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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 Complaint of ) ) DIANNE FEINSTEIN, JOHN ) SEYMOUR, THOMAS HAYES, et al.) ) Against Station KCAL-TV, ) Los Angeles, California ) MEMORANDUM OPINION AND ORDER Adopted: June 12, 1997 Released: July 25, 1997 By the Commission: 1. The Commission has before it an Application for Review filed on July 11, 1995, by Dianne Feinstein, Pete Wilson, John Van de Kamp, Marian Bergeson, Leo McCarthy, Joan Milke-Flores, John Seymour, Dan Lungren, Arlo Smith, Thomas Hayes, John Garamendi and Michael Fong (hereafter referred to as "Complainants"); an Opposition to Application for Review filed August 18, 1995, by Fidelity Television, Inc. ("Fidelity or licensee"), licensee of Station KCAL-TV, Los Angeles, California; and a Reply to Opposition to Application for Review filed August 28, 1995, by Complainants. Complainants seeks review of an Order of the Chief, Mass Media Bureau, 10 FCC Rcd 7193 (released June 30, 1995) ("Order"), dismissing Complainants' complaint against Fidelity. Complainants alleged that Fidelity had systematically overcharged them during the 1990 primary and general elections, in violation of the lowest unit charge ("LUC") requirements of Section 315(b) of the Communications Act of 1934, as amended, 47 U.S.C.  315(b). Complainants also alleged that Fidelity had engaged in rate discrimination between candidates, in violation of Section 73.1941(e) of the Commission's Rules, 47 C.F.R.  73.1941(e), and violated the comparable rate provision of 47 U.S.C.  315(b). For the reasons that follow, we deny Complainants' Application for Review. 2. The Order concluded that Complainants failed to make a prima facie case of violation of any obligation arising under 47 U.S.C.  315(b) or 47 C.F.R.  73.1941(e). First, the Order found that Complainants' reliance on generally-available statistical data was flawed because Complainants did not use the same category of statistical and rating data to determine what the LUCs should have been. Specifically, the Order found that, in calculating LUCs, Complainants inappropriately mixed cost per point Spot Quotations and Data, Inc. ("SQAD") data for Adults 25 - 54, with station specific Arbitron data for Adults 25 and over. Second, the Order concluded that Complainants failed to show that spots they purchased were of the same class as those a commercial advertiser purchased. The Order, therefore, dismissed all claims which relied on a comparison of those spots. Third, the Order held that Complainants failed to establish that rate discrimination violations between candidates occurred because Complainants did not show what classes of spots they had purchased. Finally, Fidelity was ordered to review fourteen apparent overcharges and, if appropriate, provide rebates to the four affected Complainants. The Order determined that, notwithstanding these apparent overcharges, Complainants had failed to make a prima facie case and were not entitled to discovery. The Order concluded that as to each of the Complainants who were apparently overcharged, the total number of overcharges was insignificant and thus de minimus. Order, 10 FCC Rcd at 7195 n. 11. 3. Complainants argue that the Order contains numerous errors. We shall address each claim of error in turn. A. Apparent Overcharges Should Have Established a Prima Facie Case 4. After reviewing the licensee's answer, which listed each of the approximately 1100 spots purchased by Complainants during the relevant election periods identifying class, rotation and LUC for each spot, Complainants submitted a list of more than sixty alleged overcharges. However, the Order concluded that only fourteen overcharges (involving only four of the twelve Complainants) had apparently occurred. The Order found invalid Complainants' claims regarding the majority of the alleged overcharges on the basis that the compared spots were of different rotations. In addition, the Order rejected Complainants' arguments about the impropriety of multiple levels of preemptible time. Finally, rather than allow limited discovery of Fidelity's commercial records, the Order required Fidelity to issue rebates to the affected Complainants with respect to the fourteen apparent overcharges. 5. Complainants argue that the Order erred by concluding that fourteen apparent overcharges were insufficient to establish a prima facie case, and they contend that the Order is inconsistent with cases where the Commission imposed forfeitures for multiple overcharges following an audit of those stations' commercial and political records. Complainants further contend that because review of KCAL-TV's political records and those of one commercial advertiser disclosed fourteen overcharges, review of all the licensee's commercial records undoubtedly would reveal additional overcharges. Finally, Complainants argue that the Order erred by concluding that Complainants had failed to establish a prima facie case of rate discrimination even though competing candidates (Complainants Feinstein and Wilson) purchased spots of the same class, rotation and period of time but paid different rates. 