*Pages 1--80 from Microsoft Word - 8034.doc* Federal Communications Commission FCC 01D- 01 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of READING BROADCASTING, INC. For Renewal of License of Station WTVE( TV), Channel 51 Reading, Pennsylvania And ADAMS COMMUNICATIONS CORPORATION For Construction Permit for a New Television Station to Operate on Channel 51, Reading, Pennsylvania ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) MM Docket No. 99- 153 File No. BPCT- 940407KF File No. BPCT- 940630KG INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE RICHARD L. SIPPEL Adopted: April 2, 2001 Released: April 5, 2001 APPEARANCES Thomas J. Hutton, Esquire and C. Dennis Southard, IV, Esquire on behalf of Reading Broadcasting, Inc.; Gene Bechtel, Esquire and Harry F. Cole, Esquire on behalf of Adams Communications Corporation; and James W. Shook, Esquire on behalf of Enforcement Bureau. INTRODUCTION 1. Reading Broadcasting, Inc. (" RBI") seeks renewal of its license to operate Station WTVE( TV), Channel 51, in Reading, Pennsylvania. Adams Communications Corporation (" Adams") has filed a mutually exclusive application for a construction permit for a new facility to operate on the same channel presently occupied by WTVE( TV). The Enforcement Bureau (“ Bureau”) participated as a party in all phases of the case. 1 Federal Communications Commission FCC 01D- 01 2 2. The proceeding was designated for hearing by Mass Media Bureau Order released on May 6, 1999. Hearing Designation Order, DA 99- 865 (Vid. Ser. Div., released May 6, 1999) (" HDO"). 3. Assignment for the undersigned to hear this case as Presiding Judge was pursuant to Order FCC 99M- 32, released May 14, 1999. ISSUES Phase I 4. The standard comparative renewal issue designated in the HDO, as further explicated in Memorandum Opinion and Order FCC 99M- 47, supra, was heard in Phase I. The issue was: To determine which of the proposals would, on a comparative basis, better serve the public interest; and To determine, in light of the evidence adduced pursuant to the foregoing issue, which, if either, of the applications should be granted. Phase II 5. By Memorandum Opinion and Order released on October 15, 1999, a Phase II issue was added as to Reading's basic qualifications: To determine whether Micheal L. Parker engaged in a pattern of misrepresentation and/ or lack of candor in failing to advise the Commission of the actual nature and scope of his previously adjudicated misconduct and, if so, the effect of such misrepresenta-tion and/ or lack of candor on Reading's qualifications to remain a licensee. Memorandum Opinion and Order FCC 99M- 61, released October 15, 1999. Phase III 6. By Memorandum Opinion and Order released on January 20, 2000, a Phase III issues was added as to Adams' basic qualifications: 2 Federal Communications Commission FCC 01D- 01 3 To determine whether Adams Communications Corporation has abused the Commission's comparative renewal processes by the filing of a broadcast application for speculative and/ or other improper purposes. Memorandum Opinion and Order FCC 00M- 07, released January 20, 2000. For further clarification, Phase III issues were restated for the hearing as follows: A. To determine whether the principals of Adams Communications Corporation (" Adams") filed, or caused to be filed, an application for construction permit in the hope or expectation of achieving through litigation and settlement, a "precedent" or other recognition that the home shopping television broadcasting format does not serve the public interest. B. To determine in light of findings and conclusions as to issue A above, whether the principals of Adams Communications Corporation had, and continue to have, from June 30, 1994, to the present, a bona fide intention to construct and operate a television broadcasting station at Reading, Pennsylvania. C. To determine in light of findings and conclusions as to issues A and B above, whether Adams Communications Corporation has engaged and/ or is engaging in an abuse of process, i. e., an abuse of the Commission's comparative renewal litigation and settlement process. D. If issues A and/ or B and/ or C are true, to determine whether Adams Communications Corporation is qualified to receive a Commission license, even if Adams would be willing to accept a settlement payment that is limited to legitimate and prudent expenses in return for dismissing its application. Memorandum Opinion and Order FCC 00M- 19, released March 6, 2000, modifying Memorandum Opinion and Order FCC 00M- 07, released January 20, 2000. The ultimate issue of fact and law is whether Adams filed for the purpose of settlement. Hearing Sessions 7. Hearing sessions on the Phase I standard and renewal comparative issues were held on January 6, 7, 10- 13, 2000. Hearing sessions on the qualifying issues in Phase II and Phase III were held on June 12- 13, 2000 and July 25, 2000. 3 Federal Communications Commission FCC 01D- 01 4 FINDINGS OF FACT Phase I Comparative Renewal Issue 8. Factors to be adjudicated under the standard comparative issue are (a) diversifica-tion of media ownership; (b) efficient use of the assigned frequency or the comparative signal coverage; and (c) local residence and related civic involvement of ownership and any broadcast experience. Memorandum Opinion and Order FCC 99M- 47, released August 9, 1999. It also must be determined whether RBI qualifies for a renewal preference. Id. Renewal Period 9. The relevant renewal period was determined to be August 1, 1989, to August 1, 1994. Memorandum Opinion and Order FCC 99M- 47, released August 9, 1999. 1 At the beginning of the renewal period, RBI was in bankruptcy and held the license for Station WTVE( TV) as a debtor- in- possession. (RBI Exhs. 5 and 11.) Diversification 10. The preponderance of the evidence shows that Adams is the more diversified of the two applicants. Adams 11. Adams is a Massachusetts for profit corporation that neither holds nor plans to hold any interest in any medium of mass communications other than the license to operate a new TV station on Channel 51 in Reading, PA. (Adams Exh. 1.) There is no dispute as to this fact, except for RBI’s contention that Adams filed for settlement, a purpose other than owning a station and broadcasting on Channel 51. 1 Once a competing application is filed, the renewal applicant cannot upgrade its programming to meet the challenge. RBI’s application was filed on April 7, 1994, and Adams filed its competing application on June 30, 1994. This leaves only the month of July as a possible opportunity to upgrade. But Adams contends that RBI had no meritorious programming in the month of July. Therefore, Adams could not be prejudiced by the inclusion of that one month. The renewal period begins and ends on the same dates as the expiration date of a license term and conforms with the standards for adjudicating renewal preferences. Memorandum Opinion and Order FCC 99M- 47, at 4- 6, n. 6. Relevance was measured by the renewal dates. 4 Federal Communications Commission FCC 01D- 01 5 12. Adams has eleven principals, none of whom resides or has a business or investment interest in Pennsylvania. Its officers and directors are Robert L. Haag, president and director; Howard N. Gilbert, vice president, secretary and director; Wayne J. Fickinger, vice president, treasurer and director; Manfred Steinfeld, director; and A. R. Umans, vice president and director. (Adams Exh. 1.) 13. Mr. Umans, an 8. 7% shareholder of Adams, holds a 4. 04% interest in JMP Media, L. L. C., licensee of Stations WPBG – FM and WMBD, Peoria, Illinois. Mr. Umans has committed to divest that media interest at or before commencement of broadcast operations by Adams on Channel 51. (Adams Exh. 1.) RBI 14. RBI is the current licensee of Station WTVE( TV), a UHF television facility that is located on the fringe of the Philadelphia television market, broadcasting on Channel 51. RBI holds auxiliary radio authorizations in connection with the operation of the Station. (RBI Exh. 4.) RBI also holds an authorization to operate paging and radiotelephone service on a subcarrier of Channel 51. (Id.) 15. RBI has thirty five shareholders. (RBI Exh. 2.) RBI’s officers and directors are Micheal L. Parker, president, director and shareholder; Jack A. Linton, director and shareholder; and Frank D. McCracken, executive vice president, director and shareholder. (RBI Exh. 3.) 16. None of RBI’s officers, directors or shareholders has any interest in a broadcast or radio common carrier license or applications, or newspaper, magazine, periodical, cable television system, or other media of mass communications, with the exception of Mr. Parker. 17. Mr. Parker’s other media interests consist of his ownership of multiple broadcast outlets that include Two If By Sea Broadcasting Corporation (“ TIBS”), licensee of International Broadcast Station KAIJ, Dallas, TX; translator station on Channel 221 at Upland, CA; Desert 31 Television, Inc., licensee of Station KVMD( TV) at Twenty Nine Palms, CA, and the one- time intended assignee of and time- brokerage operator of Station WHCT( TV), at Hartford, CN. 2 (Id.), Mr. Parker has made no pledge to divest these other broadcast interests. 2 After the record was closed, a “white knight” was awarded the license to the Hartford Station by assignment incident to a settlement under which TIBS is to receive approximately $7 million. See Martin W. Hoffman, Trustee in Bankruptcy, et al., MM Docket No. 97- 128, Memorandum Opinion and Order FCC 00- 387, released November 8, 2000. (Official Notice.) That settlement is being challenged. 5 Federal Communications Commission FCC 01D- 01 6 Comparative Coverage 18. Station WTVE( TV) operates on Channel 51 with an effective radiated power of 1450 kilowatts from an antenna height above average terrain of 229 meters. The predicted Grade B contour of WTVE’s signal covers a land area of 14,128 square kilometers with a population of 3,119,889 persons. (RBI Exh. 48, Jt. Engineering.) The Station has received a construction permit to move its site which would permit an increase in its power to 5,000 kilowatts, increase antenna height to 229 meters above average terrain, and increase population coverage to 21,602 square kilometers serving 7,362,938 people. (Id.) However, RBI has shown no reasonable assurance of moving to the new site. 19. Adams proposes to operate under a construction permit that allows for an effective radiated power of 5,000 kilowatts and an antenna height of 153 meters above average terrain. Adams’ predicted Grade B contour for its proposed signal would cover a land area of 14,942 square kilometers with a population of 4,260,920 persons. (Id.) 20. There are six other authorized broadcast TV services within the Grade B contours of WTVE( TV) ’s current and proposed operations. The same finding applies to Adams. (Id. at 4- 5.) The areas and populations contained in each of these two Grade B service areas are neither unserved nor underserved inasmuch as all of the areas and populations to be served by whoever wins already receive more than five services. (Id.) 21. The weight of the evidence shows that Adams has reasonable assurance of the stronger signal as well as the greater signal coverage in terms of population. Population Land Area RBI 3,119, 889 14,128 sq. km. Adams 4, 260,920 14,942 sq. mi. (Jt. Engineering RBI Exh. 48 at 3.) Adams proposes to serve 33% more people than RBI presently serves. RBI’s Proposed Site 22. RBI received a construction permit in 1990, authorizing a move to another site. But RBI never moved. In 1995, RBI received another authorization to move to yet a different site and to construct a new tower that would increase its power so that the predicted Grade B coverage would serve 75% more people than could Adams. However, under Commission policy, RBI could not construct on its designated site because of the lapse of more than three years since the grant of the license. Streamlining of Applications, Rules and Procedures, 13 F. C. C. Rcd 23056, 23090 (1998). The Commission has not responded to a request from RBI for an exception from that policy. (RBI Exh. 12, Tab B.) RBI has failed to show a reasonable likelihood that it will increase its signal coverage within the foreseeable future. Therefore, RBI’s 6 Federal Communications Commission FCC 01D- 01 7 proffered engineering (RBI Exh. 48) that would increase its signal coverage beyond Adams’ coverage is rejected for failing to meet the burdens of persuasion and proof of reliability by a preponderance of the evidence. 23. There are reliable facts in the record that support this negative finding. Mr. Parker testified that the permit to construct was last extended in 1995, and that an ongoing zoning dispute was delaying construction. (Tr. 816 –822, 854- 873.) RBI correspondence with a township was not probative because it was shown to relate to a cellular telephone tower. (Adams Exh. 41.) RBI could only “hope” that construction would proceed. But a local court issued an adverse decision on January 27, 2000, and the question was assigned for mediation. (Tr. 1905.) As of the closure of this record, there has been no report received on the status of that mediation that would be responsive to an instruction to be kept informed of developments. 