Cap Cities/ABC Wins Waiver of One-to-a-Market FCC Regulation

The Federal Communications Commission has granted Capital Cities/ABC Inc. a permanent waiver to FCC rules that might have forced the New York-based media giant to sell valuable broadcast properties in major cities, including KABC-TV and radio stations KABC-AM and KLOS-FM in Los Angeles.

In relaxing its so-called one-to-a-market rule, the FCC is allowing Capital Cities to retain ownership of the three Los Angeles stations; WABC-TV, WABC-AM and WPLJ-FM in New York; WLS-TV, WLS-AM and WYTZ-FM, Chicago, and KGO-TV and KGO-AM, San Francisco.

Though the granting of such a permanent waiver is the first action of its kind, it was not unexpected.

In March, the FCC loosened the rules that prohibited a company from owning both a radio station and a television station in the same television “market,” saying that the commissioners would look favorably upon waiver requests involving radio and television station combinations in the largest 25 broadcast markets in the country.

The commission said it would grant waivers if there were more than 30 separately owned, operated and controlled broadcast licensees, or “voices,” in a market. Los Angeles, the nation’s second-largest market, for example, is home to more than 80 radio stations and 19 television stations.

In a 3-0 ruling made public Wednesday, the commission said Capital Cities had successfully shown that their stations were located in four of the five largest markets in the country and that more than 30 separate companies owned stations in those markets. According to the FCC, there are 94 separate broadcast owners in New York, 105 in Chicago, 79 in Los Angeles and 57 in San Francisco.

Capital Cities was among three companies that asked for such a waiver. The commission has not ruled on the other two, Boston-based New England Television and Great American Broadcasting of Cincinnati.

When Capital Cities and ABC merged in 1985, the FCC granted an 18-month waiver to the one-to-a-market, or “cross-ownership,” rule. Stockholders were told that the two companies would sell off radio and television stations to meet the rule and a second FCC requirement stipulating that a single company can own TV stations that reach no more than 25% of the viewing public.

Sales in Connecticut, Florida

The two companies owned 12 TV stations and 24 radio stations, and before the $3.5-billion merger was completed in January, 1986, they sold four TV stations, eight radio stations and Capital Cities’ cable television division for a total price of about $1 billion.

Among the sales were WTNH-TV, New Haven, Conn., sold for $170 million; WXYZ-TV, Detroit, and WFTS-TV, Tampa, Fla., $246 million; WKBW-TV, Buffalo, N.Y., $65 million, and KLAC-AM and KZLA-FM, Los Angeles, $43 million.

But before the 18-month waiver period expired, the commission announced that it was considering allowing common ownership in the larger TV markets. Capital Cities requested another extension of the temporary waiver, and then a permanent waiver for its holdings in the four large markets.

“I think we can expect to see more broadcasters lining up at the commission’s office asking for these waivers,” said Patrick M. Clawson, Washington bureau chief of the trade publication Radio and Records. “The economic impact is significant in that the commission is allowing further concentration of ownership in the nation’s top media markets.”