6. In Lowest Unit Charge Requirements, 6 FCC Rcd 7511 (1991), recon. denied, 7 FCC Rcd 4123 (1992) ("Declaratory Ruling"), we stated that, to invoke the Commission's enforcement procedures, complainants had to establish a prima facie case. We did not define the parameters of a prima facie case other than to require a "short, plain statement of the claim sufficient to show that the complainant is entitled to the relief requested." Declaratory Ruling, 6 FCC Rcd at 7513. We left it to the Bureau in the first instance to exercise its discretion to make such a finding after considering all the relevant facts. Id. Once a prima facie case was made, a complainant would be entitled to discovery of all pertinent station records related to rates, terms and conditions for any advertising, commercial or political, broadcast during the relevant period. 7. It is apparent that violations occurred but the total number of overcharges (fourteen) is extremely small when compared with the total number of spots (approximately 1,100) purchased by Complainants. Thus, the issue presented is whether Complainants should be granted discovery on the facts presented here. We agree with the Bureau that discovery was not warranted because the violations were de minimus. 8. The Commission's purpose in permitting discovery in this context is to provide the parties with information as to the extent of LUC (and related) violations, if any. Our ultimate goal is to ensure timely compliance with the statute and our rules, not to punish licensees. Thus, we agree that discovery should be authorized only where the Bureau has reason to believe that a significant number of overcharges may have occurred. In contrast, where the universe of overcharges is relatively small, has already been identified, and the probability of finding additional overcharges is remote, we conclude that discovery would be contrary to the public interest as it would tend to result in unwarranted fishing expeditions into a licensee's business records. B. Additional overcharges should have been found 9. Complainants also urge that the Order erred by finding only fourteen overcharges. Complainants argue that Fidelity's submissions reveal additional overcharges because Fidelity should not have used differing rotations as a basis for charging different rates. According to Complainants, Fidelity's rotation designations are meaningless. Complainants cite, for example, rotations with substantial overlap having different LUCs, and they submit the LUCs should have been the same. Complainants thus contend that the Order improperly applied the requirement that distinctly different rotations must be based on meaningful differences to the advertiser. Further, Complainants fault the Order for excusing Fidelity's use of multiple classes of preemptible time because, according to Complainants, the "record does not indicate that . . . disclosure obligations were satisfied," and because, in any event, "the record . . . contain[s] many examples of overcharges within the preemptible class of time." Application for Review at p. 12. 10. We agree with the Bureau that only fourteen apparent overcharges were shown. Complainants' allegations of additional overcharges are unsupported because they are based on a comparison of spots for different rotations. In this regard, we disagree with Complainants that Fidelity's submissions reveal that it improperly used rotations as a basis for charging different rates. As noted in the Order, Fidelity explained why rotations that overlapped had different LUCs, namely, that "different rotations may also have different values based on the particular programs that air on a given day, audience size and market conditions." Thus, for example, even though one might expect that spots bought for a Monday through Thursday rotation would cost the same as those bought for a Tuesday through Friday rotation, it is also possible that their values could differ significantly depending on the programs which aired on the days that did not overlap. Likewise, while Complainants argued that, given the flexibility of scheduling available to the licensee, a Tuesday through Friday rotation should cost less than a spot bought for a particular day in that rotation, the licensee's answer noted that a particular day within the rotation would occasionally cost less than the rotation when that particular day's programming was less popular than those programs which ran on the other days of the week. We thus conclude that, unlike the rotations found suspect in Lawton Chiles, Bob Martinez and Bill Nelson, 9 FCC Rcd 1593, 1595 (MMB 1994) ("WTVT(TV)"), Fidelity's rotations were based on reasonable, objective criteria. 11. We also reject Complainants' claim of error regarding the Order's treatment of multiple classes of preemptible time. It is true that the Commission had announced in a 1988 Public Notice that preemptible time should be treated as a single class of time. However, although the Public Notice was in effect when Complainants purchased time, it did not represent binding law, but rather was a statement of general policy that could be challenged in any subsequent proceeding in which it was applied. See generally, Williams Natural Gas Co. v. FERC, 3 F.3d 1544, 1553-55 (D.C. Cir. 1993); see also, KMBT(TV), 9 FCC Rcd at 6054. Therefore, we shall not penalize Fidelity simply for its apparent failure to follow the 1988 policy at the time it was in effect. See Roy Barnes, Johnny Isakson, Zell Miller, et al., DA 97-512, released March 11, 1997. 