LATINO GROUPS HIT FCC HALLMARK RULING

The nation’s largest chain of Spanish-language television stations claims that a Federal Communication Commission decision to renew its licenses this week has “vindicated” the company of allegations that it was illegally under foreign control.

At the same time, Hallmark Cards Corp. and First Capital Corp. of Chicago say the FCC ruling in favor of Spanish International Communications Corp. moves them a step closer to completing their purchase of the 11 stations owned or controlled by the company, including KMEX-TV Channel 34 in Los Angeles.

“We feel the ruling is a strong one and we are encouraged by it,” said Nancy Matheny, a Hallmark spokeswoman. Matheny predicted that Hallmark and First Chicago, which agreed to buy the stations for $301 million, would take control of the stations by year’s end.

But a Latino congressman and several Latino business and community organizations that oppose the sale say that both buyer and seller may be proclaiming victory too early. They question Hallmark’s long-term commitment to Spanish-language programming.

Vowing to take their fight to the FCC’s Mass Media Bureau, which must now rule on whether to approve the sale of the Spanish International stations, the opponents accused the regulatory agency of violating its own procedures and of weakening its policies designed to increase minority ownership of broadcast outlets.

“The renewal of the licenses is a further violation of their (the FCC’s) own procedures,” because it rewards Spanish International for violating the U.S. law that limits foreign investment in broadcast outlets to 20%, said Rep. Matthew Martinez (D-Calif.).

Martinez, of Monterey Park, noted that an FCC adminisitrative law judge had refused to renew Spanish International’s licenses last year because the judge found that Mexican media magnate Emilio Azcarraga Milmo and his family effectively controlled the stations through a combination of programming and financial ties without directly violating the 20% limit.

Besides KMEX, the stations that won license renewal from the FCC this week were KWEX in San Antonio, Tex., WLTV in Miami, WXTV in New York, KFTV in Fresno and KDTV in San Francisco. Spanish International’s lower-power and repeater stations were not covered in the ruling.

In an interview Thursday, FCC Commissioner Patricia Dennis disputed Martinez’s criticism of the agency, saying that the commission was only empowered to decide the issue of license renewal that was approved by the FCC’s review board, not whether there were violations of the foreign-ownership statute.

Dennis said that the review board still must review the foreign-control issue, and the commissioners may eventually grapple with the question.

Still, she added, the commission did not try to duck the foreign-ownership issue, portraying the violations as “technical” in nature because Spanish International had never attempted to conceal the identity of its foreign investors.

“We feel completely vindicated now that the commission has recognized the problem for what it was,” Emilio Nicolas, president of Spanish International, said in a prepared statement. “We are gratified that our years of public service have not gone unnoticed.”

The commission also claimed that no precedent exists for punishing violations of foreign control after they had occured.

“Because our focus in these cases has been on ensuring future compliance with the statute, we have not had a reason to consider whether previous . . . violations warrant sanctions in addition to remedial action,” the ruling stated. Any punishment that might be meted out, the FCC concluded, could harm the stations, thereby infringing on the public interest.

“To say the law against alien control can only be used prospectively is just entirely unconvincing,” said Bruce Eisen, an attorney for the Coalition for the Preservation of Hispanic Broadcasting, a Latino business group attempting to block the sale of the stations. “I think there were clear errors of law in the commission’s decision” that lessen its ability to deter illegal foreign ownership of broadcast outlets, he said.

Former FCC Commissioner Henry Rivera said that the commission’s failure to come to grips with Spanish International’s violations of the law may also have inadvertently established a new precedent. By letting Spanish International sell its stations at full value, he said, the FCC may have removed the last incentive for enforcing its distress-sale policy, which requires broadcasters to sell their stations at 75% of their value to minority owners.

Responding to the criticism, commissioner Dennis said, “We are not making any finding that implicates the distress sale policy. This is what we call in the legal profession a ‘purple cow’--a very isolated and discrete situation. Anyone who gets an adverse judgment against them cannot then go out and expect to sell their stations.”

Eisen said that the coalition is presently considering a number of options, including petitioning the FCC to reconsider its decision and appealing the commission’s ruling in federal court.