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A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:>(*t(jBBjjvHH}j<<<@jHHHH((>><<<<<<<<<<<<<<<<<<<<<!.22YN!!!2Y!!!!2222222222!!dYd,YH?DJ?;HJ!'F?ZJH9HB6?JH^HHA!!!222,2,2,!222N2222%'22H22,,2,dd<WC;XfXW  p7sQX o8D81XXD  P7jQP P(1(#XX5h1  P7jQhP C!)!XXu,)  P7jQ,P.P/%X6J/4  pQJ@^;B\ddBBBdBBBBddddddddddBBDZY}}vBM}rk}BBBdddYdYdYB"5@^%=77n\%%7?%7777777777%%???7fOIOOICVV+7VIhOVCVO=IOOnOOI%%@7%7=1=1%7=%=\=7==1+%=7O771++9%%%%,-%7=O7O7O7O7O7nOO1I1I1I1I1++++O=V7V7V7V7O=O=O=O=O7O7O=V7V7O7O7C=O7O7O7O1O1O1I1I1I1V7V7VV7V7V=V=,=+=+%+=7V=II-O=O=V7nOO1O1=+=+N&;7%777777!$SS7!RR7S!%%777n%%77nn%7n%!t%<<<<?mBBs,??[N6Wms[77UUUH_However, SMI claims that on July, 1994, CEI acquired positive control of PTI without Commission  S- xauthorization, which SMI discovered by reviewing the stations' ownership reports. @4- yO$#- x-Ѝ SMI posits that the ownership change took place in order to eliminate a prohibited ownership arrangement  xiinvolving UMDA. Specifically, SMI claims that UMDA transferred its interests in PTI because UMDA also held  xinterests in Island Wireless Cable ("IWC"), a purported cable operator which served areas within the Grade B contour  xof KUAMTV. In this connection, we note that Section 76.501(a) of the Commission's Rules provides that "[n]o  xcable television system (including all parties under common control) shall carry the signal of any television broadcast  xZstation if such system directly or indirectly owns, operates, controls, or has an interest in a TV broadcast station  xwhose predicted Grade B contour . . . overlaps in whole or in part the service area of such system . . . ." SMI's complaints regarding this matter are pending with the Commission's Cable Bureau.  SMI further contends  xthat PTI violated Section 73.3615(a) of the Commission's Rules because PTI did not update its ownership" ,**UU "  S-information until March 14, 1995, well after the due date required by the rule.$?Q yOh- xЍ SMI also raises claims that CEI played a role in alleged violations by IWC of rules pertaining to wireless links  xwrelated to the provision of cable service and rules pertaining to transfers of control of such links. SMI contends that  x[our sanction should be severe, reflecting that "principals of the licensee's parent" have a history of prior rule  x;violations involving "unlicensed operation of microwave links." We note, however, that the proceeding SMI refers  xto involved the conduct of the purported cable operator IWC, and not PTI, the instant licensee. Furthermore, SMI's  xcomplaints appear to be unresolved and under the jurisdiction of other Bureaus. Consequently, we will not consider  xthese allegations in resolving the apparent violations discussed herein. However, our findings are without prejudice to any determination that may be made by those other Bureaus. $   !xIn response, PTI submits that no transfer of control occurred. First, PTI argues that neither CEI  x!nor UMDA ever possessed negative control of PTI since each held only 49.7% of MBC's stock.  S4- xKMoreover, PTI contends that, after the July, 1994 transaction, CEI did not possess positive de jure control.  xyIn this regard, PTI notes that while that transaction resulted in the change of various individuals' holdings  x0in CEI, CEI's holdings in MBC never changed. Specifically, PTI contends that prior to the stock  xexchange, CEI and UMDA held equal shares of 49.7% of PTI's parent, MBC, and the remaining fractional  Sh- xinterests were held by individuals CEI's principals, the Calvos,yh?Q c- x#XR  P7jQ 6MXP#э# D  P7jQP##C\  P6QP# Thomas J.M., Paul M. and Eduardo A. Calvo ("the Calvos") are officers and directors of CEI. Thomas J.M.,  xNPaul M. and Edward M. Calvo are trustees of three family lifetime trusts, which, in turn, control CEI.У and UMDA's principals Joseph  S5- xWaechter, Michael Grandinetti, and Larry Hillblom.X5 ?Q yO- xЍ#XR  P7jQ 6MXP## D  P7jQP##C\  P6QP# PTI notes that its 1993 Ownership Report for MBC is "inaccurate," because it failed to reflect the retirement  x0of principaldirector Larry Hillblom's MBC share at an unspecified time "[b]etween 1990 and 1993."