******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 May 7, 1997 1800C-B 94060537 CERTIFIED MAIL -- RETURN RECEIPT REQUESTED Bay Communications, Inc. Licensee of Station WSNV(FM), Howland, Maine P.O. Box 580 Lighthouse Park, Yarmouth, Maine 04096-0580 Dear Licensee: This letter constitutes a Notice of Apparent Liability for a forfeiture of $6,000.00 issued pursuant to Section 503(b) of the Communications Act of 1934, as amended (47 U.S.C. Section 503(b)) (the "Act"), under authority delegated to the Mass Media Bureau by Section 0.283 of the Commission's Rules (47 C.F.R. Section 0.283). Bay Communications, Inc. ("BCI") is hereby assessed a forfeiture of $2,000.00 for its apparent willful and repeated violation of 47 U.S.C. Section 315(b) as implemented by 47 C.F.R. Section 73.1942(a)(1); $2,000.00 for its apparent willful and repeated violation of 47 C.F.R. Section 73.1942(b); and $2,000.00 for its apparent willful and repeated violation of 47 C.F.R. Section 73.1943(a) and (c). BACKGROUND This action results from a Commission investigation into the political programming practices of WSNV(FM), Howland, Maine, during the period surrounding the June 14, 1994, primary election, based on a June 22, 1994, complaint from your former employee, Joseph Kennedy. The complainant alleged that the management of WSNV intentionally disregarded Commission political programming regulations. Specifically, the complainant asserted that Gordon Dunn, identified in the complaint as the General Manager, orally instructed him to schedule an extensive amount of free advertising, in the form of no-charge bonus spots, for commercial clients in an effort to "go around" the lowest unit charge ("LUC") provision of our rules. Additionally, the complainant alleged that required information was missing from the station's political file when he inspected the file on June 20, 1994, shortly after his employment at WSNV was terminated. On July 8, 1994, we sent you an initial letter of inquiry ("1st LOI") regarding your political sales practices and political file maintenance for the period encompassing the 1994 primary election. We requested that you furnish a variety of documents, including a copy of your political file, rate cards, candidate disclosure statements, if any, commercial invoices and contracts. We also requested information about your sales practices, a description of the classes of advertising time sold on the station with their probability of preemption, a description of your methodology for calculating the LUC for each class of time, and we asked you to address the complainant's allegations concerning circumvention of Commission rules. Our investigation focused on the two weeks immediately preceding the June 14th primary election. You responded to the 1st LOI on August 25, 1994, providing answers to our specific questions and categorically denying any violations. You urged us to dismiss Mr. Kennedy's "unsubstantiated" complaint. On August 30, 1994, the complainant filed a reply to your response. Based on additional questions raised by your response to the 1st LOI and the complainant's reply thereto, we sent you a second letter of inquiry ("2nd LOI") on October 19, 1994. Your response, dated April 13, 1995, conceded "some oversights and the inadvertent failure to log some spots." In a letter dated October 31, 1995, you provided further clarification concerning your political sales practices in response to a telephonic request from a Mass Media Bureau staff attorney. For purposes of clarity, the following discussion will first set out each relevant area of the law and the licensee's response thereto. We will then dispose of each allegation. DISCUSSION Apparent Disclosure Violation In order to ensure parity of treatment with a station's most favored commercial advertisers, Section 73.1942(b) of the Commission's Rules imposes affirmative disclosure obligations on stations, requiring that candidates be fully informed about commercial sales practices and the discount privileges associated with the various classes of time a station offers commercial advertisers. In the Matter of Codification of the Commission's Political Programming Policies, Report and Order, 7 FCC Rcd 678, 688-89 (1991). In response to the 1st LOI regarding WSNV's sales practices, you stated that Gordon Dunn, with BCI's approval, devised a rate card for his programming whereby advertisers could select from two basic rates. One rate was a Run of Schedule/Best Time Available ("ROS/BTA"), which ran during all dayparts. The other rate was a guaranteed/fixed position class which involved fixed, non- preemptible spots guaranteed to clear during Rush or Leo & Paul, noon to 3pm or 6am to 10am, respectively. Mr. Dunn, in his affidavit accompanying your response to the 1st LOI, asserted that advertisers who purchased spots on the ROS/BTA basis did so with the understanding that their spots would air in various dayparts, without any guarantee that they would air during Rush or Leo & Paul. Contrary to your narrative description regarding the classes of time offered by the station, the political rate card you provided revealed that ROS and BTA were not sold together; rather, it appears that ROS and BTA were sold separately. The ROS schedule ran from 6am to 10pm, and the BTA ran 24 hours. Our review of the commercial invoices during the relevant period also showed time was sold for as many as seven additional, undisclosed dayparts. Despite