News

FCC Serves Up Another Y2K Headache

5/09/1999 8:00 PM Eastern

Washington -- Here's a year-2000 problem that
hasn't been in the headlines, but that could surely result in a New Year's Day
hangover for many cable-system operators and their subscribers.

On Jan. 1, the Federal Communications Commission is putting
into effect a new model for determining the market boundaries of local TV stations.
Officially, the switch is from areas of dominant influence (ADIs) to designated market
areas (DMAs).

According to preliminary estimates, 135 counties will land
in new markets because of the move to DMAs, affecting about 80 out of 210 markets.

The change became necessary because The Arbitron Co. no
longer publishes the ADI model that is employed today. The new DMA model, developed by
Nielsen Media Research, is close, but it is not an identical substitute, the FCC said.

ADI market lines were established based on audience surveys
and complex formulas. In a May 1996 report, the FCC said the difference between ADIs and
DMAs was attributable to "a number of factors, including slightly different
methodologies and criteria, as well as normal sampling and statistical variations."

The shift to DMAs would impact the must-carry and
retransmission-consent elections of local TV stations and possibly upset the viewing
habits of some cable subscribers in unexpected ways.

"All of the people who fell in love with a weatherman
will have to fall in love with another weatherman," one FCC official quipped.

Some of the changes would be downright strange.

One example can be found in Cleburne County, Ala. Located
east of Birmingham on the Georgia border, Cleburne County is currently included in the
Birmingham market under Arbitron, but it will be part of the Atlanta market next year
under Nielsen.

This means the Charter Communications cable system in
Cleburne County will have to drop the Birmingham stations and replace them with
out-of-state Atlanta stations, cutting off 1,200 Charter subscribers from their home-state
broadcasters.

And there's another slight problem: Atlanta and
Cleburne County are in different time zones.

"I imagine that a good many of [the subscribers] will
be upset," said Tom Salters, general manager of Charter's Cleburne County
system.

The FCC has not officially adopted the Nielsen model, but
it is expected to do so shortly in order to give cable operators facing Cleburne
County-like situations enough time to evaluate their options prior to the new round of
must-carry and retransmission-consent elections, which starts Oct. 1.

"We think it would be useful [to release a decision
soon], because people are starting to negotiate," said William Johnson, deputy chief
of the FCC's Cable Services Bureau.

Under FCC rules, cable operators and TV stations can file
petitions asking to be deleted or added to a market. Since 1993, the FCC has ruled on more
than 500 such requests, but each one typically takes commission staff about four months to
complete.

Charter, for example, could file a petition asking the FCC
to delete Cleburne County from the Atlanta DMA.

Steven Horvitz, a cable attorney based here with Cole,
Raywid & Braverman, said cable operators are watching to see whether the FCC's
pending order would "grandfather" prior market modifications.

"I am thinking that is one of the key things they have
to address," Horvitz said.

All Johnson would say on that point is that the commission
was attempting "to make the process as least-disruptive as possible."

Horvitz predicted that the net effect of the market change
would be an increase in the must-carry burden on cable operators. Popular independent TV
stations would be retained on systems that have switched to new markets, he added.

Horvitz expects many TV stations and cable operators to
file market-modification requests after the FCC adopts the DMA model.

"I am pretty confident that there is going to be a
significant increase in the amount of that," he added.

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