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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
)
Citicasters Co. ) File No. 00-IH-0283
) NAL/Acct. No.
) 200132080019/MG
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: February 12, 2001 Released: February 13,
2001
By the Chief, Enforcement Bureau:
I. INTRODUCTION
In this Notice of Apparent Liability for Forfeiture (NAL), we
find that Citicasters Co. (Citicasters) apparently willfully and
repeatedly violated Section 310(d) of the Communications Act, as
amended (the Act)1, and Section 73.3540 of the Commission's
rules2 by assuming control of WBTJ(FM), Hubbard, Ohio, without
prior Commission consent. Based upon the facts and circumstances
surrounding these apparent violations, we find that Citicasters
is apparently liable for a forfeiture in the amount of $25,000.
II. BACKGROUND
Citicasters is an indirect subsidiary of Clear Channel
Communications, Inc., which controls radio station licenses in
and around the Youngstown, Ohio area.3 Stop 26-Riverbend, Inc.
(Stop 26), is the licensee of WBTJ(FM), also in the Youngstown
area. Citicasters and Stop 26 entered into an asset purchase
agreement and a related time brokerage agreement (TBA)4 in
connection with an application proposing the assignment of
WBTJ(FM)'s license from Stop 26 to Citicasters. See File No.
BALH-19990816GE. The TBA referenced the asset purchase agreement
for the proposed sale of the station, and provided that Stop 26
would accept programming from Citicasters for broadcast on
WBTJ(FM). While the assignment application was pending, Stop 26
and Citicasters became involved in a dispute after Stop 26 gave
Citicasters notice that it would terminate the TBA in order to
provide programming on WBTJ(FM) of its own choosing. Citicasters
rejected this notice of termination because Stop 26 had not
repaid advances made to it under the asset purchase agreement.
Stop 26 and Citicasters attempted to resolve issues related to
the TBA and financial arrangements under the asset purchase
agreement, but could not reach a settlement. Citicasters then
filed a complaint in state court based on the dispute.
Citicasters also requested a restraining order and injunction to
prevent Stop 26 from ``interfering, obstructing, or disrupting
programming broadcast by Citicasters on the station.'' Complaint
filed by Citicasters on June 20, 2000, Court of Common Pleas,
Mahoning County, OH.
The state court in Mahoning County, Ohio, issued a temporary
restraining order that required Stop 26 to seek court approval
before placing programming on WBTJ(FM). Specifically, the
restraining order provided that Stop 26 may preempt Citicasters'
programming on WBTJ(FM) ``only after issuance of an order from
[the state court] that such preemption is necessary and permitted
under the TBA.'' Citicasters Co. v. Stop 26-Riverbend, Inc., No.
00-CV-1582 (Mahoning County Court of Common Pleas, July 21,
2000)(Order Reaffirming and Continuing Temporary Restraining
Order entered June 20, 2000). The court's order restrained Stop
26 ``from in any manner, either directly or indirectly,
interfering, obstructing, or disrupting Plaintiff [Citicasters
Co.] in broadcasting programming on WBTJ, 101.9 FM or taking any
actions in violation of Plaintiff's rights under its Time
Brokerage Agreement....'' Id. Stop 26 had resumed programming
WBTJ(FM) on July 1, 2000 while it pursued appeals of the Mahoning
County court's orders. However, those appeals were ultimately
unsuccessful.5 On August 22, 2000, Stop 26 permitted Citicasters
to resume programming WBTJ(FM), in compliance with the court's
July 21, 2000 temporary restraining order.6 However, Stop 26
requested and obtained the Commission's dismissal of the
assignment application, over Citicasters' objection.7
Stop 26 also filed a formal complaint with the Commission based
on Citicasters' actions with respect to WBTJ(FM). The complaint
referenced the court orders that required Stop 26 to obtain court
approval before preempting programming that Citicasters provides
to WBTJ(FM) under the TBA. The staff of the Enforcement Bureau,
Investigations and Hearings Division, reviewed this complaint,
and determined that Citicasters may have effectively exercised
control over the programming of WBTJ(FM), in violation of Section
310(d) of the Act, which prohibits the transfer of control of a
broadcast station license, or any rights thereunder, without
prior Commission consent. The Investigations and Hearings
Division issued a letter of inquiry directing Citicasters to
explain its actions in light of Section 310(d) of the Act and the
Commission's rules and policies concerning control of a broadcast
station license. See Letter to Mr. Jerome L. Kersting, Senior
Vice President, Citicasters Co., Ref. EB-00-IH-0283/MG, from
Charles W. Kelley, Chief, Investigations and Hearings Division,
Enforcement Bureau (Oct.18, 2000).
