FCC Record, Volume 5, No. 17, Pages 5138 to 5328, August 13 - August 24, 1990 Page: 5,222

                                
Federal Communications Commission Record

5 FCC Rcd No. 17

Before the
Federal Communications Commission
Washington, D.C. 20554
In re Application of
David A. Davila,
Nicasio 0. Flores
and Maria Norma Flores
Transferors
and                     File No. BTCCT-890929KK
Telemundo Group, Inc.,
Transferee
For Transfer of Control of
Nueva Vista Productions, Inc.,
Permittee of Station KVDA(TV),
San Antonio, Texas
MEMORANDUM OPINION AND ORDER

Adopted: August 9, 1990;

Released: August 10, 1990

By the Chief, Video Services Division:
1. The Commission. by the Chief, Video Services Division,
acting pursuant to delegated authority, has before
it: (1) an application for transfer of control of Nueva Vista
Productions, Inc., permittee of commercial television station
KVDA-TV, Channel 60 (Ind.), San Antonio, Texas,
from David A. Davila, Nicasio 0. Flores and Maria Norma
Flores (Nueva Vista) to Telemundo Group, Inc.
("Telemundo"); (2) a Petition to Deny and Supplement
filed by Edward L. Gonzalez ("Gonzalez"); (3) informal
objections filed by the Mexican American Legal Defense
and Educational Fund, the National Hispanic Media Coalition
("NHMC"). George A. Tejadilla ("Tejadilla"), and
the League of United Latin American Citizens ("League");
(4) oppositions filed by the Nueva Vista and by
Telemundo; (5) the petitioner's reply; and (6) various
other pleadings.
BACKGROUND
2. From the record, the relevant, uncontroverted facts
appear as follows. In 1987, Nueva Vista was one of five
competing applicants for a construction permit to operate
a commercial television station on Channel 60 in San
Antonio, Texas. On June 18, 1988, grant of Nueva Vista's
application, after a comparative hearing, had been affirmed
by the Commission's Review Board, but appeals of
the Review Board's decision to the full Commission had
been filed by the four losing applicants.
3. On March 28, 1988 Nueva Vista and Telemundo
signed a letter of intent whereby they confirmed their
understandings regarding various transactions between
them ("March LOI").1 Pursuant to the March LOI,
Telemundo agreed to provide funding for the construction
and initial operation of Channel 60 in an amount based
upon budgeted costs, including a management fee of

$5,000 per month to David A. Davila ("Davila"), president
and controlling stockholder of Nueva Vista, for his
full-time services in overseeing construction and initial
program tests at the station. The construction loan was to
be secured by a lien on Nueva Vista's assets, except FCC
licenses, and included a pledge of Nueva Vista's stock.
Further, pursuant to the March LOI, Telemundo would
have a "call" option to acquire, and Nueva Vista would
have a "put" option to sell, all of Nueva Vista's stock for
$1.5 million, subject, by its terms, to FCC approval. The
March LOI also contained a provision whereby
Telemundo would provide a specified amount of Spanish
language programming to Nueva Vista, which Nueva Vista
was free to reject on reasonable grounds. The March
LOI was conditioned on, among other things, execution
of definitive agreements between Telemundo and Nueva
Vista within 45 days of the March LOI, and execution of
settlement agreements between Nueva Vista and all of its
competing applicants within 15 days. All the Board members
of Nueva Vista, including Gonzalez, and Telemundo
signed the March LOI. The March LOI expired on April
12, 1988 because Nueva Vista was unable to effectuate
settlement with all its comparative competitors within the
15-day time period.
4. On June 8, 1988, Telemundo and Nueva Vista signed
a revised letter of intent ("June LOI"). By its terms, the
June LOI recognized the intent of SAT Corp., a subsidiary
of Telemundo, to provide funding in the amount of
$950,000 to be used by Nueva Vista to settle its pending
contested Commission Channel 60 proceeding with three
of the four remaining competing applicants. The terms
were similar to those in the March LOI, except that
rather than the put/call option contained in the March
LOI, the June LOI provided that immediately following
execution of the June LOI and continuing for a period of
18 months after commencement of broadcast operations,
SAT Corp. would have a right of first refusal with respect
to the purchase of any and all of Nueva Vista's stock. 3
5. On July 19, 1988, before the Commission approved
Nueva Vista's requested settlements with all of its comparative
challengers, SAT Corp. executed a definitive
agreement with Nueva Vista to provide Nueva Vista a
loan, secured by a pledge of Nueva Vista's stock, so that
Nueva Vista could settle the pending comparative hearing
with all of the competing comparative applicants except
SABI ("Settlement Loan Agreement"). This agreement did
not contain a put/call option provision and it was signed
by Gonzalez. Subsequent to its execution, Nueva Vista was
able to settle its dispute with SABI, the last remaining
comparative challenger, and the Commission approved all
of the settlements by final order on August 31, 1988.
6. On October 21. 1988, SAT Corp. and 85% of the
Nueva Vista shareholders executed another loan agreement,
the terms of which were similar to the March LOI
providing a construction loan, put/call option provision,
and pledge of Nueva Vista stock as security, among other
things ("Construction Loan Agreement"). Gonzalez did
not sign this agreement. Nueva Vista filed the October 21,
1988 option and pledge agreements, executed pursuant to
the Construction Loan Agreement, with the Commission
on December 1, 1988. Nueva Vista's construction permit
was issued on July 27, 1989 and Station KVDA went on