3 (Tr. 1907.) RBI offered nothing further on the status of its tower relocation in its Reply pleading. Therefore, there is no reliable predictive evidence in this record to support a conclusion that RBI has a reasonable assurance that it will be able to increase its signal coverage. Local Residence, Civic Involvement And Broadcast Experience Adams 24. There are no Adams principals who reside in the Reading area, none have been active in local civic affairs in the Reading area, and none have qualifying broadcast experience. The evidence presented by Adams does reflect that there are five principals who have demonstrated civic interests and activities primarily in and around Chicago, Illinois. While there is no credit awarded from their recorded past civic involvements in Chicago, it is reasonable to assume that principals of Adams would become sufficiently interested in Reading’s civic affairs for making good faith ascertainment should Adams ultimately receive and accept an award of the license. (Adams Exh. 1.) However, Adams claims no credit for local residence, civic involvement or past broadcast experience, and none is awarded. RBI 25. RBI identifies thirty five shareholders who have resided and who presently reside within WTVE( TV) ’s predicted Grade B contour. (RBI Exh. 2.) However, it appears from ownership reports that during the renewal period eight of the thirty five were not RBI 3 See Order FCC 00M- 52, released August 18, 2000 (record closed). 7 Federal Communications Commission FCC 01D- 01 8 shareholders. (RBI Exh. 11.) 4 Therefore, RBI is credited with local residence for only twenty seven of its thirty five shareholders, which still reflects a significant local presence. 26. There are eleven shareholders of RBI identified as having significant civic involvement. (RBI Exh. 2.) 27. Because of a failure of proof, there will be credit awarded for the civic activities of only three RBI shareholders: Mr. Jack Linton (“ Linton”) for his activities as treasurer and section chair of a local bar association, for his service as president and member of the board of directors of the Reading Jewish Community Center, treasurer of Reading Soccer, president of an Estate Planning Council, membership on the Berks County Mental Health Retardation Board, and president and a member of the board of directors of the Berks County Chamber of Commerce; Dr. Paul H. Tietbohl for his activities as organizer of a group of physicians called “Choice” who provide weekend and holiday coverage for emergencies in the Reading area; and Mr. Parker for being a member of the Reading Chamber of Commerce. (RBI Exh. 2.) 28. Two RBI shareholders had recognizable broadcast experience during the relevant period: Mr. Parker and Mr. Linton. 29. Mr. Parker became executive vice president and a director of RBI in 1989. He became a shareholder and was voted RBI’s president in 1991, under stormy and highly questionable circumstances. (See discussion below at Paras. 39- 44.) He served in the capacity of RBI’s president to August 1997, and from November 1997, to the present. He was the general manager of Station WTVE( TV) from 1991 to 1996. He played a key role in bringing RBI out of bankruptcy. (RBI Exh. 3.) 30. Mr. Parker also was a principal of licensees of the following additional broadcast stations: Station City Dates of Involvement KYBY( TV) Anchorage, AK 1982 – 1984 KWBB( TV) San Francisco CA 1986 – 1993 WHRC( TV) Norwell, MA 1992 – 1997 KVMD( TV) Twentynine Palms, CA 1992 – Present KAIJ Dallas, TX 1992 – Present (RBI Exh. 3.) He was involved with these stations during their construction and initial operation. 4 RBI Exh. 2 does not identify which of the shareholders have owned an interest in RBI during the renewal period. Nor does RBI rebut or explain in its Reply the noted deficiency. The unanswered criticism includes the failure to show that all of the civically active shareholders were such during 1989- 1994; a failure to show that the claimed activities all occurred in that period; and a failure to show that the activities occurred within or were related to any community or organization within the Grade B contour. 8 Federal Communications Commission FCC 01D- 01 9 But the record is silent with respect to Mr. Parker’s activities with each station for which credit for broadcast experience is claimed. And there is no credit claimed for his related broadcast activities with respect to periods after the stations went on the air. Based on this record, RBI is entitled to some credit for Mr. Parker’s past broadcast experience. 31. Mr. Linton was house counsel for a television production company in New York City from 1963 to 1966. He served as a part- time sports announcer for RBI in 1980. (RBI Exh. 3.) Mr. Linton served as officer, director and corporate counsel for RBI for over ten years and he is credited with related broadcast experience. 32. Mr. McCracken is responsible for the day to day broadcast activities of RBI. He has had full- time management responsibilities since 1996. He has been producer of the program “Air Gospel” which, since 1996, has broadcast weekly from Station WTVE( TV). (RBI Exh. 3.) However, he was not an RBI shareholder during the renewal period and therefore no credit is awarded for his broadcast experience. Corporate Control 33. RBI’s 1988 Ownership Report reflected that there were 50,000 shares of stock issued and outstanding, divided among 18 shareholders. Dr. Henry Aurandt and his wife held 18,000 shares representing the largest portion. The Report also identified RBI's officers as Dr. Aurandt (president), Dr. Robert Denby (vice resident/ treasurer), Dr. Sergio Proserpi (vice president) and Mr. Jack Linton (secretary). (RBI Exh. 11.) The report did not identify directors. 34. In a corporate business judgment, RBI decided to hire the experienced Mr. Parker and his controlled company, Partel Inc. (“ Partel”), to remove RBI from bankruptcy and run the Station’s business. On May 28, 1989, RBI and Parker/ Partel entered into and executed a Management Services Agreement (“ MSA”). (Adams Exh. 13 at 3; Adams Exh. 19; Tr. 632.) On August 1, 1989, RBI shareholders met and elected a new slate of directors. The five directors included Dr. Aurandt and Mr. Linton as well as Mr. Parker, Dr. Clymer and Dr. Fischer. At the board of directors meeting which immediately followed, two officers were elected: Mr. Parker, president 5 and Mr. Linton, secretary. (Adams Exhs. 13, 14.) 35. The minutes reflect shareholders approval of the MSA which gave Partel and Parker full authority to conduct the operations of WTVE( TV). (RBI Exh. 18 at 2.) The MSA also provided for Partel to receive an equity interest in RBI and a certain percentage of its monthly net revenues. (Id.) On September 13, 1989, RBI's directors "ratified" the MSA and directed bankruptcy counsel to submit it to the bankruptcy court for approval. (Adams Exh. 14 at 10.) Bankruptcy counsel did so on June 19, 1990, and court approval followed on August 28, 5 Various documents identify Mr. Parker as RBI's executive vice- president. (E. g., RBI Exh. 3 and Adams Exh. 18.) Irrespective of his corporate title, Mr. Parker functioned as RBI's chief operating officer throughout the renewal period. (Tr. 824.) 9 Federal Communications Commission FCC 01D- 01 10 1990. (RBI Exh. 18 at 5; Tr. 626.) RBI did not file the MSA with the Commission or list it on an ownership report until 1997. (RBI Exhs. 11, 14.) 36. On January 20, 1991, RBI's reorganization plan became final and nonappealable. (Adams Exh. 20 at 2; Tr. 786- 87.) The plan was to become effective on September 17, 1991, thereby effectively canceling outstanding stock. (Tr. 796.) (Adams Exh. 20 at 2; Tr. 641, 796- 97.) In anticipation, on August 14, 1991, RBI filed a short form application seeking Commission approval to assign WTVE( TV) 's license from RBI, as debtor- in- possession, to RBI. (Adams Exh. 21.) RBI used Form 316 because new shareholders were to be added and shareholders' interests were going to change in conjunction with RBI's emergence from bankruptcy. The short form was used because it was thought that RBI's former shareholders would still hold more than 50% of RBI's stock following consummation. Mr. Parker signed the application as RBI's president, both as transferor and as transferee. Commission approval occurred on August 27, 1991. (Adams Exhs. 21, 22; Tr. 789- 791.) 37. The shareholder and director disclosure that was reported in the August 1991 short form application was consistent with the information that was reported in RBI's Ownership Report dated and executed by Mr. Parker on March 28, 1991. (Adams Exh. 21 and RBI Exh. 11.) Mr. Parker was president and a director while executing both filings. The other directors were Dr. Aurandt, Mr. Linton, Dr. Clymer and Dr. Fischer. RBI was still capitalized with 50, 000 shares of common stock that was held by 18 shareholders, with Dr. Aurandt and his wife owning 18,000 shares. As of August 1991, Mr. Parker and Partel legally owned no shares of RBI stock. Partel was to receive 118,467 shares out of 399,044 to be issued which would make Partel the largest RBI shareholder. (Adams Exhs. 11, 21.) This set the stage for a struggle for control of RBI. Parker’s Taking Of Control 38. That struggle began in earnest one month later when on September 14, 1991, three days before the reorganization plan became final, Dr. Aurandt called shareholders’ and directors’ meetings to recommend his wife replacing Dr. Fischer who had resigned as a director. Mr. Parker testified that “ a very volatile dispute [was] going on between shareholders.” (Tr. 669).) Mr. Parker attended and contested the legality of actions taken at the meeting. (Tr. 668- 69, 677, 679, 791- 93.) The shareholders and the directors terminated the MSA based on alleged "malfeasance" by Mr. Parker, removed Mr. Parker as a board member, and replaced him with Mrs. Aurandt. 6 (Adams Exh. 13 at 39- 40, 53, 71- 72; Tr. 669- 70, 677.) After effectively overriding the board actions taken on September 14, Mr. Parker issued new RBI 6 Dr. Aurandt and Mr. Parker had been at odds for some time and Dr. Aurandt had attempted on more than one occasion to remove Mr. Parker as RBI's president. (Adams Exh. 13 at 52.) 10 Federal Communications Commission FCC 01D- 01 11 shares to its former and new shareholders on October 15, 1991. 7 (Adams Exh. 24; Tr. 797.) Mr. Parker signed the certificates himself that had been prepared by Marvin Mercer, RBI's bankruptcy counsel. (Adams Exh. 24; Tr. 797- 800, 810.) Mr. Parker contends that this action was in accord with the Commission's prior grant of the short- form application which occurred on August 27, 1991. (Tr. 672, 795- 97.) 39. In at least two instances, the number of shares issued by Parker did not match the number approved by the Commission. First, the Commission had approved issuance of 118,467 shares to Partel, but the number actually issued was 124,401. (Adams Exh. 24.) According to Mr. Parker, the nearly 6,000 extra shares were issued with an option to Meridian Bank, an RBI lender, that allowed the bank to purchase shares for $1 (one dollar), in exchange for forgiving a $500,000 overdue payment. (Tr. 800- 01.) Second, the Commission had approved issuance of 74,678 shares to Dr. Aurandt, but Parker actually issued only 23,868 shares for Dr. Aurandt. (Tr. 799, 803; Adams Exh. 13 at 84- 86.) Mr. Parker explained that RBI chose not to issue the additional shares to Dr. Aurandt because of questions concerning a court judgment and garnishment proceedings which Mr. Parker may not have known about while the short form application was pending. (Adams Exh. 13 at 83- 84; Tr. 701- 02, 803- 04, 810.) Mr. Parker testified that he received a writ of execution incident to the Aurandt garnishment on October 11, 1991. (Tr. 888- 89, 916.) Mr. Parker understood that if garnishment should occur, the RBI shares destined for Dr. Aurandt ultimately would go to the judgment holders and that would result in a greater than 50% transfer of stock control of RBI. (Adams Exh. 28; Tr. 685, 701.) 40. Mr. Parker showed that he had the power to withhold shares from Dr. Aurandt while causing the issuance of 17,674 shares to an entity called STV Reading, Inc. (" STVR”). (Adams Exh. 24; Tr. 809- 10, 975.) Dr. Aurandt was the holder of record of some 90% of STVR voting shares. 8 But Mr. Parker did not transmit the RBI shares reserved for STVR to 7 RBI stock was reissued to all shareholders on December 31, 1991, at the insistence of the Meridian Bank in order to reflect the bank's status as a secured creditor. (Tr. 798.) 8 STV Reading, Inc. was a corporation initially controlled by Dr. Aurandt. RBI and Parker contend that Dr. Aurandt was “previously approved” by the Commission which would mean that STVR’s 4. 8% interest in RBI would incrementally bring the total of ownership shares issued to “previously- approved” shareholders to 51.6% which mathematically negates a transfer of control. (Tr. 954- 55; RBI Exh. 17 for ID but not received into evidence.) This theory of shareholders being “previously approved” was not substantiated or accepted. (Tr. 1189.) However, full attention was paid to RBI’s arguments for its Exh. 17 and it is clear that counsel worked hard to prepare and present the evidence. A detailed explanation for the exclusion ruling is set forth in Order FCC 00M- 36, released May 30, 2000, following a round of pleadings. The most significant problem found with Exh. 17 was one of reliability. Dr. Aurandt’s declaration was conclusory, did not account for an “original issue” of 1,000 shares, and lacked reliable proof that he owned more than 50% of STV stock prior to October 15, 1991. As stated in the Order: “Reading has failed to show that Exhibit 17 accounts for 17,640 shares of Reading stock --- and no resolution of the question can be made without the testimony of Dr. Aurandt and/ or more definitive business records.” Id. But regardless of how RBI’s stock register showed the issuance of stock, Mr. Parker demonstrated that he was in control before the Commission had approved any assignment application. In his sworn testimony, Mr. Parker admitted that as of October 30, 1991, he thought that he held effective voting control. (Tr. 977- 78, 987.) 