WPC܃ 2MB;R ZCourierw Roman IF#6X@DQo?@#HP LaserJet 4M ROOM 228 LPT1HPLA4MP0.PRSx  @\ifX@|D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxd3|'OM 228 LPT1HPLA4MP0.PRSXj\  P6G;\ifXP2. /3|w'CourierCG TimesCG Times BoldHPLAIIAD.PRSx  @Hy!kX@CourierCG TimesCG Times BoldCG Times Italic[Z@#2D`Z  pCourierCG TimesCG Times BoldCG Times ItalicCG Times Bold Italic<I,o?G6X@`7@8wC;, 2!%"Sh5^;LhddCCCdCCCCddddddddddCCȰdxLdxxoxxxCCCddCddYdYFdo88d8odddLL8oYdYLdddddddddCddddddddd8dddddYYYYYL8L8L8L8oddddoooozYddddxYdxdddddddddddddddddood8ddddkdddxdxdxDx8ooddהddpLododxdxdxdooooxdxLCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddLdYYddddddCddddCCCkkd88ddzzdddsssCkdC"Ȑd~d尰dCCȐzȲxCddodȐȅdCdYdsȐ`ȐȐȮzȐUvŐdȐddCCCCŅzozoYNzYYYN8YooYdYzzdzddzYzYzozzzNdzzzYzzzzCCdddddddzzzzCzdYC"`H2 : ^Yd ddd dddddd, , dudddddSSSouS,dS dSdSdSdSSZT rddddW,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdzz  i idd NN,,,, dii",,,,,,,,,  ,,,  ,,,' dd,,,,,, xd, ,,d,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,ddddudSddddd,"Sh5^$(8<><q*"xxxxWWxxxWWkkxxx .CHeading 2Underlined Heading Flush Left14 Heading 1Centered Headingcal Style 4G Y * Ã  Bullet ListIndented Bullet List*M0 Y XX` ` (#` "`H2 : ^Yd ddd dddddd, , u,ddddiSdSud,dS7uSuSuSuSSuSSu,ddddW,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNd%  i idd NN,,,, d^i",,,,,,,,,  ,,,  ,,,' dd,,,,,, xd, ,,d,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,dddduuSudddd,2U^LPJ?xxx,[Zx6X@8;X@?xxx,x `B;X?xxx,#hx6Nh ;XH8wC;,:[AXw P7XP7zC;,NZXz_ p^7X&6uC;,g/Xu&_ x$&7XXd4wC;,Xw*0 xM7XTdY,:+S P7P V"G($,:hG P7hP 3k<5,:K_k P7PSdY,NAL_ p^7W!I($,NhI_ p^7h I. 1. A. a.(1)(a) i) a)Document"Sh5^$(8<&- d(#;Public Notice, FCC Freezes Comparative Proceedings, 9 FCC Rcd 1055 (1994), in light of the  Y''- d(#,decision of the court of appeals in Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993), holding that"''0*o(o(qqP("  d(#the integration of ownership criterion used by the Commission to decide among competing  d(#applicants was unlawful. Although not made the subject of an express condition, the settlement"(0*0*0*0*"  d(#agreements recognize that Floyd's application would have to be denied in a final Commission  Y- d(#{order before ADX's application can be granted pursuant to the Joint Motion.^ Yb-#Xw P7[AXP#э#Xw P7[AXP#See Mass Media Bureau Comments on Joint Motion at 2 n. 1. This  d(#understanding comports with current Commission freeze policy because affirmance of Floyd's  d(#disqualification would allow for termination of the proceeding under the proposed settlement.  Y- d(#See Modification of FCC Comparative Proceeding Freeze Policy, 9 FCC Rcd 6689 (1994)  d(#(Commission will adjudicate basic qualification issues in frozen cases only where proposed settlement of proceeding is contingent on such issue resolution).  YH-R II. DISCUSSION ă  Y -A. Qualifications of Floyd  Y - v [3. After review of the record below, we agree with the I.D.'s disqualification of Floyd.K y^ Y- d(##Xw P7[AXP#э#Xw P7[AXP#Upon elimination of the Board, effective April 24, 1996, this proceeding was certified to  Y-the Commission. See Pensacola Radio Partners, 11 FCC Rcd 5256 (Rev. Bd. 1996).K  d(#=Floyd is the licensee and sole proprietor of radio stations WORV(AM) and WJMG(FM),  Y - d(#Hattiesburg, Mississippi. Floyd certified in his application that he had net liquid assets on hand  d(#to meet his costs and indicated that he was in the process of assembling documentation of the  Y- d(#availability of those assets.U^ YU- d(##Xw P7[AXP#эAt the time Floyd filed his application, the Commission permitted applicants simply to  Y>- d(#certify, rather than to document, their financial qualifications. See Revision of Form 301, 50 R.R.2d 381, 382 (1981).U In response to a motion filed by PRP and Miracle, the ALJ  d(#henlarged the hearing issues to determine whether Floyd was financially qualified at the time he  Yc- d(#certified his financial qualifications. See Pensacola Radio Partners, 8 FCC Rcd at 7225 5. At  d(# hearing, Floyd estimated his costs of construction and three months of operation at $260,527 and  d(#proposed to meet these costs primarily from the proceeds of the sale of his radio stations. Floyd  d(#developed his own estimate of the stations' fair market value, but the ALJ rejected Floyd's  d(#estimate because it was uncorroborated. 