FEDERAL COMMUNICATIONS COMMISSION
                  Washington, D.C.  20554
                              
                                         In reply refer to:
                                                 1800C1-JWS
                                  Ref #s 99070062, 99080114
                            Facility I.D. #42384   KRLI(FM)
                                                           
                      October 21, 1999
                   Released: October 22, 1999              
  
  CERTIFIED MAIL - - RETURN RECEIPT REQUESTED
  
  Mr. Michael L. Carter, President
  KANZA, Inc.
  102 North Mason
  Carrollton, Missouri 64633
  
  Dear Mr. Carter:  
  
       This letter constitutes a NOTICE OF APPARENT LIABILITY FOR A FORFEITURE to
  KANZA, Inc. ("KANZA") pursuant to Section 503(b) of the Communications Act of 1934, as
  amended (the "Act").  As explained herein, we believe that KANZA has willfully and/or
  repeatedly violated Section 310(d) of the Act and Section 73.3540 of the Commission's Rules by
  assuming control of Station KRLI(FM), Malta Bend, Missouri, without Commission
  authorization.  This action is taken pursuant to authority delegated to the Chief, Mass Media
  Bureau, by Section 0.283 of the Commission's Rules.
  
                         Background
  
  On June 16, 1992, your son, Miles Carter, applied for a construction permit to build a
  new commercial FM station on non-reserved channel 248 at Malta Bend, Missouri.  Malta Bend
  is located some 10 miles from Carrollton.  The Commission granted the application on
  December 22, 1992.  After receiving two extensions of time to construct and having the expired
  permit replaced, Miles Carter submitted a license application for his new station, which, in the
  meantime, had been assigned the call sign of KRLI (File No. BLH-961106KC).  We granted that
  application on February 6, 1997. 
  
  In October 1996, shortly before the license application was filed, Miles Carter entered
  into a tower lease and a Time Brokerage Agreement ("TBA") with KANZA.  Our files reflect
  that you and your wife control KANZA.  Our files further reflect that during the pendency of the
  KRLI permit, KANZA held the licenses for stations KAOL(AM) and KMZU(FM), Carrollton
  and KTRX(FM), Tarkio, all in Missouri.  Currently, KANZA is the licensee of KAOL(AM),
  KMZU(FM), and WHB(AM), Kansas City. 
  
  The lease agreement provides that, for $850 per month, KANZA would lease to Miles
  Carter space on its tower and its transmitter building.  His only ongoing financial obligations
  were maintenance of a public liability insurance policy with respect to the leased premises and
  payment of state and local taxes on the value of the leasehold.  The lease was for a five-year
  term.
  
  Under the TBA, KANZA programs the station 24 hours per day in exchange for $3,400 per
  month. In addition to giving KANZA the right to program the station, the TBA provides that
  Miles Carter can interrupt programming for the purpose of making required station
  identifications and emergency announcements, or if he determines that KANZA's programming
  is not in the public interest.  The TBA recites that Miles Carter will retain control over the
  station's personnel, programming and finances and that "all decisions made concerning the
  operation of the Station shall be made with the advise [sic] and counsel of Licensee."  The TBA
  is for a term of five years.  
  
  On April 9, 1998, Commission personnel inspected Station KRLI.  The inspector found
  that the station's studio was located in a building owned by KANZA; that the KANZA building
  included studios for KAOL(AM), KMZU(FM) and WHB(AM); that KANZA paid for the
  station's utilities and insurance; and that KANZA employed Miles Carter as an announcer. 
  Additional matters not pertinent to this letter were noted and subsequently resolved.  The
  inspection results were forwarded to this office for further review. 
  
  By letter dated March 24, 1999, we sought further information from Miles Carter to ascertain
  whether he or KANZA controlled KRLI.  In addition, we sought to determine whether his
  construction permit application was genuine and whether he was in compliance with the
  Commission's main studio rule.  Miles Carter responded by letter dated April 19, 1999.  After
  reviewing that response, the staff sent him an additional inquiry dated May 5, 1999, and one to
  KANZA dated July 6, 1999.  His response and that of KANZA are dated June 1, 1999, and
  August 4, 1999, respectively, and are considered herein.
  
  With respect to the initial application for the station, Miles Carter acknowledges that the
  idea for applying for a construction permit originated with you.  However, he states that he paid
  the application fee and that he chose and obtained financing to pay for the station's equipment. 
  He further declares that he hired, worked with and paid engineering and legal consultants and
  that he supervised the installation of the station's transmitter, antenna and studio equipment.  In
  sum, he contends that he had sole responsibility for the station's construction and activation. 
  You support these assertions.  
  