11 Federal Communications Commission FCC 01D- 01 12 Dr. Aurandt. Rather, Mr. Parker issued the RBI stock destined for STVR to himself. Mr. Parker justified this self- help action on proxies that he had previously received and which he used for his election as STVR’s president. (Tr. 970, 977.) But all of the STVR proxies relied upon by Mr. Parker came from four persons who had not previously held an ownership interest in RBI. In fact, they were the same four individuals who had secured the Aurandt garnishment. (Adams Exh. 28; Tr. 972, 975- 76.) The RBI shareholders who opposed Mr. Parker found that the new shares "were allocated by Mr. Parker in a fashion to skew the voting power of the shareholders of [RBI] in favor of Partel, Inc. and against the former shareholders of [RBI]." (Adams Exh. 13 at 72- 73.) On cross examination, Adams counsel confronted Parker with the list of shareholders who had received stock certificates including Partel, and Mr. Parker admitted that those certificates were issued by him before he had filed the application. (Tr. 703- 904.) 41. Following issuance of the new stock, Mr. Parker retained an attorney to seek an extension of time from the Commission in order to allow RBI to consummate the transfer authorized by the Commission on August 27, 1991. (Tr. 804- 06.) By letter dated October 22, 1991, Sidley & Austin requested an additional 60 days until December 27, 1991. (Adams Exh. 22.) The reason cited to the Commission was that RBI needed additional time "to coordinate the transaction, including implementing the bankruptcy reorganization plan approved by the bankruptcy court in Pennsylvania." (Adams Exh. 22; Tr. 883- 84.) Mr. Parker contends that more than just the issuance of stock had to occur before RBI could move from the protection of the bankruptcy court. It was also necessary to satisfy the Meridian Bank. (Tr. 804- 06.) The Mass Media Bureau granted an extension to December 27,1991. (Adams Exhs. 22, 23.) Mr. Parker then filed a Form 315 long form application to effect a “legitimate” transfer of control. (Adams Exh. 28; Tr. 693.) 42. In the meantime, on October 25, 1991, during the period of extension granted by the Commission, Mr. Parker sent a notice of special meeting of shareholders on only five days notice. (Tr. 806.) The meeting's purpose was to remove existing directors, elect new ones, and resolve disputes concerning Dr. Aurandt. Mr. Parker advised the shareholders that they could attend either in person or by proxy. (Adams Exh. 25.) On October 30, l991, RBI's shareholders met. This meeting resulted in the election of a new board of directors consisting of Mr. Parker and Dr. Clymer and new board members Irvin Cohen, Reverend Frank McCracken and Judge C. Meyer Rose. (Adams Exh. 13 at 70; Tr. 678- 79, 806- 07; RBI Exh. 11.) Mr. Parker knew and understood at the time that Dr. Fischer was no longer going to be a director. (Tr. 807.) The newly constituted board met on October 30, 1991, and on December 30, 1991. (Adams Exh. 15 at 77, 85; Tr. 682.) 43. On November 13, 1991, RBI filed the long Form 315 that removed RBI as debtor-in- possession and transferred control of the license to the newly constituted RBI. (Adams Exh. 28; Tr. 693.) The Commission was informed that corporate shares would increase from 50,000 to 419,038 and that the directors would include Dr. Aurandt, Mr. Linton and a totally passive Dr. Fischer. The application showed that the previous short form assignment would not be consummated because of questions concerning the ultimate ownership of 13.98% (more than 58,000) of RBI's proposed shares. Notwithstanding the Parker- dictated events of October 15 (the issuance of RBI stock) and October 30 (the shareholders meeting), Mr. Parker denied that a transfer of control had occurred prematurely. (Tr. 811.) The Commission approved the long form transfer on February 14, 1992, and Parker believed that a final accounting with creditors 12 Federal Communications Commission FCC 01D- 01 13 and consummation of new ownership were concluded in March, 1992. (Adams Exh. 31; Tr. 812- 813.) But no stock was issued following the Commission's grant of the long- form transfer application. (Tr. 703- 04, 813.) Convinced of his existing authority and control, Mr. Parker had signed the application on behalf of the transferor and the transferee. (Adams Exh. 28; Tr. 694, 807- 09.) Commission approval was granted on February 14, 1992. (Adams Exh. 31.) Amidst these mix- ups, corporate governance of RBI was in full control of Mr. Parker and he knew that to be the fact. Erroneous Ownership Reports 44. RBI’s November 1991 transfer application was prepared by one of Parker’s communications counsel (Ms. Friedman) in cooperation with RBI’s bankruptcy counsel (Mr. Mercer). Mr. Parker denied that he had any role in computing the transferee share percentages that appeared in the application. (Tr. 807- 08.) He also did not recall discussing or thinking about whether RBI needed to report that stock as already issued. (Tr. 922- 23.) He believed the overriding fact was that during the pendency of the November 1991 transfer application, RBI remained a debtor in possession and would continue as such until creditors were satisfied. (Tr. 882- 84, 923.) Ms. Friedman compiled the information and exhibits and made certain the form was prepared correctly. Ms. Friedman normally received filing information from the client. (Tr. 2107.) Mr. Parker provided or was responsible for the stock ownership data relied on by Ms. Friedman for reporting to the Commission. 45. The long form application filed in November 1991, incorrectly listed and incorrectly omitted directors. Thereafter, on April 16, 1992, RBI filed its 1992 ownership report. (RBI Exh. 11.) RBI listed its directors as Mr. Parker, Dr. Aurandt, Mr. Linton, Dr. Clymer and Dr. Fischer. RBI reported that it had not issued 50,812 shares to Dr. Aurandt because of the garnishment issue. Mr. Parker signed the report as RBI's president. (RBI Exh. 11; Tr. 814.) RBI failed to list the MSA in a contemporaneous ownership report. It merely was referenced in a document filed on February 7, 1992, which transmitted an amendment to the pending application to transfer control of WTVE( TV). 46. RBI acknowledges that its 1992 ownership report repeated the same errors relative to directors. (RBI Exh. 14.) In April 1993, Parker certified that the 1992 Ownership Report was accurate even though the slate of directors selected by Parker in 1991 continued to control RBI, a significant fact never reported to the Commission. (RBI Exh. 11.) According to Mr. Parker, the errors acknowledged by RBI occurred because of unexplained inadvertences on his part. (Tr. 812, 814- 15.) The evidence establishes that from 1992 to 1997, the Commission was deprived of sufficient information concerning the corporate control of RBI. And as indicated above, such confusion in corporate control worked to the advantage of Mr. Parker. Renewal Expectancy 47. A renewal expectancy is awarded only for substantial service throughout the renewal period. The relevant time period for considering RBI's entitlement to a renewal expectancy began August 1, 1989, and ended August 1, 1994. 13 Federal Communications Commission FCC 01D- 01 14 Minimal Public Service Programming 48. RBI devoted 2. 2% of its air time to issue responsive programming in the third quarter of 1989. (RBI Exh. 8, App. A at 2.) By the end of the renewal period, that percentage had increased to approximately 7.6%. (Id.) RBI's exhibit reflects that 35% of such programming consisted of PSAs. Using different composite weeks and not including PSAs, Adams calculates that WTVE( TV) devoted 1. 5% of its air time to non- entertainment programming during the 1989- 90 period and 2.2% to such programming during the 1993- 94 period. (Adams Exhs. 3 at 1; 7 at 2.) These statistics show that RBI’s quantity of noncommercial programming was minimal. Ascertainment 49. George Mattmiller was the Station’s general manager from August 1989 until February 1992. (RBI Exh. 6.) He was previously employed by Mr. Parker in Seattle, Washington. (Tr. 542 - 43.) He did not have ties with the Reading community when he joined RBI. Mr. Mattmiller was responsible for ascertaining community problems, needs and interests. The Station’s methodology that was in place when Mr. Mattmiller arrived, involved receiving reports of staff contacts with members of the community. (Tr. 571.) Station personnel also used a local newspaper, the Reading Eagle, and WTVE( TV) staff made a review of undefined “material that was sent to the station.” (Tr. 572.) Newspaper local stories accounted for about 90% of WTVE( TV) ’s ascertainment on a range of topics. (RBI Exh. 6 at 4.) Another source that Mr. Mattmiller mentioned was a broadcast segment entitled “Man on the Street” which provided local input while on- the- air. (Tr. 572.) 50. In mid- 1992 and through the remainder of the renewal period, RBI expanded its ascertainment efforts by sending questionnaires to business leaders and schools and by contacting charitable organizations such as the United Way, Easter Seals, American Cancer Society and the American Red Cross. (RBI Exh. 6 at 5; Tr. 453- 55, 577.) Station staff also questioned guests who appeared for program taping at the Station's studio and students during classroom visits. (Tr. 1698.) Mr. Daniel Bendetti, another station manager during the renewal period, testified that they collected these ascertainment results quarterly. (Tr. 1732.) Ralph Tobias, another station employee responsible for ascertainment, determined which issues were significant. He then used such issues to pose questions to local residents in conjunction with the taping of "Streetwise," a two- minute program that aired twice daily. (RBI Exh. 8, Apps. C at 17 and D at 14; Tr. 457, 576, 588- 89.) Ms. Kimberley Bradley collected information for program material and potential guests who could discuss community concerns on WTVE’s "In Touch." Program. (Tr. 460- 71, 581- 82.) 51. Mr. Bendetti testified that the ascertainment at WTV( TV) did not provide input into the Station’s "public service" programming. (Tr. 1666- 67, 1732- 33.) RBI relied more on material taken from satellite feeds which station personnel deemed pertinent to the station's viewing area. RBI also relied on material supplied by eleemosynary organizations such as the March of Dimes. (Tr. 461- 65, 1734.) Mr. Parker served as WTVE( TV) ’s general manager throughout the renewal period. But he did not tabulate ascertained needs; nor did he direct anyone to do so. Mr. Parker could not recall whether station personnel ever produced for his 14 Federal Communications Commission FCC 01D- 01 15 review a document that indicated what were the community's significant problems. (Tr. 830- 31.) A comparison of headlines from the Reading Eagle (Adams Exhs. 3- 7) with WTVE( TV) 's "Issues and Programs Report[ s]" (RBI Exh. 8, Apps. C through W) shows that RBI did not focus attention on issues affecting Reading and the surrounding area. Ascertained community problems either merited a public service announcement or nothing at all. When asked to identify a programmatic response to ascertained community problems, Mr. Parker could either not identify any such program or could point only to public service announcements. (Tr. 832- 47). Home Shopping 52. The majority of RBI’s programming is “home shopping,” a format which passed the public interest test under a formal assessment. In re Home Shopping Station Issues, 8 F. C. C. Rcd 5321 (1993) (home shopping stations serve the public interest, the programming does not adversely effect a renewal expectance, and home shopping stations are eligible for must carry cable carriage). Id. While not unanimous choices, those were the policy determinations made by the Commission. And Section 4 (g)( 2) of the 1992 Cable Act specifically directs that the Commission not use home shopping format as a basis to deny a renewal expectancy. 