FCC 96R·06 Federal Communications Commission Record 11 FCC Red No. 8

Before the Federal Communications Commission

Washington, l>.C. 20554

MM Docket No. 88·306

In re Applications of

Henry R. Malloy, Jr. d/b/a REM MALLOY BROADCASTING

PEEBLES BROADCASTING COMPANY

James S. Lee and Donald L. Baker d/b/a INTERACTIVE MEDIA

BERNARD DAWSON

SPECIAL MARKETS MEDIA, INC.

For Construction Permit for a

File No. BPH-860627MH

File No. BPH-860703ME

File No. BPH-860707MS

File No. BPH-860707NW

Fite No. BPH-860703MH

New FM Station on Channel 275A, Raleigh, North Carolina

MEMORANDUM OPINION AND ORDER

Adopted: March 25, 1996; Released: April 5, 1996

By the Review Board: MARINO (Chairman) and GREENE.

1. The Review Board has before it for consideration: ( l) Petition for Leave to Amend filed December 14, 1995, by Bernard Dawson and Triangle FM Broadcasters, LLC (Tri­angle); (2) Joint Motion for Approval of Settlement Agree­ments and Grant of Amended Application filed December 14, 1995, by Dawscin and Peebles Broadcasting Company, Rem Malloy Broadcasting, Interactive Media, and Special Markets Media, Inc. (Joint Petitioners); (3) Petition to In­tervene filed January 16, 1996, by Free Air Corporation; (4) Petition to Deny and Opposition filed January 16, 1996, by Free Air; (5) Supplement to Motion for Approval of Settlement Agreements and Grant of Amended Applica­tion filed January 18, 1996 by Dawson: (6) Petition for Leave to File Supplement filed January 19, 1996, by Free Air; (7) Joint Opposition to Petition to Intervene filed January 25, 1996, by Peebles, Interactive Media; and Daw­son; (8) Joint Reply filed January 26, 1996, by Peebles,

1 See Rem Malloy .Broadcasting, Initial Decision, 4 FCC Rd 8423 (ALI 1989), Supplemental Initial Decision, 6 FCC Red 2247 (ALI 1991), Further Supplemental Initial Decision, 7 FCC Red

. 8024 (ALI 1992), Second Further Supplemental Initial Decision,

Interactive Media; and Dawson; (9) Mass Media Bureau's Comments on Joint Motion for Approval of Settlement Agreements and Grant of Amended Application filed Feb­ruary 2, 1996; and (10) Reply to Joint Opposition filed February 7, 1996, by Free Air. Free Air filed a Motion to Strike on February 16, 1996, which Peebles, Interactive Media, and Dawson opposed on February 22, 1996. Free Air also filed a Motion for Leave to Reopen the Record and to Enlarge the Issues on March 6, 1996; Dawson filed an Opposition to Motion for Leave to Reopen the Record and to Enlarge the Issues on March 14, 1996 and copies of documents requested by the Board on March 14, 1996; Free Air filed a Reply to Opposition on March 18, 1996 and a Supplement to Reply on March 21, 1996. After careful consideration of the matters before us, we deny Free Air's Motion to Enlarge, approve the settlements and grant Dawson's application as amended.

• 2. Bernard Dawson, the only applicant not found to be disqualified by the AU after four hearings in this proceed­ing, 1 has requested leave to amend his application to sub­stitute Triangle for Dawson as the applicant, to substitute a new source of financing, and to adopt . the engineering proposal of Interactive Media, which was approved in Or­der, FCC 89M-1078 (AU, released Apr. 6, 1989). The settlement agreements Dawson has reached individually with Malloy, Peebles, Interactive, and Special Markets con­template: (1) granting the Dawson/Triangle application, as amended; (2) dismissing with prejudice the pending ap­plications of each of the Joint Petitioners; (3) dismissing pending but unresolved pleadings before the Review Board; (4) vacating the findings of fact and conelusions of law regarding Malloy in Second Further Supplemental lriitial Decision, 10 FCC Red 9369, and the findings of fact and conclusions of law regarding Special Markets in Supplemen­tal Initial Decision, 6 FCC Red 2247, and exceptions there­to~ and (5) terminating this proceeding. In consideration Triangle is to pay $230,000.00 to Malloy: $486,250.00 to Peebles; $486.250.00 to Interactive Media; and $175,000.00 to Special Markets. Dawson also withdraws his integration proposal, as permitted by Commission in light of the Com­mission's continuing freeze on the adjudication of hearing proceedings involving mutually exclusive applicants for new broadcast facilities. 2

3. Dawson explains the amendment in his Petition for Leave to Amend at 1-3: (1) He has formed Triangle as a North Carolina limited liability company. (2) To comply with the North Carolina law requiring that two people be active in a limited liability company. his spouse, Angela Dawson, will own a 0.5% interest in Triangle when the

