**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of Liability of )

)

SECOND GENERATION OF IOWA, LTD. )

)

Licensee of Television Station )

KFXA(TV), Cedar Rapids, Iowa )

Facility I.D. No. 35336 )

)

for a Forfeiture )

**MEMORANDUM OPINION AND ORDER**

**AND FORFEITURE ORDER**

**Adopted: May 31, 2000 Released: June 1, 2000**

By the Chief, Mass Media Bureau:

1\. The Commission, by the Chief, Mass Media Bureau, acting pursuant to
authority delegated by Section 0.283 of the Commission\'s Rules, 47
C.F.R. § 0.283, has before it for consideration the following documents:
(1) a Notice of Apparent Liability for forfeiture in the amount of seven
thousand, five hundred dollars (\$7,500) issued against Second
Generation of Iowa, Ltd. (Second Generation), licensee of station
KFXA(TV), Cedar Rapids, Iowa, in *Second Generation of Iowa, Ltd.
(KFXA(TV))*, 13 FCC Rcd 3055 (MMB 1998) (*KFXA(TV) NAL*); and (2) Second
Generation's Petition for Reconsideration requesting rescission or
reduction of the forfeiture (Petition). The forfeiture was assessed for
station KFXA(TV)'s apparent repeated violation of Section 73.670 of the
Commission\'s Rules, 47 C.F.R. § 73.670, which limits the amount of
commercial matter that may be aired during children\'s television
programming.

2\. In *KFXA NAL*, we found that station KFXA(TV)\'s record of exceeding
the Commission\'s commercial limits on three occasions during the last
license term constituted a repeated violation of Section 73.670 of the
Commission\'s Rules. Accordingly, pursuant to Section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. § 503(b), Second
Generation was advised of its apparent liability for forfeiture in the
amount of \$7,500. That amount was reached after consideration of the
factors set forth in Section 503(b)(2) of the Communications Act, and,
in particular, the five criteria consisting of: (1) the number of
instances of commercial overages; (2) the length of each overage; (3)
the period of time over which the overages occurred; (4) whether or not
the licensee established an effective program to ensure compliance; and
(5) the specific reasons that the licensee gave for the overages.[^1] We
applied these criteria to the facts of station KFXA(TV)\'s case,
considering the violations reported by Second Generation, namely three
program-length commercials, the category of violations over which
Congress expressed particular concern because young children often have
difficulty distinguishing between commercials and programs. Based on the
number and type of violations, which occurred over a four-day period, we
concluded that children had been subjected to commercial matter greatly
in excess of the limits contemplated by Congress when it enacted the
Children\'s Television Act of 1990.[^2] We also noted the Commission\'s
statement made at the time it delayed the effective date of Section
73.670 of the Rules from October 1, 1991, until January 1, 1992, that
\"giving the additional time to broadcasters and cable operators before
compliance with the commercial limits is required will have the effect
of enabling broadcasters and cable operators to hone their plans to
ensure compliance . . . .\"[^3] In doing so, we rejected inadvertent
error, the reason Second Generation gave to explain the program-length
commercials, as a basis for excusing station KFXA(TV)\'s violations of
the commercial limits. We added that, though station KFXA(TV)
implemented procedures to prevent future violations of the children\'s
television commercial limitations, this did not relieve Second
Generation of liability for the violations which had occurred.

3\. In its Petition, Second Generation contends that the amount of the
forfeiture assessed in KFXA(TV) is excessive when compared to the nature
of the violations and the size of the forfeitures the Commission has
imposed in other cases.[^4] Upon such comparison, Second Generation
argues, \"it is clear that the Commission has given no meaningful
consideration\" to the factors set forth in Section 503 of the
Communications Act, particularly whether or not the licensee had
established an effective program to ensure compliance. In this regard,
Second Generation maintains that, though initially not perfect, station
KFXA(TV)'s procedures enabled the quick discovery of the error which
caused the three program-length commercials, and criticizes us for
failing to mention this in *KFXA NAL*. Second Generation also criticizes
us for failing to mention that, once the error was discovered, station
KFXA(TV) adopted additional, more stringent screening procedures which
effectively prevented any further violations. In contrast, Second
Generation asserts, in the cases it cites *supra* n. 4, the licensees
had no procedures to protect against commercial overages and, in some
instances, failed to take effective actions to prevent further
violations. Accordingly, Second Generation submits that the "alacrity"
by which station KFXA(TV) acted and the effectiveness of its additional
measures are \"mitigating factors which, when properly weighed, should
reduce the penalty for the violation to a mere admoition \[sic\].\"

