Federal Communications Commission Washington, D.C. 20554 May 26, 2005 DA 05-1537 In Reply Refer to: 1800B3-CNZ NAL/Acct No: MB20051810040 FRN: 0003474947 WJZD, Inc. Capstar TX Limited Partnership c/o Dennis J. Kelly, Esq. c/o Gregory L. Masters, Esq. Law Offices of Dennis J. Kelly Wiley, Rein & Fielding, L.L.P. P.O. Box 41177 1776 K Street, N.W. Washington, D.C. 20018 Washington, D.C. 20006 Golden Gulf Coast Broadcasting, Inc. Mr. Douglas A. Hutcheson c/o Alan C. Campbell, Esq. 1024 Christy Dr. Irwin, Campbell & Tannenwald, P.C. Niceville, FL 32578 1730 Rhode Island Avenue, N.W. Suite 200 Washington, D.C. 20036 Re: WQYZ(FM), Ocean Springs, MS Facility ID No. 24513 File No. BALH-20031125ALX Application for Assignment of License File No. BRH-20040202AHI Application for Renewal of License Dear Counsel: We have before us the above-captioned application (the “Assignment Application”) to assign the license of broadcast station WQYZ(FM), Ocean Springs, Mississippi, from Golden Gulf Coast Broadcasting, Inc. (“GGCB”) to Capstar TX Limited Partnership, a subsidiary of Clear Channel Communications, Inc. (collectively, “Clear Channel”). We also have before us a January 5, 2004, Petition to Deny or Designate for Hearing the Assignment Application (“Sale Petition”) filed by WJZD, Inc. (“WJZD”),1 licensee of WJZD(FM), Long Beach, Mississippi, and a December 20, 2004, informal 1 Clear Channel filed an Opposition to the Sale Petition on January 21, 2004 (“Clear Channel Opposition”). GGCB filed an Opposition to the Sale Petition on January 21, 2004 (“GGCB Opposition”). WJZD filed a Reply on February 5, 2004 (“WJZD Reply”). WJZD also filed a “Statement for the Record” on June 9, 2004 (requesting, inter alia, that the Commission examine Clear Channel’s basic character qualifications). objection (“Objection”) filed by Douglas A. Hutcheson (“Hutcheson”).2 In addition, we have before us the above-referenced application of GGCB for renewal of license for WQYZ(FM) (“Renewal Application”) and a May 3, 2004, Petition to Deny or Designate for Hearing the Renewal Application, filed by WJZD (“Renewal Petition”).3 For the reasons set forth below, we issue a NOTICE OF APPARENT LIABILITY FOR A FORFEITURE to GGCB for violation of Section 73.1125 of the Commission’s Rules4 due to GGCB’s failure to maintain the requisite presence at its main studio. We also grant the Assignment Application and Renewal Application, and deny the Sale Petition, the Renewal Petition, and the Objection. WQYZ(FM) Assignment Application Background. Capstar and GGCB originally filed an application to assign the WQYZ(FM) license to Capstar on December 24, 2002.5 In the public notice announcing its acceptance,6 the staff “flagged” the application pursuant to the Commission’s then-existing Interim Policy of noting applications that proposed a level of local radio ownership concentration deemed to implicate public interest concerns.7 WJZD petitioned to deny this transaction on February 6, 2003. Before the Bureau acted on the original assignment application, pursuant to GGCB’s request, the staff dismissed the application on November 18, 2003. GGCB resubmitted the Assignment Application on November 25, 2003. Subsequently, on April 23, 2004, the staff sent GGCB a letter of inquiry (“LOI”) seeking information germane to the Assignment Application.8 GGCB responded on May 13, 2004.9 2 Clear Channel filed an Opposition to the Objection on January 10, 2005. 3 GGCB filed an Opposition to the Petition to Deny or Designate for Hearing on June 2, 2004 (“GGCB Renewal Opposition”). On June 22, 2004, pursuant to Section 1.46 of the Commission’s rules (47 C.F.R. § 1.46), WJZD filed a Motion to Accept Late-Filed Pleading, or, in the Alternative, Motion for One Day Extension of Time. WJZD filed a Reply to Opposition to Petition to Deny or Designate for Hearing on June 23, 2004. Motions for extension of time are not routinely granted. Nevertheless, because WJZD’s delay of one day does not prejudice any parties in this proceeding, and as counsel for GGCB and Clear Channel have not objected, we grant WJZD’s motion and consider the WJZD Reply herein. 4 47 C.F.R. § 73.1125. 5 File No. BALH-20021224ACR. 6 Public Notice, “Broadcast Applications,” Report No. 25396 (rel. Jan. 7, 2003). 7 See AMFM, Inc., 15 FCC Rcd 16062, 16066 n.10 (2000); see also Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, 16 FCC Rcd 19861 (2001). Under this policy, the Commission flagged proposed transactions that would result in one entity controlling 50% or more of the advertising revenues in the relevant Arbitron radio market or two entities controlling 70% or more of the advertising revenues in that market. 8 As discussed infra, WJZD alleges that GGCB’s actions resulted in an unauthorized transfer of control of WQYZ(FM), and the LOI sought information on whether GGCB has retained ultimate responsibility for essential station matters. 