Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-95-01289/USCOURTS-caDC-95-01289-0/pdf.json

Parties Involved:
Federal Communications Commission
Appellee
NewCity Communications of Massachusetts, Inc.
Intervenor
WSB, Inc.
Appellant

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 15, 1996 Decided June 14, 1996

No. 95-1289

WSB, INC.,

APPELLANT

v.

FEDERAL COMMUNICATIONS COMMISSION,

APPELLEE

NEWCITY COMMUNICATIONS OF MASSACHUSETTS, INC.,

INTERVENOR

Appeal of an Order of the

Federal Communications Commission

Kevin F. Reed argued the cause for the appellant.

Clifford G. Pash, Jr., Counsel, Federal Communications Commission, argued the cause for the

appellee. William E. Kennard, General Counsel, and John E. Ingle, Deputy Associate General

Counsel, were on brief. Daniel M. Armstrong, Associate General Counsel, entered an appearance.

Irving Gastfreund entered an appearance for the intervenor.

Before: BUCKLEY, HENDERSON and RANDOLPH, Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: The owner of an Atlanta television station

wants to purchase a radio station that is licensed to La Grange, Georgia but is also heard in Atlanta.

Before asking the Federal Communication Commission (FCC) to approve the broadcast license

transfer, the radio station's current owner sought the FCC's permission to modify the station's radio

signal so that a small area of Atlanta no longer received the signal. The FCC denied the request

because the radio station owner's reason for the requested signal change was to allow the television

station owner's purchase of the radio station to meet FCC multiple media ownership rules. The FCC

also denied the television station owner's subsequent request for a waiver. The television station

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1Formerly WYAI. 

2Although Cox owns two radio stations, its purchase of WJZF radio would not violate the

radio duopoly rule because of the stations' combined audience size. See 47 C.F.R. §

73.3555(a)(1)(ii) (permitting joint ownership of up to 2 AM and 2 FM stations in large radio

markets provided combined audience share is less than 25 per cent). 

3Similar FCC rules promote the same goals at the national level. See, e.g., 47 C.F.R. §

73.3555(e)(1) ("National multiple ownership rule"). 

owner appeals from the FCC's consolidated order, arguing primarily that the FCC's rationale for

denying both the modification and the waiver requests was arbitrary. We disagree and affirm the

FCC.

Background

This case involvesthe efforts of Cox Enterprises, Inc. (Cox) to buy commercial radio station

WJZF (FM)1(WJZF radio) from NewCityCommunications of Massachusetts, Inc. (NewCity). Cox

owns anAtlanta VHF television station (WSB-TV), two Atlanta radio stations(WSB-AM and WSBFM) and two Atlanta daily newspapers (The Atlanta Constitution and The Atlanta Journal).

NewCity broadcasts WJZF radio from an antenna located between Atlanta and La Grange, Georgia.

Although WJZF radio's "community oflicense" isLa Grange, and it must therefore provide that small

rural community with a strong radio signal, see 47 C.F.R. § 73.315 (1994), WJZF radio is also heard

throughout Atlanta. Cox would own six significant Atlanta media sources if allowed to purchase

WJZF radio.

Cox's proposed purchase ofWJZF radio implicatestwo of the FCC's media ownership rules.2

See 47 U.S.C. § 310(d) (requiring FCC approval to transfer radio broadcast license). The FCC

enforces local media ownership restrictions to promote diversity of views and programming as well

as to "prevent undue concentration of economic power" in a particular community.3See In re

Amendment of Section 73.3555 of theCommission'sRules, theBroadcast MultipleOwnershipRules,

4 F.C.C.R. 1741, 1745 (1989); FCC v. National Citizens Comm. for Broadcasting, 436 U.S. 775,

781 (1978). Under its "one-to-a-market rule," the FCC will not grant a commercial radio license to

a companythat alreadyowns a localtelevision station. See 47 C.F.R. § 73.3555(c) (1994). Similarly,

under its "daily newspaper cross-ownership rule," the FCC will not grant a commercial radio license