4\. Second Generation also argues that the characterization of station
KFXA(TV)\'s violations as \"repeated\" and \"substantial\" does not fit
the facts. Technically, Second Generation concedes, the fact that
program-length commercials occurred on three occasions constitutes a
repeated violation. Nevertheless, Second Generation opines, more salient
are the following facts: that all three violations involved a single
commercial and occurred over a very short period of time, and that
prompt, effective measures were taken to ensure that the violation would
not be repeated in the future. Along this line, Second Generation
maintains, the Commission has found a violation of the commercial limits
to be repeated when there had been a large number of commercial
overages, and only moderately higher forfeitures have been imposed in
other cases involving "much more numerous and long lasting violations."
For these reasons, Second Generation believes that station KFXA(TV)'s
violations were "minor," not "substantial," and, therefore, warrant a
minor sanction rather than a substantial fine.

5\. Finally, Second Generation says that it "does not claim that it is
'financially unable' to pay a \$7,500 forfeiture," but avers that the
imposition of any forfeiture would have a serious adverse impact on
station KFXA(TV)\'s ability to serve the public interest because the
station has suffered continuing losses. In support, Second Generation
provides unaudited financial statements, asserting that station KFXA(TV)
lost \$1,422,496 in 1996, and \$1,460,673 in 1997. Second Generation
adds that, at the time it acquired station KFXA(TV) in 1995, the station
had been dark for an extended period of time and its former licensee was
on the brink of bankruptcy. Furthermore, in order to make station
KFXA(TV) competitive and economically viable, Second Generation claims
to have invested substantial sums in marketing, programming, promotions
and improving the station's facilities. For all of these reasons, Second
Generation concludes that the forfeiture assessed in *KFXA NAL* should
be reconsidered and rescinded, and that no more than an admonition or,
at most, a nominal fine should be imposed.

DISCUSSION

6\. Preliminarily, we note that Section 503 of the Communications Act
affords the Commission a great deal of discretion in determining
forfeiture amounts based upon all of the circumstances of each
individual case.[^5] Given that discretion, we disagree with Second
Generation\'s claim that the assessment of a \$7,500 forfeiture against
it is excessive in light of the amount of the forfeitures assessed in
other cases, and we reject Second Generation\'s attempt to make a
violation-by-violation comparison with those cases. In determining the
forfeiture against Second Generation, we considered the factors set
forth in Section 503 of the Communications Act, and compared the actions
of Second Generation with the actions of licensees involved in similar
cases.[^6] We did not assess a separate forfeiture amount for each
violation, nor can Second Generation\'s actions be dissected in such a
manner.[^7] Rather, we concluded that, as a whole, the facts of this
case and relevant case law supported a \$7,500 forfeiture against Second
Generation. In this regard, the forfeiture at issue here is consistent
with that imposed in a very similar case. In *LeSea Broadcasting Corp.
(WHKE(TV))*, 10 FCC Rcd 4977 (MMB 1995) (*LeSea Broadcasting*), which we
referred to in *KFXA(TV) NAL*, we assessed a \$7,500 forfeiture for
three program-length commercials which occurred over a period of
approximately two months. The licensee in *LeSea Broadcasting*
attributed its violations to human error, and indicated that its
station\'s compliance procedures were modified and/or its personnel was
instructed to prevent recurrence. Compared to the station in *LeSea
Broadcasting*, station KFXA(TV) reported the same number and type of
violations. In addition, Second Generation and the licensee in *LeSea
Broadcasting* gave essentially the same reasons to explain their
respective violations, which in both cases occurred over a short period
of time.[^8] We stated in each case, moreover, that though the licensee
may have implemented a plan or policies to prevent future violations,
that did not relieve it of liability for the violations which had
occurred. Having thus considered the Section 503 factors, as well as the
similarities between their application in this case and in *LeSea
Broadcasting,* where a \$7,500 forfeiture was imposed, it was both
appropriate and within our discretion to assess a comparable forfeiture
in the amount of \$7,500 against Second Generation. Accordingly, Second
Generation's assertion that the forfeiture assessed in *KFXA NAL* should
be rescinded and replaced with a letter of admonition, is without merit
and shall be denied.[^9]

