FCC 92·28 Federal Communications Commission Record 7 FCC Red No. 3 Before the Federal Communications Commission Washington, D.C. 20554 MM Docket No. 89-470 In re Applications of F.E.M. RAY, INC. PLAYA DEL SOL BROADCASTERS For a Construction Permit for a New FM Station, File No. BPH-870515NL File No. BPH-870515NX Channel 281A in Tucson, Arizona MEMORANDUM OPINION AND ORDER Adopted: January 21, 1992; Released: January 27, 1992 By the Commission: I. INTRODUCTION l. Before the Commission for consideration is a Review Board decision. F.E.M. Ray. Inc., 6 FCC Red 4238 (Rev. Bd. 1991 ), granting the application of F.E.M. Ray, Inc. (FEM Ray) for a new FM radio station in Tucson. Ari­ zona. and denying the mutually exclusive application of Playa Del Sol Broadcasters (Playa). See also. F.E.M. Rav. Inc .. 6 FCC Red 573 (I.D. 1991). We agree with the Board's resolution of this case. We wish. however. to comment on certain matters. 1 II.BACKGROUND 2. The Board. affirming an initial decision by Admin­ istrative Law Judge Edward J. Kuhlmann. granted the application of FEM Ray, finding it comparatively superior to the application of Playa based on the integration and diversification criteria. FEM Ray proposes integration of all its voting stockholders and has no media interests. whereas Playa's sole principal. Edward Stolz. proposes no integration and has media interests. The Board rejected Playa 's contentions that it was entitled to dispositive com­ parative credit for its superior coverage area and Stolz"s purportedly superior broadcast record as the owner of KWOD(FM) in Sacramento. California.2 The Board held that, even if Playa were awarded comparative credit on these bases, it could not prevail over FEM Ray. Therefore. the Board concluded that FEM Ray was the compara­ tively superior applicant. F.E.M. Ray. 6 FCC Red at 4238 11 5. 3. The Board also rejected Playa·s contention that finan­ cial, misrepresentation, lack of candor and reporting is­ sues should be added against FEM Ray. The Board found that Playa failed to raise substantial and material ques.tions of fact sufficient to enlarge the issues against FEM Ray. Specifically. the Board found that the record does not support Playa's claims that FEM Ray relied on Greg 848 Cutchall as its primary source of funding, that FEM Ray became financially unqualified because Cutchall's loan commitment is no longer valid, and that FEM Ray failed to report the loss of its financing pursuant to 47 C.F.R. § 1.65. The Board found that FEM Ray has reasonable assurance of committed funding to construct and operate the proposed station and therefore is financially qualified. 6 FCC Red at 4238 11 7, 4239-40 ~~ 8-9. III. FEM RA Y'S FINANCIAL PROPOSAL 4. Playa argues that the Board erred by refusing to add the requested issues against FEM Ray. Playa again con­ tends that FEM Ray's financial certification was primarily based on a loan from Greg Cutchall. who later could not meet court ordered payments in a divorce proceeding. Furthermore. Playa contends that FEM Ray principal Francine Rienstra admitted that it was necessary to re­ place Cutchall's loan in order to maintain FEM Ray's financial qualifications. raising questions as to whether or for how long FEM Ray was financially unqualified before it took steps to secure replacement funding. Playa also asserts that FEM Ray's failure to report these matters to the Commission requires the addition of candor and re­ porting issues. 5. We agree with the Board that Playa has failed to meet its burden of making a prima facie showing in order to justify the addition of financial, misrepresentation and candor issues against FEM Ray. See e.g., Priscilla L. Schwier. 4 FCC Red 2659. 2660 ~ 7 ( 1989). Playa 's con­ tentions are based on speculation. Pfaya has failed to make specific allegations of fact. supported by affidavits. sufficient to warrant the addition of issues. See Schwier, 4 FCC Red at 2660 11 7. 6. Although Playa does not contend that FEM Ray was unqualified when it made its financial certification. Playa asserts. based on its reading of Rienstra\ hearing testi­ mony and declarations. that FEM Ray relied on Cutchall's loan to certify its financial qualifications and that it was necessary to replace this loan commitment in order to maintain FEM Ray's financial qualifications. However. contrary to Pia ya 's assertion. Rienstra ·s declara­ tions state that FEM Ray certified its financial qualifica­ tions based on funds committed by its stockholders exceeding its costs by approximately $18.000. See Rienstra declarations, May 23, 1990, ~ 3; July 18. 1990. 11~ 2-3. According to Rienstra. Cutchall's loan commitment was a cushion, in the event that the station required additional funding in order to operate after the initial three month period covered by its certification. Rienstra declaration. May 23, 1990, ~ 3. The pages of the hearing transcript cited by Playa are consistent with Rienstra·s declarations, merely attesting that Cutchall's loan commitment is still viable and that another individual has also made a loan commitment to FEM Ray. Tr. at 894-95. Playa has not made any showing to refute these assertions. Contrary to Playa's speculation, the fact that FEM Ray secured a new loan does not demonstrate that Cutchall's loan was the primary basis of FEM Ray"s financial certification. 