. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .In reply refer to:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1800B3-JR

William S. Daugherty III
123 Whispering Hills
Berea, Kentucky 40403

Vernon R. Baldwin, Inc.
8686 Michael Lane
Fairfield, Ohio 45014

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .In re: WXJJ(FM), Mt. Vernon, Kentucky
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . File No. BPH-860703MF (permit)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reinstatement of Expired Permit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .File No. BPH-941026JA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Petition for Reconsideration

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assignment of Permit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .File No. BAPH-960531GL

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Informal Objection

Dear Applicants:

This concerns: (1) the captioned application to assign the permit of Station WXJJ(FM), Mt. Vernon, Kentucky, from William S. Daugherty III ("Daugherty") to Vernon R. Baldwin, Inc. ("Baldwin") (File No. BALH-960531GL); and (2) the captioned application to reinstate the expired WXJJ(FM) permit (File No BPH-941026JA), granted August 23, 1996. On August 28, 1996, Cumberland Media, Inc. ("CMI") filed an Informal Objection to the assignment application, and on September 17, 1996, a "Petition for Reconsideration [of the grant of the reinstatement application] and Supplement to Informal Objection" ("Petition for Reconsideration"). The parties subsequently filed responsive pleadings. See Footnote 1. For the reasons set forth below: reconsideration is granted; the WXJJ(FM) permit is cancelled and the WXJJ call letters deleted; and the assignment application and Informal Objection are dismissed.

Background/Pleadings. Daugherty was granted a construction permit on April 30, 1990 with a construction period ending October 30, 1991. He subsequently received one modification of the permit (see Footnote 2), one extension (see Footnote 3), and three reinstatements of the permit which he allowed to expire on three separate occasions (see Footnote 4), culminating in a construction completion date of October 24, 1994. On October 26, 1994, two days after the permit expired yet again, Daugherty filed another (the captioned) reinstatement application ("the Fifth Request"). While that reinstatement request was pending, Daugherty filed yet another application seeking additional time to construct, File No. BPH-960531JA ("the Sixth Request"). This application was dismissed as unnecessary, and the uncontested Fifth Request was granted by the staff on August 23, 1996.

Previous requests. Daugherty asserted in support of his fourth request for additional time to construct (File No. BPH-940608JC, the "Fourth Request") that : (1) the WXJJ(FM) tower site construction was complete, including access road, electrical service, concrete anchors, and tower base; (2) the tower itself was on site and ready for assembly within three days; (3) the studio building was being remodeled; and (4) the remaining broadcast equipment would be delivered when remodeling was completed. He also asserted that construction was delayed because, due to "previous loan problems with another station," his original bank withdrew its loan approval. However, he stated that he "had negotiated" a loan with another local bank to finance remaining equipment and construction expenses. Daugherty maintained that inclement weather also accounted for construction delay. Finally, he claimed to be "totally committed and able" to finish construction within the 90-day extension period requested. Daugherty's 90-day extension request was granted July 22, 1994.

Daugherty proved unable to complete construction within the period allotted by grant of application No. BPH-940608GC. In the Fifth Request, he sought an additional 90-day extension, asserting once again that construction of the tower site is complete, including electrical service, concrete anchors, and tower base. He also stated that the WXJJ(FM) studio is being remodeled and that he is "working to finalize long-term financing for the project" which he anticipated would be arranged by December 31, 1994. Finally, Daugherty estimated that construction would be completed by January 17, 1995.

As indicated, while the Fifth Request was pending, Daugherty filed a sixth request for additional time to construct, which was dismissed as unnecessary. In support of this application, Daugherty asserted that for the past three years he had not been represented by legal counsel, that he allowed his permit to expire and was unsure what he needed to do to reinstate the permit, and that he believed he needed to demonstrate the availability of a bank loan. Daugherty also indicated that in the meantime he had been approached by Baldwin, whose communications counsel advised him that he is entitled to reinstatement of his permit by virtue of substantial construction progress. Daugherty reiterated that he has obtained a transmitter site and that a tower, although not erected, is on site. Finally, Daugherty noted that Baldwin, described as a financially qualified broadcaster, has certified that it would commence construction immediately upon consummation of the proposed assignment. See Footnote 5.

Informal Objection/Petition for Reconsideration. See Footnote 6. CMI's Informal Objection is directed to the assignment application. It seeks reconsideration of the August 23, 1996 reinstatement of Daugherty's expired permit. According to CMI, it could not have participated earlier in the reinstatement/replacement proceeding, because significant information -- specifically, an August 8, 1996 declaration of Daugherty in response to a staff inquiry and submitted as an amendment to the assignment application -- was not placed in the Commission's public records until after grant of the replacement permit; thus, CMI was unable to fully evaluate Daugherty's construction progress showing until after the applicaiton had been granted. CMI argues that Daugherty has failed to show sufficient construction progress to support extension or replacement (see Footnote 7) and has misrepresented construction progress. CMI echoes these arguments, in more detail, in its "Petition for Reconsideration and Supplement to Informal Objection."

