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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re: Application of) ) Choctaw Broadcasting Corporation)File No. BAPH-930601GJ (Assignor)) ) and ) ) New South Communications, Inc.) (Assignee)) ) For Voluntary Assignment of the ) Construction Permit for ) Station KLIP(FM), Monroe, Louisiana) MEMORANDUM OPINION AND ORDER Adopted: June 9, 1997Released: June 17, 1997 By the Commission: 1. The Commission has before it an application for review, filed on August 31, 1995 by Phoenix Broadcasting Company ("Phoenix"), licensee of station KYEA(FM), Monroe, Louisiana. Phoenix seeks re-examination of a July 24, 1995 action by the Mass Media Bureau ("Bureau") which denied reconsideration of the Bureau's October 20, 1994 denial of Phoenix' petition to deny the above- captioned application to assign the construction permit of station KLIP(FM) from Choctaw Broadcasting Corporation ("Choctaw") to New South Communications, Inc. ("New South"), which is the licensee of Monroe stations KLMB and KJLO(FM). New South and Choctaw filed oppositions to the application for review on September 22 and September 28, respectively; Phoenix filed a "Consolidated Reply" on October 5, 1995. For the reasons set forth below, we will deny the application for review and grant the assignment application. BACKGROUND 2. The KLIP(FM) construction permit (BPH-880602NN) was issued to Choctaw on August 8, 1991; construction was to have been completed by February 8, 1993. On February 2, 1993, Choctaw filed an application for extension of time to construct (File no. BMPH-930202JN). In the extension application, Choctaw indicated that the transmitter, antenna and studio equipment, which had been ordered from New South, were ready to be delivered and that some delay was occasioned because New South was having difficulty in obtaining a necessary co-axial cable. Two weeks after the filing of the extension request, on February 16, 1993, and prior to the commencement of operation, Choctaw signed a letter of intent to sell KLIP(FM) to New South for $400,000, which letter anticipated that New South would acquire and install the necessary equipment and program the station pursuant to a local marketing agreement ("LMA"). Subsequently, on March 31, 1993, still prior to operation, the parties signed a binding asset purchase agreement to sell KLIP(FM) to New South for $400,000. The LMA was signed one day later, on April 1, 1993. One week later, on April 8, 1993, Choctaw notified the Commission that it had commenced operations. An application for covering license was filed on May 10, 1993, and the instant assignment application approximately three weeks later, on June 1, 1993. 3. Phoenix' Petition to Deny. Phoenix filed a petition to deny the assignment application on July 15, 1993, alleging that Choctaw and New South participated in an unauthorized transfer of control of the KLIP(FM) construction permit because New South had been involved in every aspect of the construction and operation and that Choctaw's principal, Linda Melton, lived in Arizona during the authorized construction period. Specifically, Phoenix alleged that New South had: (1) provided the equipment and constructed the station; (2) hired and fired personnel; (3) paid KLIP(FM)'s expenses; (4) purchased outdoor advertising for the station; and (5) ran the station out of New South's studios with New South's personnel. Phoenix also alleged that, because New South acquired the equipment for, constructed, and programmed the station, and because Choctaw had not demonstrated its financial independence from New South, that "either the whole relationship between New South and Choctaw is a sham or the Commission is being asked to permit the sale of a bare license for $400,000." 4. The Bureau denied the petition to deny in William L. Silva, Esq., supra, holding that: (1) Phoenix had not demonstrated that New South had exceeded the authority granted by the LMA with respect to station operations, and the LMA comported with other agreements which the Bureau had previously approved; and (2) all employees and equipment utilized by New South in its construction and operation of KLIP(FM) were hired or acquired with Choctaw's approval, and all payments made to Choctaw employees were paid from Choctaw's account, with one exception. It also noted that a format change during the Summer of 1993 was instituted only after seeking and receiving Ms. Melton's approval, and that Choctaw engineer Roger Bennett was called upon to resolve an interference problem with station KMGC-FM, Camden, Arkansas. The Bureau indicated that these latter two incidents evidenced that New South recognized and deferred to the authority of Ms. Melton and Choctaw, and it concluded that no substantial and material question of fact existed regarding Phoenix' allegations of unauthorized transfer of control. The Bureau also found, on the basis of Choctaw/New South's response to a May 6, 1994 inquiry letter, that the instant transaction did not constitute the sale of a bare license. Finally, the Bureau also determined that the "no profit" provision for the sale of an unbuilt station applied to this transaction. See 47 C.F.R. 73.3597(c)(2). Choctaw was afforded an opportunity to document these expenses. 