53. The Commission otherwise decided to forego guidelines regarding specified quantities of types of various non- entertainment programming. See Commercial TV Stations, 98 F. C. C. 2d 1076, 1090- 92 (1984). However, the renewal standard requires that a licensee address community issues with responsive programming. The licensee is free to choose the programming that meets the needs. But it must not be a nominal effort that effectively defaults on its obligation to contribute to the discussion of issues facing the community. Commercial TV Stations, supra; Office of Communications of the United Church of Christ v. F. C. C., 707 F. 2d 1414, 1431 (D. C. Cir. 1983). A challenger must show that the licensee failed to address community issues in overall programming, not just with respect to specific issues that are not being addressed. Must Carry 54. Station WTVE( TV) operated as an affiliate of the Home Shopping Network during the 1989- 94 license term. (RBI Exh. 8.) It was classified by Arbitron, Inc. as a station in the Philadelphia Designated Market Area or "DMA”. (RBI Exh. 6 at 2.) Reading is geographically situated between the Philadelphia metropolitan area and the Harrisburg- Lancaster- Lebanon- York DMA. Id. WTVE( TV) was the only television station licensed to Reading and serving Berks, Lebanon, Chester, Lancaster, Schuylkill and Lehigh counties. WTVE( TV) was competing with stations from Philadelphia, including the major network stations and independent stations. (RBI Exh. 13.) In 1992, "must carry" was enacted, which significantly upgraded WTVE's( TV) household reach when cable systems serving the western portions of Philadelphia were required to begin carrying WTVE( TV) ’s signal. (RBI Exh. 6 at 3.) But the advent of “must carry” did not provide a total solution for the Station’s financial plight. WTVE( TV) also shared the Philadelphia DMA with WHSP- TV, Vineland, New Jersey, another Home Shopping Network affiliate. (Id. at 2.) Both stations provided the same home shopping programming. Cable 15 Federal Communications Commission FCC 01D- 01 16 systems were required only to carry the signal of the station closest to their respective headends. As a result, WTVE( TV) lost cable carriage in the eastern portion of the Philadelphia DMA which is joined with adjoining portions of New Jersey and Delaware. (Id.) 55. It is found that RBI relied on must carry cable carriage to meet much of its non-commercial programming responsibilities without incurring costs of producing the programming. This permitted some non- home shopping programming to be introduced in Station WTVE( TV) ’s signal area. It was a business decision having no impact on this decision. This predominance of “home shopping” on WTVE( TV) was not shown to have impeded responsive non- commercial programming. RBI’s failure to sufficiently identify and address local issues was a failure separate and apart from providing a “home shopping” format. Bankruptcy As Programming Factor 56. RBI was in Chapter 11 from 1986 until March 12, 1992. Memorandum Opinion and Order, FCC 99M- 47, supra at ¶¶ 11- 13. The condition of bankruptcy is not conducive to the operation of a TV broadcast station. But there is no evidence that RBI’s voluntary bankruptcy so impeded RBI that it should be excused from meeting its public interest duties to the Reading community. RBI received Commission approval to operate as debtor- in- possession in 1988, and also received Commission approval for a reorganization plan to emerge from bankruptcy in 1992. (Id.) 57. Mr. Parker succeeded in bringing RBI out of bankruptcy. But he was not able to operate the company in the black during the renewal period. Station WTVE( TV) was not operated in a profitable manner at any time before and during the renewal period. The Station operated at a loss during each year of the 1989- 94 license term. A station manager testified that RBI’s financial condition “was always unstable.“ (Tr. 1711 and RBI Exh. 5.) 58. As a result of its adverse financial condition, the Station’s equipment became outdated and “antiquated” to such an extent that critical equipment, such as the Station transmitter, had repeated outages. (Tr. 1153- 1172.) Evidence introduced by Adams also shows that the Station was understaffed during the renewal term. (Adams Exh. 16 at 5; Tr. 562- 563.) 9 The small size of the staff adversely effected the Station’s ability to produce and broadcast public 9 Adams sought to introduce bulky records on employment levels which were rejected. (See Adams Exhs. 33- 38, rejected January 10, 2000.) Rejected exhibits included a ream of documents that would add over an inch of data to the record on a fact that was adequately established by Adams Exhibit 16 and an RBI admission. Argument was heard when the Adams evidence was rejected. (Tr. 725- 726.) This was a routine evidentiary call that was within the discretion of the Presiding Judge that need not be revisited. See 47 C. F. R. §1.243 (Authority of presiding officer.) 16 Federal Communications Commission FCC 01D- 01 17 service programming. (Tr. 1666, 1691.) There is no evidence offered by RBI to show that funds or resources were diverted from a profitable operation or from the compensation of Partel and its affiliates in favor of supporting public service broadcasting. 10 59. In written testimony, Mr. Parker promised to “focus more energy and resources on the station’s public service initiatives.” (RBI Exh. 5 at1.) The evidence indicates to the contrary. Mr. Bendetti, a station manager during the renewal period, testified that RBI, through Mr. Parker, decided to cut operating costs. He instructed the staff to limit efforts to produce public service programming and to avoid out- of studio productions and studio productions that would require a “crew.” (Tr. 1674- 1679.) This policy of holding back from public service broadcasting prevailed from 1990 to 1993. (Tr. 1680.) To meet this decrease in public oriented programming, in 1993, the staff at the Station took it upon themselves to increase the production of PSAs. (Tr. 1681.) While that was a commendable partial stopgap effort, it did not fill the serious programming gap created by the Parker initiated cut- backs. Programming Methodology 60. WTVE( TV) broadcast “home shopping” fare over 53 minutes to 55 minutes per hour. The remaining five to seven minutes were dedicated to a mixture of public service offerings, public service announcements, commercials, promotional announcements (“ PSAs”), and required station identifications. (RBI Exh. 8 at 1.) At times, non- entertainment programs were aired that exceeded 15 minutes in length. These included religious programs, children's programs, political programs, and special or seasonal programs. (Id.) 61. WTVE( TV) did not broadcast non- entertainment programming on a regularly-scheduled basis. Public service programming usually appeared during five to seven minute windows. No particular program aired during the same time slots on a daily or weekly basis, and each particular program was often repeated fifteen or more times during its run. (RBI Exh. 8, App. S at 66- 68, 74 (" News to You"); Tr. 471- 73.) When WTVE( TV) began to broadcast the program, it did not appear at any regular time. (RBI Exh. 8, App. W at 149- 50.) Therefore, it would be extremely difficult for a member of the public to anticipate and plan for RBI’s non-commercial fare. Neither the Reading Eagle nor any TV guide publication advised viewers when any particular WTVE( TV) program would be broadcast. (Adams Exh. 11; Adams Exh. 12; Tr. 591- 93, 1795.) Mr. Parker acknowledged that the station primarily addressed community problems through the airing of PSAs which aired only when time was available during the daily schedule. (Tr. 472- 73.) Mr. Parker asserted that RBI was justified in relying on PSAs because of the demands of home shopping and the station's negative financial condition. (Tr. 847- 49.) It is concluded from this evidence that throughout the renewal period, interested viewers had great 10 There was an evident economic incentive to increase air time for home shopping programming in order to make the Station more attractive to cable systems. This posed a tension since those systems might have chosen to carry satellite- feed home shopping programming rather than RBI’s public service signal. (Tr. 1681- 82, 1711.) 17 Federal Communications Commission FCC 01D- 01 18 difficulty in ascertaining the time when a particular non- commercial program would appear on WTVE( TV). (Tr. 473, 476, 591- 93, 598, 1794.) RBI did not meet its duty to make available public issue programming. Noncommercial Programming 62. In reviewing the expanse of evidence in this case, it was found that during the renewal period, WTVE( TV) did broadcast some locally produced programs in response to ascertained needs. Such other public service "programs” identified as PSAs in RBI's issues and programs reports were: "Streetwise," "In Touch," "News to You Healthbeat Elderly Report," "Community Outreach Take 3," and "Kids Korner." (See RBI Exh. 8, passim.) 63. "Streetwise" was a two- minute interview program produced by RBI in which members of the public were asked to expound on local issues. (RBI Exh. 8 at 2; 588- 89.) The program was aired between August 1, 1989 and November 27, 1989. (RBI Exh. 8, App. C at 17, App. D at 14.) In the third quarter of 1989, the questions ranged from flag burning to literacy, from the virtue of freedom to prison inmates working for their keep. (RBI, Exh. 8, App. C at 16.) In the fourth quarter of 1989, the "questions ranged from hostages in Beirut to rights Americans take for granted. (RBI Exh. 8, App. D at 14.) "Streetwise" aired twice a day, generally around 9: 20 in the morning and 6: 20 in the evening. (RBI Exh. 8, App. C (third quarter 1989) at 16, App. D (fourth quarter 1989) at 14.) 64. “In Touch” was a three- minute program that featured a host and a guest discussing RBI’s selected community topics (health, welfare). (RBI Exh. 8 at 2; Tr. 463, 581- 83.) Each program focused on one topic that was determined to be an issue of public concern based on local mail and faxes recommending topics. . (Tr. 458, 582.) The topic could appear on more than one segment as part of a series. (RBI Exh. 8 at 2.) In 1989, "In Touch" was broadcast twice a day in the late morning or early afternoon and again in the early evening. In 1993, it aired three times during any given day. (RBI Exh. 8, App. B, C, D, Q, R.) Topics included local concerns for consumer protection (RBI Exh. 8, App. C at 13); foster parenting; pet care; drunk driving; speech and hearing ailments and treatments; a youth exchange program; making marriage work; AIDS and other health- care topics. Participants included a speech therapist, a midwife, a dietician, a gastroenterologist, the deputy attorney general of Pennsylvania's Bureau of Consumer Protection, the director of the Berks County Humane Society, a neurologist, a laboratory medical director, and a chiropractor. (RBI Exh. 8, App. C at 7- 8,13- 14, App. D at 5, App. Q at 29- 30.) 65. "News to You" aired in two to three- minute segments. It treated issues such as health, family concerns, consumer issues and crime/ safety - - - ." (RBI Exh. 8 at 2.) Material for the program was downloaded from satellite feeds. RBI inserted "News to You" segments into available time slots, usually twice a day. (Tr. 460- 64, 472- 73.) 66. "Healthbeat 'or "Health Report" began airing in the fourth quarter of 1992. (RBI Exh. 8, Apps. C through 0.) It ran for three minutes. Station staff obtained "stock footage” from a newsfeed company and localized the features with “wraparound information” about socially directed charitable groups and organizations such as the American Cancer Society, Community Hospital, Reading Hospital, and the American Red Cross. (RBI Exh. 8, App. P at 17.) 18 Federal Communications Commission FCC 01D- 01 19 67. "Elderly Report" also began airing in the fourth quarter of 1992. (RBI Exh. 8, Apps. C through P.) It usually ran for three minutes. RBI utilized "stock footage” from a newsfeed company and localized the features with “wraparound information” about the area senior groups" such as the Berks County Office of Aging, the Berks County Senior Citizens Council, and the Temple Association for Retired Persons. (RBI Exh. 8, App. P at 8- 9.) 68. "Community Outreach" began airing in the second quarter of 1993. (RBI Exh. 8, Apps. C through R.) RBI produced this three- minute program featuring a host and guests who would discuss a topic of local interest. Topics included local volunteer efforts and organizations; cooking tips; wedding preparations; taking a cruise; reducing driving while under the influence of alcohol; other issues related to alcohol; child abuse; recycling/ community clean- up; home safety; and the importance of dietary calcium. (RBI Exh. 8, App. R, S, T, U, V; Tr. 477.) 69. "Take 3" was a three- minute program that local youths produced with assistance from WTVE( TV). It dealt with issues of interest to young viewers. (Tr. 465- 66.) "Take 3" began airing in the second quarter of 1993. Examples of topics include results of driving under the influence of alcohol, musical instruments in high school bands, selecting a college, keeping food safe while camping, and a presentation of the inner workings of the Reading Planetarium. (RBI Exh. 8, App. R, S, T at 19.) 70. "Kids Korner” presented programming that was 90 seconds to three and one- half minutes in duration. The program was produced by RBI and dealt with issues that were of interest to children. (RBI Exh. 8 at 3, App. B, App. R, App. V.) WRVE( TV) began broadcasting "Kids Korner” in the second quarter of 1993. (RBI Exh. 8, App. Q, App. R.) Examples of issues covered include pet care, dinosaurs, recycling, the life of Milton Hershey, and an elementary school science curriculum. When "Kids Korner" aired, it could appear as many as three times per day. RBI's "Children's Issues and Program Report" identifies "Kids Korner" as a public service segment. (RBI Exh. 8, App. X, at 169, 219- 22.) From the description provided by RBI, it will be counted towards RBI’s locally produced programming. 71. In the second quarter of 1993, RBI began broadcasting politically oriented programs that were produced at the Pennsylvania state house. The programs were designed to keep "viewers apprised of various government topics." (RBI Exh. 8, App. R at 22.) RBI would alternate between programs produced by the Democrats and the Republicans. (Tr. 1694.) The programs featured state legislators who represented Reading and/ or the surrounding area. (RBI Exh. 8 at 7.) Programs were approximately 30 minutes in length and were aired on Sundays between 9: 30 a. m. and 11: 30 a. m. On occasion, WTVE( TV) would broadcast two programs on the same Sunday. (RBI Exh. 8, App. B at 6.) But such political programming was not broadcast during election campaigns. (Tr. 1694.) 72. "The Informative Moment" was a Spanish- language program produced by RBI to address issues of interest to the Hispanic community. (RBI Exh. 9 at 3; Tr. 470.) It appeared in April 1994 and ran on three minute segments. (RBI Exh. 8, App.) In a significant segment, a host and guest discussed the latter’s struggle to free himself from drugs. The program was broadcast at approximately 8: 20 in the morning and again at 8: 20 in the evening. (RBI Exh. 8 at 5, 11.) 