The FCC reduced a series of proposed fines against the licensee of three California Class A TV stations after the licensee submitted financial information showing it was operating at a loss.

Section 73.3526 of the FCC’s Rules requires each commercial broadcast station to maintain a public inspection file containing specific information related to station operations. Subsection 73.3526(e)(11)(iii) of the rule requires licensees to prepare and place in their public inspection files a Children’s Television Programming Report for each calendar quarter showing, among other things, the efforts made during that three-month period to serve the educational and informational needs of children.

In April 2015, the licensee filed license renewal applications for its three Class A TV stations. In the applications, the licensee disclosed that it had filed after the respective deadlines twelve Children’s Programming Reports for one station, and eight Reports for each of the other two stations, for a total of 28 late-filed Reports.

The FCC subsequently issued three Notices of Apparent Liability for Forfeiture (“NAL”) against the licensee. The NALs proposed fines of $9,000 for the station with 12 late-filed Reports, and $6,000 for each of the stations with eight late-filed Reports, for a total proposed fine of $21,000.

In response to the NALs, the licensee admitted to the violations, but asserted that the fines should be cancelled because, over the three years preceding the NALs, the stations operated at a loss that “significantly” exceeded their gross revenue. In the alternative, the licensee argued that the fines were excessive and should be reduced, and provided financial information that included its prior three years of tax returns and information regarding the sources of income that support the stations’ operations.

Noting that it uses gross revenue as the “primary measuring stick by which to evaluate a licensee’s ability to pay,” the FCC concluded that the average gross revenue of the stations, as well as other financial information submitted by the licensee about the stations’ operations, warranted a reduction in the fines. Accordingly, the FCC reduced the two $6,000 proposed fines to $1,500 each, and the $12,000 proposed fine to $2,250, for a total proposed fine of $5,250.