7\. Also with respect to its excessive forfeiture argument, Second
Generation\'s Petition apparently misconceives the seriousness with
which the Commission has consistently considered and treated
program-length commercials. When the Commission adopted its children\'s
television commercial rules and policies pursuant to the Children\'s
Television Act of 1990,[^10] the Commission specifically provided that,
where a program is determined to be a program-length commercial, the
*entire program* \"would count toward the statutory commercial
limits.\"[^11] In *Children\'s Television Programming*, the Commission
made it abundantly clear that, independent of their duration,
program-length commercials, by their very nature, are extremely serious,
and that its program-length commercial policy \"directly addresses *a
fundamental regulatory concern*, that children who have difficulty
enough distinguishing program content from unrelated commercial matter,
not be all the more confused by a show that interweaves program content
and commercial matter.\"[^12] To this end, in numerous cases assessing
forfeitures for violations of the children\'s television commercial
limits, the Commission has stated that, "Congress was particularly
concerned about program-length commercials because young children often
have difficulty distinguishing between commercials and programs."[^13]
In accordance with this policy of treating program-length commercials as
extremely serious violations of the children\'s television commercial
limitations, the Commission has routinely assessed higher forfeitures
for program-length commercials than for a significantly greater number
of conventional overages.[^14] Therefore, we find our consideration of
station KFXA(TV)'s three program-length commercials as substantial
violations to be consistent with Commission policy and precedent.

8\. Likewise, we affirm our determination that station KFXA(TV)'s three
program-length commercials constituted a repeated violation of Section
73.670 of the Commission's Rules. Clearly, station KFXA(TV) repeatedly
violated the commercial limits, as a program-length commercial occurred
on more than one occasion.[^15] In fact, Second Generation concedes that
the violations were "technically" repeated, but suggests that a
violation be deemed "repeated" only in those cases involving a large
number of commercial overages. We decline to adopt such an approach
here, and note that the Commission has consistently found a repeated
violation of the commercial limits in cases where a licensee reports
more than one conventional overage or program-length commercial.[^16]

9\. Finally, with respect to financial hardship, we note that the
Commission has previously considered a licensee's financial inability to
pay as a basis for reducing a forfeiture. Here, you do not claim
financial inability to pay a forfeiture, but assert that station
KFXA(TV) has suffered continuing losses. However, in analyzing a
company's financial condition for forfeiture purposes, the Commission
has stated that "\[if\] gross revenues are sufficiently great . . . the
mere fact that a business is operating at a loss does not by itself mean
that it cannot afford to pay a forfeiture.\" *PJB Communications of
Virginia, Inc.*, 7 FCC Rcd 2088, 2089 (1992). Our review of the
financial data filed by Second Generation indicates that, although the
company shows losses of \$1,460,673 in 1997, its gross revenue was
\$3,716,348. We find this gross revenue sufficiently great to
accommodate payment of the forfeiture assessed against station KFXA(TV),
which, at \$7,500, is the lowest forfeiture amount assessed for
violations of the children's television commercial limits. Therefore,
given the totality of the facts and circumstances before us, we do not
believe that eliminating or reducing the \$7,500 forfeiture is
warranted.

10\. Accordingly, IT IS ORDERED THAT the Petition for Reconsideration
filed by Second Generation of Iowa, Ltd., requesting that the forfeiture
assessed in *Second Generation of Iowa, Ltd. (KFXA(TV))*, 13 FCC Rcd
3055 (MMB 1998), be reduced or eliminated, IS DENIED.

11\. IT IS FURTHER ORDERED THAT, pursuant to Section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. § 503(b), Second
Generation of Iowa, Ltd., licensee of television station KFXA(TV), Cedar
Rapids, Iowa, FORFEIT to the United States the sum of seven thousand,
five hundred dollars (\$7,500) for repeated violations of Section 73.670
of the Commission\'s Rules, 47 C.F.R. § 73.670. Payment of the
forfeiture may be made by mailing to the Commission a check or similar
instrument payable to the Federal Communications Commission. With regard
to this forfeiture proceeding, Second Generation of Iowa, Ltd., may take
any of the actions set forth in Section 1.80 of the Commission\'s Rules,
47 C.F.R. § 1.80, as summarized in the attachment to this Memorandum
Opinion and Order.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Roy J. Stewart
>
> Chief, Mass Media Bureau

cc: David Tillotson, Esq.

[^1]: ^?^ *See, e.g., Stainless Broadcasting Co. (WICZ-TV)*, 10 FCC Rcd
    9961 (1995); *KXRM Partnership (KXRM-TV)*, 8 FCC Rcd 7890 (1993)
    (*KXRM Partnership*).

[^2]: ^?^ Pub. L. No. 101-437, 104 Stat. 996-1000, *codified at* 47
    U.S.C. Sections 303a, 303b and 394.

[^3]: ^?^ *Children's Television Programming,* 6 FCC Rcd 5529*,* 5530
    n.10 (1991).

