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Lip-Slip Costs Capitol

Capitol Broadcasting Co. Inc. is paying $10,000 to the Federal Communications Commission as part of a consent decree settling what it described as an inadvertent violation of the commission's noncollusion rules during a Broadcasting & Cable interview.

The slip came in an interview with B&C back in January 2004 about an FCC spectrum auction. During the interview, John Greene, VP, special projects, told a B&C reporter that the company was primarily interested in bidding in areas served by its TV stations in North Carolina and South Carolina.

For the record, the offending language was as follows:
"A bidding war between [EchoStar founder Charlie] Ergen and [UK cable magnate George] Blumenthal has the potential to shut out most other bidders, laments John Greene, attorney for North Carolina's Capitol Broadcasting. Capitol hopes to win licenses covering North Carolina and part of South Carolina to complement TV licenses it already owns in those states. But, Greene concedes, 'if Charlie Ergen wants it all, he can afford it.

"'We just think it will be valuable for data and video distribution in the future, but we don't have a business plan yet,' he adds."

After the story published in the January 5, 2004, issue of B&C, Capitol executives realized it might have violated FCC rules that prevent bidders from colluding by sharing information on bidding or bidding strategy, according to Diane Smith, special projects counsel, though they weren't sure since it was not a direct contact with another bidder.

Just in case, the company self-reported to the FCC a week later.

Also, as part of the settlement announced Friday, Capitol has to educate employees about what they can and can't say and do regarding FCC spectrum auctions. Smith assured B&C that the plan won't include a "don't talk to the magazine policy." Smith was working on the compliance plan Monday and said the check--wire transfer, actually--would be in the mail Tuesday.

Capitol wound up dropping out of the bidding for the spectrum, which was for a new terrestrial TV broadband service.