Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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**NOTICE OF PROPOSED RULE MAKING**

**Adopted:** December 6, 2000 **Released:** December 13, 2000

Comment date: January 26, 2001

Reply Comment date: February 12, 2001

By the Commission: Chairman Kennard, and Commissioners Ness and Tristani
issuing separate statements; Commissioners Furchtgott-Roth and Powell
concurring and issuing separate statements.

1.  We are adopting this [Notice of Proposed Rule Making]{.underline} to
    seek comment on whether and how we should modify the way in which we
    determine the dimensions of radio markets and count the number of
    stations in them. We are also seeking comment on whether and how we
    should amend the method by which we determine the number of radio
    stations owned by a party in a radio market for the purpose of
    applying our multiple ownership rules.

[Overview]{.underline}

2.  In 1991, we commenced a proceeding to relax our local and national
    radio ownership rules.[^1] We ultimately established two market
    sizes that would determine the number of radio stations in which an
    entity could have an attributable interest in a local area.[^2] One
    tier included markets with 15 or more commercial radio stations. The
    other market tier consisted of markets with fewer than 15 stations.
    A party could have attributable interests in a different number of
    stations depending on the tier into which its market fell.[^3] This
    decision required that we establish both how we would define a
    market and, because of the different treatment of markets with less
    than 15 stations and those with 15 or more, how we would count the
    number of stations in a market. We determined that:

we will define the radio market as that area encompassed by the
principal community contours (*i.e.*, predicted or measured 5 mV/m for
AM stations and predicted 3.16 mV/m for FM stations) of the mutually
overlapping stations proposing to have common ownership.[^4]

With regard to how we would count the number of stations in a market, we
stated:

> \[t\]he number of stations in the market will be determined based on
> the principal
>
> community contours of all commercial stations whose principal
> community contours
>
> overlap or intersect the principal community contours of the
> commonly-owned stations.[^5]

2.  In Section 202(b)(1) of the Telecommunications Act of 1996 ("1996
    Act"), Congress directed the Commission to increase the number of
    stations in a market in which a party could have a cognizable
    ownership interest, providing that in the largest markets a single
    entity could own up to eight stations. The number of stations in
    which it could have such an interest would depend upon the number of
    commercial stations in the market.[^6] Our methods of defining a
    radio market and determining the number of stations in a market,
    however, were not altered by the 1996 Act or by our Orders
    implementing that statute.[^7]

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3.  Using this methodology, we evaluate whether a proposed transaction
    complies with our ownership rules by first determining the
    boundaries of each market created by the transaction. Thus, we look
    to all stations that will be commonly owned after the proposed
    transaction is consummated and group these stations into "markets"
    based on which stations have mutually overlapping signal contours. A
    market is defined as the area within the combined contours of the
    stations to be commonly owned that have a common overlap. For
    example, suppose an applicant proposes to own stations A, B, C
    and D. The contours of stations A, B and C each overlap the contours
    of the other two stations -- that is, there is some area which the
    contours of all three stations have in common. Station D, on the
    other hand, overlaps the principal community contour of station A,
    but not those of stations B or C. Under our current definitions,

the area encompassed by the combined contours of stations A, B and C
form one "market" and the area within the combined contours of stations
A and D form another market.[^8]

4.  To determine the total number of stations "in the market," as
    defined above, we count all stations whose principal community
    contours overlap the principal community contour of
    [any]{.underline} one or more of the stations whose contours define
    the market. Thus, in the market formed by the contours of stations
    A, B and C, any station whose contour overlapped the contour of A, B
    [or]{.underline} C would be counted as "in the market." We use a
    different methodology, however, to determine the number of stations
    that any single entity is deemed to own in a given market. For this
    purpose, we only count those stations whose principal community
    contours overlap the common overlap area of [all]{.underline} of the
    stations whose contours define the market. Thus, a station owned by
    the applicant that is counted as being \"in the market\" because its
    contour overlaps the contour of at least one of the stations that
    create the market will not be counted as a station owned by the
    applicant in the market unless its contour overlaps the area which
    the contours of [all]{.underline} of the stations that define the
    market have in common. Referring to our example of the market formed
    by the contours of stations A, B and C, station D would be counted
    as "in the market" because its contour overlaps the contour of
    station A. But, station D would not be counted as a station owned by
    the applicant in the ABC market because station D's contour does not
    also overlap the contours of stations B and C. In short, the
    applicant's ownership of station D would not be counted against it
    in determining compliance with the ownership cap in the ABC market.

5.  Our experience has led us to conclude that this framework may be
    having results that may frustrate the structure of the statute and
    that are not in the public interest. For example, under the existing
    policies and rules, the Commission's Mass Media Bureau recently
    determined that Wichita, KS, is a market containing 52 stations and
    granted the assignment application for station KOEZ(FM) from Kansas
    Radio Assets to Journal Broadcasting Corporation, giving Journal six
    stations, including 5 FM stations, in the Wichita market. This is
    well within the eight stations that a single owner would be
    permitted to own in a market with more than 45 stations under our
    rules implementing the 1996 Act. Yet Arbitron, which defines radio
    markets for commercial purposes, classifies Wichita as a 24-station
    market in which, under these rules, a single entity could only have
    an interest in six radio stations, no more than 4 of which could be
    in the same service. Similarly, under the existing policies and
    rules, BIA data show that one party seeks to own nine stations in
    Youngstown, OH.[^9] Yet Arbitron data show only 23 commercial radio
    stations in the Youngstown metropolitan area.[^10] In another
    transaction, using the Commission's methodology, an applicant was
    able to show that Ithaca, NY, was a market with at least 32
    commercial radio stations. Yet Arbitron data show only 9 commercial
    radio stations in the Ithaca metropolitan area.[^11]

6.  Given such results, we question whether the use of overlapping
    signal contours is an appropriate means of defining market
    boundaries and counting the number of stations in a market. Our
    methodology sometimes leads to results that are completely at odds
    with commercial market definitions and economic reality, and may
    undermine the structure of the statute to allow levels of ownership
    that increase commensurately with the size of the market.
    Additionally, our methodology may encourage applicants to structure
    transactions to fragment what are commercially considered single
    markets into a number of smaller markets. While a licensee may be
    within our ownership limit as to each of these fragmented markets,
    in the aggregate it owns more stations than our rules would permit
    were these markets considered to be a single market, as they are by
    commercial rating services and would be under any economically
    meaningful market definition.

7.  The Commission has used this methodology for defining markets and
    counting stations in markets since 1992. While the methodology has
    produced some odd results since its inception, it was not until the
    ownership limits were substantially increased in 1996 that the
    methodology\'s potential to cause results at odds with economic
    reality became clearly discernible. Until then, the number of
    problems and their impact were constrained, by the more modest
    numerical ownership limits and by a 25 percent audience share cap in
    markets with 15 or more stations.

8.  Another problem with this methodology was highlighted in the
    Commission's recent [Pine Bluff]{.underline} decision.[^12] In that
    case, Seark Radio, Inc., sought to purchase one AM and two FM
    stations in Pine Bluff, Arkansas. Seark already had direct or
    attributable interests in three other stations in Pine Bluff and
    environs. A petitioner (Bayou Broadcasting, Inc.) filed a Petition
    to Deny claiming, in part, that the relevant market contained 11
    stations and that grant of the subject application would give Seark
    direct or attributable interests in 6 of those stations. Were this
    the case, it would have caused Seark to exceed the \"cap\" that one
    party can have in an 11-station market because it would give it
    interests in more than 5 of the stations in the market.[^13] In a
    decision which we recently affirmed on review, the Mass Media Bureau
    determined that, under the Commission\'s method for defining markets
    and counting the number of stations in a market, the stations
    involved actually formed three separate markets. Market 3 was formed
    by two mutually overlapping stations attributable to Seark. Two
    other stations were determined to contribute to this market. One of
    those two stations was owned by Seark. However, because this
    station\'s principal community contour did not overlap the principal
    community contours of [both]{.underline} of the stations whose
    overlapping principal community contours established the market, it
    was not counted as an attributable interest of Seark\'s in this
    market. Thus, application of our existing methodologies led to the
    determination that this Seark station would be counted as being "in
    the market" for purposes of determining the base number of stations
    in that market. But, the same station would not be considered to be
    "in the market" for the purposes of determining how many stations in
    the market were and would be owned by Seark,[^14] and thus whether
    Seark complied with the numerical station caps. Accordingly, strict
    compliance with our precedents in this area led to the conclusion
    that Seark had an attributable interest in only two of the four
    stations in this market, notwithstanding its attributable interest
    in a third station which counted as a station in the market for the
    purpose of determining the total number of stations in the
    market.[^15]

[Options]{.underline}

9.  Several options or approaches present themselves as possible means
    of addressing the definitional issues raised in the preceding
    discussion. With respect to the counting consistency issue
    exemplified by the [Pine]{.underline} [Bluff]{.underline} case, the
    most direct solution might be simply to alter our counting
    methodology and count against an applicant's ownership allowance in
    a given market **any** station that it owned[^16] and that was
    included in determining how many stations were "in the market" for
    purposes of assessing compliance with the local radio ownership
    rules. Under this proposed approach, the applicant in the
    [Pine]{.underline} [Bluff]{.underline} case would have been charged
    with ownership of three stations in a four-station market, rather
    than two, and the transaction would not have complied with the
    numerical limits in our rules.[^17] This would clearly and logically
    resolve the inconsistency in our present approach and produce more
    rational results. Moreover, this approach may better reflect the
    statute's structure, and lend consistency and predictability to the
    commercial marketplace. We invite comment on this approach.
    Alternatively, we could exclude from the count of the number of
    stations in a market, any stations owned by the applicant, except
    the commonly owned stations that form the market. We seek comment on
    this approach.

10. Another, broader approach might address both the counting anomaly
    and the discontinuity between the Commission's and commercial rating
    services' definition of radio markets generally. Under this
    approach, we would eliminate our current market definition and,
    instead, rely on commercially determined market definitions. For
    example, we could adopt Arbitron radio metro market definitions and
    simply rely on these commercial delineations to determine the total
    number of stations in any given market and how many stations an
    applicant would control in that market. Arbitron-defined markets
    have the advantage that they attempt to reflect accurately the
    location of a station's listeners and the identity of stations that
    are actually perceived by advertisers to be in a market.
    Additionally, the Department of Justice utilizes Arbitron markets in
    its competition analysis of radio station mergers. However, the use
    of Arbitron markets has the disadvantage that many radio stations
    are not in an Arbitron market. Out of 3100 counties in the United
    States, slightly less than 850 (containing, however, nearly 80
    percent of the nation's population) are in Arbitron markets.
    Arbitron defines a geographic area based on county lines. We
    recognize that Arbitron metros do not encompass all the counties
    that can receive some of the radio signals of the metro radio
    stations. However, the radio stations included in the Arbitron metro
    do a significant portion of their business in the counties that are
    included in the Arbitron metro.[^18]

11. We seek comment on whether we should use Arbitron or other
    commercially defined markets. How should we determine the dimensions
    of a market when the stations involved are not located in a
    commercially defined market? If we use Arbitron or another
    commercially defined market, what should we do when a market
    changes? For example, population growth might result in a county
    that was in a single market to later be split between two markets.
    This could cause the number of stations in the market to drop,
    placing some existing ownership combinations above the local
    ownership limits. One approach to such changes would be to disregard
    them (effectively grandfathering existing combinations) until such
    time as a relevant application is filed, at which point we would
    apply the market definitions in effect at the time of the
    application's filing or grant. We seek comment on these and on
    alternative proposals.

12. Alternatively, should we determine the number of stations in a
    market using a different contour overlap standard? For example, we
    could count as being in a market only those stations whose principal
    community contours overlap or intersect the overlap area of the
    principal city contours of the stations whose ownership is to be
    merged. This might provide a superior gauge relative to the area
    with which we are most concerned in merger situations with respect
    to both competition and diversity. However, this standard might be
    too restrictive and thus inappropriately thwart the relaxation of
    the ownership rules that the 1996 Act contemplated. Is there some
    other overlap standard that might more accurately provide a count of
    the number of stations in a market? Perhaps counting only those
    stations that overlap a certain percentage of the contour of one or
    more of the mutually overlapping stations would provide accurate
    results. What percentage would be appropriate? Another option would
    be simply to count only those stations that are actually heard in a
    market. What methodology should we use in the event we adopt this
    option? We invite comment on all of these alternatives.