19 Federal Communications Commission FCC 01D- 01 20 73. "For the People" was a three- minute program produced by RBI to focus on state and local political issues. (RBI Exh. 8 at 3; Tr. 470.) "For the People" appeared at various times during the days on which it aired. The program appeared in June 1994, shortly before the end of the renewal period. (RBI Exh. 8, App. B.) 74. RBI listed "Around Our Town" as a locally- produced program which focused on topics related to the local environment and community events. (RBI Exh. 8 at 3.) Public Service Announcements 75. RBI broadcast PSAs throughout the renewal period and averaged between 30 to 50 PSAs throughout the day. (Adams Exh. 7 at 5- 12, 22- 32.) Some of the PSAs were produced in-house. Others were obtained from local, regional or national organizations. RBI also would work with local chapters of national organizations to localize PSAs. Two such PSAs won awards from the Pennsylvania Association of Broadcasters. (RBI Exh. 8 at 3- 4.) 76. PSAs broadcast by WTVE( TV) covered such topics as local events; pet adoption; missing children; apprehension of suspected criminals; health and safety; education; civic and social concerns; the environment; persons with disabilities; the elderly; children; the armed forces; and religious groups. (RBI Exh. 8 at 4- 6.) The timing and quality of the PSAs were attested to by community witnesses and in letters from listeners that were received by RBI throughout the license term. (RBI Exh. 8, App. H; App. L, App. N, App. 0, and App. P.) Children's Programming 77. In the fourth quarter of 1992, RBI broadcast several children's programs. (RBI Exh. 8, App. P, App. X.) WTVE( TV) ’s earlier broadcasts for children were limited to PSAS. (RBI Exh. 8, App. X.) None of the programs were locally produced. RBI would air its children's fare on Saturday and/ or on Sunday mornings. 78. From October 31, 1992 to December 5, 1992, RBI produced and broadcast “Go For It," a 30 minute program which aired at 9: 30 a. m. on Saturdays. (RBI Exh. 8, App. X at 18- 19, 23.) Guests included current or former professional athletes who stressed the importance of fitness and who provided advice about developing various sports skills. 79. From November 1, 1992 through December 13, 1992, RBI broadcast a half- hour program called "Candid Kids Club." (RBI Exh. 8, App. X at 24.) Topics covered by the program included learning to fly, health tips on warm- up exercises, the life of a sea mammal, Magic Johnson's life with the HIV virus, a book review, and a movie review. 80. On December 19, 1992, RBI began broadcasting "Adventure Pals," a 30- minute program produced by Christian Children's Associates. The program contained no product advertisements or commercial breaks. The program presented a mix of stories, music, clowns, puppets and special guests to address issues of interest to children. Other topics included self- 20 Federal Communications Commission FCC 01D- 01 21 esteem, parent/ child relationships and concern for others. (RBI Exh. 8, App. X at 18, 22.) It cannot be determined from this record whether "Adventure Pals" aired weekly through the end of the renewal period. 11 Station records indicate that it usually appeared on Sundays at 8 a. m. (RBI Exh. 8; App. X at 22; RBI Exh. 9; Adams Exh. 7 at 81.) 81. On January 24, 1993, RBI began broadcasting "Widget." (RBI Exh. 8, App. X at 141.) "Widget” was a 30- minute program that covered topics relating to protection of the environment. RBI usually broadcast the program on Sundays at 8: 30 a. m. (Adams Exhs. 6, 7 at 81; RBI Exh. 8, App. B.) 82. During the first quarter of 1993, RBI broadcast three other children's programs during the renewal period: "Kids International," "Nation of Winners," and "How Do You Zoo?" "Kids International" appeared on February 27, 1993, between 8: 40 and 9: 10 a. m. That program presents scripture texts taken from educational Bible videos. RBI aired "Nation of Winners" on March 7, 1993, between 6: 30 and 7: 00 a. m. It contained "interviews and segments with children explaining how everyone needs to keep fit." "How Do You Zoo?" appeared on February 27, 1993, between 9: 47 and 10: 00 a. m. 12 It presented animal facts and included a question and answer segment involving children. 83. In 1993, RBI began broadcasting "The Children's Room" and "Twinkle." The former focused on children's literature and was designed to instill an appreciation for reading in children ages four through eight. The latter was an animated program featuring a magical character with the power to make dreams a reality. The character's adventures were intended to teach integrity, responsibility and means to save the environment. The programs ran for approximately 30 minutes and aired from 6: 00 to 7: 00 a. m. on Sundays. (RBI Exh. 8, App. S, T, U, V; RBI Exh. 9; Adams Exh. 7 at 80.) Special Programming 84. RBI also broadcast "special long- form programming" during the renewal period which included inspirational and religious programming (often aired during the Christmas season), documentaries, and miscellaneous specials. Examples of such specials appear in the station's Programs/ Issues Reports. (RBI Exh. 8, App. C at 23- 27; App. L at 13; App. P at 15- 16.) 11 RBI's Children's Issues and Program Reports do not list "Adventure Pals" after the first quarter of 1993. (RBI Exh. 8, App. X.) Nonetheless, WTVE( TV) 's logs and its Programs/ Issues Reports continue to mention the program as well as other children's shows aired by WTVE( TV) during the renewal period. (RBI Exh. 8, App. R; Adams Exhs. 6, 7; RBI Exh. 8, App. B, U. V.) Despite the conflict, the program receives credit. 12 "How Do You Zoo?" was rebroadcast in the fourth quarter of 1993. (RBI Exh. 8, App. T at 10.) 21 Federal Communications Commission FCC 01D- 01 22 85. RBI broadcast local weather reports several times a day. (Tr. 478; RBI Exh. 8, App. 0; Adams Exh. 6 at 23- 24, 80- 8 1; Adams Exh. 7 at 25- 26, 31.) RBI also provided for broadcasting a variety of religious shows throughout the license term. (RBI Exh. 8 at 6.) Lack Of Local News 86. Mr. Parker defended the lack of local news with a rationalization that the market served simply could not support program- length local newscasts. (Tr. 1746, 1749- 51.) The Station’s service- area received news from Philadelphia’s major network stations and from other media sources, both electronic and print. (RBI Exh. 5, Appendix A.) But that was a totally unacceptable justification for depriving the community of local news. News about Reading would occasionally be broadcast by the Lancaster, Pennsylvania station and would more rarely appear on the Lebanon or Philadelphia stations. (Tr. 1746, 1786.) RBI saved money by relying on others. But this business practice of using someone else to furnish the news only made RBI a “free rider” while creating a local news void that was never filled. As would be expected, the Station received complaints about the absence of regularly scheduled newscasts. By knowingly depriving the community of local news coverage, RBI breached its duty to serve the needs of the community. Public Witnesses 87. RBI submitted depositions from persons representing organizations in the local Reading area. The deponents expressed their views on how RBI addressed areas of concern. In rebuttal, Adams submitted depositions from persons who were not satisfied with the way RBI addressed concerns. The conflicting views are summarized below. Witnesses Sponsored By RBI 88. Warren Haggerty, a life- long resident of Reading, was its mayor from 1987 through 1995. He recalled appearing on a show called the "The Minute with the Mayor." A host would ask a question and Mr. Haggerty would talk for a minute or so in response. Mr. Haggerty does not know when the program was actually aired. 13 Mr. Haggerty also recalled a community promotion campaign called "Working for a Greater Reading," which aired on WTVE( TV) as a PSA from the spring of 1992 through the end of 1993. (RBI Exh. 25, at 11, 25, 27- 30, 32- 35, 37- 40, 42- 45,47- 48, 50.) 13 Although presentation of the program occurred after the renewal period ended, it is accepted that the idea for the program occurred before the renewal period expired. RBI gets some credit. 22 Federal Communications Commission FCC 01D- 01 23 89. Sandra Kissinger, life- long resident of Reading, worked with the Berks County Chapter of the American Red Cross and used media sources to promote the Red Cross in the community. (RBI Exh. 26 at 5.) She recalled an RBI promotion for the Red Cross following a major fire which destroyed an entire city block. WTVE( TV) also aired Red Cross PSAs about water safety during the second and third quarters of 1991 and the second quarter of 1992. (Id. at 14- 15, 42, 44, 46- 48.) The Station assisted the local chapter of the Red Cross with a lupus support group in the third quarter of 1992. (Id. at 16, 50.) WTVE( TV) worked with the local chapter of the Red Cross in connection with the program, "Health Beat." (Id. at 17- 18, 52.) The Station worked with the Red Cross in assisting hurricane victims. (Id. at 18- 20, 53, 55.) The Station also sponsored a ham radio club to supply emergency relay communications and when there was no emergency, to promote a flea market to fund youth services programs. (Id. at 20- 22, 57, 60, 62.) WTVE( TV) aired PSAs regarding an open house at the Red Cross to aid flood victims. 14 (Id. at 23- 24, 63, 65.) RBI helped raise funds for the Red Cross and aired PSAs warning about the dangers of heat stroke and informing about health and safety classes. (Id. at 25- 30, 67.) Station WTVE( TV) was "always there" whenever the Red Cross needed it to promote anything. (Id. at 30.) 90. Linda Witman, a life- long resident of the Reading area, is the executive director of the Berks County Chapter of the March of Dimes. (RBI Exh. 27 at 4- 5.) WTVE( TV) made a three- minute promotional tape of a fundraising event sponsored by the local chapter of the March of Dimes. (Id. at 7- 9, 34.) The Station also aired the March of Dimes PSA, which was produced annually and served as the agency's primary fundraiser. (Id. at 8, 35- 37, 4041.) WTVE( TV) also dealt with issues related to pregnancy. (Id. at 12, 28- 29, 31- 32, 39.) Ms. Witman believed that the relationship with WTVE( TV) raised public awareness of the mission of the March of Dimes while encouraging donations. (Id. at 15.) 91. Phyllis Watts is the administrator of Children's Rights of Pennsylvania, Inc. Her organization provided pictures of missing children for the Station to show, which RBI would convert into one- minute spots. She found WTVE( TV) 's airings to be extremely helpful." (RBI Exh. 28 at 7.) Ms. Watts affirmed that WTVE( TV) broadcasts occurred throughout the license term and she believed that WTVE( TV) 's efforts were "very good" in comparison with those of other area television stations. (RBI Exh. 28 at 5, 80, 103- 105.) 92. Ralph Trainer was executive director of "Abilities in Motion," which provided services throughout Berks County to people with disabilities. (RBI Exh. 29 at 5.) He was coordinator for Americans with Disabilities Act and a peer counselor. (Id. at 6.) Mr. Trainer testified that WTVE( TV) aired programs on behalf of the “Office of Aging” and on behalf of “United Cerebral Palsy”. (Id. at 9- 12, 52- 54, 56, 58.) Mr. Trainer concluded that the assistance his organization received from WTVE( TV) was comparable to that provided by other local media. (Id. at 12- 13.) 14 The "Community Outreach" program that related to flood victims was broadcast after the renewal period. Id. at 65- 66. But the programming was created before the renewal period, served a significant public interest, and RBI gets some credit. 23 Federal Communications Commission FCC 01D- 01 24 93. Ray Schacht verified that beginning in 1993, he hosted taped programs such as "Elderly Update" which were meant to address problems of the elderly. (RBI Exh. 30.) However, he was unaware of what was done with the programming after it was taped. (Id. at 18.) 94. Stanley J. McCarty has resided in the Reading area for 50 years. He was a police officer for 28 years. At the time of his deposition, he was the crime prevention supervisor and had held that position for nine years. (RBI Exh. 32 at 4- 5.) He testified that WTVE( TV) produced Pennsylvania Crime Stopper spots, which name and portray people who are wanted in connection with serious crimes. (Id.) He was also involved in producing WTVE( TV) sponsored PSAs that covered a variety of topics. (Id. at 12- 13.) The station provided time for "Reading React," a group that monitors a local emergency radio band. (Id. at 15- 16, 58, 60.) 95. Thomas R. Caltagirone has been a member of the Pennsylvania House of Representatives for 23 years. Currently, he is Chairman of the Commerce and Economic Development Committee. He had served as Chairman of the Consumer Affairs Committee and of the Judiciary Committee. (RBI Exh. 33 at 4.) He described the program "Legislative Journal" as a summary of legislative events that occur each month in the Pennsylvania state legislature and confirmed that WTVE( TV) carried his appearances on "Legislative Journal" during 1994. (Id. at 8, 46- 47.) He also verified WTVE( TV) 's broadcasting of the PSAs listed in the station's second quarter of 1994 Issues and Programs Report. (Id. at 49, 52- 54.) Mr. Caltagirone further affirmed that other programs concerning state legislative affairs were broadcast on WTVE( TV). (Id. at 10, 12- 13.) Only WTVE( TV) and a cable channel aired legislative report programs that “concerned public issues and/ or public services”. (Id. at 13.) The Station's broadcasts of legislative reports continued into the third quarter of 1994 and reported the first impeachment in Pennsylvania of a state supreme court justice. (Id. at 13- 14.) Representative Caltagirone believed that WTVE( TV) did an exemplary job of allowing public access to these governmental related public interest programs. (Id. at 15.) 