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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
Minority Television Project, ) EB-03-IH-0126
Inc. ) NAL/Account No. 200532080019
) Facility ID No. 43095
) FRN 0008886293
Licensee of Noncommercial )
Educational Television Station )
KMTP-TV, San Francisco,
California
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: 02/08/2005
Released: 02/09/2005
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for
Forfeiture (``NAL''), we find that Minority Television
Project, Inc. (``Minority''), licensee of noncommercial
educational television Station KMTP-TV, San Francisco,
California, has apparently violated section 399B of the
Communications Act of 1934, as amended (the ``Act''),1 and
section 73.621 of the Commission's rules,2 by willfully and
repeatedly broadcasting prohibited advertisements. Based
upon our review of the facts and circumstances of this case,
we conclude that Minority is apparently liable for a
monetary forfeiture in the amount of $7,500.
II. BACKGROUND
2. This case arises from allegations contained in a
reply pleading filed with the Commission by Lincoln
Broadcasting Company (``Lincoln'') on April 17, 2002, during
the course of a prior investigation by the Enforcement
Bureau (the ``Bureau'') concerning Station KMTP-TV's
underwriting practices.3 In that pleading, Lincoln alleged
that Minority had broadcast prohibited underwriting
announcements on behalf of the Honda Accord, Charles Schwab,
and Star Cruises, on January 9, February 25, and March 26,
2002, respectively.4 The Bureau thereafter inquired of the
licensee concerning the new announcements.5 Minority
responded, acknowledging that Station KMTP-TV aired the
announcements in question during the period January through
March 2002 a total of 98 times, and defended its
underwriting practices.6
III. DISCUSSION
3. Under section 503(b)(1) of the Act, any person who
is determined by the Commission to have willfully or
repeatedly failed to comply with any provision of the Act or
any rule, regulation, or order issued by the Commission
shall be liable to the United States for a forfeiture
penalty.7 In order to impose such a forfeiture penalty, the
Commission must issue a notice of apparent liability, the
notice must be received, and the person against whom the
notice has been issued must have an opportunity to show, in
writing, why no such forfeiture penalty should be imposed.8
The Commission will then issue a forfeiture if it finds, by
a preponderance of the evidence, that the person has
willfully or repeatedly violated the Act or a Commission
rule. As described in greater detail below, we conclude
under this procedure that Minority is apparently liable for
a forfeiture in the amount of $7,500 for its apparent
willful and repeated violations of section 399B of the Act
and section 73.621 of the Commission's rules.
A. Minority Apparently Has Willfully and Repeatedly
Broadcast Advertisements in Violation of Section 399B
of the Act and Section 73.621 of the Commission's
Rules
4. Advertisements are defined by the Act as program
material broadcast "in exchange for any remuneration" and
intended to "promote any service, facility, or product" of
for-profit entities.9 The pertinent statute specifically
provides that noncommercial educational stations may not
broadcast advertisements.10 Although contributors of funds
to noncommercial stations may receive on-air
acknowledgements, the Commission has held that such
acknowledgements may be made for identification purposes
only, and should not promote the contributors' products,
services, or business.11 Specifically, such announcements
may not contain comparative or qualitative descriptions,
price information, calls to action, or inducements to buy,
sell, rent or lease.12 At the same time, however, the
Commission has acknowledged that it is at times difficult to
distinguish between language that promotes versus that which
merely identifies the underwriter. Consequently, the
Commission expects only that licensees exercise reasonable,
good-faith judgment in this area.13
5. At issue are three underwriting announcements
which Minority acknowledges that the station broadcast a
total of 98 times during the period January through March
2002.14 The announcements for the Honda Accord and Charles
Schwab were televised in Mandarin Chinese and that on behalf
of Star Cruises was aired in the Vietnamese language. The
translations offered by Lincoln and Minority are
substantially similar. To the extent that the translations
offered by Minority represent its attempt to exercise its
