********************************************************
                         NOTICE
********************************************************
This document was converted from
WordPerfect to ASCII Text format.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
WordPerfect version or Adobe Acrobat version, if available.
*****************************************************************
Before the
Federal Communications Commission
Washington, D.C. 20554
                                                            In reply refer to:
                                                            818ed013 (King Broadcasters, Inc.)
                                                            818ed014 (KSRM, Inc.)
                               July 29, 1998
                                                            Released:  July 30, 1998
CERTIFIED MAIL - RETURN RECEIPT REQUESTED
Ms. Sally Hoskins, President
King Broadcasters, Inc.
Licensee of Stations KSLD(AM)/KKIS-FM, Soldotna, AK
c/o Klondike City Complex
44619 Sterling Highway
Soldotna, AK  99669
Mr. Chester P. Coleman
c/o American Radio Brokers, Inc./SFO, Suite 625
1255 Post Street
San Francisco, CA  94109
Mr. John Davis, President
KSRM, Inc.
HC 2, Box 852
Milepost 16.5 K Beach Road
Soldotna, AK  99669
                       In re:       Stations KSLD(AM)/KKIS-FM, Soldotna, AK
                                    File Nos. BAL-940401EA/BALH-940401EB
                                    Petition to Deny
Dear Applicants and Mr. Davis:
     This is in reference to the applications for assignment of the licenses of stations
KSLD(AM)/KKIS-FM, Soldotna, Alaska, from King Broadcasters, Inc. ("King"), to Chester P.
Coleman ("Coleman") (File Nos. BAL-940401EA/BALH-940401EB), the Petition to Deny filed
May 13, 1994, by Peninsula Communications, Inc. ("Peninsula"), the licensee of KPEN-FM,
Soldotna, Alaska, and the informal objection filed November 6, 1995, by William J. Glynn, Jr.
("Glynn").  For the reasons set forth below, we deny Peninsula's Petition to Deny and Glynn's
informal objection, and we grant the applications for assignment of the KSLD(AM) and
KKIS-FM licenses from King to Coleman.
    However, as set forth herein, it does appear that King engaged in an unauthorized transfer
of control of stations KSLD(AM) and KKIS-FM to Coleman and to KSRM, Inc. ("KSRMI"),
without prior Commission consent, in violation of Section 310 of the Communications Act of
1934, as amended (the "Communications Act"), and Section 73.3540 of the Commission's Rules.
We have determined that the appropriate sanction for this violation is a monetary forfeiture, not
denial of the assignment application.  This letter, therefore, also constitutes a NOTICE OF
APPARENT LIABILITY FOR FORFEITURES against King Broadcasters, Inc., and against
KSRM, Inc., pursuant to Section 503(b) of the Communications Act, under authority delegated
to the Chief of the Mass Media Bureau by Section 0.283 of the Commission's Rules.
     The Pleadings.  Peninsula alleged in its Petition to Deny that King transferred control of
stations KSLD(AM) and KKIS-FM to Coleman prior to the time that the applications for consent
to that transfer were filed with, and granted by, the Commission, in violation of Section 310(d)
of the Communications Act.  Peninsula pointed first to a "Program Services Agreement" ("PSA")
dated February 16, 1994.  The PSA is a time brokerage agreement pursuant to which Coleman
provides programming for "substantially all the Stations' [KSLD(AM) and KKIS-FM] air time,"
including entertainment, commercials, news, and public service announcements.  Coleman pays
King $2,600 per month for the right to program the stations, but those payments are to be
credited against the purchase price for the stations.  The PSA further provides that Coleman will
"reimburse" King for all operating expenses of the stations, specifically including electrical
power, liability insurance, and the salary for one full-time employee of King.  The PSA also
provides that Coleman will "acquire and install and during the term of this Agreement maintain,
at [Coleman's] sole expense, all technical equipment necessary for the construction of the
facilities of Station [KKIS-FM] in accordance with that station's construction permit . . . ."  At
the time the PSA was signed, KKIS-FM had not yet been constructed.  Coleman subsequently
constructed station KKIS-FM and placed it into operation.  An FCC Form 302 license application
to cover the KKIS-FM permit was filed on March 29, 1994 (File No. BLH-940329KA, granted
July 28, 1995).
    Peninsula further alleged that one of its officers, David Becker, visited the
KSLD(AM)/KKIS-FM studios on May 10, 1994, asked to speak to the general manager of the
stations, and was told by the KSLD(AM)/KKIS-FM receptionist that the General Manager of the
stations was Chester Coleman, who was "out of state" at that time.  According to Peninsula, this
incident established that Coleman had also assumed the duties of General Manager of
KSLD(AM)/KKIS-FM.  Peninsula also supplied a Declaration from a former employee of King,
Ron Holloway, who stated that he and another King employee, Dan Donovan, were called to a
meeting at the station offices with Chester Coleman.  At that meeting, Coleman handed both
Holloway and Donovan "letters in which it was stated that Mrs. Hoskins had terminated our
positions effective immediately and that we could pick up our paychecks on Friday.  No further
conversation end of meeting."  According to Peninsula, this incident demonstrated that Coleman
had the ultimate authority to fire employees, which is a responsibility incident to a general
manager's duties.
    Peninsula also alleged that the change of call sign for the newly constructed FM station
from KAZO(FM) to KKIS-FM was a further indication of Coleman's improper control over
KKIS-FM.  According to Peninsula, the KKIS call sign was at the time assigned to an AM
station in Concord, California, licensed to Concord Area Broadcasters, which is controlled and
50% owned by Chester Coleman.  Coleman supplied King with a letter for submission with
King's call sign change request authorizing King to request the use of the call sign KKIS-FM,
concurrently reserving KKIS(AM) for continued use by the Concord station.
    Peninsula further alleged that upon prematurely assuming control of the stations, Coleman
then engaged in a further transfer of control of the stations to John Davis, the owner of KSRMI,
licensee of stations KSRM(AM), Soldotna, and KWHQ-FM, Kenai, Alaska.  To support this
allegation, Peninsula stated that when its officer, Mr. Becker, had asked to see the stations'
general manager (as discussed above) and was told that Mr. Coleman was not in the area, the
KSLD(AM)/KKIS-FM receptionist then directed Becker to John Davis, whom she allegedly
identified as the "General Manager in Mr. Coleman's absence."  Peninsula also stated that
Coleman constructed the new KKIS-FM studios in the same office space as that housing the
KSRM/KWHQ studios, and moved the KSLD(AM) studios there as well.  Further, Becker's
Declaration states that Davis told him that his company, KSRMI, had an "exclusive marketing
agreement with Chester Coleman" that permitted KSRMI to jointly sell advertising for
KSLD(AM)/KKIS-FM in conjunction with its sales efforts for KSRM(AM)/KWHQ-FM.
Peninsula submitted sales promotional materials used for the joint sales of advertising by the
KSRMI sales staff for the four stations.
    Peninsula alleged that KSRMI's control over KSLD(AM), KKIS-FM, KSRM(AM), and
KWHQ-FM involves four of the six stations in the market, in violation of the multiple ownership
rules governing markets with 14 or fewer stations.  Peninsula claimed that because KSRMI could
not own KSLD(AM)/KKIS-FM outright, KSRMI's owner, John Davis, "has apparently concocted
a scheme wherein Coleman, a radio station broker, has contracted to purchase KSLD(AM) and
KKIS-FM from Mrs. Hoskins, has entered into a time brokerage agreement with her over the
stations while FCC approval is pending, and has turned control of the stations over to Davis to
operate on his behalf."  According to Peninsula, Hoskins is a willing participant in Davis's
scheme because Hoskins is desperate to sell the stations, as is evidenced by similar allegations
of a premature transfer control of KSLD(AM) in connection with a previous 1992 proposed sale
to Cobb Communications, Inc.