· company is activated. (3) After grant of the amended ap­plication, Dawson will reacquire his wife's interest and sell a 49% equity and voting interest in Triangle to Donald W. Curtis, a North Carolina broadcaster. for $476,525.00. (4) Curtis will lend Triangle $1,477,500.00 to.he used to satisfy Triangle's obligations under the settlement agreements with the other parties in this proceeding. (5) Curtis will have an option . to purchase all of the assets of· Triangle for $495,975.00, which option can be exercised during a 30 day period beginning no sooner than 18 months after the station begins operation or 60 days after grant of Triangle's

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10 FCC Red 9369 (ALI 1995). 2 Public Notice, FCC Freezes Comparative Proceedings, 9 FCC Red 1055 (1994).

11 FCC Red No. 8 Federal Communications Commission Record FCC 96R-06

application becomes "final," whichever occurs later. (6) Dawson has the right to terminate the Curtis option by purchasing Curtis's 49% interest during the same 30 day period for $953,050.00, and causing Triangle to repay Cur­tis the outstanding balance of its loan. (7) Triangle and Curtis will enter into a program affiliation agreement, which provides Triangle the absolute right to reject pro­gramming provided by Curtis. (8) Curtis has reasonable assurance of a loan to cover his purchase and loan commit­ments to Triangle from Wachovia Bank and Trust in the amount of $2,300,000.00. This financial plan replaces the financial proposal approved by the AU in Initial Decision, 4 FCC Red at 8428-291111 53-61 (1989).

4. ~tanding. Free Air Corporation, a former party to this proceeding whose application was dismissed. with prejudice for failure to prosecute,3 filed a Petition to Intervene and a Petition to Deny and Opposition. In seeking intervention, Free Air alleges standing as an aggrieved party if the pro­posed settlement is approved because of an injury it claims "is separate and distinct from its. failure to secure the permit, namely the opportunity to try again if the remain­ing applicants are denied and the channel 8declared vacant and open for new applications."4 Free Air also claims its participation would facilitate resolution of issues against Dawsonffriangle it raised earlier in this proceeding and now raises in its Petition to Deny and Opposition. Its Petition to Intervene is supported only by a declaration from counsel, Stephen T. Yelverton, as to Free Air's rea­sons for filing and the fact that one of Free Air's principals lives in Raleigh, the listening area to be served by the

·proposed station. 5. Free Air has not established its standing to reenter this

proceeding as a party. Orange Park Florida T. V., Inc. v. FCC, 811 F.2d 664, 670-73 (D.C. Cir, 1987), holds that loss of the opportunity to "try again" is a cognizable injury if the entity seeking standing has documented its ability and willingness to do so. As Peebles, Interactive Media, and Dawson argue in opposing Free Air's intervention,5 Free Air's application was dismissed because Free Air failed to appear at the hearing on its own basic qualifications, alleg­edly because of a principal's ill health .. 6 Free Air's pleading fails to assert any interest in trying again and is unaccom­panied by anything· from either principal attesting or

·documenting that she is able and willing to reapply for this channel. Without such a showing, the injury alleged in counsel's pleading is purely speculative, and insufficient to provide a basis for standing. 7

6. Free Air's counsel's mention of a Raleigh residence for one bf Free Air's principals also. fails to establish stand­ing.8 "The Commission . . . is not required to extend standing to former parties in new applicant proceedings

3 Rem Malloy Broadcasting, Memorandu.m Opinii:Jn and Order, FCC 95M-60 (AU, released Feb. 23, 1995), appeal denied, 10 FCC Red 4974 (Rev. Bd.), rev. denied, 10 FCC Red 9502 (1995), appeal pending sub nom. Free Air Corp. v. FCC, Case. No. 95-1490 (0.C. Cir. Free Air Motion for Summary Reversal and Remand filed Nov. 9, 1995). 4 Free Air Petition to Intervene at 2. s Joint Opposition to Petition to Intervene at 3-5. 6 See Memorandum Opinion and Order, FCC 95M-60 at 3 , 8. 7 Cf. Office of Consumers Counsel v. FERC, 808 · F.2d 125, 128-29 (D.C. Cir. 1987). 8 The claim to local residence is supported by a declaration from counsel without any information explaining the basis for his statement, but not by any statement under penalty of per-

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merely on the ground that they are private individuals residing in the community to be served by the station."9

Free Air argues that its counsel has special expertise re­garding the North Carolina law of limited liability com­panies, but rather than document counsel's expertise, it offers only a copy of the North Carolina statute and a copy of materials from a continuing legal education course, neither of which establishes expertise. Thus, Free Air has failed to establish that it has any interest to be vindicated or that its participation will facilitate consideration of Daw­son's amended application or the settlement agreements pending before the Commission.

