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ÿÿ$$-CÓÓ2óÓÔ€XoX%&Ó Ô€€€€€òòÚ  Ú1Ú  ÚóóÝ  ÝÔ€ô°„õXXoÔ€For€ease€of€reference,€the€petitions€and€complaints€will€hereinafter€collectively€be€referred€to€as€"the€complaints"Ð ° Ðand€the€petitioners€and€complainants€will€hereinafter€collectively€be€referred€to€as€"the€complainants."€€MBC€and€LABIÏboth€filed€consolidated€oppositions€to€the€complaints€on€October€3,€1994.€€Platinum€and€Topeka€both€filed€replies.€ÏEagle€filed€numerous€requests€for€additional€time€in€which€to€file€a€reply,€but€there€is€no€record€that€Eagle€ever€did€so.€ÏNo€informal€objections€or€petitions€to€deny€were€filed€against€either€the€renewal€or€the€transfer€of€control€application.(>!2é($¤¤Ý ƒ8Pì!ÝÑ8€°„ôõdÈdÈ8ÑÑ  ÑÓ  ÓÓ2óÓÑxÈÑÔ€&Ó %õôÔÔ€&Ó %%&Ó ÔÓC€ - ÿÿ$#;CÓÝ  ÝÓ2óÓÔ€XoX%&Ó Ô€€€€€òòÚ  Ú0Ú  Úóó ÑÝ ƒ0$ÝÝ  Ý€Ô€ôôôÔÔW€ô\  `*Times New RomanTTWÔThe€amount€of€€possible€consideration€was€increased€pursuant€to€a€settlement€agreement€entered€into€by€andÏbetween€LABI,€Law,€and€MBC,€in€connection€with€a€case€filed€in€the€District€Court€of€Riley€County,€Kansas.€€SeeÏAmendment€of€Option€Agreement€dated€September€9,€1996.€€Under€that€amendment,€so€long€as€the€CommissionÏgrants€the€pending€assignment€application,€Law€is€entitled€to€$67,500€in€consideration€for€the€transfer€and€deliveryÏto€MBC€of€51%€of€LABI's€stock.Ô€XXXÔÔW€ô\  `*Times New RomanTTWÔ ÑÝ ƒ0$ÝÝ  Ý€Ô€ôôôÔÔW€ô\  `*Times New RomanTTWÔTopeka€and€Platinum€also€suggest€that€Law€has€withheld€information€from€the€Commission€regarding€LABI'sÏnegotiations€and€agreements€with€MBC.€€Specifically,€they€contend€that€"agreements„commitments"€were€enteredÏinto€in€1993,€but€LABI€did€not€file€the€Option€Agreement€and€other€relevant€documents€until€July€11,€1994,€whenÏit€filed€its€ownership€report€following€consummation€of€the€pro€forma€assignment.€€LABI€responds€that€it€has€madeÏfull€disclosures€to€the€Commission,€keeping€it€informed€of€LABI's€ongoing€negotiations€with€MBC€and€filing€copiesÏof€the€executed€documents€as€required€by€Section€73.3613€of€the€Commission's€Rules.€€The€Agreements€at€issue€wereÏexecuted€on€June€14,€1994,€and,€to€the€extent€required,€were€filed€with€the€Commission€on€July€11,€1994,€within€theÏthirty€day€period.€€Moreover,€documents€filed€by€LABI€prior€to€that€date€reported€its€ongoing€negotiations€with€MBC.€ÏAccordingly,€we€see€no€reason€to€pursue€Complainants'€allegations€in€this€regard.Ô€XXXÔÔW€ô\  `*Times New RomanTTWÔ ÊÝ ƒ0$ÝÝ  Ý€Ô€ôôôÔÔW€ô\  `*Times New RomanTTWÔWhen€the€Commission€first€adopted€its€prohibition€on€newspaper„broadcast€cross„ownership,€Seaton€and€MBCÏwere€grandfathered€as€a€permissible€newspaper„broadcast€combination.€€47€C.F.R.€ðð€73.35555,€note€4.Ô€XXXÔÔW€ô\  `*Times New RomanTTWÔ ¿Ý ƒ0$ÝÝ  Ý€Ô€ôôôÔÔW€ô\  `*Times New RomanTTWÔHaving€so€concluded,€we€need€not€reach€LABI's€position€that€Complainants€had€the€burden€of€proving€thatÏLaw€would€receive€more€than€the€legitimate€and€prudent€expenses€of€constructing€the€station.Ô€XXXÔÔW€ô\  `*Times New RomanTTWÔ  ÿÿCƒ‰•›£«±Right ParRight-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|J«ô\  `*Times New RomanTTôôCô\  PŽ6QôPô\  `*Times New RomanTTXXPô\  PŽ6QXPô\  `*Times New RomanTT&&Jô\  PŽ6Q&P(òPì$¡¡Ñ8€°„ôõdÈdÈ8ÑÑ  ÑÓ  ÓÓ2óÓÑxÈÑÔ€&Ó %õôÔÔ€&Ó %%&Ó ÔÓC€ - ÿÿ$#;CÓ d˜HP LaserJet IIISiØ,,,,,Ø,0##37=CIQYag­­1.a.i.(1)(a)(i)1)a) hÝ ƒ,8'ÝÓ  ÓÓ2óÓÔ€>&Ó %õôÔÔ€>&Ó %%&Ó ÔÓC€ - ÿÿ$$-CÓÝ  Ýà@>>4ìàò òFederal€Communications€Commissionˆà€((l(#àDA€98„784€€€€ó óˆÐ ° Ðß?€9'' }xdE°x?ßô\  `*Times New RomanTT3Ž~$|ŒÿU‹ÿÀÀÀÝ ƒ8Pì!ÝÑ8€°„ôõdÈdÈ8ÑÑ  ÑÓ  ÓÓ2óÓÑxÈÑÔ€&Ó %õôÔÔ€&Ó %%&Ó ÔÓC€ - ÿÿ$ CÓÝ  ÝÑX°ÑÑ8€Ó &%dÜôõdÈ8ÑññÖ€+ÿÿÖññññÖ€=ÿÿÖññÔ_Ôà@ˆˆ4ìàFederal€Communications€CommissionˆÐ W Ðà@\\9ìàWashington,€D.C.€20554ˆÌÌÓ  ÓApril€23,€1998ÌÌÓ  Ó€In€reply€refer€to:Ì1800C1„CMW¹Ó  ÓÌÌÌÓ  Óò òReleased:€€April€24,€1998€ó óÐ w   ÐÓ  ÓÌRichard€R.€Zaragoza,€Esq.ÌFisher€Wayland€Cooper€LeaderÌ&€Zaragoza€L.L.P.Ì2001€Pennsylvania€Avenue,€N.W.ÌSuite€400ÌWashington,€D.C.€€20006„1851ÌÌandÌÌJohn€Tongier,€Esq.ÌHolbrook,€Heaven,€and€Osborn,€P.A.ÌP.O.€Box€3867ÌMerriam,€KS€€66203„0867ÌÌÌà  àà ` àà ¸ àà  àà h àà À àà  àRe:à p àStation€KXBZ(FM)Ð Gð Ðà  àà ` àà ¸ àà  àà h àà À àà  àà p àManhattan,€KSÌà  àà ` àà ¸ àà  àà h àà À àà  àà p àFile€No.€BRH„970207YAÌà  àà ` àà ¸ àà  àà h àà À àà  àà p àFile€No.€BTCH„961029GIÌÌDear€Counsel:ÌÌÔ2ÿÿÔÚ  Ú1Ú  Ú.Ô3  Ô€€This€letter€is€in€reference€to€(i)€the€above„captioned€application€for€renewal€of€license€of€StationÏKXBZ(FM)€(formerly€KTDF(FM)),€Manhattan,€Kansas€(File€No.€BRH„970207YA);€(ii)€the€above„¼captioned€application€for€transfer€of€control€of€Station€KXBZ,€licensed€to€Little€Apple€Broadcasting,€Inc.Ï("LABI"),€from€Michael€D.€Law€to€Manhattan€Broadcasting€Co.,€Inc.€("MBC")€(File€No.€BTCH„¼961029GI);€(iii)€a€complaint€dated€August€9,€1994,€filed€by€The€Eagle€Broadcasting€Company,€Inc.Ï("Eagle");€(iv)€a€Petition€for€Revocation€Hearing€dated€August€9,€1994,€filed€by€Topeka€Broadcomm,€Inc.Ï("Topeka");€(v)€a€Petition€for€Revocation€Hearing€dated€August€23,€1994,€filed€by€Platinum€Broadcasting,ÏInc.€("Platinum");€and€(vi)€a€complaint€dated€August€26,€1994,€filed€by€Montgomery€Publications,€Inc.Ï("Montgomery").׃/×Ý ƒ.ÿÿÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×Ð w( "* ÐÌÐ  *À#,ƒ ÐÓ  Óò òBACKGROUNDó óÐ W ÐÓ  ÓÌà  àÔ2ÿÿÔÚ  Ú2Ú  Ú.Ô3  Ô€€On€March€9,€1990,€the€Commission€granted€the€application€of€Little€Apple€Broadcasting,€aÏpartnership€("LABP"),€for€a€construction€permit€for€a€new€commercial€FM€station€in€Manhattan,€Kansas.€€OnÏNovember€2,€1993,€LABP€filed€an€application€for€the€òòproóó€òòformaóó€assignment€of€the€permit€to€LABI€(File€No.Ð — @ ÐBAPH„931102GG).€€The€òòóóapplication€was€granted€on€November€24,€1993.€€Notification€of€consummation€wasÐ g  Ðfiled€with€the€Commission€on€June€21,€1994,€stating€that€the€closing€was€"effective"€as€of€June€1,€1994.€ÏPursuant€to€grant€of€that€application,€and€the€consummation€thereof,€the€managing€general€partner€of€LABP,ÏMichael€D.€Law€("Law"),€became€the€sole€officer,€director,€and€100%€shareholder€of€LABI.€€ÌÌà  àÔ2ÿÿÔÚ  Ú3Ú  Ú.Ô3  Ô€€Law€states€that€he€was€approached€by€three€different€broadcast€groups€interested€in€investing€inÏhis€station.€€In€mid„1993€he€entered€negotiations€with€MBC.€€MBC€is€the€licensee€of€Stations€KMAN(AM)€andÏKMKF(FM)€in€Manhattan,€Kansas,€and€the€principals€of€MBC€hold€attributable€ownership€interests€in€SeatonÏPublishing€Co.,€Inc.€("Seaton"),€which€publishes€a€daily€newspaper€in€Manhattan,€òòThe€Manhattan€Mercuryóó.€Ð ç  ÐNegotiations€continued€between€LABI,€Law,€and€MBC€for€over€a€year.