**DA 08-483**

**Released: March 3, 2008**

**[CERTIFIED MAIL-RETURN RECEIPT REQUESTED]{.underline}**

Nexstar Broadcasting, Inc., and Mission Broadcasting, Inc.

c/o Howard M. Liberman, Esq.

Drinker Biddle & Reath LLP

1500 K Street, N.W.

Suite 1100

Washington, D.C. 20005

Ft. Smith 46, Inc.

c/o Peter Tannenwald, Esq.

Irwin, Campbell & Tannenwald, P.C.

1730 Rhode Island Avenue, N.W.

Suite 200

Washington, DC 20036-3120

# Re: Application for Assignment of License

> KFTA-TV, Fort Smith, Arkansas
>
> (File Nos. BALCT-20060411ABX and BRCT-20050201ALT; Facility ID No.
> 29560)
>
> KNWA-TV, Rogers, Arkansas
>
> (File No. BRCT-20050201ALW; Facility ID No. 29557)

Gentlemen:

This is in regard to the above-referenced application for consent to
assign the broadcast television license of Station KFTA-TV, Fort Smith,
Arkansas, from Nexstar Broadcasting, Inc. ("Nexstar"), to Mission
Broadcasting, Inc. ("Mission"), and the above-referenced applications
seeking renewal of the licenses for Station KFTA-TV and Station KNWA-TV,
Rogers, Arkansas. Ft. Smith 46, Inc. ("Ft. Smith 46"), filed a Petition
to Deny the instant assignment application on May 22, 2006, and
supplemented its petition on July 25, 2006.[^1] Nexstar and Mission
filed a joint Opposition to Petition to Deny on June 6, 2006, to which
Ft. Smith 46 filed a Reply on June 16, 2006.[^2] On September 5, 2006,
Ft. Smith 46 filed a Petition to Deny the license renewal applications
of Station KFTA-TV and commonly owned Station KNWA-TV, raising matters
regarding the Nexstar/Mission relationship that are additional to those
advanced in the Petition to Deny the Station KFTA-TV assignment. After
considering all the pleadings in this case, we grant in part and deny in
part the Petition to Deny the instant assignment application, admonish
Nexstar for a false certification in violation of Section 1.17(a)(2) of
the Commission's rules, and deny the Petition to Deny the license
renewal applications.

*Background*. The Commission granted applications assigning Stations
KFTA-TV (formerly KPOM-TV) and KNWA-TV (formerly KFAA(TV)) to Nexstar on
December 21, 2004.[^3] In so doing, the Commission also granted a
continuing satellite exception to the local television ownership rule to
permit Station KNWA-TV to continue operating as a satellite of Station
KFTA-TV,[^4] and denied a petition to deny filed by Ft. Smith 46.
Following consummation of the instant transaction, Mission intends to
switch Station KFTA-TV's network affiliation from NBC to Fox.[^5]
Mission and Nexstar will also enter into a Joint Sales Agreement ("JSA")
that will cover the sale of advertising time for Station KFTA-TV and a
Shared Services Agreement ("SSA") that will cover technical support,
back-office support, and the production of newscasts for Station
KFTA-TV. Nexstar and Mission will also hold reciprocal loan guarantees.
Draft copies of the JSA and SSA have been submitted along with the
assignment application.

*Petition to Deny Station KFTA-TV Assignment Application*. Ft. Smith 46
argues that the agreements between Nexstar and Mission demonstrate that
Mission will not be independent, and, therefore, the Commission should
either dismiss the instant application as violating Section 73.3555(b)
of the Commission's rules, or designate the application for hearing.[^6]
Ft. Smith 46 states, in particular, that the "closely intertwined
relationship between Nexstar and Mission goes far beyond the confines of
a traditional" JSA, and is similar to previous arrangements the
Commission determined implicated the local television ownership
rule.[^7] According to its interpretation of the JSA, Mission will sell
all of the available commercial time on Station KFTA-TV to Nexstar;
Nexstar will be entitled to all advertising revenue; and Nexstar, not
Mission, will set the rates for advertising sold by Nexstar. Ft. Smith
46 argues that the Commission has tentatively concluded that television
JSAs should be attributable and, therefore, the Commission should not
rule on the application while the rulemaking remains pending. Ft. Smith
46 states that, pursuant to the SSA, Stations KFTA-TV and KNWA-TV will
co-locate their main studio; share non-managerial administrative and/or
master control and technical facilities; share grounds keeping,
maintenance, security, and other services related to those facilities;
and Nexstar will produce news for use on Station KFTA-TV.

Ft. Smith 46 argues that the history of the Nexstar-Mission relationship
establishes that Mission "is an alter ego, if not *de facto* subsidiary
of Nexstar."[^8] Ft. Smith 46 cites, in particular, Nexstar's Security
and Exchange Commission ("SEC") filings. According to Ft. Smith 46,
these filings attribute Mission's revenues and debts to Nexstar; refer
to markets in which Mission and Nexstar have stations as "duopoly
markets;" state that Nexstar has a "controlling financial interest in
Mission for financial reporting purposes;" and state that Nexstar
receives "substantially all of the available cash, after debt service
costs, generated by the stations \[licensed to Mission\]."[^9] Ft. Smith
46 notes that Mission owns no stations that are not in Nexstar markets,
and asserts that Mission's sole shareholder and President, David Smith,
has demonstrated a poor understanding of Mission's operations, as
evidenced by a newspaper article attached to the Petition to Deny. Ft.
Smith 46 alleges that Mission and Nexstar share legal counsel and that,
in general, "every outreach to the public will be operated by
Nexstar."[^10]

In addition to alleging that Nexstar and Mission are not independent,
Ft. Smith 46 makes two allegations of misrepresentation. It first
contends that Nexstar asserted in 2003 that Station KNWA-TV could not
operate as a stand-alone station, and that this assertion was the basis
of the Commission's grant of a satellite exception to the multiple
ownership rule in December 2004. Ft. Smith 46 argues that the local
market has not changed significantly since grant of the satellite
exception, and, therefore, Nexstar must have misrepresented facts in its
request for a satellite exception, or is misrepresenting facts now when
it argues that station KNWA-TV can operate independently.