      In his Opposition to the Petition to Deny, Coleman asserted that the PSA is a permissible
time brokerage agreement which provides for the sale of a substantial block of time on the
stations to Coleman in consideration for Coleman making a monthly payment to King "plus
reimbursing [King] for its operating expenses and acquiring and installing the equipment that was
needed to complete construction of KKIS-FM."  According to Coleman, the PSA comports with
time brokerage agreements that have been found by the Commission not to have resulted in a
transfer of control of a radio station, citing Revision of Radio Rules and Policies, 7 FCC Rcd
6387,  66 (1992); Joseph A. Belisle, 5 FCC Rcd 7585 (MMB 1990); J. Dominic Monahan, 6
FCC Rcd 1867 (MMB 1990); and Peter D. O'Connell, 6 FCC Rcd 1869 (MMB 1990).  Coleman
further asserted that the PSA commits King to retain "ultimate control over the Stations' facilities
and operations, including, specifically control over the stations finances, personnel and
programming and compliance with the Stations' obligations to operate in the public interest and
to comply with the rules, regulations and policies of the FCC."  The PSA also allows King to
reserve up to eight hours per week "for the broadcast of regularly scheduled news, public affairs,
and other programming produced and/or selected by Owner."  The PSA further provides that
King is obligated to broadcast programming over the stations which addresses the issues of public
importance in the service areas, and that King "will use a substantial portion of the air time
reserved to it under the Agreement to satisfy its public service programming obligations."
      With respect to the change in call sign for KKIS-FM station, Coleman admitted asking
King to change it and making the call sign of his California station available to King, but he
contended that there was no legal significance to this involvement.  Coleman argued that call
signs are promotional and marketing identifiers for radio stations, and that a time brokerage
agreement typically gives the programmer the right to request changes in call signs for marketing
purposes.  With respect to Peninsula's allegation that Coleman was involved in the firing of King
employees Ron Holloway and Dan Donovan, Coleman submitted new declarations from both
Holloway and Donovan, as well as from Coleman and Sally Hoskins, all asserting that Ms.
Hoskins was in fact present at the meeting at which Holloway and Donovan were fired, and that
Hoskins herself handed them their termination letters (which were letters signed by Hoskins), not
Coleman.  Coleman also submitted a declaration from the stations' receptionist, who denied
having identified either Coleman or John Davis as the general manager of KSLD(AM)/KKIS-FM.
      As for the further allegation that Coleman, subsequent to assuming control from King,
then turned over control of the stations to John Davis' KSRMI, Coleman admitted to having
entered into an oral joint advertising sales agreement with KSRMI, enabling it to engage in joint
sales of KSLD(AM)/KKIS-FM with KSRMI's KSRM(AM)/KWHQ-FM. Coleman insisted,
however, that Davis and KSRMI have had no involvement in programming KSLD(AM) or KKIS-
FM, or in any other aspect of KSLD(AM)/KKIS-FM's operations other than advertising sales
pursuant to the joint sales agreement with Coleman.  Citing Revision of Radio Rules, supra, 7
FCC Rcd 2755,  63, Coleman argued that joint venture arrangements that do not involve time
brokerage or programming are permitted by the Commission without restriction.
      In its Reply, Peninsula contended that King had tried to mislead the Commission that the
KSLD(AM)/KKIS-FM "main" studios are located at Mrs. Hoskins's other non-broadcast business,
Sam's Pawn Shop, when in fact the stations are operated completely from Davis's
KSRM(AM)/KWHQ-FM studios several miles away, which Hoskins had advised the Commission
in a March 2, 1994, letter were "auxiliary" studios for KSLD(AM)/KKIS-FM. Peninsula also
alleged that KSLD(AM)'s only microwave studio-transmitter link was moved to the KSRM(AM)
studios, and that therefore "Mrs. Hoskins has no ability to operate KSLD(AM) and KKIS-FM
stations from Sam's Pawn Shop."  In addition, Peninsula submitted a Declaration of Brent
Elkington, the licensee of KZXX(AM), in neighboring Kenai, Alaska, in which Elkington stated
that, "[i]t is generally known here in the Kenai-Soldotna radio market that Mr. John Davis
controls and jointly sells KSRM(AM), KWHQ-FM, KSLD(AM) and KKIS-FM and that Mrs.
Sally Blakely Hoskins has essentially abandoned her day-to-day control over the latter two
stations to Mr. Davis."  Elkington described a joint sales presentation he witnessed wherein Davis
"made it clear that he would in the future be jointly selling advertising for
KSRM-KWHQ-KSLD-KAZO (now KKIS)."  Elkington also asserted that by listening to the
station, he had "ascertained that Mr. Davis' employees produce and participate in the local
programming broadcast over KSLD(AM) and KKIS-FM."  Elkington stated in particular that all
of the locally-produced public service and commercial announcements on KSLD(AM)/KKIS-FM
feature Davis' employees, and that KSLD(AM)'s daily 7:00 pm to 11:00 pm live local
programming, a talk show, was moderated by Pat Nichols, an employee of KSRMI.
     Coleman's Response to Reply included a Declaration from Sally Hoskins attesting that
the main studio for KSLD(AM)/KKIS-FM, located at Sam's Pawn Shop, has full program
origination equipment and means for both stations to broadcast directly from this location.
Additionally, Coleman provided his own Declaration and one from Davis stating that the persons
who produce and announce public service announcements and commercials for
KSLD(AM)/KKIS-FM are employees of Coleman's production company, "Radio One."
According to both Coleman and Davis, the only material produced or announced by persons
employed by KSRMI are commercials which are sold in combination with KSRM(AM)/KWHQ-
FM pursuant to the admitted joint sales agreement between Coleman and Davis.  With respect
to the employee of KSRMI who also hosted a daily program on KKIS-FM, Pat Nichols, Davis
and Coleman claimed that Ms. Nichols at that time was concurrently employed by KSRMI and
by Coleman's Radio One, and Coleman produced a copy of Radio One's payroll check for
Nichols for the relevant time period.  Further, Coleman attested that he had been much more
involved in the programming produced for KSLD(AM)/KKIS-FM pursuant to the PSA than
claimed by Peninsula, and he pointed to certain programming decisions he made and to frequent
trips to Soldotna to supervise programming operations.  Coleman further stated that he has a
full-time employee on site who supervises Radio One's daily programming operations.
    Peninsula's January 11, 1996, Supplement to Comments alleged that Sally Hoskins, the
sole owner of King, had filed a voluntary petition for personal bankruptcy in U.S. Bankruptcy
Court in Alaska on August 31, 1995, and had failed to list her ownership of King and the stations
as assets.  According to Peninsula, this alleged failure shows that Hoskins does not consider
herself to be the owner or licensee of the stations.  King's February 20, 1996, Supplemental
Response to Comments contradicts this allegation, noting that Hoskins' ownership of King's
stock was correctly listed in her bankruptcy filing, and that Peninsula looked on the wrong
schedule. King contends that Hoskins's personal bankruptcy has no impact on the subject
assignment applications.
    The Commission also received an informal objection dated November 6, 1995, from
William J. Glynn, Jr., of Kasilof, Alaska.  Glynn alleged that announcements were recently aired
on stations KKIS-FM, KSRM(AM), and KWHQ-FM, encouraging listeners to apply for a
construction permit for a new FM allocation at Kasilof.  According to Glynn, these
announcements were aired by Davis in "an attempt to generate so many filings on the Kasilof
allocation that the matter will be designated for hearing and tie up the proceeding for years."
Glynn claims that this effort will limit competition by keeping a new station in an adjoining
market off the air pending the outcome of the hearings.