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4The "one-to-a-market ownership rule" states in part:

No license for an AM, FM or TV broadcast station shall be granted to any party

(including all parties under common control) if such party directly or indirectly

owns, operates or controls one or more such broadcast stations and the grant of

such license will result in: ... The predicted 1 mV/m contour of an existing or

proposed FM station ... encompassing the entire community of license of an

existing or proposed TV broadcast station(s), or the Grade A contour(s) of the TV

broadcast station(s) ... encompassing the entire community of license of the FM

station.

47 C.F.R. § 73.3555(c). The newspaper cross-ownership rule is similar except that it refers to the

"community in which such newspaper is published" rather than the "community of license." See

47 C.F.R. § 73.3555(d). 

5Cox's ownership of WSB-TV, WSB-FM and WSB-AM is exempt from the FCC multiple

ownership rules because Cox owned the stations before the FCC rules became effective. See 47

C.F.R. § 73.3555 n.4 (multiple ownership rules shall "not be applied so as to require divestiture,

by any licensee, of existing facilities"). 

6NewCity requested permission to change the station's transmitter from "omnidirectional" to

"directional." Eighty thousand Atlanta residents, three per cent of WJZF radio's current audience,

would no longer receive the radio signal if the transmitter were so modified. 

to a company that already owns a local daily newspaper. See 47 C.F.R. § 73.3555(d). The multiple

ownership rules prohibit the owner of a community's television station or daily newspaper from also

owning a radio station that "encompasses" the community.4

Cox's and NewCity's initial strategy for gaining FCC approval of their transaction was to

modify WJZF radio's signalso that the station would no longer "encompass" Atlanta. Because Cox

already owns one Atlanta television station and two Atlanta newspapers, both the "one-to-a-market"

and the "newspaper cross-ownership" rules prohibit Cox from acquiring a radio station which has a

signal "encompassing" Atlanta; Atlanta is both the "community of license" and the "community in

which such newspaper is published" for Cox's television station and daily newspapers respectively.5

WJZF radio's signal encompasses Atlanta and thus Cox could not own the station. Undaunted,

NewCity submitted to the FCC a Minor Change Application asking for permission to modify WJZF

radio's signal so that a "sliver" of Atlanta would no longer receive the signal.6 Because the modified

signalwould no longer encompass Atlanta, the multiple ownership rules would not prevent Cox from

purchasing WJZF radio.

On August 11, 1993 the Chief of the Mass Media Bureau's Audio Services Division granted

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NewCity permission to modify the radio signal. Jacor Broadcasting, Inc. (Jacor), a licensee of two

Atlanta radio stations (WGST (AM) and WPCH (FM)), objected to NewCity's modification request

and petitioned the FCCfor review ofthe decision. Before the FCC ruled on the modification request,

NewCity and Cox asked the FCC to approve NewCity's assignment of the modified WJZF radio to

WSB, Inc., a wholly owned subsidiary of Cox.

In response to the assignment application, the Chief of the FCC's Mass Media Bureau asked

NewCity and Cox to submit materials establishing that Cox's ownership of unmodified WJZF radio

qualified for waiversfrom the FCC's multiple ownership rules. Cox and NewCity requested that the

FCC grant Cox "case-by-case" waivers to allow it to purchase WJZF radio. See 4 F.C.C.R. at 1744

(describing criteria for granting "case-by-case" waiver from multiple ownership rules in light of

"dramatic increase in the number of media outlets in markets of all sizes, which has enhanced both

viewpoint and programming diversity on a local level").