Oppositions. Baldwin questions CMI's standing. It also argues that Daugherty has shown the requisite construction progress to warrant the August 23, 1996 reinstatement grant.

Discussion. Procedural issues. CMI, as licensee of Station WRVK(AM), Mt. Vernon, has standing in the proceeding under FCC v. Sanders Brothers' Radio Station, 309 U.S. 470 (1940). Additionally, while CMI did not object to the reinstatement application prior to its grant as required by 47 C.F.R. §1.106(b)(1), it has demonstrated that information central to the staff's action -- the declaration from Daugherty in response to an informal staff inquiry -- was not placed in the Commission's public reference room until after the Fifth Request had been granted. See Footnote 8. Thus CMI has justified its failure to timely object to the Fifth Request.

Substantive issue. Section 73.3534(b) of the Commission's Rules provides in pertinent part that applications for reinstatement or extension of time to construct will be granted only if one of three circumstances is demonstrated: (1) construction is complete; (2) substantial construction progress has been made; or (3) there has been a lack of construction progress for reasons clearly beyond the control of the permittee, which has taken all possible steps to expeditiously resolve problems and proceed with construction. The Commission's criteria for extensions are strict, and explicit notice has been given of its intent to limit extension grants to permittees which demonstrate that they have met one of the three §73.3534(b) criteria. Construction of Broadcast Stations, 102 FCC 2d 1054 (1985).

With respect to the subject Fifth Request, the first criterion is not relevant, as Daugherty did not indicate that construction of WXJJ is complete with testing underway looking toward prompt filing of a license application. As to the second, the Commission has made clear that it will consider only construction progress made during the course of the most recent construction period. See Joseph I. Kendrick, FCC 96-435, released November 8, 1996; Mansfield Christian School, 10 FCC Rcd 12589, 12590 (1995); Metrovision, Inc., 2 FCC Rcd 1907 (M.M.Bur. 1987), affirmed, 3 FCC Rcd 598 (1988). As detailed below, although Daugherty specified in the Fifth Request that various aspects of construction had been completed, they were not accomplished during the most recent construction period.

To determine whether Daugherty made "substantial progress" during the most recent construction period, we must examine his specific factual representations. Daugherty asserted in support of the Fourth Request:

Tower site construction is complete, with an access road, electrical service, concrete anchors and base of tower. The tower itself is on site, unassembled, and can be installed within three days . . . . Work was commenced November 1, 1993. . . . I remain totally committed and able to finish construction within 90 days and . . . request a 90 day extension . . . to finish construction. (Emphasis added)

. . . construction of the tower site is complete with an access road, electrical service, concrete anchors and base of tower. The studio building is being remodeled. . . . I . . . would anticipate . . . construction completed within . . . 90 days. . . . I request a 90 day extension . . . to complete the project. (Emphasis added)

[Daugherty]. . . obtained land needed for the station, and a tower, which is actually on the transmitter site, but has not yet been erected . . . as soon as the assignment is completed [the assignee] will immediately begin building. (Emphasis added)

During the period in question. . . I completed gradework on the access road and installed drain tiles, purchased a building for the tower site to house the transmitter, made a $2,500 payment on computer hardware and software . . . and made payments towards the long term lease of the studio building. (Emphasis added)

A comparison of these claims reveals very little actual progress towards constructing WXJJ(FM) during the most recent relevant construction period, July 22 through October 24, 1994. Significantly, Daugherty's most recent claims regarding construction of the tower and access road are recitations of construction progress previously claimed in support of his Fourth Extension Request for additional time to construct and in support of earlier extension/reinstatement applications. See Footnote 9. The only progress during the relevant period appears to be the purchase of a transmitter building, one payment for computer hardware and software (the relation of which to construction of WXJJ(FM) is unspecified), and continued payments on a studio lease. This does not constitute "substantial" progress toward completion of construction of WXJJ(FM). See Stephen E. Powell, FCC 96-363, released September 26, 1996 (permit cancelled when permittee had not received and installed equipment necessary to initiate station operations in the two years following grant of his permit); Bernadine H. Layne, 2 FCC Rcd 2506 (1987) (only step towards construction was acquisition of studio and office equipment, which was insufficient to warrant grant of extension). Compare Community Service Telecasters, Inc., 6 FCC Rcd 6026, 6028 (1991) (extension denied where applicant acquired no equipment and erected no tower); F.B.C., Inc., 3 FCC Rcd 4595 (M.M. Bur. 1988) (permittee made "substantial progress" where it ordered tower, transmitter, and antenna and substantially completed construction of transmitter building).