Ft. Smith 46 further argues that Mission and Nexstar both misrepresented
to the Commission in response to Section II, Question 5, and Section
III, Question 7, of the assignment application that neither is a party
to a pending application where unresolved character issues had been
raised. Ft. Smith 46 states that on January 3, 2006, Cable America
Corporation ("Cable America") filed a petition to deny the license
renewal applications for Stations KSFX-TV and KOLR(TV), Springfield,
Missouri, licensed to Nexstar and Mission, respectively. The petition
alleged that Nexstar exercised *de facto* control over Mission, and also
raised allegations of misrepresentation and false certification. Ft.
Smith 46 states that these renewal applications remain pending.

Nexstar and Mission respond that Mission has all the indicia of a *bona
fide* independent business enterprise. They argue that David Smith makes
all the corporate governance decisions, and that Mission further has
"three principal officers, a corporate headquarters office..., its own
controller to handle corporate financial requirements, and sufficient
staff to oversee the core day-to-day operations of its stations."[^11]
According to Nexstar and Mission, Mission's full-time Chief Operating
Officer, and not David Smith, oversees the day-to-day operations of
Mission.

Nexstar and Mission argue that the draft JSA and SSA are virtually
identical to agreements that the Commission has approved in connection
with past transactions between Nexstar and Mission. They argue that Ft.
Smith 46 has not established that Nexstar is or will be programming
Mission's stations, that Nexstar employs or supervises Mission's
employees, and that Nexstar controls Mission's finances. They argue that
Ft. Smith 46 mischaracterizes the draft JSA and SSA. They state that
under the draft JSA, Nexstar may collect the revenues attributable to
commercial advertisements, but that Mission is entitled to 70% of all
such revenues. Citing language in the JSA, they state that Mission, not
Nexstar, will set advertising rates. According to Nexstar and Mission,
due to the geography of the Ft. Smith DMA, Stations KFTA-TV and KNWA-TV
intend to maintain separate main studios, and intend to have separate
general managers. While acknowledging that Nexstar will assist in the
news production for Station KFTA-TV, they state that the SSA vests
ultimate control over the news programming with Mission.

Nexstar and Mission argue that their financial information is
consolidated in Nexstar's SEC filings pursuant to accounting rules, but
that fact does not indicate that Nexstar exercises *de facto* control
over Mission. Nexstar and Mission point to the "Risk Factors" disclosed
in the SEC Form S-4, one of which includes the possibility that Mission
may make programming decisions with which Nexstar disagrees. They argue
that Nexstar's SEC filings specifically define "duopoly markets" to
include those markets where Nexstar owns, operates, programs or provides
sales and other services to more than one station.

With respect to the allegation of misrepresentation involving the 2003
satellite showing, Nexstar and Mission respond they will have
constructed full-power digital facilities by mid-August 2006, thus
providing Stations KFTA-TV and KNWA-TV with the technological basis to
operate as separate, stand-alone stations.[^12] They argue that Station
KNWA-DT's signal will be significantly stronger than its analog signal.
They also state that they anticipate entering into a reciprocal carriage
agreement whereby each station will provide programming to be aired on
the other station's second digital programming stream. In addition to
technological changes, they also argue that stand-alone status for
Station KNWA-TV is justified since there has been substantial population
growth in the northern portion of the local market during the last two
years, and that total TV advertising revenues have grown accordingly.

With respect to Nexstar and Mission's alleged false certifications, they
acknowledge that the Commission had not resolved the issues raised by
the petition to deny the station KSFX-TV and KOLR(TV) license renewal
applications and, therefore, the petition should have been referenced in
the assignment application. They contend, however, that the failure to
include such references does not indicate an intent to deceive the
Commission. Nexstar and Mission state that failure to reference the
petition was an oversight since Cable America requested dismissal of the
petition on March 31, 2006. They state that they have been candid and
forthright in their dealings with the Commission since becoming
licensees in 1996 and 1998, respectively.

