FCC Record, Volume 4, No. 17, Pages 6251 to 6597, August 14 - August 25, 1989 Page: 6,456
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Federal Communications Commission Record
4 FCC Red No. 17
Federal Communications Commission
Washington, D.C. 20554
In re Application of
File No. BALCT-881125KF
For Assignment of License of Television
Station KREQ(TV), Arcata, California
MEMORANDUM OPINION AND ORDER
Adopted: August 4, 1989;
Released: August 18, 1989
By the Commission:
1. The Commission has before it for consideration the
above-captioned application for consent to the assignment
of the license of station KREQ(TV), channel 23 (IND.),
Arcata, California, from Mad River Broadcasting Company
(Mad River) to California-Oregon Broadcasting, Inc.
(COBI). COBI is the licensee of station KRCR-TV, channel
7 (ABC), Redding, California, and radio stations
KFLI(AM) and KEKA-FM, Eureka, California. On February
9, 1989, COBI obtained Commission consent for its
acquisition of the construction permit of unbuilt station
KDKJ(TV), channel 8, Fort Bragg, California.' COBI's
acquisition of KREQ(TV) will result in overlap of the
predicted Grade B contour of that station with commonly
owned KRCR-TV and that of unbuilt station KDKJ(TV).
COBI proposes to operate KREQ(TV) "primarily as a
satellite" of KRCR-TV,2 and has requested that the assignment
application be granted pursuant to the "satellite
exception" to the Commission's duopoly rule for television
stations, Section 73.3555(a)(3).3 Additionally, because
KREQ(TV)'s city grade contour encompasses Eureka, the
application is subject to the Commission's "one-to-a-market"
rule, Section 73.3555(b), which generally prohibits
common ownership of aural and television stations in the
same market. COBI has requested a twelve-month waiver
to divest its interest in stations KFLI(AM) and KEKA-FM.
2. With regard to the proposed satellite operation,
COBI contends that a grant of its proposal would be
consistent with Section 73.3555 of the Rules. First, it
notes that when computed in accordance with the standard
prediction method, the Grade B contours of KRCRTV
and KREQ(TV) as well as KDKJ(TV) and KREQ(TV)
overlap. However, COBI argues that because of the mountainous
terrain separating Redding from the Eureka ADI,
reliance on the standard prediction method is inappropriate
in this instance. In this connection, COBI submitted
the results of an engineering study showing the predicted
and supplemental terrain-limited Grade B contours for
the stations. COBI claims that the study shows that none
of the three terrain-limited Grade B contours of the stations
overlaps any of the others. Therefore, COBI maintains
that the proposed assignment will neither reduce
program diversity nor contribute to any undue concentration
of economic power, the twin policy concerns underlining
the duopoly rule. Even assuming some overlap,
COBI argues that the operation of KREQ(TV) as primarily
a satellite of KRCR-TV would be in accord with
Commission's satellite policy which permits a television
station in a sparsely-settled rural area to operate as a
satellite of a co-owned station serving portions of the same
3. COBI argues that KREQ(TV) is a struggling UHF
independent station, operating in the 187th television
market, and that it must compete with two VHF networkaffiliated
stations, KIEM-TV, channel 3 (NBC), Eureka;
and KVIQ-TV, channel 6 (CBS), Eureka. It notes that
Arcata is a small town of 12,340 persons, located in
Humboldt County which has a population of 113,700.
COBI avers that the Eureka-Arcata market area is substantially
smaller and more rural than several communities
where the Commission has inferred the
appropriateness of a television satellite operation because
of the small market size without submission of a detailed
economic analysis. E.g., Sainte Limited, 3 FCC Rcd 185
(1988); Capitol Broadcasting Co., 54 RR 2d 811 (1983).
Based on its experience in operating broadcast stations
and its knowledge of the northern California area, COBI
claims that the Eureka-Arcata market will not support a
stand-alone independent television station. It points out
that Humboldt County has experienced a significant economic
decline in its principal industries of lumbering and
fishing. Additionally, it observes that the county unemployment
rate of 9.9% is almost double the California
statewide average of 5%, and the national rate of 5.4%.
Studies of the market conducted by Mad River, COBI
states, indicate that the economy will remain weak for the
"near-term" future, and that even if there was significant
economic growth, the market still could not support a
stand-alone independent UHF station in competition with
the local VHF network-affiliated stations.
4. COBI further asserts that a statement from the President
of Mad River reveals that, since going on the air in
August, 1987, KREQ(TV) has lost money every month.
During the period from February 1, 1988, to December
31, 1988, the statement shows that the station's total income
was $110,000, while the operating costs exceeded
$400,000, and that the station's projected budget for 1989
anticipates a loss for the year of approximately $170,000.4
COBI states that in June, 1988, Mad River decided to sell
KREQ(TV) because of continued losses and little prospect
of future profit. Thus, COBI notes, a professional station
broker, was retained by Mad River for the purpose of
finding qualified buyers for the station. In a statement
submitted at COBI's request, the broker maintains that,
after three months of intensive work and contacts with
approximately 20 prospective buyers, he was unsuccessful
in selling the station or entering into negotiations for a
sale. It was not until he had discussions with a representative
from COBI, which explored COBI's plan to rebroadcast
the programming of KRCR-TV, was he successful in
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United States. Federal Communications Commission. FCC Record, Volume 4, No. 17, Pages 6251 to 6597, August 14 - August 25, 1989, book, August 1989; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc1672/m1/223/: accessed January 22, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.