In the Matter of the Petition by                                ) 
                                                                               )
WILLAMETTE TV AND CABLE GUIDES                  )
320 S.W. Stark Street, Suite 219                           )
Portland, OR 97204-2634                                      )
                                                                              )
                                                                              )
Denial of Second-Class Mail                                  )
Privileges for "CABLE CHOICE"                             )   P.S. Docket No. 16/97

APPEARANCES FOR PETITIONER:                        R. Stephen Shibla, Esq.
                                                                              410 North Third Street
                                                                              P.O. Box 1146
                                                                              Harrisburg, PA 17108-1146
                                                                              Matthew S. Perlman, Esq.
                                                                              1050 Connecticut Avenue, N.W.
                                                                              Washington, DC 20036-5339

APPEARANCE FOR RESPONDENT:                      Jeffrey Zelkowitz, Esq.
                                                                             Office of Mail Classification
                                                                             Classification & Rates Dept.
                                                                             United States Postal Service
                                                                             Washington, DC 20260-1143

Cohen, James A.

POSTAL SERVICE DECISION

Respondent has appealed from the Initial Decision of an Administrative Law Judge which set aside the ruling of the Director, Office of Mail Classification, United States Postal Service, denying Petitioner's application for second-class mail privileges with respect to the publication "Cable Choice." The Administrative Law Judge concluded that the publication has complied with the second-class mail requirements set forth in Domestic Mail Manual (DMM) ??422.221 and 422.223 since January 3, 1983, and is not designed primarily for advertising purposes within the meaning of DMM § 422.231. Accordingly, he found that Cable Choice, was entitled to second-class mail privileges effective January 3, 1983. Respondent has filed 23 exceptions to the Initial Decision. Petitioner has filed a Reply Brief. Respondent's exceptions have been combined where appropriate and are discussed below.

Exceptions 1, 2, 5, 7, 9 & 13

These exceptions address Findings of Fact 6, 8, 17, 20, 22, and 31, all of which concern the Administrative Law Judge's method of determining the amount of advertising contained in Cable Choice. This determination is significant because DMM § 422.231 states that " g general publications ^1/ primarily designed for advertising purposes may not qualify for second-class privileges." DMM § 422.232b, in turn, defines "advertising" for purposes of obtaining second-class mail privileges as including " a articles, items, and notice in the form of reading matter inserted in accordance with a custom or understanding . . ."

In Finding of Fact 6, the Administrative Law Judge stated that under this subsection, in order for "articles, items, and notices" to be considered advertising they must have been inserted in a publication in accordance with "a 'custom or understanding,' the burden of showing which is upon Respondent. No such 'custom or understanding' has been shown to exist" in this case (I.D. at p. 7).

In Finding of Fact 8, the Administrative Law Judge found that "the largest segment of each issue of Cable Choice is made up of news and information of a public character," consisting of cable program listings (I.D. at p. 8). At Finding of Fact 17, he set forth a table breaking down the contents of four randomly selected issues of Cable Choice in terms of total pages; pages of advertisements; pages of advertisements for Cablesystems Pacific (CSP), the cable television company to which Cable Choice listings are keyed; pages of articles; masthead, decoder, channel and FM guides; and program logs (I.D. at p. 12). According to a footnote, the masthead was not considered advertising, but photographs of actors or scenes from films were counted as advertisements for CSP when the pay-per-view channel was mentioned and the telephone number for ordering the service was given (I.D. at p. 12, fn. 2).

Findings of Fact 20, 22, and 31 summarize the Administrative Law Judge's determinations as to content. In Finding of Fact 22(g), he found that even if "articles, items, and notice" are considered "advertising," they "do not make advertising the predominant characteristic of the various issues of the publication" (I.D. at pp. 14-15). In Finding of Fact 31, he found "as a mathematical fact that the publication does not consist principally of advertising and articles about advertisers in the publication" within the meaning of DMM § 422.231c (I.D. at p. 18).

