AT&T Services, Inc., Complainants, V. Mercury Broadcasting Company, I

BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554

In the Matter of ) ) DIRECTV, LLC; AT&T Services, Inc., ) MB Docket No. 19-168 ) Complainants, ) CSR No. 8979-C ) v. ) NAL Account No. MB-202041430008 ) Mercury Broadcasting Company, Inc., et. al. ) ) Defandants. )

To: Secretary For delivery to: Media Bureau – Policy Division

SUPPLEMENTAL REQUEST FOR CANCELLATION OR REDUCTION OF FORFEITURE

1. Mercury Broadcasting Company, Inc. (“Mercury”), by its attorney, submits this

supplemental response to the Memorandum Opinion and Order and Notice of Apparent Liability

for Forfeiture (FCC 20-122), released September 15, 2020 (the “NAL”) regarding the above-

captioned matter. Mercury is also joining with the other Defendants in the above-captioned

matter in the submitting the Defendants’ Response to Memorandum Opinion and Order and

Notice of Apparent Liability for Forfeiture being filed concurrently herewith (the “Joint

Response”). In the event the proposed forfeitures are not cancelled in response to the arguments

set forth in the Joint Response, by this separate supplemental filing Mercury requests reduction of the proposed forfeiture imposed on Mercury based on its demonstrated inability to pay and history of past compliance.

2. Request for Confidential Treatment. Pursuant to Section 0.459 of the

Commission’s Rules, Mercury requests that the financial information submitted herewith,

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comprised of copies of portions of the licensee’s income tax returns for 2017, 2018, and 2019, be withheld from public disclosure should disclosure ever be requested by an outside party. This information, which is not made available to the public or third parties by Mercury, is entitled to protection pursuant to 47 C.F.R. § 0.459(b)(3-7) of the Commission’s Rules, as it relates to the financial performance of Mercury’s business operation and would cause the licensee economic harm if it were available to competitors. For the avoidance of doubt, Mercury’s request includes a request that this information be withheld and protected from disclosure to the other parties to this proceeding, including the other Defendants.

3. Response to Alleged Rule Violations. Mercury hereby restates and incorporates by reference the arguments and responses incorporated in the Joint Response, demonstrating why no forfeiture is appropriate.

4. Support for Cancellation or Reduction of Proposed Forfeiture. As demonstrated in the Joint Response, the forfeitures imposed against all of the Defendants should be cancelled or significantly reduced. As demonstrated therein, the conclusion that the Defendants violated the good faith negotiation rules was in error. Moreover, even if that conclusion were supported, as a novel application of the good faith negotiation rules, and the first-ever proposed forfeiture for their violation, it would not support imposition of a statutory maximum fine on Mercury and the other Defendants.

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5. In the event that the Commission nonetheless declines to cancel or reduce the proposed forfeitures for the reasons set forth in the Joint Response, Mercury nonetheless posits that the total forfeiture amount imposed on Mercury must be significantly reduced in light of the licensee’s inability to pay, history of compliance, and relief for small business. Mercury operates a single broadcast television station which carries programming from the

MyNetworkTV service, rather than any of the Big 4 broadcast networks. Moreover, Mercury is party to a grandfathered Local Marketing Agreement covering the Station, further limiting

Mercury’s revenue and ability to absorb significant unexpected costs.

a. Inability to Pay. Mercury seeks relief based on inability to pay. Attached hereto at Exhibit A are copies of the first section of Mercury’s Form 1120 corporate tax returns for 2017, 2018, and 2019 (confidentiality requested in paragraph 2 above). Consistent with

Commission precedent, Mercury requests reduction of the total proposed forfeiture amount to not more than 7.6% of average annual gross revenues for the preceding three years. See, e.g.,

Hoosier Broadcasting Corporation, Forfeiture Order, 15 FCC Rcd 8640 (2002) (forfeiture not deemed excessive where it represented approximately 7.6 percent of the violator’s gross revenues).

b. History of Overall Compliance. Mercury has an established record of compliance with Commission rules and policies, and has not received any Notices of Violation or Notices of Apparent Liability during the current license term of KMTW.1 In keeping with established Commission precedent, the total forfeiture should be further reduced by 20% for a good prior record. See, e.g., Indiana Wesleyan University, 28 FCC Rcd. 6208 (2013).

1 The station was subject to a Forfeiture Order based on violations of the commercial limits in children’s programming that occurred in 2002 and were disclosed in the Station’s 2006 license renewal application. Mercury Broadcasting Company, Inc., 25 FCC Rcd 4564 (2010).

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c. Relief for Small Business. The Commission has recognized that it must take

into account the “relatively small size and limited operations” of a business enterprise in

establishing a forfeiture amount.2 As can be deduced form the attached tax returns, Mercury is a small business. Mercury owns and operates only a single broadcast television station. That station does not hold a “Big 4” network affiliation, but carries MyNetworkTV programming.

Mercury also qualifies as a small business under the Small Business Administration standards for television broadcasting.3 It is therefore appropriate for the Commission to consider the size of

Mercury’s operation and limited resources as a small business in establishing the forfeiture amount, if any, in the instant case.

6. Conclusion. In light of the foregoing, and in accordance with the statutory instruction that the Commission must take into consideration “with respect to the violator, the degree of culpability, any history of prior offenses…, and such other matters as justice may require,” 47

U.S.C. § 503(b)(2)(D), the Commission must cancel or substantially reduce the proposed forfeiture amount against Mercury in this proceeding.

October 15, 2020 MERCURY BROADCASTING COMPANY, INC.

Fletcher, Heald & Hildreth, PLC By: ______1300 North 17th Street, 11th Floor Daniel A. Kirkpatrick Arlington, VA 22209 Its Attorney 703-812-0400 [email protected]

2 See TV Max, Inc. and Broadband Ventures Six, LLC d/b/a Wavevision, Thomas M. Balun, Eric Meltzer, and Richard Gomez, et al., 28 FCC Rcd 9470, 9480 (2013). 3 See generally, 13 C.F.R. Section 121.201

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EXHIBIT A

Declaration of Van H. Archer

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BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554

To: Secretary For delivery to: Media Bureau – Policy Division

DECLARATION OF VAN H. ARCHER, III

1. My name is Van H. Archer, III. I am President of Mercury Broadcasting Company, Inc.

2. I have reviewed the foregoing Supplemental Request for Cancellation or Reduction of Proposed Forfeiture and all factual matters set forth therein are true to the best of my knowledge and belief. True and accurate copies of portions of the Federal tax returns for Mercury Broadcasting Company, Inc. are attached hereto. To the best of my knowledge, information, and belief formed after reasonable inquiry, the foregoing Supplemental Request is well grounded in fact; warranted by existing law or a good faith argument for the extension, modification or reversal of existing law; and is not interposed for any improper purpose.

______Van H. Archer, III President Mercury Broadcasting Company, Inc.

Date:

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EXHIBIT B

COPIES OF EXCERPTS OF 2017, 2018, 2019 FEDERAL TAX RETURNS OF MERCURY BROADCASTING COMPANY, INC.

[BEGIN CONFIDENITAL INFORMATION]

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