5 FCC Red No. 20 Federal Communications Commission FCC 90D-40 claim a comparative advantage on the basis of its pro­ Before the posed coverage. Joint Stipulation Regarding Areas and Federal Communications Commission Populations to be Served, May 2.2, 1989; Tr. 22. Washington, D.C. 20554 3. A prehearing conference was held on December 15, 1988 and the hearing was scheduled to commence on May 22, 1989. At the May 22 hearing session, the parties announced they were close to a settlement and expected MM Docket No. 88-468 to file a settlement agreement within the week (Tr. 30-31). The exhibits of the parties were received without objec­ In re Applications of tions, cross examination was waived, and the record was closed (Tr. 32-37). Dates were set for the filing of pro­ SANDERS File No. BPH-870729MB posed and reply findings with the expectation that the BROADCASTING procedural schedule would be mooted by the expected settlement agreement. However, the parties were unable COMPANY to resolve their differences and a settlement agreement LIMITED was not filed. PARTNERSHIP 4. Greater Greenwood Broadcasting Limited Partner­ ship (Greater) and Sanders Broadcasting Company Limit­ GREATER File No. BPH-870729ME ed Partnership (Sanders) fiied proposed findings of fact GREENWOOD and conclusions of law and replies thereto on July 24, BROADCASTING 1989 and August 9, 1989, respectively. Notwithstanding the parties waiving of cross examination and their not LIMITED objecting to each other's exhibits, the findings submitted PARTNERSHIP by the parties challenged the bona fides of the respective applications, opposed the award of integration credit, and For a Construction Permit for a sought diversification demerits. At a conference held on New FM Station on Channel 294A February 1, 1990, the Presiding Judge ruled, absent a in Greenwood, Indiana settlement, that cross-examination of the principals would be required. The record was reopened and a hearing date of February 26. 1990 was established (Tr. 40-51). See also, Appearances Order, FCC 90M-277, released February 14, 1990. David Honig, on behalf of Sanders Broadcasting Com­ 5. Hearing sessions were held from February 2.6 to 28, pany Limited Partnership; Stephen Diaz Gavin, Paul 1990. With the consent of the parties, the proposed find­ Perrone, Thomas L. Siebert, Paul C. Besozzi. and J. Jeffrey ings previously filed by Greater and Sanders were dis­ Craven, on behalf of Greater Greenwood Broadcasting missed (Tr. 260). A new set of findings and conclusions Limited Partnership; and Robert Zauner, on behalf of the was filed on May 24, 1990: replies thereto were filed on Chief, Mass Media Bureau. June 6, 1990. The record was finally reclosed by Memo­ randum Opinion and Order. FCC 90M-1480 released June 5, 1990. INITIAL DECISION OF ADMINISTRATIVE lAW JUDGE JOSEPH CHACHKIN FINDINGS OF FACT Issued: September 14, 1990 Released: September 25, 1990 SANDERS BROADCASTING COMPANY LIMITED PARTNERSHIP PRELIMINARY STATEMENT BACKGROUND 1. The Mass Media Bureau designated the above-cap­ tioned applications for comparative hearing by Hearing Designation Order, (HDO), DA 88-1410, released Septem­ 6. Sanders is a State of Indiana limited partnership ber 23, 1988. 1 The Hearing Designation Order specified the (Greater Ex. ll, p.l; Greater Ex. 13, p. 1). Kerry Sanders following issues for hearing: is the sole general partner and owns 25% of the equity interest of Sanders (Sanders Ex. 1, p. 1). His current address is 4000 N. tv1r;ridian Street, Indianapolis, IN 46205 1. To determine which of the proposals would, on a (Id.; Tr. 75). comparative basis, best serve the public interest. 7. The current and only limited partner of Sanders is 2. To determine, in light of the evidence adduced the A.H.A.B. Family Trust. 916 Oak Avenue, Scranton. pursuant to the foregoing issues, which of the ap­ Pennsylvania 18508 (Sanders Ex. 1, p. 1). Mr. Guyon plications should be granted, if any. Turner is the Trustee of the Trust. ld. The Trust holds 75% equity interest in the partnership. ld. 2. The designation order permitted the adduction of 8. The original limited partner of Sanders was comparative coverage evidence under the standard com-· MediaComm NationaL Inc. (Greater Ex. 1 L p. 7; Greater parative issues. The parties, have, however. stipulated that Ex. 13, p. 1). Ragan A. Henry is President of MediaComm the differences in area and population to be served are (Greater Ex. 12, p. 1-4; Tr. 217). At the time of the filing insignificant and that neither of the applicants would of the Sanders application. Mr. Henry was the President and 100% shareholder of MediaComm (Tr. 145, 217). 