Ф In any event, PTI claims that the transfer of MBC  xshares by UMDA did not convey a controlling interest in the licensee because UMDA's overall interest  xin MBC was transferred in equal approximate 16.6% shares to CEI's principals, Thomas J.M. and Paul  xM. Calvo, and to Edward M. Calvo, Trustee of the Edward M. & Frances B. Calvo Lifetime Trust. Thus,  xCEI's existing noncontrolling 49.7% ownership interest in MBC remained unchanged throughout. Finally, PTI contends that the MBC shares held by CEI's principals should not be attributed to CEI.   OxIn reply, SMI argues that the prior unreported retirement of Larry Hillblom's one MBC share  x/sometime "between 1990 and 1993" resulted in UMDA losing negative control, and in CEI acquiring  x[positive control of the licensee, due to CEI's retention of control over 500 of thethen reduced number of  xoutstanding MBC shares thereafter numbering only 999, instead of 1000. SMI contends that CEI thus  x=passively acquired 50.05% (500/999) positive control of MBC. SMI further alleges that this transfer of  xcontrol occurred without prior Commission approval, and that Commission precedent sanctions failure to  x[obtain prior transfer consent by the imposition of substantial monetary forfeitures, especially, where, as  Sk- xhere, violation of an important Commission policy or rule is implicated, citing Galesburg Broadcasting  S8- xjCo., 69 RR 2d 211 (1991) (violation of alien ownership restriction), Cate Communications Corp., 60 RR  S- x2d 1386 (1986) (repeated instances of unauthorized transfer of control) and Rust Craft Broadcasting, Inc.,  S-47 RR 2d 947 (1970) (violation of cable/broadcast television crossinterest prohibition). ?Q yOk%- xwЍ In its further reply, PTI maintains its view that the Commission does not aggregate aligned ownership interests,  xand opines that the retirement of the Hillblom share, in this case, would not have triggered any shift of licensee control because UMDA and CEI continued, respectively, to hold only noncontrolling 49.7% interests in MBC. Ы ",C)C)UU"Ԍ S-x  S-  xDiscussion. Section 310(d) of the Act prohibits the transfer of control of a station license, and  xany rights thereunder, without prior Commission consent. There is no exact formula by which control of  xa broadcast station can be determined. It is well settled that "control," as used in the Act and pertinent  x0Commission rules, encompasses all forms of control, actual or legal, direct or indirect, negative or  S- xaffirmative, and that the passage of de facto as well as de jure control demands the prior consent of the  S- xCommission. Stereo Broadcasters, Inc., 55 FCC 2d 819, 821 (1975) (citing WWIZ, Inc., 36 FCC 561,  x2 RR 2d 169 (1964) and cases cited therein). In ascertaining whether a transfer of control has occurred,  xwe traditionally look beyond the legal title to whether a new entity or individual has obtained the right  S6- xto determine the basic operating policies of the station. See WHDH, Inc., 17 FCC 2d 856 (1969), aff'd  S- xsub nom. Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D.C. Cir. ?Q S- x` `  Federal Communications Commission DA 981513 ____________________________________________________________________________________1970), cert. denied, 403 U.S. 923 (1971).   x In addition, for purposes of determining licensee control, trustees, corporate shareholders, officers,  x.and directors are generally fully attributed to the entities with whom they are associated, without regard  S - xKto whether the underlying entities are natural persons or otherwise. See Attribution of Ownership Interests  S - xz("R&O"), 97 FCC 2d 997 (1984) recon. in part, 58 RR 2d 604 (1985), further recon., 1 FCC Rcd 802  S -(1986). As set forth in paragraph 55 of the R&O: x"[a]ny person (or entity) holding or sharing the power x to vote the assets of a trust will have those assets attributed x to him. If those assets are above the benchmark adopted herein, x that person will be deemed to have a cognizable interest in x the licensee's facilities."  S-Id., 97 FCC 2d at 1024.  S- xyMoreover, the R&O acknowledged only narrow and limited instances under which corporate officers and  xydirectors would be relieved of attribution consequences. As the Commission noted, "we do not intend to  xpermit officers and directors to disclaim their interests as a matter of course. The basic rationale for  x]attributing interest to officers and directors of corporate licensees or those of the licensee's parent  S- xcorporations remains valid." Id. at 1025. The Commission further noted that the burden is squarely upon  xthe licensee to establish why particular officers' or directors' activities and duties should render them nonattributable to their licensees.  