[Procedural Matters]{.underline}

13. We do not propose that any rules and policies we adopt herein should
    be applied retroactively to existing ownership combinations. Those
    ownership arrangements were granted as being in the public interest
    and in accordance with applicable Commission rules and policies.
    There is no reason to disturb these ownership combinations.

14. Merger applications now pending or filed after the adoption of this
    Notice but before our final decision in this proceeding present
    another case. 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.\"[^19] Given this
    conclusion, it would be inappropriate to continue to apply this
    standard to pending and newly filed applications. We believe that
    the harm caused by application of this standard outweighs any harm
    caused by the deferment of decision on these applications. We intend
    to act expeditiously in this proceeding to ensure that any such
    deferments are few in number and short in duration.

[Administrative Matters]{.underline}

15. [Comments and Reply Comments]{.underline}. Pursuant to Sections
    1.415 and 1.419 of the Commission\'s rules, 47 C.F.R. §§ 1.415,
    1.419, interested parties may file comments on before January 26,
    2001, and reply comments on or before February 12, 2001. Comments
    may be filed using the Commission\'s Electronic Comment Filing
    System (ECFS) or by filing paper copies. [See]{.underline}
    [Electronic Filing of Documents in Rulemaking
    Proceedings]{.underline}, 63 Fed. Reg. 24,121 (1998).

16. Comments filed through the ECFS can be sent as an electronic file
    via the Internet to \<http://www.fcc.gov/e-file/ecfs.html\>.
    Generally, only one copy of an electronic submission must be filed.
    If multiple docket or rulemaking numbers appear in the caption of
    this proceeding, however, commenters must transmit one electronic
    copy of the comments to each docket or rulemaking number referenced
    in the caption. In completing the transmittal screen, commenters
    should include their full name, Postal Service mailing address, and
    the applicable docket or rulemaking number. Parties may also submit
    an electronic comment by Internet e-mail. To get filing instructions
    for e-mail comments, commenters should send an e-mail to
    ecfs@fcc.gov, and should include the following words in the body of
    the message, \"get form \<your e-mail address.\" A sample form and
    directions will be sent in reply. Parties who choose to file by
    paper must file an original and four copies of each filing. If more
    than one docket or rulemaking number appear in the caption of this
    proceeding, commenters must submit two additional copies for each
    additional docket or rulemaking number. All filings must be sent to
    the Commission\'s Secretary, Magalie Roman Salas, Office of the
    Secretary, Federal Communications Commission, 445 Twelfth Street,
    S.W.; TW-A325, Washington, D.C. 20554.

17. Parties who choose to file by paper should also submit their
    comments on diskette. These diskettes should be submitted to: Wanda
    Hardy, 445 Twelfth Street, S.W., Room, 2-C207, Washington,
    D.C. 20554. Such a submission should be on a 3.5 inch diskette
    formatted in an IBM compatible format using MS Word 97 for Windows
    or compatible software. The diskette should be accompanied by a
    cover letter and should be submitted in \"read only\" mode. The
    diskette should be clearly labeled with the commenter\'s name,
    proceeding (including the docket number in this case, MM Docket No.
    00-244, type of pleading (comment or reply comment), date of
    submission, and the name of the electronic file on the diskette. The
    label should also include the following phrase \"Disk Copy - Not an
    Original.\" Each diskette should contain only one party\'s
    pleadings, preferably in a single electronic file. In addition,
    commenters must send diskette copies to the Commission\'s copy
    contractor, International Transcription Service, Inc., 445 Twelfth
    Street, S.W., CY-B402, Washington, D.C. 20554.

18. Comments and reply comments will be available for public inspection
    during regular business hours in the FCC Reference Center, Federal
    Communications Commission, 445 Twelfth Street, S.W., CY-A257,
    Washington, D.C. 20554. Persons with disabilities who need
    assistance in the FCC Reference Center may contact Bill Cline
    at (202) 418-0270, (202) 418-2555 TTY, or <bcline@fcc.gov>. Comments
    and reply comments also will be available electronically at the
    Commission's Disabilities Issues Task Force web site:
    [www.fcc.gov/dtf](http://www.fcc.gov/dtf). Comments and reply
    comments are available electronically in ASCII text, Word 97, and
    Adobe Acrobat.

19. This document is available in alternative formats (computer
    diskette, large print, audio cassette, and Braille). Persons who
    need documents in such formats may contact Martha Contee at (202)
    4810-0260, TTY (202) 418-2555, or <mcontee@fcc.gov>.

20. [Ex Parte Rules]{.underline}. This is a permit-but-disclose notice
    and comment rulemaking proceeding. Ex parte presentations are
    permitted except during the Sunshine Agenda period, provided they
    are disclosed as provided in the Commission\'s Rules. [See
    generally]{.underline} 47 CFR Sections 1.1202, 1.1203, and
    1.1206(a).

21. [Initial Regulatory Flexibility Analysis]{.underline}. With respect
    to this [Notice]{.underline}, an Initial Regulatory Flexibility
    Analysis (\"IRFA\") is contained in Appendix A. As required by
    Section 603 of the Regulatory Flexibility Act, the Commission has
    prepared an IRFA of the possible significant economic impact on
    small entities of the proposals contained in this
    [Notice]{.underline}. Written public comments are requested on the
    IRFA. In order to fulfill the mandate of the Contract with America
    Advancement Act of 1996 regarding the Final Regulatory Flexibility
    Analysis, we ask a number of questions in our IRFA regarding the
    prevalence of small businesses in the radio broadcasting industry.
    Comments on the IRFA must be filed in accordance with the same
    filing deadlines as comments on the [Notice,]{.underline} but they
    must have a distinct heading designating them as responses to the
    IRFA.

22. [Authority]{.underline}. This [Notice]{.underline} is issued
    pursuant to authority contained in Sections 4(i), 303, and 307 of
    the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i),
    303, and 307, and Section 202(h) of the Telecommunications Act of
    1996.

