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 Federal  Communications  Commission  FCC  01  -336 
 Before  the 
 Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  Matter  of  ) 
 ) 
 Edwin  L.  Edwards,  Sr.  )  File  Nos.  BTCCT-  19991116BEC 
 (Transferor)  )  BTCCT-  19991116BEE 
 )  FIN:  7933  &  74137 
 and  ) 
 ) 
 Carolyn  C.  Smith  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 Glencairn,  Ltd.,  parent  entity  of  ) 
 ) 
 Baltimore  (WNUV-  TV)  Licensee,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 WNUV-  TV,  Baltimore,  Maryland  ) 
 ) 
 Columbus  (WTTE-  TV)  Licensee,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 WTTE-  TV,  Columbus,  Ohio  ) 
 ) 
 Shareholders  of  Sullivan  Broadcasting  )  File  Nos.  BTCCT-  19991116BDR  -  DU 
 Company  III,  Inc.  )  FIN:  411,  416  &  417 
 (Transferors)  ) 
 ) 
 and  ) 
 ) 
 Glencairn,  Ltd.  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 Sullivan  Broadcast  ing  Company  III,  Inc.  ) 
 Licensee  of  Television  Stations  ) 
 WRGT-  TV,  Dayton,  Ohio  ) 
 WTAT-  TV,  Charlest  on,  Sout  h  Carolina  ) 
 WVAH-  TV,  Charlest  on,  West  Virginia  ) 
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 Federal  Communications  Commission  FCC  01  -336 
 2 
 ABRY  Holdings  Co.  )  File  No.  BTCCT-  19991116BEH 
 (Transferor)  )  FIN:  35388 
 ) 
 and  ) 
 ) 
 KOKH  Licensee,  LLC  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 Sullivan  Broadcast  ing  Company  IV,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 KOKH-  TV,  Oklahoma  Cit  y,  Oklahoma  ) 
 ) 
 Glencairn,  Ltd.  )  File  No.  BTCCT-  19991116BDN 
 (Transferor)  )  FIN:  51518 
 ) 
 and  ) 
 ) 
 Sinclair  Acquisition  Group  X,  Inc.  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 San  Antonio  (KRRT-  TV)  Licensee,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 KRRT-  TV,  Kerrville,  Texas  ) 
 ) 
 Glencairn,  Ltd.  )  File  No.  BTCCT-  19991116BDX 
 (Transferor)  )  FIN:  74174 
 ) 
 and  ) 
 ) 
 Sinclair  Acquisition  Group  VII,  Inc.  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 WVTV  Licensee,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 WVTV-  TV,  Milwaukee,  Wisconsin  ) 
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 Federal  Communications  Commission  FCC  01  -336 
 3 
 Glencairn,  Ltd.  )  File  No.  BTCCT-  19991116BCS 
 (Transferor)  )  FIN:  54963 
 ) 
 and  ) 
 ) 
 Sinclair  Acquisition  Group  VIII,  Inc.  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 Raleigh  (WRDC-  TV)  Licensee,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 WRDC-  TV,  Durham,  North  Carolina  ) 
 ) 
 Glencairn,  Ltd.  )  File  No.  BTCCT-  19991116BDK 
 (Transferor)  )  FIN:  16820 
 ) 
 and  ) 
 ) 
 Sinclair  Acquisition  Group  IX,  Inc.  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 Birmingham  (WABM-  TV)  Licensee,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 WABM-  TV,  Birmingham,  Alabama  ) 
 ) 
 Glencairn,  Ltd.  )  File  No.  BTCCT-  19991116BDP 
 (Transferor)  )  FIN:  56548 
 ) 
 and  ) 
 ) 
 Sinclair  Acquisition  Group  XI,  Inc.  ) 
 (Transferee)  ) 
 ) 
 For  Consent  to  the  Transfer  of  Control  of  ) 
 Anderson  (WFBC-  TV)  Licensee,  Inc.  ) 
 Licensee  of  Television  Station  ) 
 WFBC-  TV,  Anderson,  South  Carolina  ) 
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 Federal  Communications  Commission  FCC  01  -336 
 4 
 WPTT,  Inc.  )  File  No.  BALCT-  19991116AIZ 
 (Assignor)  )  FIN:  73907 
 ) 
 and  ) 
 ) 
 WCWB  Licensee,  Inc.  ) 
 (Assignee)  ) 
 ) 
 For  Consent  to  Assignment  of  License  of  ) 
 Television  St  at  ion  WCWB-  TV,  ) 
 Pittsburgh,  Pennsylvania  ) 
 ) 
 River  City  License  Partnership  )  File  No.  BALCT-  960823IA  (Assignor)  )  FIN:  56537 


 )  and  ) 
 ) 
 WLOS  Licensee,  Inc.  )  (Assignee)  ) 


 )  For  Consent  to  Assignment  of  License  of  ) 
 Television  St  at  ion  )  WLOS(  TV),  Asheville,  Nort  h  Carolina  ) 
 ) 
 River  City  License  Partnership  )  File  No.  BALCT-  960618IG  (Assignor)  )  FIN:  56548 


 )  and  ) 
 ) 
 Anderson  (WFBC-  TV)  Licensee,  )  Inc.  ) 


 (Assignee)  )  ) 
 For  Consent  to  Assignment  of  License  of  )  Television  St  at  ion  ) 
 WFBC-  TV,  Anderson,  South  Carolina  ) 
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 Federal  Communications  Commission  FCC  01  -336 
 5 
 River  City  License  Partnership  )  File  No.  BALCT-  960823IU  (Assignor)  )  FIN:  56528 
 )  and  ) 
 ) 
 KABB  Licensee,  Inc.  )  (Assignee)  ) 


 )  For  Consent  to  Assignment  of  License  of  ) 
 Television  St  at  ion  )  KABB-  TV,  San  Antonio,  Texas  ) 
 ) 
 River  City  License  Partnership  )  File  No.  BALCT-  960604IA  (Assignor)  )  FIN:  51518 


 )  and  ) 
 ) 
 KRRT  Licensee  Corp.  )  (Assignee)  ) 


 )  For  Consent  to  Assignment  of  License  of  ) 
 Television  St  at  ion  )  KRRT(  TV),  Kerrville,  Texas  ) 


 MEMORANDUM  OPINION  AND  ORDER  AND 
 NOTICE  OF  APPARENT  LIABILITY 


 Adopted:  November  15,  2001  Released:  December  10,  2001 
 By  the  Commission:  Commissioner  Copps  approving  in  part;  dissenting  in  part  and  issuing 
 a  statement. 


 I.  INTRODUCTION 
 1.  Before  the  Commission  are  the  above-  captioned  applications  dealing  with  various 
 transactions  involving  Sullivan  Broadcast  Holdings,  Inc.  (SBH),  Sinclair  Broadcasting  Group, 
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 Federal  Communications  Commission  FCC  01  -336 
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 Inc.  (Sinclair)  and  Glencairn  Ltd.  (Glencairn)  and  their  respective  subsidiaries.  Petitions  to  deny 
 were  filed  by  Rainbow/  PUSH  Coalition  (Rainbow)  and  Kelley  International  Licensing,  LLC 
 (Kelley).  Rainbow  and  Kelley  allege,  inter  alia,  that  Sinclair  exercises  de  facto  control  over 
 Glencairn  and  that  they  have  misrepresented  facts  and  concealed  the  true  extent  of  their  business 
 relationships  to  permit  Sinclair  to  own  television  stations  it  would  otherwise  not  have  been 
 permitted  to  own  under  the  Commission’s  broadcast  multiple  ownership  rules.  For  the  reasons 
 set  forth  below,  we  grant  in  part  and  deny  in  part  the  petitions  to  deny,  issue  notices  of  apparent 
 liability  to  Sinclair  and  Glencairn  for  their  actions,  and  conditionally  grant  the  above-  referenced 
 applications  with  the  exception  of  the  WFBC-  TV  application,  which  we  dismiss  in  accordance 
 with  Section  73.3566  of  the  Commission’s  Rules. 


 II.  BACKGROUND 
 A.  Applications 
 2.  This  proceeding  began  in  1998  when  SBH  proposed  to  sell  its  television  stations  to 
 Sinclair  and  Glencairn.  Glencairn  was  to  obtain  WRGT-  TV,  Dayton,  Ohio,  WTAT-  TV,  Charleston, 
 Sout  h  Carolina,  WVAH-  TV,  Charlest  on,  West  Virginia,  KOKH-  TV,  Oklahoma  Cit  y,  Oklahoma,  and 
 W34BX,  Bluefield,  West  Virginia  (Sullivan  III  Stations)  with  SBH’s  remaining  stations  being  sold  to 
 Sinclair.  1  Pursuant  to  an  agreement  among  the  parties,  Glencairn  will  be  the  licensee  of  the 
 Sullivan  III  stations  and  own  the  stations’  license  assets,  while  Sinclair  will  hold  all  of  the  Sullivan 
 III  stations’  non-  license  assets.  Glencairn  will  lease  those  assets  from  Sinclair.  Furthermore, 
 Sinclair  has  an  existing  local  marketing  agreement  (LMA)  for  the  Sullivan  III  stations  which  will 
 continue  in  force  with  Glencairn  as  the  licensee. 


 3.  On  August  5,  1999,  the  Commission  adopted  its  revised  broadcast  multiple  ownership 
 rules.  2  Following  that  action,  several  changes  were  made  to  the  proposed  transactions  between 
 SBH,  Sinclair  and  Glencairn.  First,  SBH  requested  that  the  application  to  transfer  control  of 
 KOKH-  TV  to  Glencairn  be  dismissed.  Therefore,  KOKH-  TV  is  no  longer  one  of  the  Sullivan  III 
 stations  to  be  transferred  to  Glencairn.  3  Instead,  the  above-  captioned  application  was  filed 


 1  Those  stations  were:  WUTV(  TV),  Buffalo,  New  York;  WMSN-  TV,  Madison,  Wisconsin;  WRLH-  TV, 
 Richmond,  Virginia;  WXLV-  TV,  Winston-  Salem,  North  Carolina;  and  WZTV(  TV),  Nashville,  Tennessee 
 (Sullivan  II  Stations).  The  applications  for  transfer  of  control  of  the  Sullivan  II  stations  to  Sinclair  were  unopposed 
 and  are  concurrently  being  granted  by  separate  staff  action.  See  File  Nos.  BTCCT-  980519IA-  IB  and  BTCCT-980519ID- 
 IF. 


 2  See  Review  of  the  Commission’s  Regulations  Governing  Television  Broadcasting,  MM  Docket  No.  91-221 
 and  87-  8,  Report  and  Order,  14  FCC  Rcd  12903  (1999)  (Ownership  Report  and  Order),  recon.  granted  in 
 part,  16  FCC  Rcd  1067  (2000). 


 3  SBH  subsequently  let  expire  the  license  for  television  translator  station  W34BX,  Bluefield,  West 
 Virginia,  and  it  is  no  longer  part  of  this  transaction. 
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 Federal  Communications  Commission  FCC  01  -336 
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 seeking  consent  to  the  transfer  of  KOKH-  TV  to  Sinclair.  In  addition,  on  November  16,  1999, 
 Glencairn  requested  Commission  approval  for  a  transfer  of  control  whereby  its  President  and 
 100%  voting  shareholder,  Edwin  L.  Edwards,  Sr.,  would  exit  the  company  to  be  replaced  by 
 Carolyn  Smith,  the  mother  of  the  principals  of  Sinclair,  as  the  new  100%  voting  shareholder. 
 Specifically,  Glencairn  filed  the  above-  captioned  applications  to  transfer  control  of  two  of  its 
 existing  television  stations,  WNUV-  TV,  Baltimore,  Maryland,  and  WTTE-  TV,  Columbus,  Ohio. 
 Major  amendments  to  the  pending  applications  to  transfer  control  of  WRGT-  TV,  WTAT-  TV, 
 WVAH-  TV,  and  W34BX  from  Sullivan  III  to  Glencairn  were  also  filed  to  report  the  proposed 
 change  in  control  of  Glencairn. 


