WPC 2?BJZECourier3|f#Xw P7cXP#HP LaserJet IIISi PostScript Rm 610HPLAIIPO.PRSx  @hhhhHJwX@ X-#Xw P7cXP#2)qLXCourierTimes Roman"S^2CRddCCCdq2C28dddddddddd88qqqYzoCNzoozzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`lC2CC!CCCCCCCCCCd8YYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddodYYYYYYdzYzYzYzYdddddddCdCdCCCdNCdz8zCzCzCz8dddddCCCoNoNoNoNzCzCzCdddddzYzYNF2[dCYddddd7>d<d<$YYdCCddooCYNXg~ierT?xxx x6X@KX@2.[kL Z3|fTimes RomanTimes Roman Bold"S^*8DSS888S^*8*.SSSSSSSSSS..^^^Jxooxf]xx8Axfxx]xo]fxxxxf8.8NS8JSJSJ8SS..S.SSSS8A.SSxSSJP!PZ8*888888888888S.xJxJxJxJxJooJfJfJfJfJ8.8.8.8.xSxSxSxSxSxSxSxSxSxSxJxSxSxSxSxS]SxJxJoJoJoJoJxSfJfJfJfJxSxSxSxSxSxSxS8S8S888SA8xSf.f8f8f8f.xSxSxSxSxSxo8o8o8]A]A]A]Af8f8f8xSxSxSxSxxSfJfJN:*LS8JSSSSS.4}}S2S}2JJS88SS]]8J2t^^\\^^ee*C^.wR)Ewn\1fy\r\Sxx\rHP LaserJet IIISi PostScript Rm 610HPLAIIPO.PRSC\  P6QhhhhHJwP2RL` L L"S^2CRddCCCdq2C28dddddddddd88qqqYzoCNzoozzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`lC2CC!CCCCCCCCCCd8YYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddodYYYYYYdzYzYzYzYdddddddCdCdCCCdNCdz8zCzCzCz8dddddCCCoNoNoNoNzCzCzCdddddzYzYNF2[dCYddddd7>d<d<$YYdCCddooCY%7777777777>>>1eOIIOC=OO%+OCbOO=OI=COOhOOC%%47%17171%777V7777%+77O77155<%%%n%%%%%%%%%%7O1O1O1O1O1bII1C1C1C1C1%%%%O7O7O7O7O7O7O7O7O7O7O1O7O7O7O7O7=7O1O1I1I1I1I1O7C1C1C1C1O7O7O7O7O7O7O7%7%7%%%7+%O7CC%C%C%CO7O7O7O7O7bOI%I%I%=+=+=+=+C%C%C%O7O7O7O7hOO7C1C1N'27%177777"SS7!TT7S!117n%%77l==n%1n!t>><<>>mBBs,>[N6-msTN[TTTH_<1CPthat was granted in December 1986 and went on the air in June 1987. Both the Dothan and Florence  xapplications were to be financed by $275,000 loans that were personally guaranteed by the Pearces. The  xPearces claim a net worth of more than $2 million and also claim that bank commitment letters were  xissued for all of the stations. All of the applications except the Cordoba station were eventually  S- x dismissed.! yOY- xԍ Following the dismissal of all of the listed applications, Houston Pearce became the 50 percent shareholder in an applicant/permittee for an FM station in Glencoe, Alabama. The interests held by the Pearces do not constitute a large or unusual number of outside  S- x interests that might raise a question as to the applicant's financial qualifications. See Certification of  Sk- xFinancial Qualifications, 2 FCC Rcd 2122 (1987); George Edward Gunter, 104 FCC 2d 1363, 136667  xz 78 (Rev. Bd. 1986). The facts do not otherwise raise a substantial question that Breeze would be unable to meet its financial commitments.   Ox11. Another of Breeze's principals, 25 percent general partner William Phillips, was also a 33  x[percent limited partner in an applicant for a station in Northport, Alabama. Subsequently, he was also a  x49 percent shareholder in the proposed assignee of an FM station in Chickasaw, Alabama, for which he  xywas the cosignor of a note for $361,804. As above, the extent of Phillips' outside interests does not raise a substantial and material question of fact as Breeze's financial qualifications.  Sm- B. Miller's Financial Qualifications   Nx12. As discussed above, we find no merit to Miller's objections to the settlement. Nevertheless,  xbefore we can approve the settlement, we must also address a pending application for review relating to  S- xMiller's qualifications to be a licensee.OX@! yO%- xyԍ Application for Review, filed September 20, 1993. Also pending are: (1) an Opposition to J. McCarthy  xwMiller's Application for Review, filed October 5, 1993, by Breeze and (2) an Opposition to Applications for Review, filed October 5, 1993, by Maranatha. O The Board found that Miller failed to demonstrate that at the time"` ,l(l(,, "  xhe filed his application he had sufficient available funds to meet the costs associated with this application  xand other pending applications in which he had an interest. Miller estimated the cost of construction and  xinitial operation for the Gulf Breeze station to be $126,000, which he proposed to meet from his personal  xMassets. The Board accepted the claim that Miller's net worth of $3,308,000 including $576,000 in net  xliquid assets would be sufficient to cover the costs of the Gulf Breeze station as well as two other FM  xstations in which Miller had an interest. 8 FCC Rcd 1836  56. However, the Board found that Miller  xyalso had interests in numerous low power television (LPTV), multipoint distribution service (MDS), and cellular radio applications.   x13. These applications were filed by two companies that Miller owned in connection with J.R.  xMiller (no relation). Miller held a 51 percent interest in M&M Communications, Inc., which had pending  xapplications for 72 LPTV stations and 46 MDS stations. The Board estimated the costs of construction  xjand initial operation for the LPTV stations to be $8,460,000 and for the MDS stations to be $7,958,000.  