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 FEDERAL  COMMUNICATIONS  COMMISSION  FCC  02-  206 
 1 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of 
 READING  BROADCASTING,  INC. 
 For  Renewal  of  License  of  Station  WTVE(  TV),  Channel  51 
 Reading,  Pennsylvania 
 And 
 ADAMS  COMMUNICATIONS  CORPORATION 

 For  Construction  Permit  for  a  New  Television  Station  to  Operate  on 
 Channel  51,  Reading,  Pennsylvania 

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 MM  Docket  No.  99-  153 
 File  No.  BRCT-  940407KF 

 File  No.  BPCT-  940630KG 

 APPEARANCES 
 Thomas  J.  Hutton,  Eric  Fishman,  and  C.  Dennis  Southard,  IV  on  behalf  of  Reading  Broadcasting,  Inc.;  Gene  A.  Bechtel  and  Harry  F.  Cole  on  behalf  of  Adams  Communications  Corporation;  Erwin 
 G.  Krasnow,  Eric  T.  Werner,  and  Michael  M.  Pratt  on  behalf  of  Micheal  L.  Parker;  and  Charles  W.  Kelley  and  James  W.  Shook  on  behalf  of  the  Chief,  Enforcement  Bureau. 

 DECISION 
 Adopted:  July  3,  2002  Released:  July  11,  2002 
 By  the  Commission: 
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 I.  PRELIMINARY  STATEMENT 
 1.  In  this  decision,  we  reverse  the  Initial  Decision  of  Administrative  Law  Judge  Richard  L.  Sippel,  which  denied  the  renewal  application  of  Reading  Broadcasting,  Inc.  (RBI)  and  granted 
 the  competing  application  of  Adams  Communications  Corporation  (Adams)  for  a  construction  permit.  We  find  that  RBI  is  the  comparatively  superior  applicant  here,  despite  a  minimal  past 
 record  in  operating  the  station.  In  so  doing,  we  dispose  of  the  last  remaining  comparative  renewal  proceeding,  in  which  an  incumbent  licensee  faces  a  comparative  challenge  from  a 
 construction  permit  applicant  for  the  same  facilities.  Congress,  by  Act  of  February  8,  1996,  Pub.  Law  104-  104,  110  Stat.  56,  codified  as  47  C.  F.  R.    309(  k)(  4),  prohibited  the  comparative 
 consideration  of  renewal  applicants  filed  after  May  1,  1995.  In  Implementation  of  Section  309(  j)  of  the  Communications  Act,  13  FCC  Rcd  15920,  16005-  06    212-  14  (1998),  discussed 
 further  at  paragraph  73,  below,  the  Commission  determined  that,  auctions  not  being  a  legally  available  option,  it  would  apply  the  factors  set  forth  in  Policy  Statement  on  Comparative 
 Broadcast  Hearings,  1  FCC  2d  393  (1965),  consistent  with  existing  case  law,  to  resolve  the  few  remaining  comparative  renewal  cases  including  this  one. 

 I.  BACKGROUND 
 2.  RBI  seeks  renewal  of  its  license  to  operate  station  WTVE(  TV),  Channel  51,  Reading,  Pennsylvania.  In  addition  to  the  standard  comparative  issue,  issues  were  designated  as  to  the 
 basic  qualifications  of  RBI  and  Adams  to  be  licensees.  The  first  issue  seeks  to  determine  whether  RBIs  principal  Micheal  L.  Parker  (Parker)  made  misrepresentations  or  lacked  candor 
 before  the  Commission  in  reporting  his  previously  adjudicated  misconduct.  The  second  issue  concerns  allegations  that  Adams  abused  the  Commissions  processes  by  filing  its  application  for 
 an  improper  purpose. 
 3.  Administrative  Judge  Richard  L.  Sippel  (ALJ)  granted  Adams  competing  application  and  denied  RBIs  renewal  application.  Reading  Broadcasting,  Inc.,  FCC  01D-  01  (ALJ  Apr.  5, 
 2001)  (ID).  The  ALJ  resolved  both  basic  qualifications  issues  favorably  to  the  respective  applicants.  The  ALJ  concluded  that  Adams  had  not  filed  its  application  for  the  improper  purpose 
 of  obtaining  a  settlement  and  that  Adams  principals  had  not  lacked  candor  in  their  testimony  on  the  subject.  ID  at    247.  Turning  to  RBI,  the  ALJ  held  that  Parker,  who  is  RBIs  president,  a 
 director,  and  a  shareholder,  had  given  false  and  misleading  information  in  a  series  of  applications,  concerning  his  prior  involvement  in  misconduct.  ID  at    235.  Although  the  ALJ 
 concluded  that  Parker  was  unqualified  to  be  a  Commission  licensee,  the  ALJ  further  held  that  RBI  was  not  disqualified  provided  that  it  severed  its  relationship  with  Parker.  Id. 

 4.  Having  found  both  applicants  basically  qualified,  the  ALJ  resolved  the  comparative  issue  favorably  to  Adams.  He  ruled  that  RBI  was  not  entitled  to  a  renewal  expectancy  because 
 WTVE(  TV)  s  programming  had  been  deficient  during  the  relevant  1989-  94  license  term  and  because  Parker  had  violated  the  Commissions  rules  by  transferring  control  of  the  station  without 
 authorization  and  by  violating  the  Commissions  reporting  requirements.  ID  at    246.  The  ALJ  awarded  Adams  a  slight  comparative  preference  for  diversification  because  Parker  had  interests 
 in  existing  broadcast  stations.  ID  at    249.  He  also  gave  Adams  a  slight  preference  for  comparative  coverage.  ID  at    250.  In  the  ALJs  view,  these  advantages  outweighed  RBIs 
 slight  preferences  for  local  residence  and  civic  activities.  ID  at    251-  52. 
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 5.  Now  before  the  Commission  are  exceptions  to  the  initial  decision  filed  by  RBI,  and  related  pleadings.  1  For  the  reasons  set  forth  below,  we  will  reverse  the  initial  decision.  We  find 
 that  neither  Adams  nor  RBIs  Parker  committed  disqualifying  misconduct,  that  RBI  is  not  entitled  to  a  renewal  expectancy  based  on  its  past  operation  of  WTVE(  TV),  but  that  RBI  is 
 comparatively  superior  to  Adams. 
 II.  ADAMS  ABUSE  OF  PROCESS  ISSUE 
 6.  Initial  Decision.  In  considering  Adams  basic  qualifications,  the  ALJ  credited  Adams  claim  that  it  did  not  abuse  the  Commissions  processes  2  by  filing  its  application  for  the  purpose 
 of  reaching  a  settlement,  as  opposed  to  having  a  bona  fide  intention  to  own  and  operate  a  broadcast  station.  3  In  reaching  his  decision,  the  ALJ  considered  evidence  submitted  by  RBI  that 
 most  of  Adams  principals  had  previously  been  principals  of  Monroe  Communications  Corporation  (Monroe),  which  had  filed  a  comparative  challenge  against  a  television  station  in 
 Chicago.  ID  at    154.  Although  the  Commission  granted  Monroes  application  after  lengthy  proceedings,  Monroes  principals  did  not  operate  the  station,  but  instead  agreed  to  a  settlement 
 in  which  they  dismissed  their  application  in  return  for  a  buy-  out  of  approximately  $17.5  million.  However,  the  ALJ  noted  that  the  Commission,  in  approving  the  Chicago  settlement,  found  that 
 Monroe  had  not  filed  for  the  purpose  of  reaching  a  settlement.  Id.  The  ALJ  also  credited  testimony  that  Monroes  principals  would  have  operated  the  station  except  that  they  believed  that 
 they  would  not  be  able  to  produce  Spanish  language  programming  equal  to  the  stations  existing  programming.  ID  at    239. 

 7.  The  ALJ  also  considered  testimony  as  to  Adams  motives  for  filing  the  Reading  application.  He  found  that  Adams  principals  believed  that  home  shopping  stations  such  as 
 WTVE(  TV)  generally  did  not  serve  the  public  interest  because  such  stations  did  not  originate  local  programming,  and  that  these  stations  were  vulnerable  to  a  comparative  renewal  challenge. 
 ID  at    157-  58.  The  Adams  principals  formulated  a  strategy  under  which  they  would  challenge  a  home  shopping  station  regardless  of  where  it  was  located.  ID  at    158.  After  encountering 
 difficulties  acquiring  a  transmitter  site  needed  to  mount  a  challenge  in  Marlborough,  Massachusetts,  Adams  principals  pursued  the  Reading  market  as  the  next  available  opportunity. 

 1  Before  the  Commission  are:  (1)  Reading  Broadcasting,  Inc.  s  Exceptions  to  Initial  Decision  of  Administrative 
 Law  Judge  Richard  Sippel,  filed  May  21,  2001,  and  reply,  filed  May  31,  2001,  by  Adams;  (2)  Brief  in  Support  of  Initial  Decision  and  Contingent  Exceptions  of  Adams  Communications  Corporation,  filed  May  21,  2001,  and  a  reply 

 filed  May  31,  2001,  by  RBI;  and  (3)  a  consolidated  reply,  filed  May  31,  2001,  by  the  Enforcement  Bureau.  By  Order,  FCC  01-  251  (Sept.  13,  2001),  we  accepted  the  Consolidated  Exceptions  and  Brief  of  Micheal  L.  Parker  to  the 
 Initial  Decision  of  Administrative  Law  Judge  Richard  L.  Sippel,  filed  May  21,  2001,  as  an  amicus  brief;  RBI  and  Adams  filed  replies  on  September  24,  2001. 
 2  The  term  abuse  of  process  can  generally  be  defined  as  the  use  of  a  Commission  process,  procedure,  or  rule  to 
 achieve  a  result  which  that  process,  procedure,  or  rule  was  not  designed  or  intended  to  achieve,  or,  alternatively,  use  of  such  process,  procedure,  or  rule  in  a  manner  which  subverts  the  underlying  purpose  of  that  process,  procedure,  or 

 rule.  See  Formulation  of  Policies  and  Rules  Relating  to  Broadcast  Renewal  Applicants,  4  FCC  Rcd  4780,  4793  n.  3  (1989). 
 3  At  the  time  RBI  raised  allegations  of  abuse  of  process  against  Adams,  Adams  filed  a  letter  with  the  Office  of 
 General  Counsel  asking  that  office  to  take  appropriate  action.  Letter  from  Gene  A.  Bechtel  and  Harry  Cole  to  Christopher  Wright,  General  Counsel  (Nov.  24,  1999).  In  light  of  our  action  herein,  we  will  dismiss  the  letter  as 

 moot. 
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 Id.  at    158-  59.  The  ALJ  credited  testimony  that,  in  pursuing  this  strategy,  Adams  principals  had  acted  out  of  a  primary  motive  to  acquire  a  station  at  low  cost.  ID  at    156-  57,  159. 
 8.  In  reaching  this  conclusion,  the  ALJ  discounted  the  significance  of  circumstances  that  could  arguably  be  interpreted  as  suggesting  a  lack  of  serious  interest  in  operating  a  broadcast 
 station  in  Reading.  For  example,  the  ALJ  found  that  Adams  had  no  connection  with  the  Reading  area  and  it  cannot  be  accepted  that  they  picked  RBI  from  a  list  of  renewals  out  of  concern  at  the 
 time  of  target  selection  for  the  interests  of  the  local  viewers  of  Channel  51.  ID  at    157.  Additionally,  he  found  that  Adams  investigation  of  Reading  reflected  uncontrolled,  haphazard 
 methodology.  Id.  at    160.  He  noted  in  particular,  an  incident,  the  significance  of  which  the  parties  hotly  disputed.  In  May  1994,  Adams  principal  Howard  N.  Gilbert  hired  a  man  named 
 Paul  Sherwood  to  tape  WTVE(  TV)  s  programming,  so  that  Gilbert  could  review  the  stations  public  service  offerings.  ID  at    161-  66.  Sherwood,  however,  mistakenly  taped  not 
 WTVE(  TV),  but  the  Home  Shopping  Club  cable  channel.  Although  Gilbert  reviewed  the  tapes,  he  did  not  discover  that  he  was  not  watching  WTVE(  TV)  until  after  this  proceeding 
 commenced  in  1999.  The  ALJ  did  not  consider  these  lapses  to  be  a  demonstration  that  Adams  lacked  a  serious  intent  to  construct  and  operate  the  station. 

 9.  The  ALJ  also  found  no  indication  that  Gilberts  eventual  participation  in  settlement  talks  with  the  Spanish  language  network,  Telemundo,  whose  programming  was  by  this  time 
 being  carried  by  WTVE(  TV),  demonstrated  that  Adams  had  filed  its  application  with  an  intent  to  settle.  ID  at    170-  73.  According  to  the  ALJ,  Adams  attorney  told  Telemundo  attorney,  Anne 
 Swanson,  that,  while  Adams  planned  to  pursue  its  application,  it  would  not  say  no  to  a  settlement.  ID  at    170.  Swanson  asked  Gilbert  for  a  settlement  figure,  but  Gilbert  would  not 
 give  one  because  Adams  had  not  valued  the  station.  Gilbert  agreed  that  Adams  would  pay  one-third  of  the  cost  of  an  appraisal  and  indicated  that  he  would  be  reasonable  about  a  settlement. 
 ID  at    171-  72.  RBI,  however,  did  not  participate  in  the  settlement  talks  and  the  settlement  did  not  materialize.  The  ALJ  found  that  Gilbert  was  prepared  to  negotiate  a  serious  settlement  in 
 1999,  but  that  he  was  not  the  initiator  of  the  discussions.  ID  at    172,  243.  Similarly,  the  ALJ  did  not  find  it  dispositive  of  an  intent  to  settle  that  the  fee  agreement  between  Adams  and  its 
 attorneys  (who  were  also  Monroes  attorneys)  provided  that  the  attorneys  would  receive  twice  their  usual  hourly  rate  if  Adams  application  were  granted  or  if  the  application  were  dismissed  on 
 economically  favorable  terms,  including  a  settlement  for  reasonable  and  prudent  expenses.  ID  at    174. 