7. Additionally. even assuming that Cutchall's loan commitment is now required to maintain its financial qualifications. Playa fails to show that Cutchall is unable to meet his loan commitment. Although. as Playa ob­ serves, Cutchall did not make the payments ordered in his divorce proceeding, Playa provides no evidence as to why he did not do so or otherwise demonstrate the relevance 7 FCC Red No. 3 Federal Communications Commission Record FCC 92-28 of that circumstance to this proceeding. In this regard, the fact that FEM Ray obtained an additional loan commit­ ment does not imply that FEM Ray otherwise lacked adequate financin~. Playa's contentions to the contrary are mere speculation. IV. ORDER 8. ACCORDINGLY, IT IS ORDERED, That the Ap­ plication for Review filed August 14, 1991 by Playa de! Sol Broadcasters IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Donna R. Searcy Secretary FOOTNOTES 1 Now before the Commission are an application for review filed August 14, 1991 by Playa and an opposition filed August 21. 1991 by FEM Ray. In its opposition, FEM Ray seeks ex­ pedited consideration of Playa·s application for review. We note that the Commission has committed itself to expeditious consid­ eration of applications for review in routine adjudicatory pro­ ceedings and thus we have acted accordingly in this case. See Proposals to Reform the Commission's Comparative Hearing Pro­ cess to Expedite the Resolution of Cases, 6 FCC Red 157. 104 ~ 50 ( 1990). 2 Specifically. the Board found that Playa is entitled only to a very slight to slight preference for its proposed greater coverage area, since. as Playa concedes, both applicants will provide new service to areas and populations that already receive five or more aural services. The Board also found that Playa would not be entitled to full credit for Stolz's broadcast record ·even if it were deemed superior. since Stolz does not propose to be in­ tegrated into the day-to-day management of the Tucson station. 6 FCC Red at 4238 ~ 4. We agree with the Board. See Omaha TV 15, Inc., 4 FCC Red 730, 735 ~ 38 ( 1989). Therefore. there is no relevance in Playa's present contentions that the Commission should take official notice of the finding in the KWOD(FM) comparative renewal proceeding, Royce International Broadcast­ ing, 4 FCC Red 7139, 7142-44 (Rev. Bd. 1989)(subsequent history omitted). that Stolz had an exemplary broadcast record and that this circumstance should be treated as a threshold showing sufficient to entitle Playa to claim comparative credit for an unusually good past broadcast record. 3 Likewise. we reject Playa's contention that the addition of a financial issue is appropriate because Rienstra stated that one of FEM Ray's stockholders had decided to withdraw as an active participant for financial reasons. The testimony Playa relies on in this regard indicates that the stockholder has paid FEM Ray $1.000, has committed to a loan for $1,000 more, and that FEM Ray can ask the stockholder to honor the loan commitment if the funds are necessary. Tr. Q38-40. Absent affidavits or docu­ mentation raising a substantial and material question of fact concerning the need for this investor's remaining $1.000 com­ mitment, Playa's allegations are based on speculation and do not warrant further consideration. See Washoe Shoshone Broadcast­ ing, 5 FCC Red 5561, 5562 ~ 10 ( 1990). Playa also contends that FEM Ray's financial qualifications are in question because an­ other of its stockholders is involved in a bankruptcy and is a 849 defendant in a civil suit based on breach of contract. fraud in the sale of securities and RICO. However, Playa has not dem­ onstrated that the fact of the bankruptcy and lawsuit have affected FEM Ray's financial qualifications. FEM Ray asserts that this stockholder has satisfied her financial •commitment, and Playa offers no evidence disputing this assertion. See Rienstra declaration, July 18, 1990. ~ 7. Furthermore, to the extent that Playa suggests that FEM Ray had an obligation to report the pending lawsuit. we note that Playa has not dem­ onstrated that the outcome of the litigation would make a material difference in FEM Ray's finances or would be of decisional significance in determining FEM Ray's qualifications to be a Commission licensee. See Policy Regarding Character Qualifications in Broadcast Licensing. 5 FCC Red 3252 ( 1990); Policy Regarding Character Qualification in Broadcast Licensing, 102 FCC 2d 1179 ( 1986 ), recon. granted in part, denied in part, 1 FCC Red 421 (1986), appeal dismissed sub nom. National Associ­ ation for Better Broadcasting v. FCC, No. 86-1179 (D.C. Cir. Jun. 11, 1987); Van Buren Community Service Broadcasters, Inc., 87 FCC 2d 1018, 1020 ~ 7 (Rev. Bd. 1981).