WPC7 2PBV`@Z3|CA Roman (TT)8xCdXOXx{2 PQXP"5@^dC2CCdECCCCCCCd<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddnddddddd2'@i@ZC"5@^2Coddȧ8CCdr2C28ddddddddddCCrrrdzNdzoȐC8CtdCdoYoYCdo8Co8odooYNCodddYO,Oh2CC!CCPRCdodddddȐYYYYYN8N8N8N8oddddooooddoddddzodddYYYYYYddddooPoNoNCNodo8RoodȐYYoNoNNF2ldCdddddd!""a5Right ParRight-Aligned Paragraph Numbers_o` `  @h(1)  hh#(#h a6Right ParRight-Aligned Paragraph Numbersh` `  hh#@$(a) hh#((# a7Right ParRight-Aligned Paragraph NumberspfJ` `  hh#(@*i) (h-(# a8Right ParRight-Aligned Paragraph NumbersyW"3!` `  hh#(-@p/a) -pp2(#p 2a&#r$S%%Tech InitInitialize Technical Style. k I. A. 1. a.(1)(a) i) a) 1 .1 .1 .1 .1 .1 .1 .1 Technicala2paragraph/taba5TechnicalTechnical Document Style)WD (1) . a6TechnicalTechnical Document Style)D (a) . 2P)&A''(a2TechnicalTechnical Document Style<6  ?  A.   a3TechnicalTechnical Document Style9Wg  2  1.   a4TechnicalTechnical Document Style8bv{ 2  a.   a1TechnicalTechnical Document StyleF!<  ?  I.   2/)*3*+a7TechnicalTechnical Document Style(@D i) . a8TechnicalTechnical Document Style(D a) . Doc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:political sales practices and political file maintenance for the period encompassing the 1994  xprimary election. We requested that you furnish a variety of documents, including a copy of  xyour political file, rate cards, candidate disclosure statements, if any, commercial invoices and  xKcontracts. We also requested information about your sales practices, a description of the classes  xof advertising time sold on the station with their probability of preemption, a description of your  xmethodology for calculating the LUC for each class of time, and we asked you to address the  xcomplainant's allegations concerning circumvention of Commission rules. Our investigation focused on the two weeks immediately preceding the June 14th primary election.   @xYou responded to the 1st LOI on August 25, 1994, providing answers to our specific  xquestions and categorically denying any violations. You urged us to dismiss Mr. Kennedy's  x"unsubstantiated" complaint. On August 30, 1994, the complainant filed a reply to your response.  xiBased on additional questions raised by your response to the 1st LOI and the complainant's reply  xthereto, we sent you a second letter of inquiry ("2nd LOI") on October 19, 1994. Your response,  xdated April 13, 1995, conceded "some oversights and the inadvertent failure to log some spots."  xIn a letter dated October 31, 1995, you provided further clarification concerning your political  xKsales practices in response to a telephonic request from a Mass Media Bureau staff attorney. For  x=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. x  X-( DISCUSSION ĐTP  X- Apparent Disclosure Violation   xIn order to ensure parity of treatment with a station's most favored commercial advertisers,  x\Section 73.1942(b) of the Commission's Rules imposes affirmative disclosure obligations on  xstations, requiring that candidates be fully informed about commercial sales practices and the  xdiscount privileges associated with the various classes of time a station offers commercial  XN- xadvertisers. In the Matter of Codification of the Commission's Political Programming Policies,  X7-Report and Order, 7 FCC Rcd 678, 68889 (1991).   |xIn response to the 1st LOI regarding WSNV's sales practices, you stated that Gordon  xLDunn, with BCI's approval, devised a rate card for his programming whereby advertisers could  X- x_select from two basic rates.x  yOT"- xԍ You state that on April 1, 1994, BCI entered into a Time Brokerage Agreement ("Agreement") with Gordon  xDunn, pursuant to which Mr. Dunn purchased time on WSNV to broadcast certain programming and sell advertising  xwinserted into the programming. The programming consisted of two talk shows, the "Rush Limbaugh Show" ("Rush")  xand the "Leo & Paul Show" ("Leo & Paul"), and music during the remaining dayparts. During the course of our  xiinquiry you informed us of your dissatisfaction with the assistance that Mr. Dunn provided you in preparing your  xwresponses to the Commission and that, as a result, you terminated the Agreement with Mr. Dunn in December 1994.  x;This termination, you state, hampered BCI's efforts to respond to certain Commission requests for information and"'0*((O'"  xnecessitated a request for an extension of time, which we granted. You also asserted that Mr. Dunn hired, was responsible for, and ultimately fired the complainant.  One rate was a Run of Schedule/Best Time Available"0*(("  x("ROS/BTA"), which ran during all dayparts. The other rate was a guaranteed/fixed position  xclass which involved fixed, nonpreemptible spots guaranteed to clear during Rush or Leo &  xPaul, noon to 3pm or 6am to 10am, respectively. Mr. Dunn, in his affidavit accompanying your  xresponse to the 1st LOI, asserted that advertisers who purchased spots on the ROS/BTA basis did  xso with the understanding that their spots would air in various dayparts, without any guarantee that they would air during Rush or Leo & Paul.   xContrary to your narrative description regarding the classes of time offered by the station,  x[the political rate card you provided revealed that ROS and BTA were not sold together; rather,  X1- x=it appears that ROS and BTA were sold separately.1 yO- xKԍ BCI represented, in response to the 1st LOI, that the political rate card became effective May 7, 1994, and  xcontinued in effect throughout the remainder of the period preceding the primary. The rate card contained the following information:  yO-x` `  hh@60secondpp30second  15second  yOz-ROSx` `  6am10pmhh@$10hpp$7  $5  yOB-"Leo & Paul" ` `  6am10amhh@$13hpp$10  $6.50  yO -"Rush Limbaugh" noon3pmhh@$15hpp$12  $7.50  yO-BTA x` `  24 hourshh@$7.50hpp$5  $3.75 The ROS schedule ran from 6am to 10pm,  xand the BTA ran 24 hours. Our review of the commercial invoices during the relevant period  X - xalso showed time was sold for as many as seven additional, undisclosed dayparts.X  yO4- x<ԍ These missing dayparts and schedules sold to commercial advertisers were: ROS 5am8am; ROS 6am3pm;  xROS 6am6pm; ROS 6am7pm; ROS 6am8pm; Afternoon Drive Time 3pm7pm; and News and weather sponsorship. Despite the  xNabsence of this information from the rate card, you assert that Mr. Dunn orally provided  xkadditional requisite information and "explained to many candidates his political advertising  xpolicies and the LUC rates." Section 73.1942(b), however, places an affirmative duty of  xdisclosure on broadcasters for the benefit of all candidates. Your rate card did not appear to  xicontain the most rudimentary elements of your sales practices. Moreover, the submitted rate card  xdid 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.   xAdditionally, the rates listed on the political rate card did not appear to be accurate in  xseveral instances. For example, the invoice for Bennett's Down to Earth Gifts lists 30second  x ROS 6am10pm spots at $4 per spot, running during the period preceding the primary. The  xpolitical rate card listed the same class and amount of time for the same period as $7 per spot.  xAlso, the invoice for Countryside Restaurant contained three apparent inconsistencies for spots  xpurchased to air during the primary period. First, it listed 30second Leo & Paul spots for $5,  xywhereas the political rate card lists these spots for $10. Second, it listed 30second Rush spots"0*(("  xfor $5, whereas the political rate card lists them for $12. Third, it contained 30second Afternoon Drive spots for $5, a daypart and rate absent from the political rate card entirely.  X-   xFor the foregoing reasons, you appear to have violated the disclosure requirements in  xzSection 73.1942(b) of the Commission's rules, and a forfeiture of $2,000 is thus warranted for  xthis apparent violation. With respect to Dunn's involvement in setting rates on WSNV pursuant  x.to the time brokerage agreement, it is important to emphasize that it is the licensee's obligation  x.to comply with our rules, and that, ultimately, you must bear responsibility for the activities of  XH-your employees and those individuals with whom you do business. mH yO -ԍ See Letter to J. Dominic Monahan, 6 FCC Rcd 1867 (1991).m  X -Apparent LUC Violation   xSection 315(b) of the Communications Act, as implemented by Section 73.1942(a)(1) of  xthe Rules, directs licensees to charge legally qualified candidates for public office the LUC of  xthe station for the same class and amount of time in the same period during the 45 days  X - xpreceding a primary election.x X yO-ԍ Section 315 (b) states, in pertinent part:   x(b) The charges made for the use of any broadcasting station by any person who is a legally qualified  xicandidate for any public office in connection with his campaign for nomination for election, or election, to such office shall not exceed  ` x` ` (1) during the fortyfive days preceding the date of a primary or primary runoff election and during  x,the sixty days preceding the date of a general or special election in which such person is a candidate, the lowest unit charge of the station for the same class and amount of time for the same period . . . The legislative history of the LUC provision shows that Congress  xLintended to "place the candidate on par with a broadcast station's most favored advertiser." S.  x.Rep. No. 96, 92d Cong., 1st Sess. 27 (1971). Since the enactment of the LUC provision in 1972,  x{we have ruled that Section 315(b) requires nocharge bonus spots to be included in LUC  XK- xicalculations, except for those provided to nonprofit advertisers. See In the Matter of Codification  X4- xof the Commission's Political Programming Policies, Report and Order, 7 FCC Rcd 678 (1991).  xNocharge bonus spots serve as an inducement for commercial advertisers to purchase time from  x[a station, and candidates are entitled to these discount privileges. Thus, bonus spots must be  X-included in LUC calculations.  yO8- x-ԍ Bonus spots may directly affect the LUC rates, for example, "if a station sells 10 spots for $10 each to an  x,advertiser but promises him an additional 10 spots 'free,' the average price per spot for 'lowest unit charge' purposes  yO - xwill be $5 instead of $10." The Law of Political Broadcasting and Cablecasting: A Political Primer, 100 FCC 2d 1478, 1517 (1984).   ^xThe complainant alleged that Gordon Dunn orally directed him to air additional spots  xbeyond the number required by contract for the station's preferred commercial clients and to  xyexclude this information from the logs. The complainant also asserted that this benefit was not  xextended to candidates. You deny that nocharge bonus spots were offered as alleged. You  xfurther deny complainant's assertion that "Mr. Dunn ordered Mr. Kennedy to exclude certain"e 0*(("  xinformation from the political programming logs in order to circumvent the FCC's political  X-advertising policies." The complainant offered no extrinsic evidence for this allegation.  X-  !xAlthough our investigation did not indicate an intentional circumvention of the law, we  xfound evidence suggesting that, in at least one instance, the number of spots that aired appears  xto have exceeded the amount of time for which a commercial advertiser contracted. The Darling  xFord invoice evidenced a contract for 43 spots to run June 612. The complainant asserts, in his  x.reply to your response to the 1st LOI, that WSNV's program logs show that you aired 53 such  xspots. You responded that the complainant was mistaken and that the spot aired 48 times,  xkexplaining that "Mr. Dunn claims this occurred as the result of either an operator or logging  xerror." Thus, it appears that, even under your characterization, Darling Ford received five spots  x-for which no charge was made. In light of this discrepancy, there appears to be an inconsistency  x with respect to the calculation of the unit charge for Darling Ford's spots. Specifically, you  xZasserted, in the response to the 2d LOI, that the Darling Ford account received "fifteen 60second  xROS/BTA spots" and "28 bonus spots per week" at an "average rate of $9.30 per spot." The  xtotal number of Darling Ford spots under this calculation is 43, not 48, as you acknowledged  xwere actually aired. Therefore, the unit rate, given the sum of 48, should be $8.33. At least one  Xy-candidate, Jim Mitchell, purchased the ROS 6am to 10pm daypart for $10.ly yO- x;ԍ In addition, as discussed above, ROS/BTA is not a distinct daypart on the rate card, but two separate categories.  x,The invoice for Darling Ford indicated that the spots were, in fact, ROS 6am to 7pm: a daypart not included on the  xhrate card. In any event, a 60second ROS that runs from 6am to 7pm is quite arguably more attractive to candidates  xYthan one that runs from 6am to 10pm. The rate card lists the LUC for a 60second ROS from 6am to 10pm at $10 per spot, $1.67 more per spot than ROS 6am to 7pm. l   xA further apparent violation occurred in connection with the Rush and Leo & Paul  xprograms. Specifically, in response to the 1st LOI, you maintained that "[d]uring the primary  xseason, commercial advertisers continued to purchase time on a guaranteed basis during either  x/Rush or Leo & Paul at the same rates as political advertisers," and that "Mr. Dunn charged  xpolitical advertisers with the same rates they charged their most favored commercial advertisers  xKfor fixed spots in the Rush and Leo & Paul shows." However, the invoices you provided indicate  x[several instances where similar spots were sold to commercial advertisers for less than the rate  xjpaid by candidates. One commercial invoice indicated that Countryside Restaurant contracted  xfor a number of 30second Leo & Paul spots to air during the primary period for $5 each. By  xicomparison, congressional candidate Jim Mitchell purchased eight spots during this period at $10 each, resulting in an apparent overcharge.  X7-  x Our analysis also revealed that two additional apparent overcharges occurred. First, a  x=hand written notation in candidate Sumner Lipman's file indicates that Lipman purchased both  x[30 and 60second spots, but he was charged as if he ran only 60second spots. You asserted  xthat Mr. Dunn ran the 30second spot only once, and he "inadvertently failed to notice the rate  xdifferential in preparing the bill." You do not note, however, whether the station rebated Mr.  xLipman. Second, a comparison of the Machias Savings Bank's rate with the rate charged candidate Steve Zirnkilton for 60second ROS 6am10pm spots reveals apparent overcharges. "!x0*(( "Ԍ  xxAlthough the political rate card and the candidate's invoice show a $10 rate, your response states  xthat the rate for Machias Savings Bank was $8.92 per spot. You explain that this discrepancy  xwas due to an "inadvertent failure of Mr. Dunn to log some spots." In any event, because of the  X_- x>admitted lapse in logging and other apparent miscalculations, we are not confident that the  xrevised LUC calculation offered is accurate. Thus, as we explain below, you will be required  xto review all of your pertinent records and provide the Commission with a report of your findings and whatever rebates, if any, were issued. x   xFor the foregoing reasons, it appears that you have violated the LUC provision of Section  xMof 315(b) of the Communications Act and 47 C.F.R. Section 73.1942(a)(1), and a forfeiture of  x1$2,000.00. is warranted. We have given you specific examples of apparent candidate  xLovercharges, which may not represent the entirety of overcharges. We therefore direct you to  xreview all of your invoices, commercial and political, covering the entire 45day period preceding  xthe 1994 primary and to submit to the Commission within thirty (30) days of the receipt of this  xletter, a report specifying the refunds made to each of the candidates who purchased time during this period.  X- Apparent Political File Maintenance Violation x   1xThe Commission's Rules require licensees to keep, and permit public inspection of, a  xcomplete record of all requests for broadcast time made on or on behalf of candidates for public  xoffice, together with a disposition made by the licensees of such requests. 47 C.F.R.   x73.1940(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  Xe- xcontain a political advertising rate card,*e yO- xZԍ #C\  P6QP#Licensees are not required to publish rate cards and thus their absence from the political file is irrelevant for purposes of determining whether a violation occurred.#C\  P6QP#* candidate requests for time, or records of the schedules  xof time purchased by candidates. In support of this allegation, he submitted a statement  xattesting 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.   nxYou replied to the complainant's allegation that this was your first knowledge that  x[requisite material was missing from the political file. You outlined your procedure for routinely  xmaintaining the political file, but failed to attest to the presence of all requisite political file  xmaterial in the file on June 20, 1994. In light of the complainant's affidavit attesting to the  xkmissing materials, witnessed by his wife and a third person identified as the Howland Town  x/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 $2,000 for this violation is warranted. "h$ 0*((F#"Ԍ X-*; X-x  #XP\  P6Q DXP#Federal Communications Commission`(# DA 97953 ă  yxdddy * )^ԙ FORFEITURE ĐTP   OxAccordingly, pursuant to Section 503(b) of the Communications Act, you are hereby  x=advised of your apparent liability for a FORFEITURE of $2,000.00 for your apparent willful and  xrepeated violation of 47 C.F.R. Section 73.1942(b) by failing to affirmatively and fully disclose  x]rate and class information to candidates; $2,000.00 for your apparent wilful and repeated  xMviolation of 47 U.S.C. Section 315(b) and 47 C.F.R. Section 73.1942(a)(1) by failing to charge  xcandidates no more than the lowest unit charge of the station during the 45 days preceding the  x[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. x   xWith respect to the forfeiture imposed herein, you are afforded a period of thirty (30) days  xyfrom the date of this letter "to show, in writing, why a forfeiture penalty should not be imposed  xor should be reduced or to pay the forfeiture. Any showing as to why the forfeiture should not  x1be 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  xprovisions of Section 1.80 of the Commission's Rules are summarized in the attachment to this letter.      x` `  hh@Sincerely, x` `  hh@ x` `  hh@Roy J. Stewart x` `  hh@Chief, Mass Media Bureau  Xe-#XP\  P6Q DXP#attachment#Xx6X@DQ/X@#