9 Letter from Alan C. Campbell, Esq., May 13, 2004 (“LOI Response”). 2 Hutcheson objects to the grant of the Assignment Application asserting that, because Clear Channel is currently operating WTKE(FM), Holt, Florida, “in violation of FCC rules,” it should not be able to acquire WQYZ(FM).10 Specifically, Hutcheson contends that Clear Channel did not timely file a license application for WTKE(FM) as the FCC rules require. Hutcheson fails to establish any connection between this allegation, which involve a station in a different market, and the operation of WQYZ(FM). Moreover, Hutcheson fails to raise a substantial and material question of fact as to Clear Channel’s qualifications.11 WTKE(FM) is neither associated with the instant application nor located in the same market (Arbitron’s Gulfport-Biloxi-Pascagoula Metro Survey Area (the “Biloxi Metro”)). Accordingly, we find that Hutcheson’s assertions are not relevant to our review of the Assignment Application, and his Objection is denied. WJZD makes three arguments. First, it argues that GGCB has taken actions which resulted in an unauthorized transfer of control of station WQYZ(FM) to Clear Channel in violation of Section 310(d) of the Communications Act of 1934, as amended (the “Act”). Second, WJZD asserts that grant of the Assignment Application would result in Clear Channel having undue concentration of market power in the Biloxi Metro. Finally, WJZD contends that the Commission must hold a hearing on Clear Channel’s basic character qualifications before making a determination whether grant of the Assignment Application would serve the public interest. Unauthorized Transfer of Control. According to WJZD, the evidence demonstrates that GGCB has ceded control of WQYZ(FM) to Clear Channel. GGCB counters that it has maintained proper licensee control of WQYZ(FM) and Clear Channel has exercised appropriate programming and operational functions under a Local Programming and Marketing Agreement (the “LMA”) that Clear Channel assumed in February 2003.12 In ascertaining whether an unauthorized transfer of control has occurred, we look to whether a party other than the station’s licensee has the right to determine the station’s basic operating policies, with particular attention to three areas: programming, personnel, and finances.13 Licensees are permitted under Section 310(d) of the Act to delegate day-to-day operations relating to those three areas, as long as they continue to set the policies guiding those operations and remain ultimately in control of them.14 The Commission has expressly found that LMAs, properly conditioned, do not by themselves establish that a 10 Objection at 1. 11 See Policy Regarding Character Qualifications in Broadcast Licensing, 102 F.C.C.2d 1179 (1986), recon. granted in part and denied in part, 1 FCC Rcd 421 (1986) (subsequent history omitted). 12 See GGCB Opposition at 6. GGCB and Star Broadcasting, Inc. (“Star”) originally entered into a Local Programming and Marketing Agreement dated December 12, 2002 with respect to Station WQYZ(FM). Star assigned all of its rights, title, benefits and interest in this agreement to Clear Channel, effective February 16, 2003. The LMA was filed with the Commission on February 14, 2003. 13 See, e.g., Secret Communications II, LLC, 18 FCC Rcd 9139, 9145 (2003). 14 See, e.g., WGPR, Inc., 10 FCC Rcd 8140, 8142 (1995). 3 transfer of control has taken place.15 The facts alleged by WJZD do not establish a prima facie case that GGCB has engaged in an unauthorized transfer of control of WQYZ(FM). First, the LMA comports with Commission policy. Section 7, for example, expressly provides for complete licensee control of the station and for direct licensee payment of station expenses. In addition, GGCB states that its president and 50 percent stockholder, Lawrence Edward Steelman (“Steelman”), serves as the primary contact with Clear Channel regarding management of the station pursuant to the LMA and maintains an office near the WQYZ(FM) main studio.16 Debra Sanford (“Sanford”), the other 50 percent stockholder of GGCB, lives near the studio and “monitors the operations of WQYZ and its programming on a regular basis.”17 Moreover, in March 2004, GGCB hired a full-time station manager/program director who continues to serve in that capacity at the WQYZ(FM) studio.18 Section 7 of the LMA specifies that the licensee maintains full authority and control over all of the GGCB finances. Steelman handles the accounting and bookkeeping for the licensee and writes checks to cover station expenses, such as electricity, tower rent, and insurance, as well as regulatory fees.19 In addition, Steelman has been personally involved in station programming issues under the LMA, and discussed with Clear Channel in advance, and ultimately approved, a change in the station’s format.20 GGCB’s conduct indicates that it has maintained appropriate licensee control of WQYZ(FM) under the LMA.