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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
K.I.D.S. - TV6 ) File No. 99100489
) NAL/Acct. No. 20013208005
Licensee of Low Power ) Facility #63149
Television Station ) JWS
K06MU, Big Bear Lake, )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: October 18, 2000 Released: October 20,
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture, we
find that K.I.D.S. - TV6, licensee of low power television
station K06MU, Big Bear Lake, California, has apparently violated
Section 310(d) of the Communications Act of 1934, as amended
(``Act''), 47 U.S.C. § 310(d), and Section 73.3540(a) of the
Commission's rules, 47 C.F.R. § 73.3540(a), by transferring de
facto control of the K06MU license without obtaining prior
Commission approval. We conclude that K.I.D.S. - TV6 is
apparently liable for an eight thousand dollar ($8,000)
2. The Enforcement Bureau received a complaint alleging
that K.I.D.S. - TV6 had sold the license for K06MU without
obtaining Commission approval. As a result of that complaint, on
January 31, 2000, the Chief, Investigations and Hearings
Division, sent a letter of inquiry to K.I.D.S. - TV6. Although
K.I.D.S. - TV6 did not respond to the letter of inquiry, Bear
Valley Broadcasting, Inc. (``Bear Valley''), the proposed
assignee of the K06MU license, filed a response on March 23,
2000. The staff then sent two additional letters of inquiry to
3. The staff's investigation revealed that on September
17, 1999, K.I.D.S. - TV61 and Bear Valley entered into an
agreement to sell the K06MU license and station facilities to
Bear Valley. On September 19, 1999, those parties also entered
into an ``Interim Management Agreement.'' The term of the
agreement was through November 30, 1999, but Bear Valley has the
right to ``extend the term for such time as is necessary to
obtain the approval'' for the assignment of the license to Bear
Valley. Under the agreement, Bear Valley acquired ``full and
complete power and exclusive authority to conduct, on behalf of
[the licensee], all business operations and transactions on or
pertaining to'' K06MU. The agreement also provided that Bear
Valley (1) receives all monies derived from station operations,
except for certain insurance benefits, (2) has the right to
establish all policies for the television station, (3) can employ
personnel for the operation of the station, and (4) can make
whatever changes to the station's property or equipment that it
deems appropriate. Bear Valley also assumed any loss that might
result from the station's operation during the management
agreement. K.I.D.S. - TV6 may terminate the management agreement
only if Bear Valley files for bankruptcy or is placed in
receivership, or if Bear Valley defaults on any material
provision of the agreement, and the default is not cured within
60 days or such longer period as is reasonable.
4. Bear Valley states that under the management agreement,
its principal Robert Cartwright controls the station's financial
records and books, pays the station's operating expenses, and
establishes the station's management. Mr. Cartwright and Bear
Valley principal Jacque P. Montero interview, hire, and fire
station personnel, establish station management, and maintain the
programming format (which is the same format used by K.I.D.S. -
TV6). Bear Valley pays a contract engineer to maintain the
5. On December 22, 1999, Chuck Foster, the principal of
K.I.D.S. - TV6, pled guilty in the Superior Court, State of
California, County of San Bernardino, to a criminal charge of
felony insurance fraud. See People v. Chuck Foster, Case No.
FVI009947. Mr. Foster was incarcerated in state prison. On
February 9, 2000, Mr. Foster was sentenced to two years in prison
(with credit for time previously served). Bear Valley represents
that prior to Mr. Foster's incarceration, Mr. Cartwright and Mr.
Foster discussed the station's operations on almost a daily
basis. As of June 22, 2000, Mr. Cartwright had not received
permission to visit Mr. Foster in prison, although they had
spoken on the telephone ``on a number of occasions.'' See Bear
Valley June 23, 2000 Response to Letter of Inquiry, Response 3.
6. K.I.D.S. - TV6 and Bear Valley filed an application for
the Commission's consent to assign the K06MU license to Bear
Valley on January 12, 2000 (File No. BALTVL-20000112ABO). That
application remains pending.
7. Section 310(d) of the Act provides in pertinent
No . . . station license, or any rights thereunder,
shall be transferred, assigned, or disposed of in any
manner, voluntarily or involuntarily, directly or
indirectly, or by transfer of control of any
corporation holding such permit license, to any person
except upon application to the Commission and upon
finding by the Commission that the public interest,
convenience, and necessity will be served thereby.
Similarly, Section 73.3540(a) of the Commission's rules, 47
C.F.R. § 73.3540(a), provides, ``Prior consent of the FCC must be
obtained for a voluntary assignment or transfer of control.''