 4.  Also  on  November  16,  1999,  the  above-  captioned  applications  were  filed  seeking 
 Commission  consent  to  the  transfer  of  control  of  Glencairn’s  five  other  existing  television  stations 
 (WVTV-  TV,  Milwaukee,  Wisconsin;  WRDC-  TV,  Raleigh,  North  Carolina;  KRRT-  TV,  San 
 Antonio,  Texas;  WABM-  TV,  Birmingham,  Alabama;  and  WFBC-  TV,  Anderson,  South  Carolina) 
 from  Glencairn  to  Sinclair  pursuant  to  existing  options  agreements.  Glencairn  will  continue  to 
 own  television  stations  in  Baltimore,  Maryland,  and  Columbus,  Ohio,  and  Sinclair  will  continue  its 
 existing  LMA  with  these  stations. 


 5.  In  response  to  the  1998  Sullivan  III  applications,  Rainbow  and  Kelley  filed  separate 
 petitions  to  deny  4  and  subsequently  Rainbow  filed  a  petition  to  deny  and/  or  revoke  Sinclair  and 
 Glencairn  licenses  following  the  November  16,  1999  applications.  5  Notwithstanding  the 
 procedural  deficiencies  of  certain  of  the  parties’  pleadings  filed  subsequent  to  these  petitions,  we 
 believe  that  the  public  interest  would  be  better  served  by  our  consideration  of  all  of  the 
 submissions  on  their  merits  and  we  have  done  so. 


 B.  Petitioners’  Allegations 


 4  The  following  additional  pleadings  were  filed  in  response  to  these  petitions:  Glencairn’s  Opposition  to 
 Kelley’s  Petition  to  Deny  filed  August  5,  1998;  Glencairn’s  Supplement  to  Application  for  Transfer  of  Control 
 filed  July  30,  1998;  Glencairn’s  Opposition  to  Rainbow’s  Petition  to  Deny  filed  August  13,  1998;  Kelley’s  Reply 
 filed  August  18,  1998;  Rainbow’s  Reply  filed  August  25,  1998;  Glencairn’s  Supplement  to  Opposition  to  Petition 
 to  Deny  filed  September  3,  1998;  Rainbow’s  Comments  filed  September  16,  1998;  Kelley’s  Motion  to  Strike  filed 
 September  17,  1998;  Glencairn’s  letter  providing  additional  information  filed  October  1,  1998;  Glencairn’s 
 Opposition  to  Motion  to  Strike  filed  October  1,  1998;  Glencairn’s  amendment  filed  October  9,  1998;  Kelley’s 
 Reply  to  Opposition  to  Motion  to  Strike  filed  October  13,  1998;  Rainbow’s  Comments  filed  October  23,  1998; 
 Kelley’s  Comments  filed  October  23,  1998;  Glencairn’s  Consolidated  Reply  Comments  filed  December  3,  1998; 
 Rainbow’s  Comments  filed  December  16,  1998;  Kelley’s  Motion  for  Leave  to  File  Response  filed  December  18, 
 1998;  Kelley’s  Response  filed  December  18,  1998;  Kelley’s  Reply  filed  April  27,  1999;  Rainbow’s  Comments  filed 
 April  27,  1999;  Glencairn’s  Comments  filed  July  14,  1999. 


 5  The  following  additional  pleadings  were  filed  in  response  to  Rainbow’s  pleading:  Glencairn’s 
 Oppositions  filed  February  15,  2000,  Sinclair’s  Oppositions  filed  February  16,  2000;  Rainbow’s  Reply  filed  March 
 14,  2000;  and  Rainbow’s  Supplemental  to  Reply  filed  April  28,  2000. 
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 Federal  Communications  Commission  FCC  01  -336 
 8 
 6.  Prior  Decisions.  In  its  initial  petition  to  deny,  Rainbow  points  to  another  proceeding 
 wherein  questions  concerning  the  relationship  between  Glencairn  and  Sinclair  were  initially  raised.  6  While  the  staff  rejected  those  allegations  in  its  River  City  Decision,  and  approved  the 


 underlying  transaction,  Rainbow  notes  that  applications  for  review  of  the  staff’s  decision  were 
 filed  by  two  different  parties.  7  Here,  Rainbow  urges  that  the  allegations  raised  in  that  proceeding 
 be  revisited  in  light  of  the  additional  allegations  it  has  raised.  8  Rainbow  and  Kelley  argue  that, 
 whatever  the  prior  validity  of  the  Sinclair/  Glencairn  relationship,  the  instant  transaction  goes  too 
 far  and  takes  the  relationship  well  outside  the  boundaries  of  the  Commission’s  rules  and  policies. 


 7.  In  its  opposition,  Glencairn  argues  that  the  Rainbow  and  Kelley  allegations  are  based 
 principally  on  facts  regarding  the  ownership  structure  of  Glencairn  and  the  relationship  between 
 Glencairn  and  Sinclair  of  which  the  Commission  is  fully  aware  and  has  previously  deemed 
 insufficient  to  raise  an  issue  under  its  rules.  Glencairn  notes  that  the  staff  has  approved 
 Glencairn’s  acquisitions  of  television  stations  on  other  occasions  in  contested  proceedings 
 concerning  Glencairn’s  ownership  structure  and  the  company’s  relationship  to  Sinclair.  9 
 Glencairn  maintains  that  the  facts  of  this  case  are  no  different.  Glencairn  also  contends  that  this 
 arrangement  is  essentially  identical  to  one  approved  by  the  staff  when  it  permitted  the  assignment 
 of  licenses  of  KHGI(  TV),  Kearney,  Nebraska,  and  KWNB(  TV),  Hayes  Center,  Nebraska,  from 
 Fant  Broadcasting  (Fant)  to  Pappas  Telecasting  of  Central  Nebraska  (Pappas)  and  the  assignment 
 of  license  of  KSNB(  TV),  Superior,  Nebraska,  from  Fant  to  Colins  Broadcasting  Company 
 (Colins).  10 


 6  See  Letter  of  the  Chief,  Video  Services  Division  to  River  City  License  Partnership,  dated  June  27,  1997 
 (River  City  Decision). 
 7  That  decision  involved  the  sale  of  the  following  television  stations:  WLOS(  TV),  Asheville,  North 
 Carolina,  and  KABB-  TV,  San  Antonio,  Texas,  being  sold  to  Sinclair;  and  WFBC-  TV,  Anderson,  South  Carolina, 
 and  KRRT-  TV,  Kerrville,  Texas,  being  sold  to  Glencairn.  The  parties  filing  Applications  for  Review  were  Pulitzer 
 Broadcasting  Company  (Pulitzer)  and  Post-  Newsweek  Stations,  San  Antonio,  Inc.  (Post).  As  noted  infra,  given  the 
 similarity  of  the  issues  raised  in  that  proceeding,  we  have  consolidated  our  review  of  the  Applications  for  Review 
 in  the  River  City  proceeding  into  this  case. 


 8  Rainbow  maintains  that  it  has  standing  to  challenge  the  KOKH-  TV  and  KRRT-  TV  transfer  applications 
 because  two  of  its  members  are  residents  in  the  stations’  communities  of  license.  See  United  Church  of  Christ  v. 
 FCC,  359  F.  2d  994  (D.  C.  Cir.  1966)(  United  Church  of  Christ).  Kelley  maintains  that  it  has  standing  to  challenge 
 the  KOKH-  TV  transfer  application  because  it  is  the  licensee  of  KWTV(  TV),  Oklahoma  City  which  competes  with 
 KOKH-  TV  in  the  Oklahoma  City  Designated  Market  Area.  See  FCC  v.  Sanders  Brothers  Radio  Station,  309  U.  S. 
 470,  476  (1940)  (Sanders  Brothers). 


 9  See  Letter  from  the  Chief,  Video  Services  Division  to  Sinclair  Broadcast  Group,  Inc.,  Ref:  1800E1- 
 PRG,  dated  May  20,  1994  (1994  Letter)  and  River  City  Decision,  supra. 
 10  See  Letter  from  Chief,  Video  Services  Division  to  David  D.  Burns,  Esq.  et  al.,  dated  February  17, 
 1999,  app.  for  review  pending  (Burns  Decision). 
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 Federal  Communications  Commission  FCC  01  -336 
 9 
 8.  Sullivan  III  Stations  Debt.  To  answer  Rainbow’s  allegations  concerning  the  bona 
 fides  of  the  Sullivan  III  stations  transaction,  Glencairn’s  President,  Mr.  Edwards,  reported  in  a 
 Declaration  that  Glencairn  would  be  assuming  $80  million  in  debt  as  the  consideration  for  its 
 acquisition  of  the  Sullivan  III  stations.  However,  little  more  than  a  month  later,  Glencairn 
 reported  that  the  debt  figure  was  incorrect.  In  a  new  Declaration,  Mr.  Edwards  explains  that  he 
 was  initially  informed  by  Glencairn’s  corporate  lawyers  and  accountants  involved  in  the 
 transaction  that  Sullivan  III  had  more  than  $80  million  in  debt  on  the  books.  Upon  attempting  to 
 obtain  written  confirmation  of  this  fact  from  his  accountants  in  order  to  respond  to  the  Kelley  and 
 Rainbow  petitions,  Mr.  Edwards  states  that  he  was  subsequently  informed  that  Sullivan  III  in  fact 
 has  approximately  $40.5  million  in  debt  on  its  books.  11  Mr.  Edwards  explains  that  he  relied  on  an 
 employee  to  handle  the  task  of  determining  the  exact  amount  of  Sullivan  III  station  debt  because 
 he  was  busy  with  other  Glencairn  matters,  such  as  the  production  of  a  local  television  program, 
 management  of  Glencairn  stations,  and  coordination  of  a  golf  and  awards  dinner.  Mr.  Edwards 
 claims  that  the  employee  learned  of  the  correct  figure  for  the  assumed  debt  on  or  about  August 
 17,  1998,  but  because  he  was  on  vacation  at  the  time,  there  was  a  lapse  of  communication 
 between  them.  At  the  time  he  signed  his  original  Declaration,  Mr.  Edwards  claims  he  was  having 
 a  hectic  week  and  did  not  focus  on  the  accuracy  of  the  $80  million  debt  figure.  Upon  looking  into 
 the  matter,  Mr.  Edwards  states  that  he  later  discovered  the  error  and  voluntarily  brought  it  to  the 
 attention  of  the  Commission.  Regardless,  Mr.  Edwards  states  that  Glencairn  is  refinancing 
 Sullivan  III’s  debt  independently  of  Sinclair,  through  a  major  financial  institution,  Chase 
 Manhattan  Bank  (Chase  Manhattan). 


 9.  Kelley  argues  that  the  fact  that  Mr.  Edwards  had  no  knowledge  of  the  most  basic  fact 
 in  this  transaction  –  the  purchase  price  payable  by  Glencairn  -  is  evidence  that  he  is  not  truly  the 
 controlling  party  of  Glencairn  and  that  Sinclair  is  the  real  party  in  interest  behind  Glencairn. 
 Rainbow  and  Kelley  also  allege  that  a  substantial  and  material  question  of  fact  exists  as  to  whether 
 Mr.  Edwards  submitted  false  declarations  and  misrepresented  facts  or  lacked  candor  in  his  original 
 Declaration.  The  mistake  made  by  Glencairn  on  the  amount  of  the  debt  to  be  assumed  ($  80 
 million  versus  $40.5  million)  was  not  trivial,  Rainbow  argues,  and  tended  to  favor  Glencairn’s 
 interests.  Rainbow  argues  that  Glencairn  had  to  show  that  it  was  at  risk  for  more  than  a  token 
 amount  relative  to  the  value  of  the  stations.  By  putting  in  evidence  an  amount  twice  the  true 
 number,  Rainbow  argues,  Glencairn  was  trying  to  mislead  the  parties  and  the  Commission  into 
 believing  that  its  exposure  was  twice  what  it  really  was. 


