In a recent decision, the FCC made clear that when there is a transfer of control of a station through the sale of the stock of the licensee company, the new owners are not absolved of any FCC violations that may have taken place when the old owners controlled the company. In this case, the old owners had various main studio, public file and issues programs lists issues, along with some compliance problems with late-filed Children’s Television Reports. While the FCC cancelled a fine on the licensee for reasons unrelated to the transfer of the stock (issuing an admonition instead), it went out of its way to emphasize that a new owner of the stock of a licensee company remains liable for the conduct of a predecessor controlling owner. The sale of stock, and the FCC’s approval of that sale, does not remove the threat of fines for violations that occurred when the old owner still controlled the company.
We wrote here about a similar warning in connection with a case decided several years ago. Assignments of license, where the FCC approves the sale of a station to a new licensee, seemingly do provide the new owner with some degree of protection against problems with FCC compliance that occurred during the watch of the old owner – but that is because the licensee has changed. (Note however, as we wrote here, if a compliance issue was discovered by the FCC before the sale, it is possible that the FCC could go after the old licensee for a fine, even after a sale has been completed). But, where the licensee remains the same, the FCC looks to the licensee company for compliance, regardless of who owns that company.
Continue Reading Buyers of Broadcast Stations Through Stock Transfer Beware – Liability for Fines of Prior Owner Can Still be Imposed After the Transfer