Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of) ) Liability of ) KCTZ COMMUNICATIONS, INC. ) ) Licensee of Television Station ) KCTZ(TV), Bozeman, Montana ) ) for a Forfeiture) MEMORANDUM OPINION AND ORDER Adopted: November 4, 1997 Released: November 6, 1997 By the Chief, Mass Media Bureau: 1. The Commission, by the Chief, Mass Media Bureau acting pursuant to authority delegated by Section 0.283 of the Commission's Rules, 47 C.F.R. 0.283, has before it for consideration (i) a Notice of Apparent Liability ("NAL") in the amount of fifteen thousand dollars ($15,000) issued against Big Horn Communications, Inc. ("Big Horn"), licensee of station KCTZ(TV), Bozeman, Montana; and (ii) Big Horn's Request for Reduction of Forfeiture filed on August 26, 1993. The forfeiture was assessed for apparent repeated violation of Section 73.670 of the Commission's Rules, 47 C.F.R. 73.670, which limits the amount of commercial matter that may be aired during children's programming. 2. On December 1, 1992, Big Horn filed an application for renewal of license for KCTZ(TV), File No. BRCT-921201KX. In response to Question 9(b) of that application, as to whether KCTZ(TV) had complied with the limits on commercial matter in children's programming specified in Section 73.670 of the Commission's Rules, KCTZ(TV) stated that it had not so complied. In accordance with the requirement of Question 9(c), KCTZ(TV) submitted Exhibit C to its application, listing each segment of children's programming which exceeded the commercial limits. Exhibit C revealed that between January and September, 1992, KCTZ(TV) exceeded the commercial limits on children's television on 55 occasions. Of these 55 commercial overages, six were 90 seconds in duration; one was 70 seconds in duration; 15 were 60 seconds in duration; 12 were 45 seconds in duration; and 21 were 30 seconds in duration. In its explanation of these commercial overages, KCTZ(TV) stated that during the period in question it operated as a satellite of station KOUS-TV, Billings, Montana; that since KCTZ(TV)'s "program advertising 'skeleton' is identical to KOUS[-TV], management assumed that the total amount of advertising within the children's programs would be the same as on KOUS[-TV]" and that, therefore, "if KOUS[-TV] stayed within the limits, KCTZ[TV] would automatically do so." KCTZ(TV) further stated that, although most of the programming on KCTZ(TV) was rebroadcast from KOUS-TV, it frequently substituted its own commercials for the commercials contained in the KOUS-TV transmission; and that KCTZ(TV)'s "switchers", the employees whose responsibility it was to substitute KCTZ(TV) commercial matter for KOUS-TV commercial matter, had "a certain amount of discretion to depart from the scheduled log" in making such commercial substitutions, primarily for "make-goods" and "run of schedule" advertisements. However, the switchers were not aware of the Commission's rules limiting the amount of commercial matter in children's programming. Accordingly, the switchers sometimes substituted KCTZ(TV) commercial matter for public service announcements contained in KOUS- TV's children's programming, resulting in the listed commercial overages. KCTZ(TV) characterized the commercial overages as accidental and unintentional, and stated that they resulted from a "weakness in communications and management." 3. In Big Horn NAL, supra, the Chief of the Mass Media Bureau, pursuant to delegated authority, considered the following "factors of particular importance": the number and duration of commercial overages, the period of time over which the overages occurred, and whether the licensee had established an effective program to ensure compliance with the children's television commercial limitations. Upon consideration of these factors, it was determined that a forfeiture in the amount of $15,000 was appropriate. Id., 8 FCC Rcd at 5082. 4. In its Request for Reduction of Forfeiture, Big Horn concedes that there is no dispute about the facts concerning the nature and extent of children's television commercial overages reported in its renewal application. However, it contends that the forfeiture should not be imposed, or should be reduced, based on certain factors set forth in Policy Statement - Standards for Assessing Forfeitures, 6 FCC Rcd 4695 (1991)("Policy Statement/ Assessing Forfeitures"). Big Horn argues that the Commission staff did not take into consideration the four downward adjustment criteria described in the Policy Statement that provide for reductions of forfeitures. 