> **DA 06-321**
>
> ***In Reply Refer to:***

1800B3-TSN

L.T. Simes, II and Raymond Simes

P.O. Box 2870

West Helena, AR 72390

**Re: FM Broadcast Auction No. 37**

> L.T. Simes II and Raymond Simes

New(FM), Friars Point, Mississippi

Facility ID No. 164256

File No. BNPH-20050103AAV

Application for Construction

Permit

Dear Applicants:

Before the Audio Division is a Form 301 application (the "Simes
Application") filed by L.T. Simes, II, and Raymond Simes (collectively,
the "Simes") for a new FM broadcast station at Friars Point,
Mississippi.[^1] On March 11, 2005 (the "March Letter"), we informed you
that, based on our review of the Simes Application, there was reason to
believe that you did not qualify for the 25 percent new entrant bidding
credit you claimed against your winning bid for the Friars Point
construction permit. In the March Letter, we requested that you provide
evidence and/or argument in support of your claim for the 25 percent new
entrant bidding credit.

On April 1, 2005, Mr. L.T. Simes, II, on behalf of the Simes, responded
to our March Letter. In his response, Mr. Simes claims that he
accurately represented in the Simes' Form 175 application that neither
partner had an attributable interest in more than three media of mass
communications; that the Friar's Point allotment was in "another state,
in a different Arbitron market and separated by the Mississippi River";
that the process of determining bidding credit eligibility was "flawed"
in that engineering information was not required as part of Form 175;
and that the Simes "detrimentally relied" on the Commission's
"approving" the 25 percent bidding credit, and are thus "in jeopardy of
losing all three (3) stations."

The Simes applied for four FM allotments in Auction No. 37: Cotton
Plant, Arkansas; Elaine, Arkansas; Friars Point, Mississippi; and New
Albany, Mississippi. They were the successful bidders for the Friars
Point, Mississippi allotment. The Simes claim a 25 percent new entrant
bidding credit against their winning auction bid for the Friars Point
permit, having certified in both their Form 175 auction filing window
application and their Form 301 post-auction application that they have
attributable interests in only two other media of mass
communication.[^2] In a September 13, 2004, informational letter,[^3]
the Commission noted that the Simes were not eligible to claim the new
entrant bidding credit against their Auction No. 37 bids for the
construction permit at Elaine, Arkansas, because it was in the same area
as one of the stations in which the Simes have an attributable
interest.[^4] In the Simes Acceptance Letter, however, the staff
inadvertently indicated that the Simes could claim a 25 percent new
entrant bidding credit for the other three FM permits.

An applicant may claim a 25 percent new entrant bidding credit when it
has attributable interests in no more than three media of mass
communications, as noted by Mr. Simes.[^5] However, our rules also
provide that an applicant may not claim a new entrant bidding credit if
the station for which it is applying is in the same area as a medium of
mass communication in which it has an attributable interest.[^6] FM
broadcast stations are considered to be in the "same area" if there is
overlap between their principal community (70 dBµ) contours.[^7] This is
true notwithstanding that the stations may be in different states and/or
Arbitron Metros. The new entrant bidding credit eligibility
requirements, including the "same area" restriction, were specifically
enunciated in several pre-auction public notices.[^8] Furthermore,
applicants are charged with knowledge of the auction rules,[^9] and the
burden of providing information and demonstrating qualifications by the
applicable deadlines falls upon the applicants.[^10]

In a pre-auction filing window public notice, the Commission directed
applicants to file, with Exhibit C to their FCC Form 175 applications,
certification and support establishing their eligibility to claim a new
entrant bidding credit.[^11] While they identified their two existing
mass media interests in another portion of the Form 175 (in Exhibit A --
Ownership), the Simes simply certified in Exhibit C to their general
eligibility for the new entrant bidding credit, thus implying their
entitlement to a 25 percent bidding credit for all four allotments
selected in the application.[^12] In the *Auction 37 Procedures Public
Notice*, we specifically directed applicants claiming a 25 percent
bidding credit to "identify and describe such media of mass
communications" in addition to the required certification.[^13]

