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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Delta Radio, Inc. ) Licensee of WOHT(FM), Drew, MS ) ) For a Forfeiture ) MEMORANDUM OPINION AND ORDER AND FORFEITURE ORDER Adopted: August 20, 1998 Released: August 24, 1998 By the Chief, Mass Media Bureau: INTRODUCTION 1. On November 6, 1995, the Chief, Mass Media Bureau ("Bureau") issued a Notice of Apparent Liability ("NAL") to Delta Radio, Inc. ("Delta") pursuant to Section 503(b) of the Communications Act of 1934, as amended ("the Communications Act"), under authority delegated to the Chief of the Mass Media Bureau by Section 0.283 of the Commission's Rules. In the NAL, the Bureau found that Delta had engaged in an unauthorized transfer of control of the license for Station WOHT(FM) (formerly and hereafter referred to as Station WKZB(FM)), Drew, Mississippi, in violation of Section 310(d) of the Communications Act of 1934, as amended, and Section 73.3540 of the Commission's Rules. Delta responded to the NAL on December 13, 1995, claiming that the forfeiture should be reduced or rescinded. As discussed below, we deny Delta's request for rescission but grant, in part, its request for reduction of the forfeiture. BACKGROUND 2. The unauthorized transfer of control took place from July 28, 1993, when Delta entered into a "Bill of Sale and Management Contract" with Eddie Bond ("Bond") until June 29, 1994, when the Commission granted an application for assignment of the license from Bond to Delta, subject to any possible enforcement action. The Bureau issued a NAL against Delta for $7,500. The details of the unauthorized transfer were set out in the NAL and will not be repeated here. 3. In its December 13, 1995, response to the NAL, Delta claims that there are a number of reasons why the forfeiture should be reduced or rescinded. Delta argues that the Bureau should have considered that its president, Larry Fuss, made several attempts to ensure that the management contract entered into with Bond complied with Commission regulations, but Bond would not cooperate with these efforts. In addition, Delta claims that the Bureau should not have relied upon Delta's refusal to comply with Bond's demand to cease broadcasting as a basis for finding an unauthorized transfer of control. Delta maintains that Bond ordered Delta to cease operations in order to force Delta to pay him for the station in advance of Commission approval of the application for assignment of the license. Delta argues that under the circumstances, it was appropriate to refuse to comply with Bond's request to cease broadcasting, especially since continued operation of the station was in the public interest as it ensured both continued local service and the employment of two minority employees. In support of its position, Delta cites Bennett Gilbert Gaines. Delta maintains that in that case, even though the local marketing agreement ("LMA") operator refused the licensee's representative's request to vacate the premises and to cease operation of the station, the Commission absolved the LMA operator from liability and approved his application for acquisition of the station. 4. Delta also argues that the Commission should have considered the fact that Delta applied for FCC consent to assignment of the station within a few days after it began operating the station. Delta further contends that its cooperation with the Commission warrants forfeiture rescission or reduction. Moreover, Delta asserts that the $7,500 forfeiture assessed against it for one violation is unfair when compared to the $15,000 forfeiture assessed against Bond for three unauthorized transfers of control. Delta maintains that the forfeiture assessed against Bond represents a $5,000 forfeiture for each transgression and argues that it should not have been assessed a $7,500 forfeiture for one alleged transgression. 5. In addition to its substantive arguments, Delta claims that the forfeiture should be reduced or rescinded because of its history of compliance with the Communications Act and the Commission's Rules and because of its inability to pay. In support of its claim of inability to pay, Delta states that it lost its tower during a 1994 ice storm and was not able to return to full power for over two years. According to Delta, the station could not attract many advertisers during that time, which caused the station's revenues to decrease. Delta claims that the station's expenses exceed its revenues and that payment of the forfeiture would create a financial hardship for the station and jeopardize the ability of WKZB, the only FM station in Drew, Mississippi, to continue operating. 6. Delta's response to the NAL did not contain sufficient information to support its claim of inability to pay. Accordingly, on May 15, 1997, the Bureau sent Delta a letter requesting further information. In response, Delta sent the Bureau three letters, dated June 13, 1997, June 16, 1997, and July 16, 1997, detailing its financial situation. Delta claims that it is operating at a loss and provides, in support, a copy of its 1996 income tax return. In addition, it asserts that the financial situation of station WKZB is even more uncertain than reflected in that return. Delta also submitted a statement from Mr. Fuss in which he repeated his earlier statements about the loss of the station's transmission tower. He states that the tower loss was not covered by insurance and that Delta lacked the funds necessary to pay for a new tower. As a result, he states that the station went off the air and then was forced to operate at low power for over two years. He asserts that while WKZB began operating from a new tower in October 1996, the station never recovered financially from the effects of operating at low power for such an extended length of time and is supported financially by Delta's other stations. Moreover, Mr. Fuss maintains that the economic condition of WKZB's service area is declining. DISCUSSION 7. As we stated in the NAL, there is no exact formula for determining whether a transfer of control has taken place. The Commission has traditionally looked beyond the legal title to ascertain whether a new entity or individual has obtained the right to determine the basic operating policies of the station. The key factor in determining control is ultimate responsibility for essential station matters, such as personnel, programming, and finances. In the NAL, the Bureau stated that "[t]he responses of both you and Bond to the Commission's letters of inquiry explicitly confirmed that control of Station WKZB was transferred to you prior to Commission approval." Nothing in Delta's response to the NAL has persuaded us otherwise. 