DA 05-2225

Released: July 29, 2005

Sweetwater Broadcasting Company

c/o Jonathan Lichstein

1500 Foremaster Lane

Las Vegas, NV 89101

Uhlmann/Latshaw Broadcasting, LLC

P.O. Box 419410

Kansas City, MO 64141

Bozeman Trail Communications Company

c/o J. Dominic Monahan, Esquire

Ulvas, Cobb, Richards & Fraser, PC

777 High Street, Suite 300

Eugene, OR 97401

Re: Application for Consent to Transfer Control of the Licensee of
Station KCWY(TV) Casper, Wyoming

File No. BTCCT-20040217ACN

Facility ID No. 68713

NAL Acct. No. 0541420016

FRN: 0003748662

Gentlemen:

This is with regard to the application on FCC Form 315 to transfer
control of Sweetwater Broadcasting Company (Sweetwater), licensee of
Station KCWY(TV), Casper, Wyoming, from Uhlmann/Latshaw Broadcasting,
LLC (ULB) to Bozeman Trail Communications Company (BTC), which is owned
and controlled by Sunbelt Communications Company (Sunbelt). A timely
Petition to Deny the application was filed by Max Media of Montana LLC
(Max Media). This letter also constitutes a NOTICE OF APPARENT LIABILITY
FOR A FORFEITURE against Sweetwater pursuant to Section 503(b) of the
Communications Act of 1934, as amended ("Act"), under authority
delegated to the Chief, Media Bureau, by Section 0.283 of the
Commission's Rules, 47 C.F.R. §0.283. As set forth herein, it appears
that Sweetwater willfully and repeatedly violated Sections 73.3526,
73.3613 and 73.3615 of the Commission's Rules.[^1]

**Background.** By the subject application, ULB proposes to transfer its
51 percent interest in Sweetwater to BTC, which currently holds a 49
percent interest in the licensee.[^2] In this regard, ULB and BTC are
signatories to a Stock Purchase Agreement dated July 30, 1998. That
agreement contemplated the creation of Sweetwater, the transfer of 49
percent of that licensee to BTC, and an option for BTC to obtain ULB's
controlling 51 percent interest in Sweetwater to be exercised within 45
days after KCWY began program testing. By letter dated March 16, 2001,
BTC purportedly exercised that option, and on November 24, 2003, ULB
filed a long-form application to transfer its 51 percent interest and
ultimate control of Sweetwater to BTC.[^3] On February 15, 2004, that
application was dismissed by the staff because it failed to include a
copy of the underlying Stock Purchase Agreement giving rise to the
contemplated transaction.[^4] Two days later, the parties re-filed the
subject application, along with a copy of the Stock Purchase Agreement,
and Max Media filed its petition to deny.

**[Transfer of Control Application]{.underline}**

**Petition to Deny.** Max Media is the former licensee of KTGF(TV),
Great Falls, Montana.[^5] It claims standing as interested party to this
proceeding because the network programming arrangements for KCWY are
tied to the network programming arrangements for other television
stations under common control with BTC which Max Media alleges adversely
impact KTGF. Specifically, on February 25, 2004, Max Media filed a
"Request for Expedited Declaratory Ruling" challenging the network
arrangements between NBC and six television stations (including KCWY)
purportedly under common control of Sunbelt and alleging that those
arrangements appear to violate the "territorial exclusivity" provisions
of Section 73.658(b) of the Commission's Rules, 47 C.F.R. §73.658(b).

Although Max Media acknowledges that the Commission is assessing its
territorial exclusivity complaint in a separate proceeding, it maintains
in the instant petition that those allegations also evidence one of a
variety of means that Sunbelt has employed to exercise *de facto*
control of KCWY without FCC consent before the station was even
constructed. Max Media asserts that in 1998 when Sunbelt acquired its 49
percent interest in the licensee, it also obtained: an unconditional
option to acquire the remaining 51 percent pursuant to a Stock Purchase
Agreement; the right to build the station pursuant to a Construction and
Lease Agreement; and the right to program nearly the entire KCWY
schedule, subject only to Sweetwater's "reasonable approval," pursuant
to a Time Brokerage Agreement. Max Media also states that Sunbelt agreed
with NBC in 1999 to shift its network affiliation in Casper to Sunbelt
(or one of its affiliates) at such time that it had an operational
facility and staff in that community. Although KCWY was not specifically
named in the agreement with NBC, Max Media suggests that Sunbelt's
control of KCWY is evidenced by the fact that NBC subsequently shifted
its affiliation in the Casper market to that station in September
2003.[^6]