Respondent excepts to the Administrative Law Judge's treatment of "articles, items, and notices" concerning programming services offered by CSP as non-advertising material. It contends that this material should be considered advertising under DMM § 422.232a or b. In this regard, it argues that § 422.232b is only illustrative and that any material that falls within the general definition set forth in subsection a must be considered advertising.

DMM § 422.232a states:

General. The term advertising includes all material for the publication of which a valuable consideration is paid, accepted, or promised; that calls attention to something for the purpose of getting people to buy it, sell it, seek it, or support it."

Subsection by provides specific guidance in construing the "General" definition. It states:

"Specific. If an advertising rate is charged for the publication of reading matter or other material, such material shall be deemed to be advertising. Articles, items, and notices in the form of reading matter inserted in accordance with a custom or understanding that textual matter is to be inserted for the advertiser or his products in the publication in which a display advertisement appears, are deemed to be advertising. If a newspaper or periodical advertises its own services, or issues, or any other business of the publisher, whether in the form of display advertising or editorial or reading matter, this is deemed to be advertising. Public service advertisements for which no consideration has been paid are not considered advertising for postal purposes."

Similarly, the portion of this subsection relied on by the Administrative Law Judge in Finding of Fact 6 with regard to "articles, items, and notices," is deemed to incorporate and set forth a specific application of the "General" definition under subsection a. Accordingly, this portion of subsection b is controlling as to whether "articles, items, and notices" are considered advertising for purposes of second-class eligibility.

The Administrative Law Judge correctly found that, under subsection b, "articles, items, and notices" are not "advertising" absent "a custom or understanding" regarding textual matter inserted for the advertiser or his products as specified in that provision. Respondent contends that such a "custom or understanding" has been established by the agreement between Petitioner and CSP, which sets forth the content and format of Cable Choice and states that the format may not be changed without CSP's consent (Exh. P-6). As Respondent notes, the agreement establishes the name of the publication; that its cover will concern CSP's programming unless otherwise agreed to by CSP; and that the publication must carry all of CSP's programming.

The magazine format set forth in the agreement was obtained from Petitioner's marketing presentation to CSP and was intended to match that of Channels magazine, another cable guide already published by Petitioner in the Portland, Oregon, metropolitan area (Tr. 34). The Channels guide is specifically referenced in the agreement (Exh. P-6, at para. 2). No evidence has been presented that CSP had any input into the format for Channels.

Exhibit "A" to the parties' agreement states that " t he format of Cable Choice is as the attached copy" (Exh. P-6 at Exh. A). While the specific copy attached is not reflected in this record, Exhibit "A" makes clear that the bulk of the magazine is to consist of "rolling logs and guide," which is consistent with the format of the copies of the publication which have been introduced as exhibits. This description, and the requirement that Petitioner "carry all of the Cablesystems' video programming in the Guide" (Exh. P-6 at para. 3(b)) do not in themselves constitute "a custom or understanding that textual matter is to be inserted for the advertiser or his products" within the meaning of DMM § 422.232b since they relate to the publication's basic information purpose. Obviously, any publication which purports to contain information regarding cable television programming would be worthless without accurate rolling logs and guides. The mere fact that the publication is keyed to a specific cable television company's listings does not in itself convert the informational nature of the listings into advertising. This is particularly true where, as here, the publication contains the listings for local commercial and public stations available without cable (Tr. 110-11).

Accordingly, the Administrative Law Judge was correct in determining that the rolling logs and program guides are not advertising. Similarly, his conclusion that the masthead and decoder are not advertising is correct.

However, the parties' agreement reflects "a custom or an understanding that textual matter is to be inserted for the advertiser or his products" with regard to other portions of the publication's contents. Regarding the cover, paragraph 2(b) of the agreement states that " i n all events, Willamette shall at least use 'spot-color,'" and that unless Petitioner gives CSP one month notice when it intends to use "spot color," it is expected to use full color (Exh. P-6). This subparagraph also states that "Willamette agrees that the cover will relate to cable programming unless otherwise agreed to by Cablesystems. . ." (id.) Moreover, the cover prominently states that Cable Choice is the "official guide for Cablesystems Pacific." Accordingly, the cover constitutes advertising.

