Do DC Lawyers Think It’s ‘The End’ For KDND?

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By Adam R Jacobson
RBR + TVBR


Can a tragic incident that occurred nearly a decade ago still present a significant risk to your business — including the loss of your station’s license?

Entercom will soon find out the answer, after the FCC late last week directed the company to come to Washington, D.C. and defend itself in front of an Administrative Law Judge intent on discovering whether or not the license renewal of the company’s CHR/Pop KDND-FM 107.9 in Sacramento may proceed.

What do Inside the Beltway communications attorneys think of the possible loss of the license for a station known as “The End”?

There’s no consensus among the lawyers who spoke with RBR + TVBR. 

Richard Helmick, an attorney at Cohn & Marks LLP, believes there is a very strong justification for the FCC’s Oct. 27 hearing designation order, which will give Entercom the opportunity to raise additional facts and circumstances at a date to be held within the next nine months.

“A person died,” Helmick says, bluntly. “This has got to be a standout decision. There is no statute of limitations.”

At issue with the Commission is a contest held on January 12, 2007 on the KDND morning show, called “Hold Your Wee for a Wii,” in reference to the Nintendo Wii game console. The winner, as determined by the station, would be the contestant who was able to drink water at regular intervals for the longest time without urinating or vomiting.

A decade on, the FCC takes issues with several key facts that it raise “serious questions as to whether Entercom operated KDND in the public interest during the most recent license term.”

In particular, the Commission notes that, in soliciting contestants, the show hosts announced eleven times that the contestants would be drinking water every 15 minutes — giving the quantity once as “eight ounces” and once as “an eight-ounce or 16-ounce glass of water.” However, the Commission notes, “These pre-contest announcements did not mention any risks associated with the contest in general or water intoxication (a.k.a. hyponatremia) specifically.”

There’s also a possible case of severe irresponsibility on the part of KDND and Entercom’s Sacramento management and staff.

“The record suggests that Entercom formulated, promoted, conducted and aired over the station an inherently dangerous contest in which one listener-contestant died of water intoxication and many others suffered serious physical distress,” the Commission said.

This could lead to the conclusion by an Administrative Law Judge that Entercom failed to serve the public interest with KDND during the previous license term — warranting the denial of the renewal application.

Such cases are atypical, Helmick notes. “We have seen license revocations for character qualifications, where someone has committed a crime,” he says. “In this case, it was a contest that went awry.”

Such cases are also rare, Helmick adds, noting that one station lost its license for conducting a contest that involved a point-to-point scavenger hunt that resulted in motorists failing to abide traffic laws and police involvement. This incident happened some three decades ago.

A ‘HUGE DEAL’ THAT DESERVES ATTENTION

Veteran attorney Peter Tannenwald, of Fletcher, Heald & Hildreth, stresses that as the FCC has called for a renewal hearing and not a revocation hearing, Entercom has the burden of proof.

If it was a revocation hearing, the FCC would have the burden of proof — thus putting Entercom in more peril than its present situation.

Still, Tannenwald notes, “Failure to renew a license is very rare in any context, particularly where, as here, the licensee has the resources to fight back. However, unless Entercom can negotiate a settlement with the FCC, which seems unlikely at this point, the proceedings may drag out over a period of years and will certainly be expensive for Entercom.”

How costly could that be? Tannenwald said one client he defended a few years ago spent upward of $500,000 on legal fees.

Once Entercom’s legal team meets with the FCC’s Administrative Law Judge, the question in Tannewald’s mind comes down to jurisdiction.

“Can the FCC have jurisdiction over this?” he asks. “There will be an issue about the rule on contests, and I did not see anything that didn’t explain this.”

Yet, this seems to be the crux of the FCC’s decision to hold a license renewal hearing.

A 36-page Hearing Designation Order and Notice of Opportunity for Hearing provides an extensive retelling of the “Hold Your Wee For a Wii” contest at KDND, which resulted in the death of contestant Jennifer Lea Strange — one of two finalists for the prize.

As noted by the Commission, contestants were told by Entercom staff that they would be drinking eight-ounce bottles of water every 10 minutes, rather than at the 15-minute intervals previously announced on the air. The FCC has a problem with the last-minute change.