96. Monica Ruano- Wenrich, a long- term resident of the Reading area, has been an employee of the United Way of Berks County since July 1991. (RBI Exh. 34 at 4.) She testified that in 1993, WTVE( TV) broadcast PSAs concerning the United Way. (Id at 9, 27, 29- 30.) 97. Ronald Rouse has resided in the Reading area for 15 years. He produced segments for the WTVE( TV) program "Minority Voices." (RBI Exh. 35 at 4.) He recalled viewing the Station's calendar of events and the local weather. (Id. at 8.) "Minority Voices" did not appear on WTVE( TV) during the renewal period. But it was created during the renewal period and receives some credit. 98. Richard Bennett is executive of the Hawk Mountain Council of the Boy Scouts of America. He has resided in the Reading area continuously since 1988. (RBI Exh. 36 at 4.) Mr. Bennett related that Mr. Bendetti spoke at two area high schools in 1993 on careers in television in connection with a career awareness program that was sponsored by the Boy Scouts. (Id. at 7- 8, 15.) Mr. Bennett recalled WTVE( TV) produced PSAs which focused on the environment and on belonging to the Boy Scouts as opposed to a street gang. (Id. at 11- 12, 18- 20.) 24 Federal Communications Commission FCC 01D- 01 25 99. Douglas F. Didyoung, Sr. is a life- long resident of the Reading area. (RBI Exh. 37, at 4.) During the renewal period, Mr. Didyoung was the executive director of Prisoners of War/ Missing in Action, Forget- Me- Nots, Inc. The organization is a public awareness group consisting of veterans and civilians who endeavor to have the federal government supply answers about soldiers still missing from various wars. WTVE( TV) aired videos supplied by his organization which related to the construction of a Vietnam War Memorial in Berks County. The Station also aired allegations that the federal government covered up knowledge about American soldiers held captive long after the Vietnam conflict ended. (Id. at 8- 10, 25, 28, 33, 35.) He also confirmed that the station had interviewed him in connection with those veterans' issues. (Id. at 12, 14.) 100. Joan Breisch, a life- long resident of the Reading area, is the executive director of the Literacy Council of Reading/ Berks. (RBI Exh. 38 at 4- 5.) The Literacy Council is a non-profit organization that teaches adults to read, write and speak English. Ms. Breisch was with the Literacy Council throughout the renewal period. (Id. at 5.) She recalled the station airing PSAs during the renewal period and one longer program concerning issues related to literacy. (Id., passim.) She recalled other PSAs shown on WTVE( TV) concerning the Humane Society. (Id. at 15, 34, 40, 48.) 101. Daniel Dillard is executive director of the Burn Prevention Foundation. He served in that capacity throughout the renewal period. The organization develops and distributes educational materials and curricula related to the prevention of burn injuries. It also coordinates a comprehensive regional health care network of providers of burn care services. (RBI Exh. 39 at 3- 4.) Mr. Dillard confirmed that WTVE( TV) provided assistance in connection with a Burn Foundation fund raising event and that it did not charge the Foundation for its services. (Id. at 5- 7, 18, 20- 21.) Mr. Dillard confirmed that WTVE( TV) aired PSAs from the Burn Foundation as well as "News to You" segments concerning the Burn Foundation and the National Fire Protection Association. (Id.) 102. Michael A. O'Pake, a life- long resident of the Reading area, filmed a monthly 30-minute program entitled "Report to the People." (RBI Exh. 40 at 4- 5.) The program informs the people of Berks County about activities of the legislature in Harrisburg. (Id. at 5- 6.) Mr. O'Pake could not confirm whether the program aired during the renewal period. But he acknowledged that he was contacted by WTVE( TV) in July 1994 with regard to a program which was taped and aired later in 1994. (Id. at 7- 8, 39.) 103. Frederick C. Windbeck, Jr. is the founder and executive director of the Switchback Gravity Railroad Foundation, a volunteer organization established in 1986, which seeks to restore Pennsylvania's first railroad. (RBI Exh. 41 at 7- 8, 11.) WTVE( TV) worked with the Foundation to produce a low- cost film for the purpose of promoting the Foundation and informing the public about the railroad. (Id. at 9- 10.) Witnesses Sponsored By Adams 25 Federal Communications Commission FCC 01D- 01 26 104. John Loos has been coordinator of emergency management for Berks County since 1992. (Adams Exh. 44 at 6.) He has resided in the Reading area for 14 years. Mr. Loos coordinates the responses and recovery that follow an emergency. (Id. at 7.) In situations warranting warnings to the public, he uses an emergency alert which is handled by two county radio stations. (Id. at 9- 10.) Local broadcast media are needed to inform the general public in responding to such events as a weather emergency. (Id. at 10.) WTVE( TV) failed to contact him or his agency in connection with broadcasting information concerning a local blizzard. (Id. at 14- 15.) Mr. Loos recalled that WTVE( TV) only contacted him to do a "short program." Id. at 28- 29. However, nothing ever came of it. (Id. at 23.) Mr. Loos does not recall whether WTVE( TV) provided any air coverage with respect to any local emergency that occurred during the renewal period. (Id. at 28.) Those emergencies included two blizzards and one earthquake as well as related water main and electrical problems. (Id. at 17- 27.) 105. Lawrence Medaglia is the elected Registrar of Wills and Clerk of the Orphans Court for Berks County. He is a life- long resident of the Reading area. (Adams Exh. 45 at 5.) Previously, he was the administrative supervisor of the Berks County District Attorney's office. (Id. at 8.) So far as he knew, WTVE( TV) never broadcast any programming related to the District Attorney's office. (Id. at 13.) During the renewal period, the only television news coverage available was on Channel 69 from Allentown, the Philadelphia network channel, or Channel 8 from Lancaster. Mr. Medaglia was not aware of the station's airing of Crime Stopper PSAs or of its governmental affairs programming. (Id. at 19.) Such unawareness may have been due to the absence of WTVE( TV) program scheduling in the local newspapers. 106. James Troutman was the Berks County Clerk of Courts during the renewal period. (Adams Exh. 46 at 5.) He has been a resident of Berks County for 25 years. (Id. at 6.) Mr. Troutman attends meetings of the Berks County Commissioners. (Id. at p. 7.) WTVE( TV) never covered any meeting of the County Commissioners. (Id. at 13- 14.) Mr. Troutman had no knowledge of WTVE( TV) ever providing any news coverage of any local, state or national elections during the renewal period. (Id. at 17.) If Mr. Troutman wanted to view any local news stories he would watch Channel 8 from Lancaster. (Id. at 18.) 107. Roger Kimpland resided in the Reading area for 25 years. For the past 20 years, he has been the media coordinator for the Reading Area Community College. (Adams Exh. 47 at 5- 6.) If he wanted to watch coverage of local news and events during the renewal period, Mr. Kimpland would watch Channel 8 from Lancaster. (Id. at 9.) 108. David Baldinger is a television producer for Lucent Technologies. In the early 1980s he was the operations manager for WTVE( TV). He had also worked for Channel 69 in Allentown. He has resided in Reading since 1984. (Adams Exh. 48 at 5- 6.) While he was at WTVE( TV), the station had two news broadcasts per day during the week with two- minute updates during the evening and on the weekends. Newscasts were locally oriented and included coverage of city council and county commissioners' meetings, local elections and criminal enforcement activities. (Id. at 7- 8.) Mr. Baldinger recalled that after WTVE( TV) stopped covering local news sometime in the mid- 1980s, the only television coverage of local news was provided for a brief period over Channel 15 from Lebanon and, infrequently, from Channel 69 in Allentown. (Id. at 8- 9.) WTVE( TV) did not provide any local news coverage of interest to 26 Federal Communications Commission FCC 01D- 01 27 Reading or Berks County during the renewal period. (Id. at 10.) Mr. Baldinger testified that while Philadelphia stations would not have carried news of interest to residents of Berks County, some of the stations closer to Reading would have done so. (Id. at 14- 15.) Community Activities 109. The staff at Station WTVE( TV) made efforts at community outreach. Those included fund raisers for the Red Cross, Reading React (emergency radio band) and the Burn Foundation. The Station also produced a film for the Switchback Gravity Railroad Foundation. School visits were made at which Station personnel spoke to students about careers in broadcasting. Visits were made by local youth groups to the Station's studio. (RBI Exhs. 6, 8, and 36.) Station staff assisted local police in preparing an informational video and a local fire company in producing tapes of an anniversary parade. Local high schools were assisted in producing their own shows. (RBI Exh. 8, App. N, P.) WTVE( TV) produced a five- minute segment about the Reading Rehabilitation Hospital that aired on a local cable system. (Id.) The Station donated space for the translator of the Harrisburg public television station. (Id. at 32.) The Station distributed fliers that explained a non- alcoholic dairy beverage program, donated equipment and support services in conjunction with the production of a video on teenage drinking and driving, and participated in meetings of local women's groups and discussions on careers in broadcasting. (RBI Exh. 8 at App. V.) These are all commendable activities that receive credit. Compliance Failures To Report Information 110. To qualify for a renewal preference, the incumbent licensee must show a positive record of compliance with the Communications Act and Commission rules. Cowles Broadcasting, Inc., 86 F. C. C. 2d 993, 1017 (1981). Under the management of Micheal Parker, RBI is shown to have been lax and indifferent in reporting significant events. RBI has candidly acknowledged that it failed on multiple occasions to comply with Commission requirements to timely and accurately report officers, directors, shareholders and ownership/ operating agreements. (RBI Exh. 14; Tr. 624- 628, 814- 815.) Management Services Agreement 111. RBI entered into the MSA on May 28, 1989, under which Partel was to receive a substantial ownership interest in RBI. 15 (RBI Exh. 18 at 6- 19; Adams Exh. 19; Tr. 626.) The MSA was to be reported to the Commission within 30 days of the MSA’s execution under §1.65. On February 7, 1992, more than one year after its execution, RBI reported the MSA, but only as 15 The most legible copy of the MSA was introduced as Adams Exh. 19 that reflects signatures of Mr. Parker and Dr. Aurandt and their signatures’ notarizations on May 28, 1989. 27 Federal Communications Commission FCC 01D- 01 28 an amendment to the bankruptcy transfer application. (RBI Exh. 14.) The amendment contained no identifying reference to the MSA, did not direct the reader’s attention to the MSA in the material which followed, and gave no communicative information from which it might be determined that Parker would be in full charge of the business of Station WTVE( TV). RBI’s counsel, to his credit, disclosed in a composite document prepared for the hearing these many RBI “Reporting Failures.” Mr. Parker offered as explanation for delays in disclosure the fact that the MSA was a work in progress which needed court approval before achieving finality. (Tr. 625- 626.) But it was more than 18 months from the bankruptcy court’s approval that the Commission finally was informed that Parker via Partel had “full authority necessary to conduct the day- to- day operations of the Station.” (Adams Exh. 19 at 4.) There was no acceptable excuse offered for the delay. 112. Mr. Parker was to be elected chief operating officer with “full authority” to conduct those day- to- day operations. (Id.) Parker received the authority to make all personnel decisions and no checks for expenses were to be written without his express authority. (Id.) Approval of the MSA was obtained from the bankruptcy court on January 8, 1991. Thus, the Commission was not informed immediately after the court’s approval in January 1991, that Mr. Parker was RBI’s chief operating officer. (RBI Exh. 14.) Nor was the Commission informed in connection with the transfer of RBI’s license that Mr. Parker had been elected a director of RBI in August, 1989, at the same meeting in which the MSA was approved by RBI's shareholders. (Adams Exh. 13 at 3- 4.) (RBI Exh. 14.) Reference to the MSA appears towards the end of the document as a consulting contract between Partel, Inc. and the debtor that was court approved. (Adams Exh. 30.) The mere reference to the MSA in February, 1992 as cited in RBI Exh. 14, did not disclose that Partel was to receive a substantial ownership interest or that the Parker had full operational control over WTVE( TV). Officers, Directors and Shareholders 113. RBI has acknowledged that between October, 1991 and March, 1994, it misreported to the Commission the identities of RBI's officers and directors. (RBI Exh. 14.) Inaccurate reports were included in RBI's 1991 long- form transfer of control application, in its April, 1992 ownership report, and in its April, 1993 ownership certification. Mr. Parker signed the inaccurate reports in question which he brushed away as "inadvertence[ s]". (Tr. 815.) RBI's long- form transfer of control reflected that as late as November 1991, RBI stock had not been issued to individuals and entities who had received the right to the stock almost one month prior to the filing of the application. (Adams Exh. 28.) These matters were too important to be excusable “inadvertence[ s]”. Telemundo Option Agreement 114. In May, 1998, RBI entered into a Network Affiliation Agreement (“ Affiliation Agreement") with Telemundo Network, Inc. (RBI Exh. 11.) After a delay of one year, the Affiliation Agreement accompanied RBI’s Ownership Report dated March 31, 1999. Section 10( b) of the Affiliation Agreement provided: 28 Federal Communications Commission FCC 01D- 01 29 ... Telemundo shall have the right (the "Option"), in its sole discretion, exercisable upon sixty (60) days written notice to [RBI] (the "Option Notice Date"), to purchase all interests in [RBI] or substantially all of the assets [sic] of [RBI] for a purchase price equal to the greater of (i) $40 million or (ii) twelve (12) times the broadcast cash flow for the previous twelve (12) month period. -- -[ T] he Option shall be of no force or effect until such time as the grant of [RBI] 's license renewal application filed on or about April 1, 1994, with the FCC becomes final, that is, no longer subject to FCC or judicial review. (Id.) Thus, Telemundo held a conditional option to acquire ownership of Station WTVE (TV) and timely disclosure of that option was withheld without excuse. 