Max Media therefore contends that before approving this transaction, the
Commission should investigate whether there was a premature transfer of
control of the KCWY license; whether the parties intentionally
misrepresented or lacked candor with respect to the false certification
that copies of all agreements were submitted with this and the dismissed
November 24, 2004 transfer application; and whether BTC's parent company
(Sunbelt) had *de facto* control and exercised legal authority on behalf
of the licensee when Sunbelt "violated the network territorial
exclusivity rule in the 1999 arrangement with NBC." Max Media states
that, in any event, because a violation of the network exclusivity rule
is a "disqualifying, license-revocation rule violation," this
application should not be granted until its complaint against Sunbelt is
resolved.

In its opposition pleading, Sweetwater asserts that Max Media's petition
is baseless and has been submitted to harass and obstruct operations
involving Sunbelt. It contends that the petition should be dismissed
because Max Media lacks standing and has presented no factual basis to
support its arguments.[^7] Sweetwater also argues that the agreements
between ULB and BTC do not evidence a shift of control of KCWY because
the licensee \-- through its majority shareholder ULB -- retains
ultimate control of the station. Moreover, it argues that although BTC
has the right to program nearly all of KCWY's broadcast schedule, that
is irrelevant as "the Commission has never set limits on the amount of
time a brokered station could sell." Moreover, Sweetwater asserts that
such facts would only be relevant if the licensee had completely
forfeited its responsibilities, which is not the case here.

In a reply pleading, Max Media states that Sweetwater's arguments
regarding the submission of the Loving affidavit are without merit. It
argues that the affidavit meets the statutory requirement that a
petition to deny be accompanied by the affidavit of one with personal
knowledge of the facts alleged, and that Sweetwater's contention that it
is "borrowed" from another proceeding is without merit. Moreover, it
asserts that Sweetwater's references to a few select portions of the
time brokerage agreement that address licensee control prove little when
viewed against the larger context of how the station is actually
operated by BTC's principals. It therefore urges the Commission to look
beyond the boiler-plate language in the time brokerage agreement to
examine the facts and circumstances presented regarding BTC's control of
KCWY. In that regard, it states that the Stock Purchase Agreement
between the parties provided BTC with the "unilateral opportunity" to
take control of Sweetwater before the station was even constructed.
That, combined with BTC's apparent control over nearly all KCWY's
program schedule and its exercise of legal authority on behalf of the
station in its arrangements with NBC, leads Max Media to conclude that
an unauthorized transfer of control of the station has already taken
place.

**Discussion.** As an initial matter, we conclude that Max Media lacks
standing. A petition to deny may only be filed by a party in interest.
*See* 47 U.S.C. § 309(d)(1) and 47 C.F.R. § 73.3584. Party in interest
status is deemed to exist when a petitioner demonstrates that the grant
of the petitioned application will cause the petitioner a direct injury.
*See Sierra Club v. Morton,* 405 U.S. 727, 733 (1972); *see also
National Broadcasting Co.,* 37 FCC 2d 897, 898 (1972). A causal link
between the injury and the challenged action must be shown by the
petitioner. *See Duke Power Co. v. Carolina Environmental Study Group,
Inc.*, 438 U.S. 59, 72, 78 (1978). This causal link is established when
the injury is "fairly traceable" to the challenged action and the injury
would be prevented or remedied by grant of the application. *Id.,* at
74, 81. Not only must a petitioner demonstrate that it is a party in
interest, the petition must contain specific factual allegations
demonstrating that the grant of the application would be inconsistent
with the public interest, convenience and necessity.[^8]

Although Max Media's standing argument is based on its assertion that
the programming arrangements for KCWY are tied to network programming
arrangements for other stations in different television markets which
adversely affect KTGF, it fails to provide any specific factual
allegations demonstrating direct injury *vis-à-vis* the Sweetwater
transfer application -- Max Media does not compete with Sweetwater in
this television market and has not shown how it will be prejudiced by
the grant of this application.[^9] In light of Max Media's failure to
meet its burden to establish standing, we will dismiss its petition and
treat it as an informal objection pursuant to 47 C.F.R. § 73.3587.
Moreover, after considering Max Media's and Sweetwater's pleadings, we
find that no substantial and material question has been presented
concerning BTC's participation in the affairs of KCWY. However, as
discussed below, it appears that Sweetwater has violated the
Commission's Rules with respect to the reporting and filing of certain
contracts, as well as placing copies thereof in the station's public
inspection file.

