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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 December 16, 1998 CERTIFIED MAIL, RETURN RECEIPT REQUESTED IN REPLY REFER TO: 1800CI-sbf 98090408 Washington Broadcast Management Co., Inc. Licensee of KNTB (AM), Lakewood, Washington 71 Yesler Way Seattle, WA 98104 Dear Licensee: This letter constitutes a NOTICE OF APPARENT LIABILITY FOR A FORFEITURE against Washington Broadcast Management Co., Inc. ("WBM") pursuant to Section 503(b) of the Communications Act of 1934, as amended (the "Communications Act"), under authority delegated to the Chief of the Mass Media Bureau ("Bureau") by Section 0.283 of the Commission's Rules. As set forth herein, it appears that WBM engaged in an unauthorized transfer of control of the license for Station KNTB (AM), Lakewood, Washington, in violation of Section 310(d) of the Communications Act of 1934, as amended ("the Act") and Section 73.3540 of the Commission's Rules, 47 C.F.R.  73.3540. In addition, it appears that WBM violated Section 73.1125 of the Commission's Rules, 47 C.F.R. 73.1125, by failing to maintain a meaningful managerial and staff presence in the main studio. On February 4, 1998, an application was filed seeking Commission approval of the assignment of Station KNTB from WBM to FTP Corporation (File No. BAL-980204EJ). Fred Lundgren, the former president of WBM, filed a petition to deny the application. He alleged that he had entered into an agreement with Triangle Broadcasting Co., Inc. ("Triangle") for the transfer of control of WBM to Triangle and that Commission approval had not been obtained for that transaction. Accordingly, he contended that the new owners of WBM should not be allowed to assign Station KNTB. Following the filing of this petition to deny, the parties agreed to file the appropriate application requesting nunc pro tunc approval of the transfer of control of WBM to Triangle and Lundgren withdrew his petition (File No. BTC-980421HU). Those applications remain pending. Lundgren's petition to deny raised concerns regarding a possible unauthorized transfer of control of Station KNTB. Notwithstanding Lundgren's withdrawal of his petition to deny, a letter of inquiry was issued to WBM on August 7, 1998. By letter dated September 11, 1998, Lundgren, as the former president of WBM, responded to the letter of inquiry. In addition, Frank Olsen, as President of Triangle and current president of WBM, filed a letter on September 17, 1998, providing further information regarding this matter. Based on the information before us, as discussed infra, it appears that WBM engaged in an unauthorized transfer of control of Station KNTB by transferring ownership of WBM to Triangle on December 17, 1997. This violation is continuing. It also appears that WBM is in violation of the Commission's main studio rule by failing to maintain a full-time managerial and staff presence at Station KNTB's main studio. Unauthorized Transfer of Control There is no exact formula by which control of a broadcast station can be determined. In ascertaining whether a transfer of control has occurred, we traditionally look beyond the legal title to whether a new entity or individual has obtained the right to determine the basic operating policies of the station. See WHDH, Inc., 17 FCC 2d 856 (1969), aff'd sub nom. Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D.C. Cir. 1970), cert. denied, 403 U.S. 923 (1971). Although a licensee may delegate certain functions to an agent or employee on a day-to-day basis, ultimate responsibility for essential station matters, such as personnel, programming, and finances, cannot be delegated. Southwest Texas Public Broadcasting Council, 85 FCC 2d 713, 715 (1981). See also Salem Broadcasting, Inc., 6 FCC Rcd 4172 (MMB 1991). Both Lundgren and Olsen admitted that ownership and control of WBM were transferred to Triangle without prior Commission authorization. Both explained that in late 1997, Olsen learned that Station KNTB was having financial difficulties and was in bankruptcy. Olsen approached Lundgren with a proposal for Triangle to purchase WBM. Lundgren agreed to the sale and the agreement was signed on December 17, 1997. Pursuant to the terms of the agreement, Triangle acquired 100% of the stock of WBM. In addition, Lundgren resigned as president of WBM and was replaced by Olsen. Lundgren's duties at WBM were reduced to those of a consultant and advisor. Lundgren admitted that as of December 17, 1997, Olsen assumed all responsibility for the operation of Station KNTB, including the critical areas of personnel, programming, and finances. Triangle did not seek authority from the Commission to transfer control of the station until it filed its FCC Form 315 application on April 21, 1998. According to Lundgren's response, the finances of the station are handled by Olsen, Tim Mauch, the station's engineer, Chris Handley, WBM's local business manager, and Rene Schenk, the comptroller of both WBM and Triangle. Lundgren also stated that Olsen has control