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

Kimberly M. Thompson, President/CEO
Fatima Response, Inc.
2044 Beverly Plaza #281
Long Beach, CA 90815

Dennis Michael Crepps
Big Tree Communications
506 Shasta Way
Mt. Shasta, CA 96067

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .In re: KZRO(FM), Dunsmuir, CA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fatima Response, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BALED-960514GK

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Petition to Deny
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Informal Objection

Dear Applicants:

This letter refers to: (1) the captioned application to assign the permit and sell the assets of station KZRO(FM), Dunsmuir, California, from Fatima Response, Inc. ("FRI") to Big Tree Communications ("BTC"); (2) the petition to deny that application, filed on June 21, 1996 on behalf of The State of Oregon Acting By and Through the State Board of Higher Education for the Benefit of Southern Oregon State College ("Southern Oregon"); and (3) an informal objection to the application, filed on August 6, 1996 by Tristar Broadcasting Corp. ("Tristar"), the license of station KWHO(FM), Mt. Shasta, California. In order fully to evaluate the arguments raised in these pleadings, we request the additional information described below.

Southern Oregon petition. In its petition to deny, Southern Oregon charges that FRI has been administratively dissolved on October 22, 1995, and therefore is not lawfully transacting business. Additionally, Southern Oregon states that FRI was not incorporated until July 7, 1993, more than two years after it filed its application for the KZRO(FM) construction permit, and thus may have unlawfully obtained the permit. In response, FRI indicates that it has been incorporated since 1986, and remains a valid corporation to this date, although not in the state of Oregon. In order to verify FRI's rebuttal, we request that FRI submit: (1) a certification from the appropriate Secretary of State indicating that FRI was in fact validly incorporated on April 1, 1993, when it filed its construction permit application for the Dunsmuir, California frequency; and (2) a certification from the appropriate Secretary of State, as well as current articles of incorporation and by-laws, demonstrating that FRI presently is validly incorporated and in what state it is currently incorporated.

Tristar objection. In its objection, Tristar indicates that there has been a premature transfer of control of KZRO(FM) from FRI to BTC in that BTC principal Dennis Michael Crepps used his own resources to "build, program, and control the station." It also states that, although authorized as a noncommercial educational FM station, KZRO(FM) currently is operating as a commercial station.

In order to fully evaluate the evidence submitted by Tristar, as well as that submitted in opposition by BTC, we request that FRI and BTC respond to the following specific inquiries:

1. In a November 23, 1995 response to a previous inquiry letter, FRI indicates that it had hired McKenna Communications, Inc. "McKenna") to build station KZRO(FM), and that McKenna hired Mr. Crepps as a "subcontract worker" to "construct the studios for KZRO." November 23, 1995 letter from Kimberly M. Thompson to Mr. Ben Halprin, at 2. It is now apparent that station KZRO(FM) was entirely constructed using equipment owned by Mr. Crepps, who leases the equipment to FRI for $1 per year. Given these facts, please provide

a) a copy of the agreement pursuant to which McKenna was to construct station KZRO for FRI;

b) a copy of the agreement pursuant to which McKenna employed Crepps as a "subcontractor," as well as any subsequent agreements pursuant to which Crepps was permitted to acquire all equipment necessary to operate the station in his own name (see Footnote 1);

c) documentation of any payment made by FRI to McKenna, and any payments made by McKenna to Crepps, for construction of station KZRO(FM);

d) an indication (with documentation, where possible) of who negotiated and signed leases and/or contracts (for land, legal/engineering services, equipment, employees, etc.) involved in constructing the station; and

e) a detailed statement recounting which FRI principal or employee oversaw the installation of the KZRO equipment (specifically including transmitter, tower, and antenna as well as studio and other ancillary equipment). What was his/her authority with respect to Crepps, and how regular was his/her contact with Crepps during construction of the station? If the responsible person was an FRI employee and not a principal, submit evidence of payment for time spent supervising construction.