7. Petition to Deny. Free Air's Petition to Deny and Opposition questions Dawson's financial and site qualifica­tions, alleges Dawson's counsel is a real party in interest to the application, alleges that Curtis will have legal control of Triangle, and alleges that the settlement agreement does not comply with the Commission's requirements for waiver of the limit on consideration for the settlement. Its January 19, 1996 Petition for Leave to File Supplement summarizes these arguments. Because Free Air has failed to establish its standing and also because its petition to deny fails to meet the requirements for a petition to deny in section 309(d)(l) of the Communications Act of 1934, as amended, 47 U.S.C. § 309(d)(l) and section 73.3584(a) of the Commission's Rules, 47 C.F.R. § 73.3584(a), we will treat the pleading as an informal objection. 10 .

8. Financial Qualifications. Free Air argues that this Board cannot accept Dawson's amendment to the basis for his financial qualifications because his application should have been dismissed long ago for failing to establish his financial qualifications in a timely and proper fashion. Dawson had initially certified that he was not financially qualified, took no steps to become qualified until almost the eve of the hearing, and failed to amend his application or .show good cause before submitting his direct case as to his financial proposal. Although the AU found Dawson to be financially qualified on the basis of his showing at hearing, Free Air argues here as it did at hearing and in exceptions that this was error.

9. If this proceeding were being decided on the basis of exceptions pending before the Board, we would evaluate the course Dawson followed under Aspen FM, Inc,, 6 FCC Red 1602, 1603 111111-12 (1991), which rejected the Com­mission's former liberal amendment policy and required an amendment accompanied by a good cause showing be­fore a new financial proposal could be accepted into evi­dence. u However, in Las Americas the Commission de­scribed a narrow exception to rigid applicat'ion of the good

tury from the alleged resident. Radio Represematives, Inc., 6 FCC Red 6995, 6995 , 4 (1991),

citing Kenneth J. Crosthwait, 79 FCC 2d 191, 194-95 , 5 (1980). lO Cf. Las Americas Communications, .Inc., 5 FCC Red 1634, 1635, 5 (1990) (although entity seeking to intervene in order to object to settlement lacked standing, FCC considered arguments on its own motion). 11 See Radio Representatives, 6 FCC Red 6995; Sharron Annette Haley, 6 FCC Red 1567, 1568-69 (Rev. Bd.), rev. denied, 6 FCC Red 4630 (1991), affd mem. sub nom. Prater & Durham v. FCC, 983 F.2d 298 (D.C. Cir. 1992); Edwin A. Bernstein, 4 FCC Red 8420, 8421-22 , , 6-7 (Rev. Bd. 1989), rev. denied, 5 FCC Red 2843 (1990), affd by judgment sub nom. Lefebvre v. FCC, 926 F.2d 1215 (D.C. Cir; 1991).

FCC 96R·06 Federal Communications Commission Record 11 FCC Red No. 8

cause requirement.12 "Where a post-designation amendment permits the immediate grant of a pending application, ei­ther by facilitating a settlement agreement or by curing a disqualifying defect in the only pending application, the Commission generally concludes that the equities favor accepting the amendment." Free Air argues that we must follow Pontchartrain Broadcasting Co., Inc., 8 FCC Red 2256 (1993), aff'd 15 F.3d 183 (D.C. Cir. 1994), a later case in which the Commission rejected an amendment estab­lishing the financial qualifications of the sole remaining applicant, but Pontchartrain is clearly distinguishable. Ac­ceptance of the proffered financial amendment in Pontchartrain would not have eliminated the need to re­view character questions and, therefore, would not have relieved the Commission of the administrative burdens occasioned by that proceeding.13 The court found that this treatment was fully consistent with Las Americas.14 In Pontchartrain the Commission was also concerned that a different resolution would disserve broader interests in ad­ministrative finality because the applicant there had cer­tified to its qualifications but "fail[ed] to secure ... assurance of financing in the first place, then stubbornly maintain[ed] ... that its financial proposal was reliable, contrary to the fact, only to submit a new proposal long after the conclusion of the additional hearing made neces­sary by its intransigence." 15 Unlike Pontchartrain, with the universal settlement and Dawson's amendment, this case falls within the Las Americas exception because it can be resolved without further proceedings. Furthermore, while Dawson's dilatoriness in becoming financially qualified is of some concern, it does not rise to the degree present in Pontchartrain. Dawson never maintained that he was quali~ fled when he was not, and he had financing in place by the time of the hearing, not two years later.1 6

10. Free Air argues that, because Dawson has substituted a new financial proposal, this Board must require docu­mentation before we can approve the settlement. We dis­agree. Where ari applicant previously found to be qualified substitutes a new financial proposal as part of a settlement, we have not routinely required the kind of documentation that an applicant must submit if his financial qualifications are at issue, and we do not routinelr. require documenta­tion to support settlement payments. 7 In the amendment, Dawson and Triangle provided the information required on the application form, including the source of the loan Curtis has already arranged, and Free Air has not raised a