 10.  Viewing  the  totality  of  the  circumstances,  the  ALJ  ultimately  concluded  that  Adams  did  not  file  its  application  for  the  purpose  of  reaching  a  settlement,  which  would  have  been  an 
 abuse  of  process.  See  Garden  State  Broadcasting  Limited  Partnership  v.  FCC,  996  F.  2d  386  (D.  C.  Cir.  1993).  For  the  reasons  noted  in  paragraph  6,  supra,  he  did  not  believe  that  the 
 participation  of  Adams  principals  in  the  earlier  Monroe  application  reflected  adversely  on  their  motives  for  filing  in  Reading.  ID  at    239.  He  concluded  that,  in  view  of  the  Commission  policy 
 limiting  settlements  to  expenses,  and  then  only  after  a  hearing,  it  would  not  have  been  realistic  for  Adams  principals  to  file  for  the  purpose  of  achieving  a  settlement,  and  it  was  credible  that 
 they  intended  to  seek  a  construction  permit.  ID  at    240.  Additionally,  the  ALJ  observed  that  Adams  had  shown  concern  for  programming  and  had  taken  serious  steps  to  litigate  its 
 application.  ID  at    241-  42.  Finally,  the  ALJ  believed  that  WTVE(  TV),  which  was  only  recently  emerging  from  bankruptcy,  was  not  a  logical  target  for  an  applicant  seeking  a  cash 
 settlement.  ID  at    244. 
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 11.  Exceptions.  In  its  exceptions,  RBI  contends  that  the  ALJs  conclusion  that  Adams  filed  its  application  for  the  purpose  of  owning  and  operating  a  station  cannot  be  reconciled  with 
 Gilberts  original  testimony  that  Adams  had  a  different  motive  for  filing    namely,  to  set  a  precedent  that  the  home  shopping  format  was  generally  contrary  to  the  public  interest.  RBI  sees 
 Adams  application  as  a  continuation  of  the  pattern  of  conduct  manifested  by  the  Chicago  settlement  in  which  they  file  an  application  to  make  a  point  and  then  settle  even  if  they  are 
 granted  the  facility.  RBI  accuses  Adams  principals  of  lacking  candor  in  describing  and  producing  documents  regarding  their  settlement  talks  with  Telemundo  and  their  effort  to 
 ascertain  Readings  programming  needs.  According  to  RBI,  a  motive  to  settle  would  be  disqualifying,  even  if  it  were  not  the  primary  motive  for  filing.  RBI  also  contends  that  the 
 Adams  fee  agreement  with  counsel  betrays  an  intention  to  settle  because,  for  purposes  of  compensating  counsel,  it  treats  settlement  as  equivalent  to  grant  of  the  application. 

 12.  Adams  responds  that  the  ALJ  carefully  analyzed  the  testimony  of  Adams  witnesses  and  specifically  found  that  testimony  credible.  See  ID  at    245.  The  Enforcement  Bureau  agrees 
 with  the  ALJ  that  no  abuse  of  process  occurred,  although  it  found  the  testimony  of  Adams  witnesses  troubling  in  some  respects. 

 13.  Discussion.  This  issue  presents  a  close  question  as  to  whether  Adams  primary  motive  was  to  operate  the  station  or  to  obtain  a  settlement.  As  an  initial  matter,  we  disagree  with 
 RBIs  suggestion  that  Adams  application  would  be  abusive  even  if  an  intention  to  settle  was  only  a  secondary  motive.  Our  cases  make  clear  that,  to  constitute  abuse,  an  improper  motive, 
 such  as  a  motive  to  settle,  must  be  the  primary  and  substantial  purpose  of  the  filing.  See  Radio  Carrollton,  69  FCC  2d  1139,  1150-  51    24-  26  (1978),  recon.  denied,  72  FCC  2d  264  (1979).  4 
 See  also  Faulkner  Radio,  Inc.  v.  FCC,  557  F.  2d  866,  875  (D.  C.  Cir.  1977).  Thus,  Adams  application  would  represent  an  abuse  of  process  only  if  it  was  filed  for  the  primary  purpose  of 
 obtaining  a  settlement.  See  also  47  C.  F.  R.    73.3525(  b)(  2). 
 14.  We  find  that  the  record  raises  a  substantial  question  as  to  whether  Adams  primary  interest  was  in  owning  and  operating  a  station  or  whether  the  application  was  filed  for  other 
 purposes  with  the  ultimate  expectation  of  settlement.  Testimony  by  Adams  principal,  Gilbert,  suggests  that  the  groups  primary  motivation  was  to  influence  Commission  policy  regarding 
 home  shopping  stations  generally,  rather  than  obtaining  ownership  of  a  broadcast  station.  He  acknowledged  that  the  groups  interest  was  in  public  service  broadcasting  nationwide,  as 
 opposed  to  Reading  in  particular,  and  termed  the  group  crusaders  in  this  regard.  Tr.  1131-  32.  He  said  that  he  knew  of  no  station  with  a  home  shopping  format  that  served  the  public  interest, 
 that  there  was  nothing  unique  about  Reading,  and  that  Reading  was  chosen  simply  because  it  was  the  next  available  station  up  for  renewal.  5  Tr.  1119,  1122-  24.  He  testified:  [  T]  he  problem  is 
 how  to  get  FCC  to  make  a  statement  and  do  something  so  you  would  change  the  nature  of  broadcasting.  Tr.  1118.  He  further  testified  that:  If  we  win  this  case,  and  you  have  to  have  a 
 reasonable  amount  of  public  service  broadcasting,  Home  Shopping  Network  isnt  going  to  work.  Tr.  1120.  He  explained  that  the  group  did  not  offer  to  buy  a  home  shopping  station 

 4  Millar  v.  FCC,  707  F.  2d  1530  (D.  C.  Cir.  1530),  cited  by  RBI,  affirmed  Commission  policy  that  was  subsequently 
 clarified  by  Radio  Carollton.  5 
 At  one  point,  Gilbert  testified:  This  isnt  a  great  place  to  be,  Reading.  Tr.  1119. 
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 because:  That  wouldnt  have  achieved  the  result  we  were  trying  to  achieve.  Tr.  1115.  He  then  drew  an  analogy  to  the  Chicago  proceeding,  in  which  Monroe  settled:  Wed  been  successful  in 
 Monroe,  in  first  knocking  off  pay  TV.  Equally  or  more  important,  as  it  came,  we  stopped  pornography  in  the  United  States.  Id. 

 15.  Gilberts  testimony  further  suggests  that  Adams  principals  gave  little  attention  to  the  things  that  reasonable  business  people  typically  do  in  preparing  to  acquire  a  station.  According 
 to  Gilbert,  the  group  had  no  written  analysis  of  the  demographics  of  the  Reading  market  and  was  not  interested  in  researching  the  revenue  of  WTVE(  TV).  Tr.  1065-  66.  They  did  not  research  the 
 potential  value  of  the  construction  permit  they  were  applying  for.  Tr.  1066.  See  also  Tr.  2530  (indicating  that  Adams  also  did  not  research  the  Marlborough,  Massachusetts  station).  Even  the 
 ALJ  found  that  the  evidence  of  [Adams]  investigating  the  needs  of  the  community  is  accorded  little  weight.  ID  at    160.  Additionally,  the  fee  arrangement  between  Adams  and  its  attorneys 
 suggests  that  Adams  viewed  settlement  as  no  less  favorable  an  outcome  than  grant  of  a  construction  permit.  The  agreement  provides  that  the  attorneys  would  receive  approximately 
 one-  half  their  usual  fee  for  litigating  the  case,  but  that  they  would  receive  twice  their  usual  fee  if:  (  a)  the  Adams  application  is  ultimately  granted,  or  (b)  the  Adams  proceeding  is  resolved 
 through  a  settlement  which  is  economically  favorable  for  Adams  (including,  for  example,  a  resolution  which  entitles  Adams  to  reimbursement  for  its  reasonable  and  prudent  expenses  .  .  .  .   
 RBI  Exh.  21.  By  contrast,  the  earlier  Monroe  fee  agreement  (involving  the  same  attorneys)  provided  that  the  attorneys  would  receive  twice  their  usual  rate  if  the  Monroe  application  were 
 granted,  but  only  their  usual  rate  if  the  application  were  dismissed  pursuant  to  a  settlement  agreement.  RBI  Exh.  20. 

 16.  Weighing  against  these  circumstances,  is  the  fact  that  the  ALJ  specifically  found  credible  the  testimony  of  Adams  principals  that  they  intended  to  operate  the  station.  He  held 
 that: 
 There  has  been  a  careful  analysis  of  the  testimony  of  Adams  principals  regarding  motive  for  filing,  the  Telemundo  settlement  and  programming  discussions,  the  taping  episode, 
 and  the  temporary  lapse  of  Adams  corporate  status.  The  testimony  of  Adams  principals,  while  not  crisp,  clear  and  concise  in  all  respects,  has  not  misrepresented  any  material 
 facts,  has  not  misstated  any  facts  of  decisional  significance,  has  not  distorted  the  record,  has  not  been  misleading,  and  has  not  been  lacking  in  candor. 

 ID  at    245.  This  testimony  indicates  that  Adams  filed  its  challenge  as  a  way  to  obtain  a  station.  Tr.  2429-  30,  2467-  68.  It  also  indicates  that  Adams  intended  to  operate  the  station  as  a  Spanish 
 language  station.  Tr.  1126-  27,  2444-  45;  RBI  Exh.  45  at  9-  11.  We  believe  that  the  ALJs  determination  of  the  credibility  of  Adams  witnesses  is  entitled  to  deference.  See,  e.  g., 
 TeleSTAR,  Inc.,  2  FCC  Rcd  5,  13    23  (Rev.  Bd.  1987),  citing,  Penasquitos  Village,  Inc.  v.  NLRB,  565  F.  2d  1074,  1078-  80  (9  th  Cir.  1977).  While  the  ALJ  did  not  make  specific  demeanor 
 findings  in  his  initial  decision,  the  record  indicates  that  he  actively  participated  in  questioning  witnesses  concerning  this  issue.  See,  e.  g.,  Tr.  2452-  58.  Given  the  close  attention  that  the  ALJ 
 manifestly  paid  to  the  live  testimony,  it  would  be  unreasonable  to  suppose  that  he  could  have  reached  the  conclusion  he  did  in  the  preceding  quotation  unless  his  observation  of  the  witnesses 
 satisfied  him  that  they  were  credible.  This  factor  distinguishes  the  present  case  from  Garden  State  Broadcasting  Limited  Partnership  v.  FCC,  996  F.  2d  386,  391-  92  (D.  C.  Cir.  1993),  in  which 
 an  applicants  claimed  motivation  for  filing  was  shown  to  be  a  fabrication. 
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 17.  We  have  examined  the  other  various  factual  issues  that  RBI  argues  demonstrate  that  Adams  had  no  interest  in  operating  the  station  and  that  it  intended  to  settle.  We  find  that  this 
 evidence  is  ambiguous  at  best  and  thus  does  not  provide  a  basis  to  reject  the  ALJs  conclusion  that  the  testimony  of  Adams  principals  establishes  that  they  intended  to  operate  the  station. 
 Adams  willingness  to  engage  in  settlement  discussions  with  Telemundo  does  not  demonstrate  that  settlement  was  Adams  primary  motive.  While  the  testimony  concerning  the  Telemundo 
 settlement  discussions  indicates  that  Gilbert  seriously  explored  the  possibility  of  settlement,  Telemundos  attorney  recalled  that  Gilbert  planned  to  pursue  his  application.  Tr.  2221.  She  also 
 recalled  that  Gilbert  expressed  an  interest  in  becoming  a  Telemundo  affiliate  in  the  event  the  Adams  application  was  granted.  Tr.  2262,  2278,  2281-  82.  Similarly,  Adams  carelessness  in 
 attempting  to  tape  WTVE(  TV)  s  programming  does  not  by  itself  establish  that  Adams  had  no  real  interest  in  investigating  WTVE(  TV)  s  allegedly  poor  performance  as  preparation  for 
 operating  the  station.  Under  these  circumstances,  we  do  not  see  a  firm  basis  to  reject  the  ALJs  findings  on  this  issue,  and  we  therefore  affirm  the  ALJs  conclusion  that  Adams  did  not  abuse 
 the  Commissions  processes  in  filing  its  application.  Similarly,  we  find  no  basis  to  conclude  Adams  witnesses  committed  misrepresentations  in  their  testimony.  As  noted,  the  ALJ  closely 
 observed  these  witnesses  and  found  no  significant  misconduct  in  the  asserted  discrepancies  advanced  by  RBI.  Our  own  review  of  the  record  provides  no  substantial  basis  to  disagree  with 
 the  ALJs  conclusions  in  this  regard. 
 III.  RBI  MISREPRESENTATION/  LACK  OF  CANDOR  ISSUE 
 18.  Initial  Decision.  The  ALJ  found  that  RBIs  president,  director,  and  shareholder,  Micheal  L.  Parker  made  misrepresentations  and  lacked  candor  before  the  Commission.  He 
 found  that  Parker  made  false  and  misleading  statements  concerning  misconduct  in  which  Parker  was  involved  that  was  found  in  two  prior  Commission  proceedings  discussed  below.  ID  at   
 223-  32. 
 19.  San  Bernardino  Proceeding.  In  the  San  Bernardino  comparative  proceeding,  the  presiding  Administrative  Law  Judge  found  that  Parker  was  an  undisclosed  real-  party-  in-  interest 
 in  an  application  filed  by  San  Bernardino  Broadcasting  Limited  Partnership  (SBBLP).  Religious  Broadcasting  Network,  2  FCC  Rcd  6561,  6567    60  (ALJ  1987).  The  Presiding  Judge 
 disqualified  SBBLP  and,  alternatively,  held  that  SBBLP  was  not  entitled  to  comparative  integration  credit.  The  Review  Board  did  not  reach  the  issue  of  SBBLPs  basic  qualifications, 
 but  affirmed  the  denial  of  integration  credit.  Religious  Broadcasting  Network,  3  FCC  Rcd  4085  (Rev.  Bd.  1988).  The  Board  held: 