€€During€that€time,€Law€informed€theÏCommission€of€his€ongoing€discussions€with€MBC,€reporting€that€a€preliminary€agreement€had€been€reached.€ÏòòSeeóó€òòe.g.óó€Exhibit€1€to€LABP's€October€26,€1993,€Application€for€Minor€Modification€of€Construction€PermitÐ W  Ð(File€No.€BMPH„931027IF).€€€In€mid„1994,€the€agreements€between€Law€and€MBC€were€formalized,€resultingÏin€the€execution€of€an€Option€Agreement,€Promissory€Note,€Security€Agreement,€Stock€Pledge€Agreement,ÏStudio€Lease,€Tower€Lease,€Joint€Sales€Agreement,€and€Employment€Agreement€(collectively,€"theÏAgreements").€€In€sum,€pursuant€to€the€Agreements,€LABI:€borrowed€construction€monies€from€MBC€pursuantÏto€a€Promissory€Note€secured€by€the€station's€assets€and€a€stock€pledge;€contracted€to€lease€transmitter€andÏstudio€space€from€MBC;€granted€MBC€the€right€to€sell€KXBZ's€commercial€air€time€and€receive€a€percentageÏof€the€monies€derived€from€the€sale€thereof;€agreed€to€share€some€of€MBC's€non„management€staff;€and€grantedÏMBC€the€exclusive€right€to€acquire€stock€in€LABI.€€MBC€has€now€exercised€its€right€to€acquire€stock€in€LABI,Ïand€the€pending€application€seeks€transfer€of€control€of€100%€of€LABI€stock€from€Law€to€MBC.ÌÌà  àÔ2ÿÿÔÚ  Ú4Ú  Ú.Ô3  Ô€€As€part€of€the€pending€assignment€application,€MBC€has€promised€to€eliminate€existing€attributableÏcross„ownership€interests€between€MBC€and€Seaton€that€were€grandfathered€when€the€Commission€adoptedÏthe€daily€newspaper€cross„ownership€rule€in€1975.€€òòóóòòSee€Multiple€Ownership€of€Standard,€FM,€and€TelevisionÐ ç ÐBroadcast€Stations,€Second€Report€and€Orderóóòò,óó€50€FCC€2d€1046,€òòòòóórecon.€granted€in€partòòóó,óó€53€FCC€2d€589€(1975),Ð ·` Ðòòòòóóaff'd€sub€nom.òòóó€òòóóFCC€v.€National€Citizens€Committee€for€Broadcastingòòóó,óó€436€U.S.€775€(1978).€€Specifically,Ð ‡0 ÐMBC€proposes€that€as€of€the€closing€of€the€instant€transfer€of€control,€Edward€L.€Seaton€will€have€resignedÏas€president€and€a€director€of€MBC,€retaining€only€a€non„attributable€3.8%€stock€interest€in€MBC.€€EdwardÏL.€Seaton€is€presently€the€controlling€stockholder€(53.1024%),€as€well€as€president,€secretary,€treasurer,€andÏa€director€of€Seaton.€€Additionally,€MBC€asserts€that€three€other€members€of€the€Seaton€family€will€haveÏresigned€their€positions€as€officers€or€directors€of€Seaton.€€MBC€states€that,€as€a€result€of€these€changes,€noÏindividual€will€hold€attributable€interests€in€both€MBC€and€Seaton.ÌÌÌÓ  Óòòò òóóTHE€AGREEMENTSó óÐ ×&€ ( ÐÓ  ÓÌà  àÔ2ÿÿÔÚ  Ú5Ú  Ú.Ô3  Ô€€The€Option€Agreement,€executed€June€14,€1994,€€grants€MBC€two€separate€options€to€purchaseÏthe€stock€of€LABI,€although€both€could€be€exercised€simultaneously.€€The€first€option€grants€MBC€the€rightÏto€purchase€49%€of€the€stock€of€LABI€at€anytime€from€the€date€of€execution€until€ten€years€after€theÏcommencement€of€program€tests€(Section€2.1).€€In€consideration€for€that€option,€MBC€paid€LABI€$53,800,Ïwith€$100€more€to€be€paid€in€consideration€of€the€transfer€and€delivery€to€MBC€of€the€stock€(Sections€2.1€andÏ2.2).€€Moreover,€in€consideration€for€the€construction€loan€and€other€"Collateral€Agreements,"€the€OptionÏAgreement€grants€MBC€the€right€to€purchase€51%€of€all€of€the€outstanding€LABI€stock€at€anytime€during€theÏten€year€period€following€the€commencement€of€program€tests€(Section€3.1).€€The€consideration€for€the€transferÐ '.Ð'1 Ðand€delivery€to€MBC€of€51%€of€LABI's€stock€varies€depending€upon€when€the€option€isÏexercised,€but,€at€a€minimum,€is€$56,100€(Section€3.1€and€3.2).× ƒ1 ××  ×ÌÌà..àÔ2Ô6.Ô3  Ô€€Pursuant€to€the€Option€Agreement,€in€the€event€that€the€49%€option€is€exercised€and€MBC€andÏLaw€are€both€shareholders€of€LABI,€Law€has€a€right€of€first€refusal€for€the€49%€interest€during€the€tenÏyear€period€following€commencement€of€program€test€authority€and€both€MBC€and€Law€have€a€right€ofÏfirst€refusal€thereafter€(Section€2.3).€€Moreover,€upon€the€transfer€of€Law's€49%€interest€in€LABI€to€MBC,ÏMBC€agrees€to€pledge€such€stock€to€Law€to€secure€the€performance€of€its€obligations€under€the€OptionÏAgreement€(Section€2.4).€€Additionally,€if€the€agreement€is€terminated,€depending€on€why€termination€hasÏoccurred,€MBC€is€entitled€to€a€refund€from€Law€of€all€amounts€paid€by€MBC€to€Law€(Section€7).€€Finally,Ïif€MBC€acquires€the€49%€interest,€but€fails€to€exercise€the€51%€option,€Law€must€either€repurchase€theÏ49%€or€seek€an€independent€party€to€purchase€such€interest€for€the€fair€market€value€of€such€stockÏ(Section€10).ÌÌà..àÔ2Ô7.Ô3  Ô€€The€parties€also€executed€a€Promissory€Note€on€June€14,€1994,€whereby€MBC€agreed€to€lendÏLABI€up€to€a€specified€sum€to€be€used€to€finance€the€construction€of€Station€KXBZ.€€SpecificÏrequirements€for€payment€of€the€loan€plus€interest€are€contained€in€that€agreement.€€The€loan€is€securedÏby€the€station's€assets€(Security€Agreement€dated€June€14,€1996)€and€Law's€stock€in€LABI€(Stock€PledgeÏAgreement€dated€June€14,€1994).ÌÌà..àÔ2Ô8.Ô3  Ô€€On€that€same€date,€LABI€and€MBC€also€entered€into€a€Studio€Lease€and€a€Tower€LeaseÏwhereby€LABI€leases€space€on€MBC's€tower€and€in€MBC's€studio€building.€€Both€agreements€are€for€aÏperiod€of€five€years,€but€may€be€renewed,€and€both€contain€specific€provisions€regarding€rent€and€theÏpayment€thereof.ÌÌà..àÔ2Ô9.Ô3  Ô€€MBC€and€LABI€also€entered€into€a€Joint€Sales€Agreement€on€June€14,€1994.€Pursuant€to€thatÏagreement,€which€is€for€a€five€year€renewable€term,€MBC€is€authorized€to€represent€LABI€in€the€sale€ofÏall€of€the€commercial€advertising€time€on€Station€KXBZ€and€to€provide€any€general€and€administrativeÏservices€necessary€to€facilitate€the€sale€of€commercial€air€time€on€the€station€(Section€1).€€Under€the€JointÏSales€Agreement,€MBC€retains€a€certain€percentage€of€all€revenues€derived€from€the€sale€of€time€jointlyÏon€Station€KXBZ€and€on€any€other€radio€station.€€All€other€station€income€is€to€be€given€to€LABI,Ïalthough€MBC€is€to€receive€a€certain€percentage€of€any€station€profit€after€the€payment€of€expenses.€€IfÏthe€station€revenues€are€insufficient€to€pay€expenses,€MBC€has€agreed€to€pay€the€shortfall,€up€to€a€certainÏsum,€but€LABI€must€repay€that€amount€or€it€may€be€considered€a€liability€at€closing€(Section€4).€€TheÏJoint€Sales€Agreement€provides€that€"decisions€regarding€the€program€format€.€.€.€shall€remain€the€soleÏand€exclusive€province€and€responsibility€of€Owner€[LABI]"€(Section€8).€€Moreover,€it€specifies€thatÏ"Owner€shall€continue€to€retain€full€authority€and€control€over€the€operation€of€the€Station"òòóó€(Section€8).ÌòòóóÌà..àÔ2Ô10.