5. Petition for Reconsideration. Phoenix filed a petition for reconsideration of the Bureau ruling on November 28, 1994 rearguing that New South was involved in every aspect of the construction and current operation of KLIP(FM) and therefore exercised de facto control over the station. Phoenix also argued that it had established a prima facie case regarding an unauthorized transfer of control and that the burden therefore shifted to Choctaw to establish that KLIP was independently owned and operated. It asserted that the Bureau had applied the wrong legal standard in evaluating its petition. It also asserted that the Bureau erred by not discussing two ex parte communications in February 1994 from New South principal Bob Holladay to the Chief of the Bureau's Audio Services Division. Finally, Phoenix contended that Choctaw and New South lacked candor by failing to disclose that Roger Bennett, purportedly Choctaw's engineer responsible for overseeing construction of KLIP(FM), was a full-time employee of New South. 6. On July 24, 1995, the Bureau denied reconsideration. It determined that even were it to assume, arguendo, that Phoenix' allegations, if true, made a prima facie case that grant of the subject application would be inconsistent with the public interest, consideration of the entire record established that Phoenix had raised no substantial and material question of fact of an unauthorized transfer of control. The Bureau stated that the only new matters Phoenix presented were its concern that Roger Bennett was an employee of New South and its allegation that the prior ruling neglected to find an ex parte violation and to apply an appropriate sanction. The Bureau found that the former was adequately explained by Mr. Bennett's sworn statements that he was paid by Choctaw for his work for Choctaw. The Bureau also found that, even if the Holladay letters constituted ex parte contacts, it had no prejudicial effect because a copy was formally provided to all parties on February 24, 1994, and a response from Phoenix was sought and considered. Therefore, the Bureau denied the petition for reconsideration. 7. Application for Review. In its Application for Review, Phoenix reiterates that the Bureau applied the wrong legal standard in evaluating its petition to deny. Furthermore, it restates the arguments raised previously, asserting that: (1) the facts in this case demonstrate that there had been an unauthorized transfer of control of station KLIP; (2) the Bureau "utterly failed" to support its factual determinations regarding Choctaw's retention of control; (3) the Bureau erred in relying on the fact that Ms. Melton was consulted prior to a format change during the Summer of 1993 and on Mr. Bennett's role as a Choctaw employee in finding no unauthorized transfer of control; (4) the Bureau failed to consider the allegation that Choctaw and New South intentionally withheld the fact that Mr. Bennett was and remains a New South employee, as well as a Choctaw employee; and (5) New South engaged in prejudicial ex parte contacts with Bureau decision-making personnel and, if the instant application is not dismissed for that reason, New South should at least be sanctioned. 8. Neither Phoenix nor Choctaw has presented for review the Bureau's finding that the unbuilt station provisions of 47 C.F.R. 73.3597(c) apply to this transaction and that consideration for the sale is limited to Choctaw's documented out-of-pocket expenses. In fact, on January 11, 1996, Choctaw submitted documentation of its out-of-pocket expenses and we have determined that Choctaw is entitled to payment by New South for legitimate and prudent expenses totalling $196,903.73. Our grant of the subject application will be conditioned accordingly. DISCUSSION Proper Legal Standard 9. It is well settled that, in assessing the merits of a petition to deny, the Commission is guided by Sections 309(d)(1) and (2) of the Communications Act of 1934, as amended, 47 U.S.C. 309(d)(1) and (2), as explained in Citizens for Jazz and Astroline Communications Co., supra. First, the Commission determines whether the petitioner makes specific allegations of fact which, if true, would demonstrate that grant of the application would be prima facie inconsistent with the public interest. If so, the Commission proceeds to examine and weigh all of the material before it, including responsive pleadings, to determine whether or not the petitioner has presented a substantial and material question of fact requiring resolution in an evidentiary hearing. Such analysis "permits the Commission to determine 'whether the totality of the evidence arouses a sufficient doubt on the point that further inquiry is called for,'" Astroline Communications Co., supra, 857 F.2d at 1561-2, quoting Gencom, Inc. v. FCC, 832 F.2d 171, 181 (D.C. Cir. 1987). Finally, the Commission must determine whether or not grant of the application would serve the public interest, convenience, and necessity. 