5. Big Horn advances several arguments in support of its position that the forfeiture should be reduced or rescinded. It argues, first, that it had procedures in place to ensure compliance with the children's television commercial limits. Big Horn states that after it discovered violations of the commercial limits it put into effect revised procedures; and that between that time and the filing of its request for reduction there have been no recurrences. Second, Big Horn argues that favorable weight should be given to the voluntary good faith disclosures of these violations. Finally, Big Horn states that it had never been fined or disciplined for violation of the Commission's rules, with the exceptions of "a separate manifestation of the same violation", reprimands for violations of the children's television commercial limitations issued against two other stations licensed to Big Horn, KYUS-TV, Miles City, Montana, and KOUS-TV, Billings, Montana. Big Horn concludes that these factors "mandate mitigation of the forfeiture to zero", or, in the alternative, to an "absolute maximum" of $7,500. Discussion 6. In United States Telephone Ass'n. v. FCC, 28 F3rd 1232 (D.C. Cir. 1994), the U.S. Court of Appeals for the District of Columbia set aside Policy Statement/Assessing Forfeitures, supra, stating that the guidelines for assessing forfeitures established therein must be subject to public comment to comply with the Administrative Procedure Act. In accordance with the court's decision, the Commission released Forfeiture Guidelines - Notice of Proposed Rulemaking in CI Docket No. 95-6, 10 FCC Rcd 2945 (1995). After receiving and considering comments from the public in that proceeding, the Commission adopted guidelines for assessing forfeitures. Forfeiture Guidelines - Report and Order in CI Docket No. 95-6, FCC Rcd (FCC 97-218, adopted June 19, 1997, released July 28, 1997)("Forfeiture Guidelines"). Forfeiture Guidelines, id., became effective on October 14, 1997. 62 Fed. Reg. 43474 (August 14, 1997). However, with regard to (i) all cases pending when Forfeiture Guidelines, supra, was adopted, and (ii) all cases involving "violations arising from facts that occurred before the effective date of th[at] order", forfeiture amounts are to be assessed "under the case-by-case approach in effect when the violation occurred", in conformity with the standards set out in Section 503 of the Communications Act. Id. at 49. 7. In Big Horn NAL, supra 8 FCC Rcd at 5081, the Commission specificaly recognized that a petition for review of Policy Statement/Assessing Forfeitures, supra, was pending in the court of appeals, and stated that the assessed forfeiture amount of $15,000 was determined after consideration of the factors specified in Section 503(b)(2) of the Communications Act and in Policy Statement/Assessing Forfeitures, supra. As stated above, in determining the forfeiture amount in the instant case the Commission considered the number and duration of commercial overages at KCTZ(TV), the period of time over which the overages occurred, and whether the licensee had established an effective program to ensure compliance with the children's television commercial limits. Id., 8 FCC Rcd at 5082. These criteria, which were developed and applied by the Commission in previous cases, are appropriate in analyzing violations of the children's television commercial limits, since they take into account, inter alia, "the nature, circumstances, extent, and gravity of the violation, and, with respect to the violator, the degree of culpability", as required under 503(b)(2)(D) of the Communications Act. Thus, as specified in Forfeiture Guidelines, supra at 49, the forfeiture amount in the instant case was determined in accordance with the criteria developed and applied by the Commission in previous cases, in conformity with the standards established in Section 503 of the Communications Act. 8. Commercial Overages and Related Forfeiture Amount. With regard to the number and duration of commercial overages and the period of time over which the overages occurred, the forfeiture assessed in Big Horn NAL, supra, is consistent with that assessed in roughly similar cases. For instance, in KEVN, Inc., 8 FCC Rcd 5077 (1993), the licensee exceeded the children's television commercial limitations on 58 occasions between January and September, 1992. Of those 58 commercial overages, 27 were 60 seconds in duration and 31 were 30 seconds in duration. In that case, the Commission issued a Notice of Apparent Liability in the amount of $15,000. In WHP Television, L.P., 10 FCC Rcd 4979 (1995), the licensee exceeded the children's television commercial limitations on 38 occasions between October and December, 1993. Of those 38 commercial overages, one was three minutes in duration, eight were between two and three minutes in duration, 21 were between one and two minutes in duration, seven were between one-half and one minute in duration, and one was four seconds in duration. In that case, the Commission issued a Notice of Apparent Liability in the amount of $15,000. In Mountain States