Federal Communications Commission FCC 99-143 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) INDEPENDENT COMMUNICATIONS, INC.) Licensee of Television Stations ) KTTM(TV), Huron, South Dakota and ) KTTW(TV), Sioux Falls, South Dakota ) For a Forfeiture ) MEMORANDUM OPINION AND ORDER AND FORFEITURE ORDER Adopted: June 10, 1999 Released: June 14, 1999 By the Commission: 1. The Commission has before it for consideration a Response to a Notice of Apparent Liability (NAL) in the amount of twenty-seven thousand, five hundred dollars ($27,500) issued against Independent Communications, Inc. (ICI), licensee of stations KTTM(TV), Huron, South Dakota, and KTTW(TV), Sioux Falls, South Dakota.1 ICI seeks rescission or reduction of the forfeiture that was assessed for apparent repeated violations of Section 73.670 of the Commission©s Rules, 47 C.F.R. § 73.670, which limits the amount of commercial matter that may be aired during children©s programming. 2. By way of background, in the Children©s Television Act of 1990,2 Congress directed the Commission to adopt rules, inter alia, limiting the number of minutes of commercial matter that television stations may air during children©s programming, and to consider in its review of television license renewals the extent to which the licensee has complied with such commercial limits. Pursuant to this statutory mandate, the Commission adopted Section 73.670 of the Rules which limits the amount of commercial matter which may be aired during children©s programming to 10.5 minutes per hour on weekends and 12 minutes per hour on weekdays. Children©s Television Programming, 6 FCC Red 2111, 2118, recon. granted in part, 6 FCC Red 5093, 5098 (1991). The commercial limits became effective on January 1, 1992. Children©s Television Programming, 6 FCC Red 5529, 5530 (1991). 1 Independent Communications, Inc., 8 FCC Red 7886 (1993) (Independent NAL). Pub. L. No. 101-437, 104 Stat. 996-1000, codified at 47 U.S.C. Sections 303a, 303b and 394 (Children©s Television Act). 9605 Federal Communications Commission FCC 99-143 3. In its license renewal applications for stations KTTM(TV) and KTTW(TV), ICI admitted that it did not comply with the limits on commercial matter in children©s programming specified in Section 73.670 of the Commission©s Rules. Specifically, ICI stated that, for an eight- month period, the stations exceeded the children©s television commercial limits on 121 occasions/ Of these 121 commercial overages, three were two minutes in duration, four were 90 seconds in duration, 44 were one minute in duration and 70 were thirty seconds in duration. ICI further stated that the stations© traffic manager believed the stations were in compliance with the children©s television commercial limits and reported such compliance to the stations© general manager at monthly meetings. According to ICI, it was when stations KTTM(TV) and KTTW(TV) engaged an outside auditor to verify their compliance with the commercial limits that they discovered that a problem with compliance existed. Following that discovery, 12 additional children©s television commercial overages occurred, which ICI attributed to inexperienced employees, the traffic director©s wedding leave, problems understanding break format changes and an overzealous sales manager. ICI asserted, however, that no overages occurred after its installation of a new traffic software/hardware system in July, 1992. 4. In Independent NAL, the Commission considered the factors set forth in Section 503(b)(2) of the Communications Act and the guidelines set forth in Policy Statement, Standards for Assessing Forfeitures, 8 FCC Red 6215 (1993), to determine the appropriate forfeiture amount for the violations reported by station KTTM(TV) and KTTW(TV). In particular, the Commission considered the number and duration of commercial overages, the period of time over which the overages occurred and whether the licensee had established an effective program to ensure compliance with the children©s television commercial limitations. Applying those factors to the case of stations KTTM(TV) and KTTW(TV), the Commission noted that the 121 commercial overages constituted an unusually high number of violations and that 51 of the overages were one minute in duration or longer. The overages occurred, moreover, over a period of approximately eight months, including two months after the licensee became aware that it was in violation of the commercial limits. Thus, the Commission determined, it was apparent that the licensee had not established an effective program to ensure compliance with the children©s television commercial limitations. Upon consideration of these factors, the Commission found that a forfeiture in the amount of $27,500 was appropriate. Id. at 7886-87. 