the absence of this information from the rate card, you assert that Mr. Dunn orally provided additional requisite information and "explained to many candidates his political advertising policies and the LUC rates." Section 73.1942(b), however, places an affirmative duty of disclosure on broadcasters for the benefit of all candidates. Your rate card did not appear to contain the most rudimentary elements of your sales practices. Moreover, the submitted rate card did not even suggest that candidates should inquire about the existence of additional dayparts. We are thus unpersuaded that such oral disclosures, if made, were full and complete. Additionally, the rates listed on the political rate card did not appear to be accurate in several instances. For example, the invoice for Bennett's Down to Earth Gifts lists 30-second ROS 6am- 10pm spots at $4 per spot, running during the period preceding the primary. The political rate card listed the same class and amount of time for the same period as $7 per spot. Also, the invoice for Countryside Restaurant contained three apparent inconsistencies for spots purchased to air during the primary period. First, it listed 30-second Leo & Paul spots for $5, whereas the political rate card lists these spots for $10. Second, it listed 30-second Rush spots for $5, whereas the political rate card lists them for $12. Third, it contained 30-second Afternoon Drive spots for $5, a daypart and rate absent from the political rate card entirely. For the foregoing reasons, you appear to have violated the disclosure requirements in Section 73.1942(b) of the Commission's rules, and a forfeiture of $2,000 is thus warranted for this apparent violation. With respect to Dunn's involvement in setting rates on WSNV pursuant to the time brokerage agreement, it is important to emphasize that it is the licensee's obligation to comply with our rules, and that, ultimately, you must bear responsibility for the activities of your employees and those individuals with whom you do business. Apparent LUC Violation Section 315(b) of the Communications Act, as implemented by Section 73.1942(a)(1) of the Rules, directs licensees to charge legally qualified candidates for public office the LUC of the station for the same class and amount of time in the same period during the 45 days preceding a primary election. The legislative history of the LUC provision shows that Congress intended to "place the candidate on par with a broadcast station's most favored advertiser." S. Rep. No. 96, 92d Cong., 1st Sess. 27 (1971). Since the enactment of the LUC provision in 1972, we have ruled that Section 315(b) requires no-charge bonus spots to be included in LUC calculations, except for those provided to non-profit advertisers. See In the Matter of Codification of the Commission's Political Programming Policies, Report and Order, 7 FCC Rcd 678 (1991). No-charge bonus spots serve as an inducement for commercial advertisers to purchase time from a station, and candidates are entitled to these discount privileges. Thus, bonus spots must be included in LUC calculations. The complainant alleged that Gordon Dunn orally directed him to air additional spots beyond the number required by contract for the station's preferred commercial clients and to exclude this information from the logs. The complainant also asserted that this benefit was not extended to candidates. You deny that no-charge bonus spots were offered as alleged. You further deny complainant's assertion that "Mr. Dunn ordered Mr. Kennedy to exclude certain information from the political programming logs in order to circumvent the FCC's political advertising policies." The complainant offered no extrinsic evidence for this allegation. Although our investigation did not indicate an intentional circumvention of the law, we found evidence suggesting that, in at least one instance, the number of spots that aired appears to have exceeded the amount of time for which a commercial advertiser contracted. The Darling Ford invoice evidenced a contract for 43 spots to run June 6-12. The complainant asserts, in his reply to your response to the 1st LOI, that WSNV's program logs show that you aired 53 such spots. You responded that the complainant was mistaken and that the spot aired 48 times, explaining that "Mr. Dunn claims this occurred as the result of either an operator or logging error." Thus, it appears that, even under your characterization, Darling Ford received five spots for which no charge was made. In light of this discrepancy, there appears to be an inconsistency with respect to the calculation of the unit charge for Darling Ford's spots. Specifically, you asserted, in the response to the 2d LOI, that the Darling Ford account received "fifteen 60-second ROS/BTA spots" and "28 bonus spots per week" at an "average rate of $9.30 per spot." The total number of Darling Ford spots under this calculation is 43, not 48, as you acknowledged were actually aired. Therefore, the unit rate, given the sum of 48, should be $8.33. At least one candidate, Jim Mitchell, purchased the ROS 6am to 10pm daypart for $10. A further apparent violation occurred in connection with the Rush and Leo & Paul programs. Specifically, in response to the 1st LOI, you maintained that "[d]uring the primary season, commercial advertisers continued to purchase time on a guaranteed basis during either Rush or Leo & Paul at the same rates as political advertisers," and