12. Moreover, in 1991, the Commission determined that it was reasonable for stations to define, as separate classes for LUC purposes, rates that afforded varying levels of assurance against preemption. In so doing, the Commission determined that its 1988 policy of treating all immediately preemptible time as a single class "does not appear to effectuate what Congress envisioned when it enacted  315(b)." Codification Report, 7 FCC Rcd at 691. Thus, it is clear now that stations legitimately may establish separate classes of preemptible time. See KMBT(TV), 9 FCC Rcd at 6054. Accordingly, because we believe the statute allows separate classes of preemptible time, the fact that Fidelity sold such classes does not provide a basis for a prima facie case. Further, Complainants did not establish that Fidelity did not disclose the existence of multiple levels of preemptible time. Indeed, the record reflects that Complainants purchased a wide variety of classes of time, suggesting that they were aware that such classes existed. In light of the foregoing, we agree with the Bureau that Fidelity's practices regarding immediately preemptible time does not establish a prima facie case of a 47 U.S.C.  315(b) violation. C. Comparison to Generally-Available Statistical Data 13. Finally, Complainants criticize the Order's rejection of their "average rate data." Complainants contend that the discrepancy cited in the Order between the data they used and the data they should have used is inconsequential since use of the correct data did not appreciably affect the resulting LUC figures. Complainants thus submit that the appropriate data, which they contend was relied upon by the Bureau in the LUC complaint against KCOP-TV, another Los Angeles television station, establishes a prima facie case of overcharges by KCAL-TV. Complainants argue that dismissal of their complaint is inconsistent with the KCOP-TV decision and that the Bureau should not have rejected the data they used because Fidelity never complained that the Complainants' data was mismatched. Complainants also contend that their "average rate analysis is reinforced by the specific violations set forth in the Complaint, including the 14 violations totalling $9,175 acknowledged by the Bureau, as well as the other violations specified herein." Application for Review at p. 17. 14. Complainants here admit that their complaint relied on SQAD data in which they inappropriately used different categories of statistical and rating data in calculating the LUCs for KCAL-TV. Thus, the Complainants' LUCs were calculated incorrectly and the Order properly rejected them. Moreover, even if the differences between properly calculated LUCs and those submitted by Complainants were small, Complainants nevertheless failed to present matched data necessary to an initial evaluation of the complaint. Were we to permit Complainants to resubmit data in an Application for Review in order to establish a prima facie case, we would open our procedures to abuse and inefficiency by effectively allowing complainants to litigate their initial complaints before the full Commission rather than the Bureau. For these reasons, we will not permit Complainants to recalculate LUCs in their Application for Review to establish a prima facie case. 15. In addition, we reject Complainants' argument that the Order and KCOP-TV are inconsistent. The facts before the Bureau in KCOP-TV were different, which, in turn, led to different results. Specifically, in KCOP-TV, whereas the Bureau found that the complaint incorrectly used different categories of statistical and rating data, it nevertheless found a prima facie case had been established through the station's own SQAD analysis as provided in the station's response. KCOP-TV, 10 FCC Rcd at 7154. Unlike KCOP-TV, the record here was not so supplemented, and the Bureau accordingly determined that a prima facie case had not been established. Finally, we find immaterial the fact that Fidelity never cited mismatched data as a reason for dismissing Complainants' complaint. If a complaint warrants dismissal, it should be dismissed whether or not the licensee cites a particular argument or even files an answer. Cf. Declaratory Ruling, 6 FCC Rcd at 7513 (because the filing of an answer is optional, the Bureau has the option of dismissing the complaint where the complaint fails to establish a prima facie case). Finally, we reject the Complainants' argument that their average rate analysis is reinforced by the specific violations set forth in the Complaint, including the 14 overcharges acknowledged by the Bureau, because the average rate analysis was fatally flawed for the reasons discussed above. ORDERING CLAUSE 16. ACCORDINGLY, in light of the foregoing, Complainants' Application for Review is hereby DENIED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary