FCC 95-373 Federal Communications Commission Record 10 FCC Red No. 19

Greenville, which he intended to operate as a satellite of Before the WFXI(TV). The petitioner further claimed that after Federal Communications Commission McCune©s application was dismissed,2 he transferred his Washington, D.C. 20554 interests in WFXI(TV) to his father, but, unbeknownst to the Commission, did not cede actual control.3 Moreover, WITN argued that after consummation of the WYDO(TV) In re Application of transaction, WFXI(TV) and WYDO(TV) had at times broadcast identical programming and dual station iden Karl H. Stoll tifications, allegedly further indicating their common con trol.4 Finally, WITN argued that McCune©s failure to dis (Transferor) close his relationship with WFXI(TV) raises questions con cerning his candor. and File No. BTCCT-920804KE 3. In denying the petition, the staff found that WITN had not submitted facts demonstrating common control of the Frederick J. McCune two stations. The staff noted that petitioner had provided (Transferee) no information suggesting that McCune and McCune Senior did not operate or had not previously operated at For consent to transfer control of arm©s length, or that one exercised an undue influence station WYDO(TV), Greenville, NC over the other. Thus, the staff concluded that there was no reason to attribute McCune Senior©s interests to McCune. In addition, the staff reminded KS Family about its duty to MEMORANDUM OPINION AND ORDER comply with all Commission rules and policies, including the station identification policy. Adopted: August 21,1995; Released: September 5,1995 4. In its application for review, WITN claims that McCune had the burden of demonstrating the independent By the Commission: operation and control of WFXI(TV) and WYDO(TV), be cause he, his father, and other family members, have had a previous history of business dealings with respect to the 1. The Commission has before it for consideration an acquisition and sale of interests in various broadcasting application for review filed by WITN-TV, Inc. (WITN), properties. Further, WITN submits information indicating licensee of station WITN-TV, Washington, North Carolina, that, since McCune acquired WYDO(TV), the two stations seeking reversal of the April 21, 1993 action of the Chief, have at times again broadcast dual station identifications, Video Services Division, denying WITN©s petition for re and they have broadcast substantially identical program consideration 1 and affirming the staff©s September 21, 1992 ming. Moreover, WITN avers, the stations jointly sell ad grant of the above-captioned application of Karl H. Stoll to vertising time, jointly market and promote themselves, and transfer control of KS Family Television, Inc. (KS Family), share an office. According to the petitioner, these are indi licensee of station WYDO(TV), Greenville, North Carolina, cia of common control. Finally, in the application for to Frederick J. McCune (McCune). WITN also filed a review, WITN argues that McCune lacked candor and vio request for an order to show cause why the construction lated Section 1.65 of the Commission©s Rules5 by not in permit for WYDO(TV) should not be revoked. forming the Commission before the grant was final that 2. In its petition for reconsideration, WITN asserted that WYDO(TV) had executed a time brokerage agreement with grant of the application had created a violation of the WFXI(TV). Specifically, McCune informed the Commis duopoly rule, Section 73.3555(b) of the Commission©s sion in its opposition to the petition for reconsideration Rules. Specifically, WITN alleged that a prohibited Grade that he was contemplating entering into a time brokerage B overlap existed between station WYDO(TV) and station agreement with WFXI(TV), adding that the terms had not WFXI(TV), Morehead City, North Carolina. According to yet been finalized. Petitioner claims that this statement was WITN, McCune controlled both stations by virtue of his a material misrepresentation, because only 16 days later relationship with Frederick K. McCune (McCune Senior), WYDO(TV) began broadcasting the programming of his father, who had a 15.74% interest in Local Televisions WFXI(TV). According to WITN, the unlikelihood of final Associates, Inc. (LTA), licensee of WFXI(TV). In support izing such an agreement within this 16-day period suggests of its assertion, WITN noted that McCune had controlled that McCune had already consented to the agreement. WFXI(TV) in 1991 when he filed an application to acquire the construction permit for an unbuilt station in

1 On September 22, 1992, before the effective date of the staff 3 WITN alleged that McCune Senior had no prior broadcast grant of the WYDO(TV) transfer of control application, WITN experience. filed an informal objection against that application. On Septem 4 Dual station identifications are generally prohibited by ber 29, however, WITN filed a petition for reconsideration Section 73.1201(b) of the Commission©s Rules, which requires a which incorporated the matters raised in the objection. Those station to broadcast, at the beginning and ending of each time of matters were fully considered and disposed of in the staffs operation as well as hourly, its call letters and its community or action on the petition for reconsideration. communities of license. 47 C.F.R. §§73.l2Ql(a)-(b). 2 Because it denied the permittee©s application for an extension 5 Section 1.65 of the Commission©s Rules requires an applicant of time within which to construct, the Commission did not to inform the Commission within 30 days of any significant consider the merits of the accompanying assignment applica changes as to any matter that may be of decisional significance tion, which included a satellite proposal. Community Service in the consideration of its application. Telecasters, Inc., 6 FCC Red 6026 (1991).