5. ICI argues in its Response to the NAL that the proposed forfeiture should be reduced because the number of children©s television commercial overages was actually less than it originally reported in its renewal applications. ICI further contends that the proposed forfeiture should be eliminated or substantially reduced because the Commission, in specifying the amount of the forfeiture, did not take into consideration certain "downward adjustment factors" established in Policy Statement - Standards for Assessing Forfeitures, 8 FCC Red 6215 (1993). In particular, ICI asserts that: (1) it voluntarily disclosed the commercial overages; (2) it voluntarily established policies and procedures to prevent future violations; and (3) it would suffer 3 Station KTTM(TV) operates as a satellite station of station KTTW(TV), and the programming and commercial matter on both stations is identical. 9606 Federal Communications Commission FCC 99-143 "substantial financial hardship" if it was required to pay the forfeiture. DISCUSSION 6. In United States Telephone Ass©n. v. FCC, 28 F3rd 1232 (D.C. Cir. 1994), the U.S. Court of Appeals for the District of Columbia set aside Policy Statement, Standards for Assessing Forfeitures, 6 FCC Red 4695 (1991), recon. denied, 7 FCC Red 5339 (1992), revised. 8 FCC Red 6215 (1993), stating that the guidelines for assessing forfeitures established therein must be subject to public comment to comply with the Administrative Procedure Act. In accordance with the court©s decision, the Commission released Forfeiture Guidelines - Notice of Proposed Rulemaking in CI Docket No. 95-6, 10 FCC Red 2945 (1995). After receiving and considering comments from the public in that proceeding, the Commission adopted guidelines for assessing forfeitures. Forfeiture Guidelines - Report and Order in CI Docket No. 95-6, 12 FCC Red 17087 (1997) (Forfeiture Guidelines). Forfeiture Guidelines became effective on October 14, 1997. 62 Fed. Reg. 43474 (August 14, 1997). However, with regard to (i) all cases pending when Forfeiture Guidelines was adopted, and (ii) all cases involving "violations arising from facts that occurred before the effective date of th[at] order," forfeiture amounts are to be assessed "under the case-by-case approach in effect when.the violation occurred," in conformity with the standards set out in Section 503 of the Communications Act. Id. at 17108-17109. 7. In Independent NAL, the Commission specifically recognized that a petition for review of Policy Statement/Assessing Forfeitures was pending in the court of appeals. As mentioned supra TJ 4, the Commission considered the number and duration of commercial overages at stations KTTM(TV) and KTTW(TV), the period of time over which the overages occurred and whether the licensee had established an effective program to ensure compliance with the children©s television commercial limits. These criteria, which were developed and applied by the Commission in previous cases,4 are appropriate in analyzing violations of the children©s television commercial limits since they take into account, inter alia, "the nature, circumstances, extent, and gravity of the violation, and, with respect to the violator, the degree of culpability," as required under Section 503(b)(2)(D) of the Communications Act. Thus, as specified in Forfeiture Guidelines, the forfeiture amount in the instant case was determined in accordance with the criteria developed and applied by the Commission in previous cases, in conformity with the standards established in Section 503 of the Communications Act. See Ramar Communications, Inc. (KJTV(TV)), 12 FCC Red 20490 (MMB 1997), aff©d 9 FCC Red 1831 (MMB 1994). 8. Number and Duration of Commercial Overages. ICI states that a review of its records revealed that the total number of commercial overages was 100, rather than 121, as originally reported in its license renewal applications. Furthermore, of those 100 commercial overages, ICI maintains that two (rather than three) were two minutes in duration, three (rather than four) were 90 seconds in duration, 32 (rather than 44) were one minute in duration and 63 (rather than 70) 4 See. e.g., Koplar Communications (KPLR-TV), 8 FCC Red 7884 (1993); KXRM Partnership (KXRM-TV), 8 FCC Red 7890 (1993). 9607 Federal Communications Commission FCC 99-143 were thirty seconds in duration. We believe, however, that 100 commercial overages is still an unusually high number of violations. In this regard, we find that a forfeiture of $27.500 for that number and duration of children©s television commercial limit violations is consistent with that assessed in roughly similar cases under the case-by-case approach and in accordance with the Section 503(b)(2) criteria described supra, U 7. For instance, hi North Carolina Broadcasting Partners (WCCB(TV)), 13 FCC Red 3450 (1997) (NCB Partners©), the licensee exceeded the commercial limits on 71 occasions from April 1, 1993, to March 31, 1995, as a result of human error and/or inadvertence. Of those 71 violations, 18 were less than 30 seconds in duration, 23 were 30 seconds or longer but less than one minute in duration, ten were one minute or longer but less than one and one-half minutes in duration, four were one and one-half minutes in duration, one was two minutes in duration, one was two and one-half minutes in duration and 14 were program-length commercials.