The Simes attached to their post-auction Form 301 construction permit
application for Friars Point a study demonstrating compliance with the
Commission's radio multiple ownership rules.[^14] Therein, the Simes
multiple ownership study showed overlap of the 70 dBµ contours of
KCLT(FM), in which the Simes have attributable interests, and the
proposed new Friars Point FM broadcast station at the actual coordinates
designated by the Simes.[^15] This overlap defeats the Simes' claim of a
25 percent new entrant bidding credit against their winning bid for the
Friars Point permit. As noted above, the Simes did not disclose this
"same area" overlap (or, indeed, any overlap) in their Form 175
application, thus implicitly representing that they were eligible to
claim the 25 percent new entrant bidding credit for all of the FM
allotments on which they proposed to bid. The staff's failure to note
the Friars Point overlap in the Simes Acceptance Letter can thus be at
least partly attributed to the Simes' failure to disclose it. At most,
the staff's omission of this overlap from the Simes Acceptance Letter
would constitute an inadvertent error, which may be corrected at any
time.[^16]

Moreover, applicants claiming new entrant status must include in their
post-auction Form 301 application an exhibit demonstrating their
eligibility for the bidding credit.[^17] Thus, any applicant's
eligibility for the new entrant bidding credit is subject to further
review once the applicant files Form 301. The Commission will make its
final determination regarding an applicant\'s eligibility to hold a
permit or license, including eligibility for the new entrant bidding
credit, when it is ready to grant the permit or license.  While the
Simes, in their Form 301 application, merely reiterated the general
bidding credit certification they made in their Form 175, the staff
discovered the "same area" overlap during review of the multiple
ownership exhibit to the Simes Application. Because the Simes
Application now clearly shows a prohibited "same area" overlap, we must
enforce our new entrant bidding credit rules and deny the bidding credit
for the Friars Point allotment.

For the foregoing reasons, we find that the Simes do not qualify for a
new entrant bidding credit against their final payment on the Friars
Point, Mississippi allotment. When we announce, in a subsequent public
notice, that the Friars Point allotment is ready for grant, we will
calculate the Simes' final auction payment based on their gross winning
auction bid, rather than the gross winning bid net of the claimed
bidding credit.[^18] We remind the Simes that failure to remit full
final payment in a timely manner will constitute default, and will
subject them to the applicable penalties for bid default,
notwithstanding any pending challenges to their bidding credit
eligibility.[^19]

Sincerely,

Peter H. Doyle

Chief, Audio Division

Media Bureau

[^1]: File Nos. BNPH-20050103AAV (FM159).

[^2]: *See*, *e.g*., Exhibit A to Form 175 filed by Raymond Simes in FM
    Broadcast Auction No. 37. Raymond Simes disclosed a 10 percent
    interest in station KCLT(FM), West Helena, Arkansas, and a 50
    percent interest in KAKJ(FM), Marianna, Arkansas. L.T. Simes, II,
    disclosed a 45 percent interest in KCLT(FM) and a 50 percent
    interest in KAKJ(FM).

[^3]: *Letter to Mr. Raymond Simes*, Ref. No. 1800B3-TSN (WTB Sept. 13,
    2004) ("Simes Acceptance Letter").

[^4]: *Public Notice*, "Auction of FM Broadcast Construction Permits -
    456 Bidders Qualified to Participate in Auction No. 37," 19 FCC Rcd
    19773, 19872 (MB/WTB 2004). *See also* 47 C.F.R. §§ 73.5007(a), (b)
    (no bidding credit if any of an applicant's commonly owned mass
    media facilities serve the same area as the proposed broadcast
    station).

[^5]: 47 C.F.R. § 73.5007(a).

[^6]: *Id*., §§ 73.5007(a), (b).

[^7]: *Id*. §§ 73.5007(b)(2)(ii), 73.5007(b)(3)(ii).

