In three cases released in the last week, the FCC grappled with the issue of when the amount of a fine (or a "forfeiture" as the FCC refers to it) imposed on a broadcaster for a violation of an FCC rule is too much to be sustained. Clearly, the FCC wants a fine for a violation of its rules to be meaningful, so as to discourage bad behavior. But in some cases, the fine could be so great as to impact the public service provided by a station – or to even put it out of business. Thus, the FCC has adopted a test where it will look at the gross revenues of the licensee of the station to see if the licensee can pay the fine. And these cases make clear that it is the entire gross revenue of the licensee – not just the revenue of radio operations that is considered in this analysis. And, even for noncommercial or nonprofit broadcasters, these same tests apply.
One case very clearly demonstrates that the FCC is looking at a licensee’s full revenue – not just that revenue available to the broadcast station. This case involved a school district that submitted financial information about its noncommercial radio operations in an attempt to reduce a $7000 fine for a late-filed license renewal. The FCC rejected that ground for reduction (though it did reduce the fine to $5600 based on the applicant’s prior history of compliance), saying that the entire funding of a licensee must be reviewed before a hardship reduction would be granted. As no information about the district’s revenues was provided, no hardship reduction was in order. In another case, the FCC looked at the revenues of the licensee (a church). As these revenues were between $391,000 and $520,000 during a three year period, the FCC determined that a $7000 fine, approximately 1.5% of the licensee’s gross revenues, was not too much. There, the Commission cited cases where fines of as much as 7.9% of a licensee’s revenues were not deemed excessive. Only in a nonbroadcast case, involving an individual who was found to have been operating an unlicensed radio transmitter on a government frequency was the FCC moved to decrease a proposed fine, reducing it from $10,000 to only $750 upon a finding that the individual had no current source of income from which the fine could be paid. The moral is that, if you operate a broadcast station, violate the FCC rules and have money, the FCC is going to be looking for a piece of it. One more reason to assess your operations and make sure that you are operating on the right side of the rules.