12 Las Americas, 5 FCC Red at 1637 11 25. . 13 Pontchartrain, 8 FCC Red at 2257 11 10. The Commission did not follow the Board's earlier analysis in Pontchartrain, 7 FCC Red 1898, 1903 11 18, 1904, 20 (1992), that the sole remaining applicant was unqualified· and not entitled to cure the defi­ciency by amendment. 14 Pontchartrain, 15 F.3d at 185. . 15 Pontchartrain, 8 FCC Red at 2257 , 11. 16 Free Air tries to undermine the financing that Dawson established at the hearing because another applicant relying on the same bank was found to have provided a worthless letter of accommodation, but it offers no factual basis for questioning

· whether Dawson's later relationship with the bank suffered from the same problem. Free Air Petition to Deny and Opposi­tion at 2. It merely complains that Dawson did not submit the bank official for cross examination. Id. The AU ruled that parties could cross-examine Dawson, but, after hearing argu­ment from counsel, found no basis for calli.ng other witnesses about Dawson's proposal. Tr .. 21, 34. See Proposals to Reform the Commission's Comparative Hearing Process to Expedite the

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substantial and material question regarding the availability of the loan as represented. In contrast, in Rockledge Radio, Inc., 4 FCC Red 5092, 5094 (Rev. Bd. 1989), on which Free Air relies, Class A stockholders of a reformed ap­plicant committed themselves to being responsible for ob­taining a loan in the future. In light of the substantial increase in the size of the needed bank loan because of the settlement costs, the Board said in Rockledge that it could not approve the new arrangement without a financial showing.

11. Site Qualifications. Free Air questions Dawson's site qualifications on two grounds. It argues that the Commis­sion must determine whether Dawson had reasonable as­surance of a site when he filed his application because, according to Free Air, he subsequently failed to meet the site owner's requirements. Free Air Petition to Deny and Opposition at 4. The AU denied a motion to enlarge seeking designation of a site issue against Dawson because Dawson had established the landowner's consent at the time of his site certification, and this point was conceded by the movant. Tr. 46, memorialized in Order, FCC 89M-116 (released Jan. 16, 1989). Dawson had timely amended his site, so the initial site owner's requirements no longer applied. See tr. 46. Free Air also argues that the site proposed in the amendment must meet current technical requirements but offers no reason why the site would not. Free Air Petition at 4. The Mass Media Bureau advises that the amended site does meet Commission requirements. Bureau's Comments on Joint Motion for Approval of Set­tlement Agreements and Grant of Amended Application at 4 11 4. Free Air's challenge to the settlement because of Dawson's site qualifications has no merit.

12. Real Party in Interest/Motion to Enlarge. Free Air alleges that, before the Dawson/Triangle application can be granted, the Commission must resolve whether Dawson's counsel is a real party in interest to the application. Free Air Petition at 5. According to Free Air, counsel allegedly solicited Dawson to apply for the channel, provided pros­ecution funds, and took an interest in the station in lieu of a fee. Because Dawson/Triangle did not file articles of incorporation and a written operating ·agreement for Tri­angle, Free Air speculates that there is a substantial and. material question about counsel's role in Triangle. Id. at 5-6. Free Air's only support for the allegation that Dawson promised counsel an equity interest in the station is tran­script page 808, which clearly contradicts this allegation.

Resolution of Cases, Report and Order, 6 FCC Red 157, 162 (1990) (oral testimony or cross examination should be permitted "only where material issues of decisional fact cannot adequately be resolved without oral evidentiary hearing procedures or the public interest otherwise requires oral evidentiary proceed­ings."); see also Radio Lake Geneva Corp., 7 FCC Red 5586, 5592 1111 20-21 (Rev. Bd. 1992) (AU did not abuse discretion in denying cross-examination where he afforded other party "a specific and clean opening to make its case for cross-examina­tion" but found arguments too speculative), and cases cited therein at 5591 , 18, rev. denied, 8 FCC Red 2190 (1993). Thus, although the procedure Dawson followed in establishing his financial qualifications may be open to question, there are no substantial and material questions going to the substance of the iualifications he established below. 1 See Charisma Broadcasting Corp., FCC 951-35 (Gen. Counsel, released Dec. 13, 1995); Isis Broadcasting Group, FCC 951-28 (Gen. Counsel, released Nov. 28, 1995); Emision de Radio Balmeseda, Inc., 7 FCC Red 8629 (Rev. Bd. 1992); Susan D. Brown, 6 FCC Red 7210 (Rev. Bd. 1991).

