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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 ) ) Brooke Communications, Inc. ) ) Licensee of KKMX (FM) ) Tri City, Oregon ) ) For a Forfeiture MEMORANDUM OPINION AND ORDER AND FORFEITURE ORDER Adopted: April 7, 1999 Released: April 8, 1999 By the Chief, Mass Media Bureau: 1. The Commission, by the Chief, Mass Media Bureau ("Bureau"), acting pursuant to authority delegated by Section 0.283 of the Commission's Rules, has before it: (1) a Notice of Apparent Liability, 10 FCC Rcd 8249 (MMB 1995) ("NAL"), assessing a forfeiture of $10,000 against Brooke Communications, Inc. ("Brooke"); and (2) Brooke's August 28, 1995, response to the NAL, styled as a petition for reconsideration. In the NAL, the Bureau determined that there was an unauthorized transfer of control of Station KKMX (FM), Tri City, Oregon, from FM Broadcasters of Douglas County ("FBDC") to Brooke, without prior Commission consent, in violation of Section 310(d) of the Communications Act of 1934, as amended (the "Communications Act"), 47 U.S.C. 310(d), and Section 73.3540 of the Commission's Rules, 47 C.F.R. 73.3540. For the reasons set forth below, we reduce the forfeiture to $6,000. I. BACKGROUND 2. On January 18, 1991, FBDC and Brooke entered into a "Station Service Agreement" ("SSA") whereby Brooke agreed to broker substantially all the time on Station KKMX. An application for assignment of the license was filed by FBDC on May 11, 1992, seeking Commission consent to assign the license from FBDC to Tri City Communications ("TCC") (BALH-920511HT). Douglas County Tri Casters, Inc. ("DCTC") filed a petition to deny the assignment, alleging, inter alia, that Brooke was in control of Station KKMX from January to December 1991. The Audio Services Division concluded that there may have been an unauthorized transfer of control of Station KKMX, but held that the assignment application could nevertheless be granted, without prejudice to whatever enforcement action, if any, the Commission deemed appropriate. The application for assignment was granted on March 12, 1993. 3. On February 1, 1995, the Bureau sent separate letters of inquiry to Robert Larson, president of FBDC, TCC, and Brooke, seeking further information regarding the operations of KKMX during the time in question. While Brooke and TCC submitted comprehensive responses to our letters, FBDC did not respond to our letter. A second letter to FBDC was returned to the Commission. However, based on the information that had been received previously, the Bureau concluded that there was sufficient evidence of an unauthorized transfer of control and issued notices of apparent liability to both Brooke and FBDC, released on August 3, 1995. Brooke filed a response to its NAL on August 28, 1995. FBDC did not respond. 4. While the Bureau was reviewing the unauthorized transfer of control allegations, DCTC filed an application for review of the assignment of Station KKMX to TCC. By Memorandum Opinion and Order released September 21, 1995, the Commission denied that application for review. FM Broadcasters of Douglas County, 10 FCC Rcd 10429 (1995) ("FBDC MO&O"). The Commission concluded that the Bureau correctly granted the assignment application despite outstanding issues. In so ruling, the Commission noted that NALs had been issued to FBDC and Brooke for forfeitures of $10,000 each and found that the remedy was appropriate. III. DISCUSSION 5. Statute of Limitations. Brooke alleges that the NAL is barred by the statute of limitations. Brooke maintains that in 1991, when the alleged unauthorized transfer of control occurred, a three year limitation period was in effect and that more than three years passed between the alleged violation and the issuance of the NAL in July 1995. Brooke acknowledges that the Communications Act was amended in October 1992 to extend the statutory period. However, Brooke argues that the amendment is not applicable to its situation because the alleged violation took place nearly a year before the effective date of the amendment. Brooke contends that "[n]othing in the language of the statutory amendment indicates that Congress intended to apply the extension of the statute of limitations retroactively." Response at 3, citing Landgraf v. USI Film Products, 114 S.Ct. 1483 (1994). 6. We reject Brooke's contention that imposition of a forfeiture is barred by the statute of limitations in effect at the time of the unauthorized transfer of control. The Commission has repeatedly held that the applicable statute of limitations is the one in effect at the time the notice of apparent liability is issued. See, Broadcast Associates, Inc, 11 FCC Rcd 15479 (MMB 1996); CanXus Broadcasting Corporation, 6 FCC Rcd 5399 (MMB 1991) (NAL); aff'd, 7 FCC Rcd 3874 (MMB 1992); recon. granted in part, 8 FCC Rcd 4323 (MMB 1993), review denied, 10 FCC Rcd 9950 (1995) (applicable statute of limitations is the one in effect on the date that the notice of apparent liability is issued). The statute of limitations in effect on August 3, 1995 (the date this NAL was released) authorized the Commission to issue a forfeiture against a licensee for violations of the Communications Act or the Commission's rules which took place during the current license term or one year before the date of issuance of the notice of apparent liability, whichever is earlier. 