[^8]: *See*, *e.g.*, *Public Notice*, "Auction of FM Broadcast
    Construction Permits Scheduled for November 3, 2004 -- Notice and
    Filing Requirements, Minimum Opening Bids, Upfront Payments and
    Other Auction Procedures," 19 FCC Rcd 10570, 10586, 10615 (MB/WTB
    2004) ("*Auction 37 Procedures Public Notice*"); *Public Notice*,
    "Auction of FM Broadcast Construction Permits -- Status of FCC Form
    175 Applications to Participate in Auction No. 37," 19 FCC Rcd
    17938, 17939 n.7 (MB/WTB 2004).

[^9]: *See Auction 37 Procedures Public Notice*, 19 FCC Rcd at 10575.

[^10]: *See Amendment of Part 1 of the Commission's Rules -- Competitive
    Bidding Procedures, Order on Reconsideration of the Third Report and
    Order, Fifth Report and Order, and Fourth Further Notice of Proposed
    Rule Making*, 15 FCC Rcd 15293, 15324 (2000). *See also* 47 U.S.C. §
    307(j)(5) (participation in auctions prohibited "unless such bidder
    submits such information and assurances as the Commission may
    require.").

[^11]: *See Auction 37 Procedures Public* Notice, 19 FCC Rcd at 10585-86
    ("An applicant claiming that it qualifies for a 25 percent new
    entrant bidding credit must provide a certification . . . *and must
    identify and describe such media of mass communication*.") (emphasis
    added).

[^12]: *See* Exhibit C to Form 175 filed by Raymond Simes in FM
    Broadcast Auction No. 37. *See also supra* note 6.

[^13]: Additionally, the Simes did not elect to specify preferred site
    coordinates for the Friars Point allotment, relying instead on the
    allotted coordinates. While the Simes claim the pre-auction
    application process is "flawed" by not requiring engineering
    information, such information is generally not necessary. Vacant
    allotments presume full class facilities with a transmitter at the
    specified allotment coordinates, with the Form 175 applicant having
    the option to specify preferred coordinates that differ from the
    allotment coordinates if desired. *See* *Implementation of Section
    309(j) of the Communications Act -- Competitive Bidding for
    Commercial Broadcast and Instructional Television Fixed Service
    Licenses*, 13 FCC Rcd 15920, 15974-75 and n.153 (1998), *on recon.,*
    14 FCC Rcd 8724, *on further recon.,* 14 FCC Rcd 14521(1999).
    However, this did not relieve applicants of their obligation to
    disclose any "same area" overlap with respect to new entrant bidding
    credit eligibility in Exhibit C to Form 175. *See Auction 37
    Procedures Public Notice*, *supra* note 8, 19 FCC Rcd at 10585-86,
    10614-15.

[^14]: *Id*. § 73.3555(a).

[^15]: Any prior contour overlap evaluation would have compared KCLT(FM)
    to the reference coordinates relied upon in the Simes' Form 175
    application.

[^16]: *See*, *e.g*., *Zenith Electronics Corp. v. U.S.*, 884 F.2d 556,
    560 (Fed. Cir. 1989) ("A number of cases have recognized the
    authority of an administrative agency to correct inadvertent,
    ministerial errors \[citations omitted\]."); *Robert Fetterman d/b/a
    RF Communications*, 16 FCC Rcd 8221, 8223 (2001).

[^17]: *Public Notice*, "Auction of FM Broadcast Construction Permits --
    456 Bidders Qualified to Participate in Auction No. 37," 19 FCC Rcd
    19773, 19781 (MB/WTB 2004) ("*Auction 37 Qualified Bidders Public
    Notice*").

[^18]: *See Auction 37 Qualified Bidders Public Notice*, 19 FCC Rcd at
    19377 ("In such cases, the Commission will make appropriate
    adjustments in the new entrant bidding credit prior to the
    computation of down and final payment amounts due from any affected
    winning bidders.")

[^19]: *See Delta Radio, Inc.*, 18 FCC Rcd 16889 (2003); 47 C.F.R. §
    1.2109(c).