xMiller also held a 50 percent interest in Miller Communications, Inc., which had applications for 30  xcellular radio systems. The Board estimated the cost of the systems to be $60 million. 8 FCC Rcd at 1836  67.   Ax14. According to the Board, Miller explained that these various LPTV, MDS, and cellular  xjapplications did not involve any commitment of his personal resources and, thus, the approximately $76  xLmillion in estimated costs did not detract from his qualifications for the Gulf Breeze FM station. 8 FCC  xRcd at 1836  8. According to Miller, J.R. Miller had orally agreed to provide all funding for the LPTV  xstations. The MDS stations would assertedly be funded by the loans from the Barnett Bank of Pensacola,  xzFlorida, or by J.R. Miller, if necessary. Miller indicated that the cellular stations would be funded by  Sk- xvarious bank loans. Id. Miller also noted that the Commission had eliminated the requirement that  S8- x[applicants make a financial showing in connection with LPTV applications. Id. at 1837  11. He finally  xKobserved that the various authorizations applied for were to be awarded by lottery and that it was therefore  S-unlikely that more than a fraction of the applications would ever be granted. Id.  Sl-  x15. The Board held, citing Texas Communications Limited Partnership, 5 FCC Rcd 5876, 5878  xy 11 (Rev. Bd. 1990), that Commission policy required Miller to demonstrate the availability of funds to  xmeet the costs of construction and initial operation for all of the pending applications and that Miller failed  x\to do so. The Board found that J.R. Miller had never agreed to provide funding for all of the pending  x=proposals. The Board further found that neither Miller nor J.R. Miller had ever calculated the total cost  xof all of the facilities, had not submitted bank commitment letters covering all the facilities, and had  x>committed themselves to build only a few facilities that they would choose. The Board inferred that  x.Miller would be liable for the costs of the LPTV, MDS, and cellular stations as a shareholder of the two  xcorporate applicants and because he stated in at least one LPTV application that the station would be  xfunded by his personal resources. 8 FCC Rcd at 1837  13. The Board found no precedent for taking  Sn-into account the probability that the applications would or would not be granted. Id. at 1837  15.   ^x16. In his application for review, Miller asserts that the Board erred in finding him financially  xunqualified. He denies that he was personally obligated to fund the LPTV, MDS, or cellular facilities and  xmaintains that the fact that he was a shareholder of the two corporate applicants is no reason to impute  xsuch an obligation to him. He urges that no costs should be imputed to him based on the LPTV  xyapplications, because the Commission eliminated the need for a showing of financial qualifications in that  xservice. Moreover, he claims that J.R. Miller was committed to and had the means to fund the number  xof LPTV stations that likely would have been awarded in lotteries. Miller further claims that the MDS and cellular applications were supported by bank letters as to which he would have no personal liability.   Ax17. We reverse the Board and conclude that Miller has demonstrated that he is financially  xqualified to construct and operate the Gulf Breeze FM station. In reaching this conclusion, we wish to"=',l(l(,,+"  xkclarify the applicable legal standard. As the Board correctly held, the pendency of Miller's numerous  xLPTV, MDS, and cellular applications at the time he certified his financial qualifications are potentially  xyrelevant to the inquiry here. We do not agree, however, with the unqualified assertion that Miller has the  x>burden of showing in this proceeding that he is financially qualified with respect to all of his pending  xapplications. No issue has been specified as to the financial qualifications of the other applicants of which  xMiller is a principal and thus all questions concerning the grantability of those other pending applications  xjare beyond the scope of this proceeding. His involvement with the other applications is relevant only to  xthe extent that it could have a potential impact on the availability of the funds relied on here. Thus, in  Sh- xPlaya de Sol Broadcasters, 8 FCC Rcd 7027, 7028  11 (Rev. Bd. 1993), the Board, in designating a  xfinancial issue, rejected an applicant's claim that the bank loan relied on in that proceeding (Mecca,  xkCalifornia) was "distinct" and "independent" from financial arrangements supporting another pending  S- xapplication (Montecito, California), because it found substantial and material questions of fact as to  xwhether the personal commitments supporting the Montecito financing would adversely impact the bank's  Si - xwillingness to make the loan relied on in the Mecca proceeding.Xi ! yO - xԍUltimately, the Presiding Judge resolved the financial issue in that applicant's favor, finding that the evidence  xdeveloped after remand confirmed that the Mecca and Montecito proposals were in fact distinct and independent.  