 We  affirm,  con  brio,  the  ALJ's  refusal  to  award  "integration"  credit  to  [SBBLP];  its  application  was  and  remains  a  travesty  and  a  hoax.  We  need  not  repeat,  point-  by-  point, 
 all  of  the  findings  of  fact  which  the  ALJ  has  set  out  to  support  his  conclusion  that  the  progenitor  and  the  real-  party-  in-  interest  of  [SBBLP]  is  definitely  not  Van  Osdel,  she 
 being  merely  a  fig  leaf  for  the  true  kingpin  of  [SBBLP],  one  Michael  Parker,  who  currently  holds  an  interest  in  numerous  other  broadcast  permits  (I.  D.,  para.  61),  and  who 
 could  not  in  his  own  identity  have  hoped  to  prevail  in  this  very  close  comparative  contest. 
 *  *  *  * 
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 [W]  e  find  no  error  in  the  ALJ's  core  conclusion  that  Van  Osdel  is  neither  the  sole  nor  dominant  management  figure  purported  by  [SBBLP],  but  a  convenient  vizard.  She  can 
 claim  no  serious  or  material  role  in  SBB's  most  elementary  affairs.  [SBBLP]  is  a  transpicuous  sham,  compare  Pacific  Television,  supra,  and  the  ALJ  justly  rejected  its 
 attempted  fraud. 
 3  FCC  Rcd  at  4090    16,  18.  See  ID  at    119-  20.  Subsequently,  the  Review  Board  approved  a  settlement,  under  which  SBBLP  withdrew  its  application  in  return  for  a  payment  of  $850,000. 
 Religious  Broadcasting  Network,  5  FCC  Rcd  6362  (Rev.  Bd.  1990);  ID  at    121. 
 20.  Mt.  Baker  Proceeding.  In  a  second  proceeding,  Mt.  Baker  Broadcasting  Company,  Inc.,  an  entity  controlled  by  Parker,  sought  reinstatement  of  a  construction  permit  for  a  new 
 station  at  Anacortes,  Washington  that  had  been  cancelled  for  failure  to  construct  in  a  timely  fashion.  Mt.  Baker  Broadcasting  Co.,  Inc.,  3  FCC  Rcd  4777  (1988).  Notwithstanding  Mt. 
 Bakers  asserted  good  faith  efforts  to  complete  construction  on  a  timely  basis,  the  Commission  denied  reinstatement,  finding  that  the  facilities  that  Mt.  Baker  eventually  constructed  were  at 
 variance  with  those  authorized.  The  Commission  rejected  Mt.  Bakers  suggestion  that  its  construction  permit  could  be  reinstated  and  a  forfeiture  imposed: 

 Mt.  Baker  contends  that  the  imposition  of  a  forfeiture  is  often  the  penalty  for  unauthorized  construction  of  a  broadcast  station.  [A]  forfeiture  might  be  appropriate  in 
 some  cases  where  construction  differs  by  a  modest  degree  from  the  facilities  authorized.  The  departure  in  this  case  is  clearly  not  modest;  for  example,  operation  with  10.3  kW 
 ERP,  compared  to  3630  kW  authorized.  In  addition,  there  are  no  significant  mitigating  circumstances  in  this  case,  but  there  are  substantial  aggravating  factors.  In  that  regard, 
 improper  construction  did  not  occur  through  error  or  inadvertence;  the  facts  clearly  indicate  an  effort  to  deceive  the  Commission.  A  license  application  would  have  revealed 
 what  had  been  built  and  would,  almost  certainly,  have  been  denied,  but  Mt.  Baker  did  not  file  one,  and  the  deception  was  not  uncovered  until  the  Field  Operations  Bureau 
 inspection. 
 3  FCC  Rcd  at  4778    8.  See  ID  at    122. 
 21.  Alleged  Misrepresentations  and  Lack  of  Candor  Concerning  These  Two  Proceedings.  Thereafter,  Parker  filed  several  applications,  including  transfer  and  assignment 
 applications.  Question  4  of  the  version  of  Forms  314  and  315  in  effect  at  the  time,  dealing  with  the  assignees/  transferees  qualifications,  asked: 

 (a)  Has  an  adverse  finding  been  made,  adverse  final  action  taken  or  consent  decree  approved  by  any  court  or  administrative  body  as  to  the  applicant  or  any  party  to  the 
 application  in  any  civil  or  criminal  proceeding  brought  under  the  provisions  of  any  law  related  to  the  following:  any  felony,  antitrust,  unfair  competition,  fraud,  unfair  labor 
 practices,  or  discrimination? 
 (b)  Is  there  now  pending  in  any  court  or  administrative  body  any  proceeding  involving  any  of  the  matters  referred  to  in  4(  a)? 
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 If  the  answer  to  (a)  or  (b)  above  is  Yes,  attach  as  Exhibit  No.  ____,  a  full  disclosure  concerning  the  persons  and  matters  involved,  identifying  the  court  or  administrative  body 
 and  the  proceeding  (by  dates  and  file  numbers),  stating  the  facts  upon  which  the  proceeding  was  based  or  the  nature  of  the  offense  committed,  and  disposition  or  current 
 status,  of  the  matter.  Information  called  for  by  this  question  which  is  already  on  file  with  the  Commission  need  not  be  refiled  provided:  (1)  the  information  is  now  on  file  in 
 another  application  or  FCC  form  filed  by  or  on  behalf  of  transferee;  (2)  the  information  is  identified  fully  by  reference  to  the  file  number  (if  any);  the  FCC  form  number  and  the 
 filing  date  of  the  application  or  other  form  containing  the  information  and  the  page  of  paragraph  referred  to;  and  (3)  after  making  the  reference,  the  transferee  states,  "No 
 change  since  date  of  filing. 
 Question  7  asked: 
 Has  the  applicant  or  any  party  to  this  application  had  any  interest  in  or  connection  with  the  following: 

 (a)  an  application  which  has  been  dismissed  with  prejudice  by  the  Commission?  (b)  an  application  which  has  been  denied  by  the  Commission? 
 (c)  a  broadcast  station,  the  license  of  which  has  been  revoked?  (d)  an  application  in  any  Commission  proceeding  which  left  unresolved  character 
 issues  against  the  applicant  (e)  If  the  answer  ---  is  Yes,  state  in  Exhibit  No.  --,  the  following  information 
 (i)  name  of  party,  (ii)  nature  of  interest,  giving  dates, 
 (iii)  call  letters  of  station,  (iv)  location. 

 22.  Parker  gave  answers  to  these  questions  in  six  applications  filed  between  March  2,  1989  and  August  3,  1992.  In  a  March  2,  1989  transfer  application  for  Station  KWBB(  TV),  San 
 Francisco,  California,  Parker  answered  4(  a)  and  4(  b)  no,  7(  a)  and  7(  b)  yes  and  7(  c)  and  7(  d)  no.  ID  at    125-  27.  The  application  included  a  narrative  statement  relating  to  the  Mr.  Baker 
 proceeding  that  read  as  follows: 
 Micheal  L.  Parker,  Vice  President  and  a  director  of  West  Coast,  ...  is  an  officer,  director,  and  shareholder  of  Mt.  Baker  Broadcasting  Co.,  which  was  denied  an  application  for 
 extension  of  time  of  its  construction  permit  for  KORC(  TV),  Anacortes,  Washington,  FCC  File  No.  BMPCT-  8607OIKP.  See  Memorandum  Opinion  and  Order,  FCC  88-  234, 
 released  August  5,  1988.  6 
 He  did  not,  however,  report  the  San  Bernardino  proceeding.  Parker  gave  identical  answers  in  a  December  8,  1989  Form  346  application  for  a  new  low  power  television  station  in  Los  Angeles, 
 California.  7  ID  at    128. 
 6  He  also  noted  that  a  petition  for  reconsideration  of  the  Mt.  Baker  ruling  was  pending  at  the  time. 
 7  The  wording  of  Question  4  on  Form  346  differed  from  that  on  the  assignment  and  transfer  applications  in  that  it 
 referred  to  fraud  before  another  governmental  unit.  ID  at    124.  In  view  of  this  wording,  the  ALJ  found  that  Parker  could  legitimately  answer  Question  4  in  the  negative  on  Form  346. 
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 23.  Later,  in  a  July  21,  1991  transfer  application  for  Station  WHRC-  TV,  Norwell,  Massachusetts,  Parker  answered  Question  4  and  7  as  he  had  before,  but  included  for  the  first 
 time,  a  narrative  concerning  the  San  Bernardino  proceeding  in  response  to  Question  7,  which  read: 

 Although  neither  an  applicant  nor  the  holder  of  an  interest  in  the  applicant  to  the  proceeding,  Micheal  Parker's  role  as  a  paid  independent  consultant  to  San  Bernardino 
 Broadcasting  Limited  Partnership  ["  SBBLP"],  an  applicant  in  MM  Docket  No.  83-  911  for  authority  to  construct  a  new  commercial  television  station  on  Channel  30  in  San 
 Bernardino,  CA,  was  such  that  the  general  partner  in  [SBBLP]  was  held  not  to  be  the  real  party  in  interest  to  that  applicant  and  that,  instead,  for  purposes  of  the  comparative 
 analysis  of  [SBBLP's]  integration  and  diversification  credit,  Mr.  Parker  was  deemed  such.  See  Religious  Broadcasting  Network  et.  al.,  FCC  88R-  38,  released  July  5,  1988. 
 MM  Docket  83-  911  was  settled  in  1990  and  Mr.  Parker  did  not  receive  an  interest  of  any  kind  in  the  applicant  awarded  the  construction  permit  therein,  Sandino  Telecasters,  Inc. 
 See  Religious  Broadcasting  Network  et.  al.,  FCC  9OR-  101,  released  October  31,  1990. 
 ID  at    129-  30.  Parker  gave  similar  answers  in  the  November  13,  1991  assignment  application  for  WTVE(  TV),  Reading,  Pennsylvania,  the  June  4,  1992  assignment  application  for  Station 
 KTMD(  TV),  Twenty  Nine  Palms,  California,  and  the  August  3,  1992  assignment  application  for  AM  International  Broadcast  Station  KCBI,  Dallas,  Texas.  ID  at    134-  36. 

 24.  With  respect  to  the  Dallas  application,  the  Commissions  staff  processing  that  application  requested  additional  information  regarding  whether  character  issues  had  been  added 
 or  requested  in  the  proceedings  specified  in  Parkers  answer  to  Question  7.  ID  at    136.  Parker  then  submitted  an  amendment  to  the  application,  stating: 

 Two  If  By  Sea  Broadcasting  Corporation  ("  Two  If  By  Sea")  has  applied  for  authority  to  acquire  Station  KCBI  from  Criswell  Center  for  Biblical  Studies.  As  part  of  that 
 application,  Two  If  By  Sea  listed  applications  in  which  its  officers,  directors  and  principals  had  held  interests  and  which  were  dismissed  at  the  request  of  the  applicant. 
 This  will  confirm  that  no  character  issues  had  been  added  or  requested  against  those  applicants  when  those  applications  were  dismissed. 

 However,  a  character  issue  (i.  e.,  the  real-  party-  in-  interest  issue)  had  been  added  against  the  dismissing  applicant,  SBBLP,  in  the  San  Bernardino  proceeding. 
 25.  ALJs  Conclusions.  The  ALJ  faulted  Parkers  responses  for  three  reasons.  8  First,  the  ALJ  found  that  Parker  should  have  answered  yes  to  Question  4  because  the  reference  to 
 fraud  in  that  question  was  sufficiently  broad  to  encompass  the  findings  made  in  the  Mt.  Baker  and  San  Bernardino  proceedings.  ID  at    123.  He  found  that  Parkers  response  of  no  to 
 Question  4  was  false  and  misleading.  ID  at    223-  25.  In  addition,  the  ALJ  found  that  Parkers 

 8  The  ALJ  termed  Parkers  failure  to  mention  the  San  Bernardino  proceeding  in  the  San  Francisco  and  Los  Angeles 
 applications  as  negligent.  ID  at    227.  The  ALJ,  however,  found  no  lack  of  candor  in  this  regard.  He  found  that  Parkers  narrative  responses  were  incomplete  but  not  willfully  misleading.  ID  at    226. 
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 amendment  to  the  Dallas  application  was  false  and  misleading.  ID  at    229.  According  to  the  ALJ,  Parker  should  have  reported  the  Commissions  finding  in  Mt.  Baker  that  there  had  been  an 
 effort  to  deceive  although  no  issue  had  been  added  in  that  case.  More  importantly,  a  character  issue  clearly  had  been  added  in  the  San  Bernardino  proceeding.  Although  the  ALJ  found 
 Parkers  conduct  disqualifying,  he  held  that  RBI  would  not  be  found  unqualified  if  it  severed  its  relationship  with  Parker.  9  ID  at    233-  35. 

 26.  Exceptions.  RBI  and  Parker  dispute  the  ALJs  finding  that  Parker  committed  misconduct.  They  assert  that  the  ALJ  misconstrued  the  scope  of  Question  4,  which,  they  say, 
 refers  to  non-  FCC  misconduct.  They  also  assert  that  the  fact  Parker  reported  the  Mt.  Baker  and  San  Bernardino  proceedings  in  response  to  Question  7  rebuts  any  inference  that  his  failure  to 
 answer  Question  4  in  the  affirmative  was  intended  to  mislead  the  Commission.  Additionally,  they  maintain  that  Parker  relied  on  the  advice  of  counsel  in  preparing  the  Dallas  amendment. 

 27.  Adams  supports  the  ALJs  findings.  Moreover,  Adams  contends  that  Parkers  misconduct  should  also  disqualify  RBI.  The  Enforcement  Bureau  agrees  with  RBI  that  Question 
 4  relates  to  non-  FCC  misconduct.  The  Bureau,  however,  agrees  with  Adams  that  the  Dallas  amendment  lacked  candor  and  that  if  Parker  is  disqualified,  so  is  RBI. 

 28.  Discussion.  Although  Parkers  responses  were  not  satisfactory  in  all  respects,  we  find  that  the  ALJs  conclusion  that  Parker  committed  disqualifying  misconduct  is  flawed  and  not 
 supported  by  the  record  as  a  whole.  We  agree  with  RBI,  Parker,  and  the  Bureau  that  Question  4  referred  to  adverse  findings  by  courts  and  administrative  bodies  other  than  the  FCC.  The 
 requirements  of  Question  4  derive  from  the  determinations  in  the  Commissions  policy  statements  on  character  as  to  what  types  of  misconduct  are  relevant  to  an  applicants 
 qualifications.  The  policy  statements  consistently  discuss  the  types  of  misconduct  listed  under  Question  4  as  non-  FCC  misconduct,  i.  e.,  misconduct  which  may  be  a  violation  of  law  but 
 does  not  specifically  contravene  the  Communications  Act  or  any  specific  Commission  rule  or  policy.  Character  Qualifications,  102  FCC  2d  1179,  1183  n.  11  (1986).  See  Character 
 Qualifications,  102  FCC  2d  at  1193-  1208    31-  52.  See  also  Policy  Regarding  Character  Qualifications  in  Broadcast  Licensing,  5  FCC  Rcd  3252,    3-  4  (1990),  modified,  6  FCC  Rcd 
 3448  (1991).  Likewise,  the  instructions  to  the  current  forms  clarify  that  the  question  seeks  information  regarding  non-  FCC  misconduct: 

 An  assignee  must  disclose  in  response  to  Item  8  [the  current  counterpart  to  Question  4]  whether  it  or  any  party  to  the  application  has  been  the  subject  of  a  final  adverse  finding 
 with  respect  to  certain  relevant  non-  broadcast  matters. 
 FCC  314  Instructions,  Instructions  for  Section  III  Assignee,  Item  F  (Apr.  2001).  Moreover,  the  Bureau  advocates  this  interpretation. 

