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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** DA#98-447 Federal Communications Commission Washington, D.C. 20554 In reply refer to: 1800C1-SD 95100461 Adopted: March 5, 1998 Released: March 6, 1998 CERTIFIED MAIL -- RETURN RECEIPT REQUESTED Vista Point Communications, Inc. Licensee of Station WFXD(FM), Marquette, Michigan 21160 Califa Street Woodland Hills, California 91367 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 Chief, Mass Media Bureau by Section 0.283 of the Commission's Rules (47 C.F.R. Section 0.283). Vista Point Communications, Inc. ("Vista") 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 WFXD(FM), Marquette, Michigan, during the 1994 and 1995 primary and general election periods, specifically from June 17, 1994, through June 13, 1995. On March 26, 1996, we sent you a letter of inquiry ("LOI") regarding your political sales practices and political file maintenance for the period encompassing the 1994 and 1995 primary and general elections. On April 24, 1996, you responded that any political file violations were due to management changes, a depressed economy and a lack of "skilled radio people." You also attributed any LUC violations to possible "mistake[s] or an incorrect order [that] was processed without my knowledge . . . purely on [sic] accident." However, your response contained several incomplete answers to our specific questions. On July 9, 1996, you provided a supplementary response to our LOI, in which you attempted to clarify the station's political sales practices. You also stated that you would review the station's records and provide refunds to any candidates, if necessary. 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 our question regarding WFXD's sales practices, you stated that WFXD's rate card permitted advertisers to select from three types of schedules, and that "they are the same for both commercial and political [advertisers]." The three types are ROS (run of schedule), TAP (total audience participation), and Program Sponsorships. The TAP and Program Sponsorship schedules are fixed. The ROS is sold from 6am - 7pm, 6am - 12 midnight, and dayparted." While you state in your response that "dayparting has always been $2.00 more per spot," you do not explain how the dayparts are dissected to achieve the LUC for those time periods either in your response to our inquiry or on the 1994 political rate card provided to the candidates. In addition, the 1994 political rate card presents only the ROS 6am - 7pm class of time. The TAP and Program Sponsorship schedules are absent from the rate card entirely. In response to our inquiry into the station's policies regarding disclosure of political rates to candidates or their media buyers, you responded that "each candidate or buyer was given a political rate card and request form, when asked about rates concerning political candidates." However, your 1994 political rate card did not appear to contain even the most rudimentary elements of your sales practices. Furthermore, while it is not incumbent on the licensee to provide every detail of its sales practices in writing to political candidates or their media buyers, you do not indicate that the station orally provided additional requisite information to political candidates regarding its political advertising policies and LUC rates. Moreover, the submitted 1994 political rate card did not suggest that candidates should inquire about the existence of specific dayparts, or, as mentioned above, did not indicate other types of spots were available. Thus, it appears that the station did not make full and complete disclosure of its sales practices to political candidates during the 1994 primary and general elections. Additionally, as discussed more fully below, the rates listed on the political rate card appear to be higher than the rates actually charged to commercial advertisers in several instances, and thus do not accurately reflect the LUC. For example, the invoice for Honda of Marquette lists a 60-second net weekend rate of $1.00 preceding both the 1994 primary and general elections. The political rate card listed the same class and amount of time for the same period as $1.60 per spot. Also, the invoice for the National Rifle Association ("NRA") for advertisements which aired March 29, 1995, through April 4, 1995, was inconsistent with political rates charged to candidates during the 1995 Special Election. First, it listed 15-second NRA spots for $5, whereas the political rate card lists these spots for $5.50. Second, it listed 35 15-second NRA spots at no charge (bonus spots). We did not receive a response to our request that you explain how you calculated the bonus spots in determining the LUC, and it appears that these bonus spots were not included in the LUC calculation. While you assert that employee error was the cause of the apparent inconsistencies between the rates charged to commercial advertisers and political candidates, licensees are ultimately responsible for compliance with our rules and policies. See Letter to J. Dominic Monahan, 6 FCC Rcd 1867 (1991). For the foregoing reasons, you appear to have violated the disclosure requirements in Section 73.1942(b) of the Commission's Rules. 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 and during the 60 days preceding a general 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. 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. Moreover, the Commission's regulations specifically provide that "bonus spots . . . must be included in the calculation of the lowest unit charge calculation." 47 C.F.R. 73.1942(a)(i)(xi). Thus, bonus spots clearly must be included in LUC calculations. In regard to WFXD, the complainant alleges that commercial advertisers were charged a lower rate than the LUC rate charged to candidates during the 1994 and 1995 primary and general elections. You state that if candidates were overcharged during the 1994 and 1995 election periods, you will provide rebates. However, due to the lack of information provided in your two responses to our LOI, we cannot determine which political candidates were overcharged. First, there are apparent gaps in station records regarding the rates charged both political candidates and commercial advertisers. In reviewing the political files of 1994 and 1995 that you provided, we are unable to ascertain the rates charged many of the candidates during the election periods in question because the information is simply not included in your records. Second, there are very few commercial invoices included in your response. Third, you stated that the invoices we requested were unavailable. Nevertheless, the invoices you do provide indicate instances where similar spots were sold to commercial advertisers for less than the rate paid by candidates according to the political rate cards. Specifically, as stated above, the commercial invoices for Honda of Marquette appear to establish a $1 (net) rate for a 60-second spot while the LUC for that same spot as indicated on the 1994 political rate card is $1.60. The Honda spots aired from September 26, 1994, to February 11, 1995, encompassing the 1994 general election period. Additionally, the invoice for the NRA during the 1995 Special Election appears to establish a $5 (net) rate for a 15-second spot with the provision of 35 15-second bonus spots at no charge. There is no indication that the bonus spots provided to the NRA were calculated into the LUC. Moreover, the LUC for a 15-second spot is listed as $5.50. You attribute this apparent violation to the actions of a new account representative and maintain that you verified that these spots did not affect the rates for any political advertising. However, it appears that the LUC for the 1995 Special Election was affected by these spots. According to station records, the NRA spots apparently aired from March 29, 1995, through April 4, 1995. The 1995 Special General Election occurred on May 16, 1995. Consequently, the NRA ads aired during the 60-day window preceding the Special General election and should have been considered when calculating the LUC under Section 315(b)(1). Due to your incomplete political files, we are unable to determine the number of candidates who purchased time during the 1994 primary and general election periods or the 1995 Special General Election. However, based on the apparent inconsistencies in the rates charged to commercial and political advertisers during these time periods, it appears that at least one candidate, Mike Prussi, a candidate in the 1995 Special Election, may be entitled to a rebate. Thus, it is incumbent upon you, as licensee, to review all of your pertinent records, and provide the Commission with a report of your findings and whatever rebates, if any, are necessary. For the foregoing reasons, it appears that you have violated the LUC provision of Section 315(b) of the Communications Act and 47 C.F.R. Section 73.1942(a)(1). 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, for the respective 45-day and 60-day periods preceding the 1994 and 1995 primary and general elections, including the 1995 Special Election. You then must submit to the Commission within thirty (30) days of the receipt of this letter, a report specifying the rebates 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, (a "disposition" includes "the schedule of time purchased, when spots actually aired, the rates charged, and the classes of time purchased"). 47 C.F.R.  73.1943(a). Moreover, licensees are required to retain requisite information in their political files for two years after an election. 47 C.F.R. 73.1943(c). The complainant alleged that on several occasions during the 1994 and 1995 primary and general elections, she noticed that the station's political file was incomplete. Your supplementary response included the apparent political files for the 1994 and 1995 election periods. However, many of the documents contained in the file did not include the requisite disposition of the advertising requests. For example, most of the advertising agreements contained in the 1994 political file did not include the schedules of time purchased and the rates charged to the candidates. Moreover, in our LOI we requested that you specify whether and when the station aired advertisements during the 1994 and 1995 primary and general election periods for the following candidates: John Engler, Spence Abraham, Dave Anthony, and Mike Prussi. You stated that you do not know the exact dates of the advertising time purchased by these candidates. This information should have been in the political file and readily available to both you and the general public, yet you were unable to answer the question. Based on your inability to provide information that should be contained in the station's political file, and the incompleteness of the files you provided, it appears that you violated Section 73.1943 of the Commission's Rules. FORFEITURE Accordingly, pursuant to Section 503(b) of the Communications Act, you are hereby advised of your apparent liability for a FORFEITURE of $6,000.00: $2,000.00 for your apparent willful and repeated violation of 47 C.F.R. Section 73.1942(b) (failure to affirmatively and fully disclose rate and class information) to candidates from June 17, 1994, through June 13, 1995; $2,000.00 for your apparent willful and repeated violation of 47 U.S.C. Section 315(b) and 47 C.F.R. Section 73.1942(a)(1) (failure to charge candidates no more than the lowest unit charge of the station) from June 17, 1994, through June 13, 1995; and $2,000.00 for your apparent willful and repeated violation of Section 73.1943(a) and (c), (failure to properly maintain a political file) from June 17, 1994, through June 13, 1995. The apparent disclosure violations and lowest unit charge violations cited herein appear similar to those in Bay Communications, Inc., ("Bay") 12 FCC Rcd 5989 (1997), for which a $2,000 fine was issued for apparent disclosure violations and a $2,000 fine was issued for lowest unit charge violations. In Bay the invoices indicated that commercial advertisers paid less than the rates charged to political candidates and the political rate card was also incomplete. Moreover, in Bay, the station's incomplete political file and the licensee's apparent miscalculations of the LUC hindered the Commission's ability to calculate accurately the required rebate amounts. As in the instant case, the Commission required the licensee in Bay to review its records independently to calculate any necessary rebates. Additionally, the political file forfeiture is similar to the political file violation in Zephyr Broadcasting, Inc. ("Zephyr"), 9 FCC Rcd 6822 (1994), for which a $2,000 fine was issued for political file violations. Thus, after considering the factors set forth in 47 U.S.C. Section 503(b), as well as the foregoing precedents, we find that a fine in the amount of $6,000 is appropriate. 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 cc: Melody Virtue, Esq. Haley, Bader & Potts P.L.C. 4350 N. Fairfax Drive Suite 900 Arlington, VA 22203-1633