    Commission Inquiries and Inspections.  After review of the Peninsula and Coleman
pleadings, the Audio Services Division staff sought additional information as to whether there
had been a premature or unauthorized transfer of control of Stations KSLD(AM) and KKIS-FM
from King to Coleman and/or to Davis and KSRMI.  The Division thus on May 8, 1995, sent
letters of inquiry to King and Coleman.  Responses to the Commission's letters of inquiry were
filed by King on July 6, 1995, and by Coleman on July 13, 1995.  In addition, inspections of
both the main and auxiliary studios of KSLD(AM)/KKIS-FM were conducted by the Anchorage
Field Office of the Commission's Compliance and Information Bureau ("CIB") on August 23,
1995.
    The responses to the Commission's May 1995 letters of inquiry provided information
regarding Coleman's and KSRMI's involvement in the operations of the stations starting in
February of 1994.  First, the responses to the letters of inquiry disclosed that Coleman had
assigned his rights and obligations under the King/Coleman PSA to KSRMI, by a letter
agreement dated April 27, 1995, effective May 1, 1995.  Thus since that date, KSRMI has been
directly acting as programming broker for the stations.  It was also noted that KSLD(AM) had
gone silent under Commission authority in February 1995 and therefore KSRMI was not
providing any programming to KSLD(AM), only to KKIS-FM.  Coleman disclosed that he and
KSRMI had entered into a reciprocal option agreement providing options to acquire each other's
stations under certain conditions.  In addition, the April 27, 1995, letter agreement provided that
if KSRMI were to sell KSRM(AM) and KWHQ-FM to a third party as a combination, KSRMI
would also have the right to compel Coleman to sell KKIS-FM to that same party in a single
transaction, as long as the purchase price for KKIS-FM was at least $500,000 (i.e., if the price
is equal to or exceeds $500,000, Coleman did not have the right to approve or disapprove the
sale or the final sales price for KKIS-FM).  In addition, if KKIS-FM is sold pursuant to the
provision, the proceeds would be split by Coleman and KSRMI.  Specifically, the first $100,000
would go to Coleman (plus an amount not to exceed $15,000 to pay for the equipment Coleman
leased from KOLA, Inc.), and the remainder of the sale proceeds from KKIS-FM would be split
equally by Coleman and KSRMI.   In addition, the letter agreement provided KSRMI itself an
option to purchase KKIS-FM for $100,000 plus the $15,000 cost of the equipment leased from
KOLA, Inc.  Coleman was also granted an option to purchase KSRM(AM)/KWHQ-FM from
KSRMI for $1,400,000.  The letter agreement also stated that as a condition to Coleman
exercising this option, he "must repay, in cash, all sums that I have borrowed personally from
John G. Davis, President of KSRM, Inc."
    With respect to Coleman's involvement in the construction of KKIS-FM, Hoskins stated
that she had retained an engineering consultant and had contracted to purchase equipment for the
new FM facilities prior to entering into the PSA with Coleman.  Hoskins produced a copy of her
engineering construction contract, an equipment order, and an $8,000 deposit check.  Hoskins did
not claim that this deposit paid for any equipment or that she did in fact pay any of the costs of
constructing KKIS-FM.  Hoskins did state, however, that KKIS-FM's transmitting equipment is
installed on a tower she owns and inside her transmitter building.  Coleman stated that he
"supplied" KKIS-FM's used transmitter, stereo generator and exciter, audio processor, and
miscellaneous cables, mounting items, and spare parts through a lease from a third party (KOLA,
Inc.).  The terms of the equipment lease were not specified, but Coleman claimed he made all
the lease payments, made all the relevant arrangements, and was solely responsible for this
obligation.  In addition, Coleman claimed he purchased the FM station's 3-bay antenna, STL
package, computer systems, meters, amplifiers, and most other studio and transmission equipment
from Broadcast Supply Worldwide, Inc. ("BSW").  The total price of the purchased items was
$62,734.30, and Coleman's July 13, 1995, response to the letter of inquiry asserted that he
"ordered and paid for the equipment listed" as having been purchased from BSW.  King does not
pay Coleman anything for the use of this equipment by KKIS-FM.
    As noted above, the PSA specified that Coleman would reimburse King for all expenses
incurred in the operations of the stations.  Although King continued to pay the cost of liability
insurance for the stations (under a blanket policy covering Hoskins' other businesses as well),
Coleman in fact paid all other costs of the stations' operations, including utilities, auxiliary and
main studio rents, telephone service, and satellite program services.  Coleman stated that he
entered into an agreement directly with Satellite Music Network for the satellite programming
format broadcast by KKIS-FM (the "Hot-AC" network), and that during the term of the PSA,
Coleman also paid Satellite Music Network for the "Pure Gold" program network that had been
carried on KSLD(AM) under an agreement that predated the PSA.
    In addition, Coleman explained in his July 13, 1995, response to the Commission's letter
of inquiry that during the time that he operated the stations pursuant to the PSA, he paid all the
stations' expenses directly rather than reimbursing King for these expenses as called for in the
PSA:
     Although the Programming Agreement, as originally drafted, contemplated that Sally
     [Hoskins] would pay all of the Stations' bills and that I would then reimburse her for the
     Stations' expenses, the practice developed, as a matter of convenience for both of us, that
     Sally [Hoskins] would send me various bills for reimbursable expenses and I would issue
     a check to pay the bill.
Neither Coleman's nor King's July 1995 responses to the Commission's inquiry letters disclosed
whether, after the PSA was assigned to KSRMI in April 1995, King continued to send station
bills to the "programmer" (now KSRMI) for payment, or whether King then assumed direct
responsibility for the payment of the stations' bills.
    Coleman was also asked whether any of the persons he employed in his role as
programmer under the PSA were also employees of KSRMI.  As noted above, Coleman had
previously stated that the host of the local live evening interview program on KSLD(AM), Pat
Nichols, was concurrently employed part-time by KSRMI and part-time by Coleman.  Coleman
responded that his only two other employees, Kurt Haider and Chris Bartells, who were employed
by Coleman as production managers for KSLD(AM)/KKIS-FM, also worked part-time for
KSRMI at the same time they worked for Coleman.
    The responses to the May 8, 1995, letters of inquiry also provided further information as
to the program origination capabilities of the KSLD(AM)/KKIS-FM main studio and the public
service programming activities undertaken on a regular basis by Hoskins.  Hoskins stated that
she serves as full-time general manager of King's stations, and that King has one additional
employee working full-time at the stations' main studio, although it is clear that both Hoskins
and the additional employee also spend an unspecified proportion of their time on Hoskins' other
businesses.  Although Hoskins was asked to specify the particular responsibilities of all personnel
assigned to the main studio, Hoskins stated only that the additional employee, Loretta Smith, is
present "to assist me on a fulltime basis."  Hoskins asserted that she (Hoskins) maintains the
KSLD(AM)/KKIS-FM public inspection file at King's "main" studio, and that she also maintains
the quarterly issues/programs lists and unspecified financial records for the stations.
    The CIB inspection confirmed that the KSLD(AM)/KKIS-FM "main" studio at Sam's
Pawn Shop was fully equipped for program origination, and that King actually had the full-time
staffing at its main studio claimed in its Response.  While reporting that the PSA relegated most
programming aspects of KKIS-FM's operations to KSRMI and that most station operations were
conducted from the "auxiliary studios" located at the KSRM(AM)/KWHQ-FM studios, the CIB
inspectors did not find other direct evidence that control over the stations had shifted from King
to either Coleman or Davis/KSRMI.
    Upon review of the July 1995 responses from King and Coleman to the Commission's
letters of inquiry, the staff determined that additional questions had arisen regarding the role of
KSRMI in the operation of KSLD(AM) and KKIS-FM both during the period when Coleman
acted as programmer under the PSA and during the subsequent period, beginning May 1, 1995,
when KSRMI itself became the programmer as a result of Coleman's assignment of the PSA to
KSRMI.  Therefore, further letters of inquiry were sent to Coleman and to KSRMI on April 15,
1996, primarily seeking information regarding the roles of KSRMI and its owner, John Davis,
in the construction of Station KKIS-FM in early 1994 and in the operations of KSLD(AM) and
KKIS-FM both before and after the PSA was assumed by KSRMI.  Coleman and KSRMI filed
separate responses to the further letters of inquiry on May 13, 1996, and May 15, 1996,
respectively.
    With respect first to the construction of KKIS-FM, Coleman's earlier July 1995 response
to the first letter of inquiry had stated that he had "ordered and paid for" certain equipment for
the construction of KKIS-FM and the relocation of KSLD(AM) broadcast operations, including
the FM antenna, the FM STL equipment, the Digilink computers and other transmission and
studio equipment, from BSW, listed on an "Invoice History Inquiry" as costing $62,734.30.
Coleman had stated further that BSW's "Invoice History Inquiry" specified "KSRM - KSRM, Inc.
John Davis, GM" as "Customer" because Coleman "had arranged to lease space from KSRM and
because Mr. Davis was present in Alaska to receive the shipment on [Coleman's] behalf."  The
further letters of inquiry to Coleman and to KSRMI sought additional information as to whether
Mr. Davis had any dealings with equipment supplier BSW in connection with the equipment
listed on the Invoice History Inquiry.  Coleman stated that while Mr. Davis "had no discussion
with Broadcast Supply Worldwide about purchasing items for KSLD(AM) and KKIS-FM," Davis
"did talk to Broadcast Supply Worldwide to coordinate air freight shipments of the antenna for
KKIS-FM about credit, payments and extended payment plan."  Davis also stated that he "talked
to Bernice McCulloch, President of B.S.W. about credit and extended payment plans for the new
equipment when advertising sales did not come even close to expectations."  Coleman was also
asked to supply copies of invoices, bills of sale, or other documents relating to the equipment
purchased from BSW.  In response, Coleman submitted both "Statement of Account" documents
and invoices from BSW.  The BSW Statements of Account listed "KSRM - KSRM INC." under
the "For the Account of" heading.  The invoices had separate headings for "Sold To," which
listed "KSRM - KSRM, Inc." along with its postal box mailing address, and "Ship To," which
listed "KSRM Mile 16 1/2 K-Beach Road" as the shipping location.  The invoices also listed
"KSRM" as the "Customer No."
    The further letter of inquiry to Coleman asked specifically for proof of what entity
actually paid BSW for the $62,734.30 in equipment purchased from BSW.  Coleman supplied
his check registers and one cancelled check representing three payments to BSW totalling
$15,309.66.  KSRMI was also specifically asked "whether [Davis] or KSRMI paid for any of
the items which Mr. Coleman has identified [from the BSW Invoice History Inquiry] as relating
to KKIS-FM or KSLD(AM), either by paying Broadcast Supply Worldwide Inc. directly or by
reimbursing Coleman for any such equipment purchases, and if so; specify the amounts paid by
KSRMI/Davis."  KSRMI's complete answer to this question as set forth in its April 30, 1996,
response to the letter of inquiry was "KSRM made some payments to Broadcast Supply
Worldwide, Inc. (B.S.W.) for Mr. Coleman.  No reimbursements were made to Mr. Coleman."
(Emphasis added).  KSRMI failed to specify the amounts it paid directly, but it must be assumed
that KSRMI directly paid the balance of the $62,734.30 total not paid by Coleman, i.e.,
$47,424.64.
    Davis asserted, however, that KSRMI's employees did not participate in constructing
KKIS-FM and relocating KSLD(AM)'s studios to the KSRM(AM)/KWHQ-FM studio location.
Rather, according to Davis, "Coleman had his own engineer do most of the work," with
additional technicians and tower riggers hired and paid by Coleman. Davis asserted that his only
participation in the construction was to deliver some of the KKIS-FM transmitter equipment to
the tower site with his truck.
    However, most of the funds used by Coleman to pay for the construction engineers were
provided by KSRMI.  In addition to the amounts paid directly by KSRMI in 1994 for equipment
purchased to construct KKIS-FM and move KSLD(AM) to the newly constructed "auxiliary"
studio in KSRMI's building, KSRMI provided Coleman with a total of $63,349.26, in twelve
loans ranging from $2,000 to $10,000 during the period from February 18, 1994, to July 15,
1994.  According to Coleman, these loans were made for the following purposes:
            All monies borrowed were used for KSLD(AM) & KKIS-FM.  The monies borrowed
            were used along with my own funds to defray the costs of constructing KKIS-FM, to
            acquire equipment for and install auxiliary studios for KSLD(AM) and KKIS-FM-FM at
            the KSRM studio site, and to cover operating costs . . . .  I did not keep records as to the
            specific purpose for which the borrowed funds were used.
In response to the request in the further letters of inquiry that documents pertaining to these loans
be provided to the Commission, Davis and Coleman produced three different promissory notes
reflecting these loans. The first, dated April 1, 1994, in the amount of $20,000, stated that the
loan was to be repaid on the first anniversary of the closing of a sale of one of Coleman's other
radio stations to a third party, with no deadline or other provision for repayment if that closing
did not occur. The second promissory note, which does not bear a date of execution but was
apparently signed during the second half of 1994, is for the consolidation of the twelve loans
made from February 18 to July 15, 1994, totaling $63,349.26, with a payment date of June 31,
1995.  The third promissory note, which was included with Coleman's response but not with
KSRMI's, was dated April 20, 1995.  This third note states a principal amount of $46,506 and
that it is "for monies owed as a result of a debt confessed in a Confession of Judgment Before
Action." This Note requires payment of principal and interest in full upon the closing of either
of two other radio station deals involving Coleman or in three years from execution, whichever
comes first, with no payments of principal or interest prior to the due date.  According to Davis
and Coleman, Coleman repaid these loans in full in a series of payments to KSRMI made from
December 15, 1994, to July 21, 1995.
    In addition, KSRMI, upon its assumption of Coleman's rights under the PSA on April 27,
1995, paid King certain amounts that were apparently then owed by Coleman to King under the
PSA.  In this regard, the further letter of inquiry asked KSRMI to provide a listing of all
payments made by KSRMI to King.  KSRMI's response, at Exhibit 1A, reported a payment by
KSRMI to King on the day after the assignment of the PSA to KSRMI, April 28, 1995, in the
amount of $9,896, which is $7,296 in excess of the May 1995 brokerage fee of $2,600.   In
addition, on June 1, 1995, KSRMI paid King both the $2,600 June PSA payment and an
additional payment of $2,199.97.  It appears that these payments represent amounts that were
previously due to King from Coleman under the PSA prior to the assignment to KSRMI.
    In addition to paying King amounts previously due from Coleman, KSRMI, upon directly
assuming the PSA on April 27, 1995, also forgave Coleman the amounts which were supposed
to have been charged Coleman for rent for the "auxiliary" KSLD(AM)/KKIS-FM studios in
KSRMI's building from the time that the stations' operations were moved there in March 1994
through April 1995.  Coleman and KSRMI had an oral agreement that Coleman would be
charged $500 per month rent by KSRMI for the space taken by the KSLD(AM)/KKIS-FM
auxiliary studios.  According to Coleman, this rent was one of the costs to be paid to KSRMI
from collected sales revenues to be paid after KSRMI's costs were recovered.  Coleman stated
further that "[t]he rent was not paid as the sales efforts never produced enough revenues to pay
all the monthly bills."  The letter agreement by which KSRMI assumed the PSA from Coleman
stated that KSRMI assumed all of Coleman's accounts payable as of the assumption date, and
this assumption included all the back rent.  Thus the auxiliary studio rent was never paid by
Coleman to KSRMI.