Exhibit "A" to the agreement sets forth specific space guidelines for "abbreviated lead story" (3/4 page), "local programming story" (1/2 to 1 page), and "syndicated features" (1/2 to 1 page). These items obviously concern and highlight CSP programming. While their content may also have an informational component, the imposition of specific space allotments reflects an "understanding" by the parties as to textual matter which transformed these items into advertising. ^2/ Certain articles provided from time to time by CSP may also constitute advertising (Tr. 80-81).

Respondent contends that all material in Cable Choice concerning CSP's services - including the rolling logs, guides, masthead, and decoder - should be considered as advertising because this material may help convince customers to purchase or renew CSP services. In determining whether material constitutes advertising under DMM § 422.232, its primary purpose must be considered. If this purpose is informational, the material is not advertising merely because, by the fact of publication, it may encourage interest in a company's services. In this regard, see AMOCO Motor Club, P.S. Docket No. 2/50 (PS.D. Nov. 20, 1974), where, in considering the second-class mail eligibility of a travel magazine issued by a motor club, it was noted:

"it would stand to reason that members of a motor club would be attracted to the type of articles one might find in a travel magazine and that such a magazine purely on its own merits could be a legitimate profit making enterprise. This may present special problems in evaluating the true purpose of the publication but these are to be resolved on the individual facts of each case rather than on any disqualification standard broader than the regulation itself" (at pp. 7-8).

Respondent's reliance on the Initial Decision in Banner Publications, Inc., P.S. Docket No. 17/32 (I.D. Dec. 23, 1983), and TV Host, Inc., P.S. Docket No. 17/25 (I.D. Feb. 28, 1984, aff., P.S.D. Jan. 30, 1985) is misplaced because the circumstances considered in those cases differ from those established in this record. In Banner, the Administrative Law Judge found that the publication in question:

"is primarily designed for advertising purposes because it is controlled by the cable company and conducted as an auxiliary to and essentially for the advancement of the company's cable television business" (I.D. at p. 9).

In TV Host, Inc., it was found that the publication which was the subject of the application for second-class mail privileges was also controlled by and conducted as an auxiliary to, and essentially for the advancement of, various cable television companies (I.D. at pp. 15-16; P.S.D. at pp. 14-15). As discussed infra, the present facts do not justify similar findings.

Respondent makes other arguments regarding the accuracy of the table at Finding of Fact 17. The Administrative Law Judge's findings as to Cable Choice's content are not entirely consistent (cf. I.D., F.O.F. 17, 20 & 31, at pp. 11-13, 17-18). An independent review of the four issues on which his table was based reflects that the calculations of advertising space for these issues may err on the low side. However, unless the program listings are considered advertising, the contents of these issues would not fall within DMM § 422.231c regardless of how the remaining portions of the magazines are viewed. That provision defines "general publications primarily designed for advertising purposes" as those "that consist principally of advertising and articles about advertisers in the publication."

In Exception 9, Respondent contends that § 422.231 should not be read to require any specific proportion of advertising matter as a precondition to finding that a publication is primarily designed for advertising purposes and thus ineligible for second-class mail privileges. It contends that subsections a through 3 of § 422.231 only set forth examples of publications ineligible for second-class mail privileges and do not limit the section's general exclusion from eligibility. However, the applicability of subsections a and c is expressly tied to the amount of advertising content in the publication seeking second-class mail privileges. Since the bulk of the content of Cable Choice is that of a rolling log and program guide and, as noted, the log and program guide do not constitute advertising, this publication is not primarily designed for advertising purposes within the meaning of either § 422.231a or c.

While the finding that a publication is primarily designed for advertising purposes may be made based on other characteristics of the publication, such as those set forth in subsections b, d, and e, as Respondent itself notes, such a finding would then be based on factors independent of the overall content. The applicability of these other subsections to Cable Choice is addressed infra.

Respondent also objects to the Administrative Law Judge's reliance on Petitioner's testimony regarding its intent in publishing Cable Choice. It contends that DMM § 422.231 requires a "deeper look" into motives, citing Channel Northwest, Inc., H.E. Docket No. 5/178 (H.E. Rep. March 12, 1958) at pp. 14-15. While a thorough review is certainly required, Respondent has not shown that such a review was not made in this case. The Administrative Law Judge not only relied on Petitioner's testimony regarding the purpose of Cable Choice, but also noted that the evidence in the record supported this testimony. The Administrative Law Judge committed no error in this regard.

The Channel Northwest case cited by Respondent differs significantly from the present case. Under the facts established in the record in this case and contrary to the facts in Channel Northwest, (1) as of January 3, 1983, over 50% of the copies of Cable Choice were distributed through subscriptions to an independent paying audience; and (2) the motivation advanced by Petitioner of providing, and profiting from an interest in obtaining, cable programming information reasonably could have been the primary purpose for publishing Cable Choice, regardless of whatever advertising advantage CSP believed it would obtain thereby, or actually obtained. While Respondent argues that a publisher should not escape the advertising strictures of § 422.231 because it sought to obtain a profit, whether or not a profit was intended by a publisher is a factor which may be considered together with all of the other factors and relationships to determine a publication's eligibility for second-class mail privileges.

Finally, Respondent disputes the statement in the footnote at Finding of Fact 17 that "by the time the CSP computer gets the guide, he has already paid his cable hook-up fee" (I.D. at p. 12 fn. 2). Respondent correctly points out that CSP customers may have received Cable Choice before renewing cable service, purchasing additional services, or ordering pay-per-view programs and that at one time CSP customers received the guide before signing up for cable service. However, the statement in the footnote doe not affect the ultimate determinations in this proceeding, which are based on other factors and relationships as discussed herein.

Accordingly, while portions of Respondent's exceptions may have merit, the ultimate finding which they address, that Cable Choice is not primarily designed for advertising purposes, is affirmed.

Exception 3

Respondent excepts to the final sentence of Finding of Fact 10, in which the Administrative Law Judge stated that while Petitioner contends Cable Choice is primarily intended to inform CSP customers, " i t is also intended to inform viewers of broadcast television who do not have cable service" (I.D. at p. 9). Respondent objects to any implication that providing information to non-CSP customers is a primary purpose of Cable Choice. The finding, which is supported by the citations given, contains no such implication and is affirmed.

Respondent takes a limited exception to Finding of Fact 16, in which the Administrative Law Judge found that "Petitioner competes with several other publishers of viewer guides to broadcast and cable television programming in Portland" (I.D. at p. 11). Respondent proposes to add that Petitioner also copetes with producers of customer-designed guides, for opportunities to produce custom-designed guides under agreement with individual cable systems. Respondent's proposed addition is not inconsistent with the finding and demonstrates no error. Accordingly, the finding is affirmed.

Respondent takes a limited exception to Finding of Fact 19, "for the purpose of clarifying that the program schedule, FM guide, and all other nondisplay advertising in Cable Choice is devoted to the services offered by CSP." The proposed clarification does not affect the validity of the finding, which is supported by the citations to the record and is hereby affirmed.

This exception concerns Finding of Fact 21, in which the Administrative Law Judge found that Cable Choice carries "more advertisements for local broadcast television stations, alone, than for Cablesystems Pacific" (I.D. at p. 13). Respondent correctly points out that this finding is based on only one issue of Cable Choice and is not borne out by other issues (e.g. see Exhs. P-13, P-16, P-17 & P-20). Accordingly, the quoted portion of Finding of Fact 21 is reversed.

These exceptions address Findings of Fact 28 and 29, which concern the applicability of DMM § 422.231b to Cable Choice. This provision excludes from second-class privileges

" p publications owed or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of any other business or calling of those who own or control them."