10. In this case, the Bureau applied the proper legal standard in its reconsideration ruling. Pursuant to the Astroline standards, the Bureau assumed that Phoenix had presented a prima facie case, and proceeded to the second step, holding that, in examining the entire record before it, Phoenix had not raised any substantial and material questions of fact necessitating a hearing. However, it is also clear that, under Section 309(d), the burden of both presenting a prima facie case and demonstrating the existence of a substantial and material question of fact must be carried by the petitioner. See, e.g., Mobile Communications Corp. of America v. FCC, 77 F.3d 1399, 1410 (D.C. Cir. 1996) (burden on petitioner, not Commission). Phoenix cites no authority for its contention that, once a prima facie case has been presented, the burden shifts to the applicant(s) to demonstrate that no substantial and material questions of fact exist. Unauthorized Transfer of Control 11. Section 310(d) of the Communications Act prohibits the transfer of control of a station permit or license, or any rights thereunder, without prior Commission consent. In determining whether or not an unauthorized transfer of control has occurred, the Commission looks to any acts or agreements vesting in a "new" entity the right to determine basic policies concerning the operation of the station. See, e.g., WHDH, Inc., 17 FCC 2d 856 (1969), aff'd sub nom. Greater Boston Television Corporation v. FCC, 44 F.2d 841 (D.C. Cir. 1971), cert denied, 403 U.S. 923 (1971). The Commission inquiry with respect to the locus of control of a station's operation focuses on three factors: the programming, the personnel, and the finances. Southwest Texas Public Broadcasting Council, 85 FCC 2d 713, 716 (1981); Stereo Broadcasters, Inc., 55 FCC 2d 819 (1981), recon. denied, 50 RR 2d 1346 (1982). Additionally, as in WGPR, Inc., supra, 10 FCC Rcd at 8142, we must examine the instant transaction in light of the April 8, 1993 LMA and evaluate it on the basis of past Commission and staff pronouncements on the matter of local marketing and time brokerage agreements. Those cases hold that the tripartite standard against which we assess control applies with equal force to a licensee which is a party to an LMA. Thus, a licensee involved in an LMA is not relieved of its responsibility to retain ultimate control; i.e., to mandate basic policies pertaining to the fundamental station operations of programming, personnel, and finances. Cosmopolitan Broadcasting Corporation, 59 FCC 2d 558, recon. denied, 61 FCC 2d 257 (1976); Salem Broadcasting, supra, 6 FCC Rcd at 4173. But as is true with any broadcaster, even one whose station is not brokered, Section 310(d) permits the delegation of day-to-day operations relating to those three areas, so long as the licensee continues to set the policies guiding those operations. Southwest Texas Public Broadcasting Council, supra; The Alabama Educational Television Commission, 33 FCC 2d 495, 508 (1972). The touchstone of control, in short, is not divining who executes that station's policies, but who establishes those policies governing the three areas and exercises ultimate control. WGPR, Inc., supra, 10 FCC Rcd at 8142. Our examination should be thorough where, as here, the broker is also the prospective purchaser of the station and was directly involved in constructing the station and making it operational. See, e.g., Bee Broadcasting Associates, 5 FCC Rcd at 6586, and Roy M. Speer, FCC 96-258 (released June 14, 1996). 