 10.  Glencairn’s  Finances.  Kelley  also  argues  that  several  facts  concerning  Glencairn’s 
 finances  evidence  that  it  is  controlled  by  Sinclair.  First,  Kelley  notes  that  the  sale  of  the  Sullivan 
 III  stations  to  Glencairn  was  originally  structured  so  that  the  promissory  note  that  Glencairn 
 would  be  assuming  as  consideration  for  its  acquisition  of  stations  would  be  held  by  Sinclair.  This 


 11  Mr.  Edwards  also  reported  that  there  was  an  error  in  the  preparation  of  the  promissory  notes  and  that 
 the  Sullivan  II  debt  figure  ($  61  million)  and  the  Sullivan  III  debt  figure  ($  40.5  million)  were  inadvertently 
 transposed  on  the  promissory  notes. 
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 Federal  Communications  Commission  FCC  01  -336 
 10 
 fact,  Kelley  argues,  and  the  fact  that  the  note  has  provisions  favorable  to  Glencairn  (such  as  an 
 interest  below  market  rates  and  no  provisions  for  how  they  are  to  be  secured)  demonstrates  that 
 Glencairn’s  debt  obligation  is  not  an  arms-  length  commercial  transaction  and  that  Sinclair  is  the 
 controlling  party  behind  this  transaction. 


 11.  While  Glencairn  claims  that  it  will  be  re-  financing  the  note  with  its  existing  line  of 
 credit  from  Chase  Manhattan,  Kelley  points  out  that  the  1995  Chase  Manhattan  Credit  Agreement 
 supplied  by  Glencairn  does  not  provide  any  funds  for  the  current  transaction  and  specifically 
 prohibits  Glencairn  from  assuming  debt  from  third  parties  as  it  is  proposing  in  this  transaction. 
 Glencairn  replies  that  the  1995  Chase  Manhattan  Credit  Agreement  will  be  amended  and  restated 
 once  all  the  necessary  governmental  approvals  have  been  obtained  and  the  parties  are  ready  to 
 consummate  the  Sullivan  III/  Glencairn  merger.  This  will  allow  it  to  obtain  additional  debt  despite 
 the  language  of  the  agreement.  Glencairn  states  that  this  is  customary  business  practice. 


 12.  Value  of  the  Stations.  Rainbow  notes  that  Sinclair  is  seeking  to  purchase  five 
 television  stations  comprising  most  of  Glencairn’s  prime  broadcast  real  estate  for  the  sum  of  $8 
 million  in  Sinclair  stock.  Rainbow  alleges  that  this  sum  does  not  reflect  the  true  value  of  these 
 stations.  Rainbow  estimates  that  these  stations  are  worth  at  least  $218.8  million  and  that  the  $8 
 million  purchase  price  indicates  that  Sinclair,  and  not  Glencairn,  established  the  purchase  price.  If 
 Glencairn  were  truly  an  independent  company,  Rainbow  alleges,  it  would  never  have  accepted  a 
 price  1/  27  of  the  licenses’  value.  It  would  have  considered  more  than  one  buyer,  hoping  to  secure 
 fair  market  value  and  maximize  the  return  for  its  stations,  Rainbow  concludes.  Furthermore, 
 Rainbow  contends  that  the  fact  that  Glencairn  is  receiving  Sinclair  stock  and  not  cash  assures  that 
 Glencairn’s  financial  fortunes  will  be  closely  tied  to  Sinclair’s  stock  price.  Rainbow  maintains  that 
 Glencairn  will  have  a  strong  incentive  to  always  act  in  Sinclair’s  financial  interest.  Rainbow 
 further  alleges  that,  by  requiring  Glencairn  to  take  its  stock,  Sinclair  has  disabled  Glencairn’s  new 
 President  from  growing  the  company  through  acquisitions  of  its  own.  Rainbow  contends  that  no 
 company  would  approach  Glencairn  about  selling  them  a  station  since  sellers  expect  to  be  paid  in 
 cash  and  not  third-  party  stock. 


 13.  Glencairn  responds  that  that  the  Commission  has  always  recognized  marketable 
 securities  as  valuable  liquid  assets  and  such  securities  comprise  good  collateral  for  loans  to 
 acquire  stations.  Sinclair  argues  that  the  business  judgment  as  to  whether  its  stock  will  increase 
 or  decrease  in  value  is  one  for  Glencairn  and  not  Sinclair  to  make.  Sinclair  states  that  it  did  not 
 require  Glencairn  to  take  stock  for  its  stations  and  that  the  purchase  price  for  the  stations  was 
 negotiated  between  the  parties  with  each  being  represented  by  independent  counsel.  As  for  the  $8 
 million  purchase  price,  Sinclair  contends  that  Rainbow  has  no  basis  by  which  to  value  the  stations 
 which  are  encumbered  with  bank  debt  and  LMAs,  both  of  which  reduce  their  value.  Sinclair 
 states  that  Mr.  Edwards,  as  the  voting  shareholder,  and  Mrs.  Smith,  as  a  non-  voting  shareholder 
 with  the  right  to  vote  on  certain  extraordinary  matters,  including  the  merger  acquisitions, 
 determined  that  the  sale  to  Sinclair  delivered  fair  value  to  the  company. 
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 14.  Rainbow  also  points  to  the  fact  that  Glencairn  had  an  agreement  with  SBH  to 
 purchase  KOKH-  TV,  but  that  agreement  was  terminated  and  replaced  with  a  new  agreement  to 
 permit  Sinclair  to  purchase  the  station  instead.  Rainbow  questions  what  would  motivate  a  rational 
 company  in  Glencairn’s  position  to  back  away  from  such  a  purchase  and  cede  it  to  another 
 company.  Rainbow  notes  that  it  does  not  appear  that  Glencairn  received  any  compensation  in 
 exchange  for  agreeing  to  walk  away  from  its  acquisition  of  KOKH-  TV.  Glencairn  maintains  that 
 Mr.  Edwards  was  not  the  only  businessman  who  saw  the  Commission’s  revision  of  the  television 
 duopoly  rules  as  an  opportunity  to  terminate  its  proposed  purchase  of  KOKH-  TV.  When  the 
 rules  changed,  Glencairn  contends,  relationships  and  deals  changed,  and  that  signifies  nothing 
 improper  thereby.  By  withdrawing  from  the  KOKH-  TV  purchase,  Glencairn  states  that  it  will 
 reduce  the  amount  of  debt  it  will  assume,  a  perfectly  legitimate  course  to  take. 


 15.  Edwards  Buy-  Out.  Finally,  Rainbow  questions  the  facts  surrounding  Glencairn’s 
 buy-  out  of  Edwards  for  $1.  5  million.  First,  Rainbow  alleges,  the  $1.  5  million  price  is  considerably 
 less  than  the  value  of  the  assets  and  power  that  Edwards  would  be  giving  up.  Rainbow  argues 
 that  Edwards’  interest  in  Glencairn  is  worth  far  more  than  the  $1.  5  million  irrespective  of  whether 
 the  buy-  out  was  calculated  on  the  value  of  Glencairn’s  pre-  or  post-  transfer  stations.  Rainbow 
 calculates  that  Edwards  3%  equity  share  should  be  worth  either  $3.  68  million  or  $1.  98  million. 
 Rainbow  contends  that  Edwards  is  being  underpaid  either  $2.  2  million  or  $500,000.  Rainbow 
 also  alleges  that  the  equity  value  figures  do  not  even  take  into  account  the  fact  that  Edwards’ 
 equity  consists  of  all  of  the  voting  stock  which  should  have  earned  him  a  huge  premium.  Rainbow 
 concludes  that  Edwards  could  not  have  negotiated  the  terms  of  his  buy-  out  because  he  would 
 never  have  decided  to  have  his  company  buy  himself  out  for  much  less  than  the  actual  value  of  his 
 interest.  Rainbow  also  questions  the  fact  that  Glencairn  is  borrowing  the  $1.  5  million  from 
 Sinclair  to  fund  the  buy-  out.  Rainbow  contends  that  this  fact  proves  that  Glencairn  does  not  have 
 the  ability  to  finance  its  purchase  of  the  Sullivan  III  stations  since  it  cannot  even  finance  the  buy-out 
 of  its  own  President. 


 16.  Glencairn  responds  that  the  “temporary  loan”  from  Sinclair  to  Glencairn,  that  would 
 be  used  to  purchase  Mr.  Edwards’  interest,  would  only  be  a  “bridge”  loan  from  Sinclair  in  the 
 event  that  the  Commission  granted  the  Glencairn  transfer  applications  prior  to  granting  the 
 Sullivan  III  transfer  applications.  Glencairn  and  Sinclair  argue  that  Rainbow  has  no  basis  to  value 
 Mr.  Edwards’  stake  in  Glencairn.  12 


 III.  DISCUSSION 
 12  Rainbow  also  produced  copies  of  advertisements  and  trade  publications  that  erroneously  refer  to 
 Sinclair  as  the  licensee  of  Glencairn’s  stations.  See  Rainbow’s  August  29,  2001,  letter  to  the  Commission  and 
 Glencairn’s  September  5,  2001,  response.  However,  we  do  not  believe  that  such  information,  erroneously  reported 
 by  third  party  sources/  publishers,  evidences  Glencairn  having  abdicated  control  of  its  stations  to  Sinclair. 
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 A.  The  Evidentiary  Burden 
 17.  Under  the  Communications  Act,  parties  challenging  an  application  to  transfer  control  by 
 means  of  a  petition  to  deny  under  Section  309(  d)  of  the  Communications  Act  must  satisfy  a  two-  step 
 test.  13  First,  the  petition  to  deny  must  set  forth  “specific  allegations  of  fact  sufficient  to  show  that  .  .  .  a 
 grant  of  the  application  would  be  prima  facie  inconsist  ent  wit  h  [t  he  public  int  erest  ].”  14  Second,  the 
 petition  must  present  a  “substantial  and  material  question  of  fact”  concerning  whether  the  grant  of  the 
 application  would  serve  the  public  interest.  15  If  the  Commission  concludes  that  the  protesting  party  has 
 met  both  prongs  of  the  test,  or  if  it  cannot,  for  any  reason,  find  that  grant  of  the  application  would  be 
 consistent  with  the  public  interest,  the  Commission  must  formally  designate  the  application  for  a 
 hearing  in  accordance  with  Section  309(  e)  of  the  Communications  Act.  16 


 18.  To  satisfy  the  first  prong  of  the  test,  a  petitioning  party  must  set  forth  allegations, 
 supported  by  affidavit,  that  constitute  "specific  evidentiary  facts,  not  ultimate  conclusionary  facts  or 
 mere  general  allegat  ions  …."  17  The  Commission  determines  whether  a  petitioner  has  met  this 
 t  hreshold  inquiry  in  a  manner  similar  to  a  trial  judge's  consideration  of  a  motion  for  directed  verdict:  "if 
 all  the  supporting  facts  alleged  in  the  affidavits  were  true,  could  a  reasonable  fact  finder  conclude  that 
 the  ultimate  fact  in  dispute  had  been  established."  18 


 19.  If  the  Commission  determines  that  a  petitioner  has  satisfied  the  threshold  standard  of 
 alleging  a  prima  facie  inconsistency  with  the  public  interest,  it  must  then  proceed  to  the  second  phase 
 of  the  inquiry  and  determine  whether,  "on  the  basis  of  the  application,  the  pleadings  filed,  or  other 
 matters  which  [the  Commission]  may  officially  notice,"  the  petitioner  has  presented  a  "substantial  and 
 material  question  of  fact."  19  If  the  Commission  concludes  that  the  "totality  of  the  evidence  arouses  a 


 13  47  U.  S.  C.  §  309(  d). 
 14  47  U.  S.  C.  §  309(  d)(  1);  Gencom  Inc.  v.  FCC,  832  F.  2d  171,  181  (D.  C.  Cir.  1987)(  Gencom);  and 
 Astroline  Communications  Co.  v.  FCC,  857  F.  2d  1556,  1562  (D.  C.  Cir.  1988)(  Astroline). 
 15  47  U.  S.  C.  §  309(  d)(  2);  Gencom,  832  F.  2d  at  181;  and  Astroline,  857  F.  2d  at  1562. 


 16  47  U.  S.  C.  §  309(  e). 
 17  United  States  v.  FCC,  652  F.  2d  72,  89  (D.  C.  Cir.  1980)  (en  banc)  (quoting  Columbus  Broadcasting 
 Coalition  v.  FCC,  505  F.  2d  320,  323-  24  (D.  C.  Circuit  1974)). 
 18  Gencom,  832  F.  2d  at  181. 