In Finding of Fact 28, the Administrative Law Judge found that although the parties' agreement provides that copies of Cable Choice will be furnished for use in soliciting potential CSP customers, CSP neither owns nor controls Petitioner, and does not use Cable Choice in promoting sales of its cable services (I.D. at p. 16). In Finding of Fact 29, the Administrative Law Judge found that in order for DMM § 422.231b to apply

"there must be, first, an individual, group, or concern engaged in at least two businesses, one of which is publishing.

Next, the publishing business must be so operated that it fairly can be said to function 'as an auxiliary to and essentially for the advancement of' one or more of the other businesses" (I.D. at p. 16).

He further found that these elements were absent in this case.

Respondent excepts to the finding that CSP does not use Cable Choice in promoting sales of its cable services. It asserts that copies of Cable Choice originally were intended for distribution to potential CSP customers and that this intent should ot be disregarded merely because the distribution was discontinued as unsuccessful. Further, it asserts that CSP informs potential customers that it will provide them with a free subscription to Cable Choice if they become CSP customers (citing Tr. 150-51 & Exh. R-3) and relies on the good will of this "bonus" to increase sales.

Respondent's argument that CSP relies on the bonus of a free subscription to promote initial sales of cable service is not persuasive. There is no evidence to support the conclusion that a cable company would expect it could persuade individuals to become subscribers by offering free programming guides. However, the agreement between Petitioner and CSP explicitly states, in a paragraph entitled "Promotion" that

"Cablesystems shall, throughout the life of this Agreement, include along with any promotional material distributed to persons solicited for cable subscriptions a free copy of the Guide. Willamette shall provide Cablesystems with sufficient copies . . . for distribution to its potential cable subscribers at no cost to Cablesystems" (Exh. P-6, at para. 4(a)).

Petitioner conceded that at one time CSP gave potential customers a free copy of Cable Choice. Although it no longer does so (Tr. 72-73, 125-26), CSP still advertises extensively in Cable Choice. By virtue of such advertising, it continues to promote its services to the publication's readers, whether these readers are potential customers or actual customers who may be considering subscribing to premium channels, pay-per-view programs, or renewing their basic subscriptions.

Accordingly, Finding of Fact 28 is reversed insofar as it states that CSP does not use Cable Choice in promoting sales of its cable services. It is noted, however, that such promotion does not in itself preclude the publication's eligibility for second-class mail privileges so long as the proscriptions in DMM § 422.231 are not violated thereby.

Respondent also excepts to the finding that CSP does not control Petitioner. As Respondent notes, the Administrative Law Judge apparently based this finding on Findings of Fact 24-27, which, in turn, noted the absence of cross-ownership, common employees, or use of common offices, facilities, or equipment (I.D. at pp. 15-16). While Respondent does not dispute these underlying factual determinations, it asserts that these elements are not dispositive of whether "control" exists within the meaning of DMM § 422.231b. It argues that the Administrative Law Judge's approach limits consideration to "formal indicia of control" and "ignores the practical means by which an entity may control a publication" (Resp. Brief at p. 33).

Under DMM § 422.231b, quoted supra, common ownership need not exist for a finding of "control" since the provision explicitly covers publications "owner or controlled" (emphasis added). Ownership and control are not necessarily synonymous. Finding of Fact 29 is reversed to the extent it implies otherwise. See also, TV Host, Inc., supra. This determination depends on an examination of the entire available record and a variety of factors which may affect the relationships between the publication seeking eligibility and other companies or individuals. See TV Host, Inc., supra.