[^4]: ^?^ Specifically, Second Generation cites to *WHP Television, L.P.
    (WHP-TV)*, 10 FCC Rcd 4979 (MMB 1995) (*WHP Television*) (\$15,000
    forfeiture assessed for 38 violations of the commercial limits);
    *Independent Communications (KTTM(TV) and KTTW(TV))*, 8 FCC Rcd 7886
    (1993), *aff'd*, FCC 99-143 (released June 14, 1999) (\$27,500
    forfeiture assessed for 121 violations of the commercial limits);
    *Koplar Communications, Inc. (KPLR-TV)*, 8 FCC Rcd 7884 (1993)
    (*Koplar*) (\$30,000 forfeiture assessed for 197 violations of the
    commercial limits); *KXRM Partnership*, 8 FCC Rcd 7890 (\$25,000
    forfeiture assessed for 87 violations of the commercial limits);
    *Channel 39 Licensee, Inc. (WDZL-TV)*, 12 FCC Rcd 14012 (1997)
    (\$27,500 forfeiture assessed for 56 violations of the commercial
    limits, including 22 program-length commercials); and *Paramount
    Stations Group of Washington, Inc. (WDCA(TV)),* 12 FCC Rcd 14890
    (MMB 1997) (\$15,000 forfeiture assessed for 20 violations of the
    commercial limits, including 11 program-length commercials).

[^5]: ^?^ *See Triple X Broadcasting Co., Inc.*, 46 RR2d 788, 789 (B/C
    Bur. 1979), citing *Brennan Broadcasting Co.*, 25 FCC 2d 400, 405
    (1970); *Southern California Broadcasting Co. (KIEV(AM))*, 6 FCC Rcd
    4387, 4388 (1991), *recon. denied*, 7 FCC Rcd 3454 (1992).

[^6]: ^?^ Aside from the fact that they involved violations of the
    children's television commercial limits, the cases to which Second
    Generation refers are not factually similar to its own. For example,
    significantly, unlike here, four of those six cases, *viz*. *WHP
    Television, Independent Communications,* *Koplar* and *KXRM
    Partnership (KXRM-TV)*, involved no program-length commercials.

[^7]: ^?^ *See* *Southern California Broadcasting Company*, 6 FCC Rcd
    4387, 4388 (1991); *Niagara Frontier Broadcasting Corp.*, 51 FCC 2d
    525 (1975), *aff\'d*, 36 RR2d 1584 (1976), *recon. granted in part*,
    38 RR2d 1004 (1976).

[^8]: ^?^ We note, here, that while station KFXA(TV)'s violations
    occurred over a shorter period of time than those at issue in *LeSea
    Broadcasting,* the period of time over which the violations occurred
    is only one of the five criteria we consider in assessing the
    forfeiture amount.

[^9]: ^?^ We do not believe that an admonition should be imposed in lieu
    of the forfeiture assessed in *KFXA NAL* based on the alleged
    "alacrity" by which station KFXA(TV) acted and the efficacy of its
    additional compliance measures. We expect licensees to act swiftly
    to catch errors which cause violations of the commercial limits, and
    to take prompt, effective corrective measures when necessary. The
    fact that Second Generation appears to have met these expectations
    does not require us to mitigate or eliminate the forfeiture.

[^10]: ^?^ Pub. L. No. 101-437, 104 Stat. 996-1000, *codified at* 47
    U.S.C. Sections 303a, 303b and 394.

[^11]: ^?^ *Children\'s Television Programming*, 6 FCC Rcd 2111, 2118
    (1991).

[^12]: ^?^ 6 FCC Rcd at 2118 (emphasis added).

[^13]: ^?^ S. Rep. No. 227, 101st Cong., 1st Sess. 24 (1989); *see,
    e.g., Fox Television Stations of Philadelphia, Inc.,* DA 99-1832
    (released Sept. 9, 1999)*; Northeast Kansas Broadcast Service, Inc.
    (KTKA-TV),* 13 FCC Rcd 13930 (MMB 1998)*; Buffalo Management
    Enterprises Corp. (WIVB-TV*), 10 FCC Rcd 4959, 4960 (MMB 1995).

[^14]: ^?^ *See, e.g., Channel 39 Licensee, Inc*. *(WDZL(TV))*, 12 FCC
    Rcd 14012, 14015 n.3 (1997).

[^15]: ^?^ *Hale Broadcasting Corporation*, 79 FCC 2d 169 (1980).

[^16]: ^?^ *See, e.g.*, *Fox Television Stations of Philadelphia, Inc.
    (WTXF-TV)*, DA 99-1832 (MMB, released Sept. 9, 1999); *Fox
    Television Stations, Inc. (KRIV(TV))*, 13 FCC Rcd 22,355 (MMB 1998);
    *LeSea Broadcasting*, 10 FCC Rcd 4977.