9770 10 FCC Red No. 19 Federal Communications Commission Record FCC 95-373

5. In response, KS Family argues that its time brokerage ticipation of family members in the financial affairs, pro agreement with WFXI(TV) is lawful, and that, rather than gramming, and personnel decisions of each other©s media misrepresent its intentions, it duly informed the Commis interests; (4) prior broadcast experience of the individual sion that it was negotiating the agreement. Under the agree seeking to establish independent interests; (5) financial in ment, according to KS Family, WYDO(TV) retains its dependence; (6) sharing of personnel, equipment, contrac obligation to ensure that its programming responds to com tors, or information regarding programming; (7) munity needs; the ability to reject WFXI(TV) program involvement by family members in the acquisition or ap ming; the right to substitute other programming; and the plication process. full responsibility for all the direct and indirect costs of 7. Petitioner has presented neither persuasive nor sub operating the station. The licensee further states that the stantial information bearing on the factors noted above. arrangements between WYDO(TV) and WFXI(TV) are There is substantial evidence in the record supporting KS typical of stations involved in a time brokerage agreement. Family©s contention that there is no interdependence be For example, KS Family notes that one of the primary tween McCune and McCune Senior that would warrant purposes of such an agreement is to enhance the coverage attributing the interest of one to the other. Specifically, area of the brokering station©s programming. As a result, McCune Senior asserted in an affidavit that he acquireaThis the brokering station will often include the other station©s interest in WFXI(TV) in an "arms length transaction" and coverage area when attempting to attract advertisers. In that he "will not have any involvement, financial or other addition, KS Family contends that the joint promotional wise, in the acquisition or operation by [hisj son or any announcements with WFXI(TV), about which WITN now other person of WYDO-TV." Furthermore, KS Family complains, are permissible, and that WYDO(TV) visually notes that the McCunes are financially independent of one airs the required station identification upon the hour, and another. Indeed, McCune has personally constructed, op at the beginning and end of the broadcast day. Lastly, KS erated, bought and sold AM, FM and television stations in Family denies that it lacked candor, or violated Section eastern North Carolina since 1982, and has interests in 1.65, arguing that it has no duty to report the execution of other businesses, as well. His father has no involvement in a time brokerage agreement to the Commission, and that any of these businesses, and in fact, father and son have the execution of the agreement a few days after mentioning lived nearly 200 miles apart from each other for the past its negotiations with LTA does not indicate that it mis 18 years. Petitioner provides no information to suggest any represented to the Commission the state of these negotia ongoing business relationship between the father and son tions, since it is possible for two parties to reach such an in media enterprises or any other business. Weighing the agreement in a few days. relevant factors, we find no basis in the record to attribute 6. We have reviewed the actions of the Chief, Video McCune Senior©s interest in LTA and WFXI(TV) to Services Division, and we conclude that the matters were McCune and conclude that no violation of the duopoly fairly considered and properly decided under applicable rule is presented by McCune©s acquisition of WYDO(TV). precedent. The allegations of fact made by petitioner to 8. Second, while the petitioner contends that the time demonstrate common control of the stations, even if ac brokerage arrangement, between WFXI(TV) and cepted as true, see Citizens for Jazz on WRVR v. FCC, 775 WYDO(TV) suggests continuing control by McCune over F.2d 392, 397 (D.C. Cir. 1985), do not establish a prima WFXI(TV), it is not clear how this relates to its assertion facie case that WYDO(TV) and WFXI(TV) were under that McCune controls or influences WFXI(TV) through his common control in violation of our duopoly rule,6 or that father©s minority interest in LTA. Petitioner also appears to KS Family lacked candor in its disclosures to the Commis contend that McCune, irrespective of his father©s interest in sion. See Astroline Communications Co. Ltd. v. FCC, 857 LTA, retained control of LTA even though he divested F.2d 1556, 1561 (D.C. Cir. 1988). WITN©s allegations con himself of his 49% stock interest in and no longer holds cerning common control of the two stations raise several any position with the company. WITN bases this conten distinct issues. First, petitioner appears to contend that, by tion, in large part, on the time brokerage agreement be virtue of the nature of the relationship between McCune tween WFXI(TV) and WYDO(TV), and the alleged dual and McCune Senior, McCune Senior©s former interest in identifications used by stations. Yet, there is nothing in the WFXI(TV) should be attributed to his son. Under the record to support the inference that the agreement between Commission©s family attribution cases, the Commission be these stations is anything more than a legitimate brokerage gins with the assumption that each adult family member©s agreement which is permissible under the Commission©s interests are independent from, and not attributable to, rules. McCune did not own any stock, or have any other other family members absent evidence to the contrary. attributable interest in WFXI(TV), and McCune Senior Cannon©s Point Broadcasting Co., 93 F.C.C. 2d 643, 654-55 held only a minority interest in WFXI(TV) and did not (Rev. Bd. 1983), recon. denied, 94 F.C.C. 2d 72, review serve as an officer or director of LTA. Indeed, McCune denied, FCC 84-161 (April 13, 1984); Clarification of Com Senior is a practicing physician in Virginia Beach, Vir mission Policies Regarding Spousal Attribution, 1 FCC Red ginia. Additionally, the relationships between the stations 1920, 1922-23 (1992). These cases then identify factors that WITN claims indicate common control are simply which we consider relevant in evaluating whether one typical arrangements, acceptable under Commission rules family member©s interest should be attributed to another, and policies, that facilitate the performance of a time including: (1) representations that the media interests of brokerage agreement. Finally, WITN©s reliance on Arnold close family members will be independent and will not be L. Chase, 5 FCC Red 1642 (1990), to support its claim, is subject to common influence or control; (2) co-mingling of misplaced. In Chase, the petitioner attempted to demon ownership or other interests in media businesses; (3) par strate de facto acquisition of control by a father of a

6 In addition to barring common control of two television sta common ownership of attributable interests in two such sta tions with overlapping Grade B contours, the duopoly rule bars tions.

9771 FCC 95-373 Federal Communications Commission Record 10 FCC Red No. 19

licensee corporation ostensibly controlled by his son, by noting the continuing relationship between the family businesses which included, inter alia, financial assistance given by the father to the son©s business, and ownership by the son of a stock interest in the family enterprises that controlled the father©s corporation. Id. at 1643-44. In this case, unlike in Chase, petitioner provided no information suggesting that McCune and McCune Senior worked to gether in a broadcast or broadcast-related business during the pendency or after grant of the transfer application. Consequently, WITN has failed to establish a prima facie case that McCune controlled WFXI(TV).7 9. In addition, we reject WITN©s assertion that KS Family©s failure to disclose that WYDO(TV) had begun rebroadcasting WFXI(TV)©s programming constituted a lack of candor and violated Section 1.65 of the Commis sion©s Rules. The mere proximity between the October 27, 1992 opposition in which McCune noted that he was en gaged in discussions concerning a programming agreement with WFXI(TV), the execution of the agreement on No vember 3, and the commencement of operations under the agreement on November 12, does not indicate that McCune attempted to mislead the-Commission concerning the WYDO-WFXI programming arrangement. Thus, the circumstances surrounding the execution of the time brokerage agreement do not demonstrate that McCune ei ther lacked candor or violated Section 1.65. 10. These factors, as well as those expressly discussed in the staff letter, support the staffs grant of the transfer application. Having so concluded, we also find that, be cause WITN©s request for an order to show cause rests on the unsupported assumption that the two stations are com monly controlled in contravention of our rules, it should be denied. 11. Accordingly, IT IS ORDERED that the application for review filed by WITN-TV, Inc. IS DENIED. 12. IT IS FURTHER ORDERED that the request for an order to show cause why the construction permit for sta tion WYDO(TV). Greenville, North Carolina, should not be revoked, IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

William F. Caton Acting Secretary

7 LTA recently assigned WFXI(TV) to Gocom Television, L.P. denied the WITN petition. The parties consummated the trans (File No. BALCT-940915KY), thereby divesting itself of the action on May 2, 1995, and on May 10, WITN filed an applica station. WITN filed a petition to deny this transaction. On tion for review of the staff decision. March 31, 1995, the staff granted the assignment application and

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