11 FCC Red No. 8 Federal Communications Commission Record FCC 96R·06

According to the transcript, Dawson was required to pay his lawyer "cash" if his application prevailed, in the amount of one-third "the value" of the station. Accord tr. 810; see tr. 45-46 (AU denied motion to enlarge to add real party in interest issue, because nothing provided by movant overcame counsel's affidavit_ that he had no equity interest in or control over applicant), memorialized in Order, FCC 89M-116. The documents supplied with Daw­son's amendment account for 100% of the ownership of the applicant and Triangle and make no mention of coun­sel. They emphasize that Dawson will have control.

13. On March 6, 1996, long after the time for opposing the settlements and the Dawsori/Triangle amendment had passed, and without any showing of diligence, Free Air filed a Motion for Leave to Reopen the Record and to Enlarge the Issues, again claiming that Dawson's repre­sentation as to his spouse's role in the organization of Triangle is false and that Dawson's counsel in fact has 50% voting and legal control of the limited liability company. This is based on an attached copy of the Triangle Articles of Organization filed with the North Carolina Secretary of State on November 27, 1995, which shows Lawrence J. Bernard, Jr., Dawson's counsel, as one of the organizers of Triangle, along with Dawson. According to §§ 57C-2-20 and 57C-2-21 of the North Carolina Limited Liability Com­pany Act, N.C. Gen. Stat. §§ 57C-2-20, 57C-2-21, also attached to Free Air's motion, the persons executing tli.e articles of organization become members of the limited liability company and are managers unless a contrary in­tent is specified. The Triangle Articles of Organization specifically state_ that all members shall be managers. Ac­cording to § 57C-3-02 of the .Act, attached to Free Air's January 17, 1996 Petition to Deny and Opposition, a per­son ceases to be a member by voluntarily withdrawing from the company or through removal .in accordance with the articles of organization or an operating agreement.

14. In his March 14, 1996 Opposition to Motion for Leave to Reopen the Record and to Enlarge the Issues, Dawson explained that his representations in his December 14, 1995 Petition for Leave to Amend accurately character­ized the existing and proposed structure of Triangle. Ac­cording to Dawson, he intended that his wife would acquire her 0.5% interest when Triangle is activated. Coun­sel signed the Triangle Articles of Organization as an orga­nizer but not with the intent of becoming a member or owner of Triangle. Bernard explained in a declaration giv­en under penalty of perjury that, when he signed Triangle's Articles of Incorporation, he had not reviewed the relevant North Carolina statutes and was not aware that signing the articles made him a member of Triangle. He assumed that Triangle would be like other corporations he had formed-­for clients by executing articles of incorporation as an organizer. In those situations, his obligations were auto­matically extinguished when the company was activated. Further, he explained, the form for the Articles of Or­ganization does not make clear that organizers are also members or owners of a limited liability company in North

18 Copies of these documents were provided to the Board by letter from Wilhelm to Blair of 3/14/Q6 and served on counsel for Free Air as well as counsel for the other parties. 19 Free Air Petition to Deny and Opposition at 6. 20 Id. at 6-11. 21 Dawsonrrriangle Petition for Leave to Amend, Exh. No. I, Agreement for Purchase of Minority Interest in Triangle FM Broadcasters, LLC (Purchase Agreement) at l, 2 l\! l, 3 l\! 3(b),

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Carolina. He added: "I do not now have, and have never had, any understanding or agreement with Dawson, [Tri­angle] or anyone else, that I would have, or would be entitled to receive, an ownership interest in the radio sta­tion proposed in Dawson's application." Declaration of Lawrence J. Bernard, Jr. at 2, attached to Dawson Opposi­tion. Having learned of the import of being an organizer, counsel recommended that Dawson adopt a formal operat­ing agreement for Triangle and accept counsel's withdrawal as a member, which was done. The Operating Agreement for Triangle FM Broadcasters, LLC was adopted March 12, 1996, and counsel's withdrawal was prepared and accepted on the same date.18 Nothing Free Air has argued to the contrary in its Reply to Opposition and Supplement to Reply rebuts the Bernard Declaration and Dawson's repre­sentations that, if Bernard had ownership or control of Triangle by virtue of signing as an organizer, it was unintended and quickly corrected. On the basis of all of the information provided about ownership and control of the applicant, we do not find any substantial and material question of fact as to whether Dawson's counsel is a real party in interest in the applicant or whether Dawson mis­represented counsel's role ..