 19  47  U.  S.  C.  §  309(  d)(  2);  see  also  Gencom,  832  F.  2d  at  181. 
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 sufficient  doubt"  as  to  whether  grant  of  the  application  would  serve  the  public  interest,  the  Commission 
 must  designate  the  application  for  hearing  pursuant  to  section  309(  e).  20 


 20.  For  the  reasons  set  forth  below  in  paragraphs  21-  27,  we  find  that  Kelley  and  Rainbow 
 have  set  forth  specific  allegations  of  fact  sufficient  to  show  that  certain  of  the  current  transactions  in 
 this  proceeding  have  resulted  in  Sinclair  exercising  de  facto  control  over  Glencairn  in  violation  of 
 Section  310(  d)  of  the  Communications  Act.  With  respect  to  the  second  prong  of  the  test,  we  do  not 
 find  that  a  substantial  and  material  question  of  fact  exists  that  warrants  designating  these  applications 
 for  hearing.  We  find  this  record  sufficient  to  demonstrate  that  a  violation  of  Section  310(  d)  of  the 
 Communications  Act  occurred.  This  does  not  mean,  however,  that  we  must  designate  the  applications 
 for  hearing.  21  As  explained  below,  we  conclude  that  the  appropriate  remedy  for  this  violation  is  a 
 forfeiture.  Thus,  we  see  no  need  for  an  evidentiary  hearing  on  this  issue. 


 21.  Our  review  of  the  facts  and  circumstances  in  this  case  leads  us  to  conclude  that  a  hearing  is 
 not  appropriate  here.  While  certain  of  the  transactions  involved  a  violation  of  Section  310(  d),  we  find 
 that  such  actions  appear  to  reflect  reliance  on  past  staff  decisions  involving  similar  facts,  22  and  thus 
 appear  to  be  miscalculations  on  the  part  of  Sinclair  and  Glencairn  as  to  what  was  permissible.  23  Also, 
 we  note  that  Mr.  Edwards,  the  party  at  the  center  of  Glencairn’s  temporary  abdication  of  control,  is 
 leaving  the  company,  thus  mitigating  the  potential  for  future  lapses.  Furthermore,  we  find  that  the 
 parties  have  cooperated  in  our  investigation  of  this  case  and  manifested  no  palpable  intent  to  deceive 
 the  Commission  about  these  matters.  Therefore,  we  do  not  believe  the  violation  here  to  be  of  a  nature 
 that  it  raises  questions  about  the  character  qualification  of  these  parties  to  be  licensees.  Despite  the 


 20  Serafyn  v.  FCC,  149  F.  3d  1213,  1216  (D.  C.  Cir.  1998)  (quoting  Citizens  for  Jazz  on  WRVR  Inc.  v. 
 FCC,  775  F.  2d  392,  395  (D.  C.  Cir.  1985)). 
 21  See  Roy  M.  Speer,  11  FCC  Rcd  18393  (1996)  (unauthorized  transfer  of  control  did  not  necessitate 
 designation  of  applications  for  hearing  where  there  was  no  substantial  and  material  question  of  fact  as  to  whether 
 parties  intended  to  deceive  the  Commission);  FM  Broadcasters  of  Douglas  County,  10  FCC  Rcd  10429  (1995)  (no 
 qualification  issues  raised  by  license  assignment  applications  notwithstanding  unauthorized  transfer  of  control  by 
 assignor  and  issuance  of  NAL);  see  also  Mountain  Signals,  Inc.,  6  FCC  Rcd  2874  (MMB  1991). 


 22  See  1994  Letter,  supra  and  River  City  Decision,  supra. 


 23  See  Roy  M.  Speer,  supra;  Arlie  L.  Davison  and  Associates,  Inc.,  supra  (no  hearing  where  unauthorized 
 transfer  of  control  was  the  result  of  mistaken  belief  by  parties  that  applications  had  been  filed);  Notice  of  Apparent 
 Liability  for  Forfeiture  of  KGNT,  Inc.,  16  FCC  Rcd  1656  (Enforcement  Bureau  2001)  and  Notice  of  Apparent 
 Liability  for  Forfeiture  of  KEOT,  Inc.,  16  FCC  Rcd  863  (Enforcement  Bureau  2001)  (no  hearing  where  310(  d) 
 violations  were  the  result  of  licensee’s  mistaken  understanding  concerning  what  constituted  a  transfer  of  control). 
 Cf.  C.  Devine  Media,  8  FCC  Rcd  2493  (1993)  and  Seraphin  Corporation,  2  FCC  Rcd  7177  (1987). 
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 Federal  Communications  Commission  FCC  01  -336 
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 improper  actions  of  Sinclair  and  Glencairn,  we  conclude  that  designation  for  hearing  of  the 
 various  above-  captioned  applications  is  not  warranted.  Rather,  we  conclude  that  the  above-captioned 
 applications  can  be  granted  conditioned  upon  certain  changes  in  the  agreements 
 between  the  parties. 


 22.  Having  concluded  that  the  violation  issued  here  would  not  warrant  denial  of  these 
 applications,  we  must  determine  the  appropriate  remedy  for  the  unauthorized  transfer  of  control 
 in  which  the  parties  engaged.  Section  503(  b)(  1)(  B)  of  the  Act  provides  for  the  imposition  of  a 
 forfeiture  penalty  against  any  person  who  “willfully  or  repeatedly  failed  to  comply  with  any  of  the 
 provisions  of  this  Act  or  of  any  rule,  regulation,  or  order  issued  by  the  Commission  under  this  Act 
 or  under  any  treaty,  convention,  or  other  agreement  to  which  the  United  States  is  a  party  and 
 which  is  binding  upon  the  United  States”.  There  is  ample  precedent  for  imposing  forfeitures  for 
 unauthorized  transfers  of  control.  24  While,  as  discussed  above,  Glencairn  and  Sinclair  appear  to 
 have  miscalculated  what  was  permissible  under  past  staff  decisions,  we  find  that  the  de  facto 
 transfers  were  willful  within  the  meaning  of  Section  503.  For  purposes  of  Section  503,  willful 
 means  the  conscious  and  deliberate  commission  of  an  act  irrespective  of  an  intent  to  violate  the 
 Communications  Act  or  the  Commission’s  Rules.  25  Accordingly,  we  conclude  that  a  forfeiture  is 
 warranted. 


 B.  Sinclair’s  De  Facto  Control  of  Glencairn 
 23.  With  respect  to  the  sale  of  the  Sullivan  III  stations  to  Glencairn,  we  find  that  the 
 record  demonstrates  that  Sinclair  exercised  de  facto  control  over  Glencairn  in  violation  of  Section 
 310(  d)  of  the  Communications  Act  and  the  Commission’s  rules.  A  combinat  ion  of  fact  s  leads  us  to  this 
 conclusion.  Most  prominent  is  Mr.  Edwards’  lack  of  knowledge  of  the  amount  of  Sullivan  III  debt  that 
 Glencairn  was  to  assume  (t  he  key  term  of  Sullivan  III  transaction).  He  was  responsible  for  signing  the 
 merger  agreement  between  his  company  and  SBH.  The  fact  that  Edwards  was  ignorant  of  the  most 
 import  ant  term  of  the  Sullivan  III  deal  indicates  that  he  was  not  actively  involved  in  the  corporate 
 management  of  Glencairn  with  respect  to  these  transactions.  Edwards  pleads  that  his  subordinates 
 were  in  charge  of  negot  iat  ing  the  Sullivan  III  deal  and  establishing  the  exact  amount  of  debt  to  be 
 assumed.  However,  it  was  Edwards  who  signed  the  agreements,  and  his  ignorance  of  the  substantial 
 liabilit  y  to  which  he  was  committ  ing  his  company  st  rongly  indicat  es  his  lack  of  cont  rol  of  Glencairn 
 during  the  Sullivan  III  transaction. 


 24.  Furt  her,  the  st  ruct  uring  of  the  Sullivan  III  transaction  to  allow  Sinclair  to  pay  almost  all  of 
 t  he  purchase  price  of  the  Sullivan  III  stations  and  Glencairn  to  obtain  these  stations  at  a  small  fraction 
 of  their  value  underscores  the  fact  that  it  was  Sinclair,  and  not  Edwards,  that  made  the  decision  as  to 


 24  See,  e.  g.,  Galesburg  Broadcasting  Company,  6  FCC  Rcd  2210  (1991). 


 25  See,  e.  g.,  SBC  Communications,  FCC  01-  308  (Oct.  16,  2001)  n.  67;  Southern  California  Broadcasting, 
 6  FCC  Rcd  4387  (1991). 
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 what  st  at  ions  Glencairn  should  acquire  and  at  what  price.  Furt  hermore,  the  Sullivan  III  deal  was 
 st  ruct  ured  so  that  Sinclair  would  be  the  holder  of  the  Sullivan  III  promissory  note,  creating  a  debtor-creditor 
 relationship  between  Glencairn  and  Sinclair.  This  debtor-  creditor  relationship  was  not 
 permitted  under  the  Commission's  then-  existing  policy  on  television  LMAs,  which  permitted  a 
 time  broker  and  licensee  to  have  an  LMA  and  one  additional  relationship  linking  the  broker  and 
 licensee,  such  as  a  loan  or  an  option  to  purchase  the  station.  26  Since  Sinclair  held  an  option  to 
 acquire  Glencairn’s  stations  in  addition  to  an  LMA  of  those  stations,  it  was  not  permitted  to  have 
 a  third  financial  arrangement  with  Glencairn. 


 25.  While  Glencairn  and  Sinclair  argue  that  this  type  of  transaction  was  allowed  in  the 
 Burns  Decision,  that  decision  was  taken  by  the  staff  and  is  not  yet  final  because  an  Application  for 
 Review  of  that  decision  was  filed  and  remains  pending.  Therefore,  we  have  not  yet  decided  whether 
 the  staff’s  ruling  was  correct  and  it  is  not  binding  precedent  upon  the  Commission.  Second,  assuming 
 it  is  correct,  the  Burns  Decision  is  distinguishable,  because  in  that  case  the  second  part  of  the 
 t  ransact  ion,  which  involved  the  sale  of  cert  ain  st  at  ions  to  Colins,  was  negot  iat  ed  several  mont  hs  aft  er 
 Pappas  entered  into  its  original  agreement  to  purchase  other  stations  in  the  same  market.  In  addition, 
 the  staff  found  that  Colins  had  the  ability  to  reject  the  terms  of  the  agreement  and,  if  needed,  could  self-finance 
 the  acquisition  of  its  station.  Conversely,  the  instant  transaction  was  one  large  package 
 st  ruct  ured  by  Sinclair  in  such  a  way  as  to  indicat  e  that  Sinclair  was  the  part  y  cont  rolling  the  transact  ion. 


 26.  In  addition,  we  must  consider  Edwards’  agreement  to  sell  all  but  two  of  Glencairn’s 
 t  elevision  st  at  ions  to  Sinclair  immediat  ely  following  adopt  ion  of  the  new  mult  iple  ownership  rules. 
 While  we  tradit  ionally  do  not  examine  the  purchase  price  in  a  st  at  ion  sale,  we  will,  as  here,  consider 
 such  matters  where  it  appears  from  other  facts  that  the  arrangement  may  not  have  been  an  arms-  length 
 transaction  between  the  parties.  Even  assuming  Rainbow’s  conservative  approach  to  determining 
 value,  there  is  no  question  that  Edwards  agreed  to  sell  Glencairn’s  stations  for  a  small  fraction  of  their 
 value.  In  a  similar  vein,  Edwards  allowed  Glencairn’s  proposed  acquisit  ion  of  KOKH-  TV,  Oklahoma 
 City,  Oklahoma,  to  be  terminated  thereby  permitting  Sinclair  to  acquire  it  consistent  with  the  new 
 t  elevision  duopoly  rule.  While  Glencairn  maint  ains  that  this  was  done  to  reduce  the  amount  of  Sullivan 
 III  debt  that  it  was  assuming,  we  do  not  believe  that,  absent  immediat  e  and  pressing  financial  dist  ress,  a 
 reasonable  businessman  would  allow  his  company  to  walk  away,  uncompensated,  from  the  bargain 
 such  a  deal  represented  and  allow  another  company  to  take  its  place.  Glencairn  has  made  no  such 
 claim  of  financial  distress. 