Ô3  Ô€€Finally,€Law,€LABI,€and€MBC,€to€a€limited€degree,€entered€into€an€Employment€Agreement.€ÏUnder€that€agreement,€Law€committed€to€be€General€Manager€of€the€station,€overseeing€its€day„to„dayÏoperation,€in€exchange€for€a€specified€"Monthly€Fee"€(Section€4).€€Pursuant€to€the€agreement,€MBC€is€to€Çreimburse€LABI€for€the€payment€of€Law's€"Monthly€Fee"€as€an€inducement€to€LABI€to€enter€into€the€JointÏSales€Agreement.ÌÌÌÓ  Óò òDISCUSSIONó óò òó óÌÌÓ  Óà..àÔ2Ô11.Ô3  Ô€€Complainants€contend€that€the€Agreements€give€MBC€ownership€and€control€of€StationÏKXBZ€in€violation€of€the€Commission's€rules€and€policies€regarding€multiple€ownership,€cross„interest,Ïunauthorized€transfer€of€control,€and€sale€of€an€unbuilt€station.€€Further,€Topeka€and€Platinum€argue€thatÏany€action€taken€by€LABI€should€be€unwound€since€the€transfer€of€control€from€LABP€to€LABI€is€notÏvalid.€€Finally,€Eagle,€Topeka,€and€Platinum€allege€that€MBC€has€been€less€than€forthcoming€with€theÏCommission€because€its€most€recent€ownership€report€failed€to€disclose€the€interests€of€its€principals€inÏòòThe€Manhattan€Mercuryóó.× ƒ2 ××  ×€€LABI€and€MBC€both€assert€that€LABI€and€Station€KXBZ€are€completelyÏowned€and€controlled€by€Law€and€that€neither€the€agreements€nor€the€effectuation€thereof€show€otherwise.€ÏFurther,€LABI€contends€that€there€is€no€reason€to€invalidate€the€assignment€of€the€station€from€LABP.€ÏFinally,€MBC€states€that€it€has€been€forthcoming€with€the€Commission€and€that€there€is€no€evidence€thatÏit€has€engaged€in€either€misrepresentation€or€lack€of€candor.ÌÌà..àA.à` ..` àòòóóòòMisrepresentation€or€Lack€of€Candor€by€MBCóóÌÌà..àÔ2Ô12.Ô3  Ôòòóó€€Eagle,€Topeka,€and€Platinum€all€point€out€that€MBC's€1997€ownership€report€failed€to€discloseÏthe€interests€of€its€principals€in€òòThe€Manhattan€Mercuryóó,€although€none€of€the€three€complainantsÏspecifically€contend€that€such€a€failure€was€intentional.€€MBC€asserts€that€there€was€no€intent€to€deceiveÏthe€Commission€with€regard€to€its€principals'€interests€in€òòThe€Manhattan€Mercuryóó.€€It€states€that€most€ofÏMBC's€principals€have,€through€their€interests€in€Seaton,€had€an€interest€in€òòThe€Manhattan€Mercuryóó€forÏdecades€and€that€the€Commission€was€informed€of€those€interests€at€the€time€the€stations€were€first€built.€ÏFurther,€other€ownership€reports€have€contained€information€about€MBC's€connection€with€the€paper.€ÏMBC€contends€that€it€does€not€know€why€the€1997€ownership€report€did€not€mention€the€paper,€but€thatÏits€failure€to€do€so€was€simply€an€oversight€and€that€there€was€no€motive€or€intent€to€conceal€itsÏconnection€with€the€daily€paper.ÌÌà..àÔ2Ô13.Ô3  Ô€€Misrepresentation€involves€false€statement€of€material€fact€made€with€an€intent€to€deceive.€ÏòòFox€River€Broadcasting,€Inc.óó,€93€FCC€2d€127,€129€(1983).€€Lack€of€candor€involves€concealment,€evasion,Ïand€other€failures€to€be€fully€forthcoming€concerning€material€facts€undertaken€with€an€intent€to€deceiveÏthe€Commission.€€òòIdóó.€€We€do€not€believe€that€the€information€before€us€supports€a€finding€of€eitherÏmisrepresentation€or€lack€of€candor.€€Moreover,€we€do€not€find€any€evidence€of€a€"willful€materialÏomission"€warranting€a€sanction€pursuant€to€Section€1.117€or€73.1015€of€the€Commission's€Rules.€€òòSeeÏAbacus€Broadcasting€Corp.óó,€8€FCC€Rcd€5110,€5115€(Rev.€Bd.€1993).€€MBC€previously€has€informed€theÏCommission€of€its€connection€to€òòThe€Manhattan€Mercuryóó€and€there€is€no€evidence€to€suggest€that€its€Çfailure€to€include€such€information€in€its€1997€ownership€report€was€anything€but€an€oversight.€ÏAccordingly,€no€Commission€action€is€required€in€this€regard.ÌÌà..àB.à` ..` àòòFailure€to€Consummate€in€a€Timely€ManneróóÌÌà..àÔ2Ô14.Ô3  Ôòòóóò òó ó€€Topeka€and€Platinum€contend€that€the€transfer€of€control€of€Station€KXBZ€from€LABP€toÏLABI€was€not€timely€consummated€and€that€the€transfer€should€not€be€recognized.€€Specifically,€they€stateÏthat€the€application€to€change€to€corporate€form€was€granted€November€24,€1993,€and€was€conditionedÏupon€consummation€within€sixty€days.€€Thus,€it€should€have€been€consummated€by€January€23,€1994.€ÏThey€assert€that€since€it€was€not€consummated€until€June€1994,€the€transfer€of€control€is€invalid.€ÏAdditionally,€Topeka€maintains€that€LABI€violated€the€express€terms€of€the€authorization€by€taking€stepsÏtoward€construction€of€the€station€before€it€had€notified€the€Commission€of€the€consummation.€€In€supportÏof€its€assertion,€it€points€to€an€equipment€order€signed€by€Michael€Law€on€behalf€of€LABI.ÌÌà..àÔ2Ô15.Ô3  Ô€€LABI€contends€that€the€sixty„day€closing€time€is€an€informal,€unofficial,€and€internal€policyÏof€the€Mass€Media€Bureau€which€has€never€been€codified.€Further,€it€points€out€that€grants€of€additionalÏtime€to€consummate€are€routinely€given€by€oral€confirmation.€€Thus,€LABI€contends€that€its€failure€toÏtimely€consummate€should€not€invalidate€the€transfer€of€control.€€Additionally,€LABI€rejects€Topeka'sÏcontention€that€it€proceeded€with€construction€of€the€station€prior€to€consummation.€€While€it€concedesÏthat€when€Law€signed€the€equipment€proposal,€he€specified€that€he€was€doing€so€on€behalf€of€LABI,€itÏargues€that€the€designation€of€the€company€as€LABI€was€inadvertent,€pointing€to€the€fact€that€the€orderÏwas€in€the€name€of€LABP€and€that€Law€indicated€his€title€as€"partner,"€not€president.€€Moreover,€itÏcontends,€the€mere€acceptance€of€an€equipment€proposal€does€not€constitute€premature€construction.ÌÌà..àÔ2Ô16.Ô3  Ô€€It€is€true€that€in€connection€with€the€grant€of€the€pro€forma€assignment€application,€theÏCommission€issued€a€letter€dated€November€30,€1993,€advising€LABI€that€it€had€sixty€days€to€completeÏthe€assignment€and€that€it€was€required€to€notify€the€Commission€of€such€consummation.€€It€is€also€trueÏthat€LABI€did€not€complete€consummation€within€that€sixty„day€period,€and€there€is€no€evidence€that€itÏrequested€additional€time€to€consummate.€€However,€while€the€staff€could€have€rescinded€its€grant€whenÏthe€parties€went€beyond€the€sixty„day€consummation€period,€it€did€not€do€so.€€Rather,€upon€the€filing€ofÏthe€consummation€letter€on€June€21,€1994,€the€staff€simply€updated€its€records€to€reflect€LABI€as€theÏlicensee€of€€Station€KXBZ.€€In€this€case,€involving€a€pro„forma€assignment€with€no€change€to€theÏcontrolling€party,€the€staff's€action€was€clearly€appropriate.€Accordingly,€the€assignment€remains€valid.€ÏMoreover,€we€find€no€basis€for€concluding€that€LABI€proceeded€with€construction€of€the€station€prior€toÏconsummation.