12. Programming. KLIP(FM) is currently operated pursuant to the April 1, 1993 LMA. Under the terms of that agreement, Choctaw makes available to New South "substantially all the Station's air time" for a payment of $1,000 per month, which payment includes a "base compensation" plus Choctaw's anticipated reasonable and prudent operating expenses. Choctaw is responsible for compliance with the Communications Act and Commission's rules, regulations, and policies including, inter alia, the political broadcasting, equal employment opportunity, main studio, and public file rules. LMA,  2.1, 3.2(b), (g). Choctaw is also responsible for monitoring New South's programming and for preparing up to three hours per week of programming material responsive to the needs and interests of Monroe residents. Id., at 3.2(3), (f). Choctaw retains the right to reject programming offered by New South if it believes such programming to be contrary to the public interest, id., at  4.2, 4.3, and Choctaw retains the right to terminate the LMA if at any time it believes the agreement to be contrary to the public interest or is otherwise inconsistent with its obligations as a Commission licensee. Id., at  5.1(c). Thus, the Bureau is correct that the LMA comports with agreements approved in the cases cited above. While Phoenix charges that the LMA confers a "paper right" of control only, it has proffered no evidence that New South exceeded those rights with respect to KLIP(FM) programming. Furthermore, as noted by the Bureau, when New South proposed a format change in the Summer of 1993, it did so only with the prior consent of Ms. Melton. This is evidence that, in fact as well as in theory, New South recognized and deferred to Ms. Melton's authority with respect to station programming, and we reject Phoenix' contention that we should not consider that evidence because it occurred after Phoenix filed its petition to deny. 13. Personnel. Under the terms of the LMA, Choctaw is to retain and compensate two employees, one of whom is to be its own full-time operations manager, who is to be responsible for overseeing the operation and programming of the station. Choctaw is also to retain a Chief Operator to oversee compliance with engineering requirements; this licensed operator will, however, be paid by New South during those duty periods when New South's programming is being aired. LMA, at 3.2(h). Phoenix charges that New South has hired and fired employees and paid at least one station employee, Frederick Gordon, directly. We have acknowledged that an LMA, which entails the broker's provision of programming and the sale of advertising to be aired on the station, by its very nature necessitates that the broker employ a staff which will be present at the station's studio. See, e.g., Gisela Huberman, Esquire, 6 FCC Rcd at 5937; WGPR, Inc., 10 FCC Rcd at 8143. That New South employs a staff to produce and broadcast programming on KLIP(FM) does not, in and of itself, demonstrate that New South had the right to control station operations or mandate station policy. 14. The LMA also indicates that Choctaw will employ, and Choctaw has repeatedly averred, that it does in fact currently employ and compensate two employees: Chief Operator Roger Bennett and General Manager Mick Lane. Additionally, while Phoenix states that New South directly paid Choctaw employee Frederick Gordon in April of 1993, Choctaw indicates that New South only did so because Choctaw's payroll system was not yet in place and that Mr. Gordon subsequently reimbursed New South for money it paid to him upon receiving compensation from Choctaw. Choctaw also indicates, and Mr. Bennett avers, that he was involved in the construction of the station and charged Choctaw for that work; Choctaw supports this claim in its May 8, 1996 filing, which both reaffirms Mr. Bennett's role and includes a $200 check to Mr. Bennett (dated May 3, 1993, ostensibly after Choctaw had put in place its payroll system) for his duties pertaining to the construction of the station during a four-day period in April of 1993. While Mr. Bennett is an employee of New South, he also provides engineering services to other broadcast stations in the Monroe vicinity on a contract basis. With respect to his role in the construction of KLIP(FM), he was directed and paid by Choctaw for his work on behalf of that company. We are concerned with Choctaw's failure to disclose Mr. Bennett's relationship with New South in its initial responses to Phoenix' pleadings, but in light of the extant declarations and documentation that he was paid by Choctaw for work done for Choctaw, we cannot find that the omission was accompanied by the necessary intent to deceive. See Trinity Broadcasting of Florida, Inc., 10 FCC Rcd 12,020, 12,063 (1995) ("A necessary and essential element of both misrepresentation and lack of candor is intent to deceive.") 15. Finally, Choctaw states that all employees hired by New South in its operation of KLIP(FM) pursuant to the LMA were hired or acquired with Choctaw's approval. Choctaw indicates that, while Ms. Melton lived in Arizona, she was represented in Monroe by her business partner/agent, Walter Frank, Jr. and her daughter, Julie Frank; both Ms. Melton and Mr. Frank have submitted unconstested affidavits to this effect. Upon her return to Monroe, claims Choctaw, Ms. Melton "meets regularly with station employees as well as oversees the station's operations." Opposition to Petition to Deny, at 7. Phoenix presents no evidence that New South employees have displaced Ms. Melton and general manager Mick Lane in ultimate decision-making functions. See WGPR, id. Therefore, we find that Phoenix has raised no question warranting further inquiry with respect to this factor. 