  Miles Carter also contends that he controls the station's issue responsive programming
  policies.  In this regard, he asserts that he prepares the station's quarterly issues/programs lists,
  and that he initiated the broadcast of a "Community Calendar," which highlights events for local
  non-profit organizations.  He also declares that he participated in determining the station's
  entertainment format and that he decided that KRLI should cover certain high school athletic
  events and air a one hour talk show that focuses on area sporting events.  Nevertheless, he
  concedes that KANZA's personnel are involved in the production and broadcast of all of the
  station's programming.  In this regard, KANZA personnel prepare and deliver the station's news
  and produce and host all of the station's issue responsive programming.  Miles Carter has never
  exercised his TBA right to interrupt KANZA's programming on KRLI.
  
  Miles Carter also states that he has been "general manager" of KRLI since it began
  operations in October 1996.  However, he also relates that he has not hired any station employees
  and that KANZA is the entity with authority to hire and fire all employees who are involved with
  KRLI pursuant to the TBA.  He further acknowledges that he has been employed by KANZA at
  its Carrollton location since 1991.  Miles Carter has held the positions of on-air announcer,
  operations manager, and, since 1998, general manager of the KANZA stations.  He states that he
  has been on site at KRLI daily during the hours of 8:00 a.m. to 5:00 p.m. since the station began
  operations.  According to you, Miles Carter's wife also works at KRLI as a bookkeeper.  
  
  With respect to station finances, Miles Carter states that he has paid all application and
  regulatory fees.  He further states that, in December 1996, he and his wife borrowed nearly
  $140,000 from a local bank.  He relates that he used the sum borrowed to repay in full the sums
  drawn under a line of credit obtained in September 1996, which, in turn, he utilized to pay
  construction expenses and buy station equipment.  He indicates that he and his wife are repaying
  the $140,000 loan.  He also states that he pays state property taxes attributable to KRLI. 
  However, he also acknowledges that he has no studio lease and that the tower lease makes no
  reference whatsoever to studio space.  In this regard, he claims that it was always "understood"
  that the transmitter/site lease payments covered the KRLI studio facilities.  Further, he admits
  that KANZA pays the following KRLI expenses: property insurance on station equipment;
  utilities (water, gas, and electricity); telephone; news programming; promotions/advertisements;
  and maintenance of station equipment.
  
                         Discussion
                              
  A.  Unauthorized Transfer of Control
  
       Section 310(d) of the Communications Act states, in pertinent part:
  
       No construction permit or station license, or any rights thereunder, shall be transferred,
       assigned, or disposed of in any manner, voluntarily or involuntarily, directly or indirectly,
       or by transfer of control of any corporation holding such permit or license, to any person
       except upon application to the Commission and upon finding by the Commission that the
       public interest, convenience, and necessity will be served thereby.
       
  See also, Section 73.3540 of the Commission's Rules. 
  
       There is no formula for evaluating whether a party is in de facto, or actual, control of a
  broadcast station.  See, e.g., Stereo Broadcasters, Inc., 55 FCC 2d 819, 821 (1975), modified, 59
  FCC 2d 1002 (1976).  In making such a determination, we traditionally look to whether a new
  entity has obtained the right to determine the basic operating policies of the station.  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).  Specifically, we seek to ascertain who
  determines the station's policies with respect to programming, personnel and finances.  See
  Choctaw Broadcasting Corporation, 12 FCC Rcd 8534, 8538 (1997).  A licensee may delegate
  certain functions on a day-to-day basis to an agent or employee, see, e.g., Southwest Texas
  Public Broadcasting Council, 85 FCC 2d 713, 715 (1981), but such delegation cannot be
  wholesale. That is, those persons assigned a task must be guided by policies set by the permittee
  or licensee.  See David A. Davila, 6 FCC Rcd 2897, 2899 (1991).  Moreover, the standards by
  which we measure control are equally applicable in situations involving time brokerage
  agreements.  Choctaw Broadcasting Corporation, supra.
  