In its Reply, Ft. Smith 46 cites the reciprocal loan guarantees,
distinguishing them from previous guarantees the Commission has
approved. Ft. Smith 46 also notes that Nexstar's website commingles all
of the Nexstar and Mission stations, without distinguishing which
stations are owned by Mission. Ft. Smith 46 further states the
opposition raises for the first time each station's plan to duplicate
its programming on the second digital channel of the other, which it
alleges constitutes both a prohibited reservation of time in violation
of Section 73.1150 of the Commission's rules, as well as an attributable
local marketing agreement.[^13] Ft. Smith 46 concludes that, if the
Commission chooses not to dismiss or designate the application for
hearing on the basis of their alleged violation of Section 73.3555(b) of
the Commission's rules, it "would be arbitrary and capricious for the
Commission to grant the application without at a minimum forbidding any
options, restricting the scope of any 'joint services,' and forbidding
the use of each station's second digital stream by the other."[^14]

In response, Nexstar disputes Ft. Smith 46's assertion that Nexstar's
corporate website fails to distinguish between Mission and Nexstar
stations, and provides printouts from a link entitled "Access Station
Information" as support. Nexstar and Mission argue that they do not
propose to permit Station KFTA-DT and KNWA-DT to provide programming for
each other's analog or primary digital signal. Retransmission of
programming broadcast by another station on a station's second DTV
channel, according to Nexstar and Mission, does not constitute an
impermissible time brokerage agreement, and is consistent with the
Commission's determination to permit licensees to use their excess
digital capacity for additional services. Nexstar and Mission further
argue that their proposed arrangement does not implicate Section 73.1150
of the Commission's rules since the purchase agreement, SSA, and JSA do
not grant Nexstar the right to reserve time on Station KFTA-TV for its
use, and Nexstar will not be using the analog and primary digital
facilities of Station KFTA-TV.[^15]

*Discussion.* The Commission applies a two-step analysis to a petition
to deny under the public interest standard. The Commission must first
determine whether the petition contains specific allegations of fact
sufficient to show that granting the application would be *prima facie*
inconsistent with the public interest.[^16] This first step "is much
like that performed by a trial judge considering a motion for directed
verdict: if all the supporting facts alleged in the \[petition\] were
true, could a reasonable factfinder conclude that the ultimate fact in
dispute had been established."[^17] If a petition meets this first step,
the Commission must determine whether, "on the basis of the application,
the pleadings filed, or other matters which \[the Commission\] may
officially notice," the petitioner has raised a substantial and material
question of fact as to whether granting the application would serve the
public interest.[^18]

*De Facto Control.* Upon review of all the pleadings in this case, we
conclude that Ft. Smith 46 has failed to raise a substantial and
material question of fact as to whether Mission has ceded *de facto*
control of its station to Nexstar. The Commission analyzes *de facto*
control issues on a case-by-case basis.[^19] In determining whether an
entity has *de facto* control of an applicant or a licensee,[^20] we
have traditionally looked beyond legal title and financial interests to
determine who holds operational control of the station.[^21] The
Commission, in particular, examines the policies governing station
programming, personnel, and finances. The Commission has long held that
a licensee may delegate day-to-day operations without surrendering *de
facto* control, so long as the licensee continues to set the policies
governing these three indicia of control.[^22]

Both the JSA and SSA contain language to the effect that Mission will
maintain control over Station KFTA-TV. Section 3 of the SSA states that
the "arrangement will not be deemed to give either Party any right to
control the policies, operations, management or any other matter
relating to the Station operated by the other Party." Section 8 of the
JSA states that "Mission shall continue to maintain full control over
the operations of \[Station KFTA-TV\], including programming, editorial
policies, employees of Mission, and Mission-controlled facilities."

With respect to programming in particular, Section 2(b) of the SSA
states that "\[e\]ach Party will maintain for the Station(s) operated by
it separate managerial and other personnel to carry out the selection
and procurement of programming for such Station, and in no event will
the Parties or the Stations share services, personnel or information
pertaining to such matters," except as relates to the production of news
programming. There will be shared responsibility in producing news
programming, but Mission will determine the title and format of such
newscasts, and Nexstar and Mission will enter into a newscast operating
conditions agreement "which will provide the basis for daily operations,
contingencies, KFTA-TV's access to breaking stories,...editorial and
ratings reviews and guidelines for access by Mission personnel and
KFTA-TV customers to Nexstar's facilities." Section 8 of the JSA states
that Mission "may, in its sole discretion, decline to accept advertising
sold by Nexstar, in the event that it reasonably believes that the
broadcast of such advertising would violate applicable laws or
regulations, would damage Mission's reputation in the community, or
would otherwise be contrary to the public interest." Considering the
various provisions of the JSA and SSA in their entirety, we do not
believe that Nexstar will have an impermissible level of influence over
Station KFTA-TV's programming.

With respect to personnel, the SSA provides that Mission will employ a
general manager and business manager for Station KFTA-TV, and that these
managerial employees will report solely to Mission. The SSA thus
complies with the minimum staffing requirements of the main studio
rule.[^23] Stations KFTA-TV and KNWA-TV will also maintain physically
separate main studios. While Nexstar personnel may implement a number of
technical and business services, they will at all times be subject to
the direction and control of Mission.

With respect to finances, the JSA provides that Mission will receive 70%
of all revenue attributable to commercial advertisements, and as noted
by Mission and Nexstar in their opposition, Mission will set the rate
for the sale of time on the station. We do not believe the statements in
Nexstar's SEC's filings cited by Ft. Smith 46 are probative of *de
facto* control in this instance. The Commission has long held that it is
not bound by the definition of "control" used in securities law.[^24] In
any case, as noted by Nexstar and Mission in their opposition, the SEC
Form S-4 states that Mission may make programming decisions with which
Nexstar disagrees, which does not indicate that Nexstar will hold
operational control over Mission.