 29.  Accordingly,  we  find  that  Question  4  did  not  require  Parker  to  report  proceedings  before  the  FCC,  and  his  answer  to  Question  4  was  therefore  appropriate.  Moreover,  we  agree 
 9  In  response  to  the  ALJs  findings,  RBI  submitted  a  Section  1.65  Statement  on  May  21,  2001,  indicating  that 
 Parker  had  resigned  as  president  and  director  of  RBI,  that  his  stock  interests  had  been  placed  in  a  voting  trust  or  otherwise  transferred,  and  that  a  management  agreement  between  Parker  and  RBI  had  been  terminated. 
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 with  RBI  and  Parker  that  it  would  be  incongruous  to  find  that  Parker  lacked  candor  in  failing  to  report  the  Mt.  Baker  and  San  Bernardino  proceedings  in  response  to  Question  4,  when  he  did 
 report  those  same  proceedings  under  Question  7  once  they  were  resolved. 
 30.  We  next  address  whether  Parkers  response  contained  in  the  Dallas  amendment  lacked  candor.  This  is  a  closer  question,  but  we  conclude  that  the  record  does  not  support 
 disqualification.  Parkers  response  to  the  staffs  question:  This  will  confirm  that  no  character  issues  had  been  added  or  requested  against  those  applicants  when  those  applicants  were 
 dismissed  (RBI  Exh.  46  ,  Att.  J  at  J3;  Adams  Exh.  55  at  3)  was  inaccurate  in  that  a  real-  party-in-  interest  issue,  i.  e.,  an  issue  potentially  bearing  on  character,  had  been  added  against  SBBLP  in 
 the  San  Bernardino  proceeding.  10  Moreover,  Parker  admits  that  he  reviewed  the  amendment  and  was  aware  that  an  issue  had  been  added  in  the  San  Bernardino  proceeding.  Tr.  1991-  92. 
 However,  Parker  explained  that  he  answered  as  he  did  because  he  believed  that  the  issues  in  the  San  Bernardino  proceeding  had  been  resolved  favorably  to  him  at  the  time  the  application  was 
 dismissed.  In  short,  Parker  viewed  the  thrust  of  the  staff  members  question  to  be  whether  unresolved  character  issues  had  been  added.  He  testified: 

 .  .  .  [M]  y  belief  was  that  there  werent  any  issues  that  were  outstanding  in  1992  in  this  case;  that  it  had  been  resolved.  .  .  .  Im  simply  saying,  in  1992,  it  was  clearly  my 
 understanding  that  there  were  no  issues  pending  and  that  they  had  been  resolved  in  that  case  .  .  .  in  terms  of  responding  to  the  Commission,  I  thought  I  was  signing  an  accurate 
 statement.  .  .  .  And  I  believe  that  .  .  .  there  werent  any  [character  issues]  added  or  requested  at  the  time  [the  applications]  were  dismissed.  .  .  .  [T]  his  sentence  deals  with 
 when  [the  application]  was  dismissed.  [I]  n  terms  of  an  adverse  finding  that  would  haunt  me  forever,  I  did  not  believe  that  to  be  the  case,  and  clearly,  I  believe,  that  when  the 
 [R]  eview  [B]  oard  approved  the  settlement  .  .  .  I  believed  that  all  adverse  rulings  had  been  resolved  .  .  .  . 

 Tr.  2027-  28,  2030,  2065,  2067,  2070.  He  further  testified  that  his  response  reflected  an  opinion  letter  and  long  discussion  with  his  communications  counsel,  Clark  Wadlow,  as  to  the 
 significance  of  the  various  rulings  in  the  San  Bernardino  proceeding.  Tr.  2008-  09,  2024. 

 31.  We  find  that,  on  balance,  the  record  as  a  whole  does  not  support  the  conclusion  that  Parkers  response  was  consciously  intended  to  deceive  the  Commission.  His  earlier  narrative 
 response  to  Question  7  (see  paragraph  23,  supra)  effectively  rebuts  the  inference  that  the  amendment  was  intended  to  conceal  from  the  staff  the  existence  of  the  real-  party-  in-  interest  issue 
 or  the  Boards  ruling.  On  the  contrary,  the  narrative  response  refers  to  both  the  issue  and  the  Board'  ruling,  albeit  without  further  elaboration.  In  view  of  the  fact  that  Parker  had  already 
 voluntarily  put  this  information  before  the  Commission,  we  see  no  reason  to  infer  that  he  somehow  intended  to  conceal  this  information  by  not  mentioning  the  real-  party-  in-  interest  issue 
 and  the  Boards  ruling  a  second  time,  in  response  to  the  staffs  inquiry.  In  this  regard,  the  record  does  not  indicate  that  the  staff  requested  the  amendment  because  it  wanted  more  information 
 than  was  already  supplied  in  the  narrative.  Rather,  the  parties  stipulated  that  the  staff  member 
 10  No  character  issue  had  been  added  or  requested  in  the  Mt.  Baker  proceeding. 
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 involved  requested  the  amendment  pursuant  to  her  usual  practice  of  asking  whether  character  issues  had  been  sought  or  added,  in  all  cases  where  an  applicant  identified  prior  FCC 
 applications  that  had  been  dismissed.  Bureau  Exh.  2  at  2-  3    c-  e.  Parker  had  no  reason  to  know  that  in  requesting  the  amendment  the  staff  had  not  fully  considered  the  information  that  he  had 
 already  disclosed. 
 32.  Moreover,  the  record  directly  corroborates  Parkers  contention  that  he  had  no  motive  to  conceal  the  rulings  regarding  the  real-  party-  interest  issue,  because  his  counsel  had  advised  him 
 that  the  real-  party-  in-  interest  issue  had  been  resolved  in  a  manner  that  did  not  reflect  adversely  on  his  character.  The  opinion  letter,  written  a  year  and  a  half  before  the  Dallas  amendment  was 
 filed,  states  in  its  entirety: 
 You  have  asked  our  opinion  on  the  impact  on  your  qualifications  to  be  a  principal  in  an  FCC  licensee  of  the  conclusions  on  the  real-  party-  in-  interest  issue  against  San 
 Bernardino  Broadcasting  Limited  Partnership  (  SBBLP),  an  applicant  in  the  Channel  30,  San  Bernardino,  California  licensing  proceeding  before  the  FCC. 

 As  you  are  aware,  we  were  counsel  to  a  competing  applicant  in  that  proceeding.  Since  we  had  (and  still  have)  an  attorney-  client  relationship  with  you,  we  were  not 
 directly  involved  in  the  trial  of  that  issue.  However,  we  have  reviewed  the  decision  and  are  generally  familiar  with  the  facts  and  issues  involved. 

 It  is  our  opinion  that  the  Administrative  Law  Judge  (  ALJ)  simply  concluded  that  SBBLP  had  failed  to  report  your  activities  and  involvements  with  SBBLP    which 
 the  ALJ  found  to  be  such  as  to  make  you  a  real-  party-  in-  interest.  However,  the  ALJ  did  not  find  that  you  had  done  anything  irmproper  [sic]  or  that  anything  you  had  done 
 reflected  adversely  on  you. 
 As  I  mentioned  above,  we  have  continued  to  represent  you  in  other  FCC  proceedings,  as  we  have  for  the  last  eight  or  ten  years.  You  serve  as  a  principal  of  other 
 FCC  licensees.  We  are  aware  of  no  question  that  has  ever  been  raised  as  to  your  qualifications  to  hold  such  a  position. 

 Please  do  not  hesitate  to  contact  me  if  you  need  further  information  on  this  subject. 
 Letter  from  R.  Clark  Wadlow  to  Mr.  Micheal  L.  Parker  (Feb.  18,  1991);  RBI  Exh.  46,  Att.  D;  Adams  Exh.  58.  The  records  of  Wadlows  firm  disclose  that  Parker  was  billed  for  a  45  minute 
 teleconference  regarding  character  issues  on  February  18,  1991,  the  day  the  letter  was  written.  This  is  consistent  with  Parkers  testimony  that  the  letter  reflects  a  long  discussion  of  the  matter 
 between  himself  and  Wadlow.  Adams  Exh.  59.  Wadlow  testified  at  the  hearing  that,  in  light  of  the  Boards  approval  of  a  settlement  in  the  San  Bernardino  proceeding,  he  believed  that  no 
 findings  adverse  to  Parker  had  been  made.  11  Tr.  1822,  1829,  1854-  55. 
 11  But  see  Allegan  County  Broadcasters,  Inc.,  83  FCC  2d  371  (1980),  which  permits  the  reimbursement  of  a 
 dismissing  applicant  despite  unresolved  issues  concerning  the  applicants  character. 
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 33.  Although  Wadlows  letter  did  not  warrant  Parkers  statement  that  no  issue  had  been  added  (since  one  had  been),  12  it  tends  to  rebut  the  inference  that  Parker  had  a  motive  to  deflect 
 Commission  scrutiny  from  the  real-  party-  in-  interest  issue,  which  Wadlow  said  did  not  reflect  adversely  on  Parkers  qualifications.  In  interpreting  the  technical  significance  of  the  San 
 Bernardino  decision  with  respect  to  his  qualifications  to  be  a  licensee,  Parker  could  reasonably  rely  on  the  advice  of  counsel.  13  See  Fox  Television  Stations,  Inc.,  10  FCC  Rcd  8452,  8478    60, 
 8500-  01    119  (1995).  Parker  did  not  have  notice  that,  contrary  to  Wadlows  advice,  the  Commission  viewed  the  San  Bernardino  proceeding  as  raising  questions  that  affected  Parkers 
 ability  to  acquire  stations,  until  five  years  later,  when  the  Commission  held  in  the  Hartford,  Connecticut  assignment  proceeding  that  Serious  character  questions  also  remain  regarding  the 
 assignee  Parker/  TIBS.  Two  If  By  Sea  Corp.,  12  FCC  Rcd  2254,  2257  (1997).  Until  the  petitioner  to  deny  in  the  Hartford  proceeding  argued  that  the  San  Bernardino  proceeding  raised 
 such  questions,  the  Commission  routinely  granted  Parker-  related  applications,  despite  the  fact  that  his  response  to  Question  7  included  a  reference  to  the  San  Bernardino  proceeding.  Four  of 
 these  applications  had  been  granted  by  the  time  of  the  Dallas  amendment.  We  agree  with  the  Bureaus  observation  that  the  Commissions  prior  actions  involving  Parker  created  a  climate  of 
 ambiguity  that  could  reasonably  have  led  him  (and  his  counsel)  to  believe  that  the  issue  had  been  resolved  in  a  manner  that  did  not  affect  his  qualifications.  See  Bureaus  Proposed  Findings 
 and  Conclusions  of  Law  at  63-  64    129;  Reply  Findings  and  Conclusions  of  Law  at  9-  10    18,  14    23.  We  are  satisfied  that  Parker  believed  that  the  staffs  question  focused  on  unresolved 
 character  issues  and  that  Parker  believed  that  no  such  issues  remained. 
 34.  In  view  of  the  foregoing,  we  find  there  is  no  reason  to  believe  that  Parkers  response  resulted  from  an  intent  to  conceal  incriminating  information  or  that  it  constitutes  a 
 misrepresentation  or  lack  of  candor.  The  ALJs  misinterpretation  of  Question  4  and  his  failure  to  give  adequate  consideration  to  the  factors  discussed  above  undermine  the  ALJs  opinions  as  to 
 Parkers  credibility.  14  Accordingly,  we  decline  to  follow  Adams  suggestion  that  the  ALJs  opinions  as  to  Parkers  credibility  should  be  given  deference.  Therefore,  we  disagree  that  Parker 
 needs  to  sever  his  ties  with  RBI  for  RBI  to  remain  qualified. 
 IV.  RBIs  RECORD    COMPLIANCE 

 12  Both  Wadlow  and  attorney  Eric  S.  Kravetz,  who  drafted  the  amendment,  testified  that  they  would  not  have  stated 
 that  no  issue  had  been  added.  Tr.  1813,  2372-  73.  Wadlow  further  testified  that  he  was  aware  that  a  character  issue  had  been  added  in  the  San  Bernardino  proceeding,  but  that  he  believed  the  final  settlement  constituted  a  resolution 

 of  the  character  issue  that  did  not  reflect  adversely  on  Parker.  Tr.  1822.  Parker  testified  that  it  was  this  understanding  that  made  him  believe  that  any  character  issue  had  been  dismissed,  so  that  his  amendment  was 
 correct.  Tr.  2065.  13 
 Moreover,  Wadlows  advice  was  not  unreasonable  on  its  face.  As  the  Commission  subsequently  held,  a  finding  that  a  person  is  a  real-  party-  in-  interest  does  not  necessarily  reflect  adversely  on  that  persons  character.  See 