Citicasters filed its response to the Enforcement Bureau's letter
of inquiry, and asserted that its actions did not effectuate an
unauthorized transfer of control of WBTJ(FM). Citicasters argues
that the terms of the TBA are consistent with Commission
precedent, ensuring that Stop 26 remained in control of WBTJ(FM)
but requiring Stop 26 to make decisions concerning programming
and station operations in a reasonable, good faith manner.
Citicasters claims that Stop 26 failed to act reasonably or in
good faith with respect to its attempts to terminate the TBA and
to preempt programming, thereby breaching the terms of its
contractual agreements. Citicasters argues that under these
circumstances, it was entitled to seek judicial enforcement of
the terms of the TBA. In addition, Citicasters asserts that the
temporary restraining order preserved the status quo pending the
outcome of litigation of the parties' contractual disputes,
especially given: (1) Stop 26's unjustifiable attempt to
terminate the TBA in the context of its breach of the purchase
agreement; (2) Stop 26's attempts to use preemption of
Citicasters' programming as a pretext to avoid its contractual
obligations under the asset purchase agreement and TBA and (3)
the irreparable harm to Citicasters, to WBTJ(FM)'s advertisers,
and to WBTJ(FM)'s listeners caused by Stop 26's unilateral
termination of Citicasters' programming. Futhermore, Citicasters
asserts that the Commission does not have jurisdiction to
adjudicate this contractual dispute. Citicasters claims that the
Ohio court was required to enforce the TBA and determine whether
Stop 26 abided by its obligations to preempt programming in a
reasonable, good faith manner. Citicasters argues that the
temporary restraining order was merely a safeguard and a
screening device to ensure that Stop 26 complied with the terms
of the TBA and did not interfere with its bona fide contract
rights during the pendency of litigation within the exclusive
jurisdiction of the state court.
The letter of inquiry issued by the Investigations and Hearings
Division also afforded Stop 26 the opportunity to respond to
Citicasters' submission. Stop 26 asserts that Citicasters
usurped its authority by precipitating and vigorously prosecuting
injunctive relief that has barred Stop 26 from programming
WBTJ(FM). In this regard, Stop 26 claims that Citicasters
deliberately thwarted its repeated attempts to resume programming
the station by pursuing the temporary restraining order as well
as criminal contempt citations against Stop 26 and its principals
which were imposed after Stop 26 failed to immediately comply
with the court's orders. Stop 26 also filed a supplement which
indicates that Stop 26 resumed programming WBTJ(FM) on November
12, 2000.8 In addition, Stop 26 reported that on November 17,
2000, it received written notification of Citicasters' intention
to terminate the TBA. Citicasters responded to Stop 26's
supplement, and reiterated its argument that it was entitled to
seek injunctive relief in state court and that there has been no
unauthorized transfer of control of WBTJ(FM) as a consequence of
its conduct. Citicasters also affirms that the TBA has been
terminated.9
III. DISCUSSION
Section 310(d) of the Communications Act, as amended, prohibits
the transfer of control of a broadcast station license, or any
rights thereunder, without prior Commission consent. 47 U.S.C.§
310(d). See also 47 C.F.R. § 73.3540. The Commission has ruled
that a licensee's participation in a local marketing or time
brokerage agreement is not per se a violation of the
Communications Act or any Commission rule or policy. WGPR, Inc.,
10 FCC Rcd 8140, 8141 (1995)(subsequent history with respect to
unrelated issues is omitted).
However, the Commission has repeatedly emphasized that a licensee
involved in a time brokerage agreement must retain ultimate
control of the station. See, e.g., Choctaw Broadcasting
Corporation, 12 FCC Rcd 8534 (1997); WGPR, Inc., supra; 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). ``The focus of any Commission
inquiry with respect to the locus of control of a station's
operation is tripartite: the programming, the personnel and the
finances.'' WGPR, Inc., 10 FCC Rcd at 8141. Licensees are
permitted under Section 310(d) of the Act to delegate day-to-day
operations, but such delegation may not be wholesale. The
licensee, and not the broker, must mandate the basic policies
pertaining to fundamental station operations in these three
areas. See Southwest Texas Public Broadcasting Council, 85 FCC
2d 713, 715 (1981); The Alabama Educational Television
Commission, 33 FCC 2d 495, 508 (1972). The Commission evaluates
issues of license control by ascertaining whether the licensee
establishes policies governing these three essential areas of
station operation. See WGPR, Inc., 10 FCC Rcd at 8142.