``good-faith'' discretion under Xavier, supra, we will defer
to it. Accordingly, we will accept and rely on Minority's
translations in evaluating whether it acted reasonably in
its exercise of that discretion.15
6. In this case, Minority acknowledges that it aired
the subject messages on behalf of the station's
underwriters, all of which are for-profit entities, 98
times.16 Minority argues, however, that its broadcast of
the announcements was consistent with pertinent Commission
precedent.17
7. In this regard, Minority represents that, as
specifically permitted by section 73.621 of the Commission's
rules, it received only ``general contribution[s made] to
the station's operating cost'' from World Channel, Inc., a
program supplier, and that such contributions to the station
were not made in quid pro quo exchange for the broadcast
inclusion of individual announcements, including those made
on behalf of the Honda Accord and Charles Schwab, but,
rather, to offset the station's general operating costs.18
Minority avers that it has not received consideration
directly from the underwriters themselves, or compensation
on a per-spot basis for airing underwriting announcements,
since contracting with program supplier World Channel, Inc.,
in December 1998. 19 Minority claims that, since that time,
it has received only general annual station operating
contributions to subsidize the cost of airing the programs
that World Channel supplies.20 Although Lincoln argues that
Minority's explanation is at odds with the account given in
the prior forfeiture proceeding, viz., that Minority
``received cash consideration for each of the
announcements'' then under investigation, it appears that
Minority may simply have been imprecise in previously
explaining how it received such payments.21
8. Regarding the third underwriting announcement,
Minority represents that it had an ``oral barter or trade
arrangement'' with another program supplier, Tron Do, in
exchange for Minority's agreement to broadcast Mr. Do's
program, ``Dien Dan Vietnam,'' on which program the Star
Cruises messages were contained.22 Minority contends that
Station KMTP-TV's broadcast of the underwriting
announcements thus do not violate section 399B of the Act,
even if the messages contained language or references that
promoted for-profit entities, because they were not aired in
exchange for consideration.
9. We reject Minority's arguments, and find that each
of the announcements at issue apparently exceeds the scope
of what is permissible under section 399B of the Act, and
the Commission's pertinent rules, in light of the ``good
faith'' discretion afforded licensees under Xavier, supra.
In this regard, the announcements each seek impermissibly to
distinguish favorably their underwriters from competitors by
directly stating or implying that they offer superior
service or products, and some of the announcements also
invite or urge business patronage.
10. With regard to the Honda Accord announcement, we
note that the visual aspects of the announcement depict the
automobile in use, turning a circle, while the narrator,
speaking in Chinese, describes several of the vehicle's
attributes through the terms ``accuracy,'' ``flexibility,''
``power'' and ``level,'' suggesting that such qualities
commend it as a vehicle that will accompany viewers ``around
the direction of [their] life, straight or curve.''23
Minority argues that, because these adjectives are not
usually applied to describe automotive performance, and are
``factually descriptive,'' they should not be deemed to be
promotional. This argument lacks merit. As we have said
previously, the purported factual descriptiveness or
veracity of any reference is irrelevant to the issue of
whether that message is promotional.24 Moreover, we find
that these terms are clearly promotional. Although the term
``accuracy'' does not appear to refer to a quality
ordinarily associated with automobiles, the same cannot be
said for the other adjectives contained in the announcement.
In this regard, the term ``flexibility'' appears to imply
that the car possesses varied functionality, which, in this
case, intends a comparative and qualitative reference. It
further appears that the term ``power,'' in this case,
speaks to the vehicle's acceleration, torque or horsepower
rating, which is similarly descriptive and pertinent to
automotive quality. Moreover, the announcement's reference
to the term ``level'' reasonably suggests, in the context
presented, that the Honda Accord automobile's drivers enjoy
a smooth ride, which is a favorable reference to the
product's handling characteristics.