Respondent cites editorial restrictions on a publication as a "significant factor" in determining control. As noted supra, the magazine format set forth in the agreement between Petitioner and CSP was patterned after a pre-existing magazine produced by Petitioner and over which CSP was not shown to have had any control. The agreement itself does not reflect any editorial control over the bulk of Cable Choice. Those articles for which specific space is allotted in the agreement, as already discussed, have been determined to be advertisements - consistent with Respondent's own view - and therefore cannot also be considered to reflect editorial control. Moreover, Petitioner does not show CSP its articles or editorials in advance (Tr. 90) and CSP has on occasion complained about editorials run by Petitioner (Exhs. P-14 & 15). Petitioner possesses sole control over the types of advertisements run in the publication as is evident by advertisements and for video rental companies and satellite dish receivers, both of which are competitors of CSP (Tr. 83; Exhs. P-16 at p. 41, P-17 at p. 30). Cable Choice also includes advertisements for commercial broadcast channels, which appeared in the publication over CSP's objection (Tr. 41-42; Exh. P-7 at pp. 17, 27 & 31).

Respondent also cites, as a significant factor in determining "control," whether the publisher receives financial support from a company or is otherwise dependent on it. While CSP has provided financial support to Petitioner through the purchase of trial subscriptions for CSP customers, the record also shows that Petitioner independently derives income from its publication through subscriptions and newsstand sales, with the number of independently paid subscribers exceeding those paid by CSP under trial subscriptions as of November 15, 1982 (Tr. 99-102). In this regard, as discussed infra, Respondent concedes that Petitioner has had more than a token list of subscribers as of January 3, 1983. It is also noted that Petitioner receives all advertising revenues from the publication (Tr. 30).

Respondent cites various administrative decisions as supporting its view that CSP should be found to control Cable Choice. However, factors considered significant in those cases are absent here. For example, in TV Host, Inc., supra, the publisher was found to be essentially a printing company for various cable television companies, the survival of each of the publication's customized editions depended on financial support and assistance from the individual cable company which purchased virtually the entire output of the publication and directly provided the publisher with almost all of the subscription revenue, and the cable companies retained some of the revenue from national and regional advertisers and all of the revenue from advertising space which they sold in their own editions. Further, Vertical Mktg., Inc., P.S. Docket No. 2/6 (I.D. April 3, 1974) and AMOCO Motor Club, supra, which are also cited by Respondent, both allowed second-class mail privileges and do not support its position here. Cf. Westchester Interconnect, Inc., P.S. Docket No. 18/75 (I.D. June 13, 1984); Commodore Business Machs., Inc., P.S. Docket No. 14/95 (I.D. Feb. 17, 1983); Smokenders, Inc., P.S. Docket No. 4/192 (I.D. Jan. 19, 1977); Holmes Management Co., P.S. Docket No. 4/71 (I.D. Feb. 12, 1976; P.S.D. Oct. 22, 1976).

A review of the entire record and all aspects of the relationship between CSP and Petitioner supports the Administrative Law Judge's finding that Cable Choice is not controlled by CSP within the meaning of DMM § 422.231b. While individual editions of Cable Choice may display certain of the features cited in TV Host, Inc., to reflect control (e.g., Exh. P-20, at p. 2, has a letter from CSP to subscribers; see also Exh. R-8 & 9 at pp. 2 - 3, Exh. R-11 at p. 3), the overall relationship between Petitioner and CSP does not reflect the type of control noted in that and the other cited cases. Respondent has not rebutted the evidence that Petitioner operates independently of CSP. Although during the start-up period Petitioner may have greatly depended on the trial subscription revenues received from CSP, it has not been shown that this publication's economic survival is tied to or even primarily based on receipt of revenues received from trial subscriptions. Moreover, there is no evidence of common ownership or of CSP's ability to influence either the editorial or advertising content of the publication.

Further, even if "control" were found in this case, in order to come within the prohibition of DMM § 422.231b, Cable Choice would have to be "conducted as an auxiliary to and essentially for the advancement of" CSP. See TV Host, supra; The Diners' Club, Inc., P.O.D. Docket No. 1/225 (D.D. Jan. 27, 1961) at p. 12; Florists' Transworld Delivery Ass'n., P.S. Docket No. 1/167 (P.S.D. May 24, 1974) at p. 11. Respondent contends that Cable Choice is an auxiliary to and essentially for the advancement of CSP because it is used to encourage existing customers to renew or purchase CSP services. However, under the regulation, the publication must be conducted "essentially for the advancement" of another business (emphasis added). This is not the case here. The record reflects an independent market for publications with cable program listings (see Tr. 20-25), which Cable Choice is intended to service. Petitioner only approached CSP for help in marketing the guide (Tr. 29, 114). CSP had not intended to publish its own guide (Tr. 114).