 Evansville  Skywave,  Inc.,  7  FCC  Rcd  1699,    13-  14  (1992)  (an  applicants  failure  to  demonstrate  that  its  ownership  structure  will  be  effectuated  as  described  does  not,  without  more,  raise  a  question  of  egregious 
 misconduct).  14 
 In  particular,  the  ALJ  had  no  basis  for  finding  that  certain  testimony  by  Parker  (Tr.  2652),  in  which  Parker  disagreed  with  the  ALJs  characterization  of  his  previous  testimony,  showed  an  added  lack  of  candor.  ID  at    231. 
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 35.  Initial  Decision.  The  ALJ  considered  WTVEs  performance  for  the  license  term  beginning  August  1,  1989  and  ending  August  1,  1994  to  determine  whether  RBI  was  entitled  to  a 
 renewal  expectancy  in  the  comparative  analysis.  ID  at    47.  He  evaluated  WTVE(  TV)  s  performance  using  five  factors  derived  from  the  Review  Boards  decision  in  Fox  Television 
 Stations,  Inc.,  8  FCC  Rcd  2361,  2366-  68  (Rev.  Bd.  1993),  recon.  denied,  8  FCC  Rcd  3583  (Rev.  Bd.  1993),  modified,  9  FCC  Rcd  62  (1993),  affd  sub  nom.  Rainbow  Broadcasting,  Inc.  v.  FCC, 
 1995  WL  22486  (D.  C.  Cir.  1995).  These  five  factors  are:  (1)  the  efforts  made  to  ascertain  community  needs  and  interests;  (2)  the  programming  response  to  those  needs  and  interests;  (3) 
 the  incumbent's  reputation  in  the  community  for  serving  the  needs  and  interests;  (4)  the  record  of  compliance  with  the  Communications  Act  and  the  Commission's  rules  and  policies;  (5)  evidence 
 of  community  outreach  in  providing  a  forum  for  the  expression  of  local  views.  With  respect  to  the  fourth  factor,  although  the  ALJ  found  RBI  qualified  to  be  a  licensee,  he  held  that  Parkers 
 misrepresentations  and  lack  of  candor  were  relevant  to  whether  RBI  was  entitled  to  a  renewal  expectancy  in  the  comparative  analysis.  ID  at    110.  The  ALJ  also  found  that  Parker  was 
 responsible  for  other  violations  that  detracted  from  RBIs  record  during  the  license  term.  ID  at    203,  246.  Specifically,  he  found  that  Parker  had  effectuated  an  unauthorized  transfer  of 
 control  of  WTVE(  TV)  and  had  failed  to  disclose  to  the  Commission  the  facts  related  to  this  occurrence.  The  ALJ  further  found  that  Parker  had  violated  the  Commissions  reporting  rules  in 
 other  respects. 
 36.  The  ALJ  found  that  the  unauthorized  transfer  of  control  was  related  to  changes  in  ownership  in  connection  with  RBIs  Chapter  11  bankruptcy  proceeding.  RBI  was  in  bankruptcy 
 from  1986  until  March  12,  1992.  ID  at    56.  RBIs  1988  Ownership  Report  indicated  that  RBI  had  50,000  outstanding  shares  of  stock  divided  among  18  stockholders.  ID  at    33.  The  largest 
 stockholders  were  Dr.  Henry  Aurandt  and  his  wife,  who  held  18,000  shares.  In  1989,  as  part  of  its  effort  to  resolve  its  bankruptcy,  RBI  entered  into  a  Management  Services  Agreement  (MSA) 
 with  Parker,  who  was  an  experienced  broadcaster,  and  his  company,  Partel,  Inc.  (Partel).  ID  at    33-  34.  RBI  filed  the  MSA  with  the  bankruptcy  court  in  1989,  but  did  not  file  the  MSA  with  the 
 Commission  until  1997.  (The  MSA  was,  however,  mentioned  in  a  pleading  filed  in  1992.  ID  at    45,  111.)  In  conjunction  with  the  MSA,  Parker  became  president  and  a  director  of  RBI,  with 
 full  authority  to  conduct  the  operations  of  WTVE(  TV).  ID  at    34-  35. 
 37.  Parker  led  efforts  to  implement  a  Chapter  11  reorganization  plan.  The  reorganization  plan  approved  by  the  bankruptcy  court  called  for  the  cancellation  of  RBIs  existing  stock  and  the 
 issuance  of  new  stock.  ID  at    36.  In  anticipation  of  the  plan  becoming  effective,  RBI,  on  August  14,  1991,  filed  a  short  form  transfer  of  control  application,  seeking  Commission  approval 
 of  the  assignment  of  WTVE(  TV)  from  RBI,  as  debtor-  in-  possession,  to  RBI.  The  short  form  was  used  because,  despite  the  issuance  of  stock  to  new  stockholders,  including  Partel,  it  appeared  that 
 RBIs  existing  stockholders  would  continue  to  own  more  than  50  percent  of  RBIs  stock.  The  Commission  approved  the  transfer  on  August  27,  1991,  specifying  that  the  transfer  must  be 
 consummated  by  October  28,  1991.  Id.;  Adams  Exh.  22. 
 38.  As  set  forth  in  the  August  14  application,  Partel,  Parkers  company,  would  own  118,467  of  the  399,044  new  shares,  replacing  Aurandt  as  the  largest  single  stockholder.  ID  at   
 37.  This  resulted  in  a  conflict  between  Parker  and  Aurandt  over  control  of  RBI.  On  September  14,  1991,  Aurandt  called  a  stockholders  and  directors  meeting  that  purported  to  terminate  the 
 MSA,  based  on  Parkers  alleged  malfeasance.  ID  at    38.  Parker  contested  this  action,  and,  on  October  15,  1991,  issued  new  stock,  with  some  variations  from  the  number  of  shares  reported  to 
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 the  Commission.  ID  at    38-  39.  Parker  then  requested  and  received  an  extension  of  time  from  the  Commission,  until  December  27,  1991,  to  consummate  the  transfer  of  control.  ID  at    41. 
 On  October  30,  1991,  Parker  convened  a  meeting  of  stockholders  and  directors  to  elect  a  new  board  of  directors  and  to  resolve  the  dispute  with  Aurandt.  ID  at    42. 

 39.  On  November  13,  1991,  after  the  stock  had  been  issued  on  October  15,  RBI  filed  a  long  form  transfer  application  indicating  that  shares  in  RBI  would  increase  to  419,038.  ID  at   
 43.  The  long  form  application  was  intended  to  supersede  the  short  form,  since  it  appeared  that  more  than  50  percent  of  RBIs  stock  ultimately  might  pass  to  new  stockholders.  The 
 Commission  approved  the  long  form  transfer  on  February  14,  1992.  The  ALJ  found  that  prior  to  Commission  approval  of  the  long  form  application  Parker  already  fully  controlled  RBI  and 
 Parker  knew  that  to  be  the  fact.  ID  at    43.  See  also  ID  at  n.  8.  (Parker  admitted  that,  as  of  October  30,  1991,  he  had  effective  voting  control  of  RBI.) 

 40.  The  ALJ  found  that  an  unauthorized  transfer  of  control  occurred  when  in  October  1991,  control  passed  to  a  new  group  of  stockholders  appointed  and  led  by  Parker.  ID  at    214. 
 The  ALJ  observed  that  the  November  13,  1991  transfer  application  did  not  reflect  that  new  stock  had  already  been  issued  in  October  and  that  new  directors  loyal  to  Parker  had  been  elected. 
 Rather,  the  application  erroneously  reflected  RBIs  old  ownership  structure  and  directors.  Similarly,  ownership  reports  in  1992  and  1993  failed  to  list  the  new  directors.  ID  at    45-  46. 
 According  to  the  ALJ,  The  Commission  was  deprived  of  sufficient  information  concerning  the  corporate  control  of  RBI  during  this  period.  ID  at    46.  The  ALJ  found  that  The  ultimate 
 travesty  was  holding  back  from  disclosing  to  the  Commission  until  1997,  the  fact  and  effect  of  the  MSA.  ID  at    215. 

 41.  Additionally,  the  ALJ  found  that  RBI  had  been  untimely  in  reporting  a  May  1998  Network  Affiliation  Agreement  with  Telemundo.  The  Telemundo  Agreement  was  required  to  be 
 reported  because  it  gave  Telemundo  an  option  to  acquire  WTVE(  TV).  ID  at    114-  17. 
 42.  Exceptions.  RBI  denies  that  Parker  ever  improperly  controlled  RBI,  since  he  acted  with  the  approval  of  RBIs  stockholders.  RBI  maintains  that  Parker  appropriately  sought 
 Commission  approval  for  the  changes  in  ownership  related  to  the  reorganization.  According  to  RBI,  the  reporting  failures  were  inadvertent  and  reflected  no  motive  to  deceive  the  Commission. 
 Additionally,  RBI  argues  that  the  ALJ  should  not  have  considered  the  1998  reporting  violation  involving  the  Telemundo  Agreement,  since  it  occurred  after  the  license  term  in  question.  Adams 
 and  the  Bureau  support  the  initial  decisions  determination  that  these  deficiencies  reflect  adversely  on  RBIs  eligibility  for  a  renewal  expectancy. 

 43.  Discussion.  We  find  that  the  record  in  this  case  does  not  disclose  misconduct  that  significantly  detracts  from  RBIs  record  during  the  1989-  94  license  term.  As  the  preceding 
 section  of  this  decision  indicates,  we  find  that  Parker  did  not  lack  candor  in  his  reporting  of  the  Mt.  Baker  and  San  Bernardino  rulings  to  the  Commission.  15  Moreover,  we  find  no  basis  to 
 conclude  that  Parker  knowingly  effectuated  an  unauthorized  transfer  of  control  of  WTVE(  TV).  The  record  reveals  no  more  than  that,  in  a  complex  and  contentious  bankruptcy  proceeding,  RBI 
 fumbled  its  reporting  obligations. 
 15  The  amendment  to  the  Dallas  application,  which  contained  the  inaccurate  statement,  was  not  filed  on  behalf  of 
 RBI  and  is  therefore  irrelevant  to  RBIs  record  of  compliance. 
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 44.  RBI  timely  sought  and  received  Commission  approval  for  transferring  control  of  WTVE(  TV).  On  August  14,  1991,  RBI  filed  a  short  form  or  pro  forma  application  for  the 
 assignment  of  WTVE(  TV)  from  RBI,  as  debtor-  in-  possession,  to  RBI.  Adams  Exh.  21.  The  use  of  a  short  form  application  is  appropriate  in  the  case  of  corporate  reorganizations  that  do  not 
 involve  a  substantial  change  in  ownership.  47  C.  F.  R.    73.3540(  f)(  4).  See  also  47  U.  S.  C.    309(  c)(  2)(  B).  The  test  for  substantiality  is  generally:  (a)  whether  50  percent  or  more  of  the  stock 
 is  being  transferred,  and  (b)  whether,  as  a  result  of  the  transaction,  50  percent  or  more  of  the  outstanding  stock  will  be  held  by  a  person  or  persons  whose  qualifications  have  not  been 
 approved  or  passed  on  in  a  long  form  application  for  the  particular  station  involved.  See  Barnes  Enterprises,  Inc.,  55  FCC  2d  721,  725    8  (1975).  In  this  case,  of  the  399,044  shares  proposed 
 to  be  issued,  56.7  percent  would  go  to  existing  RBI  stockholders.  Partel,  a  new  shareholder,  would  become  the  largest  single  stockholder  with  a  29.7  percent  interest,  while  Aurandts 
 interest  would  drop  from  36  percent  to  18.7  percent.  Adams  Exh.  21.  On  these  facts,  the  short  form  application  could  arguably  be  used,  although  given  the  degree  of  Parkers  influence  as  the 
 single  largest  stockholder,  a  long  form  would  have  been  preferable. 
 45.  When  Parker  issued  stock  on  October  15,  1991,  the  shares  issued  differed  from  those  specified  in  the  application  in  four  respects.  See  Adams  Exh.  24.  First,  3,960  shares  for  new 
 stockholder  Meyer  Weiner  were  never  issued.  16  Second,  an  additional  5,935  shares  were  issued  to  Partel  with  an  option  for  RBI  creditor  Meridian  Bank  to  purchase  them  for  $1  a  share.  Parker 
 explained  that  this  had  been  done  in  return  for  Meridians  forbearance  of  an  overdue  payment.  Tr.  800-  01.  Third,  Parker  refrained  from  issuing  50,812  shares  to  Aurandt.  Parker  testified  that 
 on  July  31,  1991,  a  federal  district  court  entered  a  judgment  against  Aurandt  and,  on  October  11,  1991,  Parker  was  served  with  an  order  garnishing  Aurandts  stock  to  satisfy  the  judgment. 
 Reading  Exh.  15;  Tr.  888-  89,  916.  Parker  withheld  the  stock  pursuant  to  the  garnishment  order.  17  Adams  Exh.  28  at  Exh.  4.  Fourth,  Parker  issued  17,674  shares  to  an  entity  called  STV 
 Reading,  Inc.  (STVR).  Parker  explained  that  STVR,  which  was  owned  mainly  by  Aurandt,  was  an  RBI  creditor  that  elected  to  take  an  equity  interest  in  lieu  of  partial  repayment  of  debt.  18  Tr. 
 910,  975. 
 46.  As  a  result  of  these  differences,  of  the  stock  actually  issued,  only  47.6  percent  remained  in  the  hands  of  existing  stockholders,  while  4.8  percent  went  to  STVR.  Thus,  if  STVR 
 is  considered  a  new  stockholder,  Parker  should  have  sought  long  form  approval  before  issuing  the  stock.  However,  since  Aurandt  owned  some  90  percent  of  STVR,  it  was  reasonable  for 
 Parker  not  to  treat  STVR  as  a  new  stockholder  and  to  rely  on  the  Commissions  short  form  authorization  in  issuing  the  stock.  Moreover,  less  than  a  month  later,  RBI  filed  an  updated,  long-form 
 transfer  application  on  November  13,  1991,  anticipating  the  possibility  that  the  ultimate  disposition  of  Aurandts  shares  would  require  such  approval.  Adams  Exh.  28.  Accordingly, 
 even  if  a  long  form  should  have  been  filed  prior  to  the  issuance  of  new  stock,  the  record  does  not  warrant  a  finding  that  Parker  acted  in  bad  faith  in  filing  a  short  form. 

 16  Weiner  apparently  withdrew  as  a  stockholder. 
 17  Absent  a  finding  that  Parkers  action  was  not  an  appropriate  response  to  the  garnishment  order,  we  find  no  basis 
 for  the  ALJs  apparent  disapproval  of  Parkers  power  to  withhold  stock  from  Aurandt.  ID  at    40.  18 
 In  view  of  Parkers  unrebutted  testimony  that  Aurandt  elected  to  have  stock  issued  to  STVR,  we  see  no  basis  for  the  ALJ  to  find  that  Parker  caused  the  issuance  of  shares  to  STVR.  ID  at    40. 
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 47.  Additionally,  we  find  no  basis  to  conclude  that  the  failure  of  the  long  form  to  disclose  the  prior  issuance  of  stock  was  the  result  of  a  deliberate  deception.  When  asked  whether 
 he  felt  that  he  had  an  obligation  to  report  the  prior  issuance  of  the  stock,  Parker  testified  that: 
 .  .  .  [I]  t  really  made  no  difference.  .  .  Frankly,  I  dont  think  I  thought  about  it  at  all.  I  had  FCC  counsel  dealing  with  these  matters.  And  my  understanding  is  that  there  is  no 
 transfer,  whether  it  is  reported  or  unreported,  that  the  316  [short  form]  was  for  the  purposes  of  coming  from  debtor  in  possession  to  the  new  corporation.  But  if  you 
 compared  the  old  ownership  to  the  new  ownership,  there  was  no  transfer  of  control.  .  .  .  I  dont  recall  the  issue  coming  up  even,  19  did  I  need  to  disclose  to  the  Commission  that 
 weve  issued  the  shares  or  not.  And  I  think  the  representations  we  made  in  the  315  [long  form]  for  the  transfer  demonstrated  to  the  Commission  where  our  problem  was. 