11. Minority further contends that the Honda Accord
announcement is not promotional because the automobile is
portrayed being driven in a pattern that spells the Chinese
character for the word ``life,'' and not ``racing down a
roadway.''25 Minority claims that the instant presentation
is therefore allegorical or symbolic and does not promote
the featured product's automotive qualities.26 We note that
Minority cites no precedent supporting this contention. To
the contrary, even where underwriting announcements utilize
indirect or oblique forms of expression to convey their
message, they may still be found to promote their
subjects.27 We find that the instant announcement portrays
the vehicle as one that would enhance or enrich the viewers'
lifestyles, and by doing so, impermissibly promotes the
underwriter's product.
12. We find that the Charles Schwab announcement
promotes the company by inviting business patronage. In
this regard, the message implores viewers to consider that
``new tax laws are affecting different kinds of IRA
retirement accounts,'' and then invites them to ask the
advisers at Charles Schwab for specific advice on how best
to respond to such changes.28 Similarly, the Star Cruises
announcement describes its Hoi Ngo Trung Duong vacation
package in comparative and qualitative terms by stating that
it is ``an interesting tour that has received many
compliments,'' thus attempting to distinguish it favorably
from other such tours.29 The announcement also
characterizes the cruise ship's accommodations as ``world
class,'' and not in permissible value-neutral terms.
Furthermore, the announcement makes a prohibited call-to-
action through inviting viewers to ``please call,'' and by
implying that, because ``seats are limited,'' that they
should act promptly to secure a reservation.30
13. Contrary to Minority's contentions, the
underwriting announcements at issue appear to have been
broadcast in exchange for consideration. In this regard,
``consideration,'' for purposes of section 399B of the Act,
may consist of the program material itself.31 The Act does
not require that the consideration involved be supplied
directly by the sponsor or underwriter itself.32
Furthermore, the Commission has long held that promotional
statements made on behalf of for-profit entities, when made
in exchange for the receipt or reasonable anticipation of
direct or indirect consideration, are prohibited under
section 399B, and that cognizable consideration may take
many forms.33 Thus, even if the program supplier, World
Channel, Inc., negotiated with the advertising firms or
underwriters involved and received payments directly from
them, that factor would be of no consequence, because
Minority's decision to include the announcements in the
material that it broadcast appears based on the fact that
it, in turn, was to receive consideration from the
programmer, if not on a ``per spot'' basis, then in the form
of annual payments.34 The production orders and invoices
supplied by Minority indicate that its program supplier
World Channel, Inc., billed advertising firm Monva, Inc.,
for placing the Honda Accord and Charles Schwab
announcements in program material intended for broadcast
over the station.35 The invoices contemplate that the
station would run the announcements on specific dates in
exchange for payment, and belie any claim that the
announcements were aired on a gratuitous basis. In addition,
the inclusion of the Star Cruise announcement in the
programming supplied to the station was, according to
Minority, based on ``oral barter or trade arrangement'' and
thus supported by consideration.36
B. Proposed Action
14. Section 503(b) of the Act and section 1.80(a) of
the Commission's rules both state that any person who
willfully or repeatedly fails to comply with the provisions
of the Act, the rules or Commission orders shall be liable
for a forfeiture penalty.37 The Commission's Forfeiture
Policy Statement sets a base forfeiture amount of $2,000 for
violation of the enhanced underwriting requirements.38 The
Forfeiture Policy Statement also specifies that the
Commission shall adjust a forfeiture based upon
consideration of the factors enumerated in section
503(b)(2)(D) of the Act, such as ``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 may require.''39
15. In this case, it appears that, during the period
January through March 2002, Minority willfully and
repeatedly broadcast advertisements in violation of section
399B of the Act and section 73.621 of the Commission's
rules. We believe that a substantial forfeiture is
necessary due to several factors, including the period of
time during which the prohibited announcements were aired --
three months -- and the significant number of times that the
announcements were repeated - 98. Nevertheless, we believe
the potential liability if we simply applied the $2,000 bas
amount to each of the 98 apparent violations would be
excessive here. Based on all the circumstances and after
examining forfeiture actions in other recent underwriting
cases, we believe that a proposed forfeiture of $7,500 is
appropriate here.40
16. Accordingly, applying the Forfeiture Policy
Statement and the statutory factors to this case, we
conclude that Minority is apparently liable for a forfeiture
in the amount of $7,500, for violating the Commission's
underwriting rules. We will not hesitate to take even
stronger enforcement action against noncommercial
educational licensees that engage in similarly serious
violations of our underwriting requirements.