16. Station Finances. The LMA obligates New South to pay Choctaw $1,000 per month for its airtime. Choctaw is responsible for paying all costs of station operation, LMA at 2.1, although it will be reimbursed for such expenses by New South as part of the $1,000 monthly payment for "reasonable and prudent" expenses. This is substantially more than the $20 per month netted by the licensee in Salem Broadcasting, Inc., 6 FCC Rcd at 4172, and is thus not demonstrative that Choctaw lacks control of station finances. 17. It is apparently true that, as in WGPR, Inc., the $1,000 per month payment to Choctaw under the LMA constitutes its sole source of funding for the term of the brokering arrangement. However, also as in WGPR Inc., the LMA is identical to those we have previously approved, and is not atypical of such contractual arrangements for making airtime available to a broker in exchange for consideration calculated to incorporate the station's fixed and operating costs plus a built-in profit. WGPR, Inc., 10 FCC Rcd at 8145. The Commission went on to state in WGPR, Inc. that: So long as the time brokerage arrangement is one which retains the ultimate decision-making authority in the licensee, the receipt of [the monthly payment] does not amount to an abdication of its control over finances . . . We caution licensees engaged in time brokerage arrangements, however, that they must operate . . . as a stand-alone entity discrete from the broker. Thus, we require that licensees must maintain their own bank accounts, pay the salaries of their own employees, and remain responsible for their own obligations to programmer, utility companies, and other operational matters. In other words, the licensee should be ready to operate independently from the broker at any time it believes the arrangement does not fulfill its public interest responsibilities. Id. Notwithstanding Phoenix' contrary protestations, it has not provided any evidence that Choctaw is unable to operate the station in the absence of New South. Choctaw has a right to use the equipment now in operation, and in fact is obligated to pay for the equipment in the event that the sale is not consummated. Choctaw has claimed, and Phoenix has not contradicted, that it has paid station expenses and its own two employees. 18. Additionally, although there is no evidence that New South advanced money to Choctaw for construction of KLIP(FM), New South purchased all of the equipment necessary for the construction and initial operation of KLIP(FM) pursuant to the February 16, 1993 agreement between Choctaw and New South. The cost of acquisition and installation of the equipment was $69,246.21, as itemized in Exhibit 3 appended to New South's May 26, 1994 response letter. While legal title to the equipment is held by New South, that equipment will remain in use even if the instant transaction is not consummated; as indicated above, Choctaw will in that event pay full cost for the equipment and its installation. Phoenix has submitted no evidence which indicates that New South's delegated authority to construct the station gave it control of KLIP(FM) finances to the extent that it will take part in making financial policy, conducting financial operations, or dictating to Choctaw the station's physical operations. Thus, as in WGPR, Inc., this case is distinguishable from cases in which the control of the licensee or permittee was at issue because another party had supplied all funds for acquisition or construction of the station and had attempted to exercise a level of control corresponding to that financial contribution. See, e.g., WLOX Broadcasting Company v. FCC, 260 F.2d 712 (D.C.Cir. 1958); Heitmeyer v. FCC, 95 F.2d 91 (D.C. Cir. 1937). See also Lowrey Communications, L.P., 7 FCC Rcd 7139, 7148-9 (Rev. Bd. 1992). 