yOa-Playa del Sol Broadcasters, 9 FCC Rcd 4840, 4846  51 (S.I.D. 1994).  By contrast, in this case, Miller relies  xKon his personal assets to finance the construction and initial operation of the proposed station and contends  xthat the other pending applications would be financed independently either by J.R. Miller or by bank loans and would not require the use of his personal assets.  Sj-  #x18. We find that the Board's decision and the ALJ's supplemental initial decision (Breeze  S7- xBroadcasting Company, Ltd., 7 FCC Rcd 1653 (S.I.D. 1992), do not properly analyze the relevance of  xNMiller's nonbroadcast applications because they suggest that Miller has an unqualified burden of  x{demonstrating his financial qualifications with respect to those applications in order to show he is  xjfinancially qualified with respect the Gulf Breeze application. We disagree. If Miller arranged his affairs  xso that his obligations to fund the FM applications were to be satisfied by available resources that he was  x>not obligated to use to fund the various nonbroadcast applications, it is irrelevant to this proceeding  x=whether he had the resources to fund the nonbroadcast applications. For this reason, we will conduct a  xde novo review of the record on this issue to determine whether Miller effectively segregated his  xcommitments to the FM and nonbroadcast applications and to determine the nature of these obligations.   ^x19. We find that the evidence supports Miller's contention that his commitments to the non xbroadcast applications were separate from and did not detract from his financial qualifications here. We  x\reach this conclusion although we do not find that Miller's arrangements to finance the nonbroadcast  xapplications were necessarily adequate for that purpose. It is sufficient that they did not conflict with  xMiller's intent to earmark his personal resources to finance the FM stations. In this regard, the record  xksupports Miller's contention that his understanding with J.R. Miller relieved him of any obligation to devote his personal resources to the applications in which he and J.R. Miller had a joint interest.  S-  ^x20. We recognize that that understanding does not appear to have been reduced to a formal or  x=binding commitment. The Memorandum of Agreement between Miller and J.R. Miller, executed July 3,  x1984 (Breeze Remand Exh. 2) did not contain such a provision. Indeed, the record indicates that draft  xlanguage that would have committed J.R. Miller to provide funding was deleted from the final version.  xJt. Stipulation 1 at 2; Tr. 88385. Nevertheless, despite the absence of a formal, written agreement to that  xeffect, J.R. Miller confirmed that he and Miller understood that the latter would not be required to provide  xyfinancing. The record contains a sworn declaration by J.R. Miller (Miller Remand Exh. 1, Att. A), which states:"<#,l(l(,,&"Ԍ ` ԙXxX` ` I agreed that in the event any of the LPTV applications were granted, I  ` would lend M&M, either directly or through loans secured from third  ` dparties, the funds necessary to prosecute the applications, construct and  ` operate the stations. . . . . It was understood that Mr. Miller and his wife  ` fwould have no personal financing obligation with respect to these stations.x`  xzThis declaration was sufficient to demonstrate that Miller was not personally obligated to finance the LPTV stations.   x21. We also recognize that J.R. Miller was not committed to fund all pending applications or even  xall applications granted by the Commission. Rather, in written testimony stipulated to by the parties (Jt. Stipulation 1 at 2), he stated:  ` XxX` ` [I] expressed a willingness to fund or arrange funding for the construction  ` and operation of the stations if we chose to build them. Our approach  ` would have been to build a few of the stations and see how they did. If  ` they turned out well, I would furnish or obtain more money to build more of them.x`  xMoreover, he specifically testified that he would not have contributed the funds necessary to construct all  x\of the pending LPTV and MDS stations. Jt. Stipulation 1 at 3. The record thus establishes that J.R.  xMiller would provide financing only for certain stations that he and Miller "chose" and does not establish Miller's financial qualifications with respect to all pending applications.   