8. Delta claims that its forfeiture should be rescinded or reduced because it attempted to enter into a valid local marketing agreement with Bond, making good faith efforts to comply with Commission rules and regulations. Moreover, it argues that the Commission should recognize its efforts to serve the public interest by keeping the station on the air. We did, however, note such efforts in the NAL and assessed the forfeiture based on the totality of the record before us, including such factors. We likewise reject Delta's argument that the forfeiture should be reduced or rescinded because it was justified in refusing Bond's request to cease broadcasting. Delta was not the licensee of the station and therefore had no authority to made a decision about its continued operation. The Bennett Gilbert Gaines case, supra, cited by Delta as support for its contention that it acted properly in refusing Bond's request, is not on point. That case involved a complex set of facts pertaining to a station that was in bankruptcy. In Bennett Gilbert Gaines, the station was licensed to a receiver who in turn entered into an LMA with an individual to operate the station. The LMA operator refused to comply with an order by a representative of the receiver, who was acting without instruction from the receiver, to vacate the station's premises and to cease broadcasting. The Administrative Law Judge concluded, and the Review Board concurred, that the receiver had ultimate control over the station's programming, personnel, and finances, and that the incident involving the attempt to evict the LMA operator did not have a bearing on the receiver's control of the station. In contrast, the record in this case clearly indicates that even apart from the incident in question, Delta, and not Bond, was in control of the station's programming, personnel, and finances. 9. Further, we reject Delta's argument that the forfeiture should be reduced or rescinded because it filed an application for assignment of the station soon after entering into the LMA. The mere filing of an assignment application does not give the assignee the right to assume control of the station, nor is it a basis for reduction of a forfeiture assessed for an unauthorized transfer of control. The Commission has consistently issued forfeitures for unauthorized transfers of control from the date control was first transferred until the date that the assignment application was granted. See Salem Broadcasting Inc., 6 FCC Rcd 4172, 4173 (MMB 1991); First Broadcasting Corp., 3 FCC Rcd 2758 (1988). 10. We also find without merit Delta's argument that the forfeiture should be reduced because it cooperated with the Commission and "candidly disclosed" all the relevant information. The Commission expects its licensees to cooperate and to be truthful in its dealings with us. Thus, such behavior should not result in any special treatment to the licensee. 11. Finally, we reject Delta's claims that the assessment of a $7,500 forfeiture against it is unfair in light of the amount of the forfeiture assessed against Bond. Delta asserts that Bond was fined $15,000 for three unauthorized transfers of control, which it characterizes as $5,000 for each violation. In determining a forfeiture amount, the Bureau compares the actions of the party in question with the actions of other licensees involved in similar cases and also considers the factors set out in Section 503(b)(2) of the Act. In assessing a forfeiture against Bond, the Bureau did not assess a separate forfeiture amount for each violation, nor can its actions be dissected in such a manner. Rather the Bureau concluded that as a whole, Bond's actions warranted a $15,000 forfeiture. Similarly, the Bureau concluded that the facts of this case and relevant case law supported a $7,500 forfeiture against Delta. 12. Although we reject Delta's substantive arguments for reduction or rescission of the forfeiture, we find that reduction of the forfeiture is warranted based on its showing of inability to pay and its prior history of compliance with the Communications Act and Commission rules and regulations. Delta has demonstrated that the company is operating at a loss and that Station WKZB is in an even more difficult financial position. According to the statement submitted by Larry Fuss, WKZB lost its tower during an ice storm. The station had neither insurance nor its own funds to pay for a new tower. As a result, the station went off the air and then operated at low power for over two years. 13. In evaluating a claim of inability to pay, the Commission has stated that operating at a loss is one factor to be considered, although it is not necessarily sufficient in and of itself to support such a claim. PJB Communications of Virginia, 7 FCC Rcd 2088 (1992). In this case, Delta has shown that it is operating at a loss and also has provided the Commission with other evidence of financial difficulty. Accordingly, we find its showing sufficient to warrant a reduction of the forfeiture to $5,000. 14. We also accept Delta's argument that reduction of the forfeiture is warranted because it has no prior history of violations of the Communications Act or the Commission's Rules. Accordingly, we reduce the forfeiture to $4,000. 15. Accordingly, IT IS ORDERED, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C. Section 503(b), that Delta Radio, Inc. FORFEIT to the United States the sum of four thousand dollars ($4,000) for willful and repeated violations of Section 310(d) of the Communications Act, as amended, and Section 73.3540 of the Commission's Rules, 47 C.F.R. Section 73.3540. Payment of the forfeiture may be made by mailing to the Commission a check or similar instrument payable to the Federal Communications Commission. 16. IT IS FURTHER ORDERED, that the Mass Media Bureau send by Certified Mail -- Return Receipt Requested, copies of this Memorandum Opinion and Order and Forfeiture Order to Delta Radio, Inc. FEDERAL COMMUNICATIONS COMMISSION Roy Stewart Chief, Mass Media Bureau