On May 5, 1995 the FCC issued a consolidated order reversing the Mass Media Bureau's

approval of the modification request and denying the assignment request. NewCity Communications

of Mass., Inc., 10 F.C.C.R. 4985 (1995). The FCC agreed that Cox could purchase a modified WJZF

radio because as modified the station would not encompass Atlanta. The FCC denied the

modification request, however, because the purpose of the request wasto allow Cox to buy the radio

station. The FCC decided against waiving the one-to-a-market rule (it did not reach the waiver

request regarding the newspaper cross-ownership rule) and denied New- City's request to assign

WJZF radio to Cox. Cox's appeal, in the name of WSB, Inc., followed.

Modification Request

The FCC claims that a procedural lapse prevents us from reviewing Cox's appeal from the

denial of NewCity's modification request. Section 405(a) of the Communications Act of 1934 (Act)

reads:

The filing of a petition for reconsideration shall not be a condition precedent to

judicial reviewof any [FCC] order, decision, report, or action except where the party

seeking such review (1) was not a party to the proceedings resulting in such order,

decision, report, or action, or (2) relies on questions of fact or law upon which the

Commission, or designated authority within the Commission, has been afforded no

opportunity to pass.

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7Accepting the FCC's argument would also require us to ignore the holding in Office of

Communication of the United Church of Christ v. FCC, 779 F.2d 702 (D.C. Cir. 1985). In that

case, we relied on Washington Ass'n for Television & Children v. FCC, 712 F.2d 677 (D.C. Cir.

1983) (WATCH) to hold that "Section 405 simply codifies the common law exhaustion

requirement." 779 F.2d at 707. The FCC asks us to disavow the UCC decision because in that

case we purportedly disregarded the statutory text and instead relied on WATCH, a case

interpreting section 405(a)(2), not (a)(1). (Appellee's Br. at 17 n.9.) ("We believe that this

decision [UCC] was in error.") We considered and rejected the same arguments in UCC itself. 

See 779 F.2d at 706-07 (quoting language of statute and acknowledging different provision at

issue in WATCH). 

47 U.S.C. § 405(a) (emphasis added). The FCC argues that Cox "was not a party" to the

modification application. Cox did not petition for reconsideration of the FCC's reversal dismissing

the modification application and the agency therefore concludes that under section 405(a)(1) we

cannot review Cox's challenge to its denial of NewCity's modification application.

Although silent before the staff decision to approve New- City's modification request, Cox

defended that decision before the FCC. After Jacor petitioned for review, the FCC sent Cox and

NewCity a letter "in reference to the recently granted application to modify the facilities of [WJZF],

La Grange, Georgia, and the pending application to assign the license of [WJZF]." Joint Appendix

(JA) 226. The letter noted "the Commission's traditional concern with facilities modifications

designed solely to avoid overlap problems under the multiple ownership rules." Id. Cox defended

the initial decision to approve NewCity's proposed modification. The FCC's consolidated order

addressed Cox's arguments regarding the modification application. 10 F.C.C.R. at 4987. These

circumstances cause us to conclude that Cox "participated in the proceedings" involving NewCity's

modification request.7 We therefore turn to the merits of the FCC's modification decision.

The FCC denied NewCity's modification request because the request was " "designed solely

to avoid overlap problems.' " 10 F.C.C.R. at 4986. Cox claims that the FCC's refusal to approve

NewCity's modification request was such a departure from FCC precedent that it was an abuse of

discretion. We disagree.

Cox first arguesthat the FCC arbitrarily relied on inapplicable precedent. The FCC cited two

decisions, Huron Shores Broadcasting Corp., 53 F.C.C.2d 216, 217 (1975), and Jones T. Sudbury,

4 Rad. Reg. 2d (P & F) 679, 680 (FCC 1965), in support of its rationale. Repeating language from

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8The FCC orders in Huron and Sudbury omitted these facts; Cox apparently reviewed the

parties' original documents, now some twenty to thirty years old. (Appellant's Br. at 26-27.) 

