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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 Applications of ) MM DOCKET NO. 87-250 ) GLOBAL INFORMATION TECHNOLOGIES, INC. ) File No. BPCT-861219KG ) TEXSTAR COMMUNICATIONS, LTD. ) File No. BPCT-870212KM ) FRONTIER BROADCASTING, INC. ) File No. BPCT-870212KN ) FREDERICKSBURG CHANNEL 2 ) File No. BPCT-870212KP ) STONEWALL BROADCASTING, INC. ) File No. BPCT-870212KU ) For a Construction Permit for a ) New Television Station ) Fredericksburg, Texas ) ORDER Adopted: July 28, 1997 ; Released: August 4, 1997 By the Commission: 1. This order grants a Joint Request for Approval of Settlement Agreements filed September 19, 1996 by Global Information Technologies, Inc. (Global), Fredericksburg Channel 2 (Fredericksburg), and Stonewall Broadcasting, Inc. (Stonewall). The Joint Request contemplates that Global and Fredericksburg merge their interests into a limited partnership which will receive the construction permit, that Stonewall be dismissed in exchange for a monetary payment, and that the Commission affirm the Review Board's disqualification of Frontier Broadcasting, Inc. (Frontier) and TexStar Communications, Ltd. (TexStar), see Global Information Technologies, Inc., 8 FCC Rcd 4024 (Rev. Bd. 1993), recon. denied, 8 FCC Rcd 6629 (Rev. Bd.), and grant a simultaneously-filed Joint Petition to Reopen the Record and Motion to Enlarge the Issues by Global and Fredericksburg against Hal S. Widsten, a competing applicant in this proceeding whose application was subsequently dismissed. See 2, infra. The proposed Agreements are expressly contingent upon dismissal of the non-merging applications. The Mass Media Bureau supports approval of the Agreements. 2. This proceeding involves applications for a new television broadcast station in Fredericksburg, Texas. The Board disqualified Frontier under a site availability issue and TexStar under a financial qualifications issue, and concluded that, among the remaining applicants, Fredericksburg was comparatively superior. Id. After applications for review were filed with the Commission, the case became subject to the Commission's comparative freeze policy. See FCC Freezes Comparative Proceedings, 9 FCC Rcd 1055 (1994). That policy, however, allows that, where parties file a request for approval of a settlement that is contingent upon resolution of basic qualifying issues, such issues will be adjudicated. See Modification of FCC Comparative Proceeding Freeze Policy, 9 FCC Rcd 6689 (1994). Accordingly, the Memorandum Opinion and Order, FCC 97I-13, released March 26, 1997, granted the Joint Petition and remanded the proceeding on financial and misrepresentation issues against Widsten. Subsequently, by Order, 97M-76, released May 5, 1997, Administrative Law Judge Edward Luton granted Widsten's request to dismiss his application with prejudice and cancelled further hearing proceedings. The ALJ's Order also purported to terminate the proceeding, but this aspect of his ruling was erroneous because Commission review of the Joint Request was expressly reserved pending resolution of the remand hearing. Memorandum Opinion and Order, FCC 97I-13, at n. 1. The Joint Request is now ripe for consideration. 3. After review of the record below involving Frontier and TexStar, the Commission agrees with the Board's disqualification of those applicants under the respective site availability and financial qualifications issues and denies their applications for review. See 47 C.F.R. 1.115(g) (Commission may deny applications for review without specifying reasons). There is only one point that warrants comment. Frontier argues that it should not have been disqualified for lacking reasonable assurance of the availability of the transmitter site proposed in its application because the ALJ found that it established good cause to amend to a new site following an adverse FAA determination. This claim is incorrect. The record shows that Frontier amended its application on the "B" cut-off date to specify a different transmitter site, but that the amendment responsive to the FAA's concerns which was subsequently accepted by the ALJ only involved a reduction in height of Frontier's proposed tower and had nothing to do with the issue of the availability of its original site. See Order, FCC 88M-2119, released July 7, 1988. Moreover, Frontier's implication that it should be found qualified on the basis of its new site, irrespective of whether it had reasonable assurance of its original site, is also incorrect. See Radio Delaware, Inc., 4 FCC Rcd 8630, 8631 (Rev. Bd. 1989) (applicant must have reasonable assurance of site availability when it originally files its application); compare 62 Broadcasting, Inc., 4 FCC Rcd 1768, 1771-1773 (Rev. Bd. 1989), rev. denied, 5 FCC Rcd 830 (1990) (applicant which knew it did not have reasonable assurance of transmitter site at time it filed