8 FCC Rcd at 7228 26 and 7237 107. Floyd also  d(#relied on a formal appraisal of the stations' value by Susan Harrison, a communications  d(#consultant, whom Floyd retained on the day he signed the certification, but whose appraisal was  d(#not prepared until months later. The ALJ concluded, however, that Harrison's appraisal was  d(#unreliable. The ALJ noted that Harrison never inspected the stations and did not take account  d(#Zof such important factors as market size, program format, service area, ratings, staffing, and  Y}- d(#whether Floyd paid himself a salary. She also did not reduce the value of the stations to reflect  Yf- d(#the 20% or greater discount typically available in cash transactions. Id. at 7229 3031 and  d(#;7237 109. Instead, the ALJ accepted the appraisal provided by Charles Giddens, president of  d(#[Media Venture Partners, a brokerage, appraisal, and analysis firm, which was the largest  d(#broadcast transaction mergers and acquisition business at the time of the hearing. Giddens took  d(#into account pertinent factors lacking in the Harrison appraisal. The firm had conducted several  d(#hundred appraisals, and Giddens, a broadcast station owner, had considerable personal"0*(( "  d(#experience in appraising broadcast properties. He had also spoken at broadcast industry  d(#functions on the methodology and mechanics of broadcast station evaluation. Giddens estimated  d(#that a cash transaction would produce in the range of $200,000 to $216,000 for Floyd's stations.  Y-Id. at 7229 3233, 35 and 7237 109.  v 4. Although Floyd also attempted to establish his financial qualifications by placing  d(#reliance on cash on hand in his personal savings and checking accounts and his stations'  d(#checking account, which totaled $143,000, the ALJ declined to consider this evidence. The ALJ  d(#pointed out that Floyd's deposition testimony only stated that he planned to rely on "proceeds  d(#from the existing stations" to finance the proposal and did not mention the use of cash on hand.  Y - d(#Id. at 7228 28; tr. 118283. In addition, the ALJ found that Floyd provided no showing of his  d(#financial assets and liabilities to support his ability to meet his commitment. 8 FCC Rcd at 723637 105.  v z5. In adopting the certification procedure, the Commission emphasized that it was not  d(#hmodifying its basic substantive financial requirements or changing the factual basis for meeting  Y- d(#;those requirements. See Revision of Form 301, 50 R.R.2d at 382; Revision of Application for  Yy- d(#Construction Permit for Commercial Broadcast Station (FCC Form 301, 4 FCC Rcd 3853, 3858  d(#(1989). To establish reasonable assurance of financial qualifications at the time of certification,  d(#an applicant "must provide substantial and reliable evidence" of sufficient net liquid assets on  Y4- d(#hand, or committed sources of funds. Northampton Media Associates, 4 FCC Rcd 5517, 5519  Y- d(#(1989); recon. denied, 5 FCC Rcd 3075 (1990); aff'd, Northampton Media Associates v. FCC,  d(#941 F.2d 1214 (D.C. Cir. 1991). The Commission requires "probative evidence" of financial  d(#hability, and reliance on the selfserving, uncorroborated statement of the person responsible for  d(#certifying the applicant's financial qualifications that he "took the appropriate steps" to secure  Y- d(#the needed funds is not sufficient. Id.; Aspen FM, Inc., 6 FCC Rcd 1602, 1603 (1991). Where  d(#the funding source is an individual, rather than a financial institution, the applicant must provide  d(#Yevidence, such as a balance sheet or financial statement, that its source had sufficient net liquid  Y|- d(#assets at the time of certification to provide the funds. Northampton, 4 FCC Rcd at 5519; Short  Ye- d(#Broadcasting Co., Inc., 8 FCC Rcd 5574, 5576 (Rev. Bd. 1993). It is well established that  YN- d(#;these standards apply to all applicants utilizing the financial certification process. See Mission  Y7- d(#Broadcasting Corp. v. FCC, 113 F.3d 254, 260 (D.C. Cir. 1997) (rejecting claim that Commission failed to give adequate notice of its financial requirements).  v 6. Moreover, although not directly applicable to Floyd, it is noteworthy that the  d(#JCommission has more recently strengthened the certification process by amending Form 301 to  d(#wrequire that applicants submit additional information about their financial qualifications and, as  d(#Jit did prior to certification, the Commission now requires that applicants have their underlying  d(#hdocumentation verifying their funding on hand at the time they submit their applications. "We  d(#stress that when the applicant checks the box on Form 301 that it is financially qualified, it must  Yh$- d(#have at that time sufficient liquid assets in excess of current liabilities and/or sufficient funds  YQ%- d(#available from committed sources to construct and operate the facility." Revision of Application  Y:&- d(#Zfor Construction Permit for Commercial Broadcast Station, 4 FCC Rcd at 3859. To provide  d(#guidance to applicants on the funding information required, the Commission added to its current"#'0*((P("  d(#instructions for Form 301 the instructions it formerly used to elicit financial information and  d(#documentation. "Pursuant to these instructions, documentation that establishes an applicant's  d(#financial qualifications includes . . . a balance sheet of the applicant; . . . [and] financial  Y- d(#statements for all persons who agreed to furnish funds . . . ." Id. at 3859 n. 68. Balance sheets  Y- d(#and financial statements must be detailed. Id. at 3864 (Instructions for Section III Financial Qualifications).  v 7. In his exceptions, Floyd principally argues that the ALJ erred in refusing to consider  d(#Floyd's testimony that he would use his personal funds to finance the station. We disagree. As  d(#;the ALJ concluded, Floyd could not place reliance on his personal funds because Floyd simply  d(#failed to provide a balance sheet or other documentary evidence establishing that he had  d(#sufficient net liquidity at the time of certification to furnish the needed funds. For example,  d(#although Floyd relies, in part, on his stations' bank account, he did not document the stations'  d(# current liabilities including preexisting or ongoing expenses such as salaries, taxes, and the costs  d(# of litigating this proceeding. Likewise, with regard to cash in his personal bank accounts, Floyd  d(#-made no showing of his financial assets and liabilities, which would permit an independent  Y-determination of his net liquidity.   v @8. Floyd maintains, however, that he established the necessary liquidity to meet  d(#Commission requirements by virtue of his unchallenged testimony that he had no outstanding  d(#idebts. In this regard, Floyd claims that, because he is an individual applicant not relying on  d(#Ythird party funding who is familiar with his own assets and intentions, his testimony should be  d(#accepted as sufficient to establish his financial qualifications. We disagree that Floyd's showing  d(#satisfies Commission standards. First, Floyd cites no cases where we have held that the  Y- d(#Northampton standards summarized in  5, supra, are inapplicable to individual applicants  d(#relying on their own funds. As indicated, the requirement for documentation of financial  d(#wherewithal including a showing of sufficient liquid assets in excess of current liabilities has  d(#hbeen a continuing staple of the Commission's financial qualifications standards both before and  d(#hsince certification was instituted. Certification did not change the Commission's substantive or  d(#,evidentiary requirements. Second, Floyd's hearing exhibit is insufficient to prove that he is in  d(#the financial position he claims for himself. Although Floyd claims that he owns all his assets  d(#."free and clear" of any debt, his exhibit mentions specifically only Floyd's "home, other  Y - d(#investment properties, and the stations."( ^ Y- d(##Xw P7[AXP#э#Xw P7[AXP#Floyd Phase II, Exh. 1, page 4  7. Although Floyd also refers to his hearing testimony, the transcript citations in his exceptions do not support his contention.( Because Floyd is arguing that, in effect, his testimony  d(#should be accepted as tantamount to a balance sheet, we believe he was obliged to provide in  d(#his testimony the same level of detail as would appear on a financial statement. In fact,  d(#however, Floyd's exhibit makes only a single passing reference to the status of certain assets and  d(#wdoes not purport to make a complete showing of all of his liabilities. The Commission requires  Y!