9The Act requires the FCC to "make such distribution of licenses, frequencies, hours of

operation and of power among the several States and communities as to provide a fair, efficient,

and equitable distribution of radio service to each of the same." 47 U.S.C. § 307(b). See

National Broadcasting Co. v. United States, 319 U.S. 190, 217 (1943) (describing goal of Act to

"secure the maximum benefits of radio to all the people of the United States"); FCC v. Allentown

Broadcasting Co., 349 U.S. 358, 359-62 (1955) (describing section 307(b) goal "to secure local

means of expression"); 47 C.F.R. § 73.202(b) (allotting FM channels to communities across

country). 

10WJZF's radio frequency is licensed to La Grange but its radio antenna is located halfway

between La Grange and Atlanta. 

Sudbury, the FCC stated in Huron: "[T]he Commission is concerned about proposed modifications

designed solely to avoid overlap problems." 53 F.C.C.2d at 217. Cox claims the two decisions are

inapplicable because they both, it appears, involved rural communities with few radio stations.8In

contrast, Atlanta is an urban city with nineteen licensed commercial radio stations. As the FCC

concluded, however, "[t]here is nothing in the two cases that limits the broad language proscribing

modifications requested for the sole purpose of avoiding the multiple ownership rules to the

circumstances of those cases." 10 F.C.C.R. at 4987. Cox's attempt to distinguish Huron and

Sudbury based on facts not even mentioned in those orders does not come close to convincing usthat

the FCC acted arbitrarily in relying on its two earlier decisions to deny NewCity's modification

request.

Cox also claims that the FCC has "implicitly" overruled Huron. (Appellant's Br. at 24.) The

FCC "allots" radio frequencies to specific communities.9 Because a commercial station depends on

advertising for income, it is often more lucrative for a broadcaster to provide radio service to an

urban community than to a rural community even if the urban area has multiple stations and the rural

area none.10 See Communications Investment Corp. v. FCC, 641 F.2d 954, 964 (D.C. Cir. 1981)

("It isto be expected that broadcasters will constantly applywhatever pressure they can bring to bear

to get FCC approval for placement of their stations as close to the heart of a major population center

as possible.") To prevent a broadcaster from applying for a license allotted to a small community

while intending to profit from a nearby urban area, the FCC developed a collection of policies to

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11See, e.g., Policy Statement on Section 307(b) Considerations for Standard Broadcast

Facilities Involving Suburban Communities, 2 F.C.C.2d 190, 193 (1965) (suburban community

policy); Berwick Broadcasting Corp., 20 F.C.C.2d 393 (1969), modifying 12 F.C.C.2d 8 (1968),

on remand, P.A.L. Broadcasters, Inc., 40 F.C.C.2d 546 (1973) (Berwick policy); Hall

Broadcasting Co., Inc., 40 F.C.C.2d 546 (1973) (de facto reallocation policy). For example, if an

applicant for an AM license proposed a radio signal that covered both the community of license

and an urban community, the presumption was that the applicant intended to serve the urban

community, a presumption the applicant could rebut by showing it planned to serve the distinctive

programming needs of the suburban community. See Beaufort County Broadcasting Co. v. FCC,

787 F.2d 645, 650-53 & n.6 (D.C. Cir. 1986). 

12Instead, the FCC decided that "a renewal challenge for failure actually to serve the

designated community constitutes a more effective regulatory tool than utilization in advance of

guidelines and factors that are inexact in divining intent." Suburban Community Policy, 93

F.C.C.2d at 437. 

determine "which community an applicant actually intended to serve."11 The Suburban Community

Policy, the Berwick Doctrine, and the De Facto Reallocation Policy, 93 F.C.C.2d 436, 437 (1983);

see Communications Investment Corp., 641 F.2d at 967. In its Suburban Community Policy

decision, however, the FCC repealed the community policies because the increased requirements

delayed approval of proposed stations, causing the policiesto thwart rather than further the statutory

goal of making radio more available to different communities.12 Cox argues that repeal of the

community policies also repeals Huron because both involved regulating the intent behind a proposed

modification or assignment.