IV. ORDERING CLAUSES
17. In view of the foregoing, we conclude that a
monetary sanction is appropriate. Accordingly, pursuant to
section 503(b) of the Communications Act of 1934, as
amended, and sections 0.111, 0.311 and 1.80 of the
Commission's rules, Minority Television Project, Inc.,
licensee of noncommercial educational Station KMTP-TV, San
Francisco, California, is hereby NOTIFIED of its APPARENT
LIABILITY FOR A FORFEITURE in the amount of $7,500 for
willfully and repeatedly broadcasting advertisements in
violation of section 399B of the Act, 47 U.S.C. § 399b, and
section 73.621 of the Commission's rules, 47 C.F.R. §
73.621.
18. IT IS FURTHER ORDERED, pursuant to section 1.80 of
the Commission's rules, that within thirty days of the
release of this Notice, Minority SHALL PAY the full amount
of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed
forfeiture.
19. Payment of the forfeiture must be made by mailing
a check or similar instrument, payable to the order of the
Federal Communications Commission. The payment must include
the NAL Acct. No. and FRN referenced above. Payment by
check or money order may be mailed to Forfeiture Collection
Section, Finance Branch, Federal Communications Commission,
P.O. Box 73482, Chicago, Illinois 60673-7482. Payment by
overnight mail may be sent to Bank One/LB 73482, 525 West
Monroe, 8th Floor Mailroom, Chicago, Illinois 60601.
Payment by wire transfer may be made to ABA Number
071000013, receiving bank Bank One, and account number
1165259.
20. The response, if any, must be mailed to William H.
Davenport, Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, 445
12th Street, S.W, Room 4-C330, Washington D.C. 20554 and
MUST INCLUDE the NAL/Acct. No. referenced above.
21. The Commission will not consider reducing or
canceling a forfeiture in response to a claim of inability
to pay unless the respondent 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
respondent's current financial status. Any claim of
inability to pay must specifically identify the basis for
the claim by reference to the financial documentation
submitted.
22. Requests for payment of the full amount of this
Notice of Apparent Liability under an installment plan
should be sent to: Chief, Revenue and Receivables Operations
Group, 445 12th Street, S.W., Washington, D.C. 20554.41
23. IT IS ALSO ORDERED that the complaint filed by
Lincoln Broadcasting Company IS GRANTED to the extent
indicated herein and IS OTHERWISE DENIED, and the complaint
proceeding IS HEREBY TERMINATED.42
24. IT IS FURTHER ORDERED that a copy of this Notice
shall be sent, by Certified Mail/Return Receipt Requested,
to Minority Television Project, Inc., c/o its attorney,
James L. Winston, Esq., Rubin, Winston, Diercks, Harris &
Cooke, L.L.P., Sixth Floor, 1155 Connecticut Avenue, N.W.,
Washington, D.C. 20036, and by regular mail to Lincoln
Broadcasting Company, c/o its attorney, Michael D. Berg,
Esq., Law Offices of Michael D. Berg, 1730 Rhode Island
Avenue, N.W., Suite 200, Washington, D.C. 20036.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 See 47 U.S.C. § 399b.
2 See 47 C.F.R. § 73.621.
3 See Reply of Lincoln Broadcasting Company, in File Nos. EB
00-IH-0153 and 01-IH-0652, dated April 17, 2002 (``April
17th Reply'').
4 Id.
5 See Letter from Maureen F. Del Duca, Chief, Investigations
and Hearings Division, Enforcement Bureau, to Minority
Television Project, Inc., dated July 11, 2003 (``July 11th
LOI'').
6 See Letter from Minority Television Project, Inc. to
Maureen F. Del Duca, Chief, Investigations and Hearings
Division, Enforcement Bureau, dated August 19, 2003
(``August 19th Response''); see also Reply of Lincoln
Broadcasting Company, dated October 31, 2003 (``October
31st Reply''); Letter from William D. Freedman, Deputy
Chief, Investigations and Hearings Division, Enforcement
Bureau, to Minority Television Project, Inc., dated July 14,
2004 (``July 14th LOI''); Letter from Minority Television
Project, Inc. to William D. Freedman, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau,
dated July 28, 2004 (``July 28th Response''); Reply of
Lincoln Broadcasting Company, dated August 12, 2004
(``August 12th Reply''); Letter from William D. Freedman,
Deputy Chief, Investigations and Hearings Division,
Enforcement Bureau, to Minority Television Project, Inc.,
dated August 24, 2004 (``August 24th LOI''); Letter from
Minority Television Project, Inc. to William D. Freedman,
Deputy Chief, Investigations and Hearings Division,
Enforcement Bureau, dated August 31, 2004 (``August 31st
Response''); Reply of Lincoln Broadcasting Company, dated
September 15, 2004 (``September 15th Reply'').
747 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1); see also
47 U.S.C. § 503(b)(1)(D) (forfeitures for violation of 14
U.S.C. § 1464). Section 312(f)(1) of the Act defines
willful as ``the conscious and deliberate commission or
omission of [any] act, irrespective of any intent to
violate'' the law. 47 U.S.C. § 312(f)(1). The legislative
history to section 312(f)(1) of the Act clarifies that this
definition of willful applies to both sections 312 and
503(b) of the Act, H.R. Rep. No. 97-765, 97th Cong. 2d Sess.
51 (1982), and the Commission has so interpreted the term in
the section 503(b) context. See, e.g., Application for
Review of Southern California Broadcasting Co., Memorandum
Opinion and Order, 6 FCC Rcd 4387, 4388 (1991) (``Southern
California Broadcasting Co.''). The Commission may also
assess a forfeiture for violations that are merely repeated,
and not willful. See, e.g., Callais Cablevision, Inc.,
Grand Isle, Louisiana, Notice of Apparent Liability for
Monetary Forfeiture, 16 FCC Rcd 1359 (2001) (issuing a
Notice of Apparent Liability for, inter alia, a cable
television operator's repeated signal leakage).
``Repeated'' means that the act was committed or omitted
more than once, or lasts more than one day. Southern
California Broadcasting Co., 6 FCC Rcd at 4388, ¶ 5; Callais
Cablevision, Inc., 16 FCC Rcd at 1362 ¶ 9.
847 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).
9 47 U.S.C. § 399b(a).
10 Id.
11 Commission Policy Concerning the Noncommercial Nature of
Educational Broadcasting Stations, Public Notice (1986),
republished, 7 FCC Rcd 827 (1992) (``Public Notice'').
12 Id.
13 See Xavier University, Letter of Admonition, issued
November 14, 1989 (Mass Med. Bur.), recon. granted,
Memorandum Opinion and Order, 5 FCC Rcd 4920 (1990).
14 See August 19th Response at Attachment A.
15 The ``good-faith'' standard for licensee discretion is
set forth by the Commission in Xavier, supra.
16 August 19th Response at 2-4.
17 Id. Minority does acknowledge, however, that the
announcement for Star Cruises included the expression
``please call.'' Id. at 5.
18 Id. at 6.
19 August 31st Response at 2.
20 Id. at 2, n. 2.
21 See Letter of Minority Broadcast Television Project,
Inc., to Charles W. Kelley, Chief, Investigations and
Hearings Division, dated December 20, 2001, in Enforcement
Bureau proceedings numbered EB-00-IH-0153 and EB-01-IH-0652
(``December 20th Response''), at 2; see also September 15th
Reply at 6-9. For the reasons set forth, infra, we find
that Minority made the announcements at issue in exchange
for consideration. The manner in which the licensee
received such payments from its program suppliers and
underwriters, whether annually in a lump-sum, or on a per-
spot basis, is of no consequence to our analysis.
22 See August 19th Response at 6-7.
23 Id. at 3.
24 See, e.g., Minority Television Project, Inc. (KMTP-TV),
Notice of Apparent Liability for Forfeiture, 17 FCC Rcd
15646 (Enf. Bur. 2002), Forfeiture Order, 18 FCC Rcd 26611
(2003), application for review denied, Order on Review,
___FCC Rcd ___ FCC 04-293 (rel. Dec. 23, 2004), recon.
pending, citing Tri-State Inspirational Broadcasting
Corporation, Memorandum Opinion and Order, 16 FCC Rcd 16800
(Enf. Bur. 2001); Penfold Communications, Inc., supra.
25 August 19th Response at 3.
26 Id.
27 See, e.g., Minority Television Project, Inc. (KMTP-TV),
supra, 17 FCC Rcd 15646, 15653 at ¶ 21, citing Board of
Education of New York (WNYE-TV), 7 FCC Rcd 6864, 6865 (Mass
Media Bur. 1992).
28 August 19th Response at 4 and Attachment C-1.
29 Id. at Attachment D.
30 Id.
31 See Commission Policy Concerning the Noncommercial Nature
of Educational Broadcast Stations, Report and Order, 90 FCC
2d 895 (1982), recon., 97 FCC 2d 255 (1984) (``1982 Policy
Statement''); Commission Policy Concerning the
Noncommercial Nature of Educational Broadcasting Stations,
Report and Order, 86 FCC 2d 141, 148 (1981) (consideration
is broadly construed and may be deemed to include general
contributions made to licensees) (``Second Report and
Order'').
32 47 U.S.C. § 399b(a)(1) specifically provides: ``for
purposes of this section, the term `advertisement' means any
message or other programming material which is broadcast or
otherwise transmitted in exchange for any remuneration, and
which is intended to promote any service, facility or
product offered by any person who is engaged in such
offering for profit.''
33 1982 Policy Statement, 90 FCC 2d at 911-12, ¶¶ 26-28.
34 August 19th Response at Attachments B-2, B-3; C-2, C-3;
July 28th Response at Attachments B-2, B-3; C-2, C-3.
35 Id. In similar cases, the Commission has rejected
arguments that such payments constituted general station
contributions unrelated to the broadcast of underwriting
announcements made on behalf of the donors involved. See,
e.g., Penfold Communications, Inc., supra.
36 See August 19th Response at 6-7.
37 See 47 U.S.C. § 503(b); 47 C.F.R § 1.80.
38 The Commission's Forfeiture Policy Statement and
Amendment of Section 1.80 of the Rules to Incorporate the
Forfeiture Guidelines, Report and Order, 12 FCC Rcd 17087,
17115 (1997), recon. denied, 15 FCC Rcd 303 (1999)
(``Forfeiture Policy Statement''); 47 C.F.R. § 1.80(b).
39 47 U.S.C. § 503(b)(2)(D). See also Forfeiture Policy
Statement, 12 FCC Rcd at 17100 ¶ 27.
40 See, e.g., Christian Voice of Central Ohio,
Inc.(WCVZ(FM)), 19 FCC Rcd 23663 (Enf. Bur. 2004) ($20,000
forfeiture proposed for underwriting violations), response
pending; Minority Television Project, Inc. (KMTP-TV), supra
($10,000 forfeiture imposed for underwriting violations).
41 See 47 C.F.R. § 1.1914.
42For purposes of the forfeiture proceeding initiated by
this NAL, Minority Television Project, Inc. shall be the
only party to this proceeding.