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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 the Matter of Liability of ) ) PONCE-NICASIO BROADCASTING ) ) Licensee of Television Station KSPX(TV), ) Formerly KCMY(TV), Sacramento, California) ) for a Forfeiture ) MEMORANDUM OPINION AND ORDER Adopted: August 20, 1998 Released: August 26, 1998 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 (i) a Notice of Apparent Liability (NAL) in the amount of twenty thousand dollars ($20,000) issued against Ponce-Nicasio Broadcasting (Ponce-Nicasio), licensee of station KSPX(TV), Sacramento, California; (ii) Ponce- Nicasio's Response to Notice of Apparent Liability filed on April 28, 1995; and (iii) Supplements to that Response filed on July 24, 1995, and February 25, 1998. The forfeiture was assessed for apparent repeated violations 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. By way of background, in the Children's Television Act of 1990, Congress directed the Commission to adopt rules, inter alia, limiting the number of minutes of commercial matter that television stations may air during children's programming, and to consider in its review of television license renewals the extent to which the licensee has complied with such commercial limits. Pursuant to this statutory mandate, the Commission adopted Section 73.670 of the Rules, which limits the amount of commercial matter which may be aired during children's programming to 10.5 minutes per hour on weekends and 12 minutes per hour on weekdays. The Commission also reaffirmed and clarified its long-standing policy that a program associated with a product, in which commercials for that product are aired, would cause the entire program to be counted as commercial time (a "program-length commercial"). Children's Television Programming, 6 FCC Rcd 2111, 2118, recon. granted in part, 6 FCC Rcd 5093, 5098 (1991). These commercial limitations became effective on January 1, 1992. Children's Television Programming, 6 FCC Rcd 5529, 5530 (1991). 3. On July 30, 1993, Ponce-Nicasio filed a license renewal application for station KSPX(TV) (File No. BRCT-930730KK). In response to Question 9(b) of the supplement to that application, as to whether the station had complied with the limits on commercial matter in children's programming specified in Section 73.670 of the Commission's Rules, Ponce-Nicasio certified that the station had not so complied. In Exhibit 2 to the application Ponce-Nicasio revealed that from January 26, 1992, to July 26, 1992, station KSPX(TV) exceeded the commercial limits on children's programming on 27 occasions. All 27 instances were program-length commercials involving a program entitled "Quigley's Village." Ponce-Nicasio stated that station KSPX(TV) did not add any commercial matter to "Quigley's Village," but did broadcast "some of the commercial messages included by the barter distributor." Ponce-Nicasio further stated that station KSPX(TV) substituted public service announcements and station identification announcements for the barter distributor's commercial messages where "program characters promoted the purchase of Quigley's Village memberships," but initially did not delete other commercial messages which promoted "Quigley's Village" products because of the station's belief that it "was not required where program characters were not involved in promoting" the sale or purchase of program-related products. Ponce-Nicasio maintained that, upon learning in July, 1992, that a question had been raised concerning the "Quigley's Village" membership messages, station KSPX(TV) modified its policy and deleted all such announcements. Finally, Ponce-Nicasio asserted that the broadcast of these program-length commercials was unintentional, and that station KSPX(TV) had instituted procedures to prevent any recurrence. 4. In Ponce-Nicasio NAL, the Commission considered the factors set forth in Section 503(b)(2) of the Communications Act, and, in particular, the following criteria: (1) the number of instances of commercial overages; (2) the length of each such overage; (3) the period of time over which such overages occurred; (4) whether or not the licensee established an effective program to ensure compliance; and (5) the specific reasons that the licensee gives for the overages. The Commission stated that the 27 commercial overages constituted a high number of violations; that all 27 of the overages were program-length commercials; and that, in enacting the Children's Television Act, Congress was particularly concerned about program-length commercials because young children often have difficulty distinguishing between commercial matter and programming. Further, the Commission stated that the definition of, and policy on, children's program-length commercials are clearly and specifically established in Children's Television Programming, 6 FCC Rcd at 2117-18, and that, in the absence of extraordinary difficulties or circumstances, a licensee's assertion that it did not understand the Commission's children's television policies does not relieve that licensee of liability for forfeiture for violation of those policies. Finally, the Commission stated that, although it appeared that station KSPX(TV) had made some effort to comply with the Commission's children's television rules and policies, that effort clearly was not sufficient or effective in light of the violations reported in station KSPX(TV)'s renewal application. In addition, the fact that the station may have implemented a plan to prevent future violations did not relieve the station of liability for prior violations. Accordingly, the Commission determined that a forfeiture in the amount of $20,000 was appropriate. 