       Review of the record reflects that KANZA's role in the operations of KRLI goes well
  beyond that of a program provider and a landlord.  Specifically, KANZA employees produce and
  host all of KRLI's issue responsive programming; conversely, no KRLI employee is involved in
  the broadcast of such programming.  In this regard,, KANZA is Miles Carter's employer with
  respect to all operations at its Carrollton studios, which include KRLI.  Finally, KANZA directly
  pays for a variety of KRLI expenses.  In this regard, we recognize that Miles Carter and his wife
  are obligated to repay the loan obtained to purchase the station's equipment.   However, the
  Commission has advised licensees that:
  
       "licensees engaged in time brokerage arrangements   must operate   as a stand-alone
       entity discrete from the broker.  Thus, we require that licensees must maintain their own
       bank accounts, pay the salaries of their own employees, and remain responsible for their
       own obligations to programmers, utility companies, and other operational matters.  In
       other words, the licensee should be ready and able to operate independently from the
       broker at anytime [sic] it believes the arrangement does not fulfill its public interest
       responsibilities."  WGPR, Inc., 10 FCC Rcd 8140, 8145 (1995), vacated in part on other
       grounds sub nom. Serafyn v. FCC, 149 F.3d 1213 (D.C. Cir. 1998).
  
  Here, it appears that KRLI's operation is inextricably linked with the operations of
  KANZA stations KAOL(AM), KNZU(FM), and WHB(AM), and that KRLI is as much under
  KANZA's control as are its other three Carrollton stations.  In the areas of programming,
  personnel and finances, management and operation of each station ultimately resides with
  KANZA.  Thus, the instant situation bears no resemblance to cases where the Commission has
  chosen not to explore allegations involving common control of broadcast stations by members of
  the same family.  See, e.g., Alabama Radio Corporation, 69 FCC 2d 1256, 1263-64 (1978) (The
  Commission denied a petition to deny where the applicant was able to demonstrate: separate and
  distinct chains of management authority and independent day-to-day operations).
   
  In sum, reference to the criteria traditionally employed by the Commission to ascertain
  control points to KANZA, not Miles Carter, as the operator of KRLI.  It thus appears that
  KANZA obtained control of the station from Miles Carter from the time of the TBA and lease in
  October 1996 and did not relinquish control subsequently.  See Ms. Sally Hoskins, President, 13
  FCC Rcd 25317 (MMB 1998).  Accordingly, a forfeiture is warranted.  In addition, the violation
  must be remedied as outlined below.
  
     B.     Conclusion 
  
     As discussed above, we find that KANZA apparently obtained control of KRLI without
  Commission consent upon the signing of the TBA and lease in October 1996 and that such
  control has continued to the present.  Applying the guidelines adopted by the Commission, we
  believe a forfeiture of $8,000 is warranted for the willful and repeated violations of Section
  310(d) of the Communications Act and Section 73.3540 of the Commission's Rules.  See
  Washington Broadcast Management, Inc., 13 FCC Rcd 24168 (MMB 1998) (subsequent history
  omitted).  Further, in order to ensure that the instant violations are remedied, you must submit to
  the Bureau, within 30 days of the date of this letter, a plan to come into compliance with the
  Commission's rules and policies concerning control.
  
    Accordingly, pursuant to Section 503(b) of the Communications Act, you are hereby advised
  of KANZA's liability for a FORFEITURE in the amount of $8,000 for the apparent willful and
  repeated violations of Section 310(d) of the Act and Sections 73.3540 of the Commission's
  Rules.  In regard to the forfeiture, KANZA is afforded a period of thirty (30) days from the date
  of this Notice of Apparent Liability to show, in writing, why a forfeiture penalty should not be
  imposed or should be reduced or to pay the forfeiture.  Any showing as to why the forfeiture
  should not be imposed or should be reduced shall include a detailed factual statement and such
  documentation and affidavits as may be pertinent.  See Section 1.80(f)(3) of the Commission's
  Rules.  Other relevant provisions of Section 1.80 of the Commission's Rules are summarized in
  the attachment to this letter.  
  
  In addition, within 30 days of the date of this letter, you are directed to file with the
  Secretary of the Commission, attention Mass Media Bureau, a plan of action for coming into
  compliance with Section 310(d) of the Act and Section 73.3540 of the Commission's Rules. 
  Such plan shall set forth the steps you propose to take (or have already taken) to relinquish
  control of KRLI consistent with the Commission's rules and policies as explained above.  In
  addition to the foregoing, KANZA and Miles Carter may file an application to obtain
  Commission permission to assign the KRLI license from him to KANZA. 
  
                   FEDERAL COMMUNICATIONS COMMISSION   
  
  
  
                   Roy J. Stewart
                   Chief, Mass Media Bureau
  
  Attachment
  
  cc:    David M. Silverman, Esquire
    John R. Wilner, Esquire