Broadcasting, Inc. (KMSB-TV), 9 FCC Rcd 2545 (1994), the licensee exceeded the children's television commercial limitations on 45 occasions between January and December, 1992. Of those 45 commercial overages, one was 75 seconds in duration, 17 were 60 seconds in duration, one was 40 seconds in duration and 26 were 30 seconds or less in duration. In that case, the Commission issued a Notice of Apparent Liability in the amount of $14,000. In R&R Media Corporation (WTWS(TV)), 9 FCC Rcd 1715 (1994), the licensee exceeded the children's television commercial limitations on 80 occasions between July, 1992 and September, 1993. Of those 80 commercial overages, one was four minutes in duration, ten were between two and three minutes, 43 were between one and two minutes, and 26 were less than one minute. In that case, the Commission issued a Notice of Apparent Liability in the amount of $20,000. Thus, the forfeiture assessed in this case is consistent with precedent and should not be reduced. 9. Voluntary Disclosure. In addition, we note that in the Children's Television Act of 1990, Congress not only required the establishment of limits on the amount of commercial matter that may be included in children's television programming, but also directed that "the Commission shall, in its review of any application for renewal of a commercial...television broadcast license, consider the extent to which the licensee...has complied with such standards...." Pursuant to this Congressional mandate, the Commission added a supplement to FCC Form 303- S, Application for Renewal of License, directing the applicant to (i) state whether or not it had complied with the children's television commercial limits; and (ii) if it had not so complied, submit an exhibit to the renewal application listing "each segment of programming, 5 minutes or more in duration, designed for children 12 years old and under and broadcast during the license period which contained commercial matter in excess of the limits" (emphasis added), including "the length of the segment, the amount of commercial matter contained therein, and an explanation of why the limits were exceeded." Supplement to FCC Form 303-S, Application for Renewal of License, Question 9(b) and (c). Section 73.3514 of the Commission's Rules, 47 C.F.R. 73.3514, provides that "[e]ach application shall include all information called for by the particular form on which the application is required to be filed...." Section 1.17 of the Commission's Rules, 47 C.F.R. 1.17, provides that "[n]o licensee, permittee or applicant shall...in any application... submitted to the Commission, make any material misrepresentation or willful material omission bearing on any matter within the jurisdiction of the Commission." 10. Failure to provide the information called for in the renewal application, or providing incomplete or incorrect information, could have resulted in an additional forfeiture against Big Horn for violation of Section 1.17 of the Rules. Cf., David A. Ringer, 8 FCC Rcd 7037 (1993). Further, failure to disclose the occurrence of violations of the children's television commercial limitations in response to the questions in the renewal application, or providing incomplete or incorrect information, could constitute a misrepresentation or lack of candor by the applicant, which would raise a serious question as to whether the applicant possesses the character qualifications to be a Commission licensee. Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1210-11, recon. 1 FCC Rcd 421, 422 (1986)("Character Qualifications"), appeal dismissed sub nom. National Association for Better Broadcasting v. F.C.C., No. 86-1179 (D.C. Cir. June 11, 1987). Applicants for renewal of license have been disqualified on the basis of such character issues, resulting in denial of renewal. Character Qualifications/recon., 1 FCC Rcd at 422. 11. Finally, as each applicant is reminded by a statement directly under the signature block on the FCC Form 303-S renewal application, willful false statements in the renewal application are punishable by fine and imprisonment, pursuant to U.S. Code, Title 18, Section 1001. In view of the foregoing, Big Horn's provision of information regarding the nature and extent of its noncompliance with the children's television commercial limits, which it was explicitly required to provide pursuant to specific questions in the renewal application, clearly cannot be said to have constituted a "voluntary" disclosure which would have justified a reduction of the forfeiture. 