    According to Coleman, the agreed terms of the oral joint sales agreement between
Coleman and KSRMI provided that "[a]ll costs of producing programming pursuant to the PSA
were to be paid from collected advertising revenue and any excess collected revenues over the
costs of programming were to be split 50/50 by John Davis and [Coleman]."  However, "no
[p]rofits were paid to [Coleman] or John Davis while [Coleman] operated the PSA because
throughout the period the revenues collected were less than what was needed to cover
[Coleman's] costs of producing programming for broadcast on KSLD(AM)/KKIS-FM under the
PSA."  Coleman claims he made additional capital contributions to cover the shortfalls.  While
Coleman stated that he had no records of the amount of advertising sold on the stations during
the time that he operated the PSA, Davis listed collected advertising revenues starting at $3,233
for March 1994, rising to $27,163 for the November 1994, then lowering to $9,200 for April
1995, the last month that Coleman operated the PSA.  The average KSLD(AM)/KKIS-FM
monthly advertising revenues for these fourteen months was $8,516.
    The further letters of inquiry also asked Coleman and KSRMI about the effect of the
assignment of the PSA to KSRMI on certain financial provisions.  First, Section 1.3 of the PSA
entered into between Coleman and King provided that each of the $2,600 monthly payments to
King was to be applied to reduce the purchase price for the stations.  Coleman and KSRMI
stated that after assignment of the PSA to KSRMI, all monthly brokerage payments made by
KSRMI to King will continue to reduce the final purchase price for the stations from King to
Coleman.  Although Coleman received the benefit of KSRMI's payments reducing the purchase
price of the stations (a reduction of $39,000 for payments made by KSRMI from May 1995
through July 1996), Coleman has no obligation to repay these amounts to KSRMI.
    KSRMI was also asked about Section 1.3(b)(iv) of the PSA, whereby part of the
consideration to King for making program time available to Coleman as "programmer" was that
King would be provided up to $1,000 per month in advertising on KSLD(AM)/KKIS-FM or on
KSRMI's stations KSRM(AM)/KWHQ-FM.  Davis stated that from March 1, 1994, through
April 30, 1995 (during the period prior to Coleman's assignment of the PSA to KSRMI),
KSRMI's stations KSRM(AM) and KWHQ-FM carried approximately $9,000 in advertising for
King's other, non-radio businesses without payment from King or Coleman.
    The May 8, 1995, letter of inquiry to King and the April 8, 1996, letter of inquiry to
KSRMI also sought information regarding actual programming efforts undertaken by King during
the operations under the PSA.  King responded that it oversees public services announcements
broadcast on the stations, but that the announcements themselves are recorded by the
programmer's (Coleman and subsequently KSRMI) employees and inserted in the satellite
delivered programming by automation computer.  King also stated that a weekly 15-30 minute
live interview public affairs program was broadcast "at our direction."  KSRMI responded that
during the period when it served as programmer under the PSA (May 1995 to the present), "King
has been providing continuous public affairs programming on KKIS-FM."  However, of the three
regular public affairs programs listed by KSRMI, none is actually produced by King or its
employees -- two are produced by unrelated third parties and one is produced by KSRMI
employees.  Although KSRMI also stated that King's President, Sally Hoskins, has also "phoned
or faxed in news tips and information on civic activities that she wanted covered and has sent
public service announcements for us on KKIS-FM and KSLD(AM) when it was on the air," the
actual coverage and broadcasting of that information was produced by KSRMI employees.
    KSRMI also was asked to provide information regarding the payment of KKIS-FM's
operating expenses for the period beginning with KSRMI's assumption of the PSA on April 27,
1995.  KSRMI stated in response that King pays for its own business telephone for the "main"
studio located at King's other businesses' location (not for the "auxiliary" studio).  King "usually"
pays the station's power bill but is reimbursed by KSRMI for those payments.  The process King
follows in obtaining reimbursement for the station's power bill is to telephone John Davis and
advise him orally of the amount King has paid.  KSRMI then writes King a reimbursement
check.  In addition, "on occasion," KSRMI paid the power bill directly to avoid late charges.
Insurance for the stations is also paid by King.  Since becoming the programmer, KSRMI entered
into two satellite programming agreements with ABC Radio Networks for KKIS-FM, for the "Hot
AC" format for the daytime, and for "Z Rock" for the nighttime.  The Hot AC agreement was
executed by Tom Farrell, an employee of KSRMI, and the Z Rock agreement was executed by
John Davis, President of KSRMI, in each case with the notation of KSRMI as "LMA Operator."
King did not execute either agreement.  KSRMI pays ABC directly for both program services.
            Coleman and KSRMI were also asked about their involvement in the decision to take
KSLD(AM) off the air in February 1995.  Coleman states that the decision to take KSLD(AM)
off the air was made by him in consultation with John Davis, and that he told Hoskins of his
decision:
            I discussed the lack of interest in the sales staff of KSRM, Inc. to sell the KSLD(AM)
            oldies format with John Davis and we concluded that the joint sales agreement with
            respect to KSLD(AM) should be terminated.  It did not make business sense for me to
            continue to program KSLD(AM) under the PSA in the absence of a joint sales
            arrangement.  The KSLD(AM) decision was made by myself after discussions with John
            Davis about the sales problems.  I told Sally that I wanted to reduce my losses without
            abandoning my plans to consummate the sale of KSLD(AM) and KKIS-FM after the
            F.C.C. approval of this long pending transfer.
Davis states that he had several discussions with Coleman regarding the decision to take
KSLD(AM) off the air due to poor advertising sales.  Although Davis does not acknowledge that
he participated in any discussions with King on this subject, he does assert that "it was decided
by Mr. Coleman and King Broadcasters, Inc . . . that station KSLD(AM) would go 'off the air.'"
    Discussion.  Petitions to deny and informal objections must, pursuant to Section 309(e)
of the Communications Act of 1934, as amended, provide properly supported allegations of fact
which, if true, would establish a substantial and material question of fact regarding whether grant
of the application would be consistent with the public interest, convenience, and necessity. See
WWOR-TV. Inc., 6 FCC Rcd 193, 197 n.10 (1990).  Furthermore, in assessing the merits of such
pleadings, the staff must use a two-step analysis under Section 309(d)(1) and (2) of the
Communications Act.  The first step is whether or not a prima facie case has been made. If so,
we next consider whether or not there is a substantial and material question of fact to warrant
inquiry.  Thus, in assessing both the petition to deny and the informal objection, the primary
issue is whether or not substantial and material questions of fact have been raised to warrant
further action by the Commission.
            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.
47 U.S.C.  310(d). Section 73.3540(a) of the Commission's Rules states that "[p]rior consent
of the FCC must be obtained for a voluntary assignment or transfer of control."
    There is no exact formula by which control of a broadcast station can be determined.  In
ascertaining whether a transfer of control has occurred, we traditionally look beyond the legal
title to whether a new entity or individual has obtained the right to determine the basic operating
policies of the station (i.e., to affect decisions concerning the personnel, programming or
finances 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).
Although a licensee may delegate certain functions to an agent or employee on a day-to-day
basis, e.g., Southwest Texas Public Broadcasting Council, 85 FCC 2d 713, 715 (1981), such
delegation cannot be wholesale.  That is, those parties delegated to a task must be guided by
policies set by the permittee or licensee.  See David A. Davila, 6 FCC Rcd 2897, 2899 (1991).