5. In its April 28, 1995 Response to the NAL, Ponce-Nicasio states that the station made a good faith effort to comply with the children's television commercial limits; that the violations occurred because of "management's erroneous interpretation of the law;" and that the station "discovered the error itself, corrected the problem, and fully disclosed the violations to the Commission." Therefore, Ponce-Nicasio asserts, the assessed forfeiture should be reduced. In its July 24, 1996 Supplement to its Response, Ponce-Nicasio states that Section 73.670 of the Rules does not define the term "children's program-length commercial" and "do[es] not put licensees fairly on notice that the entire length of a program that contains promotional material for program-related products . . . will count as commercial time." Accordingly, Ponce-Nicasio argues that the forfeiture should be rescinded because "the Commission may not impose a monetary sanction where it fails to provide reasonable notice of the proscribed behavior." Finally, Ponce-Nicasio asserts that the forfeiture should be reduced or rescinded because payment would "cause significant financial hardship" to the licensee. DISCUSSION 6. In Children's Television Programming (Notice of Proposed Rulemaking [NPRM]), 5 FCC Rcd 7199 (1990), the Commission enunciated its "tentative conclusion that any children's program that was found to be a `program-length commercial' would count toward the statutory commercial limits" being proposed therein, and requested comment on that tentative conclusion. Id. at 7201. In Children's Television Programming, 6 FCC Rcd at 2118, the Commission stated that most of the parties that commented on this issue agreed with the tentative conclusion that the entire duration of a children's program-length commercial would count towards the commercial limits, and therefore the Commission adopted the policy. Accordingly, Ponce-Nicasio's assertion that the Commission failed to provide reasonable notice of this policy is without merit, and does not justify reduction of the assessed forfeiture amount. 7. In addition, as stated in Ponce-Nicasio NAL: In Children's Television Programming, id. at 2117-18, the Commission specifically and unequivocally defined a program-length commercial as "a program associated with a product in which commercials for that product are aired." As the Commission stated in that Report and Order, this definition "is clear, easy to understand and apply, and narrowly tailored." Id. at 2118 . . . . . In the absence of extraordinary difficulties or circumstances, a licensee's assertion that it did not understand the Commission's children's television policies does not relieve that licensee of liability for forfeiture for violation of those policies. (citations omitted) 6 FCC Rcd at 6729. Therefore, Ponce-Nicasio's restatement of its assertions that the station made a good faith effort to comply with the children's television commercial limits and that the violations occurred because of "management's erroneous interpretation of the law" does not justify reduction of the assessed forfeiture amount. 8. Voluntary Disclosure. Similarly, Ponce-Nicasio's assertions that the station "discovered the error itself, corrected the problem, and fully disclosed the violations to the Commission" do not justify reduction of the assessed forfeiture amount. As stated in Ponce-Nicasio NAL, 6 FCC Rcd at 6729, the fact that a licensee may have implemented procedures to prevent future violations of the Commission's children's television rules and policies does not relieve that licensee of liability for prior violations. 9 Further, with regard to Ponce-Nicasio's assertion that it "fully disclosed the violations to the Commission," Questions 9(b) and (c) of the FCC Form 303-S, the license renewal application, direct each and every license renewal 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 violation and an explanation as to why the limits were exceeded. 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 . . . ." In addition, 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." The fact that Ponce-Nicasio provided information in its renewal application that it was specifically directed to provide by the plain language of that application clearly does not justify reduction of the assessed forfeiture amount. 10. Financial Hardship. Finally, Ponce-Nicasio argues that the forfeiture should be reduced or rescinded because payment would "cause significant financial hardship" to the licensee. In support of this argument, the licensee states that it was awarded station KSPX(TV)'s construction permit as part of a settlement agreement, and its initial costs for acquiring the license exceeded $1,156,000; that the station operated at a deficit in every year but one since it began operating in 1990; that Ponce- Nicasio holds no other broadcast licensees, and therefore "cannot . . . distribute the burden of the Commission's forfeiture among several operating entities;" and that KSPX(TV) "operates from a technically disadvantaged site" which results in "poor antenna reception and great difficulty in building an audience." 11. However, a review of the station's financial submissions reflects a relatively positive financial position for the years under review. Specifically, net operating revenues (net income plus depreciation plus amortization) have been positive for each of the years under review and in fact have significantly increased. 12. Accordingly, IT IS ORDERED THAT the Response to Notice of Apparent Liability filed by Ponce-Nicasio Broadcasting requesting that the forfeiture assessed in Ponce-Nicasio Broadcasting, 10 FCC Rcd 6728 (1995), be reduced or eliminated, 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), Ponce-Nicasio Broadcasting, licensee of television station KSPX(TV), Sacramento, California, FORFEIT to the United States the sum of twenty thousand dollars ($20,000) 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, Ponce- Nicasio Broadcasting 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 kspx.rd $// PONCE-NICASIO BROADCASTING, KSPX(TV) (Sacramento, CA) DA 98-1671 //$ $/ 300.503(b) FORFEITURES (NAL) /$ $/ 73.670 COMMERCIAL LIMITS ON CHILDREN'S PROGRAMS /$ Addresses: Ponce-Nicasio Broadcasting Licensee, KSPX(TV) 1029 K Street Suite 23 Sacramento, CA 95814 Ponce-Nicasio Broadcasting c/o Roger J. Metzler McQuaid, Metzler, McCormick 221 Main Street Sixteenth Floor San Francisco, California 94105-1936