[Ordering Clauses]{.underline}

23. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152(a),
    154(i), 303, 307, 309, and 310, and Section 202(h) of the
    Telecommunications Act of 1996, this [Notice of Proposed
    Rulemaking]{.underline} is ADOPTED.

24. IT IS FURTHER ORDERED that the Commission's Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    [Notice]{.underline}, including the Initial Regulatory Flexibility
    Analysis, to the Chief Counsel for Advocacy of the Small Business
    Administration.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**APPENDIX A**

**Initial Regulatory Flexibility Analysis**

As required by the Regulatory Flexibility Act (RFA),[^20] the Commission
has prepared this present Initial Regulatory Flexibility Analysis (IRFA)
of the possible significant economic impact on small entities by the
policies and rules proposed in this [Notice of Proposed
Rulemaking]{.underline} ([Notice]{.underline}). Written public comments
are requested on this IRFA. Comments must be identified as responses to
the IRFA and must be filed by the deadlines for comments on the
[Notice]{.underline} provided above in paragraph 15. The Commission will
send a copy of the [Notice]{.underline}, including this IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration (SBA).
*See* 5 U.S.C. § 603(a). In addition, the [Notice]{.underline} and the
IRFA (or summaries thereof) will be published in the Federal Register.
*See id*.

## A. Need for, and Objectives of, the Proposed Rules

Section 202(h) of the Telecommunications Act of 1996 (1996 Act) requires
the Commission to review all of its broadcast ownership rules every two
years commencing in 1998, and to determine whether any of these rules
are necessary in the public interest as the result of competition. The
1996 Act also requires the Commission to repeal or modify any regulation
it determines to be no longer in the public interest. The Commission
adopted a [Notice of Inquiry]{.underline} in 1998 in compliance with
this requirement. (13 FCC Rcd 11276). The Commission believes that its
present method of determining the dimensions of radio markets and/or of
counting the stations available in those markets may be having results
that do not reflect the structure of the Telecommunications Act with
regard to the Commission's local radio ownership rules and may not be in
the public interest. Present methodology may result in radio markets
whose dimensions do not reflect actual listening patterns or
availability, artificially enhance the number of stations in those
markets or artificially fragment what may be single individual markets
into several independent smaller markets, thereby allowing a single
owner to own a number of stations in a market in excess of what Congress
intended. Our methodology sometimes leads to results that are completely
at odds with commercial market definitions and economic reality, and
thus does not advance the Telecommunications Act's structure of allowing
levels of ownership that increase commensurately with the size of the
market. Additionally, the Commission determined in its biennial review
proceeding (MM Docket No. 98-35) that it appears that the way in which
it determines the number of radio stations that a party owns in a market
may have lead to unintended results. This [Notice]{.underline} is
designed to solicit comment on proposals to assure that our definitions
and methodologies more closely reflect commercial realities and the
intent of Congress. Because Section 202(h) of the 1996 Act directs the
Commission to repeal or modify any broadcast ownership regulation it
finds no longer in the public interest the Commission has adopted this
[Notice]{.underline} to solicit comment on the modification of the
subject policies and rules.

## B. Legal Basis

This [Notice]{.underline} is adopted pursuant to sections 1, 2(a), 4(i),
303, 307, 309, 310, of the Communications Act of 1934, as amended, 47
U.S.C. §§ 151, 152(a), 154(i), 303, 307, 309, 310, and Section 202(h) of
the Telecommunications Act of 1996.

**C. Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply**

The RFA directs agencies to provide a description of, and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.[^21] The RFA defines the
term "small entity" as having the same meaning as the terms "small
business," "small organization," and "small governmental
jurisdiction.[^22] In addition, the term "small business" has the same
meaning as the term "small business concern" under the Small Business
Act.[^23] A small business concern is one which: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the SBA.[^24]

The SBA defines a radio broadcasting station that has \$5 million or
less in annual receipts as a small business.[^25] A radio broadcasting
station is an establishment primarily engaged in broadcasting aural
programs by radio to the public.[^26] Included in this industry are
commercial, religious, educational, and other radio stations.[^27] The
1992 Census indicates that 96 percent of radio station establishments
produced less than \$5 million in revenue in 1992.[^28] Official
Commission records indicate that 11,334 individual radio stations were
operating in 1992.[^29] As of September 30, 2000, Commission records
indicate that 12,717 radio stations (both commercial and noncommercial)
were operating of which 2,140 were noncommercial educational FM radio
stations.[^30] (Our multiple ownership rules, however, do not apply to
noncommercial educational radio stations.) Applying the 1992 percentage
of station establishments producing less than \$5 million in revenue
([i.e]{.underline}., 96 percent) to the number of commercial radio
stations in operation, ([i.e]{.underline}., 10,577) indicates that
10,154 of these radio stations would be considered "small businesses" or
"small organizations."

## D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

There currently are no recordkeeping or other compliance requirements
associated with the subject rule and policies. The [Notice]{.underline}
proposes no new recordkeeping or other compliance requirements.

> **E. Steps Taken to Minimize Significant Impact on Small Entities, and
> Significant Alternatives Considered**

The RFA requires an agency to describe any significant alternatives that
it has considered in reaching its proposed approach, which may include
the following four alternatives (among others): (1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of
performance, rather than design, standards; and (4) an exemption from
coverage of the rule, or any part thereof, for small entities.[^31]

In fashioning its [Report]{.underline} in the Commission's Biennial
Review Proceeding (MM Docket No. 98-35) the Commission considered a
number of alternatives to the subject counting methodology policy. These
alternatives were: (1) retention of the existing radio market definition
policy; (2) modification of the existing radio market definition policy;
(3) retention of the existing rule (47 CFR § 73.3555(a)(3)(ii))
concerning counting the number of stations in the radio market; (4)
modification of the existing rule concerning counting the number of
stations in the radio market; (5) retention of the existing policy for
counting the number of stations a party owns in a radio market; and (6)
modification of the existing policy for counting the number of stations
a party owns in a radio market. The [Biennial Review Report]{.underline}
tentatively concluded that the existing policy for determining radio
markets and counting methodology rule and policy should be modified. An
alternative considered in this item is to maintain the *status quo*.
However, the [Notice]{.underline} does propose to modify the current
method of defining radio markets and to modify our station-counting
methodologies. Alternatives (2), (4), and (6) may have a beneficial
effect on small entities. A more accurate and predictable definition of
radio markets, and improved counting methodologies may more precisely
determine the size of markets and the number of stations in them and
allow the Commission to achieve the results intended by Congress in
passing the 1996 Act. This could result in some small radio stations
facing competition from commonly owned local station groups that are
more of the size Congress intended than is the case under current
Commission rules and policies. Any significant alternatives presented in
the comments received in response to the instant [Notice]{.underline}
will certainly be considered.

