> **DA 06-1914**
>
> **Released: September 22, 2006**

MG Broadcasting, LLC, as E.A.T.

c/o Alan C. Campbell, Esq.

Irwin, Campbell & Tannenwald

1730 Rhode Island Ave., NW

Washington, DC 20036

Sunflower Broadcasting, Inc.

c/o Jack N. Goodman, Esq.

Wilmer Cutler Pickering Hale and Dorr, LLP

1875 Pennsylvania, Ave., NW

Washington, DC 20006

> Re: KWCH-TV, Hutchison, Kansas, Application for Assignment of License,
> File No.
>
> [BALCT-20060728AGC, ID No. 66413*, et al.*]{.underline}

Dear Counsel:

This letter is in regard to the above referenced applications seeking
consent to the assignment of the licenses of television stations
KWCH-TV, Hutchison, Kansas; KBSD-TV, Ensign, Kansas;[^1] KBSL-TV,
Goodland, Kansas;[^2] and KBSH-TV, Hays, Kansas,[^3] from MG
Broadcasting, LLC as E.A.T. to Sunflower Broadcasting, LLC, Inc.
(Sunflower). In connection with the acquisition, Sunflower proposes to
continue operating KBSH-TV and KBSD-TV as satellites of KWCH-TV,
pursuant to Note 5 of Section 73.3555 of the Commission's Rules, which
exempts satellite stations from application of the local television
multiple ownership rule.[^4] As discussed below, KBSL-TV does not
require a satellite waiver to permit its common ownership with the other
stations. Sunflower has submitted an exhibit in support of its proposal.

Stations KBSD-TV, KBSH-TV and KBSL-TV have operated as satellites of
KWCH-TV for several decades, and the Commission previously approved
their common ownership and satellite operation in 1982, 1988, 1989,
1992, 1994, and 2000.[^5] Although the past satellite authorizations
have included KBSL-TV,[^6] stations in a single DMA may be commonly
owned, without the need for a waiver, if their Grade B contours do not
overlap.[^7] In Appendix 1 to its Economic Viability Study by Mark R.
Fratrik, Ph.D. (Fratrik Study) that forms part of its satellite waiver
request, Sunflower demonstrates that the Grade B contour of KBSL-TV does
not overlap with the Grade B contours of any of the stations being
assigned here. Also, in an amendment to its application, Sunflower has
explained that KBSL-TV will continue to maintain a main studio, have at
least two employees, have program origination capability, and maintain a
public inspection file at the station, making a main studio waiver
unnecessary.

Pursuant to the Commission's television satellite policy, as set forth
in *Television Satellite Stations*,[^8] 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.
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.

Appendix 1 to the Fratrik Study demonstrates that there is no City Grade
overlap between KWCH-TV and any of the satellite stations or among the
satellite stations. Therefore, the first criterion is met.

Compliance with the second criterion---location in an underserved
area---can be demonstrated in either of two ways. An area is defined as
underserved if, under the "transmission test" there are two or fewer
full-service stations already licensed to the proposed satellite's
community of license, or if, under the "reception test"," 25 percent or
more of the area within the proposed satellite's Grade B contour, but
outside of the parent's Grade B contour, receives four or fewer
services, not including the proposed satellite service.[^9] Neither of
the satellite stations is licensed to a community with more than two
full-service television stations. Having satisfied the second criterion
under the "transmission test," there is no need to examine the
alternative "reception test."

With regard to the third criterion, Sunflower presents persuasive
evidence that no alternative operator is willing to operate the
satellites as stand-alone stations. The Wichita-Hutchinson DMA is the
sixth largest television market in the nation in terms of geographic
area. According to Sunflower, a single television signal cannot cover
the market and signals located outside of the Wichita area -- as all of
these satellite stations are -- can only reach limited numbers of
viewers. As a result, all of the major network affiliates in the DMA use
satellite stations to reach audiences across the market. Sunflower
states that the fact that the two satellite stations each provide Grade
B coverage to only part of the DMA would make it extremely difficult for
them to obtain cable carriage across the DMA, further disadvantaging
them as full-service operations.