As to the third §73.3534(b) criterion, an examination of the Fifth Request reveals nothing to indicate that the lack of construction progress is attributable to reasons beyond Daugherty's control or that he he took all possible steps to resolve such problems and proceed with construction. The Commission has repeatedly held that the unavailability of funds -- such as the bank's withdrawal of its loan approval here -- is not considered a circumstance "beyond the control of a permittee and does not, therefore, justify extension of a construction permit." See, e.g., Revision of Form 301, FCC 81-278, released October 19, 1981, 50 RR 2d 381 (1981); Instructions to FCC Form 301 ("It is Commission policy not to grant [an] extension of time for construction on the basis of financial inability or unwillingness to construct."). Nor does collapse of financial arrangements, of itself, constitute a sufficient reason for not building. Bernadine H. Layne, supra, 2 FCC Rcd at 2507; L.E.O. Broadcasting, Inc., 2 FCC Rcd 1810, 1811 (MMB 1987). Rather, the Commission has held that a permit extension is warranted based on lack of financing only when, unlike here, an applicant's progress is unexpectedly defeated by the repeated cancellation of committed financing from traditional capital sources, such as banks and other financial institutions. Horseshoe Bay Centex Broadcasting Co., 5 FCC Rcd 7125 (1990) (extension granted where bank's financing commitment was rescinded due to Federal Deposit Insurance Corporation lending restrictions on local banks in light of a state-wide recession causing numerous business failures). See generally Zephyr Broadcasting, Inc., FCC 96-433 (released November 8, 1996).

Further, even if Daugherty's lack of construction progress could be attributed to a loss of financing beyond his control, the record does not reveal that he took all possible steps to resolve this problem and proceed with construction. See generally Carolyn S. Hagedorn, 11 FCC Rcd 1695 (1996). In this regard, Daugherty did not detail attempts to find replacement financing. For example, in support of his fourth Form 307, Daugherty stated that he "had negotiated" a replacement loan from a bank, while in support of the Fifth Request, he merely states that he was "working to finalize" financing. Daugherty provided no details regarding his attempt to secure replacement financing or what happened with respect to the loan he "had negotiated" regarding his fourth request.
Additionally, it is well settled that Daugherty's filing of an assignment application is not a factor considered in determining whether or not to grant his request for additional time to construct. Rappaport Communications, Inc., 2 FCC Rcd 175 (1987); New Orleans Channel 20, Inc. (WULT-TV), 104 FCC 2d 304, 314 (1986), affirmed, 30 F.2d 361 (D.C. Cir. 1987). Denial of the extension request results in forfeiture of Daugherty's permit, rendering the instant assignment application moot. Metrovision, Inc., supra. Finally, that Daugherty acted without benefit of communications counsel is of no decisional significance. See CSJ Investments, 5 FCC Rcd 7653, 7654 (1990). Finally, in light of the action taken herein, we need not at this point address CMI's misrepresentation allegations.

Accordingly, in light of the above and pursuant to 47 C.F.R. §0.284, the September 17, 1996 "Petition for Reconsideration and Supplement to Informal Objection" filed by Cumberland Media, Inc. IS GRANTED; the August 23, 1996 action granting an application (File No. BPH- 941026JA) reinstating and extending the construction permit for Station WXJJ(FM), Mt. Vernon, Kentucky, IS REVERSED and that application IS DENIED; the WXJJ(FM) construction permit (File No. BPH-860703MF) IS CANCELLED; the WXJJ call letters ARE DELETED; and the application to assign the construction permit for Station WXJJ(FM) from William S. Daugherty III to Vernon R. Baldwin (File No. BAPH-960531GL) and the Informal Objection filed August 28, 1996 by Cumberland Media, Inc. ARE DISMISSED AS MOOT.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sincerely,

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Linda Blair, Chief
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audio Services Division
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mass Media Bureau


cc: John F. Garziglia, Esquire
. . . Lauren A. Colby, Esquire

Footnote 1: On September 13, 1996, CMI filed an Erratum to its Informal Objection. Baldwin submitted Oppositions to the Informal Objection and to the reconsideration petition on September 10 and 30, 1996, respectively. CMI filed a Reply to the Opposition to the reconsideration petition on October 15, 1996.

Footnote 2: File No. BMPH-910606IC, granted August 6, 1992.

Footnote 3: File No. BMPH-930129JY, granted March 22, 1993.

Footnote 4: File No. BPH-920313JV, granted April 30, 1992; File No. BPH-930924JC, granted November 30, 1993; and File No. BPH-940608JC, granted July 22, 1994.

Footnote 5: See Exhibit C to assignment application.

Footnote 6: Referencing "identical facts" relating to both its Informal Objection and Petition for Reconsideration, CMI addresses both the assignment and most recent Form 307 application grant in the petition.

Footnote 7: > If neither extension nor reinstatement were merited, the assignment application would be moot.

Footnote 8: CMI documents unsuccessful attempts of its counsel to verify receipt and to obtain that information. See Exhibit B to the Petition for Reconsideration.

Footnote 9: Daugherty asserted in support of his third Form 307 application that the tower had been purchased and the supplier retained to install it.