 27.  We  find  that  the  combination  of  facts  we  have  noted  here  demonstrates  that,  with  respect 
 to  the  instant  transaction  between  Glencairn  and  Sinclair,  Edwards  was  not  in  control  of  Glencairn  and 
 passively  permitted  Sinclair  to  dictate  the  terms  and  conditions  of  the  deal.  As  a  result,  Edwards  ceded 
 control  to  Sinclair  in  violation  of  310(  d)  of  the  Communications  Act. 


 26  See  Public  Notice,  “Processing  of  Applications  Proposing  Local  Marketing  Agreements,”  Report  No. 
 54161,  released  June  1,  1995  (LMA  Public  Notice). 
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 Federal  Communications  Commission  FCC  01  -336 
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 28.  As  for  Mr.  Edwards’  misstatement  of  the  amount  of  the  Sullivan  III  stations  debt,  we 
 find  that  the  allegation  that  such  misstatement  rises  to  the  level  of  misrepresentation  is  not 
 supported  by  the  record  in  this  case.  There  is  no  evidence  of  any  attempt  by  Mr.  Edwards  to 
 intentionally  mislead  the  Commission  or  to  conceal  the  mistake.  Given  Glencairn’s  disclosure  of 
 its  mistake,  Mr.  Edwards’  misstatement  as  to  the  extent  of  the  Sullivan  III  debt  does  not,  as 
 argued  by  Kelley  and  Rainbow,  raise  a  substantial  and  material  question  of  fact  as  to  whether 
 Glencairn  intended  to  deceive  the  Commission  by  its  misstatement.  The  intent  to  deceive  is  a 
 necessary  element  for  us  to  find  that  a  question  of  misrepresentation  has  been  raised.  27  Thus,  we 
 do  not  believe  that  such  a  misstatement  rises  to  a  question  of  misrepresentation  separately 
 warranting  either  a  forfeiture  or  designation  for  hearing  of  the  above-  captioned  applications.  We 
 remind  Glencairn,  however,  that  accuracy  in  filings  made  to  the  Commission  is  an  extremely 
 important  matter  that  demands  strict  care  and  attention  by  all  applicants  and  it  should  take  care  to 
 ensure  that  Commission  filings  made  in  the  future  are  accurate  and  complete. 


 C.  Forfeiture 
 29.  With  respect  to  this  violation,  pursuant  to  Section  503(  b)  of  the  Communications  Act, 
 we  hereby  advise  Sinclair  and  Glencairn  of  their  apparent  liability  for  a  forfeiture  each  of  Forty 
 Thousand  Dollars  ($  40,000).  This  amount  was  determined  after  consideration  of  the  factors  set 
 forth  in  Section  503(  b)(  2)  of  the  Communications  Act,  taking  into  account  the  nature, 
 circumstances,  extent  and  gravity  of  the  violations.  The  base  forfeiture  amount  for  unauthorized 
 transfer  of  control  as  set  forth  in  the  Commission’s  Forfeiture  Policy  Statement  28  and  Section 
 1.80(  b)(  4)  of  the  Commission’s  Rules  29  is  $8,000  which  may  be  adjusted  upward  in  the  case  of 
 repeated  or  continuous  violations.  30  We  find  that  the  violations  in  this  case  were  repeated  in  that 
 they  occurred  with  respect  to  the  five  Sullivan  III  stations  that  initially  Glencairn  was  seeking  to 
 acquire.  In  addition,  each  day  of  an  unauthorized  transfer  constitutes  a  separate  offense.  31 
 Therefore,  we  find  that  an  increase  in  the  base  amount  to  $40,000  is  appropriate. 


 30.  With  respect  to  this  forfeiture  proceeding,  Sinclair  and  Glencairn  are  each  afforded  a 
 period  of  thirty  (30)  days  from  the  release  date  of  this  order  “to  show,  in  writing,  why  a  forfeiture 


 27  See  Fox  River  Broadcasting,  Inc.,  93  FCC  2d  127,  129  (1983). 
 28  12  FCC  Rcd  17087  (1997),  recon  denied,  15  FCC  Rcd  303  (1999). 
 29  47  C.  F.  R.  §  1.80(  b)(  4). 
 30  With  respect  to  an  unauthorized  transfer  of  control  involving  multiple  stations,  each  station  for  which 
 control  was  transferred  is  a  separate  violation.  See,  e.  g.,  International  Business  Machines,  14  FCC  Rcd  11667, 
 11670  (WTB  1999),  Courtesy  Communications,  14  FCC  Rcd  4198,  4200  (1999). 


 31  See,  e.  g.,  Ensearch  Corp.,  FCC  99-  190,  para.  5  (1999). 
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 penalty  should  not  be  imposed  or  should  be  reduced,  or  to  pay  the  forfeiture.  Any  showing  as  to 
 why  the  forfeiture  should  not  imposed  or  should  be  reduced  shall  include  a  detailed  factual 
 statement  and  such  documentation  and  affidavits  as  may  be  pertinent.”  32 


 D.  River  City  Applications  for  Review 
 31.  In  their  Applications  for  Review  from  the  River  City  proceeding,  Post  and  Pulitzer 
 object  to  the  Sinclair-  Glencairn  relationship  for  reasons  similar  to  those  raised  by  Rainbow  and 
 Kelley  in  this  proceeding.  Essentially,  Post  and  Pulitzer  argue  that  three  past  relationships 
 demonstrate  that  Sinclair  has  controlled  Glencairn  in  past  transactions  –  Sinclair’s  LMA  of 
 Glencairn’s  stations,  Carolyn  Smith’s  interest  in  Glencairn  and  the  establishment  of  the  Glencairn 
 Trusts.  33  Because  the  issues  before  us  in  the  River  City  Applications  for  Review  are  similar  to  the 
 issues  raised  by  Rainbow  and  Kelley  with  respect  to  the  more  recent  Sinclair/  Glencairn 
 transaction,  we  have  considered  them  in  this  proceeding.  However,  we  only  find  evidence  that 
 Sinclair  exercised  de  facto  control  over  Glencairn  with  respect  to  the  instant  transaction.  There  is 
 not  the  same  type  or  aggregation  of  evidence  from  the  River  City  proceeding  as  we  find  here  to 
 support  a  finding  that  an  unauthorized  transfer  of  control  occurred.  Nor  have  Rainbow  and  Kelley 
 demonstrated  that  it  is  likely  that  such  violations  may  continue  in  the  future,  particularly  in  light  of 
 Edwards’  departure  and  the  assumption  of  control  of  Glencairn  by  Carolyn  Smith. 


 32.  We  agree  with  the  staff’s  ruling  that  the  existence  of  the  past  relationships  decried  by 
 Post  and  Pulitzer  does  not  separately  support  the  allegations  they  advanced.  Post  and  Pulitzer 
 once  again  maintain  that  the  LMAs  between  Sinclair  and  Glencairn’s  stations  provided  Sinclair 
 with  a  “meaningful  interest”  in  two  television  stations  that  serve  the  same  market  in  violation  of 
 the  then  existing  cross  interest  policy.  34  However,  as  the  staff  found,  at  that  time,  LMAs  were  not 
 considered  under  the  cross-  interest  policy.  35  Furthermore,  we  agree  with  the  staff's  finding  that 
 Glencairn’s  decision  to  enter  into  LMAs  with  Sinclair-  owned  stations  did  not  by  itself  constitute 
 unauthorized  transfers  of  control.  36  Morever,  there  was  no  other  evidence  in  the  River  City 
 proceeding  to  suggest  that  the  LMA,  either  in  form  or  practice,  violated  the  Commission’s  rules 
 or  resulted  in  Sinclair  exercising  de  facto  control  over  Glencairn. 


 32  47  C.  F.  R.  §  1.80(  f)(  3).  A  courtesy  copy  of  such  showing,  if  any,  should  be  mailed  to  the  Chief,  Video 
 Services  Division,  Mass  Media  Bureau,  Federal  Communications  Commission,  445  12th  Street,  S.  W.,  Washington, 
 DC  20554. 


 33  Glencairn  and  Sinclair  filed  oppositions  to  the  Applications  for  Review. 


 34  See  Reexamination  of  the  Commission’s  Cross-  Interest  Policy,  Report  and  Order,  4  FCC  Rcd  2208 
 (1988). 
 35  River  City  Decision  at  4. 


 36  See  WGPR,  Inc.,  10  FCC  Rcd  8140,  8141  (1995). 
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 33.  Post  further  argues  that  the  overlapping  family  ownership  structure  plainly 
 demonstrates  that  both  Sinclair  and  Glencairn  are  “Smith-  family  enterprises.”  Rainbow  also 
 argues  that  this  point  is  further  strengthened  by  the  fact  that,  following  the  proposed  Glencairn  re-structuring, 
 Carolyn  Smith  will  be  its  100%  voting  shareholder.  We  find  that  the  staff  correctly 
 determined  based  upon  the  record  then  before  it  that  Mr.  Edwards  was  shown  to  be  in  control  of 
 Glencairn  at  the  time  this  issue  was  first  raised  in  1994.  37  At  that  time,  the  staff  also  found  that 
 Carolyn  Smith’s  prior  active  involvement  in  television  station  ownership  and  her  financial 
 independence  from  the  Smith  brothers  belied  a  suggestion  that  she  would  be  under  the  control  of 
 Sinclair.  38 


 34.  Furthermore,  after  a  complete  review  of  the  record  of  this  case,  we  find  that  Rainbow 
 has  failed  to  raise  a  substantial  and  material  question  of  fact  that  a  Carolyn  Smith-  controlled 
 Glencairn  will  not  operate  independently  in  the  future.  The  Commission  has  previously  stated  that, 
 where  family  members  are  involved,  a  petitioner  attempting  to  demonstrate  a  lack  of 
 independence  between  broadcast  entities,  has  a  heavy  burden,  because  even  independent  family 
 relationships  may  have  financial  or  business  ties  which  would  ordinarily  be  persuasive  indicia  of 
 common  control  or  real-  party  status  in  non-  family  situations.  39  Rainbow  has  not  met  this  heavy 
 burden.  The  only  evidence  that  Rainbow  raises  to  support  this  allegation  is  the  fact  that 
 Glencairn’s  stations  will  continue  to  be  operated  by  Sinclair  pursuant  to  LMAs.  However,  we 
 have  previously  found  that  the  Sinclair/  Glencairn  LMAs  complied  with  the  Commission’s  rules.  40 
 There  is  no  evidence  to  suggest  a  different  conclusion  in  this  case  other  than  Rainbow’s 
 conjecture.  In  prior  cases  raising  the  issue  of  independence  of  family-  owned  broadcast  stations, 
 the  Commission  rejected  such  arguments  where  the  record  contained  similar  connections  among 
 related  licensees.  41  Should  evidence  be  produced  in  subsequent  proceedings  to  demonstrate 
 otherwise,  we  will  give  it  appropriate  consideration. 


 37  1994  Letter  at  4. 


 38  Id. 
 39  See  Cannon’s  Point  Broadcasting  Co.,  93  FCC  2d  643,  654-  55  (Rev.  Bd.  1983)(  no  real-  party-  in-interest 
 issue  based  merely  on  financial  and  business  ties  among  family  members);  Clarification  of  Commission 
 Policies  Regarding  Spousal  Attribution,  7  FCC  Rcd  1920,  1922-  23  (1992). 


 40  Under  the  Commission’s  new  attribution  policy,  new  LMAs  are  now  attributable  and  entities  seeking 
 to  enter  into  new  LMA’s  must  comply  with  the  Commission’s  new  attribution  and  multiple  ownership  rules.  See 
 Review  of  the  Commission’s  Regulations  Governing  Attribution  of  Broadcast  and  Cable/  MDS  Interests,  MM 
 Docket  No.  94-  150,  Report  and  Order,  14  FCC  Rcd  12559  (1999),  recon.  granted  in  part,  16  FCC  Rcd  1097 
 (2000),  appeal  pending  (Attribution  Order).  Entities  such  as  Sinclair  and  Glencairn,  with  existing  LMAs,  were 
 afforded  certain  grandfathering  rights  that  allowed  them  to  continue  their  existing  LMAs  for  certain  limited 
 periods  of  time  depending  on  when  the  LMA  was  executed. 