115. Section 73.3613 of the Commission's Rules requires the submission to the Commission, within 30 days of execution, of agreements which relate to the present or future ownership of a broadcast license. Section 73.3613( b)( 3)( iii) specifically includes options as agreements required to be submitted. The Telemundo Affiliation Agreement was not submitted to the Commission until April, 1999, almost a year after it was executed. The fact that the option was contingent upon RBI succeeding in its renewal did not negate RBI’s duty to timely disclose the option. 116. By letter dated March 26, 1999, addressed to Ms. Ann Gaulke, an official of Telemundo, Mr. McCracken acknowledged RBI’s decision not to disclose the option: Because I never believed that Section 10( b) [of the Telemundo Affiliation Agreement] constituted an option that Telemundo could exercise at any time whether RBI desired to sell or not, I have not filed the [Telemundo Affiliation Agreement] with our ownership reports as an option affecting ownership. (Adams Exh. 87.) 117. A motive for the non- disclosure appears elsewhere in the McCracken letter: Our communications attorney has pointed out to us that the option set out in Section 10( b) could be construed in a way that could cause RBI considerable comparative disadvantage in the [to-be- designated comparative renewal] hearing, because it may seem that RBI could not be relied upon by the FCC to honor its promises to operate the station during the coming license renewal.... Thus, the last thing RBI wants is for the FCC to perceive that it seeks license renewal solely to unload the television station at the direction of an option holder. (Id. at 1.) Mr. McCracken and RBI were concerned that the agreement could harm their comparative case and therefore arbitrarily chose not to file in violation of §73.3613. 29 Federal Communications Commission FCC 01D- 01 30 Phase II Misrepresentation/ Lack Of Candor 118. Evidence was received on whether Mr. Parker engaged in a pattern of misrepresentation or lack of candor with respect to disclosures made to the Commission in six separate applications and one amendment. Five of the applications and the one amendment were filed while Parker was a principal of RBI. The disclosures concerned formal Commission decisions that were adverse to Mr. Parker’s character qualifications. (Adams Exhs. 49, 50, 51, 52, 53, 54.) The burden of proceeding and the burden of proof on the issue were assigned to Adams. The Bureau participated in the examination of witnesses and sponsored two documents and two stipulations. San Bernardino 119. On October 30, 1987, a Commission Administrative Law Judge issued an Initial Decision, which found, inter alia, that Mr. Parker was a real party- in- interest to the application of San Bernardino Broadcasting Limited Partnership (" SBBLP"), an applicant for a new television station in San Bernardino, California. The Judge based his finding on actions taken by Mr. Parker between the time SBBLP was organized and the time SBBLP's general partner fired Mr. Parker as consultant. Mr. Parker appeared as a witness and testified at the San Bernardino hearing. (Tr. 1922.) As a consequence of Mr. Parker's role, the Judge disqualified SBBLP's application from comparative consideration. Religious Broadcasting Network, 2 F. C. C. Rcd 6561 (Admin. L. J. 1987). Mr. Parker received and read a copy of the Initial Decision shortly after its release. (Tr. 2082.) 120. On July 5, 1988, the Review Board refused to award integration credit and held: We affirm, con brio, the ALJ's refusal to award "integration" credit to SSB; its application was and remains a travesty and a hoax. We need not repeat, point- by- point, all of the findings of fact which the ALJ has set out to support his conclusion that the progenitor and the real party- in- interest of SBB is definitely not Van Osdel, she being merely a fig leaf for the true kingpin of SBB, one Micheal Parker, who currently holds an interest in numerous other broadcast permits (I. D., para. 61), and who could not in his own identity have hoped to prevail in this very close comparative contest. * * * 30 Federal Communications Commission FCC 01D- 01 31 [W] e find no error in the ALJ’s core conclusion that Van Osdel is neither the sole nor dominant management figure --- but a convenient vizard [and SBBLP] is a transpicuous sham [cite omitted], and the ALJ justly rejected its attempted fraud. Religious Broadcasting Network, 3 FCC Rcd 4085, 4090 (Rev. Bd. 1988). (Emphasis added.) Mr. Parker received and read a copy of the Review Board's decision shortly after its release. (Tr. 2085.) 121. After the Initial Decision, the parties reached a settlement which the Review Board approved. 5 F. C. C. Rcd 6362, released October 31, 1990. SBBLP received $850,000 to dismiss its application. Religious Broadcasting Network, 5 F. C. C. Rcd 6362 (Rev. Bd. 1990). Mr. Parker did not directly share in the payment to SBBLP. He testified that he “never got a dime.” (Tr. 1945.) However, at one time Mr. Parker held a 20% interest in SBBLP which he transferred to a sister and her husband who did receive money from the settlement. Mr. Parker testified that his understanding at that time was that approval of the settlement resolved the real party- in-interest issue in favor of SBBLP, rationalizing that otherwise, SBBLP could not have participated in the settlement. (Tr. 2069- 70, 2074- 75.) Mt. Baker 122. One month after the Review Board found Mr. Parker to be an undisclosed real party- in- interest, the Commission denied an application for review filed by another entity controlled by Mr. Parker. (Tr. 747.) Mt. Baker Broadcasting Co., Inc., 3 F. C. C. Rcd 4777 (1988). Mt. Baker asked the Commission to reinstate a construction permit for a new television station in Anacortes, Washington. The staff had cancelled the permit due to a substantial variance found between what had been authorized and what Mt. Baker had actually constructed. The Commission denied reinstatement and held: [I] mproper construction did not occur through error or inadvertence; the facts clearly indicate an effort to deceive the Commission. (Emphasis added.) 3 F. C. C. Rcd at 4778. Mr. Parker received and read the Commission's decision shortly after its issuance. (Tr. 1908, 2076.) Notwithstanding the finding of an “effort to deceive the Commission”, Mr. Parker testified that he understood that the Commission did not have a problem with anyone’s character in the proceeding because no character issue was added and decided. (Tr. 2645.) The conclusion that the Commission had no problem is rejected in view of the decision’s language. 31 Federal Communications Commission FCC 01D- 01 32 Disclosures On Applications Form 315 123. Questions 4 and 7 of the Commission’s transfer application form asks for information regarding character qualifications. Question 4: Legal Qualifications: (a) Has an adverse finding been made, adverse final action taken or consent decree approved by any court or administrative body as to the applicant or any party to the application in any civil or criminal proceeding brought under the provisions of any law related to the following: any felony, antitrust, unfair competition, fraud, unfair labor practices, or discrimination? (Emphasis added.) (b) Is there now pending in any court or administrative body any proceeding involving any of the matters referred to in 4( a)? If the answer to (a) or (b) above is Yes, attach as Exhibit No. ___ , a full disclosure concerning the persons and matters involved, identifying the court or administrative body and the proceeding (by dates and file numbers), stating the facts upon which the proceeding was based or the nature of the offense committed, and disposition or current status, of the matter. Information called for by this question which is already on file with the Commission need not be refiled provided: (1) the information is now on file in another application or FCC form filed by or on behalf of transferee; (2) the information is identified fully by reference to the file number (if any); the FCC form number and the filing date of the application or other form containing the information and the page of paragraph referred to; and (3) after making the reference, the transferee states, “No change since date of filing.” Question 7: Broadcast Interests: Has the applicant or any party to this application had any interest in or connection with the following: (a) an application which has been dismissed with prejudice by the Commission? 32 Federal Communications Commission FCC 01D- 01 33 (b) an application which has been denied by the Commission? (c) a broadcast station, the license of which has been revoked? (d) an application in any Commission proceeding which left unresolved character issues against the applicant (e) If the answer --- is Yes, state in Exhibit No. --, the following information (i) name of party, (ii) nature of interest, giving dates, (iii) call letters of station, (iv) location. Question 4 calls for “full disclosure” about adverse findings of “fraud” and essentially asks for copies of the decisions. The word “fraud” is sufficiently descriptive to require disclosure of the adverse decisions against Parker in San Bernardino (“ transpicuous sham” and “attempted fraud”) and Mt. Baker (“ effort to deceive the Commission”). Question 4 was answered “no.” The information requested by Questions 7( a) and 7( b) were answered “yes.” Question 7( c) asks about revocations and the question was answered “no.” Question 7( d) calls for disclosure in the context of the Commission’s Allegan policy and that question was answered “no.” 16 Form 346 124. Form 346 is used to apply for an application to construct a low power television station (LPTV). Form 346 questions concerning the legal qualifications of an applicant are substantially the same that Form 315 asks of parties to a transfer. But Question 4 is different in one material respect. In Form 315, Question 4 asks whether a party was the subject of an adverse finding made by “any administrative body.” In Form 346, the Question 4 counterpart asks whether an adverse finding has been made that was related to “fraud before another govern-mental unit.” (Emphasis added.) Since the adverse findings that would apply to Mr. Parker involve only the subject of “fraud” at the Commission and not at “another governmental unit,” the facts of this case do not fit with respect to Form 346 Question 4. However, the disclosures in Form 346 Question 7 do apply to Mr. Parker in the same manner as Question 7 disclosures apply in Form 315. 16 Allegan County Broadcasters, Inc., 83 F. C. C. 2d 371, 373 (1980) (subsequent procedures to be taken to address unresolved substantial character allegations not addressed previously in order to accommodate settlement). 33 Federal Communications Commission FCC 01D- 01 34 Parker’s Disclosures To The Commission San Francisco 125. On March 2, 1989, an entity named West Coast United Broadcasting (" West Coast”) filed an application for consent to transfer control of Station KWBB( TV), San Francisco. (Adams Exh. 50.) West Coast's secretary signed the application on behalf of the transferor and the transferee giving for her address Mr. Parker's residential address. (Adams Exh. 50 at 23; Tr. 1939- 40.) The application reported that Mr. Parker was a vice president and a director for West Coast and would continue as such following the transfer. (Adams Exh. 50 at 24, 34.) 126. West Coast responded to the questions with an unqualified "no" to both parts of Question 4. (Adams Exh. 50 at 7.) West Coast responded to Question 7 in the affirmative as to subparts (a) and (b) and in the negative as to subparts (c) and (d) thus denying that there were any unresolved character issues against Parker. The narrative disclosure stated in an exhibit: Micheal L. Parker, Vice President and a director of West Coast, ... is an officer, director, and shareholder of Mt. Baker Broadcasting Co., which was denied an application for extension of time of its construction permit for KORC( TV), Anacortes, Washington, FCC File No. BMPCT- 8607OIKP. See Memorandum Opinion and Order, FCC 88- 234, released August 5, 1988. Mt. Baker Broadcasting Co. has pending before the Commission a Petition for Reconsideration of that decision. (Id. at 26- 27.) The narrative failed to mention the finding of the “effort to deceive the Commission.” The narrative also failed to mention at all the San Bernardino decision or Mr. Parker's role in the flawed SBBLP application. 