12. History of Overall Compliance. Similarly, Big Horn's assertion that its history of overall compliance justified a reduction is without merit. As Big Horn acknowledges, the other two television stations for which it holds licenses, KOUS-TV and KYUS-TV, were issued letters of admonition for violating the very same rule, the commercial limits on children's television programs. Although the violations at these stations were not as numerous as the violations at KCTZ(TV), thereby meriting admonitions rather than forfeitures, the KOUS-TV and KYUS-TV violations demonstrate that Big Horn does not have a history of overall compliance that would have justified a reduction. 13. CTA Compliance Program. With regard to whether KCTZ(TV) had established an effective program to ensure compliance with the children's television commercial limitations, we are unpersuaded that the station's compliance program mitigates in favor of reducing the instant forfeiture. Big Horn failed to establish and implement its own effective procedures to ensure compliance with the children's television commercial limitations until it discovered the violations in the preparation of its license renewal application. 14. Further, although certain KCTZ(TV) employees were given the responsibility, authority and discretion to substitute KCTZ(TV) "make-goods" and "run of schedule" advertisements for advertisements in the incoming KOUS-TV signal, KCTZ(TV) concedes that those employees were unaware of the children's television commercial limitations, and therefore sometimes substituted KCTZ(TV) commercial matter for public service announcements contained in KOUS-TV's children's programming, resulting in additional violations of the children's television commercial limits. Big Horn characterizes this lack of awareness of the children's television commercial limits on the part of its employees as a "weakness in communications and management." However, this further demonstrates the failure by KCTZ(TV) to establish an effective program to ensure compliance with the children's television commercial limitations. Also, the absence of any such program is underscored by the fact that KCTZ(TV) did not discover that it had been in violation of the children's television commercial limitations until the preparation of its license renewal application. 15. All of these facts demonstrate a failure on the part of KCTZ(TV) to establish an effective program to ensure compliance with the children's television commercial limits, clearly justifying a forfeiture in the amount of $15,000. Nothing in Big Horn's Request for Reduction of Forfeiture contradicts these facts or justifies or necessitates reduction or mitigation of the forfeiture amount. 16. Finally, the remaining assertions made in Big Horn's Request for Reduction of Forfeiture do not warrant reduction or mitigation of the forfeiture amount. Big Horn asserts that, upon discovery of the violations, revised procedures were put into effect. As stated in Big Horn NAL, 8 FCC Rcd at 5082, the fact that the licensee "may have implemented a plan to eliminate future overages does not relieve...[the licensee] of liability for prior violations. See International Broadcasting Corp., 19 FCC 2d 793 (1969)." See also, KEVN, Inc., 8 FCC Rcd at 5078; R&R Media Corporation (WTWS(TV)), 9 FCC Rcd at 1716; Mountain States Broadcasting, Inc. (KMSB-TV), 9 FCC Rcd 2546; WHP Television, L.P., 10 FCC Rcd at 4980. Big Horn also asserts that the violations were unintentional and/or inadvertent. The Commission has repeatedly held that inadvertence and lack of intention to violate the children's television commercial limits do not excuse such violations. Ramar Communications, Inc. (KJTV(TV)), 9 FCC Rcd 1831 (1994);Act III Broadcasting License Corp. (WUTV(TV)), 10 FCC Rcd 4957 (1995); Buffalo Management Enterprises Corp. (WIVB-TV), 10 FCC Rcd 4959 (1995); Le Sea Broadcasting Corp. (WHKE(TV)), 10 FCC Rcd 4977 (1995). 17. Accordingly, IT IS ORDERED THAT the Request for Reduction of Forfeiture filed by Big Horn Communications, Inc., IS DENIED. IT IS FURTHER ORDERED THAT, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C. 503(b), KCTZ Communications, Inc., licensee of Television Station KCTZ(TV), Bozeman, Montana, FORFEIT to the United States the sum of fifteen thousand dollars ($15,000) for repeated violations of Section 73.670 of the Commission's Rules, 47 C.F.R. 73.670. Payment of the forfeiture may be made by mailing to the Commission a check or similar instrument payable to the Federal Communications Commission. With regard to this forfeiture proceeding, KCTZ Communications, Inc., may take any of the actions set forth in Section 1.80 of the Commission's Rules, 47 C.F.R. 1.80, as summarized in the attachment to this Memorandum Opinion and Order. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau kkctzrd2.rel Licensee Address: KCTZ Communications, Inc. 445 S. 24th St. West Billings, MT 59102 $// KCTZ COMMUNICATIONS, INC., KCTZ(TV) (BOZEMAN, MT) DA 97-2320 //$ $/ 300.503(b) FORFEITURES (FORFEITURE ORDER) /$ $/ 73.670 COMMERCIAL LIMITS ON CHILDREN'S PROGRAMS /$