 41  Kern  Broadcasting  Corporation,  10  FCC  Rcd  6584,  6587  (1995)  (facts  alleged  by  petitioner  similar  to 
 other  cases  where  Commission  found  that  family  relationship  did  not  raise  real-  party-  in-  interest  issues);  Cannon’s 
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 35.  Finally,  Post  and  Pulitzer  focus  on  certain  trusts  established  for  the  benefit  of  the 
 minor  children  of  the  Smith  brothers.  In  1995,  Carolyn  Smith  established  four  separate 
 irrevocable  trusts  (Trusts)  for  her  grandchildren  –  the  minor  children  of  the  Smith  brothers.  These 
 Trusts  hold  90%  of  the  non-  voting  equity  of  Glencairn.  Rainbow  argues  that,  on  a  going  forward 
 basis,  the  Trust  relationship  diminishes  all  incentive  for  Sinclair  to  pit  one  station  in  competition 
 against  the  other.  We  agree  with  the  staff’s  finding  in  the  River  City  proceeding  that  the 
 establishment  of  the  Trusts  should  not  have  resulted  in  Glencairn’s  stations  being  attributed  to 
 Sinclair.  The  staff  agreed  with  Glencairn  that  the  Trusts,  which  involved  non-  voting  Glencairn 
 stock,  were  established  by  Carolyn  Smith,  not  for  the  purpose  of  insulation  from  the 
 Commission’s  attribution  rules,  but  rather  for  estate  planning  purposes.  42  This  conclusion  was 
 based  on  the  fact  that  Carolyn  Smith  could  have  held  the  non-  voting  stock  herself,  and  therefore 
 was  not  trying  to  avoid  attribution  by  placing  this  stock  into  trusts  for  her  grandchildren.  With 
 respect  to  the  additional  question  of  whether  the  trustees  were  independent  from  the  grantor  or 
 beneficiaries  of  the  Trusts,  the  staff  correctly  found  that  Carolyn  Smith  did  not  appoint  any  of  the 
 Smith  brothers  as  trustees  of  the  Trusts  and  that  none  of  the  trustees  had  a  familial  relationship 
 with  Mrs.  Smith  or  any  of  her  children  or  grandchildren.  43  Thus,  the  creation  of  the  trusts  does 
 not  give  Sinclair  or  any  of  its  principals  control  of  the  Glencairn  stations.  Nor  do  the  trusts 
 diminish  Glencairn's  incentives  to  compete  with  Sinclair  stations.  Morever,  the  staff  found  that 
 the  Trust  instruments  did  not  provide  that  any  of  the  Smith  brothers  could  directly  accede  to  the 
 Glencairn  non-  voting  stock  interest  contained  in  the  corpus  of  the  Trusts.  If  the  Trusts  retained 
 the  Glencairn  non-  voting  stock  as  part  of  their  corpus  for  the  intended  duration,  the  staff  found 
 that  the  Smith  brothers’  children  will  be  well  past  the  age  of  majority  before  they  have  the  right  to 
 request  withdrawal  of  the  Trust  assets.  Therefore,  the  staff  correctly  concluded  that  the  existence 
 of  the  Glencairn  Trusts  did  not  support  the  allegations  advanced  by  Post  and  Pulitzer. 


 E.  Transfer  of  Control  of  WFBC-  TV,  Anderson,  South  Carolina 
 36.  We  must  dismiss  the  transfer  of  control  application  for  WFBC-  TV,  Anderson,  South 
 Carolina.  Sinclair  submitted  a  showing  with  the  transfer  of  control  application  for  WFBC-  TV 


 ________________________  Point  Broadcasting  Co.,  supra;  KTRB  Broadcasting  Co.,  Inc.,  46  FCC  2d  605  (1974)  (no  real-  party-  in-  interest 


 issue  where  transferee  included  sons  of  broadcasters  in  same  market  who  received  financing  from  their  fathers). 
 42  River  City  Decision  at  5. 


 43  Id.  See  47.  C.  F.  R.  §  73.3555  Note  2(  e).  While  the  staff  did  find  that  at  certain  times  in  the  past 
 certain  trustees  had  performed  various  legal  and  financial  consulting  work  for  the  Smith  brothers,  Sinclair  declared 
 that  the  Smith  brothers  would  not  utilize  these  persons  in  the  future.  Id.  at  6.  The  staff  concluded  that  these  past, 
 occasional  business  relationships  did  not  place  in  doubt  the  future  independence  of  the  trustees.  Id.  Sinclair 
 submitted  a  certification  to  that  effect  and  there  is  no  evidence  of  any  subsequent  dealings  between  the  trustees  and 
 the  Sinclair  brothers. 
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 Federal  Communications  Commission  FCC  01  -336 
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 attempting  to  demonstrate  that  its  ownership  of  more  than  one  television  station  in  the  Greenville-Spartanburg 
 market  would  comply  with  the  new  multiple  ownership  rules.  Sinclair  is  already  the 
 licensee  of  one  station  in  the  Greenville-  Spartanburg  market  -  WLOS(  TV),  Asheville,  North 
 Carolina.  Sinclair  submitted  an  exhibit  in  which  it  found  nine  independently  owned  full  power 
 television  stations  would  remain  in  the  Greenville-  Spartanburg  market  following  its  acquisition  of 
 WFBC-  TV.  However,  one  of  those  stations,  WNEG(  TV),  Toccoa,  Georgia,  which  Sinclair  listed 
 as  independently  owned,  is  commonly  owned  by  Spartan  Communications,  Inc.  (SCI),  the 
 licensee  of  WSPA-  TV,  Spartanburg,  South  Carolina,  another  television  station  in  the  market,  and 
 WNEG(  TV)  is  operated  as  a  satellite  of  WSPA-  TV.  Another  one  of  the  television  stations, 
 WASV-  TV,  Asheville,  North  Carolina,  which  Sinclair  listed  as  independently  owned,  is  currently 
 being  operated  by  SCI  pursuant  to  a  LMA  through  which  SCI  broadcasts  more  than  15%  of  the 
 station’s  weekly  broadcast  hours.  Therefore,  under  the  Commission’s  multiple  ownership  rules, 
 SCI  is  considered  to  have  an  attributable  interest  in  both  WASV-  TV  and  WSPA-  TV  and  these 
 stations  cannot  be  considered  independently  owned.  Given  these  facts,  we  find  that  there  would 
 only  be  seven  independently  owned  full  power  television  stations  in  the  Greenville-  Spartanburg 
 market  following  Sinclair’s  acquisition  of  WFBC-  TV.  Because  its  acquisition  of  a  second 
 television  station  in  the  Greenville-  Spartanburg  market  would  not  comply  with  the  Commission’s 
 new  multiple  ownership  rules,  we  dismiss  as  patently  defective  the  transfer  of  control  application 
 for  WFBC-  TV  pursuant  to  Section  73.3566  of  the  Rules.  44 


 F.  Conditional  Grant 
 37.  While  we  grant  the  above-  captioned  applications,  we  believe  it  appropriate  to 
 condition  the  grants  upon  certain  changes  being  made  to  the  agreements  to  ensure  that  violations 
 of  our  rules  do  not  occur  in  the  future.  First,  there  is  the  LMA  for  the  Sullivan  III  stations  for 
 which  Glencairn  will  be  the  licensee.  This  LMA  was  entered  into  between  Sinclair  and  Sullivan 
 III  and  Glencairn  will  be  assuming  the  LMA  upon  the  closing  on  the  sale  of  the  Sullivan  III 
 stations.  On  March  15,  1999,  the  staff  sent  Glencairn  a  letter  requesting  additional  information 
 concerning  the  LMA.  45  The  Inquiry  Letter  noted  two  provisions  in  the  LMA  that  the  staff  found 
 to  raise  questions  concerning  Glencairn’s  future  control  over  programming.  The  first  provision 
 permitted  Sinclair  to  obtain  specific  performance  of  the  LMA  in  the  event  of  a  material  breach  by 
 the  licensee.  The  staff  found  that  compelling  a  licensee  to  utilize  a  particular  programmer  –  even 
 if  it  is  the  programmer  with  which  it  entered  into  an  LMA  –  violates  the  licensee’s  fundamental 
 right  and  obligation  to  determine  the  type  of  programming  to  be  aired  on  its  station.  While 
 damages  may  be  an  appropriate  remedy  for  a  licensee’s  breach  of  an  LMA,  the  staff  stated  that  a 
 licensee  must  remain  free  to  choose  who  will  program  its  station.  The  second  provision  allowed 
 Sinclair  to  assign  its  rights  and  interests  under  the  LMA  without  prior  written  consent  of  the 


 44  47  C.  F.  R.  §  73.3566. 


 45  See  Letter  from  Chief,  Television  Branch  to  Glencairn  Ltd.,  ref:  1800E1-  LS,  dated  March  15,  1999 
 (Inquiry  Letter). 
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 licensee,  so  long  as  Sinclair  simply  gave  notice  of  any  such  assignment  and  the  assignment  did  not 
 violate  any  laws  or  policies.  The  staff  found  this  clause  objectionable  because  it  allowed  Sinclair 
 to  assign  the  LMA  to  any  qualified  entity,  regardless  of  whether  the  licensee  approved  of  the  new 
 programmer.  Once  again,  the  staff  concluded  that  such  a  provision  appeared  to  deprive  the 
 licensee  of  control  over  programming  by  granting  Sinclair  the  ultimate  power  to  decide  who  will 
 program  the  stations.  The  staff  requested  those  provisions  be  removed  or  suitably  amended. 
 Therefore,  to  ensure  that  such  action  is  taken,  we  condition  our  grant  of  the  transfer  of  the 
 Sullivan  III  stations  to  Glencairn  upon  Glencairn  submitting,  within  five  days  of  the 
 consummation  of  that  transaction,  an  affidavit  attesting  to  the  fact  that  the  LMA  provisions  set 
 forth  in  the  March  15,  1999  letter  have  been  removed  or  suitably  amended. 


 38.  Furthermore,  the  Sullivan  III/  Glencairn  merger  agreement  appeared  to  indicate  that 
 Glencairn  would  be  assuming  the  Sullivan  III  promissory  note  of  which  Sinclair  is  currently  the 
 holder.  Glencairn  has  indicated  that  it  intends  to  satisfy  this  promissory  note  at  the  closing  of  the 
 Sullivan  III/  Glencairn  merger  by  securing  additional  financing  from  Chase  Manhattan.  However, 
 the  terms  of  Glencairn’s  existing  Chase  Manhattan  Credit  Agreement  do  not  permit  the  extension 
 of  additional  financing.  Sinclair's  creditor  relationship  with  Glencairn,  combined  with  its  ongoing 
 brokerage  of  Glencairn's  stations  pursuant  to  LMAs  and  its  existing  option  to  purchase 
 Glencairn's  stations,  is  of  particular  concern  in  this  case,  where  we  have  already  determined  that 
 an  unauthorized  transfer  of  control  has  taken  place  between  the  parties.  Given  these  unique 
 circumstances,  we  find  that  Sinclair's  retention  of  a  creditor  relationship  with  Glencairn  would  not 
 be  appropriate.  We  therefore  will  require  that  Glencairn  satisfy  the  Sullivan  III/  Sinclair 
 promissory  note  at  the  closing  of  this  transaction  and  that  any  debt  it  incurs  to  do  so  be  held  by 
 parties  separate  from  and  independent  of  Sinclair.  Further,  we  will  require  that  Glencairn,  within 
 five  days  of  such  closing,  supply  the  Commission  with  an  affidavit  from  a  Glencairn  principal 
 attesting  to  the  required  refinancing  of  Sullivan  III/  Sinclair  promissory  note. 


 IV.  CONCLUSION 
 39.  In  view  of  the  foregoing,  and  having  determined  that  the  parties  are  otherwise 
 qualified,  we  find  that  a  grant  of  these  applications  will  serve  the  public  interest,  convenience  and 
 necessity. 


 40.  Accordingly,  IT  IS  ORDERED,  That  the  Petition  to  Deny  filed  by  Kelley  International 
 Licensing,  LLC  IS  GRANTED  TO  THE  EXTENT  INDICATED  HEREIN  AND  DENIED  IN 
 ALL  OTHER  RESPECTS. 


 41.  IT  IS  FURTHER  ORDERED,  That,  the  Petition  to  Deny  and  Petition  to  Deny  and/  or 
 Revoke  Sinclair  and  Glencairn  Licenses  filed  by  Rainbow/  PUSH  Coalition  IS  GRANTED  TO 
 THE  EXTENT  INDICATED  HEREIN  AND  DENIED  IN  ALL  OTHER  RESPECTS. 


 42.  IT  IS  FURTHER  ORDERED,  That,  the  Applications  for  Review  of  Pulitzer 
 Broadcasting  Company  and  Post-  Newsweek  Stations,  San  Antonio,  Inc.,  ARE  DENIED. 
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 22 
 43.  IT  IS  FURTHER  ORDERED,  That,  that  applications  for  transfer  of  control  of 
 Glencairn,  Ltd.,  the  parent  entity  of  Baltimore  (WNUV-  TV)  Licensee,  Inc.,  licensee  of  WNUV-TV, 
 Baltimore,  Maryland,  and  Columbus  (WTTE-  TV)  Licensee,  Inc.,  licensee  of  WTTE-  TV, 
 Columbus,  Ohio,  (File  Nos.  BTCCT-  19991116BEC  &  BEE)  from  Edwin  Edwards,  Sr.  to 
 Carolyn  C.  Smith  ARE  GRANTED. 


 44.  IT  IS  FURTHER  ORDERED,  That,  the  applications  for  transfer  of  control  of  Sullivan 
 Broadcasting  Company  III,  Inc.,  licensee  of  WRGT-  TV,  Dayton,  Ohio;  WTAT-  TV,  Charleston, 
 South  Carolina;  and  WVAH-  TV,  Charleston,  West  Virginia;  (File  Nos.  BTCCT-  19991116BDR 
 –  BDU)  from  Sullivan  Broadcasting  Company  III,  Inc.,  to  Glencairn,  Ltd.  ARE  GRANTED, 
 subject  to  the  condition  that,  within  five  (5)  days  following  consummation  of  this  transaction, 
 Glencairn.  Ltd.  submit  affidavits  in  response  to  the  matters  set  forth  in  paragraphs  37  and  38. 


 45.  IT  IS  FURTHER  ORDERED,  That,  the  application  for  transfer  of  control  of  Sullivan 
 Broadcasting  Company  IV,  Inc.,  licensee  of  KOKH-  TV,  Oklahoma  City,  Oklahoma  (File  No. 
 BTCCT-  19991116BEH)  from  ABRY  Holdings  Co.  to  KOKH  Licensee,  LLC  IS  GRANTED. 


 46.  IT  IS  FURTHER  ORDERED,  That,  the  application  for  transfer  of  control  of 
 Anderson  (WFBC-  TV),  Licensee,  Inc.  (File  No.  BTCCT-  19991116BDP)  from  Glencairn,  Ltd.  to 
 Sinclair  Acquisition  Group  XI,  Inc.  IS  DISMISSED. 


 47.  IT  IS  FURTHER  ORDERED,  That,  the  application  for  transfer  of  control  of  San 
 Antonio  (KRRT-  TV)  Licensee,  Inc.,  licensee  of  KRRT-  TV,  Kerrville,  Texas  (File  No.  BTCCT-19991116BDN) 
 from  Glencairn,  Ltd.  to  Sinclair  Acquisition  X,  Inc.  IS  GRANTED. 


 48.  IT  IS  FURTHER  ORDERED,  That,  the  application  for  transfer  of  control  of  WVTV 
 Licensee,  Inc.,  licensee  of  WVTV-  TV,  Milwaukee,  Wisconsin  (File  No.  BTCCT-  19991116BDX) 
 from  Glencairn,  Ltd.  to  Sinclair  Acquisition  VII,  Inc.  IS  GRANTED. 


 49.  IT  IS  FURTHER  ORDERED,  That,  the  application  for  transfer  of  control  of  Raleigh 
 (WRDC-  TV)  Licensee,  Inc.,  licensee  of  WRDC-  TV,  Durham,  North  Carolina  (File  No.  BTCCT-19991116BCS) 
 from  Glencairn,  Ltd.  to  Sinclair  Acquisition  VIII,  Inc.  IS  GRANTED. 


 50.  IT  IS  FURTHER  ORDERED,  That,  the  application  for  transfer  of  control  of 
 Birmingham  (WABM-  TV)  Licensee,  Inc.,  licensee  of  WABM-  TV,  Birmingham,  Alabama  (File 
 No.  BTCCT-  19991116BDK)  from  Glencairn,  Ltd.  to  Sinclair  Acquisition  IX,  Inc.  IS 
 GRANTED. 


 51.  IT  IS  FURTHER  ORDERED,  That,  the  application  for  assignment  of  license  of  WCWB-TV, 
 Pittsburgh,  Pennsylvania,  from  WPTT,  Inc.,  to  WCWB  Licensee,  LLC  (File  No.  BALCT-19991116AIZ), 
 IS  GRANTED. 
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 Federal  Communications  Commission  FCC  01  -336 
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 52.  IT  IS  FURTHER  ORDERED,  That,  pursuant  to  Section  503(  b)  of  the  Communications 
 Act  of  1934,  as  amended,  and  Sections  0.283  and  1.80  of  the  Commission’s  Rules,  Sinclair 
 Broadcasting  Group,  Inc.,  and  Glencairn,  Ltd.  are  each  hereby  NOTIFIED  of  its  APPARENT 
 LIABILITY  FOR  A  FORFEITURE  in  the  amount  of  forty  thousand  dollars  ($  40,000)  apiece  for 
 violation  of  Section  310(  d)  of  the  Communications  Act  of  1934  and  Section  73.3540  of  the 
 Commission’s  Rules. 


 53.  IT  IS  FURTHER  ORDERED,  That,  pursuant  to  Section  1.  80  of  the  Commission’s  Rules, 
 within  thirty  (30)  days  of  the  release  date  of  this  Notice,  Sinclair  Broadcasting  Group,  Inc.,  and 
 Glencairn,  Ltd.  each  SHALL  PAY  the  full  amount  of  the  proposed  forfeiture  or  SHALL  FILE  a 
 written  statement  seeking  reduction  or  cancellation  of  the  proposed  forfeiture.  Payment  of  the 
 forfeit  ure  may  be  made  by  mailing  a  check  or  similar  inst  rument  ,  payable  to  the  order  of  the  Federal 
 Communicat  ions  Commission,  and  addressed  to  the  Federal  Communicat  ions  Commission,  P.  O.  Box 
 73482,  Chicago,  Illinois  60673-  7482.  The  payment  should  note  the  NAL  numbers  of  this  proceeding 
 (NAL  Nos.  200218420001  (Sinclair)  and  200218420002  (Glencairn),  respectively).  Requests  for  full 
 payment  under  an  installment  plan  should  be  sent  to:  Chief,  Revenue  and  Receivables  Operations 
 Group,  445  12  th  Street,  S.  W.,  Washington,  DC  20554. 


 54.  IT  IS  FURTHER  ORDERED,  That,  a  copy  of  this  Notice  of  Apparent  Liability  for 
 Forfeiture  SHALL  BE  SENT  by  Certified  Mail  –  Return  Receipt  Requested,  to  Sinclair  Broadcasting 
 Group,  Inc.  ’s  counsel  of  record:  Martin  R.  Leader,  Esq.,  Shaw  Pittman,  2300  N  Street,  N.  W., 
 Washington,  DC  20037-  1128;  and  to  Glencairn,  Ltd.  ’s  counsel  of  record:  Howard  A.  Topel,  Esq., 
 Leventhal,  Senter  &  Lerman,  2000  K  Street,  N.  W.,  Washington,  DC  20006. 


 FEDERAL  COMMUNICATIONS  COMMISSION 


 Magalie  Roman  Salas 
 Secretary 
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 Federal  Communications  Commission  FCC  01  -336 
 24 
 STATEMENT  OF 
 COMMISSIONER  MICHAEL  J.  COPPS 
 DISSENTING  IN  PART  AND  APPROVING  IN  PART 


 In  the  Matter  of:  Various  Applications  for  Assignment  of  License  and  Transfer  of  Control  of  Certain 
 Television  Licenses  to  Sinclair  Broadcast  Group,  Inc.  and  Glencairn,  Ltd. 


 Over  the  last  several  years,  Sinclair  Broadcasting  Company  (“  Sinclair”)  has  pursued  a 
 strategy  of  acquiring  interests  in  or  management  of  more  than  one  station  in  each  market  in  which 
 it  has  a  television  station.  In  so  doing,  it  has  continually  pushed  against  the  parameters  of 
 ownership  structures  prohibited  by  the  Commission. 


 With  the  transactions  before  the  Commission  today,  Sinclair  has  crossed  the  line  into 
 behavior  that  the  majority  has  found  to  violate  the  Commission’s  rules.  In  assessing  a  fine  on 
 Sinclair  for  this  violation,  the  majority  purports  to  stop  the  expansion  of  Sinclair’s  forays  into 
 multiple  ownership,  but  in  fact  it  merely  points  out  that  lines  have  been  crossed,  while  allowing 
 Sinclair  to  run  over  these  lines  and  to  continue  its  multiple  ownership  strategy. 


 Background 
 The  first  of  Sinclair’s  forays  into  multiple  television  station  ownership  came  in  1991  when 
 Sinclair  acquired  a  station  in  Pittsburgh  and  sold  its  existing  Pittsburgh  station  to  that  station’s 
 manager  Edwin  Edwards,  a  Sinclair  employee,  on  extremely  favorable  terms.  Sinclair  operated  its 
 new  station  in  Pittsburgh  and  continued  to  program  its  original  station  through  a  Local  Marketing 
 Agreement  (“  LMA”). 


 After  that,  Sinclair  sought  to  acquire  the  stations  of  a  company  that  wanted  to  sell  its  four 
 stations  as  a  group.  Two  of  the  four  stations,  however,  were  in  markets  in  which  Sinclair  already 
 owned  television  stations  and  was  thus  prohibited  from  owning  additional  stations.  Sinclair  again 
 enlisted  Edwards  to  acquire  the  stations  Sinclair  could  not  own.  Because  Edwards  did  not  have 
 the  financial  resources  to  purchase  these  stations,  the  president  of  Sinclair  proposed  that  his 
 mother  finance  the  acquisition.  Carolyn  Smith,  the  mother  of  the  four  owners  of  Sinclair,  and 
 Edwards  established  Glencairn,  the  acquiring  company,  70%  of  the  non-  voting  stock  of  which 
 was  owned  by  Smith  and  30%  by  Edwards.  The  Glencairn  stations,  like  the  Pittsburgh  station, 
 were  operated  through  LMAs  by  the  Sinclair-  owned  stations  in  their  markets. 


 In  1997,  Sinclair  and  Glencairn  again  acquired  a  station  group  in  tandem.  This  transaction 
 involved  the  acquisition  by  Sinclair  of  stations  in  Asheville  and  San  Antonio  and  the  acquisition  by 
 Glencairn  of  an  additional  station  in  each  of  those  markets.  These  new  Glencairn  stations,  like  the 
 others,  would  be  operated  through  LMAs  by  the  Sinclair-  owned  stations  in  these  markets.  At  the 
 same  time,  Carolyn  Smith  transferred  her  ownership  interest,  now  90%  of  the  equity  in  Glencairn, 
 to  trusts  for  her  grandchildren  –  the  minor  children  of  the  four  brothers  who  own  Sinclair. 
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 Federal  Communications  Commission  FCC  01  -336 
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 Applications  for  Review  of  these  decisions  filed  by  Pulitzer  Broadcasting  and  Post-  Newsweek 
 Stations  are  before  the  Commission  today. 