application -- certification page stated "negotiations are in process" -- could not cure fatal defect by amending "as a matter of right" on "B" cut-off date to specify a new site) with Great Lakes Broadcasting, Inc., 6 FCC Rcd 4331, 4332 (1991), aff'd, 8 FCC Rcd 4007, 4008 (1993) (applicant permitted to amend to new site as of right under 47 C.F.R. 73.3522(a)(6) where it reasonably believed it had assurance of proposed site when it certified -- specific rental terms were discussed and applicant followed up on initial contact by non-voting shareholder). In this case, Frontier's minimal contact with the owner of the site specified in its application provided no reasonable basis for belief that the proposed site would be available and, thus, as was true of the applicant in 62 Broadcasting, it could not cure its initial deficiency through subsequent amendment. 4. In view of our affirmance of the Board's action, we dismiss as moot a Joint Request for Approval of Settlement Agreement and Dismissal of Application filed May 15, 1997 by Frontier and TexStar, which contemplates a merger between the two disqualified applicants and grant of Frontier's application. See Dorothy O. Schultz and Deborah Brigham, 12 FCC Rcd 2602, 2605 (1997) (disqualified applicant ineligible to receive construction permit); RKO General, Inc. (KHJ- TV), 3 FCC Rcd 5057, 5063 (1988) (same). 5. The Joint Request complies in all respects with the provisions of 47 U.S.C. 311(c) and 47 C.F.R. 73.3525(a) governing settlement agreements. The agreement between Global, Fredericksburg, and Stonewall provides that Global and Fredericksburg will pay Stonewall $465,000 and Stonewall will dismiss its application. The applicants have provided sworn declarations that there is no other consideration for the dismissal of Stonewall's application, that their applications were not filed for the purpose of reaching or carrying out a settlement, and that approval of the agreement will serve the public interest by expediting the institution of a new television service in Fredericksburg, Texas. In addition, Stonewall has provided documentation demonstrating legitimate and prudent expenses in the preparation, filing, and prosecution of its application exceeding the amount of the proposed reimbursement. 6. Global and Fredericksburg propose to enter into a bona fide merger agreement which contemplates a sharing of business risks and rewards. Approval of such an arrangement is consistent with Commission policy. See Amendment of Section 73.3525, 6 FCC Rcd 2901, 2902 (1991); Venton Corp., 90 FCC 2d 307, 313-14 (1982). The settlement agreement provides that, contingent upon dismissal of the other non-merging applications, Global and Fredericksburg will merge into a Texas limited partnership with Global as the general partner and Fredericksburg as the limited partner. As general partner, Global will maintain its integration and diversification commitments, to the extent required by law, and, as limited partner, Fredericksburg will not be involved in the management or operation of the media activities of the partnership. The partners will each have 50% equity interests in the merged entity and will divide equally all capital contributions and all settlement payments made to dismissing applicants. Other than the shared equity, there is no exchange of consideration between the applicants. Because the settlement is contingent on dismissal of the other applicants, Global and Fredericksburg have not yet formed the limited partnership or amended their applications to effect the merger. Therefore, final grant of the merged applicant and termination of the proceeding will be withheld pending filing of the appropriate amendments. 7. ACCORDINGLY, IT IS ORDERED, That the Joint Request for Approval of Settlement Agreement and Dismissal of Application filed by Frontier Broadcasting, Inc. and TexStar Communications, Ltd. and the Petition for Leave to Amend filed by Frontier Broadcasting, Inc. on May 15, 1997 ARE DISMISSED. 8. IT IS FURTHER ORDERED, That, subject to the filing of the amendments referred to in paragraph 6 above, the Joint Request for Approval of Settlement Agreements filed September 19, 1996 by Global Information Technologies, Inc., Fredericksburg Channel 2, and Stonewall Broadcasting, Inc. IS GRANTED and the attached settlement agreements ARE APPROVED; that the applications for review filed July 19, 1993 by TexStar Communications, Ltd. and Frontier Broadcasting, Inc. ARE DENIED and the applications for review filed July 19, 1993 by Stonewall Broadcasting, Inc. and October 8, 1993 by Global Information Technologies, Inc. ARE DISMISSED; and that the applications of TexStar Communications, Ltd. (File No. BPCT- 870212KM), Frontier Broadcasting, Inc. (File No. BPCT-870212KN), and Stonewall Broadcasting, Inc. (File No. BPCT-870212KU) ARE DISMISSED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary