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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No.: EB-
01-DV-044
) NAL/Acct. No.
200332800004
Pilgrim Communications, Inc. )
FRN 0006-1472-19
Licensee, KSKE(AM) )
Vail, Colorado )
MEMORANDUM OPINION AND ORDER
Adopted: August 26, 2005 Released: September
2, 2005
By the Acting Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Memorandum Opinion and Order (``Order''), we
deny the petition for reconsideration (``petition'')
filed by Pilgrim Communications, Inc. (``Pilgrim''),
licensee of Station KSKE(AM), Vail, Colorado.1
Pilgrim seeks reconsideration of the Forfeiture Order2
in which the Chief, Enforcement Bureau (``Bureau''),
found it liable for a monetary forfeiture in the
amount of $11,000 for willful and repeated violation
of Section 73.1125(a) of the Commission's Rules
(``Rules'') and willful violation of Sections
73.1560(a) and 73.1745(a) of the Rules.3
II. BACKGROUND
2. On November 20, 2002, the Commission's Denver,
Colorado Field Office (``Denver Office'') issued a
Notice of Apparent Liability for Forfeiture (``NAL'')4
in the amount of $11,000 to Pilgrim. The NAL was
based on findings by the Denver Office that Pilgrim
violated Section 73.1125(a) of the Rules by failing to
maintain the requisite main studio presence at Station
KSKE. The Denver Office also found that on May 9,
2001, Pilgrim did not reduce Station KSKE's power at
sunset to the level required by the station
authorization and operated with power exceeding KSKE's
authorized nighttime power level.
3. Pilgrim responded to the NAL on January 21, 2003 and
supplemented its response on February 20, 2003. On
May 19, 2004, the Bureau issued the subject Forfeiture
Order in which it upheld the NAL. On June 18, 2004,
Pilgrim filed a petition for reconsideration of the
Forfeiture Order. In its petition, Pilgrim challenges
the Bureau's finding in the Forfeiture Order that it
failed to maintain a main studio for Station KSKE.
Further, Pilgrim challenges and requests
reconsideration of the Bureau's finding that neither
cancellation nor reduction of the forfeiture is
warranted. In support of its request, Pilgrim notes
PJB Communications of Virginia, Inc.,5 and cites to
language therein stating that ``in some cases, other
financial indicators such as net losses, may be
relevant.6 Pilgrim notes that it stopped keeping
separate accounting records for KSKE since it was
showing no income and combined its expenses into the
records of KLMO. Pilgrim asserts that the Bureau
failed to give adequate weight to this information.
Pilgrim also cites Renaissance Radio, Inc.,7 in
further support of its request for cancellation or
reduction of the forfeiture.
III. DISCUSSION
4.The forfeiture amount in this case was assessed in
accordance with Section 503(b) of the Communications Act of 1934
as amended (``Act''), 8 Section 1.80 of the Rules,9 and The
Commission's Forfeiture Policy Statement and Amendment of Section
1.80 of the Rules to Incorporate the Forfeiture Guidelines.10 In
examining Pilgrim's petition, Section 503(b) of the Act requires
that the Commission 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 any other such matters as justice
may require.11
5. Pilgrim seeks reversal of the Bureau's conclusion that
it had no main studio for Station KSKE claiming in a declaration
by Ron Crider, Director of Engineering, that it ``maintained a
fully operational main studio for the station at all times.''
Although Pilgrim claims to have had a main studio, we note that
when the investigating agent attempted to inspect Station KSKE,
he found what appeared to be storage space at the address of
KSKE's main studio. The agent found no indication that there was
a studio at the location. Employees at adjacent businesses were
not aware that KSKE supposedly had a main studio at that
location. The telephone number listed in the phone book for
Station KSKE had been disconnected and no alternative phone
number could be obtained from directory assistance. Moreover,
during a telephone conversation with Pilgrim corporate office
staff, the agent was informed no Pilgrim personnel were in the
Vail, Colorado area for Station KSKE. We believe these facts
support the conclusion that there was no main studio located at
the address indicated as Station KSKE's main studio, and
contradict Crider's declaration. However, we need not reach the
question as to whether there was actually a main studio, since
the violation of Section 73.1125(a) was premised on the absence
of full-time staff and management personnel at Station KSKE
during normal business hours.12 In response to paragraph 14 of
the Forfeiture Order, Pilgrim now states that ``there is a full-
time managerial presence at the KSKE main studio,'' however, it
failed to establish in either its response to the NAL or petition
for reconsideration that there was a management level person
employed at the station at the time of the inspection.
Accordingly, there is no basis for reversal of the ultimate
finding in the Forfeiture Order that Pilgrim violated Section
73.1125(a).
