Vol. 3, Issue 2, June 2004

November 3, 2004 FCC Auction 37 Update

The FCC has released a Public Notice announcing the schedule for participating in the November 3, 2004 FM auction. A revised list of the 290 FM construction permits to be auctioned and the upfront payments/minimum opening bids for each permit was also released. That list is available at the FCC’s website and will also be available at www.cinnamonlaw.com.

We can also e-mail the list to you, upon request to
Scott@Cinnamonlaw.com.

Parties interested in bidding in the auction must file an FCC Form 175 with the Commission during a special filing window that opens on July 22, 2004 at 12 noon ET and closes on August 6, 2004 at 6 pm ET. The FCC will hold an auction seminar on July 22, 2004 at its headquarters in Washington, D.C. A live webcast of the event should be available at http://www.fcc.gov/realaudio.

Prospective bidders will be required to identify which construction permits they plan to bid on in the FCC Form 175. The bidder’s structure and ownership will need to be disclosed as part of the FCC Form 175, and material changes in the ownership of the bidding entity is prohibited once the Form 175 filing window closes.

There are strict anti-collusion rules that will become effective when the Form 175 filing widow closes.

Bidding credits will be available for “new entrants.” A 35% bidding credit will be available for bidders who have no attributable interests in any other media of mass communications. If a bidder has between one and three media interests, and those interests are not in the same area as the permit that the bidder wins, then the bidder could qualify for a 25% bidding credit. In calculating media interests, full-power non-commercial educational stations (whether in the reserved or the commercial band) count, but interests in LPTV, FM translators or other secondary services do not count.

Upfront payments must be made by wire transfer to the FCC before 6 pm ET on September 24, 2004. The amount of the upfront payment will determine how many bidding credits a bidder will have during the auction.

A mock auction will be held on October 29, 2004. The actual auction will commence on November 3, 2004. During the auction, bidders may place their bids over the Internet or by telephone. The automatic bid increment will be 10% in this auction.

Once the auction ends, the FCC will release a Public Notice announcing the winning bidders and those bidders will have 10 business days to wire additional funds to the FCC so that a total of 20% of the winning bid is on deposit. Then each winning applicant will be required to submit a long-form FCC Form 301 with specifics about its proposal for the new station. A second Public Notice will issue advising bidders when the remainder of their winning bids will be due.

If you would like additional information on the auction, or about the auction seminar in Washington, please call my office.

Freeze On FM Rule Makings And Minor Modifications

In preparation for the upcoming FM Auction, the FCC has announced a freeze on the filing of any petitions for rule making and counterproposals proposing changes to the Table of FM Allotments that would affect any of the 290 FM allotments that are scheduled to be auctioned beginning November 3, 2004. In addition, the FCC will freeze the acceptance of all minor change applications for existing FM stations during the FCC Form 175 filing window, which commences on July 22, 2004 and closes on August 6, 2004. Following the close of the Form 175 filing window, the freeze on rule making petitions and counterproposals will be expanded to include protection of any “preferred site coordinates” specified by prospective bidders in their Form 175 applications to participate in the auction.

Bishop Willis Surrenders Stations In FCC Consent Decree

Bishop Willis and his broadcasting companies reached an agreement with the FCC to satisfy outstanding fines that Willis had with the FCC based on violations discovered during inspections of Willis’ stations going back as far as 1999. Willis owed the FCC in excess of $85,000 which included regulatory fee, fines, and penalties. The government took him to court in 2001 and obtained a judgment against him for that amount.

In October 2003, the FCC wrote Willis a pre-designation letter threatening license revocation proceedings because of the fines still owed and inspections showing that violations at the stations were ongoing.

As a settlement, Willis is selling two stations and has promised to apply the proceeds of those sales to the outstanding judgment on the fines owed to the Commission. Willis also agreed to turn in for cancellation the licenses for four radio station. As long as he keeps to the bargain, he will get to keep his other stations, but will have to bring them all into compliance and certify to the FCC every six months for the remainder of the license term for each station that each station is in full compliance with the FCC rules. And as you might imagine, the FCC has promised inspectors will be visiting the stations often to check on Willis’ work..

Renewal and Ownership Report Schedule

AUGUST 1, 2004 is the deadline for radio licensees in Illinois and Wisconsin and televisions licensees in North Carolina and South Carolina to file their renewal applications with the FCC. It is also the day pre-renewal filing announcements should start at radio stations located in Iowa and Missouri and television stations located in Florida, Puerto Rico and the U.S Virgin Islands. And finally, it is the deadline for radio and television stations in Illinois and Wisconsin, and television stations in North Carolina and South Carolina to file biennial ownership reports.

EEO Public File Reports are due for radio and television stations in California, Illinois, North Carolina, South Carolina and Wisconsin.

OCTOBER 1, 2004, is the deadline for renewal applications for radio stations licensed in Iowa and Missouri and television stations licensed in Florida, Puerto Rico and the U.S. Virgin Islands.

Also on that date, Colorado, Minnesota, Montana, North Dakota and South Dakota radio stations, and Alabama and Georgia television stations will start their pre-filing announcements in preparation of for their renewal applications.

EEO Public File Reports are due for radio and television stations in Alaska, American Samoa, Florida, Guam, Hawaii, Iowa, Mariana Islands, Missouri, Oregon Puerto Rico, the U.S. Virgin Islands and Washington.

Late –Filed Renewal Applications Now Subject to Fines

During the last renewal cycle, late filed renewal applications were routinely (if begrudgingly) accepted and processed by the FCC. Even renewal applications filed after the license expiration date, if not opposed, were routinely processed.

In this new era, where the Enforcement Bureau is treated as a profit center, late filed renewal applications will now be subject to a fine. And as discussed previously, a renewal application that reveals any type of public file violation will result in the licensee being fined for its honest admission and pledge to remedy.

If a licensee does not get its renewal application on file until after the license expiration date, then that licensee must take the station off the air immediately upon expiration of the license, and keep it off the air until Special Temporary Authority to operate the station while the renewal application is pending can be obtained from the FCC. The morale of the story is –

Make sure to get your renewal applications filed on time!!

This newsletter is intended to be for informational use only. Readers should not act upon the information presented here without seeking professional legal counseling to address the facts and circumstances specific to them. The transmission and/or receipt of this newsletter does not create an attorney-client relationship.

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