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KEYE-FM, Perryton, Texas, reimbursement dispute

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Released: March 25, 2013

Federal Communications Commission

Washington, D.C. 20554

March 25, 2013

DA 13-544
In Reply Refer to:
1800B3-AJR
Released: March 25, 2013
Howard M. Weiss, Esq.
Fletcher, Heald & Hildreth
1300 North 17th Street, 11th Floor
Arlington, VA 22209
Christopher D. Imlay, Esq.
Booth, Freret, Imlay & Tepper, P.C.
14356 Cape May Road
Silver Spring, MD 20904
In re:

KBEX(FM), Dalhart, Texas1

Facility ID No. 15018

KEYE-FM, Perryton, Texas

Facility ID No. 52329


Reimbursement of Expenses


for Channel Modification
Dear Counsel:
We have before us a letter request (“Request”) from counsel to Perryton Radio, Inc. (“PRI”),
licensee of Station KEYE-FM, Perryton, Texas,2 seeking Commission adjudication of a dispute between
PRI and Radio Dalhart (“RD”), licensee of Station KBEX(FM), Dalhart, Texas, over the reimbursement
of legitimate and prudent expenses incurred by Station KEYE-FM in involuntarily changing channels to
accommodate Station KBEX(FM).3 For the reasons discussed below, we order RD to remit to PRI within
30 days of the date of this letter the sum of $73,553.73.

Background.

Six years ago and at RD’s request, the staff modified the license for Station
KBEX(FM) to specify Channel 241C1 in lieu of Channel 242C1.4 To accommodate this channel
change, the Dalhart R&O involuntarily modified the license of Station KEYE-FM to specify Channel


1 The station’s call sign was changed from KXIT-FM on February 20, 2013.
2 See Letter from Howard M. Weiss, Esq., to the Commission (rec’d Jun. 26, 2012) (“Request”).
3 Counsel to RD responded in a Letter from Christopher D. Imlay, Esq. to the Commission (dated Jul. 26, 2012)
(“Response”), and counsel to PRI replied in a Letter from Howard M. Weiss, Esq., to the Commission (rec’d Aug.
14, 2012) (“Reply”).
4 See Dalhart and Perryton, Texas, Report and Order, 22 FCC Red 4201, 4203 (MB 2007) (“Dalhart R&O”).

248C3 in lieu of Channel 241C3. 5 Pursuant to Commission policy, RD pledged to reimburse PRI for the
reasonable costs associated with changing to Channel 248C3. 6
In the Request, PRI states that Station KEYE-FM has changed channels and constructed modified
facilities.7 It also states that on June 11, 2012, it requested in writing that RD reimburse it for the
following itemized expenses:
1. New Antenna
$13,192.61
2. Stand by Antenna
$1,047.85
3. Removal and Installation of Antenna
$4,384.00
4. Printing
$3,002.73
5. Banner
$86.11
6. Electrical Parts
$613.64
7. Electrical Parts
$269.77
8. Broadcast Equipment
$883.41
9. Engineering Firm #1 – Retune and test transmitter
$10,749.51
10. Engineering Firm #2 – Project manager for channel modification
$2,750.00
11. Legal Fees
$30,000.00
12. Changing KEYE-FM logo and call letters on gazebo cover
$1,130.00
13. Engineering Firm #3 – Application preparation and technical comments
$4,150.00
14. Voice Over
$125.00
15. Engineering Firm #4 – Assistant Engineer for retuning transmitter
$1,169.10
Total
$73,553.73

Thereafter, PRI alleges that counsel to Station KBEX(FM) telephoned counsel to Station KEYE-FM and
advised that Station KBEX(FM) would not reimburse Station KEYE-FM for these itemized expenses.8
PRI contends that Station KBEX(FM)’s response conflicts with its Circleville obligation to negotiate in
good faith reimbursement issues. Under these circumstances, PRI requests that the Commission review
the itemized expenses and issue an order to Station KBEX(FM) requiring prompt payment of monies
owed to Station KEYE-FM.
In its Response, RD contends that (1) although it has never refused to meet its Circleville
obligations, PRI is no longer entitled to reimbursement because it modified KEYE-FM to operate on a
different channel than that specified in the Dalhart R&O; (2) if there is a remaining reimbursement
obligation, it should be limited to those expenses that would have been incurred in changing to Channel