5671 FCC 90D-40 Federal Communications Commission Record 5 FCC Red No. 20 MediaComm assigned its limited partnership interest to work could have been in the context of Mr. Henry's AHAB on May 25, 1988 (Greater Ex. 15, p. 1). The involvement in the National Black Media Coalition, assignment became effective on May 31, 1988. !d. which in turn had Mr. Honig work for it (Tr. 230). Also, 9. Sanders' present limited partner, AHAB, is an irrev­ Mr. Henry had spoken in the spring of 1987 to Mr. Honig ocable trust created by Mr. Henry for the benefit of his about several clients who wanted to file applications for children, Vincent A., Joseph A., Richard A., and Leah A. Docket 80-90 allocations and needed financial support Henry, and his stepson, Ralph A. Brower (Sanders Ex. 5, (Tr. 227). Mr. Henry had agreed to help Mr. Honig's p. 1). The trust was established on April 21, 1988. !d., p. clients, provided they were "good people" (Tr. 228). 8. The original assets of AHAB included limited partner­ 16. After calling Mr. Sanders back, Mr. Honig first ship interests in various FM radio applications, including provided Mr. Sanders with some information about Mr. Sanders, plus $8,000.00. ld., p. 9. Mr. Henry created the Henry, and then "patched" Mr. Henry on to the tele­ trust because his investment banker and lenders had ob­ phone conversation (Tr. 83). Mr. Sanders knew of Mr. jected to the limited partnership investments, the bankers Henry by reputation but had never met him (Tr. 84). feeling that the limited partnerships diverted Mr. Henry's 17. During the first conversation, Mr. Sanders told Mr. attention from his primary broadcast investments (Tr. Henry about himself, they talked about the Green­ 261). wood/Indianapolis market, and about how the limited 10. Mr. Sanders first learned of the availability of the partnership would be structured (Tr. 231). Although Mr. Greenwood station in May or June 1987, shortly after he Sanders testified that he had not yet decided on the or­ moved to Indianapolis (Tr. 77). Sanders moved there in ganizational structure of the application, (Tr. 87), options March 1987 (Tr. 77). He first learned about the availabil­ including a limited partnership were discussed (Tr. 87). ity from Pippi Riggins, Chairman of the Indianapolis Either in that conversation or in a subsequent conversa­ Black Media Coalition, whom he knew when they were tion on July 26, 1987, Mr. Henry agreed to proceed with both students at Howard University, Washington, D.C. the application (Tr. 85, 88-89, 232). Mr. Sanders certified (Tr. 76-77). the application two days later, on July 28, 1987 (Tr. 175). 11. Ms. Riggins told him about the station, provided 18. During the July 26 conversation, Mr. Sanders and him an FCC guidebook for the processing of an FM Mr. Henry verbally agreed to form a limited partnership application, and told him about David Honig, Sanders' (Tr. 89, 93). Among other things, it was verbally agreed counsel (Tr. 77-78). Mr. Sanders then contacted Mr. that equity distribution would be split with Mr. Henry Honig on Ms. Pippi's recommendation (Tr. 78-79). receiving 75% and Mr. Sanders 25%. Further, Mr. Henry 12. During their first conversation, Mr. Sanders told would provide funds in the form of a loan to the partner­ Mr. Honig about his interest in acquiring a station and ship to cover the costs of construction and initial opera­ Mr. Honig provided Sanders background on doing so (Tr. tion. Also, Mr. Henry would provide funds for the 79). Mr. Honig also discussed FCC procedures and basic prosecution of the application (Tr. 212-215). The qualifications issues (Tr. 80). Their conversation, which understandings reached by Mr. Sanders and Mr. Henry occurred in May or June 1987, lasted approximately 1 was reduced to writing and are contained in a letter dated hour 20 minutes (Tr. 80-81). At that time, Mr. Sanders August 4, 1987 (Greater Ex. 8, p. 2). decided that he would not purchase an existing station but 19. Mr. Henry is a partner in the law firm of Wolf, would pursue an application for a new station (Tr. 80-81). Block, Schorr and Solis-Cohen (Tr. 234). Mr. Henry did Mr. Sanders did not pursue the purchase of an existing not personally draft the limited partnership agreement station because it was too costly (Tr. 81). (Tr. 238). It was drafted by one of Mr. Henry's assistants 13. Sanders realized that he needed an investor, to assist who forwarded it to Mr. Sanders by letter dated August him financially and he contacted various people, includ­ 21, 1987 (Greater Ex. 9, p. 1; Tr. 101-102, 238). Accord­ ing Gene D'Angelo, an owner of radio and television ing to Mr. Henry, the agreement was an evolution of his stations in Columbus, Ohio and Indianapolis (Tr. 81-82). law firm's form documents (Tr. 233-234). Mr. Honig did However, these efforts were unsuccessful (Tr. 82). Ap­ not have a form limited partnership agreement and asked proximately 10-12 days after their first conversation, Mr.