Ft. Smith 46 has further not provided probative evidence that David
Smith and Mission's Chief Operations Officer fail to exercise
operational control over Station KFTA-TV. The article upon which Ft.
Smith 46 bases its allegations regarding David Smith is hearsay, and, as
such, is not reliable evidence.[^25] Moreover, it does not address
whether Mission's Chief Operations Officer would fail to exercise
operational control over Station KFTA-TV. Ft. Smith 46's other arguments
regarding David Smith's role are speculative. The Commission has further
held that the content of websites is irrelevant to determining *de
facto* control.[^26] Although in certain circumstances common counsel
can be evidence of control, it is by no means a dispositive factor.[^27]
Ft. Smith 46 has provided no evidence that Nexstar has used the common
legal representation to control Mission or station KFTA-TV.[^28]

*Attribution.* We further find that Ft. Smith 46 has failed to raise a
substantial and material question of fact as to whether Nexstar holds an
attributable interest in Mission. The Commission's attribution rules
seek to identify those interests that confer a degree "of influence or
control such that the holders have a realistic potential to affect the
programming decisions of licensees or other core operating
functions."[^29] Shared services agreements covering technical and other
back-office operations typically do not raise an issue under the
Commission's attribution rules. Likewise, the Commission has previously
determined that loan guarantees do not confer an interest upon the
guarantor requiring attribution,[^30] but that, instead, any
consideration paid for the guarantee would be considered as part of the
calculation under the equity plus debt attribution rule.[^31]

The SSA between Mission and Nexstar does, however, state that Nexstar
will provide to Station KFTA-TV "live-feed, fully-staffed and produced
newscasts....provided that such newscasts will not comprise more than
15% (by duration) of the programming broadcast on KFTA-TV during any
broadcast day."[^32] The SSA thus includes a Local Marketing Agreement
("LMA"). Under the Commission's 1999 *Attribution Order*, LMAs became
generally attributable to the brokering station unless the LMA covers no
more than 15% of the weekly broadcast hours of the brokered
station.[^33] The Station KFTA-TV SSA, on its face, appears to comply
with the 15% criterion set forth in the 1999 *Attribution Order*.

Ft. Smith 46 argues that the JSA must be considered in combination with
the other agreements between Mission and Nexstar, in particular the SSA.
In the 1999 *Attribution Order*, the Commission "declin\[ed\] to impose
new rules attributing JSAs as long as they deal primarily with the sale
of advertising time and do not contain terms that affect programming or
other core operations of the stations such that they are, in fact,
substantively equivalent to LMAs."[^34] In the *2002 Ackerley Order*,
the Commission concluded that an LMA, JSA, and other related agreements
could be substantively equivalent to an LMA in excess of 15% of weekly
broadcast hours if the agreements did not provide the licensee with an
economic incentive to control the 85% of programming not provided under
an LMA.[^35]

In the *2002 Ackerley Order*, however, the licensee received no
compensation from advertising revenues, and the broker's personnel were
involved in the selection of programming not to be provided pursuant to
the LMA. Furthermore, there was no evidence that station management ever
refused a programming suggestion from the broker. As stated above,
Mission will receive 70% of all advertising revenues and, with the
exception of newscasts, Nexstar personnel will not be involved in the
programming to be aired on Station KFTA-TV. The structure of the
relationship between Mission and Nexstar is markedly different from that
considered in the *2002 Ackerley Order*, and does not support a finding
of attribution.

Ft. Smith 46 is correct that the Commission in a recent Notice of
Proposed Rulemaking tentatively determined that television JSAs should
be attributable interests, but the Commission has yet to reach a formal
decision in the rulemaking. Further, it has not reached a decision as to
what grandfathering relief for existing television JSAs would be
appropriate if television JSAs are deemed to be attributable
interests.[^36] It is, consequently, inappropriate to condition our
decision here on the outcome of that proceeding. We further deny Ft.
Smith 46's request to otherwise condition grant on Mission and Nexstar
not entering into an option agreement in the future. The impact of such
an agreement on the status of the Mission/Nexstar relationship is
speculative.

*Misrepresentation.* Misrepresentation is a false statement of fact made
with the intent to deceive the Commission.[^37] Fraudulent intent can be
found from \"the fact of misrepresentation coupled with proof that the
party making it had knowledge of its falsity,\"[^38] and can also be
derived from motive.[^39] The Commission may disqualify an applicant who
deliberately misrepresents or lacks candor in dealing with the
agency.[^40] In addition, Section 1.17(a)(2) of the Commission's rules
prohibits any applicant from providing material factual information that
is incorrect without a reasonable basis for believing the information to
be correct.[^41] The \"reasonableness\" standard requires no more than
that regulatees exercise a degree of diligence reasonable under the
circumstances to ensure that statements to the Commission are accurate
and not misleading.[^42]

Mission and Nexstar's certifications in response to Section II, Question
5, and Section III, Question 7, of the above-referenced FCC Form 314
application were in fact false. Cable America's January 3, 2006,
petition to deny filed against the license renewal applications for
Stations KSFX-TV and KOLR(TV) specifically cites character issues,
including false certification and misrepresentation. Nexstar should have
been aware that, despite Cable America's formal request to withdraw the
petition, the license renewal applications remain pending until the
Commission reviews the matters alleged to determine whether a grant of
the applications will serve the public interest.[^43] We expect a
greater degree of care in representations made to the Commission than
was exhibited here.