x22. The limitations on J.R. Miller's commitment, however, do not conflict with Miller's intent  xto set aside his personal resources for the FM applications and segregate them from any obligation to fund  xjthe LPTV and MDS applications. The evidence confirms that Miller undertook no obligation to provide  xfunding to the extent that J.R. Miller did not. On the contrary, the evidence indicates that to the extent  xthat J.R. Miller did not provide funding, other applications that might be granted would not be financed  xout of Miller's personal resources, but rather would not be built at all. Tr. 88689. We therefore disagree  xjwith the analysis of the Board and the ALJ that establishing Miller's financial qualifications is dependent  x upon the existence of an understanding that J.R. Miller would be able to provide all financing for the LPTV and MDS applications.   nx23. Nor do we find it troubling that the agreement was not reduced to writing, since it was  xapparently intended that the agreement was openended as to which stations would actually be funded.  S- x@See Tr. 88592. Similarly, we find no probative value in a statement in one of Miller's LPTV  x[applications (Breeze Remand Exh. 1, Exh. 1) that: "Cost of construction and operation of the applicant's  x\low power TV facility will be financed from applicant's surplus funds." The application was filed in  x1980, before Miller and J.R. Miller entered into their agreement, which supersedes the application as a statement of Miller's intent.   _x24. Another piece of evidence (Breeze Remand Exh. 7), however, requires closer scrutiny,  x-although it too ultimately proves to be without probative value as to the issue of J.R. Miller's commitment.  xjThis exhibit was originally exchanged on February 1, 1990 after a financial issue was added in the hearing  xconcerning Miller's application for an FM station in Orange Beach, Alabama. In the exhibit, which was  xjintended to demonstrate Miller's thencurrent financial qualifications, Miller stated: "Mr. [J. McCarthy]  x=Miller is also obligated to provide up to 51% of the financing to construct and operate LPTV stations in  S='- xLittle Rock, AK. and Jacksonville, Fla." Id. at 1. The exhibit concluded that "[assuming] the most costly"=',l(l(,,+"  xset of circumstances," Miller's total financial obligations for the three FM applications and two LPTV  xpermits would be $757,260, which would be covered by Miller's thencurrent liquid assets of over $1.5  S- xmillion. Id. at 2. The exhibit states that, at the time, Miller had no other significant financial obligations  Sg-or commitments. Id.   x25. On its face, the exhibit seems to contradict Miller's claim in this proceeding that he was not  xzobligated to provide financing for the LPTV (or MDS or cellular) applications based on his agreement  xwith J.R. Miller. At the hearing in this case, Miller was crossexamined as to this seeming inconsistency.  Sh- x-Tr. 97678. His testimony (Tr. 977) that "whether I forgot it [i.e., the agreement with J.R. Miller] or what,  xI don't know" sheds no light on the question. Nevertheless, the circumstances in which the exhibit was  x\filed makes Miller's nonreliance on his agreement with J.R. Miller less significant. First, although the  xFebruary 1, 1990 exhibit did not rely on the agreement with J.R. Miller, Miller had previously testified  xto the existence of the agreement in a November 29, 1989, deposition in the Orange Beach proceeding.  xTr. 99295. That Miller ultimately chose not to rely on the agreement in the Orange Beach exhibit should  xynot, therefore, be construed as an admission that the agreement did not exist. Second, at the time that the  xexhibit was filed (as well as when the Orange Beach application was filed on December 3, 1987), Miller  xkno longer needed to rely on his understanding with J.R. Miller. By that time, Miller had significantly  xmore resources and fewer outside commitments than when Miller certified his financial qualifications in  x Gulf Breeze and relied on J.R. Miller to help him meet those outside commitments. By the time the  x>Orange Beach application was filed, Miller no longer had numerous pending LPTV, MDS, or cellular  xLapplications, since lotteries involving Miller's applications had already taken place. Miller Remand Exh.  x1 at 3; Gulf Breeze Remand Exh. 7 at 14. Moreover, the sale of a cellular property had yielded over $1.5  xzmillion in proceeds that Miller could use to meet his financial obligations. Miller Remand Exh. 1 at 6;  xGulf Breeze Remand Exh. 7 at 4. Thus, the record indicates that, over time, the agreement with J.R.  xMiller became superfluous as a source of funds, making it unexceptional that Miller did not rely on it in  xOrange Beach. Indeed, despite the agreement, J.R. Miller was never called upon to furnish funds or arrange for financing. Jt. Stipulation 1 at 2.   