 Tr.  922-  23.  Although  Parkers  terminology  is  somewhat  confusing,  he  offers  a  credible  explanation  for  why  he  did  not  refer  to  the  prior  issuance  of  stock  in  the  long  form  application. 
 As  noted  above,  the  Commissions  generally  applicable  test  requires  use  of  a  long  form  application  whenever  50  percent  or  more  of  a  corporations  stock  passes  to  new  stockholders. 
 As  discussed  previously,  Parkers  issuance  of  stock  on  October  15,  1991  can  be  seen  as  transferring  less  than  50  percent  of  RBIs  stock  to  new  stockholders.  This  gave  him  a  basis  to 
 believe  that  his  issuance  of  stock  was  legitimately  authorized  pursuant  to  approval  of  his  short  form  application,  and  he  therefore  had  no  motive  to  conceal  the  issuance  of  this  stock.  Parkers 
 subsequent  understanding  that  future  events  might  potentially  result  in  the  ultimate  transfer  of  more  than  50  percent  of  RBIs  stock  to  new  stockholders  gave  Parker  reason  to  request  long 
 form  authority  in  anticipation  of  these  events.  It  did  not,  however,  undermine  the  basis  on  which  Parker  issued  the  stock  on  October  15,  which  reflected  only  the  immediate  impact  of  the  transfer. 
 As  long  as  Parker  obtained  long  form  authority  before  the  contingencies  that  might  have  resulted  in  a  substantial  change  of  ownership  actually  occurred,  Parkers  conduct  did  not  violate  the  rules. 
 A  full  explanation  of  the  intermediate  steps  involved  in  the  transfer  would  have  been  desirable,  but  its  omission  does  not  imply  that  Parker  was  attempting  to  conceal  improper  conduct. 

 48.  A  related  matter  also  involved  STVR.  Parker  admits  that  at  the  shareholders  meeting  on  October  30,  1991,  at  which  new  directors  were  elected,  he  voted  the  STVR  shares 
 pursuant  to  invalid  proxies  that  he  obtained  from  STVRs  minority  owners.  Tr.  636,  970,  975-  78.  20  The  invalid  proxies,  however,  did  not  have  a  substantial  impact  on  the  control  of  RBI.  The 
 minutes  of  the  October  meeting  indicate  that  Parkers  slate  of  candidates  received  249,311  votes,  representing  67.7  percent  of  issued  shares,  59.5  percent  of  authorized  shares  (including 
 Aurandts  unissued  shares),  and  over  90  percent  of  the  votes  participating  at  the  meeting.  Adams  Exh.  30  at  38,  43,  70.  We  note  that  legal  proceedings  between  Parker  and  Aurandt  eventually,  in 
 August  1992,  resulted  in  a  settlement  agreement  stating  that: 

 19  Like  the  the  transfer  application,  transmittal  letters  from  RBIs  communications  counsel  to  the  Commission  dated 
 January  29,  1992  (Adams  Exh.  29)  and  February  7,  1992  (Adams  Exh.  30)  speak  of  the  stock  issuance  in  prospective  terms,  suggesting  that  counsel  was  unaware  that  the  stock  had  been  issued. 

 20  He  also  used  the  invalid  proxy  at  a  shareholders  meeting  on  February  4,  1992  that  ratified  the  results  of  the 
 previous  meeting.  Adams  Exh.  13  at  74-  121. 
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 .  .  .  [A]  ll  parties  hereto  agree  that  the  Parker  Board  shall  be  deemed  the  validly  elected  and  duly  authorized  board  of  directors  as  of  October  30,  1991,  [and]  that  all  actions  taken 
 by  such  board  shall  be  deemed  valid  acts  of  the  corporation  .  .  .  . 
 Adams  Exh.  27.  In  view  of  these  circumstances,  to  infer  that  Parker  intended  to  conceal  the  new  directors,  who  Parker  contended  were  validly  elected,  is  pure  speculation.  Parkers  claim  that 
 RBIs  failure  to  update  the  listing  of  its  directors  in  a  timely  fashion  was  an  oversight  is  entirely  credible.  Tr.  812. 

 49.  More  generally,  we  find  no  foundation  for  the  ALJs  finding  that:  Mr.  Parker  .  .  .  succeeded  in  snatching  control  from  an  unwilling  board  of  directors.  ID  at    216.  Parkers 
 actions  were  consistent  with  the  reorganization  plan  confirmed  by  the  bankruptcy  court.  The  record  indicates  that  the  plan  was  unanimously  approved  in  August  1991  by  RBIs  former  board 
 of  directors,  including  Aurandt.  RBI  Exh.  16.  The  minutes  of  a  shareholder  meeting  on  November  7,  1990,  shows  that  Parker  urged  the  old  stockholders  to  vote  for  the  reorganization 
 plan  because  their  consent  was  essential  for  its  approval  by  the  bankruptcy  court.  Adams  Exh.  13  at  10.  See  also  11  U.  S.  C.    1121-  29.  As  the  settlement  discussed  in  the  preceding 
 paragraph  indicates,  we  have  no  reason  to  treat  the  September  14,  1991  actions  instigated  by  Aurandt  as  having  any  validity. 

 50.  Finally,  we  see  no  basis  to  find  that  Parker  intentionally  concealed  the  MSA.  Parker  testified  that  he  thought  the  MSA  had  been  disclosed.  Tr.  625-  26.  Although  RBI  neglected  to 
 file  the  MSA  with  the  Commission  in  a  timely  manner,  the  agreement  was  in  effect  a  public  document  that  RBI  submitted  for  approval  of  the  bankruptcy  court,  which  approved  the 
 agreement  on  August  28,  1990,  a  year  before  Parkers  supposed  coup.  Adams  Exh.  14  at  10;  18,  19  at  15;  Tr.  626.  The  existence  of  the  MSA  was  disclosed  to  the  Commission  when  RBI 
 routinely  reported  in  a  February  7,  1992  amendment  to  the  transfer  application  an  order  of  the  bankruptcy  court  confirming  RBIs  plan  of  reorganization.  Adams  Exh.  30  at  8.  There  has  been 
 no  showing  that  the  terms  of  the  MSA  provided  a  motive  to  conceal  it.  All  of  this  suggests,  as  do  the  circumstances  discussed  in  the  preceding  paragraphs,  that  RBIs  reporting  deficiencies  reflect 
 its  preoccupation  with  the  bankruptcy  proceeding  and  poor  communications  between  RBI  and  its  counsel,  rather  than  any  intentional  misconduct.  We  will  not  give  these  matters  significant 
 weight  in  assessing  RBIs  record  during  the  1989-  94  license  term.  21  However,  even  if  we  did,  they  would  simply  buttress  the  finding  made  in  the  next  section  that  RBIs  record  of  performance 
 during  the  1989-  94  license  term  was  minimal  and  does  not  warrant  a  renewal  expectancy. 
 IV.  RBIs  RECORD    OTHER  FACTORS 
 51.  Initial  Decision.  During  the  1989-  94  license  term,  WTVE(  TV)  carried  a  home  shopping  format  and  was  an  affiliate  of  the  Home  Shopping  Network.  ID  at    52,  54.  Because 
 the  home  shopping  format  occupies  53-  55  minutes  per  hour,  WTVE(  TV)  s  non-  entertainment  programming  was  mainly  limited  to  the  five  to  seven  minute  breaks  in  home  shopping 

 21  RBIs  alleged  failure  to  timely  report  the  1998  Telemundo  Network  Affiliation  Agreement  occurred  after  the 
 close  of  the  1989-  94  license  term  and  will  therefore  not  be  considered.  Likewise,  Adams  allegation  that  RBI  failed  to  report,  after  the  close  of  the  license  term,  the  involvement  in  RBIs  affairs  of  Thomas  Root,  an  individual  found  to 

 have  committed  misconduct,  is  of  no  consequence. 
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 programming.  ID  at    60-  61.  During  some  time  periods,  such  as  weekends  and  holidays,  non-entertainment  programs  of  more  than  15  minutes  were  aired.  Specific  short  programs  were  not 
 regularly  scheduled  and  were  not  reflected  in  newspaper  television  listings. 
 52.  WTVE(  TV)  s  financial  condition  affected  its  non-  entertainment  programming.  From  the  beginning  of  the  license  term  until  March  12,  1992,  RBI  was  in  Chapter  11  bankruptcy.  ID 
 at    56.  Even  after  it  emerged  from  bankruptcy,  the  station  always  operated  at  a  loss.  ID  at    57.  The  resulting  reductions  in  facilities  and  staff  adversely  affected  the  stations  production  of 
 public  service  programming.  ID  at    58-  59.  In  particular,  Parker  did  not  divert  funds  from  profitable  operations  to  support  public  service  programming  and  adopted  a  policy  of  limiting  the 
 production  of  public  service  programming  to  cut  costs. 
 53.  By  RBIs  account,  the  amount  of  non-  entertainment  programming  increased  during  the  course  of  the  license  term  from  2.2  percent  in  1989  to  7.6  percent  in  1994.  Some  35  percent 
 of  the  programming  was  in  the  form  of  public  service  announcements.  Adams  credits  the  station  with  somewhat  less  non-  entertainment  programming.  ID  at    48. 

 54.  Station  personnel  testified  that  during  the  license  term,  the  staff  ascertained  community  needs  by  reviewing  local  newspapers,  contacting  members  of  the  community,  and 
 receiving  materials  from  various  organizations.  The  staff  also  sent  questionnaires  to  community  leaders  and  schools  and  conducted  interviews.  ID  at    49-  51.  However,  the  testimony  indicated 
 that  formal  ascertainment  did  not  provide  a  large  input  into  station  programming  and  the  staff  mostly  relied  on  their  informal  judgment  as  to  what  programming  they  deemed  pertinent  to 
 community  needs.  ID  at    51. 
 55.  RBI  listed  several  two  to  three  minute  programs,  some  of  which  were  produced  by  the  station,  as  responsive  to  community  needs.  ID  at    62-  74.  These  included:  (1)  Streetwise 
 (interviews  on  local  issues),  (2)  In  Touch  (interviews  on  community  topics),  (3)  News  to  You  (from  a  satellite  feed),  (4)  Healthbeat  or  Health  Report  (from  a  news  company,  with 
 local  wrap  arounds),  (5)  Elderly  Report  (from  a  news  company,  with  local  wrap  arounds),  (6)  Community  Outreach  (interviews  of  local  interest),  (7)  Take  3  (produced  by  local  youths), 
 (8)  Kids  Korner  (RBI  produced  program  dealing  with  issues  of  interest  to  children),  (9)  programming  produced  by  the  Pennsylvania  State  House,  (10)  Informative  Moment  (Hispanic-oriented 
 interviews),  (11)  For  the  People  (RBI  produced  political  program),  and  (12)  Around  Our  town  (locally  produced  community  events).  Many  of  these  shows  were  introduced  during 
 the  1992-  94  time  period. 
 56.  Other  programming  included  PSAs.  During  the  license  term,  WTVE(  TV)  averaged  30  to  50  PSAs  a  day.  Some  were  locally  produced  and  some  obtained  from  various 
 organizations.  Two  PSAs  won  awards  from  the  Pennsylvania  Association  of  Broadcasters.  ID  at    75-  76.  During  the  latter  part  of  the  license  term,  WTVE  also  carried  a  variety  of  30  minute 
 childrens  programs  on  weekend  mornings.  ID  at    77-  83.  Other  long-  form  programming  sometimes  included  documentaries  and  specials.  ID  at    84.  WTVE(  TV)  broadcast  local 
 weather  reports  but  no  local  news.  ID  at    85-  86.  WTVE(  TV)  also  carried  a  variety  of  religious  programs. 

 57.  At  the  hearing  RBI  presented  favorable  testimony  from  16  community  witnesses  concerning  WTVE(  TV)  s  programming.  ID  at    88-  103.  Adams  presented  adverse  testimony 
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 from  five  community  witnesses,  mainly  complaining  about  the  lack  of  local  news.  ID  at    104-  08. 
 58.  The  record  also  reflects  WTVE(  TV)  s  community  outreach  activities.  ID  at    109.  These  included  fund  raisers,  educational  programs,  and  assistance  to  local  law  enforcement 
 authorities.  WTVE(  TV)  also  produced  a  program  for  a  local  hospital,  donated  space  for  a  local  public  television  station,  and  participated  in  programs  opposing  drunk  driving  and  supporting 
 womens  careers  in  broadcasting. 
 59.  The  ALJ  found  ALJs  programming  during  the  1989-  94  license  term  minimal  and  undeserving  of  a  renewal  expectancy.  ID  at    203,  246.  He  found  that  WTVE(  TV)  s 
 ascertainment  efforts  fell  short  of  the  extensive  measures  considered  substantial  in  past  cases.  ID  at    194.  He  also  found  that  WTVE(  TV)  s  non-  entertainment  programming  was 
 quantitatively  minimal,  that  it  lacked  regularly-  scheduled  news  and  public  affairs  programming,  and  that  it  relied  excessively  on  PSA  type  programming.  ID  at    194,  198-  99.  He  found  that 
 WTVE(  TV)  s  community  reputation  was,  at  best,  mixed  and  that  the  stations  outreach  programs,  while  commendable,  were  insufficient  to  overcome  its  minimal  programming 
 performance.  ID  at    201-  02. 
 60.  Exceptions.  RBI  contends  that  the  ALJ  understated  the  merit  of  its  programming.  RBI  asserts  that  its  staff  made  serious  efforts  to  ascertain  community  needs  and  that  the  amount 
 and  type  of  programming  was  substantial  considering  the  constraints  of  the  home  shopping  format  and  WTVE(  TV)  s  precarious  financial  condition.  It  argues  that,  in  view  of  deregulation, 
 not  every  television  station  in  a  market  needs  to  present  regularly  scheduled  news  and  public  affairs  programming.  Additionally,  RBI  contends  that  the  ALJ  gave  insufficient  weight  to  the 
 favorable  testimony  of  community  witnesses  and  the  stations  community  outreach  efforts.  Adams  and  the  Bureau  support  the  ALJs  finding  that  WTVE(  TV)  s  program  performance  was 
 minimal. 
 61.  Discussion.  We  agree  with  the  ALJ,  the  Bureau,  and  Adams  that  WTVE(  TV)  s  performance  during  the  1989-  94  license  terms  was  minimal  and  not  deserving  of  a  renewal 
 expectancy.  We  have  already  considered  the  fourth  of  the  ALJs  five  factors  in  the  preceding  section  discussing  compliance  with  the  Act  and  the  Commissions  rules.  We  now  consider  the 
 remaining  factors. 
 62.  We  generally  agree  with  the  ALJ  that  WTVE(  TV)  s  ascertainment  efforts  were  unexceptional.  This  factor,  however,  has  little  probative  value.  The  Commission  long  ago 
 determined  that  requiring  adherence  to  specific  ascertainment  procedures  did  not  serve  the  public  interest.  See  Deregulation  of  Radio,  84  FCC  2d  968,  993    56  (1981).  The  Commission  stated: 
 To  the  extent  that  parties  may  wish  to  raise  questions  concerning  [ascertainment]  efforts,  such  questions  should  be  directed  to  the  realities  of  the  program  proposal  of  the  applicants,  or  the 
 responsiveness  of  licensees,  rather  than  to  the  ritual  of  ascertainment.  Id.  We  will  therefore  turn  to  WTVE(  TV)  s  programming  and  not  dwell  on  the  specifics  of  WTVE(  TV)  s 
 ascertainment  procedures. 
 63.  During  the  1989-  94  license  terms,  WTVE(  TV)  carried  little  non-  entertainment  programming.  For  most  of  the  term,  the  station  carried  no  regularly  scheduled  news.  Adams 
 Exh.  2  at  3.  RBIs  own  data  indicates  that  it  carried  an  average  of  3.35  percent  total  non- 
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 entertainment  programming  and  2.15  percent  locally-  produced  programming.  22  By  contrast,  in  Video  44,  5  FCC  Rcd  6383,  6383    6,  6385    18  (1990),  recon.  denied,  6  FCC  Rcd  4948  (1991), 
 the  Commission  characterized  as  substantial  the  record  of  an  independent  UHF  television  that  station  that  averaged  a  much  higher  0.92  percent  news,  16.54  percent  total  non-  entertainment 
 programming  and  4.37  percent  local  programming.  Even  after  the  station  in  Video  44  engaged  in  a  wholesale  abandonment  of  public  service  programming,  it  still  carried  4-  5  percent  non-entertainment 
 programming,  an  amount  higher  than  the  3.35  percent  average  for  WTVE(  TV). 
 64.  Additionally,  WTVE(  TV)  relied  heavily  on  PSAs  in  responding  to  ascertained  needs.  During  the  license  term,  by  our  calculation,  an  average  of  60.53  percent  of  WTVE(  TV)  s  non-entertainment 
 programming  was  in  the  form  of  PSAs.  23  Although  we  believe  that  PSAs  can  be  an  effective  means  of  meeting  community  needs,  we  have  admonished  licensees  not  to  rely  on 
 PSAs  as  the  primary  method  of  responding  to  ascertained  needs.  Public  Service  Announcements,  81  FCC  2d  346,  368-  69    47  (1980). 

