A decision that noncommercial broadcasters should note was released by the Commission last week. The decision was one that upheld a 2012 consent decree where, to resolve objections against the sale of a noncommercial radio station owned by the University of San Francisco, the Media Bureau imposed a fine of $50,000 for a pre-sale LMA which paid the licensee more than the costs of the operation of the station (we wrote about that case and a similar case resolved earlier this year, here). While last week’s decision did not tread any new ground, the fact that the full Commission upheld a determination that a $50,000 fine was an appropriate sanction for a noncommercial station that entered into an LMA that paid it more than its out-of-pocket expenses reinforces the importance of assessing the consideration paid to any noncommercial broadcaster for the sale of programming time on their stations. A noncommercial station can accept funds sufficient to reimburse it for the costs of its operations during the time that the program aired, but it cannot receive more than that reimbursement in the way of compensation for programming time.

As we wrote in January following the release by the FCC of a similar decision, with a similar fine, in another case where a noncommercial licensee was paid more than its expenses by an LMA programmer, the FCC does not want noncommercial stations to be looked at as revenue generating operations for their licensees. If the station is paid for programming, any payments should simply cover station expenses. Last week’s decision looked at other issues too.

While much of the decision deals with FCC procedural issues as to whether the Media Bureau should have negotiated a consent decree with the licensee while protests about proposed sale of the station were pending, the decision also looks at issues as to whether the licensee maintained control of the station while the LMA was in place, and whether it had an operational main studio during that period. These issues were also discussed in our article in January, with the point being made that these issues apply not just to noncommercial operators, but also to any party (including commercial operators) entering into an LMA. The licensee must remain in ultimate control of the station, and must keep a manned main studio operational, with two employees who report to that studio as their principal place of business on a daily basis. See more about the main studio staffing rules in our articles here and here.

This case provides one more reminder for broadcasters, especially noncommercial broadcasters, to exercise care in entering into an LMA or time brokerage arrangement at their stations.