It is noted that, by agreement of the parties, Cable Choice is designated as CSP's "official" guide (Exh. P-6, para. 3(a)) and this designation prominently appears on each issue cover. However, the covers also advise readers that Cable Choice is "an edition of Willamette TV and Cable Guides." The "official" designation does not establish that the publication is conducted essentially for CSP's advancement. Accordingly, Findings of Fact 28 and 29 are partially reversed as discussed but are otherwise affirmed.

This exception addresses the third sentence of Finding of Fact 30, which concerns the applicability of DMM § 422.231c, quoted supra. The Administrative Law Judge found that CSP

"does ot tell Petitioner what articles to run or what to write in the articles, nor is Petitioner paid for them" (I.D. at p. 17).

Respondent contends that CSP influences the choice or content of Cable Choice articles, which uniformly concern CSP's cable programming. It also states that since Petitioner is required to carry such articles under the parties' agreement it is realistic to consider a portion of the consideration it receives to be payment for carrying the articles.

As noted, no evidence has been presented that CSP exercises editorial "control" over Cable Choice. Articles for which specific space has been allotted under the parties' agreement are considered advertisements by CSP. Even so, Cable Choice still does not principally consist of advertising and articles about advertisers within the meaning of DMM § 422.231c. Moreover, any payment received by Petitioner for publishing the articles is in the form of marketing assistance for Cable Choice and supports the conclusion that the publication is primarily designed to promote its own interests rather than advertise CSP. Accordingly, Finding of Fact 30 is affirmed except that articles required to be run in Cable Choice under the parties' agreement are deemed to constitute part of the consideration for CSP's marketing assistance.

This limited exception concerns Finding of Fact 32, which addresses the applicability of DMM § 422.231d to Cable Choice. Subsection d excludes from second-class mail eligibility

" p publications that have only a token list of subscribers and that print advertisements free for advertisers who pay for copies to be sent to a list of persons furnished by the advertisers."

The Administrative Law Judge accepted Respondent's stipulation that Petitioner has had more than a token list of subscribers since January 3, 1983 (I.D. at p. 18) and held that January 3, 1983, was the date on which Petitioner became eligible for a second-class mail permit (I.D. at pp. 6, 29). Respondent, although reaffirming this stipulation, requests that the Judicial Officer find there was a token list of subscribers before that date. Based on the the stipulation and the conclusion reached in this decision that Petitioner is entitled to second-class mail privileges as of January 3, 1983, we see no good reason to address the preceding period.

These exceptions address Findings of Fact 37, 38, and 40, which discuss the rights and obligations of CSP and Petitioner which arise under their agreement. Respondent suggests that Finding of Fact 37 implies that CSP was dissatisfied with the format of Cable Choice. Such an inference cannot be drawn from the finding. Respondent's contention that the finding does ot set forth all of the consideration flowing to CSP under the agreement is valid. However, the failure to include such additional consideration (see Exh. P-6 at paras. 1, 2(b), 3(b), & 4(a)) does not affect the outcome of this case. Similarly, while, as Respondent contends, CSP's marketing assistance to Petitioner may disprove the statement in Finding of Fact 38 that Petitioner is paid nothing by CSP for publishing Cable Choice, such payment, as already noted, reflects a primary interest in furthering Cable Choice rather than CSP.

Regarding Finding of Fact 40, Respondent objects to the Administrative Law Judge's comparison between the terms of the agreement and informal arrangements for medical services under which a carpenter or a farmer might pay a physician in goods or services. It also objects to this comparison insofar as the example given may indicate that the purchaser does ot control the seller's production of his goods. The hypothetical given has not been considered in reviewing the Administrative Law Judge's substantive conclusions. Accordingly, Findings of Fact 37 and 38 are affirmed except as modified herein. Finding of Fact 40 is disregarded.