S-  xIn this case, the question raised is whether a de jure transfer of the licensee has occurred without  xprior Commission approval, in apparent violation of the applicable statute and the Commission's rules.  xThe basic facts are not in dispute. As noted above, PTI concluded that the retirement of UMDA principal  xyLarry Hillblom's single share in MBC sometime "between 1990 and 1993" did not result in CEI's passive  xMacquisition of control over MBC and trigger the need to file an application seeking prior Commission  xconsent. PTI further determined that the July 18, 1994 stock exchange between UMDA and CEI did not  xtransfer control of the licensee. PTI claims that its later determination was based on "informal staff  xadvice" that the interests of UMDA, CEI and its respective principals would not be deemed aggregated  x=as a unitary "control group" because the Commission applies that concept "to natural persons only, and  xywill not . . . pierce the veil of a corporate entity to apply [it]." It is significant, however, that PTI, apart  xkfrom its reliance upon purported "informal staff advice," identifies no precedent or other authority to support its interpretation of Commission ownership attribution policy.   xWe have carefully considered the record in this case, in conjunction with the materials cited and  x[supplied by both the complainant and the licensee, as they relate to the allegations. We conclude that an" (,C)C)UU+"  S- xyapparent unauthorized transfer of de jure control of the subject stations occurred in this case. Moreover,  xwe do not find mitigating PTI's stated reasons for failing to file the appropriate application seeking our  xprior approval, as required by Section 310(d) of the Act and the Commission's rules. In this regard, PTI's  x.interpretation of the aggregation of ownership interests is directly contrary to longstanding Commission  xpolicy on ownership attribution noted above. In this case, the record establishes that the MBC assets  xcontrolled by UMDA and CEI exceeded the applicable benchmark, and PTI has offered no justification  xwhy their principals' individuallyheld MBC shares should be found otherwise exempt from attribution to them.   xThus, we find no merit to PTI's unsupported contention that, in the instant case, the individual  xownership interests in MBC held by CEI's principals, the Calvos, should not be attributed to, and  xkaggregated with CEI's, for purposes of determining control of the licensee. The applicable ownership  S - xstandard was set forth in In re Corporate Ownership Reporting and Disclosure by Broadcast Licensees,  Si - x50 Fed. Reg. 27438 (June 24, 1985). In that proceeding, the Commission emphasized the rationale for aggregating ownership interests in similar situations: x"[u]nder our aggregation policy a person with stock in several separate x accounts has a cognizable interest if the sum of these accounts is equal x to or exceeds the benchmark standard, even if each account, when consid  S7-x ered in isolation, is below the benchmark [citing R&O, supra, at 1026]. x The reason for this policy is to prevent persons from 'evading our owner x ship constraint by breaking down their interests into noncognizable discrete  S-x investments' [citing Notice of Proposed Rulemaking, MM Docket 8346, x FCC 8346 (released Feb. 15, 1983), at para. 36]."  S-50 Fed. Reg. 27438, at p. 27447, para. 52  xNIn the instant case, accepting the licensee's contention would improperly allow CEI to "evade our  xLownership constraint" by dividing MBC's ownership into several "noncognizable discrete investments"  S9-described above that of CEI, on the one hand, and those of the individual Calvos, on the other., 9% yO- xxЍ The Commission indicated that it will apply a different standard of aggregation where the same person owns  yOi- xboth "passive investor" and "general investment" interests. Id. at page 2744748, para. 55. We note, however, that  xPTI has not attempted to show that the Calvos' individual interests in MBC were limited to those of a "passive investor," or that the application of that standard, in this case, would result in nonattribution. ,   xThrough aggregating the interests of the principals with those of their respective underlying  