1x26. As noted above, Miller indicated that to the extent funds were not forthcoming from J.R.  xLMiller to build stations, they would be derived from bank loans. The record also substantiates that such  x loans, rather than Miller's personal assets, would provide any funds that J.R. Miller did not provide  xpersonally. Here again, as was the case with the J.R. Miller commitment, the record does not demonstrate  xthe existence of sufficient firm commitments from banks to cover all pending applications. (Miller had  xnot even estimated the total costs associated with the pending applications. Tr. 964.) But here again,  xthese limitations do not implicate Miller's personnel funds, set aside to finance the FM stations. More  xspecifically, the record contains only two bank letters that predate the filing of Miller's Gulf Breeze  xapplication. An August 2, 1983 letter from Barnett Bank (Miller Remand Exh. 1, Att. B) states merely  xthat the bank: "has agreed to consider making funds available" for one of Miller's MDS applications. A  Sn- xJuly 12, 1984 letter from an official of the First American Bank of Pensacola (Id., Att. C, Att. 1) states  xzonly that: "I would not anticipate difficulty in arranging financing for the purpose of constructing and  xoperating cellular systems for which Miller Communications, Inc. will be seeking authorization," although  xmthe participation of other banks might be necessary. Although these letters do not reflect firm  xcommitments by banks sufficient to cover all applications, they amply substantiate Miller's intent to rely  xon bank loans and not his personal assets. The terms of the bank letter do not encumber Miller's personal assets.   ]x27. In this regard, we note that these letters (as well as letters executed after the filing of the Gulf  S%- xBreeze application) indicate that Miller's personnel guarantee might be required for any loans. Indeed,  x\Miller indicated in writing (Breeze Remand Exh. 4) that he was willing to personally guarantee a $2.3  xmillion loan from the Bank of Mobile to finance a cellular system in Binghamton, New York. We find"=',l(l(,,+"  xLthat the possibility that Miller might be required personally to guarantee loans does not detract from the  xavailability of his personal assets. Although the demands of a Gulf Breeze station on Miller's financial  xzresources might adversely affect the bank's willingness to make such a loan, we know of no precedent  xfor treating such a guaranty provision as a current liability that effectively reduces the amount of liquid assets available for the Gulf Breeze station in the first instance.  S- C. Conclusion   mx28. We find that the record confirms that Miller's plans to finance the various pending LPTV,  xMDS, and cellular applications did not rely on the same resources as his proposal to finance the proposed  xGulf Breeze FM station. Miller's actual financial qualifications with respect to these other stations is  xoutside the scope of this proceeding, as is the propriety of his intent to select which stations he might  x"choose to build." Miller is therefore qualified to be a licensee here. Because the proposed settlement  Si -agreement is effectively conditioned on the denial of Miller's application, we dismiss it. i ! yO - xԍ If the parties to this proceeding choose to amend the pending settlement agreement within the period before  xits dismissal becomes final, we would, for the purposes of 47 U.S.C.  309(l)(3), treat such an amended agreement  xZas having been filed on December 29, 1997. The parties should file any such amended agreement within 30 days after the release date of this proceeding.  S - III. ORDERING CLAUSES ă   !x29. ACCORDINGLY, IT IS ORDERED, That the Application for Review, filed September 20,  xj1993, by J. McCarthy Miller IS GRANTED, and the Decision of the Review Board, FCC 93R41 (Aug.  x19, 1993) (8 FCC Rcd 5578), and the Memorandum Opinion and order of the Review Board, FCC 93R8 (March 18, 1993)( 8 FCC Rcd 1835) ARE MODIFIED as set forth above.   x30. IT IS FURTHER ORDERED, That the Joint Petition for Approval of Settlement Agreement,  xfiled December 29, 1997, by Breeze Broadcasting Company, Ltd. and Maranatha Broadcasting Company, Inc. and the associated Motion for Leave to Amend, filed December 29, 1997 ARE DISMISSED. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Magalie Roman Salas x` `  hh@Secretary