The Fratrik Study states that all of the English-language television
networks (including the two new networks -- CW and My Network TV)
already have affiliates in the Wichita-Hutchinson DMA. If KBSH-TV and
KBSD-TV had to be operated as full service stations, there would be no
English-language network with which they could affiliate. While there
are no affiliates in the DMA of the Spanish-language television
networks, the Fratrik Study argues that the satellite stations serve
relatively rural portions of the DMA and the Hispanic population of
those areas is not large enough to support full-service operations. The
Fratrik Study also contends that television advertising revenue growth
in the Wichita-Hutchinson DMA has generally been slower than growth in
the average market, and that trend is expected to continue. Absent
substantial new revenues, it argues that additional full-service
stations could only survive by taking advertising revenue from existing
stations. The Fratrik Study concludes that, without a strong network
affiliation or other source of attractive programming not already
available in the market, the prospects for a new full-service station
succeeding are remote.

The Fratrik Study also concludes that these stations could not be
operated as full-service stations because of the additional capital
investment that full-service operation would require. The Fratrik Study
states that the stations would need to construct master control rooms,
purchase production equipment, and other equipment for functions that
are now performed at KWCH-TV, which it estimates would cost \$1.3
million per station. It further states that neither of the satellite
stations presently operates digital channels since the current licensee
elected to flash cut them to digital operation at the end of the
transition. If they became full-service stations, they would have to
either comply with or obtain a waiver of the Commission's DTV build-out
requirements. The Fratrik Study claims that the estimated costs of DTV
construction for these stations are between \$1.6 million and \$2.3
million per station. Dr. Fratrik contends that it would be extremely
difficult to obtain financing to undertake these capital investments and
to operate the stations on a full-service basis, particularly given the
very weak economic prospects for independent operations. The Fratrik
Study concludes that "there appears to be no chance that any purchaser
of these satellite stations would be able to convert them to
full-service stations."

Due to the rural nature of the market, the market's low-population
density, the unlikelihood that the stations could obtain network
affiliations, and the difficulties the stations would have obtaining
cable carriage, we find that Sunflower has met the third criterion.

Based on the above, we believe that Sunflower's showing has met our
presumptive satellite standard and that continued operation of KBSH-TV
and KBSD-TV as satellites of KWCH-TV is justified and would serve the
public interest. Accordingly, the request for continued operation of
KBSH-TV and KBSD-TV as satellites of KWCH-TV pursuant to the satellite
exception to Section 73.3555 of the Commission's Rules IS GRANTED. Upon
finding that the applicants are fully qualified and that the public
interest would be served thereby, the applications for assignment of the
licenses of television stations KWCH-TV, Hutchison, Kansas; KBSD-TV,
Ensign, Kansas; KBSL-TV, Goodland, Kansas; and KBSH-TV, Hays, Kansas,
from MG Broadcasting, LLC as E.A.T. to Sunflower Broadcasting, LLC, Inc.
ARE GRANTED.

> Sincerely,

Barbara A. Kreisman

Chief, Video Division

Media Bureau

[^1]: File No. BALCT-20060728AGD, Id No. 66414.

[^2]: File No. BALCT-20060728AGE, Id No. 66416.

[^3]: File No. BALCT-20060728AGF, Id No. 66415.

[^4]: 47 C.F.R. § 73.3555, Note 5.

[^5]: Letter from Barbara A. Kreisman, Chief, Video Services Division,
    Mass Media Bureau to John R. Feore, Jr., March 22, 2000.

[^6]: *Id.*

[^7]: 47 C.F.R. § 73.3555(b)(1).

[^8]: 6 FCC Rcd 4212 (1991).

[^9]: *Television Satellite Stations*, 6 FCC Rcd 4212, 4215 (1991).