Evaluation of Max Media's allegations that BTC is in *de facto* control
of KCWY involves a two-step process. First, we determine whether the
petition sets forth specific allegations of fact which, if true, would
demonstrate that grant of the subject application would be *prima facie*
inconsistent with the public interest. If so, we then determine, on the
basis of the application, the pleadings filed, or other matters which
may be officially noted, whether a substantial and material question of
fact is presented requiring resolution in a hearing.[^10] Thus, even if
a *prima facie* inconsistency with the public interest is presented, the
Commission must still decide "whether the totality of the evidence
arouses a sufficient doubt to the point that further inquiry is called
for."[^11] We have reviewed the pleadings and other matters before us
under this standard and find that no further inquiry is required because
no substantial and material question of fact has been presented
requiring further Commission action, or that the grant of the instant
application would be contrary to "the public interest, convenience and
necessity."

In this regard, when evaluating allegations of *de facto* control, the
Commission focuses its review on whether the entity in question makes
policies and decisions in three main areas of station operation:
programming, personnel and finances. *See WHDH, Inc.,* 17 FCC 2d 856
(1969), *aff'd sub nom, Greater Boston Television, Corp. v. FCC,* 444
F.2d 841 (D.C.Cir. 1970), *cert. denied* 403 U.S. 923 (1971). The time
brokerage agreement for KCWY complies with Commission policies as it
makes clear that ULB has ultimate control over all programming and
personnel decisions and policies. Max Media has submitted nothing to
indicate that ULB has abdicated the primary responsibilities of a
broadcast licensee. Moreover, BTC's financial participation as a
minority interest-holder in the licensee and its option to acquire
control of the station does not compel the conclusion that it controls
the licensee or has the ability to exert improper influence over the
core operations of the station prior to Commission authorization, as
alleged by Max Media. BTC's acquisition of its initial minority stake in
the licensee was the subject of the 1998 short-form application, and
that interest was reported in Sweetwater's subsequent ownership filings
at the Commission. Our rules make clear that a mere option to acquire
the licensee does not convey control.[^12] Further, after BTC elected to
exercise its option to acquire ultimate control of the station, the
parties filed the proper application and disclosed all relevant facts.
There is nothing before us to indicate that BTC has assumed premature
control of the station, either before the filing of the subject
application or during its pendency. Based on the foregoing, we find that
the applicants are fully qualified and that grant of the transfer of
control application will serve the public interest.

**[Rules Violations]{.underline}**

Section 503(b) of the Communications Act, 47 U.S.C. § 503(b), and
Section 1.80(a) of the Commission's Rules, 47 C.F.R. § 1.80(a), each
state that any person who willfully or repeatedly fails to comply with
the provisions of the Communications Act or the Commission's Rules shall
be liable for a forfeiture penalty. For purposes of Section 503(b) of
the Communications Act, the term "willful" means the violator knew it
was taking the action in question, irrespective of any intent to violate
the Commission's rules.[^13] A continuing violation is "repeated" if it
lasts more than one day.[^14]

**Filing Violation.** Section 73.3613(b)(3) of the Commission's Rules
requires every commercial television permittee and licensee to file with
the Commission contracts and other documents relating to its present and
future ownership or control, including stock purchase agreements and
options, within 30 days of the execution thereof.[^15] ULB and BTC
entered into the Stock Purchase Agreement, which contained the BTC's
option to acquire the licensee that is the basis of the subject transfer
of control application, on July 30, 1998. That agreement was not filed
at the Commission until the parties filed the subject transfer
application on February 17, 2004.

The Commission's Forfeiture Policy Statement sets a base forfeiture
amount of \$3,000 for the failure to file required information.[^16]
Sweetwater offers no explanation for its failure to file this agreement
with the Commission. Thus, considering the record as a whole, we believe
that a \$3,000 forfeiture is appropriate for the violation in this case.

**Reporting Violation.** Section 73.3615(a)(4)(i) of the Commission's
Rules requires that the contracts filed with the Commission pursuant to
§ 73.3613 be listed in the licensee's Ownership Reports.[^17] Although
the Stock Purchase Agreement, including the option for BTC to acquire
control of Sweetwater, was executed in 1998 and remains in effect, it
was not reported or otherwise disclosed in Ownership Reports filed on
behalf of Sweetwater.[^18]

The Commission's Forfeiture Policy Statement sets a base forfeiture
amount of \$3,000 for the failure to file required information.[^19]
Sweetwater offers no explanation for its failure to list this
information in its Ownership Reports. Thus, considering the record as a
whole, we believe that a \$3,000 forfeiture is appropriate for the
violation in this case.

**Public Inspection File Violation.** Section 73.3526(e)(5) of the
Commission's Rules, requires a commercial television licensee to place
in its public inspection file, among other things, an up-to-date listing
or copies of those contracts, agreements and options specified in
Section 73.3615(a)(4)(i) of the Rules.[^20] Although the Stock Purchase
Agreement, including the option for BTC to acquire control of
Sweetwater, was executed in 1998 and remains in effect, there is no
indication that a copy or listing of the Stock Purchase Agreement,
including BTC's option to acquire the licensee, was available in the
licensee's public inspection file through at least November 24, 2003,
when its previously filed transfer application was dismissed.[^21]

The Commission's Forfeiture Policy Statement sets a base forfeiture
amount of \$10,000 for violation of the public file rules.[^22]
Sweetwater offers no explanation for its failure to comply with the
public file rules in this regard. Thus, considering the record as a
whole, we believe that a \$10,000 forfeiture is appropriate for the
violation in this case.

**[Ordering Clauses]{.underline}**

Based on our review of the facts and circumstances as set forth above,
we find that Max Media has failed to raise a substantial and material
question of fact that grant of the subject transfer of control
application would be inconsistent with the public interest. Therefore,
IT IS ORDERED That Max Media's petition to deny IS DISMISSED, and when
considered as an informal objection, IS DENIED.

IT IS FURTHER ORDERED That the above-captioned application to transfer
control of Sweetwater Broadcasting Company from Uhlmann/Latshaw
Broadcasting, LLC to Bozeman Trail Communications Company IS GRANTED.

IT IS FURTHER ORDERED, That pursuant to Section 503(b) of the
Communications Act of 1934, as amended, and Sections 0.61, 0.283, and
1.80 of the Commission's Rules, Sweetwater Broadcasting Company is
hereby NOTIFIED of its APPARENT LIABILITY FOR FORFEITURE in the total
amount of sixteen thousand dollars (\$16,000) for willfully and
repeatedly violating Sections 73.3526, 73.3613 and 73.3615 of the
Commission's Rules.[^23]

IT IS FURTHER ORDERED, That pursuant to Section 1.80 of the Commission's
Rules, within thirty days of the release date of this Notice/Order,
Sweetwater Broadcasting Company SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking reduction
or cancellation of the proposed forfeiture. Payment of the forfeiture
must be made by check or similar instrument, payable to the order of the
Federal Communications Commission. The payment must include the NAL/Acct
No. and FRN No. listed above. Payment by check or money order may be
mailed to Federal Communications Commission, and P.O. Box 358340,
Pittsburgh, PA 15251-8340. Payment by overnight mail may be sent to
Mellon Bank /LB 358340, 500 Ross Street, Room 1540670, Pittsburgh, PA
15251. Payment by wire transfer may be made to ABA Number 043000261,
receiving bank Mellon Bank, and account number 911-6106. Requests for
full payment under the installment plan should be sent to: Chief,
Revenue and Receivables Operations Group, 445 12^th^ Street, S.W.,
Washington D.C. 20554.[^24]

Finally, IT IS ORDERED That a copy this *Notice* shall be sent by First
Class and Certified Mail, Return Receipt Requested to Sweetwater
Broadcasting Company, P.O. BOX 419410, Kansas City, MO, 64141, and to
its representative, Jonathan Lichstein, at the address listed above.

Sincerely,

Donna C. Gregg

Chief, Media Bureau

cc: Julian L. Shepard, Esquire

[^1]: 47 C.F.R. §§ 73.3526, 73.3613 and 73.3615.

[^2]: BTC acquired its interest in the licensee from ULB pursuant to the
    September 1, 1998 grant of a short-form application (File No.
    BAPCT-19980813IA).

[^3]: ^?^ File No. BTCCT-20031124OH.

[^4]: ^?^ Max Media filed a petition to deny this transfer application
    claiming, among other things, the failure of the parties to submit a
    copy of the Stock Purchase Agreement with the transfer application.
    It also stated that it could not obtain a copy of that agreement
    from the licensee or elsewhere in the Commission's records.

[^5]: ^?^ On November 24, 2004, Max Media assigned the KTGF license,
    which is currently held by Destiny Licenses, LLC.