Some 18 contestants participated in the contest, and each were asked to sign a general liability waiver that, as the FCC notes, did not mention the risk of hyponatremia. Lack of trained medical personnel on hand was also cited as a fault by the Commission.

Nearly three hours into the contest, Strange and another contestant were the only ones remaining in competition for the Wii; Entercom records show Strange consuming by this point a whopping 207.2 ounces of water.

KDND offered to end the contest in a draw at this point, with both contestants having the opportunity to win Justin Timberlake concert tickets. Both Strange and the other contestant refused; Strange continued to consume water until reluctantly accepting the station’s offer for concert tickets in lieu of a Wii.

After leaving the station, Strange drove home and later slipped into a coma. She soon afterward died of hyponatremia. Strange was 28 years old.

It is the danger of the contest itself, along with the changed terms presented to contestants and failure to protect the contestants from potentially life-threatening health hazards that could cost Entercom not just its license, but millions of dollars more in legal costs.

In October 2009, a wrongful death civil action against Entercom led to a jury verdict in favor of Strange’s surviving husband and two children in the amount of $16.5 million.

Following the verdict, Entercom and the Strange family entered into a settlement agreement that included the withdrawal of the family’s complaint to the Commission, filed in January 2007 just days after Jennifer’s passing.

However, Media Action Center and Sue Wilson collectively filed a petition to deny KDND’s 2013 application renewal, using the death of Strange and the Wii contest as the foundation for its request.

Meanwhile, old Entercom nemesis Ed Stolz filed an informal application tied to a pre-contest petition to deny KDND’s 2005 applications for reasons tied to Stolz’s sale of another Sacramento FM — then-KWOD 106.5 — to Entercom.

A SIGNAL FROM THE CHAIRMAN?

The Commission rejected Entercom’s contention that the contest and the events surrounding it are outside the FCC’s jurisdiction.

Broadcast attorney David Tillotson sides with Entercom.

“It absolutely boggles the mind that the FCC is bringing this in front of an Administrative Law Judge,” he says. “The absurdity of the whole position … There is negligence versus character issues at play here. Should they take away this one license? It makes no sense. If Entercom lacks character to be unfit, then why not take all of their stations away from them?”

The FCC has granted license renewals to Entercom for other stations. Thus, should the renewal of the KDND license fail to transpire, it is highly unlikely that the Commission will find Entercom unqualified to hold any licenses at all, Tillotson notes.

Erwin G. Krasnow, an owner at the law firm of Garvey Schubert Barer, believes the license renewal hearing is a “respect my authority” play directed from the very top of the Commission.

“The Wheeler FCC likes to send a signal to broadcasters about its rules and policies of greatest significance, and then use a proceeding to show the perils of noncompliance,” Krasnow says. “There are high fines, and other sanctions. For example, there’s the FCC’s policy of imposing extremely high penalties on broadcasters who use simulated EAS signals on their stations.”

But this isn’t simulcast EAS signals we’re talking about. It’s about a listener’s death and whether KDND staff were at fault.

That’s why Wiley Rein attorney Mark Lipp is interested to see how the hearing designation, “a very rare” occurrence, transpires.

“The statute of limitations does not apply where the renewal is still pending,” he says.

Meanwhile, should the “very highly unlikely” decision to not renew KDND’s license transpire, one media broker believes this could have an impact on the overall valuation of broadcast stations.

“Remember that there is this great expectation of having a license renewed and transferred,” the broker says. “This is the basis for stations bought and sold, and the denial of a license renewal works against those certainties.”

Krasnow disagrees, saying that brokers have nothing to fear.

Meanwhile, there is all-out avoidance of having your station faced with a license renewal hearing or, worse, a license revocation hearing.

“This appears to be a unique case where the FCC has turned a case of negligence – usually resolved through a lawsuit in civil courts – into a violation of the general obligation of a station to operate in the public interest,” Wilkinson Barker Knauer LLP attorney David Oxenford wrote Oct. 28 in a blog entry on the subject. “There is sure to be much more to the story as the proceeding continues … Be sure to conduct your contests carefully, as this proceeding, no matter how it is decided, shows that there can be unexpected consequences from unanticipated events that occur during the course of a contest.”

RBR + TVBR