xentities, we determine that UMDA and CEI each held 50% negative control of the licensee prior to  xLUMDA's retirement of Larry Hillblom's MBC share. Although we find that an unauthorized transfer of  xcontrol occurred in this case, in apparent violation of the Commission's rules, the record does not establish  xprecisely when that event took place. PTI indicates only that at some unspecified time "between 1990 and  xk1993," UMDA principal Larry Hillblom retired his single MBC share, and that the overall number of  xMBC's remaining outstanding shares was accordingly reduced from 1,000 to 999. We find that this event  xjeffected the loss of negative control of the licensee by UMDA, and the acquisition of its positive control  S;- xby CEI, which thereafter controlled 500/999 MBC shares, or 50.05%b;% yY%- xi#D  P7jQP#э#C\  P6QP# Under our analysis, the subsequent July 18, 1994 transfer of the remaining MBC shares from UMDA to CEI  x+ conveyed a minority interest that was appropriately reported in the licensee's annual report in accordance with Section 73.3615 of the Commission's Rules. In accordance with Section";,{({(V""  S- x>73.3540(f) of the Commission's Rules, prior to this event, a Form 316 pro forma application seeking Commission approval should have been filed by the licensee, but was not.   xIn addition, we note that PTI did not respond to the allegation that it failed to update its ownership  S- xinformation until it filed its March 15, 1995 ownership report. b% yYi- x#D  P7jQP#э#C\  P6QP# I#D  P7jQP##C\  P6QP#n its March 15, 1995 ownership report, PTI represented that the information provided was accurate as of  xwDecember 31, 1994. The rule, however, requires that such information shall be accurate "as of a date not more than 60 days prior to the filing of the Report."  On the information before us, we conclude  xthat PTI also apparently violated Section 73.3615(a) of the Commission's Rules in two respects. First, the  xjinformation it supplied in connection with its March 15, 1995 report was fifteen days "stale" at the time  xof filing. Second, the ownership report was submitted late, because it should have been made on October  S5- xM1, 1994, the anniversary of the date that the licensee's renewal application is required to be filed. See 47 C.F.R. Secs. 73.3615(a), 73.1020(a)(15) and 73.3539(a).  S -  xWe find that PTI's apparent violation of Section 73.3615 is de minimis. While the licensee's  xMarch 15, 1995 ownership report was submitted late, and contained information that was "stale," it is of  xgreater concern to us that the information revealed in the instant pleadings concerning the retirement of  x\the Hillblom share also indicates that PTI's early 1990's ownership reports were submitted with, and  xcontinue to contain, inaccurate information. However, we will not impose an additional forfeiture amount  xfor these apparent violations. Instead, we will direct the licensee to amend its earlier reports, and caution it to exercise greater care with regard to its reporting obligations in the future.  S-  xSanction. For the reasons set forth above, we find that PTI has apparently violated Section 310(d)  xLof the Act, Sections 73.3540 and 73.3615 of the Commission's Rules. From the information supplied, it  xappears that an unauthorized transfer of control occurred at an unspecified time not later than April 15,  Sk- x1994, k% yY- xY#D  P7jQP#э#C\  P6QP#As noted above, the licensee did not identify the time that the event triggering the transfer of control occurred  xmore specifically than indicating that it was sometime "between 1990 and 1993." We further note that the Tel.  xAuthorization Act of 1992, Pub. L. 102538, 160 Stat. 3533 (1992) allows the Commission to impose forfeitures for  xperiods of time reaching back to the commencement of the licensee's current term. In this case, the most recent  xlicense renewal for any of the subject stations took place on April 15, 1994 when KUAMTV's license renewal was  xgranted (File No. BRCT931005KG). Accordingly, we deem the instant apparent unauthorized transfer of control to have occurred at that time, and to have continued ever since.  