In several cases, the Commission has permitted the use of a time brokerage agreement where the
broker is also the proposed assignee of the station, as long as the time brokerage agreement is
consistent with the Commission's rules and guidelines, so that ultimate control remains with the
licensee until the grant of the application and closing of the transaction.  See, e.g., Roy R. Russo,
5 FCC Rcd 7586 (MMB 1990); Joseph A. Belisle, supra, 5 FCC Rcd 7585.
    Transfer of Control from King to Coleman and KSRMI.  After evaluating all the relevant
facts here, we conclude that King apparently engaged in an unauthorized transfer of control of
KSLD(AM) and KKIS-FM to Coleman and then to KSRMI, which began upon the execution and
implementation of the PSA by King and Coleman in February 1994 and continues to the present.
We find two facts particularly compelling.  First, by Coleman's own admission, King was merely
"told" of Coleman's business decision to take KSLD(AM) silent in February 1995.  We view
King's lack of involvement in this decision as definitive evidence that King has abdicated control
over the station.  Second, King has no ownership or control over KKIS-FM's equipment and has
no right to utilize the essential broadcasting equipment in the absence of the PSA.  Indeed, as
discussed below, the evidence strongly indicates that Coleman and KSRMI have virtually
complete control over KSLD(AM) and KKIS-FM's financial matters.
    Station Finances.  We note first that, contrary to Coleman's assertions, the express terms
of the PSA are not completely consistent with radio time brokerage agreements that have been
approved by the Commission.  Additionally, while the PSA states that King is to retain ultimate
control over programming and operations of the station, the parties in practice have gone beyond
the terms of the PSA, especially in the area of financial relationships, in turning over control to
the broker. These financial relationships are important factors to be considered in weighing
whether there has been an unauthorized transfer of control of the stations.  See Roy M. Speer,
11 FCC Rcd 18393, 18415-17 (1996).
    First, the PSA at Paragraph 1.3 requires the "programmer" -- first Coleman and
subsequently KSRMI -- to "reimburse" King for "all costs of operating the Stations," including
electrical power, liability insurance, and the salary for a King management employee.  In
addition, once the PSA went into effect, virtually all programming and broadcast operations were
originated from the KSLD(AM)/KKIS-FM "auxiliary" studios which Coleman and KSRMI
constructed in KSRMI's building housing its KSRM(AM)/KWHQ-FM broadcast studios.  King
had no financial responsibility whatsoever for the construction, maintenance, and operation of
those auxiliary studios throughout the term of the PSA, either while Coleman was the
"programmer" or later while KSRMI was the "programmer."  Although KSRMI suggests that
while it was the programmer, King was responsible for its own business telephone, KSRMI is
referring to the telephone for the "main" studio located at King's other businesses, not for the
stations' main telephone located at the KSRM(AM)/KWHQ-FM studios.  The only significant
station expense for which King has been billed is for the transmitter electrical power, which has
been either paid directly by Coleman or KSRMI or paid by King who was then reimbursed by
KSRMI.  Again, however, the electrical power for which King is preliminarily billed does not
include the power for the stations' auxiliary studios, only for the transmitter and the fallow
"main" studio.
    Although reimbursement of all basic station operating expenses by a broker may not be
improper in itself, direct payment of basic station expenses by the broker is a factor that has been
considered by the Commission in determining whether an unauthorized transfer of control has
taken place.  See e.g., Roy M. Speer, supra, 11 FCC Rcd at 18416; WGPR Inc., 10 FCC Rcd
8140, 8145 (1995).  Nor do the cases cited by Coleman sanction the direct payment of basic
station expenses by the broker.  For example, in J. Dominic Monahan, supra, 6 FCC Rcd 1867,
cited by Coleman, the licensee continued to pay "all its own operational expenses . . . ."  In Peter
D. O'Connell, supra, 6 FCC Rcd 1869, also cited by Coleman, the licensee paid its own
employees, and there was no suggestion in that decision that the broker assumed any operational
expenses for the brokered station.  In Joseph A. Belisle, supra, 5 FCC Rcd 7585, a set monthly
amount was specified to "power costs," but no other operational costs of the brokered station
were assumed by the broker.
    In practice, moreover, Coleman and King did not bother with the detailed
"reimbursement" procedures set forth in the PSA whereby King was to present monthly itemized
statements of expenses paid by King and then be reimbursed by Coleman.  Rather, for
"convenience," Coleman paid all expenses directly, and if King received any bills from vendors,
they were sent to Coleman for direct payment.
    In addition and, as noted, of particular importance, pursuant to the PSA Coleman and
KSRMI purchased or leased essentially all the studio and transmitting equipment that was
necessary to place then unbuilt station KKIS-FM into operation, and King has no ownership or
other rights in that equipment.  While King submitted in response to the Commission's letter of
inquiry a cancelled check for $8,000 to an engineering consultant in partial payment for his
assistance in obtaining equipment to construct KKIS-FM, this consulting agreement preceded the
Coleman PSA, and Coleman (who claims he oversaw construction of the station) had no idea
what services or equipment, if any, were provided for this consulting fee.  Additionally, Hoskins
did not claim that any equipment was actually purchased by King for KKIS-FM pursuant to this
consulting agreement or otherwise.  Without the transmitter, antenna, and other essential
equipment owned or leased by Coleman, the station would not be capable of operation.
            Coleman's and KSRMI's payment of all operational expenses and of the costs of
constructing KKIS-FM and relocating KSLD(AM) go beyond the time brokerage arrangements
permitted in the cases cited by Coleman.  Indeed, the present case is indistinguishable from
Salem Broadcasting. Inc., 6 FCC Rcd 4172 (MMB 1991), where the time broker's complete
construction of the new station's facilities was determined to be a primary indicator that an
unauthorized transfer of control had taken place.  As in the present case, the broker in Salem had
selected the program format for the new station. The Bureau in Salem also found to be significant
as to the lack of financial control by the permittee the fact that the net amount received by the
permittee from the broker monthly for the right to broker the station was very small (a net
payment of $20 monthly after deducting an equipment lease payment from the brokerage
payment).  In the present case, while the monthly brokerage payment is significantly higher than
in Salem and there is no cost to King for "leasing" any equipment from Coleman (which certainly
in itself does not suggest that King has retained control since King has no right to use the
equipment if the time brokerage were terminated), the monthly payments to King are deducted
from the total sales price of the stations.
    We note that the permittee in Salem had similarly argued that the time brokerage
agreement did not vary from the brokerage agreements discussed above, to which the Bureau
responded as follows:
    We reject your suggestion that the Salem/Hilber arrangement comports with the Bureau's
    recent time brokerage decisions.  When a "broker" takes on the characteristics of a lessee
    by infusing capital into the station and becoming intimately involved in decisions as to
    the construction and/or operation of a station, it transcends the traditional function of a
    time broker -- the purchase and sale of air time . . . .  In these cases, and those decided
    subsequent, there was no evidence that the broker had (or would) infuse the station with
    working capital, buy equipment for the station, choose a format, or otherwise participate
    in or finance construction of the station.
6 FCC Rcd at 4173.  Similarly, in Roy M. Speer, supra, 11 FCC Rcd 18393, the Commission
found that a permittee had engaged in an unauthorized transfer of control where employees of
a non-voting minority stockholder had supervised the construction of the new television station,
the non-voting stockholder had paid for the purchase of the station's equipment though loans to
the permittee, and the permittee was not even aware of what equipment was being purchased for
it or how much was being spent by the non-voting stockholder pursuant to these loans.  In the
present case, not only was the station constructed without any significant involvement by King,
but King does not have any ownership or control over the station's physical facilities.
    Station Programming and Personnel.  The record does not unequivocally establish the
same clear and overwhelming control over station programming and personnel by Coleman and
KSRMI as it does with respect to station financing.  It does, however, document a level of
intrusion in these areas which, taken together with Coleman's and KSRMI's domination of station
finances and King's passivity in the decision to take KSLD(AM) silent, supports our conclusion
that an unauthorized transfer of control appears to have taken place.