Citicasters claims that terms of the TBA are in accord with the
terms of other similar agreements approved by the Commission.
Specifically, with regard to preemption rights, Citicasters cites
similar agreements that contain provisions requiring the
licensee's programming substitution decisions to be made ``in
good faith.'' WGPR, Inc., 10 FCC Rcd at 8141; Roy R. Russo, 5
FCC Rcd 7586 (MMB 1990). Citicasters states that each of these
agreements require the licensee's control to be ``reasonably
exercised'' with respect to decisions concerning programming,
station policies and operations. Citicasters also argues that
provisions for termination of the TBA are comparable to those
approved in WGPR, Inc.10 Moreover, Citicasters claims that the
terms of the TBA and asset purchase agreement were reviewed and
approved by the Commission in connection with an earlier sale of
WBTJ(FM) from Stop 26 to Citicasters that ultimately could not be
consummated.11
However, the Commission looks beyond the terms of the agreement
to the facts of a specific case in order to determine the
exercise of actual control. Thus, Citicasters cannot avoid
scrutiny by claiming that the terms of its TBA with Stop 26 were
modeled on other agreements, including the agreement at issue in
WGPR, Inc. The Commission's decision in WGPR, Inc. recites the
terms of a local marketing agreement, including the licensee's
obligation to make ``good faith'' determinations as to whether to
preempt programming. In addition, the Commission ruled that ``the
licensee should be ready and able to operate independently from
the broker at any time it believes the arrangement does not
fulfill its public interest responsibilities.'' 10 FCC Rcd at
8145. In WGPR, Inc., Commission concluded the local marketing
agreement, including the ``good faith'' provisions:
assures that [the licensee] has the unqualified right to:
substitute a program it believes is of greater local or
national importance or which it believes will better address
the problems, needs and interests of [WGPR-TV's community of
license]; reject or refuse a program that it believes is
unsuitable or contrary to the public interest; refuse to
broadcast any program that does not meet Commission
requirements; preempt any program in the event of a local,
state or national emergency; and delete any commercial
announcement that does not comply with Commission
requirements or any other laws.
8 FCC Rcd at 8142.
Moreover, the Commission determined that the licensee ``has
maintained control of WGPR-TV programming as provided under the
terms of its local marketing agreement and in practice.'' Id at
8143 (emphasis added).
In determining whether or not the licensee has control over
station programming, the Commission has looked at, among other
things, the licensee's involvement in any format changes and the
ability of the licensee to reject or preempt programming. Choctaw
Broadcasting Corporation, 12 FCC Rcd 8534, 8538-39 (1997); WGPR,
Inc., 10 FCC Rcd at 8142. During the period from August 22, 2000
to November 12, 2000, the injunctive relief awarded to
Citicasters at its request required Stop 26 to seek court
approval before exercising involvement in WBTJ(FM)'s programming.
Whether or not this was consistent with the contract, it is
inconsistent with the licensee's primary obligations with respect
to an essential aspect of station operation. The Commission's
policies and decisions regarding the permissibility of time
brokerage agreements have emphasized that the licensee is
responsible for the programming aired on its station, regardless
of the source, and that licensees of brokered stations are not
exempt from their responsibility to assess community needs and
problems and to provide issue responsive programming.12
While we do not disagree with Citicasters' assertion that its
agreements with Stop 26 encompass certain contractual rights and
obligations that are outside the Commission's regulatory
jurisdiction, we are not adjudicating such rights and obligations
here. Rather, we are assessing whether Citicasters violated the
Communications Act and the Commission's rules by obtaining
interim equitable relief from a state court - in the form of
temporary restraining orders that effectively substituted a non-
licensee's programming policies and decisions for those of Stop
26 - without prior approval of the Commission. We believe that
Citicasters' actions precluded Stop 26 from exercising its rights
to substitute programming which "it believes is of greater local
or national importance or which it believes will better address
the problems, needs and interests'' of the community of license.
See WGPR, Inc., 8 FCC Rcd at 8142. It was not sufficient that
Stop 26 had the right to seek court approval to preempt
programming under the TBA. Where a contractual dispute is before
a court, the licensee must retain actual control of essential
station functions unless the Commission gives prior consent to
the assignment or transfer of control of the station. Thus, it
is a violation of the Communications Act to invoke remedies for
breach, including injunctive or other equitable relief, that
impinge on such control, without obtaining prior Commission
consent. Under these circumstances, Citicasters' actions appear
to have resulted in a violation of Section 310(d) and Section
73.3540 of the rules. In this regard, control over any one of
the three areas essential to station operation is sufficient for
a finding of an unauthorized transfer or an unauthorized
assumption of control. See, e.g., Hicks Broadcasting of Indiana,
LLC, 13 FCC Rcd 10662, 10677 (1998)(Hearing Designation Order).