In its order below, the FCC declared that it has not "overruled or modified" Huron and

Sudbury. 10 F.C.C.R. at 4987. Although both the community policies and the multiple ownership

rules affect a broadcaster's modification request, they have different rationales. The community

policiessought to prevent communitiesfrom having all the broadcast media; the multiple ownership

rules prevent individualsfromhaving allthe broadcast media. CompareCommunicationsInvestment

Corp., 641 F.2d at 965 ("If left to their own devices broadcasters would congregate around the

biggest city in the area.") with Astroline Communications Co. v. FCC, 857 F.2d 1556, 1558 (D.C.

Cir. 1988) ("The one-to-a-market rule reflects the Commission's commitment to diversity in

ownership and control of broadcast licenses."). Abandoning a regulatory method (monitoring the

reason for a proposed modification) because it no longer serves a regulatory goal (increasing the

number ofserved communities) does not require the FCCto jettison the regulatorymethod altogether

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13The FCC also denied the modification request because it proposed reducing service to

80,000 people without providing an offsetting public benefit. 10 F.C.C.R. at 4987. Because we

uphold the FCC based on its policy of diffused ownership, we need not decide whether the service

loss constitutes a separate ground on which to deny the modification request. 

14The factors are: (1) the public benefits of common ownership; (2) the type (i.e. broadcast

power) of facilities involved; (3) the financial status of the station to be purchased; (4) the

number of stations the applicant already owns in the market; and (5) diversity in the market if the

purchase is approved. A strong showing based on one factor can compensate for a weak, or no,

showing based on another factor. See Kargo Broadcasting, Inc., 5 F.C.C.R. 3442 (1990). 

if the method continues to further a separate regulatory goal (increasing the number of station

owners). We defer to the FCC's decision to reaffirm Huron and Sudbury.13

Cox complainsthat this holding willresult in the "cruel irony" of punishing it for pursuing the

assignment request too soon after the modification request. (Appellant's Rep. Br. at 3 n.6.) Had Cox

waited more than the eleven weeks it did to file the assignment request, the FCC might not have

known the reason for the modification and thus might well have allowed the modification.

Nevertheless, it is far from clear that delay would have allowed Cox to own the station. Even if the

FCC had approved NewCity's modification request, Cox's subsequentalbeit delayedassignment

request would have revealed that the reason for NewCity'smodificationwasto makeCox's ownership

of the station fit the multiple ownership rules. The FCC might well have decided not to approve an

assignment application which complied with the multiple ownership rulessolely because of a (much)

earlier modification made to facilitate the subsequent assignment. Cf. NLRB v. American Geri-Care,

Inc., 697 F.2d 56, 60 (2d Cir. 1982) (upholding NLRB finding based on "stunningly obvious" timing

of employer's actions).

Waiver Request

The FCC's case-by-case approach to a requested waiver from the multiple ownership rules

weighs five factors.14 Because WJZF radio is a powerful "Class C1" station and Cox already owns

multiple media sources, the FCC decided that neither the broadcast power of the radio station nor

the owner's other media holdings supported a waiver. 10 F.C.C.R. at 4989. Cox did not assert that

the radio station was facing financial hardship so the third factor did not support granting a waiver.

The FCC acknowledged that the proposed transaction might not increase media concentration in

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15This "presumptive waiver" rule is "based on the fact that a very large number of broadcast

outlets and separate voices will remain in these large markets, thereby preventing any single outlet

or firm from obtaining undue economic power or undue sway over public opinion. Indeed, we

believe that our "top 25 markets/30 voices' standard is conservative and may far exceed the

market size and the number of voices necessary to ensure diversity and prevent competitive

abuses." 4 F.C.C.R. at 1751. See Telecommunications Act of 1996, Pub. L. No. 104-104, 110

Stat. 56, 111, sec. 202(d) (instructing FCC to extend its presumptive waiver policy to top 50

Atlanta but stated that thisfactor alone did not justifygranting the waiver(otherwise the case-by-case

waiver approachcould become a large-market general exceptionsee infra). The FCC dubbed Cox's

proposals to increase WJZF radio's public service programming and to start a minority training

program "minor." Id. at 4990. It also doubted that joint ownership would produce "economies of

scale," another alleged public benefit, because Cox operates all of its radio and television stations

independently.