5 Id.
6 See Circleville, Ohio, Second Report and Order, 8 FCC 2d 159, 163 (1967) (requiring that, whenever an existing
station is ordered to change frequency to accommodate another station, the benefiting station must reimburse the
affected station for its reasonable and prudent expenses and establishing guidelines for determining reimbursement)
(“Circleville”).
7 Although the Dalhart R&O ordered Station KEYE-FM to change to Channel 248C3, PRI instead filed an
application for a construction permit (File No. BPH-20101203AAX) to specify Channel 229C3, which was granted
on January 25, 2011. A license application (File No. BLH-20120321ADG) to cover the construction permit was
granted on April 11, 2012. See Broadcast Actions; Report No. 47717, April 16, 2012.

8 Letter from Howard M. Weiss, Esq., to the Commission (rec’d Jun. 26, 2012), at 2.
2

248C3 rather than 229C3; and (3) PRI’s request for reimbursement is excessive9 and any reimbursement
should be approximately $19,000 to $20,000.10
In reply, PRI argues that it has not waived the right to reimbursement by moving to an FM
channel other than specified by the Dalhart R&O because RD obtained the relief it sought -- PRI vacating
Channel 241 and making it available for RD.11 PRI also asserts that its actual incurred expenses are not
excessive. In support of this position, PRI alleges that (1) the decision to use a replacement antenna to
keep the station on the air during the channel change was reasonable; (2) the purchase of a new antenna
was appropriate because RD has previously agreed to it as a reasonable expense; (3) the cost of changing
channels in this case was not affected by the move to Chanel 229C3 as opposed to Channel 248C3; and
(4) although there were a few minor legal expenses unrelated to the channel change that were
inadvertently included in the narrative description on the bills, these expenses were not included in the
current reimbursement request.12 Accordingly, PRI believes that its itemized list of expenses incurred is
reasonable and should be approved.

Discussion.

As a threshold matter, under our Circleville policy, parties are expected to negotiate
expeditiously and in good faith, and the Commission will involve itself only as a last resort.13 In this
case, the parties have not been able to reach an agreement over a six-year period.14 Although we hold


9 Specifically, RD contends that, while there were discussions between the parties about the relative costs of
retuning the existing antenna versus buying a new one, a replacement antenna was not necessary. Likewise, RD
alleges that the legal fees are inflated because they include costs for preparation of pleadings initiated by PRI in an
effort to obtain advance reimbursement and for a second construction permit for Channel 229C3 after a tolling
request for its first construction permit was denied. See Letter from Christopher D. Imlay, Esq. to the Commission
(dated Jul. 26, 2012), at 6.
10 RD itemizes these estimated expenses as follows:
1. Retune of antenna
$7,300.00
2. Shipping for antenna
$750.00
3. Parts for retuning transmitter
$2,221.00
4. Engineering services to retune transmitter
$1,000.00
5. Tower services
$5,000.00
6. Advertising
$500.00
7. Promotional
$500.00
8. Office supplies
$500.00
9. Filing fees
$900.00
10. Legal
$1,000.00
Total:
$19,671.00
See id. at 5.
11 See Letter from Howard M. Weiss, Esq. to the Commission (rec’d Aug. 14, 2012), at 1-2.
12 Id. at 5.
13 See Peter Wayne Lechman, Memorandum Opinion and Order, 8 FCC Rcd 3058 (MMB 1993), rev. denied,
Memorandum Opinion and Order, 11 FCC Rcd 4104 (1996), appeal denied sub nom. Lechman v. FCC, 107 F.3d
(D.C. Cir. 1997) (Table), rehearing denied (Mar. 4, 1997) (“Lechman”).
14 See, e.g., Letter to Christopher D. Imlay, Esq. and Howard M. Weiss, Esq., Ref. 1800B3 (MB Oct. 19, 2011)
(noting that KEYE had not changed channels due to a disagreement over reimbursement and deleting a condition
3

both parties responsible for the unnecessary expenditure of limited Commission resources to resolve these
straight forward matters, we will adjudicate this dispute.
First, we consider the impact of KEYE-FM’s move to an alternate channel. The Commission has
allowed reimbursement for a change to a different channel where there is a benefit to the reimbursing
station and where the reimbursement is for the move to an equivalent, as opposed to a higher, class
channel.15 In this case, Station KBEX(FM)’s move to Channel 241C1 was made possible by Station
KEYE-FM vacating Channel 241C3. Because Station KBEX(FM) benefits regardless of whether Station
KEYE-FM moves to Channel 248C3 or Channel 229C3, Station KBEX(FM) remains obligated to
reimburse PRI for the costs of the channel change.16 Accordingly, we conclude that RD’s reimbursement
obligation is unaffected by PRI’s decision to modify to a different channel.
Second, we find that, contrary to RD’s allegations, Station KEYE-FM’s expenses in changing
channels in this particular case were not affected by its decision to modify to Channel 229C3. On the
contrary, PRI has submitted a technical exhibit from its consulting engineering, demonstrating that the
cost for a replacement antenna would be the same whether the station operates on Channel 229C3 or
248C3.17 Likewise, the technical exhibit shows that there are no additional costs involved in retuning the
transmitter to accommodate Channel 229C3 or 248C3.18 Further, RD has not provided any
documentation to rebut PRI’s technical exhibit.
Third, we review the reasonableness of PRI’s itemized expenses under Circleville. The
Commission held there that reimbursement is proper for: (1) engineering, legal, and equipment charges;
(2) printing (logs and stationery); (3) out of pocket nonreducible expenses while the station is off the air;
(4) advertising promotion for the new frequency; and (5) miscellaneous expenses.19 After review of the
record, we find that PRI’s itemized expenses are reasonable and reimbursable. All of PRI’s legal,





from KBEX(FM)’s construction permit stating that KBEX(FM) cannot commence program tests until KEYE-FM
commences program tests on Channel 248).
15 See, e.g., Lonoke, Arkansas, and Clarksdale, Mississippi, Report and Order, 6 FCC Rcd 4861, 4862, ¶ 5 (MMB
1991) (finding that reimbursement was warranted where a station moved to a channel different from that proposed in
an Order to Show Cause in order to facilitate an upgrade but limited reimbursement to the costs of changing to an
equivalent class of channel).
16 RD relies upon Cumberland, Kentucky, Weber City, Glade Spring, and Marion, Virginia, Notice of Proposed Rule
Making, 20 FCC Rcd 18039, 18043 n.2 (MB 2005) (“Cumberland”) to support its position that the Circleville
requirements are not applicable. We find that Cumberland is distinguishable. In Cumberland, the staff proposed an
involuntary channel change for Station WOLD-FM, Marion, from Channel 263A to 273A to accommodate a change
of community proposal by another station. Reimbursement was found to be unnecessary because, in a prior
proceeding, the license for Station WOLD-FM had been modified to specify Channel 263A in lieu of Channel 273A
and Station WOLD-FM had never effectuated that channel change. Unlike Cumberland, Station KEYE-FM has
actually changed channels.
17 See Letter from Howard M. Weiss, Esq., to the Commission (rec’d Aug. 14, 2012), Technical Exhibit, at 2.
Alternatively, PRI’s consulting engineering submitted quotations for the retuning of the Station KEYE-FM antenna,
showing that the cost for retuning would have been the same for the change to Channel 229C3 or 248C3. See id., at
1-2.
18 Id. at 2-3.
19 See Circleville, 8 FCC 2d at 163-164.
4

engineering, equipment, printing, and promotional expenses are documented by statements and invoices
from the companies involved and are within the guidelines established in Circleville. While RD offers
$500 for printing and $500 for promotional expenses, PRI has thoroughly documented its printing
expenses of $3,002.73 and its promotional expenses of $1,130.00, and we find them to be reasonable.
Likewise, we find that $86.11 for a banner and $125.00 for a voice-over are reasonable under the
“miscellaneous expense” category.
We do not find persuasive RD’s argument that some of the engineering fees are excessive. With
respect to those expenses specifically questioned, PRI has demonstrated that the purchase of a new
antenna was discussed by the parties and that RD agreed that this was a reasonable business decision.20
Under these circumstances, we find that purchasing a new antenna to replace a nine-year old antenna was
appropriate. Similarly, we agree that the use of a stand-by antenna while the channel change was being
implemented was reasonable. We, therefore, will allow the entirety of the engineering fees --
$39,209.89.21
With respect to legal expenses, the Commission has allowed reimbursement for legal fees
“incurred in the negotiation process” and for filing or responding to pleadings “reasonably related to the
necessary change of channel.”22 We find that the legal fees of $30,000 claimed in the Request are
reasonably related to the channel change.23 Although RD claims that the amount of the legal fees in this
case is excessive, the amount is related to the lengthy time period in which the parties were negotiating
and filing pleadings. Accordingly, we will allow PRI’s claims for reimbursement in their entirety.

Conclusion.

Accordingly, for the reasons set forth above, IT IS ORDERED, that Radio Dalhart
SHALL REMIT to Perryton Radio, Inc., the sum of $73,553.73 within 30 days of the date of this letter.


20 See Letter from Howard M. Weiss, Esq. (rec’d Aug. 14, 2012), at 5.
21 See supra, at 2, Table of KEYE-FM’s Expenses, lines 1-3, 6-10, 13, and 15.
22 See Harold A. Jahnke, Memorandum Opinion and Order, 74 FCC2d 265, 274 (1979).
23 See Letter from Howard M. Weiss, Esq., to Christopher D. Imlay, Esq. (dated Jun. 11, 2012) (providing statement
and itemization for legal services). To the extent that RD claims that certain charges for an ownership report did not
relate to the channel change, counsel to PRI has stated that these items were inadvertently left in the narrative
description on the bills but were not included in calculating the fees for the reimbursement request. See Letter from
Howard M. Weiss, Esq., to the Commission (rec’d Aug. 14, 2012), at 4 n.9. Further, regarding the claimed
reimbursement for legal fees incurred in seeking prepayment of expenses, the Commission does not generally
require that a benefiting party prepay or deposit into an escrow account expenses for changing a channel. See
Irvington, Kentucky, and French Lick, Indiana,
Report and Order, 25 FCC Rcd 1147 (MB 2010) (rejecting a request
for prepayment of expenses because the station changing channels had not provided documentation regarding its
financial circumstances); Dickson, Tennessee, Report and Order, 4 FCC Rcd 8707 (MMB 1989) (denying a request
for an escrow arrangement because lack of a factual basis questioning a party’s ability to reimburse). However, we
find that legal fees paid by PRI for pleadings regarding the financial ability of RD to provide reimbursement or the
financial qualifications of PRI to accomplish the channel switch are reasonably related to the channel change
because RD’s financial viability was at issue. See Letter from Howard M. Weiss, Esq., to the Commission (rec’d
Aug. 14, 2012) at 4 n.10 (stating that “[a]s its tax returns and sworn testimony showed, PRI did not have liquid
assets (or any assets) necessary to make a channel switch in 2007-2011”). See also Dalhart R&O, 22 FCC Rcd at
4203 (finding, in response to a staff request for supplemental information, that RD had cured the default on a
promissory note to a third party).
5

Certification of payment should be filed with the Office of the Secretary of the Commission within three
days of the tender of payment.
.

Sincerely,

Peter H. Doyle
Chief, Audio Division
Media Bureau
6

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