and has continued since then, and that violation of the ownership report rule occurred upon the  xlicensee's failure to file its ownership report by October 1, 1994. Accordingly, pursuant to Section 503(b)  xof the Act, Pacific Telestations, Inc., licensee, Stations KUAM(AM), KUAMFM, and KUAMTV, Agana,  xGuam, is hereby advised of its apparent liability for a forfeiture of Two Thousand Dollars ($2,000.00) for  xits apparent willful, repeated violations of Section 310(d) of the Act, Sections 73.3540 and 73.3615 of the Commission's Rules.   xIn assessing this monetary forfeiture, we have taken into account the nature, circumstances, extent  xand gravity of the violations, as well as the degree of culpability and the stations' prior enforcement  xhistory. Section 503(b)(2)(D) of the Act, 47 U.S.C. Sec. 503(b)(2)(D). In this connection, the  xcomplainant urges that the sanction imposed should be comparable to the substantial fines imposed in  S:- xGalesburg Broadcasting Co., 69 RR 2d 211 (1991) ($25,000 forfeiture for failure to seek prior approval  S- x[of transfer of control, and where violation of alien ownership restriction resulted), Cate Communications  S- xCorp., 60 RR 2d 1386 (1986) ($20,000 forfeiture for repeated instances of unauthorized transfer of"< ,{({("  S- xcontrol), noted above, CanXus Broadcasting Corporation, 7 FCC Rcd 3874 (1992), recon. granted in part,  S- x8 FCC Rcd 4323, aff'd, 10 FCC Rcd 9950 (1995) ($10,000 forfeiture for unauthorized transfer of control,  xlater reduced to $1,000 where, on facts not pertinent here, the prospective purchaser attempted to keep  Sg- xjseverely financially distressed station on the air), and New West Broadcasting Systems, Inc., 7 FCC Rcd  S4- x556 (MMB 1992) recon. granted, 8 FCC Rcd 102 (1993) ($20,000 forfeiture for unauthorized de facto  xtransfer of control later rescinded, and admonishment substituted where substantial period of violation found outside statute of limitation).  Sh-  xThe nature of the unauthorized transfer of control in this case, viz., the licensee's failure to seek  S5- xLprior Commission consent, is similar to that imposed in Letter to Monte Corporation, (MMB, October  S- x5, 1995), recon. granted, 11 FCC Rcd 20535 (MMB 1996) ($2,000 forfeiture imposed for an unauthorized  xNtransfer of control from the licensee to an entity under the control of the licensee's principal, later  xrescinded for reasons not pertinent here). We find that the instant case is inapposite to those cited by the  xcomplainant, which involved violations based on unauthorized transfers of substantial control and other  x=compounding factors. Nor do we agree that the unauthorized transfer of control should be deemed more  xserious because it was based upon the licensee's desire to conceal the termination of any former principals'  xOaffiliation with IWC in order to circumvent enforcement of the Commission's rules concerning  xLbroadcast/cable television crossownership. As noted above, the July, 1994 stock exchange involved the  xtransfer of a thenminority stock interest in MBC that was properly conveyed without prior Commission approval, and was thereafter accurately reflected in the stations' ownership report.   xIn mitigation, PTI contends that it sought diligently to comply with the Commission's rules  x>through seeking staff advice concerning the July, 1994 stock exchange. However, it makes no similar  xclaim concerning its earlier retirement of the Larry Hillblom MBC share, which we have determined  xtriggered the unauthorized transfer of control in this case. Consequently, we will not reduce the proposed  S- xforfeiture on this basis. Cf. Hualapai Broadcasters, Inc., 8 FCC Rcd 4914 (MMB 1993) (forfeiture reduced in part because licensee relied upon legal opinion of a recognized authority).   xIn regard to this forfeiture proceeding, PTI is afforded a period of thirty (30) days from the date  x=of this letter "to show, in writing, why a forfeiture penalty should not be imposed or should be reduced,  xor to pay the forfeiture. Any showing as to why the forfeiture should not be imposed or should be  xreduced shall include a detailed factual statement and such documentation and affidavits as may be  xpertinent." 47 C.F.R. Section 1.80(f)(3). Other relevant provisions of Section 1.80 are summarized in the  xattachment to this letter. PTI is also directed to file the neglected Form 316 transfer of control application immediately, and amend its ownership reports, as indicated above. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Roy J. Stewart x` `  hh@Chief, Mass Media Bureau