Cox thus has little claim to a waiver, as its belated request suggests, and its arguments on

appealhave no merit. See 4 F.C.C.R. at 1753 ("Waiverrequestsforwarded byapplicants who already

own a number of media outlets in the relevant market will have a higher hurdle than those from

applicants with few outlets."); WAIT Radio, 459 F.2d at 1207 (waiver applicant faces "high hurdle").

The FCC did not ignore evidence of the lack of competitive harm caused by the proposed

purchaseit rejected the waiver request even assuming there was no competitive harm. 10 F.C.C.R.

at 4990. Cox also claims that the FCC departed from standards applied in earlier waiver cases in

denying Cox's waiver request but Cox provides not a single case where the FCC granted a cross

ownership case-by-case waiver to a buyer with a similar market position to Cox's and with similar

public benefits. On the other hand, the FCC can point to precedent supporting its decision to deny

Cox's waiver request. See Kargo Broadcasting, Inc., 5 F.C.C.R. 3442 (1990) (denying case by case

waiver to owner of Salt Lake City newspaper and television stations).

Although the proposed transaction would provide little public benefit, we are skeptical that

blocking the transaction does much for the public weal either. In the same order creating the

"case-by-case" waiver, the FCC stated it intended to "look favorably" on common ownership ofradio

and television stations if the stations are located in large urban areas where there are many

independent stations ("top 25 markets/30 voices" test).15 The presumptive waiver rule would apply

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markets "consistent with the public interest, convenience, and necessity"). 

16The footnote reads in full:

In addition, we note that CapCities/ABC requests that the Commission extend the

application of the top 25 markets/30 voices test (one-to-a-market waiver process)

to television licensees who propose to acquire more than one radio station in a

community in the same service. Possible revisions to the one-to-a-market

prohibition, including the impact of revised ownership limits, are being addressed

in the Commission's television ownership proceeding. Until the issue is resolved,

we will consider waiver requests using the case-by-case waiver approach, taking

into account our general conclusions in this proceeding regarding the public

interest in a strengthened radio service.

7 F.C.C.R. 6387 n.40 (citations omitted). 

to the Atlanta media market (Atlanta is the tenth largest television market and has over forty

independent stations) and so one might think that Cox's proposed ownership of WJZF radio would

clear the hurdle, high as it is. In Revision of Radio Rules and Policies, 7 F.C.C.R. 6387 (1992),

however, the FCC in a brief footnote rejected the suggestion that the top 25 markets/30 voices

exception apply to a television owner seeking to acquire a second local radio station.16 It escapes us

why Cox's ownership of WJZF radio is more threatening to the public interest because of its

ownership of other radio stations or, more generally, why the proposed assignment is inimical to the

public interest notwithstanding Cox's other media holdings. See 10 F.C.C.R. at 4992 (Quello,

Comm'r, concurring) ("I am also somewhat baffled as to why Cox's purchase of an additional FM

station should be denied in light of the vast array of other radio, television, [and] cable ... available

in Atlanta."). The FCC is of course free to decide, as it did in Huron, that "fixed overlap standards

[are] vastly superior to an ad hoc approach," 53 F.C.C.2d at 216, but where, as here, neither the

general rule nor its specific application may serve the public interest the FCC arguably steps outside

its statutory role. See 47 U.S.C. § 307(a) ("The Commission, if the public convenience, interest, or

necessity will be served thereby ... shall grant to any applicant therefor a station license.") Cox,

however, never asked for a top 25 markets/30 voices waiver.

For the preceding reasons, we affirm the FCC's consolidated order denying both NewCity's

modification request and Cox's assignment application.

Affirmed.

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