2. The Time Brokerage Agreement ("TBA") between FRI and Crepps, executed on June 21, 1996, indicates that FRI is responsible for payment of "all direct and indirect operating costs of the station." TBA, at 3, ¶ 7. In accordance with this agreement, FRI is requested to submit evidence (cancelled checks, ledger entries, or other documentation that the expenses actually were paid by FRI) of:

a) FRI's payment of rents and utilities at FRI's studio, tower, and transmitter site facilities from the commencement of operation through October 31, 1996;

b) FRI's payment of telephone, delivery, and postal service from commencement of operation through October 31, 1996;

c) FRI's payment of salaries, payroll taxes, insurance, and related personnel costs of each FRI employee from commencement of operation through October 31, 1996

3. As an ancillary matter, the TBA indicates that FRI shall retain a General Manager, who is to direct the day-to-day operation of the station and a Chief Operator, who is responsible for "insuring compliance with technical operating and reporting requirements established by the [Commission]." FRI is requested to identify the individuals employed by FRI in these capacities, describe in detail the duties actually performed by these individuals, and provide evidence of their compensation by FRI.

4. The TBA also indicates that FRI specifically reserves three hours per week of programming time between the hours of 6:00 a.m. and 11:00 a.m. on sundays. FRI is requested to specify (and document, if possible) whether and when it has actually broadcast its own programming during its weekly reserved time and whether or not it continues to do so.

5. Documents submitted as Exhibit 3 and Exhibit 6 to Crepps' September 30, 1996 Opposition to Informal Objection indicate that Crepps, as "Operations Manager/Program Director" of KZRO(FM), negotiated with Siskiyou County officials regarding a conditional use permit for its antenna tower and with Tristar's station KWHO(FM) regarding their disagreements. Neither FRI nor any of its principals is mentioned in either of these memos. FRI and Crepps are requested to indicate how Crepps' solo participation in these negotiations is consistent with FRI's retention of control of KZRO(FM).

6. Finally, FRI and Crepps are requested to provide legal support (including case precedent or other rulings) for its proposition that, although KZRO was authorized as a noncommercial educational entity under 47 C.F.R. §73.503 (see Footnote 2) (albeit on a non-reserved FM channel), "the Commission's rules do not preclude commercial operation by such stations." Opposition to Informal Objection, at 4.

Action on the KZRO assignment application will be withheld for 30 days from the date of this letter to enable the parties to compile and submit the requested information. Failure to file a complete response to each specific inquiry within that time period will result in the dismissal of the assignment application pursuant to 47 C.F.R. §73.3568(b) and referral of the matters raised in the Southern Oregon and Tristar pleadings to the Mass Media Bureau's Enforcement Division for further action.

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

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


cc: Gerald Stevens-Kittner, Esq.
. . .Thomas F. Erikson
. . .Robert C. Fisher, Esq.

Footnotes:

Footnote 1: Attached as Exhibit 1 to Crepps' September 30, 1996 Opposition to Informal Objection is an agreement dated May 14, 1994, pursuant to which Crepps, for the sum of $25,000: (1) acquired 49% of station KZRO; (2) obtained an option to acquire the remaining 51% for $1.00, and (3) agreed to complete construction of the station and place it on the air. In the pleading, Crepps admits that the conveyance was "null and void" because he could not acquire 49% directly in a construction permit, but he did retain the option to acquire the station's assets. He also claims that the construction of the station as an option holder with his own equipment "is fully consistent with the Commission's rules since Fatima did not relinquish control of the station." If this is the only agreement pursuant to which Crepps was to acquire equipment and construct the station, FRI and Crepps should indicate how this agreement is consistent with the representation that Crepps was employed as a "subcontractor" by McKenna.

Footnote 2: Section 73.503(a) states that a noncommercial educational FM station "will be licensed only to a nonprofit educational organization and upon showing that the station will be used for the advancement of an educational program."