We do not find, however, based on a review of the record as a whole,
that there exists a substantial and material question of fact as to
whether Mission and Nexstar intended to deceive the Commission by their
false certifications. Ft. Smith 46 has provided no evidence that calls
into question Nexstar's explanation that the failure to disclose the
petition was an "oversight." A mistake in an application alone, without
any indication that the licensee meant to deceive the Commission, does
not raise a substantial and material question of fact regarding
intentional misrepresentation.[^44] The Commission has further stated
that it will not infer intent to deceive merely because an applicant
submits false statements in an application on which it wants favorable
action.[^45]

We conclude, however, that Nexstar's failure to disclose the petition
did violate Section 1.17(a) of the Commission's rules. Under the
circumstances, it would have been reasonable to expect Nexstar to
discover the pending petitions filed against the Station KFSX-TV and
KOLR(TV) renewals, do the necessary research of Commission precedent,
and disclose the existence of the proceedings in the instant FCC Form
314.

In assessing an appropriate remedy for a violation of our rules, we must
take into account the statutory factors set forth in Section
503(b)(2)(D) of the Act,[^46] which include the nature, circumstances,
extent, and gravity of the violation, and with respect to the violator,
the degree of culpability, any history of prior offenses, ability to
pay, and other such matters as justice may require. The violation here
appears to be an isolated occurrence, so while a misunderstanding of our
rules does not excuse the violation,[^47] in exercising our discretion
under Section 503(b)(2)(D) of the Act, we conclude that a monetary
forfeiture would not be the appropriate remedy. We will instead admonish
Mission and Nexstar for their false certifications.

With respect to Nexstar's 2003 satellite showing, even were we to
conclude that it was erroneous, Ft. Smith 46 has provided no evidence
that Nexstar intended to deceive the Commission. Nexstar has stated that
it was unfamiliar with the stations and the market at the time, and had
to rely on the seller for financial information. Mission and Nexstar
have provided the reasons for why they now believe the Ft. Smith DMA can
now support Stations KNWA-TV and KFTA-TV as independent, stand-alone
stations. Because Mission is not requesting a satellite exception here,
we need not evaluate the sufficiency of this showing.

*Reciprocal Carriage Agreement.* Nexstar and Mission state in the
Opposition to Petition to Deny that they "anticipate entering into a
reciprocal agreement to permit each of their respective DTV stations to
carry the signal of the other station on the station's second DTV
programming stream,"[^48] arguing that such an agreement is consistent
with the Commission's decision to permit licensees to offer ancillary
and supplementary services on multicast digital channels.[^49]

We note that the Commission has yet to determine whether such an
agreement would be subject to the Commission's attribution standards
relating to LMAs. To the extent that the agreement is either a condition
of, or consideration for, the proposed transaction, we also note that it
would appear to violate the plain language of Section 73.1150(a) of the
Commission's rules, which states that "\[i\]n transferring a broadcast
station, the licensee...may not reserve the right to use the facilities
of the station for any period whatsoever."[^50] We will thus prohibit
Nexstar and Mission from entering into such an agreement, and, to the
extent the parties have already entered into such an agreement, we will
require that it be dissolved.

*Petition to Deny License Renewal Applications*. On August 29, 2006,
Nexstar notified the Commission that it had entered into a pre-closing
Time Brokerage Agreement ("TBA") with Mission. Under the agreement,
Mission provides Fox Network programming on Station KFTA-TV, and pays
Nexstar \$5,000 per month for the time periods during which Fox Network
programming will be aired on the station. Nexstar pays Mission \$20,000
for the right to sell the advertising for the time periods covered by
the TBA. The TBA will expire upon consummation of the instant
transaction.

In its Petition to Deny the license renewal applications for Stations
KFTA-TV and KNWA-TV,[^51] Ft. Smith 46 argues that, as a result of the
TBA, Station KNWA-TV no longer qualifies for the satellite exception.
Ft. Smith acknowledges that Note 5 to Section 73.3555 permits satellite
stations to evolve into full-service stations without requiring
divestiture, but argues that Note 5 is limited to those situations where
grant of a satellite exception will encourage diversity, localism and
the provision of a full complement of network signals. Ft. Smith 46
states that the TBA will result in the removal of NBC programming in
areas served by Station KFTA-TV, and will not result in new network
service. Ft. Smith further states that the stations' City Grade contours
will overlap once digital operations commence. Ft. Smith 46 also
contends that the TBA is "suspect" because it results in a "net cash
flow of \$15,000 per month in Mission's favor."[^52] It asks that the
Commission not renew the above-captioned stations' licenses until
Station KNWA-TV is returned to satellite status, and that the Commission
undertake appropriate enforcement action.

Nexstar argues that Ft. Smith 46's request is inconsistent with the
Commission's decision not to limit local program origination by
satellites in order to "encourage such separately-originated programming
on stations that had been entirely satellite stations previously."[^53]
Nexstar states that, in addition to Fox programming provided by Mission,
it has begun providing separate newscasts on Station KFTA-TV, which has
resulted in an additional 5.4 hours per week of locally-originated
programming, and further that it now broadcasts three weekly programs
focusing on the Dallas Cowboys football team that are not broadcast on
Station KNWA-TV.

