News

Relevant Radio not directly affected by FCC fine

By Patricia Kasten
Compass Associate Editor

GREEN BAY -- Relevant Radio itself is not facing FCC fines totaling $4.7 million, an impression given by certain news reports last week, according to Trish Luerck, CEO of Relevant Radio. The fine has been levied against another branch of Starboard Media Foundation, Inc., Relevant's parent company, for a practice known as "gaming."

Whether that fine remains in effect or is successfully appealed, Luerck does not see it directly affecting the Catholic radio network's broadcasts. However, she believes that listeners might be concerned after the way the fine has been reported in the media.

"It was less than adequately explained by Catholic News Service (CNS)," said Luerck, "reporting it as if Relevant Radio had been levied these fines. But it was, in fact, Advanced Acquisitions, a wholly owned subsidiary of Starboard Media" which is also the parent company of Relevant Radio.

Relevant Radio, which broadcasts Catholic-themed talk and music over 17 company-owned stations and 17 additional affiliates, has its corporate offices in Bellevue, just outside Green Bay.

The $4.7 million is the difference between a $6.85 million bid made by Advance in 2004 to the FCC for a new spot on a new FM spectrum being created in Yarnell, Ariz., 85 miles from Phoenix, and the eventual sale price of $2.23 million.

Under FCC regulations, the federal agency can eliminate all the penalty, or none of it, but not change the amount.

CNS spoke with Advance Acquisitions' president and chief operating officer, said Joe Giganti, who said that his company had conducted three separate tests that determined that the FM signal in Yarnell could reach the Phoenix metropolitan area. But when Advance discovered that the software used to make those determinations was flawed and the conclusions incorrect, it withdrew its bid.

After Advance, as high bidder, had withdrawn from the first auction, it did not offer bids during the second auction conducted by the FCC. Bob Atwell, chairman of Relevant Radio and its nonprofit parent, Starboard Media Foundation, said this was because Advance was no longer interested in the spectrum. The fine is the difference between Advance's first bid and the actual sale price.

Until this point, Giganti said, Advance had purchased existing radio stations for the Relevant network - often weak-signaled AM stations - with a "mixed bag" of success in petitioning the FCC for signal-strength boosts and coverage upgrades. "It was the first time Advance had ever engaged in the bid process," Giganti added. "It was a novice effort."

CNS reported that the FCC rule penalizing Advance came under regulations against a practice called "gaming."

In an interview with CNS, Atwell explained gaming in radio as a form of unfair bidding between two companies. "You have two competitive radio companies," he said. "The competitor doesn't want the station, but they don't want the competition to get it either." That company then manipulates the process by placing disproportionately high bids to scare off other would-be bidders - and once the bidding is over, that company withdraws the bid.

Atwell added that the proposed FCC penalty is "more than one-third of our (annual) budget" of $12 million, he said, and more than the net worth of Advance Acquisitions.

Luerck sees this as "a David and Goliath injustice" and pointed out that the FCC has levied smaller fines against larger radio outlets, such as the $3.3 million fine against CBS-owned Infinity Radio for broadcasts of shock jock Howard Stern's morning show.

Advance Acquisitions maintains that the bidding that led to the fine is the fault of the computer software and has submitted affidavits from two of the three engineers who used the software in making their determinations of signal strength; the third engineer died. Advance is also considering suing the software manufacturer for damages associated with the bid.

Luerck said that "Advance is contesting this as a precedent setting slap for what was truly a faulty computer reading."

She does not foresee this having any direct effect on Relevant Radio or its programming. "We're all prepared to answer honestly about this that Relevant Radio is fine and going forward," she said.

(Mark Pattison of Catholic News Service contributed to this story.)