Until Stop 26's ability to preempt programming on WBTJ(FM) was
restored, it could not exercise control over its license.
IV. CONCLUSION AND FORFEITURE AMOUNT
We conclude that Citicasters apparently violated Section 310(d)
the Act and Section 73.3540 of the Commission's rules by assuming
control of WBTJ(FM), Hubbard, Ohio, without prior Commission
consent. The violation continued from August 22, 2000, when Stop
26 came into compliance with the temporary restraining order
issued by the state court, until November 12, 2000, when Stop 26
resumed programming of WBTJ(FM). Based upon our review of the
entire record, we find that the violations were willful and
repeated. The Commission has held that an act or omission is
``willful'' if it is a conscious and deliberate act or omission,
whether or not there is any intent to violate the rule. Southern
California Broadcasting Company, 6 FCC Rcd 4387 (1991)(definition
of willfulness contained in 47 U.S.C. § 312(f) applies equally to
47 U.S.C. § 503). Furthermore, a continuing violation is
``repeated'' if it lasts more than one day. Id, 6 FCC Rcd at
4388. Under these circumstances, we conclude that the violations
warrant the imposition of a monetary forfeiture.
Section 503(b)(2)(D) of the Act13 and Section 1.80(b)(4) of the
Commission's rules14 require us to take into account ``the
nature, circumstances, extent and gravity of the violation and,
with respect to the violator, the degree of culpability, any
history of prior offenses, ability to pay and such other matters
as justice my require.''15 The Commission's Forfeiture
Guidelines establish a base 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 Rules to
Incorporate the Forfeiture Guidelines, 12 FCC Rcd 17087 (1997),
recon. denied, 15 FCC Rcd 303 (1999)(Policy Statement). We find
that imposition of a forfeiture that is higher than the base
amount is warranted based on our review of the record. In this
regard, Citicasters' actions were particularly serious in light
of Stop 26's repeated and consistent attempts to resume
programming WBTJ(FM). Further, the record supports a finding
that Citicasters is an experienced broadcaster which should have
been aware that its actions with respect to WBTJ(FM) required
prior Commission approval. Thus, based upon the information
before us and taking into consideration the factors expressed in
Section 503(b)(2)(D) of the Act, we find that a forfeiture in the
amount of twenty-five thousand dollars ($25,000) is appropriate.
V. ORDERING CLAUSES
ACCORDINGLY, IT IS ORDERED THAT, pursuant to Section 503(b) of
the Communications Act of 1934, as amended,16 and Section 1.80 of
the Commission's rules,17 Citicasters Co. is hereby NOTIFIED of
its APPARENT LIABILITY FOR A FORFEITURE in the amount of twenty-
five thousand dollars ($25,000) for willfully and repeatedly
violating Section 310(d) of the Communications Act of 1934,18 as
amended, and Section 73.3540 of the Commission's rules.19
IT IS FURTHER ORDERED, pursuant to Section 1.80 of the
Commission's rules,20 that within thirty days of the release of
this Notice, Citicasters Co., SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture. Payment of
the forfeiture may be made by mailing a check or similar
instrument, payable to the order of the Federal Communications
Commission, and addressed to the Federal Communications
Commission, P.O. Box 73482, Chicago, Illinois 60673-7482. The
payment should note the NAL number of this proceeding (NAL No.
200132080019). Requests for full payment under an installment
plan should be sent to: Chief, Credit and Debt Management Center,
445 12th Street, S.W., Washington, D.C. 20554.21
IT IS FURTHER ORDERED, that a copy of this Notice of Apparent
Liability for forfeiture SHALL BE SENT by Certified Mail - Return
Receipt Requested, to Citicasters' counsel of record: Marissa G.
Repp, Esq., Hogan & Hartson, L.L.P., 555 13th Street, N.W.,
Washington, DC 20004-1109
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 47 U.S.C. § 310(d).
2 47 C.F.R. § 73.3540.
3 Radio station licenses controlled by Clear Channel
Communications, Inc. include WKBN(AM) and WMXY(FM), Youngstown,
Ohio. Citicasters Co. is the licensee of both of these
stations.