15. Curtis Relationship. Free Air argues that the pro­posed settlement and amendment creating Triangle should be disapproved because they are "a thinly disguised buy-out of Dawson's pending and ungranted application by Curtis, who is not an applicant in this proceeding." 19 It argues that Curtis will have legal control under North Carolina law and that he will have de facto control by selecting employ­ees, loaning Triangle money and prohibiting Triangle from borrowing money elsewhere, and providing programming for the station pursuant to a program affiliation agreement. Free Air also argues that the option agreement fails to comply with Commission policy and that Dawson's option is illusory.20

16. We have carefully reviewed the documents defining the relationship between Dawson, Triangle. and Curtis and conclude that there is no merit to Free Air's allegations. The documents clearly "specify that Curtis will buy a 49% equity interest in Triangle and have a 49% voting interest in Triangle and that Dawson will be in control.21 Curtis may act as a member of Triangle throughout the term of the Reciprocal Option Agreement/2 but no Commission rule prohibits management participation of a noncontrolling owner who is not seeking insulation from operation of the Commission's attribution rules or cross interest policy described in 47 C.F.R. § 73.3555 and the accompanying Notes.23 Curtis has agreed to loan Triangle the necessary funds to construct the station, and the loan will be evidenced by a promissory note giving Curtis a first lien on the company's tangible and intangible assets and Dawson's and Curtis' rights of ownership in the company,24 Contrary to Free Air's argument, there is no provision in the option agreement for Curtis to select company or station employees, but employment agree­ments that are not terminable at will must be approved in

Attach. B, Reciprocal Option Agreement at I, 5 , 2.3, Exh. B-2, Agreemen-t for Purchase of Assets at 7 , 9(a). 22 Reciprocal Option Agreement at 5 , 2.3. 23 See Review of the Commission's .. Regulations Governing At­tribution of Broadcast Interests, MM Docket No. 94-150, Notice of Proposed Ru/emaking, 10 FCC Red 3606. 3638-39 11 11 64-65 ~ 1995). .

4 Purchase Agreement, Attach. A, Loan Agreement at 311 6.

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advance by Curtis during the term of the Reciprocal Op­tion Agreement,25 so that Curtis would not have to assume long term employment agreements if he should exercise his option.26 The Program Affiliation Agreement between Tri­angle and Curtis (the syndicator) provides that the station will be obligated to take most of its programming from the syndicator but shall not be limited in its right to reject any programming it deems unacceptable or inconsistent with its obligations as an FCC licensee, and that Triangle will remain in ultimate control of the station's facilities, includ­ing control over finances, personnel and programming to the extent required by the Commission.27 Consistent with all of these documents, the Operating Agreement for Tri­angle provides at paragraph 10 that the company will be managed by its members and at paragraph ll(b)' that ulti­mate control lies with its 51 % owner: "At all meetings of the membership, each Member shall have the right to vote in the same percentage as his or her ownership percentage •••• " 28 Free Air makes much of paragraph 10 in arguing that Curtis will be in control but makes no mention of paragraph 11.29 Nothing in any Triangle documents wrests ultimate control from Dawson and, as noted above, there is no prohibition against Curtis' participation in station mat­ters as a minority owner.

17. Curtis' option is to purchase a 51 % interest in the station from Triangle in the future, but Triangle can termi­nate Curtis' option and reacquire Curtis' 49% interest if Dawson provides Triangle with the money to pay off the aebt to Curtis.3° Free Air's argument that the Loan Agree­ment prohibits Triangle from borrowing funds for any purpose, including to pay off the debt to Curtis, is an overreading of the agreement and ignores the specific in­tent of the option agreement. We will not speculate that Dawson will be unable to seek financing to exercise his rights under the option if the station develops into a desir­able property, and we find nothing untoward in provisions that give Curtis a right of first refusal should Dawson seek to sell his interest. Similar proposals have previously been approved,31 and Free Air's speculations offer no reason why we should not approve the arrangement proposed here. Should Curtis seek to exercise his option, he will need advance Commission approval before taking control.

18. Motion to Strike. On February 16. 1996, Free Air filed a MotionPto Strike the Joint Reply timely filed by Peebles, Interactive Media, and Dawson. ostensibly to chal­lenge their quote from a recent Commission action, Quincy D. Jones, (Transferor) and Qwest Broadcasting L.L.C.

25 Reciprocal Option Agreement at 5 , 2.4. Paragraph IO of the Operating Agreement prohibits an individual member from hiring or discharging Company employees but at , 11 gives ultimate control to the member holding at least 51 % of the ownership. Attach. to letter from Wilhelm to Blair of 3/14/96. 26 Joint Reply at 18 n.13. · 27 Dawsonffriangle Petition for Leave to Amend; Exh. No. I, Attach. C, Program Affiliation Agreement at 2, 2(c), 11 , 17(c). 28 The Operating Agreement further provides that meetings of members can only be called by members holding at least 51% of the ownership percentages and that a quorum constitutes at least 51 % of the ownership. Operating Agreement at 3 I, (a), attach. to letter from Wilhelm to Blair of 3/14/96. 29 See Free Air March 21, 1996 Supplement to Reply at 1-2. Free Air also mischaracterized N.C. Gen. Stat. §§ 57C-3-20 and 57C-3-21 in arguing that Dawson must be the exclusive manager under North Carolina law in order to have control of Triangle. See id. at 2. Copies of these statutory provisions attached to Free Air's Petition to Deny clearly provide that management author-

