Nov. 1, 2003 The Federal Communications Commission has rejected an application for a transfer of ownership of St. Croix radio stations WSTX-FM and WSTX-AM, leaving the way open for the FCC to revoke their licenses.
A letter dated Oct. 27 from FCC Audio Division Chief Peter Doyle dismissing the application to transfer the licenses to Caledonia Communications was sent to the stations' attorney in Washington, Daniel A. Huber.
In August of 2001, an FCC administrative law judge found that Family Broadcasting, which is owned by Asta and Gerard Luz James and is the parent company of the stations, had run the stations "at variance from the terms of the station licensees, failed to respond to official commission correspondence and inquiries, made material misrepresentations or lacked candor concerning the relocation of the transmitter from the site authorized for WSTX-FM, violated public-safety rules and failed to maintain public inspection files."
In his Summary Decision the judge had said that "Family cannot be trusted to be truthful with the Commission or to operate its stations in accordance with the Communications Act and commission rules or with a genuine concern for public safety." He ordered Family's licenses to be revoked.
But on March 22, 2002, after an appeal was filed by Family, the FCC reviewed the decision and ruled that the revocation was warranted only if Luz James were to remain in control of the stations. By that time Family had filed a petition with the commission to transfer ownership and control of the stations to the adult children of Asta and Luz James, including Barbara James-Petersen, who had become and is currently the stations' general manager. The FCC set aside the administrative law judge's ruling in order to allow the transfer to take place but did not rule out revocation, should Family be unable to persuade the FCC that Luz James was indeed out of the picture.
A "consolidated" hearing was consequently set to begin Feb. 25, 2003, which would address the transfer and the threatened revocation. A day or two before the hearing, according to FCC attorney Kathryn Berthot, "Family filed for a Minority Distress Sale," which permits any station that is facing the loss of its license to sell its assets including the license to any "minority-controlled" company for no more than 75 percent of its assessed market value.
In an Asset Purchase Agreement executed in late February of 2003, Family consented to selling the stations to Caledonia Communications Corp. Fifty-one percent of the shares of Caledonia are held by St. Croix attorney Kevin Rames and the other 49 percent by St. Croix businessman Jonathan Cohen and his wife Amanda Friedman. Since Rames qualifies as a member of a protected minority, Caledonia is considered a minority-controlled company by the FCC.
Cohen owns and operates three FM radio stations on St. Croix, the popular Mongoose Radio, Sunny FM and Isle 95.
The purchase agreement set the full price for the stations' assets at $290,625, a figure arrived at by outside appraisers, or "valuators," as 75 percent of the actual market value. Family filed an Application for Consent to Assign the licenses to Caledonia on March 14.
In its rejection of Family's overtures the FCC said: "Family does not demonstrate that the public interest would be served by permitting it, a station licensee that has engaged in serious misconduct and has violated numerous commission rules, to receive money for the sale of WSTX-FM/WSTX-AM." Since Family had "repeatedly deceived" the FCC and was guilty of numerous violations, "We conclude that a distress sale is unwarranted on these facts," Doyle wrote to Family's attorney.
This was the second time Family had come under the gun from the FCC. When Family submitted its license-renewal application in 1996 a routine filing due every several years the commission set a hearing to look into WSTX-FM. The alleged violation in that case was the station's having gone off the air ("going silent") without notifying the commission. In a footnote to the letter sent to Huber, FCC's Doyle noted that while finding "willful and repeated violations" of FCC regulations "requiring a licensee to submit an informal, written request to remain silent, the administrative law judge nevertheless determined that, in light of the station's return to the air on Jan. 18, 1997, and continuous operation since that time, Family was qualified to remain a commission licensee."
The letter from Doyle to Huber did not mention what might happen next.
"A dismissal of the application to assign Family's licenses means that FCC will probably reschedule the hearing originally scheduled for Feb. 24 to show cause why the stations' licenses should not be revoked," a Washington, D.C., communications industry attorney familiar with the case said. "At this point, chances are very good that Family will lose its licenses and they will go up for public auction," he said. "Whoever buys them gets about six months to get up and running with the new stations."
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