4 Time brokerage is defined as ``a type of joint venture that
generally involves the sale by a licensee of `discrete blocks of
time to a ``broker'' who then supplies the programming to fill
that time and sells the commercial spot announcements to support
it.''' Revision of Radio Rules and Policies in MM Docket 91-
140, Report and Order, 7 FCC Rcd 2755, 2784 (1992), citing
Policy Statement in BC Docket No. 78-355, 82 FCC 2d 107 n.2
(1980). Time brokerage agreements also may be referred to as
``local marketing agreements'' in practice and in the
Commission's precedents.
5 Orders of the Mahoning County court were stayed pending
procedural appeals. The temporary restraining order was
reinstated following the conclusion of those appellate
proceedings and the case was remanded to the Mahoning County
court.
66 Stop 26's initial refusal to comply with the court's
temporary restraining orders resulted in a contempt citation
being issued to Stop 26 and Percy Squire, an officer and
shareholder, and its counsel. Citicasters Co. v. Stop 26-
Riverbend, Inc., No. 00-CV-1582 (Mahoning County Court of Common
Pleas, Sept. 21, 2000)(Judgment Entry).
7 Stop 26 filed a request for voluntary dismissal of the
assignment application on July 11, 2000. Citicasters filed an
opposition, requesting that the Commission maintain the status
quo pending the outcome of the ongoing litigation. However, the
staff of the Mass Media Bureau subsequently dismissed the
assignment application. Letter to Percy Squire, Esq., Reference
No. 1800B3-AB (Chief, Audio Services Division, MMB, Sept. 7,
2000). Citicasters has filed a petition for reconsideration of
the staff's action dismissing the assignment application.
8 Stop 26's supplemental pleading indicates that, in its view,
the temporary restraining order had expired due to the passage
of time.
9 We note that on October 10, 2000, Stop 26 filed a third party
complaint in the state court proceeding, naming the Commission's
Chairman and the individual Commissioners in this complaint. The
case was removed to federal court pursuant to 28 U.S.C. §
1442(a)(1), which provides for the removal of cases involving
claims against federal officers. However, the federal court has
dismissed the third party complaint, has terminated the temporary
restraining order, and has remanded the case to the Mahoning
County Court of Common Pleas for further proceedings.
Citicasters Co. v. Stop 26-Riverbend, Inc., Case No. 4:00CV02808
(N.D. O.H. Feb. 5, 2001). Stop 26 has appealed the dismissal and
remand.
10 Under the TBA, the termination was to occur upon closing of
the purchase agreement or within 10 days of termination of the
purchase agreement. In addition, the TBA could be terminated
by the non-defaulting party in the event of a default by the
other party.
11 The approval of the application to assign the license of
WBTJ(FM) from Stop 26 to Citicasters predated the merger of
Citicasters' parent company, Jacor Communications, Inc., and
Clear Channel Communications, Inc. See File No. BALH-19980528GE.
Control of Jacor, and its indirect subsidiary, Citicasters, was
transferred to Clear Channel upon consummation of the merger,
but Clear Channel was not the assignee approved in the May 1998
assignment application. Accordingly, following the merger, a
new application was filed for consent to assign the license of
WBTJ(FM) from Stop 26 to Citicasters. See File No. BALH-
19998016GE. As discussed infra, this application was later
dismissed at Stop 26's request.
12 See, e.g., Revision of Radio Rules and Policies in MM Docket
91-140, Memorandum Opinion and Order, 7 FCC Rcd 6387, 6401-02
(1992)(subsequent history omitted)(imposing restrictions under
the local radio ownership rules on certain time brokerage
agreements and requiring licensee's/permittee's certification
that it maintains control over the station's facilities,
including finances, personnel and programming). See also
Reexamination of the Commission's Cross-Interest Policy, 4 FCC
Rcd 2208, 2214 (1989)(Under Commission's former cross-interest
policy, time brokerage agreements were permitted, subject to
requirement that licensee maintain control over its
programming); Part-time Programming, 82 FCC 2d 107 (1980).
13 47 U.S.C. § 503(b)(2)(D).
14 47 C.F.R. § 1.80(b)(4).
15 47 U.S.C. § 503(b)(2)(D).
16 47 U.S.C. § 503(b).
17 47 C.F.R. § 1.80.
18 47 U.S.C. § 310(d).
19 47 C.F.R. § 73.3540.
20 47 C.F.R. § 1.80.
21 See 47 C.F.R. § 1.1914.