Posted on November 3, 2010 by David Oxenford

$25,000 Fine for Station in an LMA Not Having Staff and a Public File at the Main Studio

An FCC Enforcement Bureau District Office today issued a Notice of Apparent Liability, proposing to fine an AM licensee $25,000 for not having a meaningful staff presence at the station's main studio, and for not being able to produce a public inspection file when the FCC inspectors visited the station.   The station was being operated by another party pursuant to a Local Marketing Agreement ("LMA") and, when the FCC inspector showed up, none of the employees at the main studio identified themselves as an employee of the licensee.  Not having any employees at the main studio, and the additional inability to locate a public file for the station, resulted in the FCC proposing a $25,000 fine ($7000 for the lack of employees at the main studio, $10,000 for the lack of a public file, and an upward adjustment to reach the $25,000 total as the licensee had a series of prior violations).

The fact that this station, like so many others in this time of economic upheaval, was operating under an LMA highlights what the FCC has said so many times in the past about the staffing of such stations.  A station licensee cannot just sign an LMA, and leave the station to the control of the program provider.  Instead, the licensee must oversee the operations of the station, and have its own employees physically present at the station on a day to day basis to do so.  The decision today cites a 20 year old case for the proposition that the licensee must have both management and staff presence at the station on a full-time basis to be considered meaningful.  In other cases, the Commission has said that the there need to be a manager and a staff employee of the licensee who report to the studio as their principal place of business on a daily basis, and at least one of these employees must be physically present at the station's main studio during normal business hours.  Here, where there was no one employed by the licensee at the station when the FCC inspected it, the fine was issued.  So, if you are operating under an LMA, make sure to observe these staffing requirements, or risk a fine from the FCC.

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Posted on March 21, 2010 by David Oxenford

FCC Issues $15,000 Fines For Unauthorized Transfer of Control and Main Studio Staffing Violations for LMA Done Wrong

$15,000 per station was the cost of a broadcast licensee’s failure to adequately supervise two stations of which he was the licensee, but which were operated pursuant to time brokerage agreements or LMAs. Like many stations in these tough economic times, this licensee decided to allow a third party to provide the bulk of the programming and retain the bulk of the sales revenues, in exchange for a payment. However, as the licensee remained the licensee, he was required to maintain and exercise control over the station’s operations, and maintain a meaningful staff presence at the station. In reviewing the operations of these stations, the FCC’s Enforcement Bureau in recent decisions (here and here) concluded that the adequacy of that control was insufficient – providing a warning to other station licensees operating under LMA agreements that they must maintain operational control over the stations that they own.

The FCC has long said that a licensee must maintain a meaningful staff presence at a station, even if the station receives the vast majority of its programming from some other source – whether that is a network or programming provided under an LMA. Meaningful presence has required that at least two employees at the station be employed by the licensee, one of whom must be managerial and perform no services for the broker providing the programming under the LMA. This case makes clear that these required licensee employees must be physically present at the station’s main studio on a regular day to day basis – they cannot be located at some distant location supervising the station remotely or only periodically present at the main studio. Failure to have the station’s main studio manned by the required personnel in and of itself accounted for $7000 of the fine in this case.

The decision in the case also faulted the licensee for an unauthorized transfer of control of the station, as the licensee did not adequately control station operations. This was evident to the FCC based not only on the lack of employees, but also based on a number of other factors. First, the LMA agreement by which the station was being operated was not in writing, but was only evidenced by invoices for payment – insufficient in the FCC’s eyes to insure the required degree of control over station operations. The FCC rules require that Time Brokerage Agreements be in writing, with copies in the station's public file.  The licensee was also unable to certify, when asked by the FCC, whether certain station functions (like the maintenance of the public file and the broadcast of required EAS tests), were being accomplished, being only able to state that he was told by the broker that these matters were being dealt with. The unauthorized transfer of control made up the remaining $8000 of the $15,000 fine.

 

After imposing these fines, the FCC said that it would further review the operations of the stations, watching their future operations to insure that the licensee was in fact exercising the required degree of control. For broadcast licensees everywhere, this decision should demonstrate that the FCC is still concerned about the control of your station – make sure that you are doing what is necessary to maintain that control.
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