- d(#objective verification that an applicant has the funding it claims to have. See Sunshine  Y"- d(#Broadcasting, Inc., 6 FCC Rcd 5981, 598283 (Rev. Bd. 1991), recon. denied, 7 FCC Rcd 493  d(#(Rev. Bd. 1992) (testimony that individual lenders had sufficient cash in bank accounts, absent"#b0*(($"  d(#[documentation in form of financial statements showing net liquid assets, not sufficient to  d(#establish financial qualifications). In the absence of a balance sheet or other documentation, and  d(#because his testimony was not sufficiently detailed to show that he owned all his assets outright  d(#or to describe all his liabilities, Floyd's bank statements alone were not enough to establish that  d(#Jhe "had the necessary financial resources at [the] time" of certification to construct and operate  Y-the proposed station. See Northampton, 4 FCC Rcd at 5519.  v 9. We also disagree with Floyd that the ALJ should have accepted Floyd's  d(#wuncorroborated, selfserving opinion of the market value of his Hattiesburg stations to establish  d(#Jhis financial qualifications. Although Floyd argues that his own valuation was reasonable and  d(#made in good faith (Exceptions, at pp. 1416), Commission precedent is clear that an applicant  d(#who seeks to rely on the proceeds from the sale of nonliquid assets as a source of funds must  Y - d(#provide a valid appraisal of the value of those assets at the time of certification. See Rose  Y - d(#Broadcasting Co., 68 FCC 2d 1242, 1246 (1978); Capitol City Broadcasting Co., 9 FCC Rcd  Y - d(#7861, 7863 (Rev. Bd. 1994), rev. denied, 10 FCC Rcd 3197 (1995), aff'd by judgment, No. 96 d(#1481 (D.C. Cir. November 3, 1997) (applicant's selfserving selfappraisal of nonliquid assets  d(#rejected in absence of independent appraisals establishing property values at time of  Yy- d(#certification); see also CHM Broadcasting L.P. v. FCC, 24 F.3d 1453, 1458 & n.3 (D.C. Cir.  d(#1994) (Commission practice of requiring objective evidence to support claim of sufficient  d(#financial ability is reasonable). Floyd cannot look to Harrison for confirmation of his own  d(#wvaluation because, as the ALJ found, Harrison's estimate did not consider pertinent information  d(#affecting the stations' fair market value. The only evidence in the record of a valid independent  d(#appraisal of the value of Floyd's stations is that provided by Giddens, an experienced appraiser,  d(#who estimated the likely proceeds of a sale as at most between $200,000 and $216,000, after  d(#adjusting the market value to take account of such relevant factors as station format, location,  Y- d(#xsalaries, and the discount feature in cash transactions. See Port Huron Family Radio, Inc., 5  d(#FCC Rcd 4562, 4563 n. 5 (1990) (Commission practice is to reduce market valuation by as  d(#much as onethird because net proceeds from nonliquid assets are normally less than fair market  d(#value). Floyd does not specifically except to the ALJ's acceptance of Giddens's appraisal, which  d(#Floyd characterizes as a "reasonable estimate" (Exceptions, at p. 18), and the ALJ correctly  d(#concluded that, based on Giddens's estimate, the record established that the likely proceeds from  d(#.a station sale alone would be insufficient to meet Floyd's anticipated costs. Floyd is not financially qualified.  Y-B. Settlement Agreement  Y - v 10. In opposing the Joint Motion, Floyd argues that the settlement differs from those  Y!- d(#recently approved by the Commission in Global Information Technologies, Inc., 12 FCC Rcd  Y"- d(#11808 (1997), and Gonzalez Broadcasting, Inc., 12 FCC Rcd 12253 (1997), because the  d(#wnon-settling parties in those cases already had their exceptions ruled on by the Board, and those  d(#Ksettlements were expressly contingent upon dismissal of the non-settling parties. Floyd also  d(#Kcontends that, in view of Section 3002(a)(3) of the Balanced Budget Act of 1997 ("Balanced  d(#yBudget Act"), Pub. L. No. 10533, 111 Stat. 251 (1997), expressing Congressional policy  d(#favoring competitive bidding for broadcast spectrum, it would be in the public interest to permit"#'0*((P("  d(#Floyd to participate in an auction for the Pensacola station. An auction would also accelerate  d(#the delivery of broadcast service, Floyd maintains. In this regard, Floyd adds that the agreement  d(#between ADX and Miracle runs counter to public policy because it provides, if the Commission  d(#;does not approve the agreement, that ADX will not participate in an auction, thereby reducing the field of potential bidders.  