Washington Post 2003 Annual Report Download - page 24

The Company's 2003 net operating revenues from national and local television advertising and network compensation
were as follows:
National ÏÏÏÏÏÏÏÏÏ $100,237,000
Local ÏÏÏÏÏÏÏÏÏÏÏÏ 194,533,000
Network ÏÏÏÏÏÏÏÏÏ 18,281,000
Total ÏÏÏÏÏÏÏÏÏÏ $313,051,000
Regulation of Broadcasting and Related Matters
The Company's television broadcasting operations are subject to the jurisdiction of the Federal Communications
Commission under the Communications Act of 1934, as amended. Under authority of such Act the FCC, among other
things, assigns frequency bands for broadcast and other uses; issues, revokes, modifies and renews broadcasting licenses
for particular frequencies; determines the location and power of stations and establishes areas to be served; regulates
equipment used by stations; and adopts and implements 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.
In December 1996 the FCC formally approved technical standards for digital advanced television (""DTV''). 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'') programming with greatly enhanced image and sound quality or several channels
of lower-definition television programming (""multicasting''), and also is capable of accommodating subscription video
and data services. Available compression technology may also allow broadcasters to transmit simultaneously one channel
of HDTV programming and at least one channel of lower-definition programming. 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 has assigned
to each existing full-power television station (including each station owned by the Company) a second channel to
implement DTV while present 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 existing service areas. The FCC's DTV rules also permit stations to request modifications to
their assigned DTV facilities, allowing them to expand their DTV service areas if certain interference criteria are met. Under
FCC rules and the Balanced Budget Act of 1997, if specified DTV household penetration levels are met, station owners will
be required to surrender one channel in 2006 and thereafter provide service solely in the DTV format.
The Company's Detroit, Houston and Miami stations each commenced DTV broadcast operations in 1999, while the
Company's Orlando station commenced such operations in 2001. The Company's two other stations (San Antonio and
Jacksonville) began DTV broadcast operations in 2002.
In November 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 August 2003 the FCC began a proceeding to set rules for the DTV operations of low-
power television stations. Among other things, the FCC is considering whether to allow certain low-power television
stations to use a second channel for DTV operations while continuing analog operations on their existing channels. The use
of second channels by low-power television stations could cause additional interference with the signals of full-power
stations and limit the ability of full-power stations to modify their analog or DTV transmission facilities.
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 January 2003 the FCC released a Notice of Proposed Rule Making initiating the second
periodic review of its DTV rules. This review is broadly examining the rules and policies governing broadcasters' DTV
operations, including interference protection rules, operating requirements, and extensions of the 2006 deadline for
ceasing analog operations. As a part of this review, the FCC sought further comment 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. Pursuant to the ""must-carry'' requirements of the Cable Television Consumer Protection and
4THE WASHINGTON POST COMPANY