## F. Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rules

None.

**APPENDIX B**

# Market Definition

This Appendix illustrates the methodology for identifying and counting
stations to determine compliance with Section 73.3555(a)(1). The
Commission's current definition of a radio market is "the area
encompassed by the principal community contours (*i.e*., predicted or
measured 5 mV/m for AM stations and predicted 3.16 mV/m for FM stations)
of the mutually overlapping stations proposed to have common
ownership."[^32] The number of stations in a market is considered to be
"the number of commercial stations whose principal community contours
overlap, in whole or in part, with the principal community contours of
the stations in question."[^33] This analysis examines one metropolitan
area to show how stations have been and can be combined in compliance
with our rules. It also illustrates how certain anomalies can occur
given the Commission's definition of a radio market.

Our analysis focuses on stations in and around Youngstown, OH.
Youngstown was chosen only for illustrative purposes and the
combinations discussed in the illustrations comply with the current
multiple ownership rules. Youngstown, OH is a medium-sized city between
Cleveland, OH and Pittsburgh, PA. It is roughly 70 miles from both
cities. Arbitron (a radio listening survey service) has defined the
Youngstown-Warren metropolitan area (metro) as consisting of two Ohio
counties, Mahoning and Trumbull. These two counties have a population of
approximately 479,000 and generate retail sales of over \$5.1 billion
per year. The radio companies in these counties collect over \$21
million per year. The Arbitron metro is ranked 104^th^ among 277 metro
areas that are identified and surveyed regularly.

A spreadsheet listing the stations identified with the Youngstown-Warren
metro is provided as Attachment I. The attachment shows 23 "home market
" stations, 11 FM and 12 AM stations. The spreadsheet also lists
stations that have received a reportable listening share in the two
Youngstown counties. These stations are identified as "Out of Market
Stations" and there are 17 of those, 16 FM and 1 AM.

BIA data show that Clear Channel Communications owns (or proposes to
own) [^34] nine stations in the Youngstown metro (6 FM and 3 AM). At
first glance this may seem inconsistent with the current radio ownership
limits. In the largest markets (markets with 45 or more stations), an
owner may own up to eight stations with not more than five in one
service. This result occurs because the relevant market or markets for
compliance with the radio rules is not the Youngstown metro area, but
instead determined by radio signal contour overlaps.

To illustrate how the contour overlap rule works, we will look at the
contours of the Clear Channel stations and the contours of stations
owned by Cumulus Broadcasting, Inc. Attachment II shows the Clear
Channel contours, and Attachment III shows the Cumulus contours. Each
multiple ownership showing consists of unique station contours and
unique contour overlaps so it is impossible to illustrate all
combinations, but these two illustrate the basic process of identifying
the "market."

With respect to the Youngstown stations, the Clear Channel transaction
creates two markets.[^35] The darkened areas on the map of Attachment II
represent the common overlap (or common intersection) of the stations in
each market. Eight stations have a common intersection just east of
downtown Youngstown, and eight stations have a common intersection just
north of downtown Youngstown. Each market has seven stations in common,
WICT-FM, WTNX-FM, WMXY-FM, WBBG-FM, WRTK-AM, WKBN-AM, and WNIO-AM. Only
WBTJ-FM is unique to the eastern market, and only WNCD-FM is unique to
the northern market.

For Clear Channel to be able to own all nine stations, it must show that
some of those stations are located in different radio markets with 45 or
more stations, since otherwise it would violate the eight station cap
per market. To determine which stations overlap the markets in question,
and thus are counted as stations "in the market," an engineer is usually
employed to determine station contours that overlap, in whole or in
part, the principal community contours of the stations in question. The
contours need not overlap the area of intersection described above; they
only need to overlap one (or more) of the contours in question.

We do not show all 45 stations in this appendix because of the
difficulty in presenting that many contours. Illustrative examples show,
however, the types of stations that can be used to satisfy the
45-station count. All of the Arbitron metro stations overlap with the
contours in question for Clear Channel. Including Clear Channel's nine
stations, there are 23 home market stations that Clear Channel can
count. In addition, Clear Channel can count stations not identified with
any Arbitron market (there are nearly 5000 such stations in the U.S.)
that are located in counties adjacent to and nearby Youngstown. Lastly,
Clear Channel can count relatively distant signals that overlap
WKBN-AM's large principal community predicted contour. Attachment IV
shows the contours of five distant stations that overlap WKBN-AM. All
five of these stations can be counted in satisfying the 45 stations
count. These are not the only "distant" signals that can be counted;
they are used here only for illustrative purposes. Three of the stations
are licensed to Cleveland, and two of the stations are licensed to
Pittsburgh. Only one of the five stations has a principal community
contour that reaches within twenty miles of Youngstown. It can also be
seen that WMMS-FM and WMJI-FM in Cleveland have contours that just touch
the contour of WKBN-AM as does WXDX-FM in Pittsburgh.[^36]

The Cumulus transaction also creates two markets. The darkened areas on
the map of Attachment III represent the common overlap (or common
intersection) of the stations in each market. Six stations have a common
intersection that covers the city of Youngstown, and five stations have
a common intersection between Sharon and Greenville, PA. Each market has
three stations in common, WHOT-FM, WYFM-FM and WPIC-AM. WQXK-FM, WBBW-AM
and WSOM-AM are unique to the six station market, and WWIZ-FM and
WLLF-FM are unique to the five station market.