v 11. The Joint Motion complies with the provisions of 47 U.S.C. 311(c) and 47 C.F.R.  d(#73.3525(a) governing settlement agreements. The applicants have provided declarations under  d(#wpenalty of perjury that their applications were not filed for the purpose of reaching or carrying  d(#out a settlement agreement, and that approval of the agreements will serve the public interest by  d(#expediting the commencement of a new broadcast service in Pensacola, Florida. The amount  d(#of the payment to be made by ADX to Miracle and PRP is of no consequence inasmuch as  d(#Congress in the Balanced Budget Act has directed the Commission to waive any provision of our  Y - d(#Krules necessary to allow for settlement of frozen comparative hearing cases. See 12, infra;  Y - d(#hGonzales Broadcasting, Inc., 12 FCC Rcd at 1225556 10. Floyd's objection to the settlement  d(#;on the ground that, unlike recent cases, he has not had Commission review of his exceptions is  Y- d(# answered by our affirmance of the I.D.'s denial of his application under the financial  Yy- d(#qualifications issue. Also, as in those cases, because the agreements are, in effect, contingent  d(#upon Commission denial of Floyd's application, they allow for a final resolution of this  YK-proceeding. ` `  v 12. We also see no inconsistency between approval of the settlement and Section  d(#\3002(a)(3) of the Balanced Budget Act. Section 3002(a)(3) added Section 309(l) to the  d(#Communications Act of 1934. Section 309(l) authorizes the Commission to conduct competitive  d(#bidding proceedings with respect to competing applications for construction permits for new  d(#hcommercial broadcast stations that were filed before July 1, 1997. Section 309(l) also provides  d(#[that, for a 180day period, the Commission "shall waive any provisions of its regulations  d(#necessary" to permit these applicants to enter into settlement agreements. Thus, the statute  d(#Yclearly provides a 180day window for applicants who filed before July 1, 1997 to voluntarily  d(#iremove the conflict between their applications and encourages settlement through its waiver  d(#,mandate. The settling parties have acted within the statutory framework. Contrary to Floyd's  d(#assertion, approval of the settlement will expedite broadcast service to Pensacola without the  d(#need for an auction. Finally, the provision of the agreement between ADX and Miracle  d(#pertaining to ADX's participation in an auction is of no effect in light of our approval of the settlement.  Y -Y5 III. ORDERING CLAUSE ă@  v |13. ACCORDINGLY, IT IS ORDERED, That the Joint Motion for Approval of  d(#kSettlement Agreements and Dismissal of Applications filed October 20, 1997 by ADX  d(#Communications of Pensacola, Miracle Radio, Inc., and Pensacola Radio Partners IS  d(#GRANTED and the attached settlement agreements ARE APPROVED; that the Motion for  d(#Leave to File Supplement, filed February 6, 1998 by ADX Communications of Pensacola, and  d(#the Motion for Leave to file Consolidated Opposition, filed February 19, 1998 by Vernon C."$'0*((P("  Y- d(#Floyd, ARE GRANTED and the associated pleadings ARE ACCEPTED;^ Yy- d(##Xw P7[AXP#эIn the interest of compiling a full record, we have permitted the parties to file supplemental pleadings. that the exceptions  d(#filed November 10, 1993 by Vernon C. Floyd ARE DENIED and the exceptions filed November  d(#10, 1993 by Pensacola Radio Partners, Miracle Radio, Inc., and ADX Communications of  d(#ZPensacola ARE DISMISSED as moot; that the motions to strike filed November 30, 1993 by  d(#Pensacola Radio Partners and December 9, 1993 by Miracle Radio, Inc. ARE DISMISSED as  d(#Jmoot; that the motion for leave to amend filed February 29, 1994 by ADX Communications of  d(#YPensacola IS GRANTED and the amendment IS ACCEPTED; that the application of Vernon C.  d(#hFloyd (File No. BPH880324MK) IS DENIED and the applications of Pensacola Radio Partners  d(#(File No. BPH880323MJ) and Miracle Radio, Inc. (File No. BPH880324NU) ARE  d(#DISMISSED; that the application of ADX Communications of Pensacola (File No. BPH880324OJ) IS GRANTED; and that this proceeding IS TERMINATED. ` `  FEDERAL COMMUNICATIONS COMMISSION      ` `  Magalie Roman Salas ` `  Secretary