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(Transferee), FCC 95-497 (released Dec. 12, 1995). Free Air reiterates earlier arguments and adds allegations that the Joint Reply misrepresents Commission precedent, and that Dawson has misrepresented his control of Triangle under North Carolina law governing limited liability companies. To the extent that Free Air's motion would have this Board strike two pages of the Joint Reply, it is without merit because the Joint Reply does not mischaracterize Quincy D. Jones. To the extent that Free Air's motion alleges misrepresentation by Dawson, it is undocumented. To the extent that Free Air's motion reiterates earlier arguments, it is unauthorized. For all of these reasons, it will be dismissed. See Public Notice, Commission Taking Tough Measures Against Frivolous Pleadings, FCC 96-42 (released Feb. 9, 1996).32 .

19. Settlement Agreement. Free Air challenges the over­all settlement, arguing that it is not universal as required by the policy explained in Public Notice, FCC Waives Limi­tations on Payments to Dismissing Applicants in Unive;sal Settlements of Cases .Subject to Comparative Proceedings Freeze Policy, 10 FCC Red 12182 (1995) (Waiver Policy), because it does not include Free Air. This is without merit because Free Air has no standing as an applicant. Even if Free Air were granted party status for the purpose of challenging Dawson's qualificatio11s, in the hope that the channel will be declared vacant and new applications will be entertained, this would not re-establish any right to comparative consideration with the current applicants. Free Air lost this right when its application was dismissed because its principals failed to appear at the hearing on its own basic qualifications. The settlement agreements pre­sented to the Board include all applications now on file for the Raleigh channel and, therefore, meet the Commission's requirement that the settlement be "universal." However, our action here will be conditioned on the outcome of Free Air Corp. v. FCC, Case No. 95-1490 (D.C. Cir. filed Sept. 22, 1995). This is sufficient to preserve Free Air's interests in the event its pending appeal is resolved in its favor.

20. Free Air's argument that the Dawson/Malloy settle­ment agreement was untimely because Malloy did not sign the declaration required by 47 C.F.R. § 73.3225 until De­cember 18, 1995, is without merit. The signed agreement between Dawson and Malloy was filed December 14, 1995, on the ninetieth and last day of the temporary waiver period provided in Waiver Policy, along with agreements betw.een Dawson and the other parties. Malloy's declaration changed nothing about the agreement, but merely

ity is subject to any provisions in the written operating agree­ment. See N.C. Gen. Stat. §§ 57C-3-20(b). 57C-3-2.l. Free Air's argument is without merit. 30 Reciprocal Option Agreement at 3, IA. 31 See Gifford Orion Broadcasting, Ltd., 9 FCC Red 314 (1993); Poder Broadcasting, Inc., FCC 90R-.J (Rev. Bd. released Mar. 19, 1996) (applicant restructured by selling .J9% of voting stock to company which would finance settlement, acquire option to purchase remaining stock, and enter into time brokerage agree­ment); Frank Digesu, Sr., 9 FCC Red 7866 (Rev. Bd. 1994); Lamar Communications, Inc., 6 FCC Red 7022 (Gen. Counsel 1991). 32 Free Air's additional allegations of unethical conduct by counsel for drafting a joint response and of scandalous material do not merit attention from this forum. Counsel in this pro­ceeding have previously been admonished to observe the re­quirements of 47 C.F.R. § 1.52 and the standards of professionalism expected in Commission proceedings. We should not have to repeat this admonition to Free Air's counsel.

11 FCC Red No. 8 Federal Communications Commission Record FCC 96R·06

documented that Malloy's application had not been filed for improper purposes and that there are no understandings between Malloy and Dawson other than those shown in the settlement agreement. Any imperfection in the applicants' request for approval of the settlement agreements because Malloy's declaration was delayed was insubstantial and quickly cured.

21. The Joint Motion fully complies with the provisions of 47 U.S.C. § 311(c) and 47 C.F.R. § 73.3525, governing settlement agreements. Each party has stated under penalty of perjury that there is no other consideration for the dismissal of each application other than the consideration stated in the settlement agreement, that he or she did not did file an application for the purpose of entering into a settlement agreement, and approval of the settlement agree­ments will facilitate the early initiation of a new program service in Raleigh. The Joint Motion provides for a univer­sal settlement among all parties remaining in the proceed­ing and was filed December 14, 1995, the last day of the period during which the Commission waived the provi­sions of 47 C.F.R. § 73.3525(a)(3), precluding payments to dismissing applicants in excess of their legitimate and pru­dent expenses.33 Thus, the consideration to be paid is not limited to the dismissing applicants' legitimate and prudent expenses, and no showing of these expenses is required. The Mass Media Bureau advises that the engineering pro­posal is in compliance with all of the Commission's rules and regulations. Bureau's Comments on Joint Motion for Approval of Settlement Agreements and Grant of Amended Application at 4 11 4.