    As noted above, the PSA provided Coleman as programmer the right to program
"substantially all" of both stations' air time, reserving to King up to eight hours per week
between midnight and 6 am each day (and 7-9 am Sunday) for the broadcast of news, public
affairs, and other programming produced and/or selected by King.  However, neither King nor
Coleman asserted that King has ever actually reserved any such time for these purposes. While
Hoskins suggested in her response to the letter of inquiry that she "over see[s] the public service
announcements and issues are selected for our public affairs programming," both she and
Coleman stated that those public service announcements were actually recorded by Coleman's
employees during the period when Coleman served as programmer under the PSA.  In addition,
a weekly 15 to 30 minute live public affairs program which Hoskins claimed was recorded from
a local hotel "at our direction," also appears to have been produced and hosted by Coleman's
employees.  Similarly, when KSRMI became programmer after Coleman assigned the PSA to it
on April 27, 1995, the public affairs programming on KKIS-FM was produced not by King but
rather by KSRMI employees or by third parties.
    KSLD(AM), until being taken off the air in February 1995, carried satellite-delivered
network programming pursuant to a contract entered into originally by the prior time broker,
Cobb Communications, and paid for by Coleman during the term of Coleman's PSA.  From its
inception, KKIS-FM has carried satellite-delivered programming pursuant to a contract entered
into directly by Coleman with Satellite Music Network.  As noted above, KSRMI subsequently
entered into new satellite programming agreements for KKIS-FM after KSRMI became the
programmer of the station.  While Hoskins claims that she monitors all programming from the
"main" studio located at the site of her other businesses, all programming not delivered by satellite feed is originated from the auxiliary studios constructed by Coleman at the studios of
Davis' KSRM(AM)/KWHQ-FM.
    With respect to King's participation in the stations' personnel matters, Peninsula has
alleged in its Petition to Deny that, subsequent to adoption of the PSA, Coleman fired King
employees Ron Holloway and Dan Donovan.  We are satisfied that while Coleman may have
been present when those terminations were communicated to Holloway and Donovan, Hoskins
was present as well, and it is uncontested that the termination letters themselves were signed by
Hoskins, not Coleman.  However, while Hoskins claimed in her response to the Commission's
letter of inquiry that she "report[s] to work to the main studio as General Manager each day and
Loretta Smith is here to assist me on a fulltime basis," she failed to respond to several specific
questions in that letter of inquiry as to what her and her employee's specific duties were at the
main studio, who paid the employee's salary, and what precise functions were performed at the
main studios (Question 5 of the letter of inquiry to Hoskins).  By contrast, the employees
involved in programming aspects of the station were employed by Coleman or by KSRMI, and
the employees involved in sales of advertising were employed by KSRMI, which, while Coleman
was programmer, sold advertising for the stations pursuant to an oral joint sales agreement
between Coleman and KSRMI.  Due to Hoskins' failure to respond directly to the letter of
inquiry regarding King's employees' responsibilities, we must conclude that those employees did
not have any significant role in the stations' operations.  In sum, no evidence that King retained
control over the personnel employed by KSLD(AM)/KKIS-FM has been presented that is
inconsistent with our conclusion that an unauthorized transfer of control appears to have taken
place.
    Conclusion Regarding Control.  We have thus determined, based on the totality of
circumstances in the present case, that King apparently abandoned control of stations KSLD(AM)
and KKIS-FM starting on February 16, 1994, when the PSA with Coleman was executed.
However, it appears that control of the stations at that point in time was not assumed by Coleman
alone; rather, we conclude that the construction of KKIS-FM, the relocation of KSLD(AM), and
the subsequent operation of both stations was a joint venture of Coleman and KSRMI, and that
KSRMI's involvement in the operation of the stations during the time that Coleman served as
"programmer" under the PSA was not limited, as the parties suggest, to the sales of advertising
pursuant to the joint sales agreement.  Rather, KSRMI appears to have exercised control over the
stations during this period preceding the assignment to it of the PSA to at least an equal degree
as Coleman.  In addition, because KSRMI already owned and controlled one AM and one FM
station (KSRM(AM) and KWHQ-FM) in the relevant local market, its actions in serving as time
broker (jointly with Coleman) of an additional AM station and an additional FM station during
the period from March 1994 to February 1995 (when KSLD(AM) went silent) exceeded the
maximum of three stations that a single entity could control and/or broker in a market this size
under the multiple ownership rules in effect at the time.  See 47 C.F.R.  73.3555(a)(1)(i)
(1995) (amended 1996).
    It is true, as Coleman and KSRMI maintain, that the Commission has deregulated joint
sales arrangements that do not involve time brokerage or joint programming arrangements. See
Revision of Radio Rules and Policies, supra, 7 FCC Rcd 2755, 2787.  However, in this case,
KSRMI's relationship to Coleman during the period from February 1994 to April 1995, when
Coleman assigned the PSA to KSRMI, is not limited to a joint sales agreement.  It was KSRMI,
not Coleman, which directly paid the equipment supplier, BSW, the bulk of the cost of
constructing KKIS-FM and relocating KSLD(AM).  In addition, KSRMI was not only listed as
the delivery point for the equipment, it was also separately listed repeatedly by BSW as the
"customer" and account holder for the equipment purchase.  KSRMI's Davis did not merely
coordinate deliveries from BSW for convenience, rather, he negotiated extended payment terms,
which was critical to him because KSRMI paid the BSW equipment bills. What was paid by
Coleman for equipment purchases was primarily loaned to him by KSRMI through less-than-
arms-length loans that were documented well after the funds were advanced to Coleman, initially
with open-ended repayment obligations that attached only when Coleman obtained cash from
other enterprises, if at all.  KSRMI loaned operational funds to Coleman as well, and did not
collect the auxiliary studio rent that was supposedly being charged by KSRMI to Coleman for
this purpose.  In addition, Coleman's time brokerage employees were all part-time KSRMI
employees.
    We also find that certain of the other financial relationships between Coleman and
KSRMI indicate that the time brokerage, and indeed the assumption of control of the stations
from King, were essentially a joint venture between Coleman and KSRMI, whereby risk of loss
or potential for profit was shared by KSRMI and Coleman.  In this regard, we find it significant
that as part of the original PSA terms between King and Coleman as programmer, entered into
when KSRMI was ostensibly not a party to the PSA, King was promised and provided up to
$1,000 per month of free advertising on KSRMI's stations KSRM(AM) and KWHQ-FM.  We
also find it significant that under the oral joint sales agreement between Coleman and KSRMI,
Coleman never received any of the proceeds of advertising sales made on KSLD(AM) and KKIS-
FM, even when total sales exceeded $27,000 in the month of November 1994.  Rather, all
advertising sales revenues were retained by KSRMI to pay KSRMI's selling costs.  Conversely,
in those months where advertising sales did not cover KSRMI's costs, Coleman had no obligation
to KSRMI to make up for such shortfalls -- those risks of loss were assumed by KSRMI alone.
In addition, the payments to King of $2,600 per month under the PSA that were made by KSRMI
after the assignment of the PSA to KSRMI (as well as those past due payments made by KSRMI
to King on the day KSRMI took over the PSA) continued to reduce the purchase price for the
stations to Coleman as provided in Paragraph 1.3 of the PSA, but Coleman is under no obligation
to repay these amounts paid by KSRMI even though Coleman will receive the benefit of the
substantially reduced purchase price. Further, although Coleman has contracted to purchase
KSLD(AM)/KKIS-FM from King for $330,000, Coleman has provided an option to KSRMI to
purchase KKIS-FM for only $100,000, and this price for KKIS-FM alone was set after Coleman
and KSRMI had taken KSLD(AM) off the air, with only very minimal plans to return it to
operation.  This same option agreement authorizes KSRMI to sell KKIS-FM to a third party that
wishes to purchase KSRMl's stations, without Coleman's approval, as long as the price for
KKIS-FM is at least $500,000.  If that price for KKIS-FM is obtained, the first $100,000 goes
to Coleman, but the remainder of the purchase price is split equally by KSRMI and Coleman.