 65.  The  fact  that  WTVE(  TV)  utilized  a  home  shopping  format  does  not  warrant  a  different  conclusion.  In  finding  that  home  shopping  stations  could  adequately  address  the  needs 
 and  interests  of  the  community,  the  Commission  determined  that  home  shopping  stations  would  have  to  comply  with  the  same  rules  as  other  television  broadcast  stations.  Implementation  of 
 Section  4(  g)  of  the  Cable  Television  Consumer  Protection  and  Competition  Act  of  1992,  8  FCC  Rcd  5321,  5327    31  (1993).  Moreover,  in  approving  the  home  shopping  format,  the 
 Commission  specifically  cited  data  indicating  that  the  home  shopping  format  was  compatible  with  the  presentation  of  a  substantial  quantity  of  public  service  programming.  For  example,  the 
 Commission  noted  with  approval  the  assurances  of  a  large  home  shopping  broadcaster.  The  broadcaster  indicated  that  its  stations  significantly  exceeded  the  guidelines  that  the  Commission 
 formerly  applied  to  identify  stations  warranting  review  because  of  minimal  performance,  i.  e.,  five  percent  news  and  public  affairs  programming,  five  percent  local  programming,  and  10 
 percent  total  non-  entertainment  programming.  Id.  at  5327    30.  The  broadcaster  represented  that  its  stations  averaged  7.6  percent  news  and  public  affairs  programming,  7.6  percent  local 
 programming,  and  10.2  percent  total  non-  entertainment  programming.  Accordingly,  WTVE(  TV)  did  not  measure  up  to  the  factual  expectations  that  supported  the  Commissions 
 favorable  conclusions  regarding  the  home  shopping  format. 
 66.  Aside  from  its  quantitative  deficiencies,  WTVE(  TV)  s  programming  generally  appears  to  have  been  responsive  to  local  needs  and  interests,  if  not  to  an  exceptional  degree.  The 
 stations  non-  entertainment  programs  were  presented  throughout  the  day,  but  their  extremely  short  duration,  typically  three  minutes  or  less,  reduced  their  impact.  The  station  appears  to  have 
 enjoyed  a  generally  favorable  impression  in  the  community,  but  some  witnesses  noted  the  absence  of  news  coverage.  Compare  ID  at    88-  103  with    104-  08.  WTVE(  TV)  s  community 
 outreach  activities,  while  meritorious,  have  little  significance.  A  stations  entitlement  to  a 
 22  See  Appendix.  These  figures  were  derived  from  RBI  Exh.  8,  App.  A,  which  lists  the  number  of  minutes  per 
 quarter  of  various  types  of  non-  entertainment  programming  during  the  1989-  94  license  term.  Supporting  data  for  the  first  two  quarters  of  1990  was  unavailable.  The  data  presented  in  RBI  Exh.  8,  App.  A  is  somewhat  at  variance 

 with  the  data  presented  in  RBI  Exh.  8,  App.  B,  which  compiles  data  based  on  composite  weeks.  23 
 See  Appendix.  For  purposes  of  its  exhibit,  RBI  classified  presentations  of  less  than  two  minutes  as  PSAs  and  programs  of  two  minutes  or  more  as  programs.  Tr.  392-  93.  The  data  presented  in  RBI  Exh.  8,  App.  B  indicates  a 

 somewhat  lower  percentage. 
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 renewal  expectancy  depends  primarily  on  it  record  of  programming  and  compliance.  Activities  unrelated  to  programming  have  lesser  relevance.  See  Policies  and  Rules  Concerning  Childrens 
 Television  Programming,  6  FCC  Rcd  2111,  2115    28  (1991). 
 67.  To  some  extent,  WTVE(  TV)  s,  unimpressive  record  simply  reflects  its  poor  financial  condition  during  the  1989-  94  license  term.  As  noted  previously,  the  station  was  in  bankruptcy 
 until  early  1992.  The  record  indicates  that  the  station  was  never  profitable.  RBI  Exh.  5  indicates  that  the  station  consistently  suffered  losses  during  the  license  term,  ranging  from  $443,575  in 
 1989  to  $29,999  in  1994.  WTVE(  TV)  s  improving  financial  picture  corresponded  to  a  rise  in  the  amount  of  public  service  programming.  During  the  license  term,  the  amount  of  non-entertainment 
 programming  rose  from  2.20  percent  in  the  third  quarter  of  1989  to  7.55  percent  in  the  second  quarter  of  1994.  24  Similarly,  the  amount  of  locally-  produced  programming  rose  from 
 1.64  percent  in  the  third  quarter  of  1989  to  5.16  percent  in  the  second  quarter  of  1994.  25  Financial  shortcomings  cannot,  however,  fully  mitigate  inadequate  programming.  See  Simon 
 Geller,  102  FCC  2d  1443,  1447    10  (1985).  In  sum,  WTVE(  TV)  s  quantitative  deficiencies  and  overuse  of  PSAs  are  decisive  in  establishing  a  minimal  broadcast  record,  notwithstanding  the 
 stations  home  shopping  format  and  poor  financial  condition.  RBI  will  not  receive  a  renewal  expectancy  to  be  factored  into  the  comparative  analysis  that  follows. 

 V.  COMPARATIVE  FACTORS 
 68.  Initial  Decision.  Having  determined  that  RBI  was  not  entitled  to  a  renewal  expectancy,  the  ALJ  considered  the  other  factors  relevant  to  the  comparison  between  RBI  and 
 Adams:  local  residence  and  civic  involvement,  broadcast  experience,  comparative  coverage,  and  diversification  of  ownership.  ID  at    248. 

 69.  The  ALJ  awarded  RBI  marginal  or  slight  credit  for  local  residence  and  civic  involvement.  ID  at    219,  251.  He  found  that  27  of  RBIs  stockholders  lived  in  WTVE(  TV)  s 
 service  area  and  that  three  had  significant  civic  involvement.  ID  at    25-  27.  Adams  principals  had  no  local  residence  or  civic  involvement.  ID  at    24.  The  ALJ  diminished  RBIs  preference 
 under  this  factor  because  of  WTVE(  TV)  s  poor  broadcast  record.  ID  at    219. 
 70.  The  ALJ  found  that  two  RBI  shareholders  had  broadcast  experience  and  that  none  of  Adams  principals  had  any.  ID  at    24,  28-  31.  The  ALJ,  however,  awarded  RBI  no  credit  for 
 this  factor. 
 71.  The  ALJ  awarded  Adams  a  slight  credit  for  comparative  coverage.  ID  at    250.  26  WTVE(  TV)  currently  serves  3,119,889  persons,  whereas  Adams  proposes  to  serve  4,260,920,  37 
 percent  more.  ID  at    21.  All  of  these  persons  receive  at  least  six  other  television  signals.  ID  at    20.  The  ALJ  noted  that  in  1990  RBI  received  a  construction  permit  that  would  allow  it  to  use 
 new  facilities  that  would  increase  its  coverage  to  75  percent  more  than  Adams.  ID  at    22.  The  ALJ  did  not,  however,  credit  RBI  with  the  coverage  of  this  unconstructed  facility.  He  found 
 that  RBI  had  not  obtained  a  waiver  of  the  Commission  policy  requiring  construction  within  three 
 24  See  Appendix. 
 25  See  Appendix. 
 26  The  ALJ  originally  characterized  this  as  a  very  slight  preference.  ID  at    218. 
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 years  of  the  grant.  ID  at    22.  He  also  found  that  RBI  had  not  shown  a  reasonable  likelihood  that  it  would  be  able  to  construct  on  its  new  site,  since  RBI  has  been  embroiled  in  a  zoning 
 dispute  with  local  authorities.  ID  at    23. 
 72.  The  ALJ  also  awarded  Adams  a  slight  merit  for  diversification.  ID  at    249.  27  He  found  that  the  only  one  of  Adams  principals  with  an  existing  media  interest  had  pledged  to 
 divest  this  interest  if  Adams  application  is  granted.  ID  at    13.  He  found  that  Parker,  RBIs  largest  single  stockholder,  owned  Two  If  By  Sea  Broadcasting  Corporation,  the  licensee  of 
 Station  KVMD(  TV),  Twenty  Nine  Palms,  California,  an  international  AM  station  in  Dallas,  Texas,  and  an  FM  translator  station  in  Upland,  California,  and  the  former  proposed  assignee  of 
 Station  WHCT(  TV),  Hartford  Connecticut.  28  ID  at    17;  RBI  Exh.  4.  The  ALJ  gave  greatest  weight  to  the  two  television  stations.  ID  at    217,  249. 

 73.  Overall,  the  ALJ  concluded  that  Adams  preferences  for  diversification  and  comparative  coverage  outweighed  RBIs  advantages  for  local  residence  and  civic  involvement, 
 which  were  discounted  because  of  WTVE(  TV)  s  unmeritorious  programming.  ID  at    252. 
 74.  Exceptions.  RBI  asserts  that  it  is  comparatively  superior  to  Adams.  RBI  faults  the  ALJ  for  not  giving  it  credit  for  the  coverage  of  the  transmitter  site  covered  by  the  construction 
 permit.  RBI  also  asserts  that  its  advantages  for  local  residence,  civic  involvement,  and  broadcast  experience  are  entitled  to  greater  weight,  especially  in  comparison  to  Adams  slight 
 diversification  advantage.  Adams  supports  the  analysis  of  the  initial  decision  on  these  points. 
 75.  Discussion.  We  find  that  the  ALJ  understated  RBIs  comparative  preferences.  As  an  initial  matter,  we  reject  Adams  contention  that  the  Court  of  Appeals  opinion  in  Bechtel  v.  FCC, 
 10  F.  3d  875  (D.  C.  Cir.  1993),  mandates  that  we  not  give  weight  to  factors  such  as  local  residence,  civic  activities,  and  broadcast  experience.  Bechtel  held  that  the  Commissions  former 
 practice  of  giving  comparative  weight  to  the  proposed  integration  of  ownership  into  management  was  arbitrary  and  capricious  and  that  the  factor  was  therefore  invalid.  Under  the  Commissions 
 former  practice,  the  factors  of  local  residence,  civic  activities,  and  broadcast  experience  were  treated  as  qualitative  enhancements  of  integration.  Adams  suggests  that  the  invalidity  of 
 integration  as  a  criterion  implies  the  invalidity  of  the  three  qualitative  enhancements  as  well. 
 76.  The  Commission  has  already  considered  the  implications  of  Bechtel.  We  held  that  it  would  be  pointless  to  attempt  to  devise  an  entirely  new  set  of  comparative  factors  for  the  small 
 number  of  remaining  comparative  renewal  cases,  of  which  this  case  is  the  last.  Implementation  of  Section  309(  j)  of  the  Communications  Act,  13  FCC  Rcd  15920,  16005-  06    212-  14  (1998). 
 Instead,  we  invited  parties  to  these  cases  to  present  whatever  evidence  they  deemed  appropriate  and  indicated  that  we  would  attempt  to  decide  cases  as  nearly  as  possible  pursuant  to  pre- 
 Bechtel  standards.  We  continue  to  believe  that  this  is  the  fairest,  most  expeditious  way  to  address  this  case.  Moreover,  we  do  not  read  the  courts  decision  in  Bechtel  v.  FCC  as  criticizing 
 the  continued  use  of  local  residence  or  broadcast  experience  as  criteria.  In  striking  down  the  Commissions  practice  of  awarding  frequently  decisive  credit  for  quantitative  integration,  the 

 27  The  ALJ  originally  characterized  this  as  a  significant  preference.  ID  at    217. 
 28  After  the  close  of  the  record  in  this  case,  the  Hartford  license  was  awarded  to  a  third  party  pursuant  to  a 
 settlement.  ID  at  n2. 
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 court  observed  disapprovingly:  An  applicant  whose  proposed  owner-  manager  knows  nothing  about  either  broadcasting  or  the  community  [who  proposes  to  be  integrated  full-  time]  will 
 handily  win  an  integration  preference  over  one  whose  proposed  owner-  manager  is  a  veteran  broadcaster  who  has  spent  his  whole  life  in  the  stations  community  [but  who  proposes  to  be 
 integrated  part-  time].  10  F.  3d  at  882.  For  these  reasons,  we  do  not  believe  that  Bechtel  precludes  an  award  of  credit  for  local  residence  and  broadcast  experience  under  these 
 circumstances. 