over station personnel, with certain exceptions. Pursuant to the December 1997 purchase agreement, Lundgren is to remain an employee of WBM for a specified time period and Mauch is to remain as the chief engineer of the station. According to Lundgren, aside from the contractual obligations to employ Lundgren and Mauch, Olsen is in control of the hiring and firing of all station personnel. Lundgren further stated that the programming for the station is provided by Triangle. Specifically, he stated that all programming decisions are made by Olsen and Carlos Tynes, Triangle's program director. Based on the information before us, we find that Triangle is in control of the day-to-day operation of the station, including its programming, personnel, and finances. Accordingly, it appears that from December 17, 1997, and continuing as of the date of this Notice, you willfully and repeatedly violated Section 310(d) of the Communications Act and Section 73.3540 of the Commission's Rules by transferring control of Station KNTB without Commission authority to do so. With respect to these violations, pursuant to Section 503(b) of the Communications Act, and in accordance with the forfeiture guidelines set forth in the Commission's Forfeiture Policy Statement, WBM is hereby advised of its apparent liability for a forfeiture of $8,000 for the unauthorized transfer of control of Station KNTB. Main Studio Violation Prior to October 30, 1998, Section 73.1125 of the Commission's Rules required that a station maintain its main studio within the station's principal community contour. Effective October 30, 1998, this rule was amended to allow a station greater flexibility in the location of its main studio. In either case, the main studio must serve the needs and interests of the residents of the station's community of license. To fulfill this function, a station must, among other things, maintain a meaningful management and staff presence at its main studio. See Main Studio and Program Origination Rules (Clarification), 3 FCC Rcd 5024, 5026 (1988). In Jones Eastern of the Outer Banks, Inc., 6 FCC Rcd 3615 (1991), clarified, 7 FCC Rcd 6800 (1992), the Commission defined a minimally acceptable "meaningful presence" as full-time managerial and full-time staff personnel. It further stated that there must be "management and staff presence" on a full-time basis during normal business hours to be considered "meaningful." It appears from Lundgren's response to the Commission's letter of inquiry that WBM is in violation of the Commission's rules regarding the staffing of a main studio. The lease for the main studio for KNTB commenced on February 1, 1998. Since that date, the main studio has been staffed by Mauch, the chief engineer, and Handley, the business manager. According to Lundgren's response, these employees "float" between the main studios for KNTB and KBRO (AM), Bremerton, Washington, which is also licensed to WBM. He explained that Mauch is on call 24 hours per day, seven days a week and Handley works a standard five day work week. KNTB's studio is located in Tacoma and KBRO's studio is located in Bremerton, approximately 30 miles away. Thus, it appears that the KNTB main studio is not staffed full-time by a management level employee. Moreover, although Lundgren's response indicates that there is a full-time receptionist on duty at the building where the KNTB's main studio is located, the receptionist is employed by and is paid by the lessor of the building, and not by WBM. See, Salem Broadcasting, Inc., 6 FCC Rcd 4172 (MMB 1991) (one part-time employee did not meet the staffing requirements set out in Jones Eastern, supra.); KQQK, Inc., 10 FCC Rcd 132 (MMB 1994) (staffing violation found where station manager was not present at the studio and could be reached only by telephone). Therefore it appears that from at least February 1, 1998, when KNTB's current main studio was established, and continuing as of the date of this Notice, WBM willfully and repeatedly violated Section 73.1125(a) of the Commission's Rules by failing to maintain a full-time managerial and staff presence at the main studio for Station KNTB. With respect to these violations, pursuant to Section 503(b) of the Communications Act, and in accordance with the forfeiture guidelines set forth in the Commission's Forfeiture Policy Statement, WBM is hereby advised of its apparent liability for a forfeiture of $7,000 for the main studio staffing violation. In regard to these forfeitures, WBM is afforded a period of thirty (30) days from the date of this Notice "to show, in writing, why a forfeiture penalty should not be imposed or pay the forfeiture. Any showing as to why the forfeiture should not be imposed or reduced shall include a detailed factual statement and such documentation and affidavits as may be pertinent." 47 C.F.R.  1.80(f)(3). Other relevant provisions of Section 1.80 are summarized in the attachment to this Notice. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau Attachment cc: Josephine Schilling-Baine