8. We traditionally look beyond the legal title to whether
a new entity or individual has obtained the right to determine
the basic operating policies of the station in ascertaining
whether a transfer of control has occurred. 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: programming, personnel and finances. See,
e.g., Stereo Broadcasters, Inc., 87 FCC 2d 87 (1981), recon.
denied, 50 RR 2d 1346 (1982). A licensee may delegate certain
functions on a day-to-day basis to an agent or employee, but such
delegation cannot be wholesale. See, e.g., Southwest Texas
Public Broadcasting Council, 85 FCC 2d 713, 715 (1981). That is,
those persons assigned a task must be guided by policies set by
the permittee or licensee. See David A. Davila, 6 FCC Rcd 2897,
2899 (1991). Moreover, the standards by which we measure control
are equally applicable to situations involving ``time brokerage''
or ``management agreements.'' Choctaw Broadcasting Corporation,
12 FCC Rcd 8534, 8538 (1997).
9. In this case, K.I.D.S. - TV6 appears to have
transferred de facto control of the station through the
management agreement with Bear Valley. The terms of the
management agreement and the actual conduct of the parties show
that Bear Valley has actually set station policies, as opposed to
simply managing the station under Mr. Foster's direction. Under
the agreement, Bear Valley has ``full and complete power and
exclusive authority'' to operate the station. Moreover, Bear
Valley assumed all of the financial risks and the financial
benefits from the operation of the station. All of the station's
employees are Bear Valley's employees, and Bear Valley has the
exclusive right to set personnel policies for the station. Mr.
Foster appears to have no current role in the station's operation
because he is incarcerated. Under these circumstances, Bear
Valley appears to have acquired ultimate control over station
operations without prior Commission approval.
10. Section 503(b) of the Communications Act, 47 U.S.C. §
503(b), and Section 1.80(a) of the Commission's rules, 47 C.F.R.
§ 1.80(a), each state that any person who willfully or repeatedly
fails to comply with the provisions of the Communications Act or
the Commission's rules shall be liable for a forfeiture penalty.
For purposes of Section 503(b) of the Communications Act, the
term ``willful'' means that the violator knew it was taking the
action in question, irrespective of any intent to violate the
Commission's rules. See Southern California Broadcasting Co., 6
FCC Rcd 4387 (1991). Furthermore, a continuing violation is
``repeated'' if it lasts more than one day. Id., 6 FCC Rcd at
11. The Commission's Forfeiture Policy Statement sets a
base forfeiture amount of $8,000 for an unauthorized substantial
transfer of control. The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Commission's
Rules, 12 FCC Rcd 17087, 17113 (1997), recon. denied 15 FCC Rcd
303 (1999). Currently, there is nothing before us to suggest
that the base amount should be increased or decreased.
Accordingly, we believe that a forfeiture of $8,000 forfeiture is
IV. ORDERING CLAUSES
12. ACCORDINGLY, IT IS ORDERED pursuant to Section 503(b)
of the Communications Act of 1934, as amended, 47 U.S.C. §
503(b), and Sections 0.111, 0.311 and 1.80 of the Commission's
rules, 47 C.F.R. §§ 0.111, 0.311 and 1.80, that K.I.D.S. - TV6 is
hereby NOTIFIED of its APPARENT LIABILITY FOR FORFEITURE in the
amount of eight thousand dollars ($8,000) for willfully and
repeatedly violating Section 310(d) of the Communications Act of
1934, as amended (``Act''), 47 U.S.C. § 310(d), and Section
73.3540(a) of the Commission's rules, 47 C.F.R. § 73.3540(a).
13. IT IS FURTHER ORDERED, pursuant to Section 1.80 of the
Commission's rules, that within thirty days of the release of
this Notice, K.I.D.S. - TV6 SHALL PAY to the United States the
full amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
14. Payment of the forfeiture may be made by credit card
through the Commission's Credit and Debt Management Center at
(202) 418-1995 or by mailing a check or similar instrument,
payable to the order of the Federal Communications Commission, to
the Forfeiture Collection Section, Finance Branch, Federal
Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482. The payment should note the NAL/Acct. No. referenced
15. The Commission will not consider reducing or canceling
a forfeiture in response to a claim of inability to pay unless
the petitioner submits: (1) federal tax returns for the most
recent three-year period; (2) financial statements prepared
according to generally accepted accounting practices (``GAAP'');
or (3) some other reliable and objective documentation that
accurately reflects the petitioner's current financial status.
Any claim of inability to pay must specifically identify the
basis for the claim by reference to the financial documentation
16. Requests for payment of the full amount of this Notice
of Apparent Liability under an installment plan should be sent
to: Chief, Credit and Debt Management Center, 445 12th Street,
S.W., Washington, D.C. 20554. See 47 C.F.R. § 1.1914.
17. The response, if any, must be mailed to Charles W.
Kelley, Chief, Investigations and Hearings Division, Enforcement
Bureau, Federal Communications Commission, 445 12th Street, S.W,
Room 3-B443, Washington DC 20554 and MUST INCLUDE the file number
18. IT IS FURTHER ORDERED that a copy of this Notice shall
be sent, by Certified Mail/Return Receipt Requested, to K.I.D.S.
- TV6, 41506 Big Bear Boulevard, Big Bear Lake, California 92315.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
1 The seller was originally named ``American Sports Kids
Association.'' The agreement was later amended to substitute
K.I.D.S. - TV6 as the seller.