Washington Post 2006 Annual Report Download - page 26

equipment used by stations; and adopts and implements various regulations and policies that directly or indirectly affect the
ownership, operations and profitability of broadcasting stations.
Each of the Company's television stations holds an FCC license which is renewable upon application for an eight-year
period.
The FCC formally approved DTV technical standards in 1996. DTV is a flexible system that permits broadcasters to utilize a
single digital channel in various ways, including providing one channel of high-definition television (""HDTV'') program-
ming with greatly enhanced image and sound quality and one or more channels of lower-definition television programming
(""multicasting''), and that also is capable of accommodating subscription video and data services. Broadcasters may
offer a combination of services as long as they transmit at least one stream of free video programming on the DTV channel.
The FCC assigned to each existing full-power television station (including each station owned by the Company) a second
channel to implement DTV while analog television operations are continued on that station's analog channel. Although in
some cases a station's DTV channel may only permit operation over a smaller geographic service area than that available
using its analog channel, the FCC's stated goal in assigning channels was to provide stations with DTV service areas that
are generally consistent with their analog service areas. Pursuant to legislation enacted in February 2006, station owners
will generally be required to surrender one of their channels in February 2009 and thereafter provide service solely in the
DTV format.
In 1998 the FCC issued a decision implementing the requirement of the Telecommunications Act of 1996 that it charge
broadcasters a fee for offering certain ""ancillary and supplementary'' services on the DTV channel. These services include
data, video or other services that are offered on a subscription basis or for which broadcasters receive compensation
other than from advertising revenue. In its decision, the FCC imposed a fee of 5% of the gross revenues generated by such
services.
In September 2004 the FCC established certain rules for the DTV operations of low-power television stations. Among other
things, the FCC decided to allow certain low-power television stations to use a second channel for DTV operations while
continuing analog operations on their existing channel. Although the FCC decided that low-power television stations must
accept interference from and avoid interference to full-power broadcasters on their second channels, the use of second
channels by low-power television stations could cause additional interference to the signals of full-power stations. The FCC
also decided that low-power television stations may convert to digital operations on their current analog channels, which
might in some circumstances cause additional interference to the signals of full-power stations and limit the ability of full-
power stations to modify their analog or DTV transmission facilities. The FCC is currently processing applications for low-
power DTV licenses.
The FCC has a policy of reviewing its DTV rules every two years to determine whether those rules need to be adjusted in
light of new developments. In September 2004 the FCC issued an order concerning the second periodic review of its DTV
rules. This review broadly examined the rules and policies governing broadcasters' DTV operations, including interference
protection rules and various operating requirements. In that order the FCC established procedures for stations to elect the
channel on which they will operate after the transition to digital television is complete. Stations had the option to choose
between their current analog channel and current DTV channel, provided that those channels are between channels 2 and
51. All of the Company's TV stations except WKMG have two channels that are within this range, and they have
accordingly elected to operate on either their existing analog or digital channel. In WKMG's case, only its analog channel
is within this range and, because of technical issues related to its analog channel, WKMG requested and in May 2006
received from the FCC another channel allotment between channels 2 and 51 to use as its DTV channel when all-digital
operations commence. All channel elections are subject to final FCC approval in a rulemaking proceeding that began in
October 2006.
The FCC has received comments in long-pending proceedings to determine what public interest obligations should apply to
broadcasters' DTV operations. Among other things, the FCC has asked whether it should require broadcasters to provide
free time to political candidates, increase the amount of programming intended to meet the needs of minorities and women,
and increase communication with the public regarding programming decisions. In November 2006 the FCC established
new obligations concerning children's programming by digital television broadcasters (although some new obligations
apply to the analog signals as well). Among other things, beginning in January 2007 the FCC required stations to air three
hours of ""core'' children's programming on their primary digital video stream and additional core children's programming if
they also broadcast free multicast video streams and to limit the type of advertising that may be broadcast during
programming intended for young children.
Effective January 1, 2006, the FCC increased the amount of programming aired on broadcast stations that must contain
closed captioning. As of that date, all programming aired between 6 a.m. and 2 a.m. must be captioned unless the
10 THE WASHINGTON POST COMPANY