major change in ownership

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There were several recent FCC decisions on application processing matters worthy of note. One deals with the processing of commercial applications for FM stations or FM translators that are involved in an auction to resolve disputes, the others with the processing of noncommercial applications (in this case for LPFM stations). None break new ground – but instead they reinforce earlier decisions that some who have been around the broadcast industry had found surprising, so these decisions are worth noting. The commercial case involved the question of whether an applicant needs to receive “reasonable assurance of transmitter site availability” before specifying a transmitter site after a broadcast auction. The noncommercial cases deals with the dismissal of an application because of a change in the control of its board of directors while the application was pending.

The commercial case involved the application for a new FM translator in New Jersey, where a local broadcaster filed a petition asking that the translator application be denied as the applicant had never received permission to specify the tower site, owned by the petitioner, in the “long-form” application filed by the applicant after the applicant prevailed in an auction. After the petition was filed, the applicant amended his application to specify another transmitter site. But, under an old line of cases, the failure to have “reasonable assurance” of a transmitter site was fatal to an application and could not be corrected by a later amendment to an available site. In this week’s decision, the FCC reiterated a decision that it made a few years ago (see, for instance, our article here) concluding that, where an application is granted as a result of an auction, the applicant need not have “reasonable assurance” of its transmitter site at the time it files its “long-form” application (the application that specifies the technical details of the facilities that the applicant intends to use to operate its station).
Continue Reading FCC Application Processing Decisions – No Reasonable Transmitter Site Assurance Necessary for Auction Applications, Change in Control of Nonprofit Governing Board Fatal to Pending Applications

In a decision released earlier this week, the FCC dismissed an application for a new noncommercial FM station based on a change in the majority of the applicant’s board of directors within a one-year period after the application was filed.  The change was deemed a major change in ownership, which the FCC rules says requires the assignment of a new file number – essentially meaning that the application is treated as a new application received after the filing window for the new FM stations was closed and was therefore dismissed.  The decision was one made by the full Commission which reversed a decision of its Media Bureau.  The Bureau had granted the application following a settlement with other mutually exclusive applications. The full Commission decision to instead dismiss the application was not made without some angst, as two of the Commissioners concurred in the decision but urged the FCC to change its rules before the next noncommercial filing window to avoid a similar result in the future.  But the decision does raise some questions about just what constitutes a change in control of a noncommercial broadcaster.

In this decision, the FCC found that two changes in the majority of the members of the board of directors of the applicant, where a majority of the board members changed in a period of less than one year, constituted a major change in ownership of the applicant requiring the assignment of a new file number to the application and its dismissal.  The decision contrasted this case with those of other noncommercial applicants in another new application filing window.  In that other window, the FCC granted blanket waivers of the major change rule to applicants that had a change in a majority of their boards over a much longer period of time while their applications slowly made their way through the Commission’s processes.  It was the difference between the relatively sudden changes in ownership in less than a year in the case decided this week as opposed to the more gradual changes in the other cases that seemed to make the difference in the outcome.  But the two Commissioners who separately commented on the case asked if this distinction really should make any difference, especially as the changes did not appear to be the result of any takeover of the organization, but instead were merely changes that occurred in the normal course of operation for this volunteer organization.
Continue Reading Changes in the Board of Nonprofit Corporation Doom FCC Application for New FM Station – Addressing Control Issues in Noncommercial Broadcasting