127. The law firm of Schnader, Harrison, Segal & Lewis (" Schnader, Harrison") submitted the application to the Commission. (Adams Exh. 50 at 1; Tr. 1858.) R. Clark Wadlow, a Schnader, Harrison partner, previously represented Mr. Parker, or entities in which he had attributable interests. (RBI Exh. 46 at 2.) Mr. Parker acknowledged having reviewed the narrative response in Exhibit III which he asserted had been drafted by Schnader, Harrison attorneys. Mr. Parker claimed that West Coast had relied upon legal advice to decide what was needed to respond to the application's questions. (RBI Exh. 46 at 6.) Mr. Parker testified that he believed the information referenced above in connection with Question 7 had been prepared by Mr. Wadlow. (Tr. 1941, 2012.) Mr. Wadlow was not certain that he had reviewed the application. (Tr. 1858, 1864- 65.) Mr. Wadlow concluded that Question 7 was answered correctly, but he had no explanation as to why the San Bernardino decision was not referenced. Nor had he read the Mt. Baker decision at that time. (Tr. 1859- 60, 1865.) Mr. Parker was not represented in Mt. Baker by Schnader, Harrison. (Tr. 1914.) 34 Federal Communications Commission FCC 01D- 01 35 Los Angeles (LPTV) 128. On December 8, 1989, Mr. Parker filed an application for a construction permit for a new low power television station in Los Angeles. (Adams Exh. 49.) Mr. Parker answered questions 4 and 7 in the same manner as the disclosure in West Coast. He also included the same narrative statement relative to the Mt. Baker construction permit stating that an extension of time was denied and that a petition for reconsideration was pending before the Commission. (Adams Exh. 49 at 4- 5, 11.) As was the case in the West Coast application, nothing appeared in the Los Angeles application relating to the “effort to deceive” in Mt. Baker and nothing at all appeared with respect to the San Bernardino decision which was not even mentioned. Norwell (WHRC) 129. On July 23, 1991, an application was filed to transfer control of Station WHRC-TV, Norwell, Massachusetts, from Nikita Maggos to Two If By Sea Broadcasting Corporation (“ TIBS”). Mr. Parker was the president, sole director and 100% shareholder of TIBS. (Adams Exh. 51 at 10.) The application was transmitted to the Commission by Mr. Eric Kravetz, a communications attorney. (Id., Tr. 2343.) 130. In response to Questions 4 and 7, TIBS checked the same "no" and "yes" boxes as had West Coast. (Adams Exh. 51 at 9, 11.) The narrative exhibit contained the same information about the denial of Mt. Baker's extension application but no reference was made to a petition for reconsideration. The exhibit explaining Question 7 “yes” responses stated the following: Micheal Parker was an officer, director and shareholder of Mt. Baker Broadcasting Co., which was denied an application for extension of time of its construction permit for KORC( TV) , Anacortes, Washington, [citations omitted]. Although neither an applicant nor the holder of an interest in the applicant to the proceeding, Micheal Parker's role as a paid independent consultant to San Bernardino Broadcasting Limited Partnership (" SBB"), an applicant in MM Docket No. 83- 911 for authority to construct a new commercial television station on Channel 30 in San Bernardino, CA, was such that the general partner in SBB was held not to be the real party in interest to that applicant and that, instead, for purposes of the comparative analysis of SBB's integration and diversification credit, Mr. Parker was deemed such. See Religious Broadcasting Network et. al., FCC 88R- 38, released July 5, 1988. NM Docket 83- 911 was settled in 1990 and Mr. Parker did not receive an interest of any kind in the applicant awarded the construction permit therein, 35 Federal Communications Commission FCC 01D- 01 36 Sandino Telecasters, Inc. See Religious Broadcasting Network et. al., FCC 9OR-101, released October 31, 1990. 17 (Adams Exh. 51 at 17- 1 8.) 131. Mr. Parker testified that he does not know the narrative's author. But he believes that an attorney drafted it and he suggested that Mr. Marvin Mercer, RBI's bankruptcy attorney, prepared the narrative with input from either Mr. Eric Kravetz or Mr. Wadlow's law firm (then Sidley & Austin). (RBI Exh. 46 at 7; Tr. 1798, 1952- 54, 2058.) Mr. Kravetz, a communications counsel who did some work for Mr. Parker, denied any role in the narrative's preparation and had no knowledge as to who prepared it or how it was prepared. (Tr. 2344- 46.) Mr. Wadlow also denied that he had any role. (Tr. 1805.) Ms. Paula Friedman, a former Sidley & Austin associate, testified that she had no role in the Norwell application and that so far as she knew, no one from Sidley & Austin had any role. (Tr. 2105- 06.) Whoever was the drafter, Mr. Parker admitted reviewing the application and approving it, including the narrative. (RBI Exh. 46 at 7.) 132. Mr. Parker justified the omissions regarding the Mt. Baker and San Bernardino decisions based on a letter that he had received from Mr. Wadlow on February 18, 1991. (RBI Exh. 46 at 7 and Attachment D.) The Wadlow letter addressed the sufficiency of the narrative’s disclosure and stated: It is our opinion that the Administrative Law Judge (" ALJ") [in the San Bernardino case] simply concluded that SBBLP had failed to report your activities and involvements [sic] with SBBLP -- which the ALJ found to be such as to make you a real party- in-interest. However, the ALJ did not find that you had done anything improper [sic] or that anything you had done reflected adversely on you. As I mentioned above, we have continued to represent you in other FCC proceedings, as we have for the last eight or ten years. You serve as a principal of other FCC licensees. We are aware of no question that has ever been raised as to your qualifications to hold such a position. Mr. Parker and Mr. Wadlow testified the letter was prepared in haste because Mr. Parker had requested that it be prepared quickly in order to present it to third parties in connection with matters related to RBI's bankruptcy. (Tr. 1806- 08, 2001- 02, 2016- 19, 2025; Adams Exh. 59.) The letter was not prepared in connection with disclosures to be made to the Commission. 133. Following the Norwell grant, three more applications were filed which contained 17 Adams has objected in prehearing motions to the citations by Mr. Parker to non- published versions of Review Board decisions. While it was an irritant purposefully inflicted and although the rules require FCC Record cites, the practice does not constitute evidence of a lack of candor. See 47 C. F. R. §1. 14. 36 Federal Communications Commission FCC 01D- 01 37 the same questions and answers which had appeared in the West Coast and Norwell applications: Reading, Twenty Nine Palms and Dallas. The narrative describing the Mt. Baker and San Bernardino decisions which had appeared in the Norwell application was used once again. (Adams Exh. 52 at 7, 12, 30; Adams Exh. 53; and Adams Exh. 54 at 7, 10, 24- 25; Tr. 1971- 74.) Reading (WTVE) 134. On November 13, 1991, an application was filed for the assignment of Station WTVE( TV), Reading, PA. (Adams Exh. 52.) The transferee was Partel, the company controlled by Mr. Parker that had entered into the MSA with RBI. The disclosure followed the pattern of answering “no” to questions about fraud and including in an exhibit the “boilerplate” narrative as was used for West Coast and Norwell. Sidley & Austin represented that it had no connection with Parker’s disclosure. 18 (Tr. 1805, 2105.) In response to Question 7( a) as to whether any party had any interest in or connection with any application that had been denied or dismissed with prejudice, Mr. Parker responded “yes.” (Adams Exh. 52 at 12.) But Mr. Parker answered “no” to Question 7( d) asking whether there were unresolved character issues. The narrative descriptions of Mr. Parker vis a vis the Mt. Baker and San Bernardino proceedings were submitted to the Commission as follows: Micheal Parker also was an officer, director and shareholder of Mt. Baker Broadcasting Co. Mt. Baker Broadcasting Co. ’s application for extension of time of its construction permit for KORC( TV), Anacortes, Washington (FCC File No. BMPCT- 86070KP) was denied. See Memorandum Opinion and Order, FCC 88 – 234, released August 5, 1988. Although neither an applicant nor the holder of an interest in the applicant to the proceeding, Mr. Parker’s role as a paid independent consultant to San Bernardino Broadcasting Limited Partnership (“ SBB”), - - - was such that the general partner in SBB was held not to be the real party in interest to that applicant and that, for purposes of the comparative analysis of SBB’s integration and diversification credit, Mr. Parker was deemed such. - - - . This proceeding was settled in 1990 and Mr. Parker did not receive an interest of any kind in the Sandino Telecasters, Inc., the applicant awarded the construction permit. (Citation omitted.) (Adams Exh. 52 at 30.) 18 The distancing of the lawyers from authorship of the narrative’s language creates a further inference that it was prepared by Parker or under Parker’s direction and then given to the lawyers. 37 Federal Communications Commission FCC 01D- 01 38 Twenty Nine Palms (KVMD) 135. On June 4, 1992, an application for the assignment of Station KVMD( TV) at Twenty Nine Palms, CA was filed. (Adams Exh. 53.) Mr. Parker was the transferee and he executed the transferee portion of the application. There was no law firm or lawyer identified with this application. Mr. Parker responded “no” to Question 4 about “fraud”. He also answered “no” to Question 7( d) asking whether Mr. Parker had any interest in or connection with any application which left an unresolved character issue against the applicant. (Adams Exh. 53 at 6, 8.) Mr. Parker did answer in the affirmative to Question 7( a) and 7( b) asking whether he had any interest in or connection with an application which had been denied or dismissed with prejudice, referring to Parker’s disclosure in an exhibit. (Adams Exh. 53 at 18- 20.) The narrative accounts of the Mt. Baker and San Bernardino proceedings were the same as those made in the Station WTVE( TV) transfer quoted above. (Adams Exh. 53 at 19- 20.) Dallas (KCBI) 136. On August 3, 1992, an application for assignment of the license of International Broadcast Station KCBI, Dallas, TX, was filed. (Adams Exh. 54.) The assignee was TIBS, a Parker controlled entity. Mr. Parker responded “no” to the question about fraud. He also answered “no” to the question of whether he had any interest or connection with any applications which left an unresolved character issue against the applicant. In this particular application, the staff sought a clarifying amendment on whether basic character issues had been sought or added with respect to any of the applicants whose applications had been dismissed. (Bureau Exh. 2 at 3; Tr. 1977, 1979.) After receiving the request, Mr. Kravetz spoke with Mr. Parker and in October 1992, Mr. Kravetz drafted an amendment, which Mr. Parker signed: Two If By Sea Broadcasting Corporation (" Two If By Sea") has applied for authority to acquire Station KCBI from Criswell Center for Biblical Studies. As part of that application, Two If By Sea listed applications in which its officers, directors and principals had held interests and which were dismissed at the request of the applicant. This will confirm that no character issues had been added or requested against those applicants when those applications were dismissed. (Emphasis added.) (Adams Exh. 55 at 3; Bureau Exh. 2; Tr. 1980, 1982- 83, 2355- 56.) Mr. Parker testified that he or someone under his direction had provided Mr. Kravetz with the information and that Mr. Kravetz proposed the amendment which Mr. Parker reviewed “very carefully” and was “satisfied as to its accuracy.” (Tr. 1983.) Mr. Kravetz testified that he had spoken to the FCC staff. (Tr. 2355.) Mr. Kravetz then drafted the amendment (Adams Exh. 55) based on information that Mr. Parker provided and which Mr. Parker reviewed and signed thereby giving his approval. (Tr. 2355- 56.) In drafting the amendment, Mr. Kravetz relied exclusively on information provided him by Mr. Parker and made no independent research. (Tr. 2357.) Mr. Kravetz filed the amendment on October 29, 1992. The Commission staff granted the application one day later. (Adams Exhs. 55, 56.) 38 Federal Communications Commission FCC 01D- 01 39 Evidence Of Lack Of Candor 137. Mr. Parker never told Mr. Kravetz that a real party- in- interest issue had been added in the San Bernardino proceeding. That was a critical piece of information and its withholding by Parker left Mr. Kravetz factually out in the cold. Mr. Kravetz was entitled to receive candid information from Parker before he drafted the amendment. Had Mr. Parker told Mr. Kravetz that a real party- in- interest issue had been requested and added in San Bernardino, Mr. Kravetz would not have drafted the amendment as he did. That conclusion is established by the uncontradicted testimony of Mr. Kravetz. (Tr. 2372.) Mr. Kravetz’s testimony is credible. As a practicing attorney, there would be no motive for Mr. Kravetz to draft and/ or file an incomplete or misleading amendment with the Commission. To the contrary, as a practitioner before the Commission, Mr. Kravetz had every motive to file a complete and truthful document. Therefore, it is accepted that Mr. Kravetz would have identified and fully described the San Bernardino proceeding had Mr. Parker informed him of the facts. In that event, Mr. Kravetz would have disclosed to the Commission staff that a real- party- in interest issue had been added in the