19. Conclusion regarding control. This case presents facts which are extremely troubling. Where a prospective purchaser who is not a broker "is involved in virtually every aspect of getting the station built and on the air" -- negotiating with equipment suppliers and programming services, arranging with an engineer for tower inspection, filing applications in the name of the permittee, purchasing the studio building, arranging for financing to complete station construction, and ultimately becoming station manager -- prior to Commission approval, such involvement may constitute an unauthorized transfer of control. See Bee Broadcasting Associates, supra 5 FCC Rcd at 6586. We have also found that the complete construction of a new station's facilities by a programmer or time broker suggests an unauthorized transfer of control, particularly when coupled with a lack of financial control by the permittee, see Salem, supra, 6 FCC Rcd at 4173, and Roy M. Speer, supra, FCC 96-258 at  22-24. Indeed, our general concern with the pervasive influence which can be exercised by program suppliers is clearly evidenced by our decision to consider a "brokered" radio station an attributable interest of the program supplier for purposes of the local radio ownership rules where the program supplier provides more than 15% of the brokered station's weekly programming and owns another radio station in the same market. See 47 C.F.R. 73.3555(a)(2). We have recently proposed to extend this treatment to television LMA's and expand its application in the radio context. See Further Notice of Proposed Rulemaking In re Review of the Commission's Regulations Governing Attribution of Broadcast and Cable/MDS Interests, FCC 96- 436 (released November 7, 1996),  27. 20. In this case, not only is New South providing substantially all programming for the station, but it is the prospective purchaser as well. For these reasons alone, New South's selection and installation of the equipment for KLIP(FM), albeit with Choctaw's approval and oversight, raises serious concerns regarding Choctaw's retention of control. This concern is exacerbated by the fact that the Choctaw engineer responsible for overseeing construction, Roger Bennett, was also a New South employee. Such circumstances clearly provide an environment conducive to the unauthorized transfer of control of the brokered station. We urge all permittees to avoid putting themselves in situations so precarious as this and warn them that similar arrangments will be subject to extremely close Commission scrutiny. 21. However, notwithstanding our very serious concerns with the arrangements between Choctaw and New South, based on the totality of the evidence before us, we do not believe that Choctaw has abdicated the ultimate control which it is required to retain. New South is obligated to sell the KLIP(FM) operating equipment to Choctaw at full cost should the station sale not be consummated. Additionally, Choctaw has provided evidence that it, not New South, paid Mr. Bennett for his services in overseeing station construction, that it, not New South, is responsible for paying all station expenses, and that it employs and compensates two of its own employees. Choctaw also has submitted an uncontested affidavit from Walter Frank, Ms. Melton's ex-husband and business partner, that he approved the acquisition of all equipment as well as the construction timetable while Ms. Melton was in Arizona and that no decision was made regarding the operation of KLIP(FM) without Choctaw's input or consent. These facts, coupled with New South's apparent deference to Choctaw principal Linda Melton with respect to the KLIP(FM) format change in the summer of 1993, persuade us that the instant facts do not rise to the level of Salem, Roy M. Speer, or Bee. Rather, they indicate that Choctaw has retained a sufficient measure of control of station operations and that Choctaw will be able to operate KLIP(FM), with the equipment currently in place, should the proposed sale to New South not be consummated. Ex Parte Communication 22. Phoenix' allegations of ex parte communication are based on two letters dated February 16, 1994 from New South principal Bob Holladay to the Chief of the Bureau's Audio Services Division. In the first and introductory of these letters, Mr. Holladay states that he did not want to "take any action that would delay the outcome of this case. If I feel any more delays are caused by anyone, I feel that Ms. Melton will probably cancel her contract with my station and withdraw the application." The second letter essentially alleges bad faith by Phoenix in filing the petition to deny, based primarily upon the following: (1) in January of 1993, Mr. Holladay "released" Bradley Wilkinson from his position as Sales Manager of New South's station KRVV(FM); (2) Mr. Wilkinson, who "harbored bad feelings" toward Mr. Holladay, was subsequently hired as general manager of Phoenix' KYEA(FM), with whose format KLIP directly competed when it commenced operation in April of 1993; and (3) Phoenix offered to assume New South's Asset Purchase Agreement with Choctaw, in return for which it would withdraw its petition to deny. Mr. Holladay concludes that "[t]he intent of this letter is not to have Phoenix put in the hot seat with the FCC, but to ask your office to bring this matter to a timely and favorable conclusion, and let the free enterprise system of the Louisiana consumer pick the best product." 