The TBA does not violate any Commission rule or policy. Pursuant to
*Television Satellite Stations*, satellite stations are distinguished
from full-service stations on the basis of economic considerations and
not local program origination, in part to encourage the production of
more locally originated programming.[^54] The Commission has long
encouraged satellites to develop full-service operations and, therefore,
Note 5 to Section 73.3555 of the Commission's rules permits stations to
evolve from satellite to non-satellite operations without requiring
divestiture.[^55] To interpret the provision as Ft. Smith 46 requests
would run afoul of Note 4 to Section 73.3555, which prohibits the
Commission from requiring the divestiture of existing facilities absent
the filing of certain applications.[^56] Rather, the Commission
evaluates whether satellite status is warranted under the standards set
forth in *Television Satellite Stations* at the time of transfer or
assignment.[^57]

The Commission has determined that, at the time Stations KFTA-TV and
KNWA-TV were assigned, Nexstar was entitled to a continuing satellite
exception. Ft. Smith 46 has provided no evidence that there was relevant
contour overlap between Stations KFTA-TV and KNWA-TV at the time Nexstar
filed the applications to acquire the stations.[^58] While the TBA will
result in a net cash flow of \$15,000 per month to Mission, Ft. Smith
has failed to show how the terms of the TBA violate any Commission rule
or policy or would be otherwise inconsistent with the public interest.

Accordingly, **IT IS ORDERED**, That the Petition to Deny filed by Ft.
Smith 46, Inc., against the above-reference assignment application **IS
GRANTED IN PART**, and denied in all other respects, and that the
Petition to Deny the above-captioned license renewal applications **IS
DENIED**. **IT IS FURTHER ORDERED**, That Mission Broadcasting, Inc.,
and Nexstar Broadcasting, Inc., are hereby **ADMONISHED** for their
false certifications in response to Section II, Question 5, and Section
III, Item 7 of the above-referenced assignment application, in violation
of Section 1.17(a)(2) of the Commission's rules; and That copies of this
letter shall be sent by Certified Mail, Return Receipt Requested, to
Howard M. Liberman, Esq., Drinker Biddle & Reath LLP, 1500 K Street,
N.W., Suite 1100, Washington, D.C. 20005, counsel for Mission
Broadcasting, Inc., and Nexstar Broadcasting, Inc.

Sincerely,

Barbara A. Kreisman

> Chief, Video Division

Media Bureau

[^1]: Ft. Smith 46 is the licensee of several Class A and low-power
    television stations serving as Fox affiliates in the same Fort
    Smith-Fayetteville-Springdale-Rogers, Arkansas Designated Market
    Area ("Ft. Smith DMA") as Station KFTA-TV. Ft. Smith 46, therefore,
    has standing to file the Petition to Deny by virtue of its status as
    a market competitor. [*FCC v. Sanders Brothers Radio Station*, 309
    U.S. 470
    (1940)](http://web2.westlaw.com/find/default.wl?DB=780&SerialNum=1940126067&FindType=Y&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split).

[^2]: Nexstar and Mission filed an Opposition to Petition for Leave to
    File Supplement to Petition to Deny and a Response to Reply on
    August 14, 2006.

[^3]: Letter from Barbara A. Kreisman, Chief, Video Division, to Nexstar
    Broadcasting, Inc., dated December 21, 2004.

[^4]: *See* 47 C.F.R. §73.3555, Note 5. Nexstar acknowledges that,
    without the satellite exception, common ownership of Stations
    KFTA-TV and KNWA-TV, both of which are located in the Ft. Smith DMA,
    would violate the local television ownership rule. *See* 47 C.F.R.
    §73.3555(b).

[^5]: Section 1.2(h) of the Asset Purchase Agreement states that Station
    KFTA-TV's network affiliation agreement is not to be conveyed as
    part of the transaction between Mission and Nexstar.

[^6]: Ft. Smith 46 also complains that the Commission cannot evaluate
    the extent of the relationship between Mission and Nexstar because
    the JSA and SSA submitted with the application are drafts and
    subject to change until executed. Our conclusions are conditioned
    upon the final, executed copies being substantially identical to the
    drafts submitted with the application. We will further require
    Nexstar and Mission to submit final copies of the JSA and SSA when
    executed as part of the record in the instant proceeding.

[^7]: *Petition to Deny*, at 2.

[^8]: *Id.* at iii.

[^9]: *Id.* at 12-13.

[^10]: *Id.* at 10. Ft. Smith 46 mentions that, in at least five other
    markets, Nexstar and Mission have entered into identical Option
    Agreements. Nexstar and Mission specifically deny entering into an
    Option Agreement with respect to Station KFTA-TV, however, and Ft.
    Smith 46 has provided no evidence to the contrary.

[^11]: *Opposition to Petition to Deny*, at 10.

[^12]: Pending are applications for licenses to cover existing
    construction permits for Station KFTA-TV's and Station KNWA-TV's
    digital facilities. See File Nos. BLCDT-20060912ACY and
    BLCDT-20060915ANF.

[^13]: *Reply,* at 2.

[^14]: *Reply*, at 11-12.

[^15]: In its supplemental filing, Ft. Smith 46 argues that the DTV
    build-out plan reinforces the conclusion that Mission and Nexstar
    are not independent since Nexstar is likely to pay for construction
    of Station KFTA-TV's digital facilities. We find this argument
    speculative. We further note that Nexstar, as the current licensee,
    is responsible for completing construction of station KFTA-TV's
    digital facilities.

[^16]: 47 U.S.C. §309(d)(1); *Astroline Communications Co. Ltd.
    Partnership v. FCC,* 857 F.2d 1556 (D.C. Cir. 1988) ("*Astroline*").

[^17]: *Gencom, Inc. v. FCC*, 832 F.2d 171, 181 (D.C. Cir. 1987)
    ("*Gencom"*). *See also Serafyn v. FCC*, 149 F.3d 1213, 1216 (D.C.
    Cir. 1998) (affirming two-step public interest analysis)
    ("*Serafyn*").