These financial terms are indicative of a joint venture in the construction, operation, and
acquisition of KKIS-FM and KSLD(AM).
    As a final matter, we address the issue raised in the informal objection filed herein by
William J. Glynn, Jr.  As noted above, Glynn claims that Davis has repeatedly broadcast over
KSRM(AM), KWHQ-FM, and KKIS-FM announcements encouraging listeners to file
applications for a new FM allocation at nearby Kasilof, Alaska.  Glynn alleges that these
announcements represent an anti-competitive effort by Davis to generate multiple applications
so that the allocation will be tied up in protracted hearings.  Even assuming that the
announcements described by Glynn were in fact broadcast, we do not believe that Glynn has
demonstrated that the broadcast of such announcements would raise a substantial and material
question of fact that warrants further inquiry.  While Glynn would have us presume an improper,
anti-competitive motive behind encouraging numerous interested parties to apply for the open
allocation, the Commission in other contexts has stated that the public interest is served by a
choice among a number of qualified applicants.  See, e.g., Azalea Corp., 31 FCC 2d 561, 563
(1971).  Moreover, there is no record evidence that Davis arranged or paid the expenses of any
applicant for the Kasilof allotment or that there was any other violation of the Commission's
rules or policies.  For these reasons, Glynn's claims are speculative and do not demonstrate that
the grant of the present application would not be in the public interest.
    As stated above, we have concluded that King apparently engaged in an unauthorized
transfer of control of Stations KSLD(AM) and KKIS-FM to Coleman and KSRMI jointly, during
the period starting on or about February 16, 1994, and continuing through April 26, 1995, and
to KSRMI alone from April 27, 1995, to the present, in willful violation of Section 310(d) of the
Communications Act of 1934, as amended, and Section 73.3540 of the Commission's Rules.  In
addition, we find that KSRMI's brokerage of the stations during the period starting in March
1994, when KKIS-FM went into operation, until February 1995, when KSLD(AM) was taken off
the air, resulted in KSRMI violating the local multiple ownership rule, 47 C.F.R.
 73.3555(a)(1)(i), because during that time KSRMI exercised control over four stations in a local
radio market containing thirteen radio stations.  A transfer of control violation could warrant
revocation of King's, Coleman's and KSRMI's authorizations if the transfer and the
accompanying multiple ownership rule violation were intentionally concealed from the
Commission through misrepresentations or lack of candor.  See, e.g., Roy M. Speer, supra, 11
FCC at 18428; Black Television Workshop of Los Angeles. Inc., 8 FCC Rcd 4192, 4198 (1993);
Silver Star Communications-Albany. Inc., 6 FCC Rcd 6905, 6907 (1991).  Here we find that
there is no substantial and material question of fact that either King, Coleman, or KSRMI acted
with an intent to deceive the Commission.  Therefore, we shall not designate for revocation
King's, Coleman's, or KSRMI's Commission authorizations.  Nor do these apparent violations
require the denial of the assignment of license application.  Rather, we believe that monetary
forfeitures against both King and KSRMI are the appropriate sanction.
    We have considered the factors set forth in 47 U.S.C.  503(b) as well as Commission
precedent concerning similar violations in order to determine the appropriate amount of the fine
imposed.  In Salem Broadcasting, Inc., supra, 6 FCC Rcd 4172, 4173, the licensee was fined
$10,000 for an unauthorized transfer of control and a main studio rule violation that existed for
a period of approximately ten months.  Salem, like the present case, involved a
brokerage/programming agreement that, as effectuated, was determined to constitute an
unauthorized transfer of control.  In Roy M. Speer, supra, 11 FCC Rcd 18393, the permittee was
assessed a forfeiture of $25,000 for its participation in the unauthorized transfer of control that
was limited to the construction phase, and the non-voting stockholder that was found to engaged
in the unauthorized transfer which also resulted in the violation of the duopoly rule was assessed
a forfeiture of $150,000.  In Silver Star Communications-Albany, 6 FCC Rcd 6905 (1991), the
licensee of an AM/FM combination was fined $20,000 for an unauthorized transfer of control of
the two stations over a period of 18 months.  In First Broadcasting Corp., 3 FCC Rcd 2758
(1988), the licensee of an AM station was fined $20,000 for an unauthorized transfer of control
effectuated through unreported stock transactions. Although the licensee filed an assignment
application two years after the stock transactions took place seeking nunc pro tunc approval of
the transfer, the $20,000 forfeiture was assessed for the full six-year period that the unauthorized
transfer continued.  In Cate Communications Corp., 60 RR 2d 1386 (1986), a forfeiture of
$20,000 was affirmed by the Commission for the unauthorized transfer of control of an AM
station for a period of 13 months.
    In view of the above, pursuant to Section 503(b) of the Communications Act, King
Broadcasters, Inc. and KSRM, Inc. are hereby advised of its apparent liability for a forfeiture of
Ten Thousand Dollars ($10,000.00) each for the willful and repeated violation of Section 310(d)
of the Communications Act and Section 73.3540 of the Commission's Rules.  In regard to this
forfeiture, King and KSRMI are each afforded a period of thirty (30) days from the date of this
Notice to show, in writing, why a forfeiture penalty should not be imposed or 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.  47 C.F.R
 1.80(f)(3).  Other relevant provisions of Section 1.80 are summarized in the attachment to this
Notice.
    In light of the above, we find that there are no substantial and material questions of fact
that warrant further inquiry in a hearing.  Accordingly, the Petition to Deny the application to
assign the licenses of stations KSLD(AM) and KKIS-FM, Soldotna, Alaska, from King
Broadcasters, Inc., to Chester P. Coleman (File Nos. BAL-940401EA and BALH-940401EB),
filed May 13, 1994, by Peninsula Communications, Inc., is DENIED.  In addition, the informal
objection filed by William J. Glynn, Jr., IS DENIED.  Having found that King and Coleman are
qualified to assign and purchase stations KSLD(AM) and KKIS-FM and that the sale would
further the public interest, convenience and necessity, the applications ARE GRANTED.
However, to the extent that Coleman intends to continue the PSA with KSRMI upon
consummation of the assignment application, we caution Coleman to take all necessary steps to
ensure compliance with the Commission's policies concerning the implementation of agreements
in which a broker/licensee supplies programming to a station.  The Commission has repeatedly
emphasized that the licensee must retain ultimate control of a station subject to such an
agreement, including a time brokerage agreement or other similar arrangement, and must adhere
to the Communications Act, the Commission's rules and policies and the antitrust laws.  See,
e.g., Gisela Huberman, 6 FCC Rcd 5397 (MMB 1991); Brian M. Madden, 6 FCC Rcd 1871
(MMB 1991); Peter D. O'Connell, 6 FCC Rcd 1867 (MMB 1991); J. Dominic Monahan, 6 FCC
Rcd 1867 (MMB 1991); Roy R. Russo, 5 FCC Rcd 7586 (MMB 1990); Joseph A. Belisle, 5 FCC Rcd
7585 (MMB 1990).
                                                       FEDERAL COMMUNICATIONS COMMISSION
                                                       Roy J. Stewart
                                                  Chief, Mass Media Bureau
cc:       Michael Bader, Esquire
          Mr. William J. Glynn, Jr.
          Peter Gutmann, Esquire
          Jeffrey D. Southmayd, Esquire
  David Tillotson, Esquire