For Cumulus to own all eight stations in Youngstown, it must show that
in its six station market there are at least 15 stations, and it must
also show that there are 15 stations in the five station market, because
four of the stations are FM facilities.[^37] In the six station market,
Cumulus may include two stations that it owns in Pennsylvania to satisfy
the 15 station count. Similarly, in the five station market, Cumulus may
include two stations that it owns in Salem and one station that it owns
in Youngstown stations to satisfy the 15 station count.

**SEE ATTACHMENT I**

**SEE ATTACHMENT II**

**SEE ATTACHMENT III**

SEE ATTACHMENT IV

STATEMENT OF CHAIRMAN WILLIAM E. KENNARD

*Re: In the Matter of Definition of Radio Markets, Notice of Proposed
Rulemaking*

The Notice on the Definition of Radio Markets is a critical step in
bringing the Commission's rules in line with the commercial realities of
the radio marketplace.

As I stated when the Commission recently issued the first Biennial
Review of the broadcast ownership rules, the Commission's current
methodology for defining radio markets and counting the number of
stations in a market has the potential to produce unanticipated and
anti-competitive results in particular cases.

Section 202 of the Telecommunications Act directed the Commission to
expand the limit on how many stations a party could own in a market.
Congress specified a sliding scale of numerical limits depending on the
size of the market that, for example, would allow a party to own *up to*
8 commercial radio stations in a market with 45 stations, *up to* 7
stations in a market with 30-44 stations, and so on.

In some cases, the Commission's current methodology for defining radio
markets seems to be turning that statutory design on its head. It may be
allowing higher levels of ownership in what commercial services consider
to be much smaller markets.

Therefore, this methodology deserves a hard, careful look. Our review
will assist the Commission in discharging its statutory responsibility
to ascertain whether individual radio transactions comply with the law
and promote the public interest.

# Separate Statement of Commissioner Susan Ness

*Re: In the Matter of Definition of Radio Markets, Notice of Proposed
Rulemaking*

The Commission's current method of defining local radio markets suffers
from a number of flaws that can and should be remedied in this
proceeding. That said, I fear that the final rules we issue may be the
gilded padlock on the proverbial barn door, with the horse of
consolidation galloping over the horizon.

As this Notice points out, current radio market definition methods use
different contour overlap schemes to define commonly owned stations, on
the one hand, and total stations in a market, on the other, often
leading to uneven results that bear no resemblance to market realities.
For example, under our current contour overlap method, two competing
groups operating in the same city may be limited by two different
station caps. Since the Commission first implemented the radio ownership
changes mandated by Congress, *see* *In Re: Implementation of Sections
202(a) and 202(b)(1) of the Telecommunications Act of 1996*, 11 FCC Rcd
12368 (1996), I have highlighted the need to remedy this problem, *see,
e.g.,* Joint Statement of Commissioners Susan Ness and Gloria Tristani,
*KBYB(FM), El Dorado, Arkansas,* 13 FCC Rcd 15685 (1998). Over the last
four years, however, the radio broadcast industry has consolidated
considerably, with transactions consummated under our current, flawed
system of defining markets. I hope we can quickly conclude this
proceeding so that we do not compound the problem with further delay.

I also believe that, in the spirit of improving the law, we should be
mindful of the law of unintended consequences. Any remedy we adopt must
be applied prospectively and fairly, with cognizance of the reasonable
market expectations of parties who hold combinations lawfully assembled
under our existing rules. Finally, whatever definition we adopt should
be consistent with the intent of Congress in the Telecommunications Act
of 1996 in relaxing radio ownership restrictions.

**[SEPARATE STATEMENT OF COMMISSIONER GLORIA TRISTANI]{.underline}**

*Re: In the Matter of Definition of Radio Markets, Notice of Proposed
Rulemaking*

*MMB Docket No. 00-244*

While today's Notice represents progress, it is only a small step on a
long road. It has come so late, and at such great cost, that it is
appropriate to reflect for a moment on the damage that the Commission's
delay has inflicted on the listening public.

On August 14, 1998 -- almost two and a half *years* ago -- Commissioner
Ness and I issued a statement raising the two identical issues that
today's item implies could only recently be discerned: (1) that the
Commission's rules prevent a meaningful assessment of market
concentration because they do not apply a consistent definition of radio
"market"; and (2) that the practice of treating any station whose
principal community contour intersects with any mutually overlapping
station in the proposed combination as being in the same "market" can
lead to unrealistic results[^38][^39] Since that time, I have repeatedly
banged the drum that our rules denied justice to listeners and their
communities.[^40] Finally, in its June 20, 2000 Biennial Review Report,
the Commission tentatively concluded that "our definitions and
methodologies in this area may be having effects inconsistent with what
Congress intended" and promised a Notice of Proposed Rulemaking to
correct the problem[^41][^42] Regrettably, it has taken the Commission
an additional six months to issue today's 8-page Notice.

This is not simply a matter of the Commission ignoring congressional
directives and common sense. Real listeners in real communities have
been harmed by a consolidation of the airwaves that should not have been
permitted to take place. Across America, in cities like Omaha
(Nebraska), Wichita (Kansas), Youngstown (Ohio), Portland (Maine), Pine
Bluff (Arkansas) and Augusta (Maine) listeners have been deprived of the
broadcast diversity to which they are entitled and which the Commission
is duty-bound to ensure. For those communities, today's notice of
proposed rulemaking will provide cold comfort. We must now move with
dispatch to spare other communities a similar fate.

# Separate Statement of Commissioner Harold W. Furchtgott-Roth

I concur in this rulemaking for the limited aim of rationalizing our
arguably arbitrary and capricious methodology of counting radio stations
for purposes of section 202(b)(1). *Cf.* Joint Statement of
Commissioners Ness and Tristani, *KBYB(FM), El Dorado, Arkansas,* 13 FCC
Rcd 15685 (1998) (explaining that it makes no sense to count stations as
in the relevant market for the denominator but not the numerator of the
202(b) calculation). My purpose is not, as this Notice of Proposed
Rulemaking unfortunately suggests, to change our definition of "markets"
in order to cut back on the concentration levels that Congress expressly
set in the 1996 Telecommunications Act.