 77.  Turning  to  the  facts  of  this  case,  we  find  that  the  ALJ  understated  the  credit  due  RBI  for  local  residence,  civic  activities,  and  broadcast  experience.  RBI  Exh.  2  indicates  that  35  of 
 RBIs  50  stockholders  29  live  within  WTVE(  TV)  s  service  area,  including  Reading  and  its  suburbs.  The  ALJ  denied  RBI  credit  for  eight  of  these  stockholders,  because  they  were  not 
 stockholders  during  the  1989-  94  license  term.  ID  at    25.  This  was  an  error.  Unlike  the  renewal  expectancy  analysis,  which  focuses  on  the  licensees  performance  during  the  relevant  license 
 term,  factors  such  as  local  residence  are  based  on  the  applicants  proposals  as  of  the  appropriate  cutoff  date  established  for  the  proceeding,  in  this  case  April  30,  1999.  See  Public  Notice,  Rep. 
 No.  24457A  (Mar.  26,  1999).  Until  the  cutoff  date,  the  parties  are  free  to  upgrade  their  proposals.  We  therefore  credit  RBI  with  the  claimed  local  residence  of  35  stockholders. 

 78.  Similarly,  the  ALJ  denied  RBI  credit  for  eight  of  11  stockholders  listed  as  having  records  of  civic  activities  because  RBI  did  not  indicate  either  that  these  individuals  were 
 stockholders  during  1989-  94  or  that  their  civic  activities  occurred  during  those  years.  ID  at  n.  4.  For  the  reasons  discussed  above,  this  was  error  and  RBI  is  entitled  to  credit  for  all  11 
 stockholders.  30 
 79.  The  ALJ  also  denied  RBI  credit  for  one  of  three  of  its  principals  with  broadcast  experience,  because  he  was  not  a  stockholder  during  the  license  term.  ID  at    32.  Again  for  the 
 reasons  discussed  above,  RBI  is  entitled  to  credit  for  this  individual.  Moreover,  although  the  ALJ  made  findings  concerning  the  broadcast  experience  of  its  principals,  he  did  not  include  this 
 factor  in  his  overall  comparative  analysis.  ID  at    219,  252.  We  will  give  weight  to  this  factor. 
 80.  More  significantly,  the  ALJ  substantially  discounted  RBIs  credit  for  all  of  these  factors  based  on  WTVE(  TV)  s  minimal  past  broadcast  record.  ID  at    219,  252.  The  Court  of 
 Appeals,  however,  disapproved  this  line  of  analysis  in  Committee  for  Community  Access  v.  FCC,  737  F.  2d  74,  79-  82  (D.  C.  Cir.  1984).  In  that  case,  the  Commission  diminished  a  renewal 
 applicants  credit  for  diversification  and  integration  based  on  the  applicants  insubstantial  past  record.  The  court  faulted  the  Commission  for  ignoring  its  customary  treatment  of  integration 
 and  diversification  as  predictive  of  public  interest  benefits  in  favor  of  a  functional  analysis  that  ignored  the  renewal  applicants  advantages  under  these  criteria.  The  ALJ  here  adopted  the  same 
 invalid  analysis.  In  view  of  the  foregoing,  and  the  fact  that  Adams  claims  no  credit  for  local 

 29  As  indicated  by  the  ownership  report  dated  March  31,  1999,  incorporated  in  RBI  Exh.  11. 
 30  The  ALJ  also  faulted  RBI  for  not  indicating  that  the  civic  activities  occurred  within  WTVE(  TV)  s  service  area. 
 The  descriptions  for  10  of  the  eleven  stockholders  contained  in  RBI  Exh.  2,  however,  indicate  communities  within  WTVE(  TV)  s  service  area.  The  remaining  stockholder,  David  Mann,  lived  in  a  suburb  of  Reading  itself,  making  it 

 appropriate  to  conclude  that  his  activities  occurred  within  the  service  area. 
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 residence,  civic  activities,  or  broadcast  experience,  RBI  is  entitled  to  a  substantial  preference  for  these  factors. 
 81.  Recent  events  have  complicated  the  resolution  of  the  comparative  coverage  issue.  The  ALJ  credited  Adams  with  33  percent  (by  our  computation  37  percent)  greater  coverage  that 
 Adams  proposed  site  would  provide  as  compared  with  RBIs  current  site.  ID  at    21.  Because  all  of  the  areas  that  are,  or  would  be  served,  by  the  respective  proposals  receive  at  least  six  other 
 television  signals  (ID  at    20),  the  ALJ  awarded  only  a  slight  preference  to  Adams. 
 82.  The  ALJ  declined  to  award  RBI  credit  for  the  coverage  of  unbuilt  facilities  covered  by  a  construction  permit  issued  to  RBI  in  1990,  which  would  give  RBI  73  percent  greater 
 coverage  than  Adams  proposal.  ID  at    22-  23;  RBI  Exh.  48.  The  ALJ  observed  that  RBI  has  been  embroiled  in  litigation  with  Earl  Township,  in  which  the  site  is  located,  over  a  zoning 
 dispute  and  that  the  original  term  of  the  construction  permit  had  expired.  See  also  RBI  Exh.  12,  Tab  B  (request  for  automatic  extension  of  the  construction  permit);  Adams  Exh.  41  (stipulated 
 facts  Earl  Township  v.  Reading  Broadcasting,  Inc.).  Consequently,  he  found  that  RBI  had  not  shown  reasonable  assurance  that  the  site  would  be  available. 

 83.  On  April  30,  2001,  RBI  submitted  a  Section  1.65  Statement  reporting  that  the  Commonwealth  Court  of  Pennsylvania  had  upheld  an  injunction  against  construction  of  RBIs 
 proposed  tower.  RBI  also  submitted  an  amendment  to  the  construction  permit  substituting  a  modification  of  RBIs  current  transmitter  site  for  the  disputed  proposed  site.  The  amended 
 construction  permit  would  give  RBI  29  percent  more  coverage  than  Adams. 
 84.  We  will  not  attempt  to  resolve  the  ambiguous  status  of  RBIs  construction  permit  at  this  time.  The  slight  preference  that  the  ALJ  awarded  Adams  as  compared  with  RBIs  current 
 facilities  should  not  be  dispositive  of  this  case.  The  new  areas  to  be  served  by  Adams  already  receive  an  abundance  of  television  signals.  The  addition  of  one  more  should  not  decide  this  case 
 unless  the  comparison  is  otherwise  essentially  deadlocked.  As  discussed  below,  we  do  not  find  that  to  be  the  case. 

 85.  The  key  issue  then  is  the  relative  weight  due  RBIs  advantages  for  local  residence,  civic  activities,  and  broadcast  experience,  and  Adams  advantage  for  diversification,  resulting 
 from  Parkers  ownership  of  distant  television  interests.  As  RBI  points  out,  this  case  resembles  cases  such  as  Pueblo  Radio  Broadcasting  Service,  5  FCC  Rcd  4829,  4832    17  (Rev.  Bd.  1990) 
 and  Richard  P.  Bott,  II,  4  FCC  Rcd  4924,  4930    27  (Rev.  Bd.  1989),  in  which  similar  advantages  outweighed  smaller  diversification  preferences.  We  believe  that  the  same  result  is 
 warranted  here.  We  give  weight  to  local  residence  and  civic  activities  because  it  indicates  knowledge  of  and  interest  in  the  welfare  of  the  Community.  Policy  Statement  on  Comparative 
 Broadcast  Hearings,  1  FCC  2d  393,  396  (1965).  In  this  case,  there  is  a  clear  difference  between  the  applicants:  RBI  is  a  predominantly  local  entity  with  broadcast  experience;  Adams  is  not.  In 
 comparison,  the  impact  of  Parkers  interests  on  the  diversification  of  media  ownership  generally  in  the  United  States  31  has  little  significance. 

 31  Policy  Statement  on  Comparative  Broadcast  Hearings,  1  FCC  2d  at  394  (indicating  that  distant  interests  are 
 entitled  to  the  least  weight  in  the  diversification  analysis). 
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 VI.  SUMMARY 
 86.  In  view  of  the  foregoing,  we  will  reverse  the  initial  decision,  grant  RBIs  renewal  application,  and  deny  Adams  application  for  a  construction  permit.  The  record  in  this  case  does 
 not  support  a  conclusion  that  either  Adams  or  RBIs  Parker  committed  disqualifying  misconduct.  RBIs  record  in  operating  WTVE(  TV)  during  the  1989-  94  license  term  was  minimal  and  RBI  is 
 not  entitled  to  a  renewal  expectancy  in  the  comparative  evaluation  of  its  application  against  Adams.  Nevertheless,  RBIs  local  involvement  and  broadcast  experience  are  entitled  to  the 
 most  weight  in  this  case,  giving  it  a  clear  advantage  over  Adams. 
 VII.  PROCEDURAL  MATTER 
 87.  RBI  complains  that  the  ALJ  exceeded  his  authority  in  ordering,  in  a  Protective  Order,  RBI  to  reimburse  Telemundo  in  the  amount  of  $6,804  for  expenses  Telemundo  incurred  in 
 responding  to  an  RBI  subpoena.  Reading  Broadcasting,  Inc.,  FCC  00M-  48  (Jul.  18,  2000).  We  agree.  In  ordering  RBI  to  pay  Telemundos  expenses,  the  ALJ  relied  on  47  C.  F.  R.    1.313, 
 which  authorizes  protective  orders  relating  to  discovery  and  provides  that:  The  [ALJs]  ruling  .  .  .  may  specify  any  measures  .  .  .  to  protect  any  party  or  deponent  from  annoyance,  expense, 
 embarrassment  or  oppression.  The  Commission,  however,  does  not  interpret  this  section  as  authorizing  the  reimbursement  of  expenses.  The  ALJ  cited  no  other  authority  to  support  his  order 
 for  RBI  to  pay  Telemundos  expenses.  32  Without  such  authority,  the  order  was  improper,  and  we  will  vacate  it. 

 VII.  ORDERING  CLAUSES 
 88.  ACCORDINGLY,  IT  IS  ORDERED,  that  the  Protective  Order  of  Administrative  Law  Judge  Richard  L.  Sippel,  FCC  00M-  48  (Jul.  18,  2000)  IS  VACATED. 

 89.  IT  IS  FURTHER  ORDERED,  That  Reading  Broadcasting,  Inc.  s  Exceptions  to  Initial  Decision  of  Administrative  Law  Judge  Richard  Sippel,  filed  May  21,  2001  ARE 
 GRANTED,  and  the  Brief  in  Support  of  Initial  Decision  and  Contingent  Exceptions  of  Adams  Communications  Corporation,  filed  May  21,  2001,  ARE  DENIED. 

 90.  IT  IS  FURTHER  ORDERED,  That  the  Initial  Decision  of  Administrative  law  Judge  Richard  L.  Sippel,  FCC  01D-  01  (ALJ  Apr.  5,  2001)  IS  MODIFIED  to  the  extent  indicated  above. 
 91.  IT  IS  FURTHER  ORDERED,  That  the  application  of  Reading  Broadcasting,  Inc.  for  renewal  of  its  license  to  operate  Station  WTVE(  TV),  Reading,  Pennsylvania  (FILE  NO.  BRCT-940407KF) 
 IS  GRANTED  and  the  application  of  Adams  Communications  Corporation  for  a  construction  permit  (File  No.  BPCT-  940630KG)  IS  DENIED. 

 92.  IT  IS  FURTHER  ORDERED,  That  the  Letter  from  Gene  A.  Bechtel  and  Harry  Cole  to  Christopher  Wright,  General  Counsel  (Nov.  24,  1999)  IS  DISMISSED  as  moot. 

 32  Compare  Fed.  R.  Civ.  Proc.  Rule  45(  c)(  1),  which  authorizes  District  Courts  to  impose  upon  the  party  or  attorney 
 [causing  undue  burden  or  expense]  .  .  .  an  appropriate  sanction,  which  may  include,  but  is  not  limited  to,  lost  earnings  and  reasonable  attorneys  fee. 
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 93.  IT  IS  FURTHER  ORDERED,  That  this  proceeding  IS  TERMINATED. 
 FEDERAL  COMMUNICATIONS  COMMISSION 

 Marlene  H.  Dortch  Secretary 
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 29 
 APPENDIX  Quantity  (in  minutes  per  quarter)  of  various  types  of  non-  entertainment 
 programming  presented  on  WTVE(  TV)  during  the  1989-  94  license  term.  Figures  derived  from  RBI  Exh.  8,  App.  A. 

 Quarter  Total  WTVE-  produced  Percent  Total  Non-  entertainment  Percent  3Q89  2150  1.64%  2887  2.20% 
 4Q89  1361  1.04%  3269.5  2.  50%  3Q90  1013  0.77%  1144.5  0.  87% 
 4Q90  611  0.47%  3039  2.32%  1Q91  1127.5  0.  86%  1596.5  1.  22% 
 2Q91  1049.5  0.  80%  1126.35  0.86%  3Q91  1627  1.24%  2451  1.87% 
 4Q91  1978  1.51%  3742.3  2.  86%  1Q92  2046  1.56%  2958.5  2.  26% 
 2Q92  2239  1.71%  3208.5  2.  45%  2Q92  1975  1.51%  3229  2.46% 
 4Q92  2901.25  2.21%  7171.75  5.47%  1Q93  3183  2.43%  4933.5  3.  76% 
 2Q93  4889  3.73%  6739  5.14%  3Q93  4208  3.21%  5357  4.09% 
 4Q93  5185.5  3.  96%  6497.5  4.  96%  1Q94  6450  4.92%  9880.25  7.54% 
 2Q94  6761.5  5.  16%  9893  7.55%  Avg.  2.15%  3.  35% 

 Quarter  Total  PSA  (regardless  of  source)  Total  Non-  entertainment  Percent  3Q89  508  2887  17.60% 
 4Q89  846  3269.5  25.88%  3Q90  885  1144.5  77.33% 
 4Q90  1022  3039  33.63%  1Q91  1205  1596.5  75.48% 
 2Q91  1126.35  1126.35  100.00%  3Q91  2297.5  2451  93.74% 
 4Q91  2712.3  3742.3  72.48%  1Q92  2958.5  2958.5  100.00% 
 2Q92  2562  3208.5  79.85%  2Q92  2837.5  3229  87.88% 
 4Q92  2728  7171.75  38.04%  1Q93  2559  4933.5  51.87% 
 2Q93  3662  6739  54.34%  3Q93  2990.5  5357  55.82% 
 4Q93  3236.5  6497.5  49.81%  1Q94  3808  9880.25  38.54% 
 2Q94  3679.5  9893  37.19%  Avg.  60.53% 

 . 
29