€€The€equipment€proposal€at€issue€was€directed€to€LABP€and€was€signed€by€Law€asÏ"partner,"€not€president.€€While€Law€indicated€that€he€was€signing€the€proposal€on€behalf€of€LABI,€weÏdo€not€find€that€designation€to€be€controlling,€particularly€since€Law€was€a€principal€of€both€LABP€andÏLABI€at€the€time.ÌÌà..àC.à` ..` àòòOwnership€and€Control€of€Station€KXBZóóÌÌà..àÔ2Ô17.Ô3  Ôòòóó€€Complainants€assert€that€as€a€result€of€the€Agreements,€MBC€has€acquired€an€ownershipÏinterest€in€and€control€of€Station€KXBZ.€€Thus,€they€contend,€MBC€should€be€attributed€with€ownershipÏof€three€radio€stations€licensed€to€Manhattan,€KS,€as€well€as€the€community's€only€daily€newspaper,€inÏviolation€of€the€Commission's€multiple€ownership€rule.× ƒ3 ××  ×€€Moreover,€Complainants€contend€that€even€ifÏMBC's€relationship€with€Station€KXBZ€is€not€attributable€for€purposes€of€the€multiple€ownership€rule,€it€Çviolates€the€Commission's€cross„interest€policy.€€Finally,€Complainants€contend€that€the€Agreements€andÏthe€effectuation€thereof€have€resulted€in€an€unauthorized€transfer€of€control€of€Station€KXBZ.ÌÌà..àÔ2Ô18.Ô3  Ô€€òòOwnership€Interest€in€LABI.óó€€Section€73.3555(d)€of€the€Commission's€Rules,€47€C.F.R.€ððÏ73.3555(d)(2),€prohibits€a€party€from€directly€or€indirectly€owning,€operating,€or€controlling€a€broadcastÏstation€and€a€daily€newspaper,€where€the€station's€predicted€1€mV/m€contour€encompasses€the€entireÏcommunity€in€which€the€newspaper€is€published.€€òòSeeóó€òòWisconsin€Television,€Ltd.óó,€59€RR€2d€193,€194Ï(1985).€€Complainants€contend€that€the€Agreements€give€MBC€a€current€attributable€interest€in€StationÏKXBZ.€€MBC€and€LABI,€on€the€other€hand,€assert€that€Law€is€the€sole€officer,€director,€and€shareholderÏof€LABI€and€that€no€principal€of€MBC€holds€any€attributable€or€nonattributable€interest€in€LABI.ÌÌà..àÔ2Ô19.Ô3  Ô€€In€support€of€their€position,€Complainants€rely€on€the€terms€of€the€Option€Agreement,Ïasserting€that€the€Option€Agreement€is€in€fact€a€"perfected"€agreement€for€the€purchase€and€delivery€ofÏa€49%€interest€in€LABI,€with€99.8%€of€the€purchase€price€for€the€49%€interest€prepaid.€€They€point€to€theÏfact€that€the€agreements€on€which€the€option€is€based€(the€construction€loan,€stock€pledge,€and€securityÏagreement)€have€already€been€effected€and€that€MBC's€only€remaining€obligation€is€payment€of€$100€forÏdelivery€of€the€stock€certificates.€€In€such€a€case,€they€assert,€the€49%€interest€should€be€attributable€forÏmultiple€ownership€purposes.ÌÌà..àÔ2Ô20.Ô3  Ô€€The€Commission€has€previously€held€that€in€this€context€purchase€options€and€other€potentialÏfuture€rights€are€noncognizable€for€current€attribution€purposes.€€òòWWOR„TV,€Inc.óó,€6€FCC€Rcd€6569,€n.13Ï(1991).€€òòSee€alsoóó€47€C.F.R.€ðð73.3555,€Note€2(f).€€Specifically,€the€Commission€has€stated€that€in€theÏcontext€of€a€transfer€of€control,€there€is€"[n]o€presumption€that€an€option€will€be€exercised."€òòóóòòWWOR„TV,ÏInc.óó,€6€FCC€Rcd€at€n.13.€€Topeka€asserts€that€because€this€case€involves€a€station€that€was€unbuilt€at€theÏtime€the€agreements€were€executed,€the€Commission€should€not€apply€this€standard€but€instead€should€lookÏto€its€position€in€comparative€broadcast€cases€for€new€stations.€€In€those€cases,€because€of€the€desire€toÏprocess€applications€expeditiously€and€avoid€the€delay€caused€by€exercise€of€an€option€during€theÏproceeding,€there€is€a€presumption€that€options€will€be€exercised.€€òòIdóó.€€Such€a€presumption€allows€forÏspeedy€service€to€the€public.€€Regardless€of€whether€or€not€a€station€is€unbuilt€at€the€time€an€optionÏagreement€is€exercised,€there€is€no€such€compelling€reason€for€a€presumption€that€an€option€will€beÏexercised€in€a€transfer€of€control€context.€€Accordingly,€we€reject€Topeka's€argument€in€this€regard.€ÏAdditionally,€we€do€not€believe€that€the€up„front€option€payment,€in€this€case,€warrants€a€deviation€fromÏour€normal€policy€regarding€attribution€of€options.€€The€payment€does€not€change€the€fact€that€the€optionÏmay€not€be€exercised.€€In€fact,€the€Option€Agreement€specifically€recognizes€that€possibility€and€containsÏprovisions€for€repayment€of€the€option€price,€in€whole€or€in€part,€if€the€agreement€is€terminated.€ÏMoreover,€€we€do€not€find€that€any€of€the€other€Agreements€give€MBC€any€current€ownership€interest€inÏLABI.€€òòSeeóó€€òòAttribution€of€Ownership€Interestsóó,€97€FCC€2d€997,€1021„22€(1984)€(subsequent€historyÏomitted)€(neither€debt€agreements€nor€stock€pledges€as€security€for€a€loan€confer€a€cognizable€interest€inÏthe€holder);€òòWHW€Enterprises,€Inc.óó,€51€R.R.2d€409,€419,€n.11€(Rev.€Bd.€1982)€(subsequent€historyÏomitted)€(debtor„creditor€relationship€does€not€constitute€the€type€of€interest€cognizable€under€theÏCommission's€multiple€ownership€rules).ÌÌà..àÔ2Ô21.Ô3  Ô€€òòControl€of€Station€KXBZ.óó€€Having€concluded€that€MBC€does€not€directly€or€indirectly€haveÏa€current€ownership€interest€in€Station€KXBZ,€we€next€turn€to€the€question€of€whether€or€not€MBC€hasÏdirect€or€indirect€control€of€Station€KXBZ€in€violation€of€our€multiple€ownership€rule,€our€cross€interestÏpolicy,€and€our€prohibition€against€the€unauthorized€transfer€of€control€of€a€broadcast€station.€€CitingÏòòDavid€A.€Davilaóó,€5€FCC€Rcd€5222€(Video€Services€Division,€MMB€1990),€òòaff'dóó€6€FCC€Rcd€2897€(1991),ÏComplainants€contend€that€the€Agreements,€and€the€effectuation€thereof,€have€resulted€in€an€unauthorizedÏtransfer€of€control€of€Station€KXBZ.€€In€support€of€this€assertion,€Complainants€rely€on€the€following:€ÏMBC€loaned€LABI€the€money€to€construct€Station€KXBZ;€Station€KXBZ's€studios€are€located€in€KMKF'sÏstudio;€the€antenna€is€mounted€on€KMKF's€tower,€which€is€owned€by€MBC;€and€MBC€provides€sales€and€administrative€services€to€the€station.€€Although€Complainants€recognize€that€the€Joint€Sales€AgreementÏstates€that€Law€will€provide€programming,€they€contend€that€this€commitment€"rings€hollow"€because€LawÏresides€approximately€115€miles€away€from€Manhattan€and€is€employed€full€time€by€a€Kansas€City,€MOÏradio€station.€€Moreover,€Complainants€argue€that€the€Agreements€restrict€Law's€operation€of€StationÏKXBZ.€€Specifically,€they€contend,€Law€is€prohibited€from€assuming€any€indebtedness€and€cannot€sell€theÏstation's€assets,€change€employee€compensation,€or€modify€station€facilities.€€In€addition,€they€point€outÏthat€MBC€has€the€immediate€right€to€review€the€books€and€all€operating€information.€€€Finally,ÏComplainants€contend€that€because€the€Option€Agreement€requires€LABI€to€conduct€business€in€a€"normalÏand€ordinary"€way,€LABI€is€prohibited€from€competing€with€MBC's€stations,€KMAN€and€KMKF.€€Thus,ÏComplainants€assert,€MBC€has€"effective"€or€"operational"€control€of€€Station€KXBZ€and,€in€accordanceÏwith€òòJoseph€Patrick€Williamsóó,€56€RR€2d€1526€(MMB€1984)€and€òòWisconsin€Television,€Ltd.óó,€59€RR€2dÏ193€(1985),€MBC's€relationship€with€KXBZ€should€be€attributable€for€multiple€ownership€purposes.ÌÌà..àÔ2Ô22.Ô3  Ô€€€Both€LABI€and€MBC€assert€that€neither€the€Agreements,€nor€the€actions€of€LABI,€Law,€orÏMBC,€have€resulted€in€a€transfer€of€control€of€Station€KXBZ€and€that€Law€is€and€has€been€in€control€ofÏLABI€and€Station€KXBZ.€€LABI€and€MBC€contend€that€the€Commission€has€previously€approved€similarÏagreements€and€business€relationships.€€In€fact,€MBC€argues,€the€Commission€has€approved€even€moreÏclosely€involved€business€relationships€than€at€issue€here.€€In€support€of€its€assertions,€MBC€relies€on€òòTheÏO.R.T.H.,€Inc.óó,€FCC€87I„097,€released€September€8,€1987,€where€the€Commission€found€no€control€orÏattributable€interest€even€though€a€lender,€in€addition€to€financing€construction€and€operation,€also€suppliedÏprogramming,€nominated€certain€Board€members,€took€a€stock€pledge€and€held€a€purchase€option.€€MBCÏalso€cites€to€òòDavid€Davilaóó,€5€FCC€Rcd€5222€(Video€Services€Division,€MMB€1990),€òòaff'dóó,€6€FCC€RcdÏ2897€(1991),€where€the€Commission€concluded€that€even€though€a€lender€took€a€stock€pledge€and€a€lienÏon€the€licensee's€assets,€held€a€purchase€option,€financed€the€construction€and€initial€operation€of€theÏstation,€and€supplied€the€programming,€no€unauthorized€transfer€of€control€had€occurred.ÌÌà..àÔ2Ô23.Ô3  Ô€€Moreover,€LABI€and€MBC€contend€that€the€restrictions€in€the€Agreements€at€issue€are€allÏcommercially€reasonable€and€have€previously€been€reviewed€and€approved€by€the€Commission.€€MBCÏcontends€that€the€Commission€has€long€held€that€restrictions€upon€a€licensee€designed€to€protect€lendersÏor€minority€investors€do€not€confer€òòde€factoóó€control.€In€fact,€it€states,€the€Commission€has€approved€"farÏmore€intrusive€restrictions€than€those€at€issue€here,"€citing€òòFlathead€Valley€Broadcasters€(KOFI)óó,€5€RR€2dÏ74,€76€(Rev.€Bd.€1965)€(loan€agreement€limits€officers'€salaries€and€capital€expenditures,€and€prohibitsÏbonuses,€loans€to€officers,€dividends,€and€the€sale€of€stock);€òòData€Transmission€Co.óó,€44€FCC€2d€935,€936Ï(1974)€(agreement€limits€sale€of€stock,€merger,€selling€or€leasing€assets,€purchasing€stock,€or€making€orÏguaranteeing€loans);€òòNational€Broadcasting€Company,€Inc.óó,€6€FCC€Rcd€4882,€4883€and€n.2€(1991)Ï(agreement€requires€prior€consent€to€amend€certificate€of€incorporation,€sell€assets,€dissolve€company,Ïacquire€or€merge€with€another€corporation,€incur€indebtedness€not€in€ordinary€course€of€business).€€MBCÏOpposition€at€11.€€With€regard€to€Complainants'€specific€objection€to€those€provisions€in€the€AgreementsÏrequiring€LABI€to€operate€in€a€normal€and€ordinary€way,€MBC€contends€that€such€restrictions€are€onlyÏdesigned€to€protect€MBC's€investment,€allowing€MBC€to€claim€a€default€if€LABI,€decides,€for€example,Ïto€substantially€curtail€its€hours€of€operation€or€change€to€a€program€format€with€no€audience€appeal.€ÏMBC€Opposition€at€12.€€Finally,€in€response€to€Complainants'€arguments€regarding€limitations€on€incurringÏdebt,€LABI€points€out€that€the€Option€Agreement€does€not€flatly€prohibit€LABI€from€incurring€debt€asÏEagle€has€alleged.€€Rather,€LABI€asserts,€the€Option€Agreement€only€limits€the€amount€of€debt€that€mayÏbe€incurred,€and€how€that€additional€debt€is€secured.€€ÌÌà..àÔ2Ô24.Ô3  Ô€€As€LABI€and€MBC€have€stated,€the€Commission€has€previously€approved€agreements€withÏterms€similar€to€those€at€issue€here.€In€so€ruling,€the€Commission€looked€beyond€the€terms€of€theÏagreements€to€the€facts€of€the€specific€case€to€determine€who€was€in€actual€control€of€the€station.€€òòSeeóó,ÏòòNews€International,€PLCóó,€97€FCC€2d€349,€356„57€(1984)€(transfers€of€control€must€be€answered€withÏreference€to€the€specific€facts€presented),€òòcitingóó€òòData€Transmission€Co.óó,€44€FCC€2d€at€936„37.€€Ì‡à..àÔ2Ô25.Ô3  Ô€€There€is€no€exact€formula€by€which€control€of€a€broadcast€station€can€be€determined.€€InÏascertaining€whether€a€transfer€of€control€has€occurred,€we€traditionally€look€to€whether€a€new€entity€orÏindividual€has€obtained€the€right€to€determine€the€basic€operating€policies€of€the€station.€€òòSeeóó€òòWHDH,€Inc.óó,Ï17€FCC€2d€856€(1969),€òòaff'd€sub€nom.óó€òòGreater€Boston€Television€Corp.€v.€FCCóó,€444€F.2d€841€(D.C.€Cir.Ï1970),€òòcert.€deniedóó,€403€U.S.€923€(1971).€€Specifically,€we€look€to€three€essential€areas€of€stationÏoperation:€€the€programming,€personnel,€and€finances.€€òòSeeóó€òòe.g.óó,€òòStereo€Broadcasters,€Inc.óó,€87€FCC€2d€87Ï(1981),€òòrecon.€deniedóó,€50€R.R.€2d€1346€(1982).€€Licensees€are€permitted€under€Section€310(d)€of€the€ActÏto€delegate€day„to„day€operations€relating€to€those€three€areas,€so€long€as€they€continue€to€set€the€policiesÏguiding€those€operations.€€òòSeeóó€òòóóòòóóòòSouthwest€Texas€Public€Broadcasting€Councilóó,€85€FCC€2d€713,€715€(1981);ÏòòThe€Alabama€Educational€Television€Commissionóó,€33€FCC€2d€495,€508€(1972).€€Thus,€in€making€aÏdetermination,€we€look€not€to€who€executes€the€programming,€personnel,€and€finance€responsibilities,€butÏto€who€establishes€the€policies€governing€those€three€areas.€€òòSeeóó€òòWGPR,€Inc.óó,€10€FCC€Rcd€8140,€8142Ï(1995).ÌÌà..àÔ2Ô26.Ô3  Ô€€€€òòControl€of€Station€Construction.óó€€In€cases€like€this€one€where€the€station€was€unbuilt€at€theÏtime€the€Agreements€were€entered€into,€we€look€first€to€who€was€in€control€of€the€station's€construction.€ÏòòóóòòSeeóó€òòRoy€M.€Speeróó,€11€FCC€Rcd€18393€(1996);€òòóóòòSalem€Broadcasting,€Inc.óó,€6€FCC€Rcd€4172€(MMB€1991).€ÏLABI€states€that€Law€supervised€and€was€in€control€of€the€station's€construction.€€Law€declares,€underÏpenalty€of€perjury,€that€he:€selected€and€used€his€own€engineering€counsel€to€prepare€all€technical€reportsÏand€exhibits€submitted€to€the€Commission,€including€the€license€application;€selected€and€retained€his€ownÏlocal€counsel€for€the€purpose€of€incorporating€LABI,€and€drafting€articles€of€incorporation€and€bylaws;Ïselected€and€retained€and€used€his€own€FCC€counsel€for€negotiating€and€drafting€the€agreements;Ïpersonally€selected€the€studio€equipment€package;€had€discussions€concerning€the€transmission€equipmentÏbefore€he€spoke€to€anyone€at€MBC;€made€numerous€trips€to€Manhattan€to€meet€employees,€visit€theÏtransmitter€site,€and€oversee€the€buildout€and€refurbishment€of€MBC's€studios€to€accommodate€KXBZÏstudios€and€offices;€conferred€frequently€with€engineering€and€technical€consultants€and€visited€the€stationÏto€monitor€signal€and€sound.€€Complainants€have€provided€no€evidence€to€the€contrary.€€Thus,€based€onÏthe€evidence€before€us,€it€appears€that€Law€was€intimately€involved€with€and€in€control€of€the€station'sÏconstruction.òòóó€€òòCf.óó€òòSalem€Broadcasting,€Inc.óó,€6€FCC€Rcd€4172€(MMB€1991)€(unauthorized€transfer€ofÏcontrol€found€where€broker€infused€the€station€with€capital,€chose€the€station€format,€and€was€intimatelyÏinvolved€in€the€construction€and€operation€of€the€station);€òòRoy€M.€Speeróó,€11€FCC€Rcd€18393€(1996)Ï(unauthorized€transfer€of€control€found€where€employees€of€a€non„voting€minority€stockholder€hadÏsupervised€the€construction€of€the€new€television€station,€the€non„voting€stockholder€had€paid€for€theÏpurchase€of€the€station's€equipment€through€loans€to€the€permittee€and€the€permittee€was€not€even€awareÏof€what€equipment€was€being€purchased€for€it€or€how€much€was€being€spent).ÌÌà..àÔ2Ô27.Ô3  Ô€€òòControl€of€Station€Programming.óó€€LABI€states€that€Law€is€and€has€been€in€control€of€theÏstation's€programming.€€In€this€regard,€Law€states€that€he€personally€selected€the€musical€format€for€theÏstation€based€on€his€own€research€of€the€market€without€conferring€with€anyone€at€MBC€and€that€he€hasÏselected€all€of€the€music€to€be€played€on€the€station.€Complainants€have€provided€no€evidence€to€theÏcontrary.€The€fact€that€Law€does€not€reside€in€the€service€area€does€not,€as€Complainants€seem€to€suggest,Ïpreclude€him€from€selecting€the€station's€programming.€€Likewise,€the€existence€of€the€Joint€SalesÏAgreement€granting€MBC€the€right€to€sell€the€commercial€advertising€time€on€Station€KXBZ€does€notÏdemonstrate,€as€Complainants€also€contend,€that€Law€is€not€in€control€of€the€station's€programming.€€TheÏCommission€eliminated€its€restrictions€on€joint€sales€practices€in€1996,€concluding€that€joint€salesÏagreements€do€not€violate€the€multiple€ownership€rules.€€òòElimination€of€Unnecessary€Broadcast€Regulationóó,Ï59€R.R.2d€1500,€1516€(1986),€òòrecon.€deniedóó€63€R.R€2d€212€(1987).€€òòSee€alsoóó€òòRevision€of€Radio€RulesÏand€Policiesóó,€7€FCC€Rcd€2755,€2787€(1992)€(subsequent€history€omitted).ÌÌà..àÔ2Ô28.Ô3  Ô€€òòControl€of€Station€Personnel.óó€€LABI€states€that€it€is€in€complete€control€over€stationÏpersonnel.€€Specifically,€Law€states€that€he€personally€interviewed€and€hired€two€managers€(the€station€manager€and€music€director)€and€the€night€announcer/operator,€none€of€whom€had€any€prior€associationÏwith€MBC€or€Seaton.€€In€addition,€he€states,€that€all€of€LABI's€employees€report€either€directly€to€him€orÏhis€station€manager.€€Finally,€Law€states€that€he€has€spoken€to€his€station€manager€at€least€once€a€dayÏsince€the€station€became€operational.€€Complainants€point€to€the€fact€that€LABI€and€MBC€share€someÏpersonnel€services€as€evidence€that€Law€is€not€in€control€over€LABI's€personnel.€€The€evidence,€however,Ïdoes€not€support€such€a€conclusion.€€Law€admits€that€LABI€and€MBC€share€the€services€of€a€receptionist,Ïcontract€maintenance€engineer,€traffic€person€and€bookkeeper,€but€declares€that€none€of€these€sharedÏpersonnel€have€any€management€authority€over€the€station's€personnel,€or€any€authority€over€theÏprogramming,€policies€or€operations€of€the€station.€€Moreover,€Law€states€that€any€problems€which€ariseÏconcerning€these€shared€personnel€are€referred€to€management€of€both€MBC€and€LABI.€€It€is€permissibleÏfor€stations€to€share€staff€in€order€to€maximize€efficiencies.€€òòWGPR,€Inc.óó,€10€FCC€Rcd€at€8143,€òòcitingóó€ÏòòMichael€R.€Birdsillóó,€7€FCC€Rcd€7891€(Complaints€Branch,€MMB€1992).€€In€addition,€the€Commission€hasÏapproved€agreements€where€a€party€brokering€time€on€a€station€is€to€employ€and€be€responsible€for€theÏsalaries€and€other€expenses€related€to€personnel€it€deems€necessary€to€fulfill€its€contractual€obligations.€ÏòòSeeóó€òòWGPR,€Inc.óó,€10€FCC€Rcd€at€8143,€òòcitingóó€òòGisela€Huberman,€Esquireóó,€6€FCC€Rcd€5397€(MMB€1991).€ÏThus,€the€fact€that€MBC€and€LABI€share€some€staff€does€not€demonstrate€that€MBC€has€control€overÏStation€KXBZ.€€Moreover,€the€fact€that,€under€the€terms€of€the€Employment€Agreement,€MBC€is€toÏreimburse€LABI€for€Law's€salary€is€likewise€not€controlling.€€Although€we€require€licensees€to€remainÏresponsible€for€the€payment€of€their€own€expenses,€a€broker's€reimbursement€of€such€expenses,€as€part€ofÏits€contractual€obligations,€does€not€òòper€seóó€demonstrate€that€the€broker€is€in€control€of€the€station.€€RatherÏsuch€a€determination€depends€upon€the€particular€facts€of€a€case.€€òòWGPR,€Inc.óó,€10€FCC€Rcd€at€8145.€€òòSeeÏalsoóó€Letter€from€Barbara€Kreisman€to€Paramount€Stations€Group€of€Kerrville,€Inc.€at€11€(Video€ServicesÏDivision,€MMB€June€6,€1995),€òòreview€deniedóó€12€FCC€Rcd€6135€(1997).€€In€this€case,€there€is€no€evidenceÏbefore€us€that€MBC's€reimbursement€of€Law's€salary€has€in€any€way€transferred€control€of€Station€KXBZÏfrom€Law€to€MBC.€€òòSee€alsoóó€òòDavid€A.€Davilaóó,€5€FCC€Rcd€at€5225€(broker,€as€part€of€loan€agreement,Ïprovided€money€for€construction€and€initial€operation€of€the€station,€including€a€per€month€fee€to€presidentÏand€controlling€stockholder).ÌÌà..àÔ2Ô29.Ô3  Ô€€òòControl€of€Station€Finances.óó€€LABI€asserts€that€it€has€effective€control€over€the€station'sÏfinancial€operations.€€Specifically,€Law€states€that€the€station€has€its€own€operations€budget,€bank€accountsÏand€books,€and€that€all€checks€must€be€co„signed€by€either€him€or€his€station€manager.€€ComplainantsÏpoint€to€the€existence€of€the€loan€agreement€as€evidence€of€MBC's€control€over€the€finances€of€LABI€andÏthe€station.€€In€addition,€Topeka€also€objects€to€the€fact€that€the€Option€Agreement€provides€that€MBC€isÏpaying€$5,000€of€LABI's€attorney's€fees€and€that€under€the€Joint€Sales€Agreement,€MBC€has€agreed€to€payÏup€to€a€certain€amount€if€the€station's€revenues€are€insufficient€to€pay€expenses.€€Section€11.12€of€theÏOption€Agreement€specifies€that€MBC€will€pay€LABI€and€Law's€counsel€$5,000€in€connection€with€theÏnegotiation€and€preparation€of€the€Agreements.€€Law€has€stated€that€with€the€exception€of€that€payment,ÏLABI€has€paid€for€its€own€legal€and€professional€services.€€Accordingly,€based€on€the€information€beforeÏus,€we€cannot€conclude€that€the€payment€of€$5,000€worth€of€attorney's€fees€amounts€to€a€transfer€ofÏcontrol€over€either€LABI's€or€Station€KXBZ's€finances.