Nor is the NPRM correct in its suggestion that Congress could not have
known or understood the accepted administrative meaning of that term,
and thus the actual import of its revision of the radio limits, when it
changed the radio market limits in the Communications Act. To the
contrary, "it is well established that when Congress revisits a statute
giving rise to a longstanding administrative interpretation without
pertinent change, 'the congressional failure to revise or repeal the
agency's interpretation is persuasive evidence that the interpretation
is the one intended by Congress.'" *CFTC v. Schor*, 478 U.S. 833, 845
(1986) (quoting *NLRB v. Bell Aerospace Co.*, 416 U.S. 267, 274-75
(1974)); *see also FDIC v. Philadelphia Gear Corp.*, 476 U.S. 426,
436-437 (1986); *Zenith Radio Corp. v. United States*, 437 U.S. 443, 457
(1978).

Based on this narrow understanding of purpose -- *viz.,* to eliminate
what seems to be an irrational counting methodology, not to change the
definition of a "market" for results-oriented, counter-statutory
purposes -- I concur in this rulemaking. I take no position, however, as
to how to resolve the numerator-denominator inconsistency, and I look
forward to reviewing the comments on this matter.

# CONCURRING STATEMENT OF COMMISSIONER MICHAEL K. POWELL

# *Re: In the Matter of Definition of Radio Markets, Notice of Proposed Rulemaking* 

I concur in the decision today to conduct a Notice of Proposed
Rulemaking (NPRM) for the limited purpose of harmonizing the counting
methods we use to determine both the size, and the number of stations in
a radio market that count toward the ownership cap set forth in Section
202(b)(1). To the extent that this NPRM addresses what may be an
arbitrary distinction between counting methods, I support its issuance.
I do, however, caution the Commission to avoid using the rulemaking
process as a means to circumvent specific statutory provisions and
effectuate a different result than Congress intended.

> The NPRM asks whether the Commission should adopt a *different* (and
> more restrictive) method for determining the relevant market because
> our current definition "may undermine the structure of the statute"
> and produce results "that are not in the public interest." My single
> greatest problem with this proposal is one of statutory
> interpretation. The effect of eliminating the Commission's current
> methodology and replacing it with a commercially defined market (such
> as Arbitron) would be to shrink markets, and thereby substantially
> limit the number of stations one could own. When Congress adopted its
> radio ownership caps, Commission regulations defined these markets in
> a particular way. That way was the law of the land. The Arbitron
> market definitions were in existence, but they were not used for
> regulatory purposes, and Congress did not specifically incorporate
> them. I believe proper statutory interpretation would lead one to
> conclude that Congress set its numerical limits against the market
> definition that prevailed in regulation at the time, and not a
> definition that had not been used for this purpose previously.[^43]
>
> For this reason, I concur in today's decision for the sole purpose of
> correcting what may be an arbitrary counting methodology for
> determining the size and number of stations one may own in a local
> radio market.

[^1]: [Notice of Proposed Rule Making]{.underline} in MM Docket 91-140,
    6 FCC Rcd 3275 (1991).

[^2]: [Report and Order]{.underline} in MM Docket No. 91-140, 7 FCC Rcd
    2755 (1992), [recon. granted in part]{.underline}, [Memorandum
    Opinion and Order and Further Notice of Proposed Rule
    Making]{.underline} in MM Docket No. 91-140, 7 FCC Rcd 6387 (1992).

[^3]: [Memorandum Opinion and Order and Further Notice of Proposed Rule
    Making]{.underline} in MM Docket No. 91-140, [supra]{.underline}.

[^4]: [Id]{.underline}. at 6395.

[^5]: [Report and Order]{.underline} in MM Docket No. 91-140,
    [supra]{.underline} at 2778-79.

[^6]: Pub. L. No. 104-104, 110 Stat. 56 (1996). [See]{.underline}
    [Order, In the Matter of Implementation of Sections 202(a) and
    202(b)(1) of the Telecommunications Act of 1996 (Broadcast Radio
    Ownership)]{.underline}, 11 FCC Rcd 12368, 12370 (1996). Section
    202(b)(1) provided that:

    in a radio market with 45 or more commercial radio stations, a party
    may own, operate, or control up to 8 commercial radio stations, not
    more than 5 of which are in the same service (AM or FM);

    in a radio market with between 30 and 44 (inclusive) commercial
    radio stations, a party may own, operate, or control up to 7
    commercial radio stations, not more than 4 of which are in the same
    service (AM or FM);

    in a radio market with between 15 and 29 (inclusive) commercial
    radio stations, a party may own, operate, or control up to 6
    commercial radio stations, not more than 4 of which are in the same
    service (AM or FM); and

    in a radio market with 14 or fewer commercial radio stations, a
    party may own, operate, or control up to 5 commercial radio
    stations, not more than 3 of which are in the same service (AM or
    FM), except that a party may not own, operate, or control more than
    50 percent of the stations in such market.

[^7]: [See]{.underline} 47 CFR §73.3555(a)(3)(ii)).

[^8]: This example assumes that stations A and D are same-service
    stations, and that at least one other station, B or C, is also in
    the same service as station A. [See]{.underline} 47 CFR §
    73.3555(a)(2)("\[o\]verlap between two stations in different
    services is permissible if neither of those two stations overlaps a
    third station in the same service").

[^9]: Appendix B describes how our radio definitions and counting
    methodologies may be applied in Youngstown.

[^10]: Seventeen out-of-market commercial radio stations receive
    listening shares in Youngstown.

[^11]: Nine out-of-market commercial radio stations receive listening
    shares in Ithaca.

[^12]: [In re Application of Pine Bluff Radio, Inc.]{.underline}, 14 FCC
    Rcd 6594 (1999).

[^13]: [See]{.underline} 47 C.F.R. § 73.3555(a)(1)(iv).

[^14]: Seark could not have owned three stations in this market because
    that would have given it an attributable interest in more than half
    of the four stations considered to be in Market 3. Section
    73.3555(a)(1)(iv) allows a party to own, operate, or control up to 5
    commercial stations in markets with 14 or fewer stations provided
    that \"a party may not own, operate, or control more than 50 percent
    of the stations in such market.\"

[^15]: We recognized that this appeared to be an anomalous result but
    pointed out that it was produced by methodology that had been
    consistently used since 1992 and that subsequent events in the
    market had rendered harmless the impact of this anomaly in that
    case.

