometheus*"), *stay modified on rehearing*, No. 03-3388
    (3d Cir. Sep. 3, 2004) ("*Prometheus Rehearing Order*"), *cert.
    denied*, 73 U.S.L.W. 3466 (U.S. June 13, 2005) (Nos. 04-1020,
    04-1033, 04-1036, 04-1045, 04-1168, and 04-1177). The Commission
    recently issued a Further Notice of Proposed Rule Making in response
    to *Prometheus*. *See 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*, FCC 06-93 (rel. July 24, 2006).

[^3]: The Fargo Market has 22 stations altogether. Seven stations are
    owned by public radio or religious entities. Petition at 2 and n. 3.

[^4]: The KEGK JSA was referenced previously in a 2003 Media Bureau
    decision. *See Letter to Harry C. Martin*, 18 FCC Rcd 1498 (Media
    Bur. 2003).

[^5]: *2002 Biennial Review Order*, 18 FCC Rcd at 13745 ¶ 321.

[^6]: *Id*., 18 FCC Rcd at 13746 ¶ 325. *See also Media Bureau Announces
    Requirement to File Certain Radio Joint Sales Agreements*, 20 FCC
    Rcd 1 n.8 (2005).

[^7]: Petition at 3.

[^8]: *Id*. at 2 and n. 3.

[^9]: *See* 47 C.F.R. § 73.3555, Note 4; *see also 2002 Biennial Review
    Order*, 18 FCC Rcd at 13808 ¶ 484.

[^10]: Petition at 4-5.

[^11]: *Id*. at 5

[^12]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1157 (D.C. Cir. 1969) ("*WAIT
    Radio*").

[^13]: *See Northeast Cellular Telephone Co. v F.C.C.*, 897 F.2d 1164,
    1166 (D.C. Cir. 1990) (citing *WAIT Radio*, 418 F.2d at 1157-59).

[^14]: *2002 Biennial Review Order*, 18 FCC Rcd at 13809 ¶ 485.

[^15]: *Id*., 18 FCC Rcd at 13808 ¶ 484.

[^16]: Id.

[^17]: Id.

[^18]: 47 C.F.R. § 73.3555(a)(1)(iii).