€€We€likewise€do€not€find€that€the€provisions€inÏthe€Joint€Sales€Agreement€regarding€the€coverage€of€any€shortfall€have€resulted€in€an€unauthorized€transferÏof€control.€€Section€4(c)€of€the€Joint€Sales€Agreement€provides€for€MBC's€payment€of€any€shortfall,€upÏto€a€certain€amount,€to€òòóóLABI€which€will€then€use€that€money€to€pay€expenses.€€As€we€discussed€above,Ïreimbursement€of€expenses,€as€part€of€a€broker's€contractual€obligations,€does€not€òòper€seóó€demonstrate€thatÏthe€broker€is€in€control€of€the€station.€€òòWGPR,€Inc.óó,€10€FCC€Rcd€at€8145.€€òòSee€alsoóó€Letter€from€BarbaraÏKreisman€to€Paramount€Stations€Group€of€Kerrville,€Inc.€at€11€(Video€Services€Division,€MMB€June€6,Ï1995),€òòreview€deniedóó€12€FCC€Rcd€6135€(1997).€€€Moreover,€the€Joint€Sales€Agreement€contains€provisionsÏfor€LABI's€repayment€to€MBC€of€any€shortfall€amounts€and,€to€the€degree€that€such€amounts€are€notÏreimbursed,€specifies€that€the€shortfall€amounts€may€be€considered€a€liability€of€LABI.Ìà..àÌÇà..àÔ2Ô30.Ô3  Ô€€òòCross€Interest€Policy.óó€€Complainants,€citing€to€òòJoseph€Patrick€Williamsóó,€56€RR€2d€1526Ï(MMB€1984)òòóó,€and€òòWisconsin€Television,€Ltd.óó,€59€RR€2d€193€(1985),€argue€that€even€if€ownership€orÏcontrol€of€Station€KXBZ€is€not€attributed€to€MBC€for€multiple€ownership€and€unauthorized€transfer€ofÏcontrol€purposes,€ownership€of€that€station€should€be€attributed€to€MBC€for€cross„interest€purposes.€ÏComplainants€argue€that€the€Commission's€cross„interest€policy€was€developed€to€prevent€precisely€theÏtype€of€situation€which€exists€here,€where€parties€have€multiple€business€relationships€involving€broadcastÏand€newspaper€interests€in€the€same€market.€€In€such€a€situation,€Complainants€contend,€there€is€no€wayÏthe€stations€involved€can€be€thought€of€as€independent€or€in€competition.€€Specifically,€Topeka€andÏPlatinum€argue€that€MBC,€because€of€its€extensive€relationship€with€LABI,€should€be€considered€aÏ"putative€shareholder"€for€cross„interest€purposes.€In€addition,€Eagle€contends€that€although€theÏCommission€has€ruled€generally€that€joint€sales€agreements€do€not€violate€its€cross€interest€policy,€jointÏsales€agreements€involving€stations€serving€the€same€market€do€violate€that€policy.ÌÌà..àÔ2Ô31.Ô3  Ô€€LABI€and€MBC€argue€that€there€is€no€basis€for€finding€a€cross„interest€violation.€€SpecificallyÏthey€contend€that€MBC€has€no€ownership€interest€in€LABI,€no€control€over€LABI€or€the€station,€and€noneÏof€LABI's€shareholders,€officers,€directors,€or€management€employees€are€officers,€directors,€orÏmanagement€employees€of€LABI.€€Moreover,€they€contend€that€the€cases€cited€by€Complainants€supportÏthe€conclusion€that€there€is€no€cross„interest€violation.€€MBI€states€that€"[t]he€stations€and€the€newspaperÏoperate€independently€of€each€other€with€separate€facilities,€staff€and€day„to„day€management€andÏoperations."€€MBI's€Opposition€at€para.€5.ÌÌà..àÔ2Ô32.Ô3  Ô€€The€Commission's€cross„interest€policy€generally€focuses€on€the€potential€adverse€effects€onÏcompetition€and€diversity€in€situations€where€a€party€owns€an€attributable€interest€in€one€media€outlet€andÏenjoys€a€"meaningful€relationship"€with€another€media€outlet€serving€"substantially€the€same€area."€ÏòòReexamination€of€the€Commission's€Cross„Interest€Policyóó,€2€FCC€Rcd€3699,€3699„700€(1987).€€We€doÏnot€believe€that€any€of€MBC's€interests€in€or€relationships€with€LABI€constitute€a€"meaningfulÏrelationship"€which€implicates€the€cross„interest€policy.€€In€òòJoseph€Patrick€Williamsóó€our€finding€of€aÏpossible€cross„interest€violation€was€based€on€evidence€that€the€licensee€may€have€been€deeply€involvedÏwith€the€newspaper€at€a€management€level.€€In€òòWisconsin€Television,€Ltd.óó€our€ruling€was€based€on€theÏfact€that€a€limited€partner€of€a€station€also€had€control€over€a€newspaper€in€the€same€market.€€No€similarÏfacts€exist€in€this€case.€€Moreover,€we€reject€Eagle's€contention€that€joint€sales€agreements€involvingÏstations€in€the€same€market€are€òòper€seóó€violations€of€our€òòóócross„interest€policy.€€òòSeeóó€òòóó€òòReexamination€of€theÏCommission's€Cross„Interest€Policy,€Policy€Statementóó,€4€FCC€Rcd€2208€(1989);€òòReexamination€of€theÏCommission's€Cross„Interest€Policyóó,€2€FCC€Rcd€3699,€3699„700€(1987);€òòElimination€of€UnnecessaryÏBroadcast€Regulationóó,€59€R.R.2d€1500,€1516€(1986),€òòrecon.€deniedóó€63€R.R€2d€212€(1987);€òòIn€the€MatterÏof€Representation€of€Stations€by€Representatives€Owned€by€Competing€Stations€in€the€Same€Areaóó,€87€FCCÏ2d€668€(1981).€€Finally,€we€do€not€believe€that€the€Option€Agreement€between€MBC€and€LABI€affordsÏMBC€a€present€interest€that€carries€the€kind€of€certain,€realizable€gain€which€we€have€considered€sufficientÏto€trigger€cross„interest€concerns.€€òòóóòòSeeóó€òòRoy€M.€Speeróó,€11€FCC€Rcd€at€18442„44.òò€€óóWe€note€in€this€regardÏthat€the€right€to€acquire€a€49%€interest€in€LABI€pursuant€to€the€Option€Agreement€is€not€assignable€byÏMBC€to€any€party€other€than€stockholders€of€MBC.€€Moreover,€although€LABI€must,€in€someÏcircumstances,€repay€the€up„front€option€money,€such€repayment€is€linked€to€the€49%€option€price€andÏnot€the€market€value€of€the€49%€interest.ÌÌà..àÔ2Ô33.Ô3  Ô€€We€recognize€Complainants'€concerns€regarding€the€relationship€between€LABI€and€MBC,Ïparticularly€in€light€of€the€fact€that€MBC€or€its€principals€own€two€radio€stations€and€a€daily€newspaperÏin€the€same€market€as€Station€KXBZ.€€This€case€appears€to€be€another€in€a€series€of€cases€which€push€theÏlimits€of€our€rules.€€òòóóòòóóWe€warn€broadcasters€that€the€use€of€such€complex€contractual€agreements€involvingÏnumerous€business€relationships€between€competitors€in€the€same€market€creates€an€environment€conduciveÏto€an€unauthorized€transfer€of€control€and€violation€of€our€cross„interest€and€multiple€ownership€rules€andÏpolicies.€€Accordingly,€such€arrangements€will€be€subject€to€close€scrutiny.€€òòSeeóó€òòChoctaw€Broadcasting€Corporationóó,€12€FCC€Rcd€8534€(1997).€€Nonetheless,€in€this€case,€based€on€the€information€before€us,€weÏconclude€that€the€relationship€between€MBC€and€LABI€does€not€violate€any€existing€Commission€rule€orÏpolicy.€We€note,€however,€the€Commission€has€specifically€expressed€concern€about€multiple€businessÏrelationships€of€the€type€involved€here,€observing€that€"otherwise€permissible€cooperative€arrangementsÏbetween€broadcasters€.€.€are€being€used€in€combination€by€those€broadcasters€to€obtain,€indirectly,Ïcontrolling€interests€in€multiple€stations€that€they€would€be€prohibited€from€holding€directly€under€theÏmultiple€ownership€rules."