23. On February 24, 1994, the Bureau provided a copy of the Holladay letters to Phoenix' counsel and invited its comments. Letter to William Silva, Esq. and Hon. Bennie G. Thompson, reference 1800B3-MW (Chief, FM Branch, Audio Services Division, Mass Media Bureau, February 24, 1994). On April 5, 1994, Phoenix submitted its response. On April 5, 1994, Phoenix submitted its response, which included an affidavit from Mr. Wilkinson to the effect that: (1) he was not "released" from employment with New South, but rather left voluntarily, as he did not want to move to Alexandria, Louisiana to run a New South station there, as requested by Mr. Holladay; (2) he harbored no ill will against New South at the time he left the company, and he had not hired or harassed any New South employees; and (3) he did not know of New South's negotiations with Satellite Music Network regarding the "Touch" format, and it was not his idea to contact that program supplier for KYEA, the decision having been made by KYEA's program director, Gene Kelly. 24. The purpose of the Commission's ex parte rules is to ensure that the agency's decisions are fair and impartial and based on a public record free of influence from non-record communications between decision-makers and outside persons. Report and Order, Ex Parte Communications, 2 FCC Rcd 3011, 3012 (1987). To this end, the Commission's Rules prohibit ex parte presentations -- those not served on the parties -- made to or from decision-making personnel in restricted proceedings. 47 C.F.R. 1.1202(b). This prohibition applies to "[a]ny communication directed to the merits or outcome of a proceeding" as well as to a status inquiry "which states why timing is important to a particular party, or which in any other manner is intended as a means, direct or indirect, to address the merits or outcome, or influence the timing, of a proceeding." 47 C.F.R. 1.1202(a). "Decision-making personnel" is defined broadly as "[a]ny member, officer, or employee of the Commission who is or may reasonably be involved in the decisional process in the proceeding," 47 C.F.R. 1.1202(c), and adjudicative proceedings are restricted upon the filing of a "formal opposition" such as a procedurally sufficient petition to deny. 47 C.F.R. 1.1208(c). 25. We conclude that Mr. Holladay's communications did not comport with the ex parte requirements applicable to this restricted proceeding. Mr. Holladay's February 16, 1994 communications, which were not served on Phoenix, were addressed to the Chief, Audio Services Division, the staff official with the delegated authority to rule on Phoenix' petition. Additionally, the communication both addressed the merits of Phoenix' petition by ascribing to it an illegitimate intent and attempted to influence the timing of the decision by indicating that further delay would cause Ms. Melton to withdraw the application to assign KLIP to New South. See Ex Parte Communications, supra, 2 FCC Rcd at 3013. However, Phoenix has not alleged, and the record does not demonstrate, that Mr. Holladay's ex parte communications intentionally violated the ex parte rules. Furthermore, because the Bureau forwarded a copy of Mr. Holladay's letters to Phoenix and solicited and considered Phoenix' response, Mr. Holladay's February 16 letters did not ultimately constitute "non-record communications" between a party and the decision-maker and Phoenix was not prejudiced by the ex parte contacts. We find that Mr. Holladay's ex parte presentations were an isolated incident not warranting severe remedial action. See, e.g., Catherine L. Waddill, 8 FCC Rcd 2169, 2172 (1993), Centel Corporation, supra, 8 FCC Rcd at 6165. See also Pepper Schultz, 4 FCC Rcd 6393, 6403 (Rev. Bd. 1989), rev. denied, 5 FCC Rcd 3273 (1990). We do, however, admonish Mr. Holladay and New South to heed the ex parte rules in the future. CONCLUSION 26. For the reasons set forth above, we find that Phoenix has failed to raise a substantial and material question of fact that grant of the application before us would be inconsistent with the public interest, convenience, and necessity. We also find that New South is legally, financially, and otherwise qualified to be the licensee of KLIP(FM) and that grant of the assignment application would serve the public interest. 27. Accordingly, IT IS ORDERED, that the Application for Review filed by Phoenix Broadcasting Company IS HEREBY DENIED, and the application (File No. BAPH-930601GJ) to assign station KLIP(FM) from Choctaw Broadcasting Corporation to New South Communications, Inc. IS GRANTED subject to the condition that the consideration for the transaction shall not exceed $196,903.73. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary