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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
CBS Broadcasting Inc. ) File No. EB-04-IH-0110
) Facility ID No. 9628
Licensee of Station KCBS-TV, )
Los Angeles, California )
ORDER ON RECONSIDERATION
Adopted: June 21, 2005 Released: June
23, 2005
By the Acting Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Order on
Reconsideration, we deny the Petition for Reconsideration
(``Petition'') dated October 21, 2004, of Judi and John Estrin
(``Petitioners'') of an Enforcement Bureau (``Bureau'') letter.
By that letter, the Bureau denied the Petitioners' complaint
against CBS Broadcasting Inc. (``CBS''), licensee of Station
KCBS-TV, Los Angeles, California.1 We agree with the
conclusion reached in the Denial Letter, that, based upon the
information before us, Petitioners have failed to demonstrate
that CBS violated section 73.1216 of the Commission's rules2
with respect to ``The Extra Point Sweepstakes'' contest
conducted during December 2003 over CBS's Station KCBS-TV.
II. BACKGROUND
2. On February 27, 2004, Petitioners filed a written
complaint against CBS with the Commission.3 They alleged that
CBS had overstated the announced value of the prize in its
``The Extra Point Sweepstakes'' contest conducted over Station
KCBS-TV, a trip to the 2004 Super Bowl game in Houston, Texas.
According to the Complaint, CBS had promoted the contest prize
as being worth $8,550.4 Petitioners claimed, however, that the
``actual sums spent'' for the trip that Mrs. Estrin had
received as the contest winner were only $4,218.40.5 For this
reason, Petitioners expressed their concern that their federal
tax liability for the prize would be considerably more than the
actual value of the trip.6
3. The Bureau subsequently directed CBS to provide
information about the contest and the value of the prize that
it had awarded.7 In its response, CBS provided declarations
and accompanying materials indicating that it so valued the
prize because it paid a total of $8,550 for the trip to Map
Marketing and Incentives LLC (``Map Marketing''), the agency
that arranged for and provided the Super Bowl trip for the
winning contestant. 8 According to the CBS Response, Map
Marketing paid $6,575 to its vendors for related services and
received from CBS a fee in the amount of $1,975.9 In a reply
pleading, Petitioners maintained that, notwithstanding CBS's
representations, the hotel at which they stayed as part of the
contest prize trip was ``an older motor hotel'' located
``several miles from the downtown area'' and that the Super
Bowl seats they were awarded were not ``premium seats'' in a
``prime location,'' as promoted over Station KCBS-TV. They
also objected to the inclusion of the agency fee that CBS had
paid to Map Marketing in the valuation of the prize. 10
4. In the Denial Letter, we found that the Petitioners had
provided no basis for us to conclude that CBS failed to
substantially comply with the requirements of section 73.1216
of the Commission's rules with respect to ``The Extra Point
Sweepstakes'' contest. Specifically, we determined,
notwithstanding Petitioners' arguments to the contrary, that
CBS had provided reliable documentation adequately supporting
its position that the amount that it had paid to Map Marketing
for the contest prize was that of the prize value that it had
announced during the contest over Station KCBS-TV. Thus, we
concluded that CBS had conducted the contest as announced, in
compliance with our rule. 11
5. In their Petition, Petitioners challenge CBS's
valuation of the contest prize and the veracity of its Response
to the Bureau's letter of inquiry. Thus, they state that,
although the CBS Response included a breakdown of the cost of
the various elements contained in the prize trip, the breakdown
improperly valued the airfare at $1,200, when it was actually
only $618.40.12 In its opposition to the petition, 13 CBS
acknowledges that it erroneously reported in its Response to
the Bureau's LOI the amount that Map Marketing had paid to a
vendor for Petitioners' airfare, the result of a
misunderstanding about the nature of the information that Map
Marketing provided to CBS.14 However, CBS confirms that it
``paid $8,550 to Map Marketing to provide the trip package.''15
By letter dated November 7, 2004, Petitioners responded,
essentially repeating the arguments contained in their
Petition.16
III. DISCUSSION
6. Section 73.1216 provides that ``[a] licensee that
broadcasts or advertises information about a contest that it
conducts shall fully and accurately disclose the material terms
of the contest, and shall conduct the contest substantially as
announced or advertised. No contest description shall be
false, misleading, or deceptive with respect to any material
term.''17 Material terms include those factors that define the
operation of the contest and that affect participation therein,
including, among other things, the extent, nature and value of
prizes and the basis for valuation of prizes.18
7. CBS promoted the Super Bowl vacation package as worth
$8,550, the price it paid to Map Marketing for the package.
Petitioners argue that the value CBS should have promoted was
not CBS's purchase price, but the price paid by Map Marketing
for the various components of the package.19 The Commission
has endorsed the valuation of prizes at their retail value,
i.e., the price that contestants could expect to pay if they
purchased the prize themselves.20 Petitioners do not allege,
and there is no evidence to suggest, that the negotiations
between CBS and Map Marketing were not at arms-length.21
Indeed, Map Marketing sold similar packages at a substantially
higher price than that paid by CBS.22 We find, therefore,
based on the record before us that $8,550 was the retail value
of the prize package.23
8. The use of specialized agents like Map Marketing to
obtain vacation packages is a common and reasonable practice,
particularly for highly popular events like the Super Bowl.
Through such agents, licensees minimize the administrative
burden on their own resources, gain access to tickets and
accommodations that might otherwise be unavailable, and reduce
the risk of cost overruns for hotly contested events.24 Under
Petitioners' reading of section 73.1216, however, licensees
would have to promote their prizes only for their wholesale
value, i.e., the price paid by the entity who furnished the
prize to the licensee. Such a reading places an unreasonable
burden on licensees and is inconsistent with the intent of the
rule. We therefore conclude that CBS lawfully promoted the
prize package as valued at $8,550, the retail value of the
package, and deny the Petition for Reconsideration.25
IV. ORDERING CLAUSES
9. ACCORDINGLY, IT IS ORDERED that, pursuant to section
405 of the Communications Act of 1934, as amended, and section
1.106 of the Commission's rules, the Petition for
Reconsideration filed on October 21, 2004, by Judi and John
Estrin, IS DENIED.
10. IT IS FURTHER ORDERED that a copy of this Order
shall be sent by Certified Mail - Return Receipt Requested, to
Judi and John Estrin, 622 North Orange Street, Orange,
California 92867-6734, and to Howard F. Jaeckel, Vice President
and Associate General Counsel, CBS Broadcasting Inc., 1515
Broadway, New York, New York 10036-5794.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Acting Chief, Enforcement Bureau
_________________________
1 Letter from William D. Freedman, Deputy Chief, Investigations
and Hearings Division, Enforcement Bureau, Federal
Communications Commission to Judi and John Estrin,, dated
October 13, 2004 (``Denial Letter'').
2 47 C.F.R. § 73.1216.
3 See Letter from Judi and John Estrin to Enforcement Bureau,
Federal Communications Commission, dated February 27, 2004
(``Complaint'').
4 Id at 1.
5 Id.
6 Id at 2.
7 See Letter from William D. Freedman, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau,
Federal Communications Commission, to CBS Broadcasting Inc.,
dated July 30, 2004.
8 See Letter from Howard F. Jaeckel, Vice President and
Associate General Counsel, CBS Broadcasting Inc., to Enforcement
Bureau, Federal Communications Commission, dated September 1,
2004 (``CBS Response'').
9 See CBS Response, Exhibit C, Declaration of Pat Ranier, dated
September 1, 2004.
10 See Letter from Judi and John Estrin, to Enforcement Bureau,
Federal Communications Commission, dated September 8, 2004
(``Reply'').
11 See Denial Letter.
12 See Petition at 1.
13 See Letter from Howard F. Jaeckel, to Enforcement Bureau,
Federal Communications Commission, dated November 3, 2004 (``CBS
Opposition'').
14 Id.
15 Id. at 1.
16 See Letter from Judi and John Estrin, to Enforcement Bureau,
Federal Communications Commission, dated November 7, 2004 .
17 47 C.F.R. § 73.1216.
18 Id. at n.1.
19 CBS admits that it overstated in its Response the amount of
money that Map Marketing had actually paid for Petitioners'
airfare. CBS Opposition at 1. We note that this error was
contained in the Declaration of Map Marketing Vice President Pat
Ranier and relied on by CBS. Petitioners have provided no
evidence suggesting that CBS knew or should have known of the
error when it submitted the Declaration with its LOI Response.
See 47 C.F.R. § 1.17 (imposing duty on respondents to have a
reasonable basis for material factual statements to the
Commission). Accordingly, we deny Petitioners' request that we
should impose a sanction against CBS for this error.
20 See Dena Pictures, Inc. et al, Memorandum Opinion and Order,
71 FCC 2d 1402, 1409, ¶ 15 (1979) (Commission rejected
allegation of a violation of the contest rule where a contest
purported to give away $10,000 worth of records, and the records
awarded did in fact have a ``market retail value'' of $10,000);
Liability of Birch Bay Broadcasting, Co., Licensee of Station
KARI, Blaine, Washington, Memorandum Opinion and Order, 38 FCC
2d 988, 990, ¶ 7 (1973) (Commission found the value of each
prize in an alleged lottery to be $20, the ``retail value'' of
each prize, despite a conflicting valuation by the licensee).
21 We note there could be circumstances in which a licensee
appears to have ``overpaid'' an agent for prizes that might
raise concerns under section 73.1216, but there is no evidence
to support such an allegation here.
22 See CBS Response, Exhibit H (promotional flyer for Map
Marketing and Incentives Super Bowl XXXVIII package for $10,500
that included same components as prizes here, with addition of
rental car for four nights, invitation to private party, and two
tickets to the ``NFL Experience'').
23 With respect to Petitioner's complaints about the quality of
their hotel and their Super Bowl seats, we find that CBS's and
promotional announcements and contest rules comply with the
requirements of section 73.1216 in that it promised nothing more
than Petitioner's received. See, e.g.,CBS Response, Exhibit E
(promotional announcement; ``send in your scorecard for a chance
to win a trip to see football's biggest spectacle''); Exhibit F
(contest rules; ``One Grand Prize Winner will win Two (2) round-
trip airline tickets from Los Angeles to Houston, Texas; Four
(4) nights hotel accommodations for two persons; Two (2) tickets
to the pro-football championship game on February 1st at Reliant
Stadium in Houston, Texas; and round-trip transfers via motor
coach to and from the game. Value of the Grand Prize is: $ 8,
550.00'').
24 CBS purchased the package from Map Marketing in October 2003,
more than three months before the Super Bowl, and two months
before it ran the ``Extra Point Sweepstakes.'' Moreover, under
the terms of the deal, Map Marketing assumed the risk that the
various components of the package would cost more than price
paid by CBS. As CBS properly observes, many of the elements of
the prize package here (e.g., game tickets, hotel rooms) are
subject to ``supply and demand, which in turn are affected by a
number of factors, including the teams that ultimately face each
other in the Super Bowl.'' CBS Opposition at 2 n.1.
25 Petitioners' complaints about their tax liability based on
CBS's valuation of the prize package are irrelevant to whether
CBS complied with the Commission's rules. Moreover, we note
that the record evidence reveals that, after being selected as
the contest winner, Ms. Estrin executed a release form, in which
she acknowledged the $8,550 prize value, her responsibility
``for any and all federal, state and local taxes'' arising from
the receipt of the prize and the fact that the prize could not
be redeemed for cash. CBS Response, Exhibit B, Declaration of
Phyllis Mazzocchi dated September 1, 2004, Exhibit 1, Prize
Receipt/Release Form, dated January 8, 2004.