€€òòReview€of€the€Commission's€Regulations€Governing€Attribution€of€BroadcastÏInterestsóó,€10€FCC€Rcd€3606,€3609€(1995).€€However,€that€proceeding€is€still€pending€and€the€questionsÏraised€therein€have€not€been€resolved.€€Moreover,€we€note€that€as€part€of€the€pending€application€forÏtransfer€of€control€of€Station€KXBZ,€MBC€has€stated€that€both€MBC€and€Seaton€will€be€restructured€soÏas€to€remove€any€joint€operation€or€control€of€the€stations€and€the€newspaper.€€òòSeeóó€paragraph€4,€supra.€ÏFurthermore,€MBC€has€stated€that€the€stations€and€the€newspaper€operate€independently€of€each€other€withÏseparate€facilities,€staff€and€day„to„day€management€and€operations.€€Thus,€grant€of€the€pending€transferÏof€control€application€will€eliminate€the€current€joint€ownership€of€The€Manhattan€Mercury€and€StationsÏKMKF€and€KMAN€and€will€remove€any€ongoing€concern€with€regard€to€the€common€ownership€orÏcontrol€of€radio€stations€and€a€newspaper€in€the€same€market.ÌÌà..àD.à` ..` àòòSale€of€an€Unbuilt€StationóóÌÌà..àÔ2Ô34.Ô3  Ô€€Eagle€contends€that€because€the€Agreements€were€entered€into€before€Station€KXBZ€wasÏconstructed€and€because€MBC€obtained€an€irrevocable€"prepaid"€option€prior€to€construction,€thisÏtransaction€should€be€considered€as€the€transfer€of€an€unbuilt€station€and€evaluated€under€Section€73.3597Ïof€our€rules.€€47€C.F.R.€ðð€73.3597.€€MBC€and€LABI€assert€that€MBC€acquired€no€ownership€or€controlÏof€the€station€prior€to€its€construction€and,€pursuant€to€òòDavid€D.€Oxenford,€Esq.óó€reference€1800B3„LKÏ(Audio€Services€Division,€MMB€June€14,€1993),€andòòóó€òòDavid€Davilaóó,€5€FCC€Rcd€5222€(Video€ServicesÏDivision,€MMB€1990),€òòaff'dóó,€6€FCC€Rcd€2897€(1991),€the€no€profit€prohibition€of€Section€73.3597€of€theÏCommission's€Rules€is€triggered€only€where€there€is€an€assignment€or€transfer€of€control€of€an€unbuiltÏstation.€€€Moreover,€LABI€states€that€it€is€"inherently€improbable"€that€Law€is€receiving€more€than€theÏlegitimate€construction€expenses€and€that€the€burden€of€so€proving€should€be€on€Complainants.ÌÌà..àÔ2Ô35.Ô3  Ô€€Construction€permits€are€granted€only€to€qualified€applicants€in€reliance€on€their€òòbona€fideóóÏintention€to€place€the€proposed€station€on€the€air€and€to€provide€the€broadcast€service€they€propose.€€òòSeeóóÏòòWilliam€Silva,€Esq.óó,€reference€1800B3„MFW€(Audio€Services€Division,€MMB€July€24,€1995),€òòreconÏdenied€sub€nom.óó€òòChoctaw€Broadcasting€Corporationóó,€12€FCC€Rcd€8534€(1997)€(parties€did€not€seekÏreconsideration€of€the€discussion€concerning€the€Commission's€"no€profit"€rule).€€Accordingly,€in€orderÏto€ensure€the€integrity€of€the€Commission's€licensing€process,€"we€have€long€sought€'to€preclude€the€useÏof€broadcast€authorizations€as€a€means€of€obtaining€financial€gain€without€rendering€the€broadcast€serviceÏwhich,€alone,€justifies€the€grant€of€permits€.€.€.€'"€€òòWilliam€Silva,€Esq.óó€at€p.€4,€òòquotingóó€òòAssignment€andÏTransfer€of€Construction€Permitsóó,€33€Fed.€Reg.€12,€678€(September€6,€1968).€€As€discussed,€òòsupraóó,€thisÏdoes€not€mean€that€permittees€cannot€enter€into€certain€pre„operational€agreements,€such€as€options€orÏloans,€prior€to€constructing€and€commencing€operations.€€òòSeeóó€òòWilliam€Silva,€Esq.óó€at€5„6,€n.9.€€Nor€doesÏit€mean,€as€MBC€and€LABI€contend,€that€so€long€as€the€station€is€constructed€prior€to€filing€of€anÏapplication€for€assignment€or€transfer€of€control,€that€the€"no€profit"€rule€does€not€apply.€€Rather,Ïregardless€of€when€the€agreements€are€entered€into€and€when€the€station€is€constructed,€in€each€case€theÏterms€of€the€arrangements€between€parties€and€the€totality€of€the€facts€and€underlying€circumstances€mustÏbe€reviewed€to€determine€whether€the€facts€reflect€a€permittee's€intention€to€construct€the€station€or€areÏmore€reflective€of€an€up„front€sale€with€consummation€postponed€until€after€the€station€goes€on€the€air.€ÏòòId.óó€€Thus,€in€òòWilliam€L.€Silva,€Esq.óó€the€Audio€Services€Division€ruled€that€the€existence€of€a€signedÏbinding€asset€purchase€agreement€coupled€with€the€lack€of€any€evidence€that€the€permittee€took€anyÏconcrete€steps€toward€construction€of€the€station€prior€to€the€assignee's€involvement,€indicated€that€theÏpermittee€had€no€real€intention€to€construct.€€In€so€ruling,€the€Audio€Services€Division€distinguished€that€case€from€others€involving€option€agreements€rather€than€binding€asset€purchase€agreements.€€Specifically,Ïthe€Audio€Services€Division€stated€that€because€an€option€is€not€a€binding€contract€and€does€not€becomeÏone€until€it€is€exercised,€the€existence€of€such€a€contract€is€not€òòper€seóó€evidence€of€an€up„front€sale.€òòId.óó€atÏ5.ÌÌà..àÔ2Ô36.Ô3  Ô€€The€Option€Agreement€in€this€case€is€a€non„binding€agreement€with€options€which€may€orÏmay€not€be€exercised.€€As€discussed,€òòsupraóó,€the€fact€that€LABI€received€money€up€front€is€not€controllingÏsince,€even€with€that€payment,€MBC€acquired€no€ownership€interest€in€the€station.€€Moreover,€there€is€noÏevidence€before€us€which€indicates€that€Law€did€not€intend€to€construct€and€operate€the€station.€Rather,Ïthe€record€reveals€that€Law€took€steps€toward€construction€of€the€station€prior€to€his€dealings€with€MBCÏand€that€Law€has€been€involved€in€and€in€control€of€the€station's€construction€and€operation.€€Accordingly,Ïwe€reject€Eagle's€showing€in€this€regard€and€conclude€that€Section€73.3597€of€the€Commission's€Rules€isÏnot€applicable€to€this€case.× ƒ4 ××  ×Ì€Ìà..à¼Ó  Óòòò òCONCLUSIONóóó óÌÓ  ÓÌà..àÔ2Ô37.Ô3  Ô€€For€the€reasons€set€forth€above,€the€complaints€ARE€DENIED.€€Accordingly,€the€pendingÏapplication€for€renewal€of€license€(File€No.€BRH„970207YA)€IS€GRANTED.€€It€is€FURTHERÏORDERED,€That,€the€application€for€transfer€of€control€of€Station€KXBZ(FM),€licensed€to€LittleÏApple€Broadcasting,€Inc.,€from€Michael€D.€Law€to€Manhattan€Broadcasting€Co.,€Inc.€(File€No.€BTCH„¼961029GI)€IS€GRANTED€SUBJECT€TO€THE€CONDITION€That,€prior€to€consummation,€noÏindividual€will€hold€attributable€interests€in€both€Manhattan€Broadcasting€Co.,€Inc.€(licensee€ofÏKMAN(AM)€and€KMKF(FM),€Manhattan,€Kansas),€and€Seaton€Publishing€Co.,€Inc.€(publisher€of€theÏòòòòóóManhattan€Mercuryòòóó,óó€a€daily€newspaper€published€in€Manhattan,€Kansas).ÌÌÌà..àà` ..` àภ..¸ àà..ààh..hààÀ..Ààà..àSincerely,ÌÌÌÌà..àà` ..` àภ..¸ àà..ààh..hààÀ..Ààà..àRoy€J.€StewartÌà..àà` ..` àภ..¸ àà..ààh..hààÀ..Ààà..àChief,€Mass€Media€BureauÌÌÌÌÌcc:à..àJ.€Dominic€Monahan,€Esq.€(Counsel€for€Eagle)Ìà..àJames€A.€Gammon,€Esq.€(Counsel€for€Topeka)Ìà..àRobert€K€Weary,€Esq.€(Counsel€for€Platinum)Ìà..àMontgomery€Publications,€Inc.