[^18]: *Astroline*, 857 F.2d at 1561; 47 U.S.C. §309(e). *See also
    Gencom, Inc.*, 832 F.2d at 181.

[^19]: *See Shareholders of Hispanic Broadcasting Corporation*, 18 FCC
    Rcd 18834, 18843 (2003); [*Chase Broadcasting, Inc.,* 5 FCC Rcd
    1642, 1643
    (1990](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1990196549&FindType=Y&ReferencePositionType=S&ReferencePosition=1643&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split)).

[^20]: Such a finding would result in a violation of Section 310(d) of
    the Communications Act. [47 U.S.C. §
    310(d)](http://web2.westlaw.com/find/default.wl?DB=1000546&DocName=47USCAS310&FindType=L&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split).

[^21]: *See WHDH, Inc.*, [17 F.C.C. 2d 856, 863
    (1969)](http://web2.westlaw.com/find/default.wl?DB=1017&SerialNum=1969020733&FindType=Y&ReferencePositionType=S&ReferencePosition=863&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split),
    *aff\'d sub nom.*, [*Greater Boston Television Corp. v. FCC*, 444
    F.2d 841 (D.C. Cir.
    1970)](http://web2.westlaw.com/find/default.wl?DB=350&SerialNum=1970121902&FindType=Y&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split).

[^22]: [*WGPR,
    Inc.,*](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1995262934&FindType=Y&ReferencePositionType=S&ReferencePosition=8142&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split)
    1[0 FCC Rcd 8140, 8142
    (1995)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1995262934&FindType=Y&ReferencePositionType=S&ReferencePosition=8142&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split);
    [*Choctaw Broadcasting Corp.*., 12 FCC Rcd 8534, 8539
    (1997)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1997262388&FindType=Y&ReferencePositionType=S&ReferencePosition=8539&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split);
    [*Southwest Texas Broadcasting Council*, 85 F.C.C. 2d 713, 715
    (1981)](http://web2.westlaw.com/find/default.wl?DB=1017&SerialNum=1981034609&FindType=Y&ReferencePositionType=S&ReferencePosition=715&AP=&fn=_top&rs=WLW6.06&mt=Communications&vr=2.0&sv=Split).

[^23]: *See* [*Jones Eastern of the Outer Banks, Inc.*, 6 FCC Rcd 3615
    (1991)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1991223319&FindType=Y&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split),
    *clarified*, [7 FCC Rcd 6800
    (1992)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1992238710&FindType=Y&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split),
    *aff\'d* [10 FCC Rcd 3759
    (1995)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1995261587&FindType=Y&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split).

[^24]: *Fox Television Stations, Inc.*, 10 FCC Rcd 8452, 8519 (1995),
    *recon. denied,*11 FCC Rcd 7773 (1996); *Storer Communications,
    Inc.*, 101 F.C.C.2d 434, 442 (1985).

[^25]: *Pikes Peak Broadcasting Company, Inc.*, 12 FCC Rcd 4626, 4630
    (1997). *See also* [*RKO General, Inc. v. FCC*, 670 F.2d 215 (D.C.
    Cir.
    1981)](http://web2.westlaw.com/find/default.wl?DB=350&SerialNum=1982105993&FindType=Y&AP=&mt=Communications&fn=_top&sv=Split&vr=2.0&rs=WLW6.03),
    *cert. denied*, [456 U.S. 927
    (1982)](http://web2.westlaw.com/find/default.wl?DB=780&SerialNum=1982216436&FindType=Y&AP=&mt=Communications&fn=_top&sv=Split&vr=2.0&rs=WLW6.03);
    [*Rothschild Broadcasting Company, Inc.*, 10 FCC Rcd 7226, 7227
    (1995)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1995262623&FindType=Y&ReferencePositionType=S&ReferencePosition=7227&AP=&mt=Communications&fn=_top&sv=Split&vr=2.0&rs=WLW6.03);
    *Post-Newsweek Stations, Florida, Inc.*, 49 FCC 2d 92 (Rev. Bd.
    1974).

[^26]: *Secret Communications II, LLC*, 18 FCC Rcd 9139 (2003). *See,
    also, Kathryn R. Schmeltzer, Esq.*, 19 FCC Rcd 3897, 3900 (MB 2004).

[^27]: *See, e.g., Fox Television Stations, Inc.*, 10 FCC Rcd 8452, 8518
    (1995), *recon. denied*, 11 FCC Rcd. 7773 (1996).

[^28]: *Compare* [*Poughkeepsie Broadcasting Co., Ltd.*, 5 FCC Rcd 3374,
    3377-78
    (Rev.Bd.1990)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1990196230&FindType=Y&ReferencePositionType=S&ReferencePosition=3377&AP=&mt=Communications&fn=_top&sv=Split&vr=2.0&rs=WLW6.04),
    *rev. denied*, [6 FCC Rcd 2497
    (1991)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1991223950&FindType=Y&AP=&mt=Communications&fn=_top&sv=Split&vr=2.0&rs=WLW6.04)
    (counsel foisted upon an allegedly controlling general partner by
    allegedly passive limited partners evidence of a sham partnership).

[^29]: *Review of the Commission's Regulations Governing Attribution of
    Broadcast and Cable/MDS Interests ("Attribution Order")*, Report and
    Order, 14 FCC Rcd 12559 (1999).