47 U.S.C. 503(b)(6). Although we reject Brooke's arguments regarding the appropriate statute of limitations, we note that the applicable statute of limitations bars assessment of a forfeiture for some of the time period in question. The unauthorized transfer of control took place between January 18, 1991 and December 8, 1991. Station KKMX's license was renewed on June 6, 1991. Accordingly, the liability for forfeiture runs for six months, from June 6, 1991 to December 8, 1991. A six month period of violation, however, is still substantial and, by itself, the reduction of the enforceable period of violation does not warrant a reduction in forfeiture in this case. 7. Unauthorized Transfer of Control. Brooke argues that even if the forfeiture is not barred by the statute of limitations, it should either be rescinded or reduced because it endeavored to follow Commission's rules and policies regarding time brokerage agreements. Brooke asserts that it believed the SSA comported with Commission rules and policies and consistently endeavored to implement the terms of the SSA in accordance with FCC guidelines. In this regard it contends that Commission guidelines with respect to time brokerage agreements "seemed to continually shift on a case-by-case basis." Response at 4. It argues that at the time it entered into the SSA, the Commission had recently released Roy Russo, 5 FCC Rcd 7586 (MMB 1990) and Joseph A. Belisle, 5 FCC Rcd 7585 (Complaints and Investigations Branch, MMB 1990), and that the SSA fully comported with the requirements set forth therein. Specifically, Brooke contends, the SSA gave the licensee the right to reject programming and, in fact, Brooke points out that the licensee exercised its right in this regard when it preempted all programming effective as of December 8, 1991. Moreover, Brooke states that it continued to evaluate the SSA every time the Commission released a decision regarding time brokerage agreements and that in 1991 it entered into a letter agreement with Robert Larson, reiterating and clarifying some of his responsibilities under the SSA. Finally, Brooke contends that it was considering amending the SSA further following the release of the Commission's decision in Salem Broadcasting, Inc., 6 FCC Rcd 4172 (MMB 1991). Specifically, it asserts that it was considering requiring the licensee to hire additional personnel but decided to wait because it knew that sale of the station was imminent. 8. It is true that there is no exact formula for determining whether or not there has been an unauthorized transfer of control of a broadcast station and that the Commission's guidance in this area has developed on a case-by-case basis. However, the Commission has long held that in making such a determination, we look to whether a new entity or individual has obtained the right to determine basic operating policies of the station. See WHDH, Inc., 17 FCC 2d 856 (1969), aff'd sub nom. Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D.C. Cir. 1970), cert. denied, 403 U.S. 923 (1971). Specifically, we look to three essential areas of station operation: the programming, personnel, and finances. See e.g., Stereo Broadcasters, Inc., 87 FCC 2d 87 (1981), recon. denied, 50 R.R. 2d 1346 (1982). We have consistently stated that although a licensee may delegate certain functions to an agent or employee on a day-to-day basis, ultimate responsibility for essential station operations, such as personnel, programming, and finances, cannot be delegated. Southwest Texas Broadcasting Council, 85 FCC 2d 713, 715 (1981). 9. Brooke asserts that it has met the Commission's criteria in this regard, pointing to the licensee's right to preempt programming, the licensee's obligations to monitor programming, and the fact that programming was ultimately preempted. As the record reveals, there is some dispute between Larson and Brooke regarding the degree to which FBDC was in control of the station programming. But leaving aside this issue, there is no dispute that all Station KKMX employees were on Brooke's payroll and that even Larson himself was paid by Brooke for services performed. Moreover, with regard to finances, the record is clear, and Brooke does not dispute, that all operating expenses of Station KKMX (other than $100 per month equipment lease payment) were paid by Brooke. Accordingly, there can be no question that Brooke and not FBDC was in control of Station KKMX's personnel and finances, resulting in an unauthorized transfer of control of the station. Moreover, the Commission has specifically affirmed the Bureau's issuance of a forfeiture in this case. Specifically, in its ruling affirming assignment of Station KKMX to TCC, the Commission stated, "[w]e have, on our own motion, reviewed the staff's determination to issue an NAL in this case. We find that the proposed remedy is appropriate . . ." FBDC MO&O, 10 FCC Rcd at 10430. 