These exceptions address Findings of Fact 41 and 45, in which the Administrative Law Judge considered whether Cable Choice is eligible for second-class mail privileges under DMM § 422.231e. This subsection excludes "publications published under a license from individuals or organizations and that feature other businesses of the licensor." The Administrative Law Judge found that Petitioner has no license to publish Cable Choice (I.D. at p. 22) and concluded that Cable Choice is not designed primarily for advertising purposes within the meaning of DMM § 422.231e (I.D. at p. 29). Respondent contends that the right to designate Cable Choice as the "official" CSP guide constitutes a license.

In response to this contention, Petitioner cites portions of the hearing transcript in which officials of both Petitioner and CSP state that no license to publish Cable Choice was given and that CSP's permission is not required in order to publish a guide to cable programming (Tr. 39, 138, 218). The Administrative Law Judge cited the same factors and testimony in finding that no license exists.

Under the parties' agreement, CSP expressly granted to Petitioner

"the exclusive right and license to title and refer to the guide as the 'official' guide for Cablesystems' cable television programming in the East side Portland, oregon, metropolitan area.

Petitioner is also granted the exclusive right and license to refer to the guide as the 'official' Cablesystems Cable Television Programming Guide for the east side, Portland, Oregon, metropolitan area in all its advertising and promotional efforts"

(Exh. P-6, para. 3(a), emphasis added).

Thus, the agreement between Petitioner and CSP gave Petitioner permission to use its name in promoting and publishing Cable Choice.

Respondent argues that the right to refer to Cable Choice as the "official" CSP guide is a license which, although limited in scope, constitutes a basis for denying a second-class permit to Petitioner. This contention is rejected. As Respondent concedes, the permission granted is limited in scope. The use of the official designation and the exclusive right to local programming information does not affect the bulk of the publication and does not convert Cable Choice to a " p publication published under a license" within the meaning of DMM § 422.231e. As Petitioner argues and the Administrative Law Judge found, CSP's permission is not required in order for Petitioner to publish its cable guide. Moreover, it has been found in connection with other of Respondent's exceptions that the publication is not controlled by the cable system, nor conducted as an auxilliary to and essentially for its advancement. Thus, DMM § 422.231e does not prohibit Petitioner from obtaining a second-class permit.

This exception addresses Finding of Fact 43, in which the Administrative Law Judge discussed the relationship between Petitioner and CSP regarding editorials published in Cable Choice. The finding does not imply that Cable Choice's editorials are regularly considered objectionable by CSP, as the exception suggests. Accordingly, Finding of Fact 43 is affirmed.

In this exception, Respondent contests Finding of Fact 44 in which the Administrative Law Judge finds that CSP does not tell Petitioner what to print and that this and the other factors considered by the Administrative Law Judge in the finding are incompatible with a licensor/licensee relationship. The first part of Respondent's exception is addressed to the "control" issue. That issue, and Respondent's arguments, have been fully considered under Exceptions 10-12. The latter part of Respondent's exception has been considered under Exceptions 18 and 21. The arguments presented under this exception are not persuasive that the conclusions reached in connection with the prior exceptions are in error.

This exception concerns Paragraphs 2-6 of the summary at pages 24-26 of the Initial Decision, in which the Administrative Law Judge reiterates his key findings and conclusions.

The arguments set forth in this exception have been addressed supra.

This exception concerns Conclusions of Law 2-4 in which the Administrative Law Judge determined that Cable Choice is not a publication designed primarily for advertising purposes within the meaning of DMM § 422.231 and that Petitioner's publication was entitled to second-class mail privileges effective January 3, 1983 (I.D. at p. 29). The arguments set forth in this exception to have been addressed in discussing Respondent's exceptions to the specific findings of fact on which these conclusions are based. In accordance with this prior discussion, the Initial Decision is affirmed as modified.

Interpretation of DMM Regulations