[^30]: *Paramount Stations Group of Kerrville, Inc.*, 12 FCC Rcd 6135,
    6136-7 (1997).

[^31]: *See, e.g., In the Matter of Review of the Commission's
    Regulations Governing Attribution of Broadcast and Cable/MDS
    Interests,* 16 FCC Rcd 1097, 1112 (2001).

[^32]: Shared Services Agreement at Section 3(f)(i).

[^33]: *Attribution Order*, 14 FCC Rcd at 12597.

[^34]: *Id.* at 12612-12613.

[^35]: *Shareholders of the Ackerley Group, Inc.*, 17 FCC Rcd 10828,
    10842 (2002) ("*2002 Ackerley Order*").

[^36]: *In the Matter of Rules and Policies Concerning Attribution of
    Joint Sales Agreements in Local Television Markets*, 19 FCC Rcd
    15238, 15239, 15244 (2004).

[^37]: *Fox River Broadcasting, Inc.,* 93 FCC 2d 127, 129 (1983).

[^38]: [*David Ortiz Radio Corp. v. FCC*, 941 F.2d 1253, 1260 (D.C. Cir.
    1991)](http://web2.westlaw.com/find/default.wl?DB=350&SerialNum=1991143410&FindType=Y&ReferencePositionType=S&ReferencePosition=1260&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split),
    *quoting* [*Leflore Broadcasting Co. v. FCC*, 636 F.2d 454, 462
    (D.C. Cir.
    1980)](http://web2.westlaw.com/find/default.wl?DB=350&SerialNum=1980125409&FindType=Y&ReferencePositionType=S&ReferencePosition=462&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split).

[^39]: [*Joseph Bahr*, 10 FCC Rcd 32, 33 (Rev. Bd.
    1994)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=1994265900&FindType=Y&ReferencePositionType=S&ReferencePosition=33&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split).

[^40]: *See Policy Regarding Character Qualifications in Broadcast
    Licensing,* 102 FCC 2d 1179 (1986) (subsequent history omitted).

[^41]: 47 C.F.R. §1.17(a)(2).

[^42]: *Amendment of Section 1.17 of the Commission's Rules Concerning
    Truthful Statements to the Commission*, 18 FCC Rcd 4016, 4021
    (2003).

[^43]: *Twentieth Holdings Corporation*, 4 FCC Rcd 4052 (1989); *Booth
    American Co.*, 58 FCC 2d 553, 554 (1976).

[^44]: *High Country Communications*, 4 FCC Rcd 6237, 6238 (1989).

[^45]: *See, e.g.,* *Hispanic Broadcast System, Inc.*[, 16 FCC Rcd 8072,
    8074
    (2001)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=2001262318&FindType=Y&ReferencePositionType=S&ReferencePosition=8074&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split);
    [*Joseph W. Bollinger and Donna M. Bollinger*, 16 FCC Rcd 18107
    (2001)](http://web2.westlaw.com/find/default.wl?DB=4493&SerialNum=2001847578&FindType=Y&AP=&fn=_top&rs=WLW6.07&mt=Communications&vr=2.0&sv=Split).

[^46]: 47 U.S.C. § 503(b)(2)(D).

[^47]: Section 503(b)(1) of the Act states that any person who is
    determined by the Commission to have *willfully* or *repeatedly*
    failed to comply with any provision of the Act or any rule,
    regulation, or order issued by the Commission shall be liable to the
    United States for a forfeiture penalty. 47 U.S.C. § 503(b)(1).
    Section 312(f)(1) of the Act defines willful as "the conscious and
    deliberate commission or omission of \[any\] act, irrespective of
    any intent to violate" the law. 47 U.S.C. §312(f)(1).

[^48]: *Opposition to Petition to Deny*, at 4.

[^49]: *See Advanced Television Systems and Their Impact Upon the
    Existing Television Broadcast Service*, Fifth Report and Order, 12
    FCC Rcd 12809, 12821 (1997), *recon. denied*, 13 FCC Rcd 6860
    (1998).

[^50]: 47 C.F.R. §73.1150(a).

[^51]: The Petition to Deny was filed after the filing deadline and,
    therefore, will be considered as an informal objection pursuant to
    Section 73.3587 of the Commission's rules.

[^52]: *Petition to Deny*, at 4.

[^53]: *Opposition to Petition to Deny*, at ii.

[^54]: *Television Satellite Stations*, 6 FCC Rcd at 4212, 4215.

[^55]: 47 C.F.R. §73.3555, Note 5.

[^56]: 47 C.F.R. §73.3555, Note 4.

[^57]: *Television Satellite Stations*, 6 FCC Rcd at 4215-4216. The
    Commission stated that applicants seeking to transfer or assign a
    television satellite station are entitled to a "presumptive"
    exemption from Section 73.3555(b) of the Commission's rules if the
    parent/satellite combination 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. *Id.*
    at 4213-4214. 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. *Id.*

[^58]: In its opposition, Nexstar argues that it entered into the TBA
    with Mission after June 1, 2005, the date the previous license term
    expired, and, therefore, the allegations should not be considered in
    reviewing the instant license renewal applications. In this case,
    while we are denying the petition because we find that the TBA does
    not violate Section 73.3555 of the Commission's rules, we need not
    determine here whether grant of the license renewal applications
    would be consistent with Section 309(k)(1) of the Act. 47 U.S.C.
    §309(k)(1).