[^6]: ^?^ Max Media states that a copy of KCWY's network affiliation
    agreement with NBC is not available for inspection from the
    station's public inspection file or the Commission's records.

[^7]: Specifically, Sweetwater states that Max Media's allegations are
    not supported by a proper affidavit of one with personal knowledge
    of the facts alleged. In this regard, Max Media has submitted
    documents contained in its other filings, including the affidavit of
    Eugene Loving, its Chairman and Chief Executive Officer, to support
    its instant petition. Sweetwater states that those documents are
    defective because they were submitted in other proceedings and a
    "petitioner cannot 'borrow' an affidavit from one proceeding and
    apply it towards (sic) another." It further argues that Loving's
    affidavit, originally submitted with the territorial exclusivity
    complaint, is irrelevant to this proceeding because it was signed
    almost two months prior to the filing of the instant application and
    does not show that he has personal knowledge of the facts alleged in
    this proceeding other than that NBC shifted its affiliation in the
    Casper market to KCWY. It maintains that "in order for this Petition
    to be valid, Mr. Loving would have to execute a new affidavit."

[^8]: The allegations contained in the petition must also be supported
    by an affiant with personal factual knowledge, except for those
    allegations of which official notice may be taken. *See* 47 U.S.C. §
    309(d)(1). Sweetwater challenges the validity of Loving's affidavit
    submitted in support of this petition because it was also submitted
    in another Commission proceeding, specifically Max Media's complaint
    to the Commission regarding Sunbelt's network affiliation
    arrangements. However, Sweetwater offers no support for its
    argument, and we find no basis to reject the affidavit on this
    account. In addition, because it was filed and part of the record in
    another Commission proceeding, there is nothing to prohibit us from
    taking official notice of the subject affidavit.

[^9]: ^?^ Moreover, the grant of this application will not impact the
    evaluation of Max Media's request for a declaratory ruling on
    Sunbelt's network arrangements with NBC, which has been undertaken
    in a separate proceeding.

[^10]: 47 U.S.C. §§ 309(d)(1) and (2); *Astroline Communications Co. v.
    FCC,* 857 F.2d 1556, 1561 (D.C. Cir. 1988).

[^11]: ^?^ *Id.* at 1562.

[^12]: ^?^ 47 C.F.R. § 73.3555, Note 2(e).

[^13]: *See Southern California Broadcasting, Co.,* 6 FCC Rcd 4387,
    4387-88 (1991).

[^14]: ^?^ *Id.,* 6 FCC Rcd at 4388.

[^15]: ^?^ 47 C.F.R. § 73.3613(b)(3).

[^16]: *The Commission's Forfeiture Policy Statement and Amendment of
    Section 1.80 of the Commission's Rules*, 12 FCC Rcd 17087, 17114
    (1997), *recon. denied,* 15 FCC Rcd 303 (1999) and Section 1.80 of
    the Commission's Rules, 47 C.F.R. § 1.80.

[^17]: 47 C.F.R. § 73.3615(a)(4)(i), FCC Form 323.

[^18]: ^?^ *See* File Nos. BOA-20010531ABP, BOA-20030603AEM and
    BON-20040721AMS.

[^19]: *The Commission's Forfeiture Policy Statement and Amendment of
    Section 1.80 of the Commission's Rules*, 12 FCC Rcd at 17114, and
    Section 1.80 of the Commission's Rules, 47 C.F.R. § 1.80.

[^20]: 47 C.F.R. § 73.3526(e)(5). A licensee who keeps an up-to-date
    list of such contracts must provide a copy within seven days to a
    requesting party.

[^21]: Contrary to Max Media's contention, we do not believe Sweetwater
    made a false certification with respect to the filing of all
    agreements in the subsequently dismissed November 24, 2003 transfer
    application. While Sweetwater may have been incorrect in its
    original certification, it did disclose all relevant facts,
    including BTC's option to acquire Sweetwater, in that application.
    Absent any indication that it intended to misrepresent those facts,
    we conclude that Sweetwater did not intentionally make a false
    certification. *See, e.g., Public Notice on Random Verification of
    Financial Certifications,* 2 FCC Rcd 2122 (1987).

[^22]: *The Commission's Forfeiture Policy Statement and Amendment of
    Section 1.80 of the Commission's Rules*, 12 FCC Rcd at 17114, and
    Section 1.80 of the Commission's Rules, 47 C.F.R. § 1.80.

[^23]: 47 C.F.R. §§ 73.3526, 73.3613 and 73.3615

[^24]: *See* 47 C.F.R. § 1.1914.