[^16]: The station would be counted, of course, if the applicant had any
    interest in it that was cognizable under our attribution criteria,
    whether that interest was based on ownership interests or not.

[^17]: [See]{.underline} the discussion of Market 3 in the
    [Pine]{.underline} [Bluff]{.underline} decision, 14 FCC Rcd 6594,
    6599 (1999).

[^18]: In our 1992 decision (on reconsideration) concerning radio
    markets we decided not to utilize Arbitron markets to define radio
    markets. The Commission accepted petitioners' arguments that
    Arbitron markets change regularly, the number of rated stations
    continually fluctuate and that Arbitron tends to undercount the
    number of stations in a market because it has minimum reporting
    standards or overcount them because it counts out-of-market stations
    with reportable shares in the market. [See]{.underline} [Memorandum
    Opinion and Order and Further Notice of Proposed Rule Making in MM
    Docket No. 91-140]{.underline}, [supra]{.underline} at 6394-95. We
    do not believe these to be insurmountable problems and, for the
    reasons discussed above, we believe the use of Arbitron markets or
    equivalent commercial markets may result in more accurate measures
    of the number of stations in a market than do our current
    methodologies.

[^19]: [1998 Biennial Review Report]{.underline}, FCC 00-191 (adopted
    May 26, 2000) at para. 67.

[^20]: [See]{.underline} 5 U.S.C. § 603. The RFA, [see]{.underline} 5
    U.S.C. § 601 [et]{.underline} [seq]{.underline}*.*, has been amended
    by the Contract With America Advancement Act of 1996, Pub. L. No.
    104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the
    Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).

[^21]: 5 U.S.C. § 603(b)(3).

[^22]: [Id]{.underline}. § 601(6).

[^23]: [Id]{.underline}*.* § 601(3).

[^24]: 15 U.S.C. § 632.

[^25]: 13 CFR § 121.201, SIC code 4832.

[^26]: 1992 Census, Series UC92-S-1, at Appendix A-9.

[^27]: [Id.]{.underline} The definition used by the SBA also includes
    radio broadcasting stations which also produce radio program
    materials, however, separate establishments that are primarily
    engaged in producing radio program material are classified under
    another SIC number. [Id]{.underline}.

[^28]: The Census Bureau counts radio stations located at the same
    facility as one establishment. Therefore, each co-located AM/FM
    combination counts as one establishment.

[^29]: FCC News Release, No. 31327 (Jan. 13, 1993).

[^30]: FCC Press Release, [Broadcast Station Totals as of September 30,
    2000]{.underline}, (issued November 29, 2000).

[^31]: 5 U.S.C. § 603(c).

[^32]: [Order, In the Matter of Implementation of Section 202(a) and
    202(b)(1) of the Telecommunications Act of 1996 (Broadcast Radio
    Ownership),]{.underline} 11 FCC Rcd 12368, 12370 (1996)

[^33]: 47 CFR § 73.3555(a)(3)(ii)

[^34]: The Clear Channel transaction is based on stations in the
    Youngstown Arbitron metro, as reported by BIA. Clear Channel owns
    four stations in the metro and has filed applications to acquire
    five other metro stations. On September 7, 2000, the Commission,
    pursuant to the request of assignor Stop 26, dismissed the
    application to assign Station WBTJ-FM to Clear Channel. For purposes
    of this illustration, however, we will consider the pre-dismissal
    configuration of this transaction.

[^35]: See footnote 34, [supra]{.underline}.

[^36]: Clear Channel proposes to acquire this station in its merger with
    AM-FM Inc.

[^37]: See Attachment III

[^38]: ^.^

[^39]: ^1^ See, e.g., Concurring Statement of Commissioner Gloria
    Tristani, *Re: Application of Great Empire Broadcasting, Inc. and
    Journal Broadcast Corp. for Transfer of Control of Omaha Great
    Empire Broadcasting, Inc., Licensee of WOW(AM) and WOW(FM)*, *Omaha,
    Nebraska*; *File Nos. BTC-980831GH, BTCH-980831GI,* 14 FCC Rcd 11145
    (1999); Press Statement of Commissioner Gloria Tristani, *Re: Mass
    Media Bureau Approval of Radio License Transfer in Wichita, Kansas
    (rel. March 24, 2000)*; Press Statement of Commissioner Gloria
    Tristani, *Re: Mass Media Bureau Approval of Radio License Transfers
    in Youngstown-Warren, Ohio and Lafayette*, *Louisiana (rel. March
    20, 2000)*; Press Statement of Commissioner Gloria Tristani re: *Re:
    Mass Media Bureau\'s granting of applications to transfer radio
    licenses from Pilot Communications to Citadel Communications Corp.
    in Augusta-Waterville, Maine (rel. Feb. 28, 2000);* Press Statement
    of Commissioner Gloria Tristani *Re: Mass Media Bureau\'s granting
    of applications to transfer radio licenses from Fuller-Jeffrey
    Broadcasting to Citadel Broadcasting in Portland, Maine (rel. Aug.
    24, 1999*); Dissenting Statement of Commissioners Susan Ness and
    Gloria Tristani, *In re Applications of Pine Bluff Radio, Inc. and
    Seark Radio, Inc. File Nos. BAL-970103EA, BALH-970103EB,
    BALH-970103EC (rel. April 12, 1999*); Joint Statement of
    Commissioners Susan Ness and Gloria Tristani, *In re Station
    KBYB(FM), El Dorado, Arkansas*, 13 FCC Rcd 15685 (1998).

[^40]: ^2^ *See Biennial Review Report*, FCC 00-191 (rel. June 20, 2000)
    at para. 68.

[^41]: ^.^

[^42]: ^2^

[^43]: ^1^ "It is a commonplace of statutory construction that the
    specific governs the general*," Morales v. Trans World Airlines,*
    504 U.S. 374, 384-385 (1992) (citing, *Crawford Fitting Co. v. J.T.
    Gibbons, Inc.*, 482 U.S. 437, 445 (1987).