22. Ownership Limits. Triangle will be in compliance with the Commission's broadcast ownership limits in effect in 47 C.F.R. § 73.3555 ·at the time Dawson filed its amend­ment and as revised on March 7, 1996 pursuant to section 202 of the Telecommunications Act of 1996, Pub.L. 104-104 § 202, 110 Stat. 56, 110 (1996).34 Curtis, the pro­posed 49 percent owner of Triangle, reports attributable ownership interests in eight radio broadcast stations and nonattributable · L 17% ownership interest in a company with controlling interests in broadcast licensees.35 Curtis is an officer, director and 90.4% stockholder of WPTF(AM) and officer, director, and 100% stockholder of WQDR(FM) in Raleigh. Dawson has demonstrated with a radio market analysis that, upon grant of his application, there will be 19 AM or FM stations that provide city grade service to the Raleigh market. He has also demonstrated with a recent survey of listening in the Raleigh metro area that WPTF and WDQR obtained a combined share of 13.5% of the average quarter hour audience, 12 years and older from 6 a.m. to. 12 midnight, Monday-Friday. None of the other stations in which Curtis has an interest provides a city grade or better signal to any area that will receive a city grade signal from the proposed new station. Section

· 202(b)(l)(C) of the Telecommunications Act of 1996 pro­vides that, "in a radio m_arket with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate, or control up to 6 commercial radio stations, not more than 4 of which are in the same service (AM or FM). There is no longer any limit on national ownership.

33 Waiver Policy, 10 FCC Red 12182 (1995). 34 Order, FCC 96-90 (adopted Mar. 7, 1996), reported in FCC Revises National Multiple Ownership Rule and Local Radio Ownership Rule in Accordance with the Telecommunications

23. ACCORDINGLY, IT IS ORDERED That the Peti­tion to Intervene filed by Free Air Corporation on January 16, 1996, IS DENIED; the Petition for Leave to File Sup­plement filed by Free Air Corporation on January 19, 1996, IS GRANTED; the Motion to Strike filed by Free Air Corporation on February 16, 1996, IS DISMISSED; and the Motion to for Leave to Reopen the Record and to Enlarge the Issues filed by Free Air Corporation on March 6, 1996, IS DENIED.

24. IT IS FURTHER ORDERED That exceptions to the Initial Decision, Supplemental Initial Decision, and Further Supplemental Initial Decision of Administrative Law Judge Joseph Chachkin, and related pleadings ARE DISMISSED as moot; and· that the findings of fact and conclusions of law regarding Rem Malloy Broadcasting in Second Further Supplemental Initial Decision of Administrative Law Judge Joseph Chachkin, 10 FCC Red 9369 (1995), and the find­ings of fact and conclusions of law regarding Special Mar­kets Media, Inc., in Supplemental Initial Decision of Administrative Law Judge Joseph Chachkin, 6 FCC Red 2247 (1991), ARE VACATED.

25. IT IS FURTHER ORDERED That the Joint Motion for Approval of Settlement Agreements and Grant of Amended Application filed by Bernard Dawson and Tri­·angle FM Broadcasters, LLC, Peebles Broadcasting Com­pany, Rem Malloy Broadcasting, Interactive Media, and Special Markets Media, Inc., on December 14, 1995, IS .GRANTED and the attached settlement agreements ARE APPROVED; that the applications of Rem Malloy Broad­casting (File No. BPH-860627MH), Peebles Broadcasting Company (File No. BPH-860703ME), James S. Lee and Donald . L. Baker d/b/a Interactive Media (File No. BPH-860707MS), and Speciai Markets Media, Inc. (File No. BPH~860703MH) ARE DISMISSED with prejudice; that the Petition for Leave to Amend filed by Bernard Dawson on· December 14, 1994, IS GRANTED and the tendered amendments to the application of Bernard Dawson filed by Triangle FM Broadcasters, LLC on December 14. 1995,

· ARE ACCEPTED and the name IS CHANGED to Tri­angle FM Broadcasters, LLC; and that the application of Triangle FM Broadcasters, LLC, as amended (File No. BPH-860707NW) IS GRANTED subject to the outcome of Free Air Corp. v. FCC, Case No. 95-1490 (D.C. Cir. filed Sept. 22, 1995).

4069

26. IT IS FURTHER ORDERED That this proceeding IS TERMINATED.

FEDERAL COMMUNICATIONS COMMISSION

Marjorie Reed Green~ Member, Review Board

Act of 1996, Mass Media Action, Report No. MM 116~ 12 (Mar. 8, 1996). 35 Dawson Petition for Leave to Amend. Amendment to Ap­plication, Exh. No. 2, Radio Market Analysis.