10. Brooke argues that if a fine is warranted, it should be borne by FBDC who "may have abdicated its own responsibilities," and not by Brooke who attempted to abide by FCC case precedent and repeatedly sought the licensee's performance of its duties. Interestingly enough, as set out in the NAL, FBDC argued just the opposite, contending that control of the station was improperly wrested from Larson by Brooke. The NAL properly concluded that FBDC and Brooke together participated in a joint effort to transfer control of the station without prior Commission approval, and Brooke has provided no evidence in its response to persuade us otherwise. In such a case, contrary to FBDC's assertions, issuance of a forfeiture to both the licensee and the broker, particularly where the broker is also a Commission licensee, is appropriate. Delta Radio, Inc., 10 FCC Rcd 12538 (MMB 1995), Memorandum Opinion and Order and Forfeiture Order, DA 98-1676, released August 24, 1998. 11. Calculation of the Forfeiture. Brooke asserts that the fines imposed against it and Larson are "unduly harsh" when compared with case precedent in this area. Specifically, it alleges that the combined fine of $20,000 is unwarranted in light of Salem Broadcasting, Inc., 6 FCC Rcd 4172, 4173 (MMB 1991), where a licensee was fined $10,000 for an unauthorized transfer of control and a main studio violation. Brooke argues that the violation was more egregious in that case and that the licensee, not the broker, received a forfeiture. Moreover, it asserts, in CanXus Broadcasting Corporation, 6 FCC Rcd 5399 (MMB 1991) (NAL); aff'd, 7 FCC Rcd 3874 (MMB 1992); recon. granted in part, 8 FCC Rcd 4323 (MMB 1993), review denied, 10 FCC Rcd 9950 (1995), a case it also characterizes as more egregious than the instant case, the Commission imposed a forfeiture of $10,000 against the proposed permittee and no forfeiture was imposed against the licensee. Brooke also points to Silver Star Communications-Albany, 6 FCC Rcd 6905 (1991) which imposed a forfeiture of $20,000 for an unauthorized transfer of control of two stations. Brooke contends that the Silver Star case involved additional violations which undermined the Commission's minority distress sale policy. Finally, Brooke argues that in determining the forfeiture amount, the Commission should have taken into consideration the fact that it acted in good faith, served the public interest by keeping a financially-troubled station on air, and has a history of compliance with Commission rules and policies. 12. Despite Brooke's arguments, we do not find that the case precedent it cites mandates a reduction of the forfeiture in this case Although the Salem case also involved a main studio violation, such violation arose out of the unauthorized transfer of control, and there is no indication in the decision that the additional violation resulted in an increased forfeiture. Additionally, in Silver Star, although the decision addressed the issue of whether or not the minority distress sale policy had been undermined, the forfeiture itself was assessed solely for the unauthorized transfer of control. Moreover, we do not find CanXus to be more egregious as Brooke contends, particularly since both parties involved in this case are Commission licensees. Nonetheless, we do believe that a reduction of the forfeiture is warranted. This case is similar to Delta Radio, Inc., 10 FCC Rcd 12538 (MMB 1995), Memorandum Opinion and Order and Forfeiture Order, DA 98-1676, released August 24, 1998, a decision released after the NAL in this case. In both this case and Delta Radio, Inc., the broker assumed control over the station pursuant to a time brokerage agreement. Also, in both situations, the broker argued that its actions were intended as a good faith effort to keep a failing station on the air. Finally, in both cases, the broker, a Commission licensee, made repeated attempts to conform the agreement and the implementation thereof, with Commission rules and policies regarding time brokerage arrangements. Accordingly, given all these considerations, we believe that a forfeiture reduction is appropriate. Moreover, we find that a further reduction is warranted based on Brooke's favorable compliance history. A review of Brooke's broadcast record indicates that no other sanctions have been imposed against it. Thus, in light of Brooke's good broadcast record apart from this violation and its good faith efforts, we will reduce the forfeiture to $6,000. 13. Accordingly, IT IS ORDERED THAT pursuant to Section 503(b) of the Communications Act, Brooke Communications, Inc., licensee of KKMX(FM), Tri City, Oregon, FORFEIT to the United States of America the sum of Six Thousand Dollars ($6,000) for the willful and repeated violations of Section 310(d) of the Communications Act and Section 73.3540 of the Commission's Rules. Payment of the forfeiture may be made by mailing a check or similar instrument payable to the Federal Communications Commission at the address indicated in the attachment to this Memorandum Opinion and Order. FEDERAL COMMUNICATIONS COMMISSION Roy Stewart Chief, Mass Media Bureau