that "Mr. Dunn charged political advertisers with the same rates they charged their most favored commercial advertisers for fixed spots in the Rush and Leo & Paul shows." However, the invoices you provided indicate several instances where similar spots were sold to commercial advertisers for less than the rate paid by candidates. One commercial invoice indicated that Countryside Restaurant contracted for a number of 30-second Leo & Paul spots to air during the primary period for $5 each. By comparison, congressional candidate Jim Mitchell purchased eight spots during this period at $10 each, resulting in an apparent overcharge. Our analysis also revealed that two additional apparent overcharges occurred. First, a hand written notation in candidate Sumner Lipman's file indicates that Lipman purchased both 30- and 60-second spots, but he was charged as if he ran only 60-second spots. You asserted that Mr. Dunn ran the 30-second spot only once, and he "inadvertently failed to notice the rate differential in preparing the bill." You do not note, however, whether the station rebated Mr. Lipman. Second, a comparison of the Machias Savings Bank's rate with the rate charged candidate Steve Zirnkilton for 60-second ROS 6am-10pm spots reveals apparent overcharges. Although the political rate card and the candidate's invoice show a $10 rate, your response states that the rate for Machias Savings Bank was $8.92 per spot. You explain that this discrepancy was due to an "inadvertent failure of Mr. Dunn to log some spots." In any event, because of the admitted lapse in logging and other apparent miscalculations, we are not confident that the revised LUC calculation offered is accurate. Thus, as we explain below, you will be required to review all of your pertinent records and provide the Commission with a report of your findings and whatever rebates, if any, were issued. For the foregoing reasons, it appears that you have violated the LUC provision of Section of 315(b) of the Communications Act and 47 C.F.R. Section 73.1942(a)(1), and a forfeiture of $2,000.00. is warranted. We have given you specific examples of apparent candidate overcharges, which may not represent the entirety of overcharges. We therefore direct you to review all of your invoices, commercial and political, covering the entire 45-day period preceding the 1994 primary and to submit to the Commission within thirty (30) days of the receipt of this letter, a report specifying the refunds made to each of the candidates who purchased time during this period. Apparent Political File Maintenance Violation The Commission's Rules require licensees to keep, and permit public inspection of, a complete record of all requests for broadcast time made on or on behalf of candidates for public office, together with a disposition made by the licensees of such requests. 47 C.F.R.  73.1940(c). The complainant alleged that on June 20, 1994, shortly after the termination of his employment, he went to the station to inspect the political file. He asserts that the file did not contain a political advertising rate card, candidate requests for time, or records of the schedules of time purchased by candidates. In support of this allegation, he submitted a statement attesting to their absence with his signature, the signature of his wife, and that of the purported town clerk of Howland, Maine, as witnesses to the absence of material. You replied to the complainant's allegation that this was your first knowledge that requisite material was missing from the political file. You outlined your procedure for routinely maintaining the political file, but failed to attest to the presence of all requisite political file material in the file on June 20, 1994. In light of the complainant's affidavit attesting to the missing materials, witnessed by his wife and a third person identified as the Howland Town Clerk, and your failure to provide any direct refutation, it appears that you violated Section 73.1943 of the Commission's Rules, and a forfeiture of $2,000 for this violation is warranted. FORFEITURE Accordingly, pursuant to Section 503(b) of the Communications Act, you are hereby advised of your apparent liability for a FORFEITURE of $2,000.00 for your apparent willful and repeated violation of 47 C.F.R. Section 73.1942(b) by failing to affirmatively and fully disclose rate and class information to candidates; $2,000.00 for your apparent wilful and repeated violation of 47 U.S.C. Section 315(b) and 47 C.F.R. Section 73.1942(a)(1) by failing to charge candidates no more than the lowest unit charge of the station during the 45 days preceding the June 14, 1994 primary; and $2,000.00 for your apparent willful and repeated violation of Section 73.1943(a) and (c), by failing to properly maintain a political file during the primary period. With respect to the forfeiture imposed herein, you are afforded a period of thirty (30) days from the date of this letter "to show, in writing, why a forfeiture penalty should not be imposed or should be reduced or to pay the forfeiture. Any showing as to why the forfeiture should not be imposed or should be reduced shall include a detailed factual statement and such documentation and affidavits as may be pertinent." 47 C.F.R.  1.80(f)(3). Other relevant provisions of Section 1.80 of the Commission's Rules are summarized in the attachment to this letter. Sincerely, Roy J. Stewart Chief, Mass Media Bureau attachment