6.Regarding Pilgrim's inability to pay claim, the general
rule of PJB is that a licensee's gross revenues are the best
indicator of its ability to pay a forfeiture.13 The Bureau
followed that rule in the Forfeiture Order when it averaged
Pilgrim's gross revenues over a three-year period and compared
that amount to the forfeiture amount. As a result, the Bureau
determined that the percentage of gross revenues represented by
the forfeiture amount was within a range generally considered to
be payable.14 While it is true that PJB recognizes that in some
cases other financial indicators such as net losses may be
relevant, it is not generally the case that net losses alone will
mandate cancellation or reduction of a forfeiture. As a matter
of fact, PJB goes on to point out that if gross revenues are
sufficiently great, the mere fact that a business is operating at
a loss does not itself mean that it can not afford to pay a
forfeiture.15 In Renaissance, the case cited by Pilgrim, the
Bureau considered Renaissance's financial statements as well as
its bankruptcy filing in determining that Renaissance could not
pay the forfeiture. Here, we do not have such a severe financial
situation that it has resulted in a bankruptcy filing. Moreover,
Pilgrim has significant gross revenues in all three of the years
that its financial documentation was reviewed and, when
depreciation is added back, net income in two of those years.
Moreover, even though Pilgrim stopped accounting for KSKE
separately and combined its expenses into the accounting records
of KLMO, that fact has no impact upon the Bureau's decision
regarding Pilgrim's ability to pay the forfeiture because the
Bureau evaluated the financial records of Pilgrim Communications,
Inc. That review would have included the financial condition of
all of the holdings of Pilgrim Communications, Inc., including
that of Stations KLMO and KSKE.
IV. ORDERING CLAUSES
7. Accordingly, IT IS ORDERED that, pursuant to Section
405 of the Act16 and Section 1.106 of the Rules,17 Pilgrim
Communications, Inc.'s petition for reconsideration of the May
19, 2004 Forfeiture Order IS hereby DENIED.
8. IT IS ALSO ORDERED that, pursuant to Section 503(b) of
the Act, and Sections 0.111, 0.311 and 1.80(f)(4) of the Rules,18
Pilgrim Communications, Inc., IS LIABLE FOR A MONETARY FORFEITURE
in the amount of eleven thousand dollars ($11,000) for willful
and repeated violation of Section 73.1125(a) of the Rules and
willful violation of Sections 73.1560(a) and 73.1745(a) of the
Rules.
9.Payment of the forfeiture shall be made in the manner
provided in Section 1.80 of the Rules within 30 days of the
release of the Order. If the forfeiture is not paid within the
period specified, the case may be referred to the Department of
Justice for collection pursuant to Section 504(a) of the Act.19
Payment of the forfeiture must be made by check or similar
instrument, payable to the order of the Federal Communications
Commission. The payment must include the NAL/Acct. No. and FRN
No. referenced above. Payment by check or money order may be
mailed to Federal Communications Commission, P.O.
Box 358340, Pittsburgh, PA 15251-8340. Payment by overnight mail
may be sent to Mellon Bank /LB 358340, 500 Ross Street, Room
1540670, Pittsburgh, PA 15251. Payment by wire transfer may be
made to ABA Number 043000261, receiving bank Mellon Bank, and
account number 911-6106.
10. IT IS FURTHER ORDERED that this Order shall be
sent by regular mail and by certified mail, return receipt
requested, to Pilgrim's counsel, Christopher L. Robbins, Esq.,
Wiley, Rein, and Fielding LLP, 1776 K Street, NW, Washington, DC
20006.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Acting Chief, Enforcement Bureau
_________________________
1 Pilgrim filed a consolidated petition for reconsideration to
encompass the instant Forfeiture Order and the Forfeiture Order
issued to it for violations at Station KWYD(AM). See Pilgrim
Communications, Inc., 19 FCC Rcd 8881 (Enf. Bur. 2004). We
address the arguments raised regarding KWYD in a separate
Memorandum Opinion and Order.
2 Pilgrim Communications, Inc., 19 FCC Rcd 8877 (Enf. Bur.
2004).
3 47 C.F.R. §§ 73.1125(a), 73.1560(a), and 73.1745(a).
4 Notice of Apparent Liability for Forfeiture, NAL/Acct. No.
200332800004 (Enf. Bur., Denver Office, November 20, 2002).
5 PJB Communications of Virginia, Inc., 7 FCC Rcd 2088 (1992).
6 Id. at 2089.
7 19 FCC Rcd 10494 (Enf. Bur., 2004).
8 47 U.S.C. § 503(b).
9 47 C.F.R. § 1.80.
10 12 FCC Rcd. 17087 (1997), recon. denied, 15 FCC Rcd. 303
(1999).
11 47 U.S.C. § 503(b)(2)(D).
12 Jones Eastern of the Outer Banks, Inc., 6 FCC 2d 3615, 3616
and n. 2, clarified 7 FCC Rcd 6800 (1992).
13 PJB at 2089.
14 Id. at 2089 (forfeiture not deemed excessive where it
represented approximately 2.02 percent of the violator's gross
revenues); Hoosier Broadcasting Corporation, 15 FCC Rcd 8640,
8641 (Enf. Bur. 2002) (forfeiture not deemed excessive where it
represented approximately 7.6 percent of the violator's gross
revenues); Afton Communications Corp., 7 FCC Rcd 6741 (Com. Car.
Bur. 1992) (forfeiture not deemed excessive where it represented
approximately 3.9 percent of the violator's gross revenues).
15 Id. at 2089.
16 47 U.S.C. § 405.
17 47 C.F.R. § 1.106.
18 47 C.F.R. §§ 0.111, 0.311, 1.80(f)(4).
19 See 47 U.S.C. § 504(a).