 Finally,  in  the  transactions  before  the  Commission  today,  Sinclair  and  Glencairn  in  1998 
 filed  applications  for  the  stations  owned  by  Sullivan.  As  the  deal  was  initially  structured,  Sinclair 
 would  acquire  five  stations  –  in  Buffalo;  Madison;  Richmond;  Winston-  Salem  and  Nashville,  while 
 Glencairn  acquired  five  stations  –  in  Dayton;  Charleston,  South  Carolina;  Charleston,  West 
 Virginia;  Oklahoma  City  and  Bluefield,  West  Virginia.  Unlike  the  last  transaction,  these  were  not 
 separate  acquisitions  of  stations  by  Sinclair  and  Glencairn.  Rather,  in  these  transactions  Sinclair 
 would  acquire  the  licenses  and  assets  of  five  stations,  as  well  as  the  non-  license  assets  of  the  five 
 stations  to  which  Glencairn  would  acquire  the  license.  Glencairn  would  then  lease  these  stations’ 
 assets  from  Sinclair.  All  of  the  Sullivan  stations  have  been  operating  through  LMAs  with  Sinclair, 
 and  once  transferred  to  Glencairn  these  stations  will  continue  to  do  so.  As  to  these  stations, 
 therefore,  Sinclair  will  own  the  non-  license  assets  and  will  control  the  programming  through 
 LMAs.  The  licenses  themselves  will  be  held  by  a  company,  90%  of  which  is  owned  in  trust  for 
 the  minor  children  of  the  owners  of  Sinclair. 


 In  August  1999,  the  Commission  amended  its  longstanding  television  local  ownership 
 rules  to  permit  one  licensee  to  own  two  television  stations  in  markets  in  which  eight  independent 
 television  voices  remain  after  the  consolidation.  That  decision  also  rendered  LMAs  attributable  as 
 commonly  owned  stations  –  with  limited  grandfathering  of  existing  LMAs  –  and  thus  prohibited 
 LMAs  except  where  and  between  those  stations  that  could  be  commonly  owned  pursuant  to  the 
 revised  duopoly  rules. 


 After  the  Commission’s  decision  in  1999,  Sinclair  and  Glencairn  filed  an  application  to 
 amend  the  pending  application  of  Glencairn  to  acquire  the  station  in  Oklahoma  City,  to  make 
 Sinclair  not  Glencairn  the  acquirer,  as  under  the  new  rules  a  duopoly  would  be  permissible  in 
 Oklahoma  City.  Also  subsequent  to  the  Commission’s  1999  decision,  Glencairn  filed  applications 
 to  sell  to  Sinclair  stations  in  San  Antonio,  Milwaukee,  Durham,  and  Birmingham,  as  these  markets 
 have  sufficient  voices  in  each  market  to  permit  duopolies  pursuant  to  our  rules.  These 
 transactions  are  also  before  the  Commission  today. 


 Discussion 
 In  its  August  1999  modification  of  the  television  local  ownership  rules,  the  Commission 
 permitted  one  licensee  to  own  two  television  stations  in  certain  markets.  In  modifying  these  rules, 
 the  Commission  fully  intended  licensees  to  avail  themselves  of  the  opportunity  presented  by  the 
 rule  change.  As  the  Commission  intended,  Sinclair  has  applied  to  acquire  duopolies  in  those 
 markets  in  which  such  common  ownership  is  permissible.  As  the  Commission  also  could  have 
 anticipated,  Sinclair  has  challenged  the  rules  in  court,  seeking  and  winning  a  stay  of  the 
 requirement  that  it  terminate  its  LMAs  where  such  arrangements  have  been  rendered  violative  of 
 the  rules. 
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 Federal  Communications  Commission  FCC  01  -336 
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 What  makes  Sinclair’s  practices  disquieting,  however,  are  its  maneuvers  to  acquire 
 interests  in  multiple  stations  in  local  markets  in  seeming  contravention  –  if  not  violation  –  of 
 Commission  rules.  While  in  the  past,  Sinclair  has  entered  into  arrangements  with  Glencairn  to 
 acquire  and  manage  multiple  stations  in  local  markets  that  the  Mass  Media  Bureau  has  found  to 
 fall  just  short  of  ownership  arrangements,  the  transactions  presented  here  raise  questions  of  fact 
 requiring  further  investigation. 


 As  petitioners  point  out,  a  number  of  facts  related  to  the  transfer  of  the  Sullivan  stations  to 
 Sinclair  and  Glencairn  call  into  question  whether  Sinclair  is  the  real  party  in  interest  behind 
 Glencairn.  For  example,  Edwards  did  not  know  the  amount  of  debt  that  Glencairn  was  to  assume 
 to  acquire  the  Sullivan  stations.  Whether  Edwards  intended  to  deceive  the  Commission  or  simply 
 was  mistaken  in  his  declaration  to  the  Commission,  that  he  was  ignorant  of  the  most  important 
 term  of  the  transaction  may  call  into  question  whether  he  is  actively  involved  in  the  corporate 
 management  of  Glencairn  and  his  purported  control  of  Glencairn. 


 Further,  there  is  the  question  of  whether  the  Sullivan-  Sinclair-  Glencairn  transaction  was 
 structured  to  allow  Sinclair  to  pay  almost  all  of  the  purchase  price  of  the  Sullivan  stations  and 
 Glencairn  to  obtain  the  Sullivan  stations  it  acquired  at  a  small  fraction  of  their  value.  The  five 
 stations  to  be  acquired  by  Glencairn  were  to  be  sold  for  $8  million.  These  five  stations,  according 
 to  estimates  based  upon  comparable  sales,  should  be  worth  approximately  $90  million.  While  the 
 Commission  traditionally  does  not  examine  the  purchase  price  in  a  station  sale,  it  will  consider 
 such  matters  if  there  is  reason  to  suspect  the  parties  have  attempted  a  sham  transaction  in  order  to 
 avoid  compliance  with  rules. 


 If  these  facts  regarding  the  structure  and  value  of  the  transaction  were  the  case,  it  would 
 call  into  question  whether  Glencairn  is  a  truly  independent  company  or  whether  Sinclair  was 
 making  decisions  about  what  stations  Glencairn  should  acquire  and  at  what  price.  Furthermore, 
 until  modified  after  being  questioned  by  FCC  staff,  the  Sullivan-  Sinclair-  Glencairn  deal  was 
 structured  so  that  Sinclair  would  be  the  holder  of  the  promissory  note  on  Glencairn’s  purchase  of 
 the  Sullivan  stations,  in  violation  of  the  Commission’s  existing  policy  on  television  LMA’s. 


 In  addition,  Glencairn’s  proposed  sale  of  all  but  two  of  its  existing  television  stations  to 
 Sinclair  immediately  following  adoption  of  the  new  multiple  ownership  rules  raises  questions 
 about  its  control  of  these  stations  prior  to  those  sales.  This  raises  questions  of  whether  these 
 stations  were  merely  owned  by  Glencairn  but  controlled  by  Sinclair  until  such  time  as  Sinclair 
 could  own  them  under  our  revised  multiple  ownership  rules.  In  addition,  Glencairn  is  not  to 
 receive  cash  for  the  sale  of  its  stations  but  rather  Sinclair  stock,  which  would  further  tie  the  two 
 companies  together  financially.  These  facts  call  into  question  Glencairn’s  independent  decision 
 making  ability. 


 Finally,  Glencairn  terminated  its  proposed  acquisition  of  the  station  in  Oklahoma  City 
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 Federal  Communications  Commission  FCC  01  -336 
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 when  Sinclair  was  able  to  acquire  it  under  the  new  television  duopoly  rule.  While  Glencairn 
 maintains  that  this  was  done  to  reduce  the  amount  of  debt  that  it  was  assuming,  it  is  questionable 
 why  an  independent  company  such  as  Glencairn  would  walk  away  from  such  a  deal  without 
 compensation  company  could  take  its  place. 


 Though  the  decision  of  the  majority  imposes  a  forfeiture  on  Sinclair  and  Glencairn,  it 
 nonetheless  allows  all  but  one  of  the  transactions  at  issue  to  go  forward  with  minor  changes. 
 While  the  majority’s  finding  that  an  illegal  transfer  of  control  occurred  is  an  important  step  toward 
 curtailing  Sinclair’s  –  and  any  future  licensee’s  –  attempts  to  circumvent  the  Commission’s  local 
 ownership  rules,  it  does  not  go  far  enough. 


 The  assessment  of  a  fine  combined  with  the  approval  of  the  transfers  at  issue  is 
 incongruous.  The  finding  that  an  illegal  transfer  of  control  occurred  at  least  raises  questions 
 about  the  control  of  Glencairn  on  an  ongoing  basis,  and  about  the  independence  of  Glencairn  from 
 Sinclair  once  Glencairn  is  controlled  by  the  mother  of  Sinclair’s  owners  and  owned  in  trust  for 
 their  minor  children.  These  questions  require  designation  for  hearing. 


 With  each  transaction  over  the  years,  Sinclair  has  stretched  the  limits  of  the  Commission’s 
 local  television  ownership  rules.  In  each  of  several  transactions  that  have  come  before  it,  the 
 Mass  Media  Bureau  has  reviewed  the  transaction  and  the  Petitions  to  Deny  filed  alleging  illegal 
 transfers  of  control,  and  has  permitted  the  transaction  to  go  through.  The  transactions  before  the 
 Commission  today  raise  issues  that  prompted  the  majority  to  find  that  there  has  been  an  illegal 
 transfer  of  control  and  to  assess  a  fine.  But  the  Commission  nonetheless  has  allowed  the 
 transaction  to  go  through  without  further  review.  Each  transaction  moves  the  line  to  which  all  of 
 our  licenses  are  subject.  And  this  decision  moves  it  further  still. 


 If  anyone  wonders  how  Sinclair  will  next  push  against  the  Commission’s  rules,  recent 
 press  reports  may  give  us  a  preview.  Reportedly,  Sinclair’s  NBC  affiliate  in  Tallahassee  has 
 combined  its  operations  with  the  ABC  affiliate  in  that  market.  Because  the  ABC  affiliate  retains 
 control  of  its  programming,  Sinclair  asserts  in  the  press  that  this  relationship  is  consistent  with 
 FCC  rules,  including  the  attribution  of  Local  Marketing  Agreements  as  common  ownership.  I 
 hope  that  the  Commission  will  investigate  this  relationship  for  consistency  with  our  local 
 television  ownership  rules. 


 Conclusion 
 I  therefore  dissent  from  the  grants  of  applications  for  transfers  of  the  licenses  to  various 
 television  stations  to  Glencairn  and  Sinclair.  Because  the  relationship  between  Sinclair  and 
 Glencairn  and  the  ownership  and  control  of  Glencairn  raise  a  number  of  questions  of  fact  related 
 to  these  transactions,  I  believe  that  we  cannot  grant  these  applications  without  further  review.  I 
 therefore  dissent  from  the  majority’s  decision  not  to  designate  these  applications  for  a  hearing. 
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 Federal  Communications  Commission  FCC  01  -336 
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 In  addition,  I  dissent  from  the  denial  of  the  Applications  for  Review  filed  by  Pulitzer 
 Broadcasting  and  Post-  Newsweek  Stations.  Given  the  finding  of  illegal  transfer  of  control  of 
 Glencairn  to  Sinclair,  and  the  outstanding  questions  of  fact  regarding  independence  of  Glencairn,  I 
 believe  that  these  transactions  should  be  reviewed  and  designated  for  hearing.  In  addition,  the 
 issues  related  to  Sinclair’s  control  of  Glencairn  and  the  subsequent  transfer  of  legal  control  of 
 Glencairn  to  Carolyn  Smith  raise  questions  regarding  the  transfer  of  Carolyn  Smith’s  ownership  of 
 Glencairn  to  trusts  for  her  grandchildren  such  that  these  transfers  should  similarly  be  reviewed. 


 I  approve  the  decision  of  the  majority  to  the  extent  that  it  finds  that  an  illegal  transfer  of 
 control  occurred  vis-  à-  vis  Sinclair’s  control  of  Glencairn.  I  also  approve  the  assessment  of  a 
 forfeiture  on  Sinclair  and  Glencairn,  as  well  as  the  decision  of  the  majority  to  deny  the  transfer  of 
 WFBC  in  Anderson,  South  Carolina  from  Glencairn  to  Sinclair. 
28