Time brokerage agreement

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A consent decree, requiring $50,000 payment to the FCC by the licensee and programmer of a noncommercial radio station, demonstrates two potential problem areas for broadcasters involved in LMA or Time Brokerage (TBA) arrangements.  First, for noncommercial licensees it makes clear that the programmer cannot be paying the licensee any more for the programming time on the station than the costs of operation of the station itself – the licensee cannot “profit” from the LMA payments and use money for other non-broadcast activities of the licensee.  Second, for any party engaged in an LMA, it is important for the licensee to maintain control over station operations – even if the bulk of the programming is coming from its LMA partner.

The lesson of this case for the noncommercial licensee is that an LMA can’t be looked at as a revenue-generating activity for the licensee.  In this case, the licensee received significant LMA payments that were about twice the amount of the actual costs of its operation of the station.  These excess payments were to be credited to the ultimate purchase price of the station should the programmer choose to exercise an option at the end of the LMA term.  However, these payments were apparently not characterized as option fees, but instead as LMA payments.
Continue Reading $50,000 Penalty for LMA Operations – No Payments in Excess of Expenses for Noncommercial Licensees, and a Reminder that Licensee Must Remain in Control

More than 8 years ago, a group of television station owners (the Network Affiliated Stations Alliance or "NASA") who operated stations affiliated with the major television networks filed a request with the FCC, petitioning the Commission to rule that certain provisions in network affiliation agreements that limited the ability of stations to preempt network programming should be prohibited.  While some of these issues were raised in the Commission’s localism proceeding, the parties have now reached an agreement to resolve many of the issues.  The Commission last week released an order approving that agreement and clarifying some of the legal issues as to what provisions can be contained in network affiliation agreements.  These clarifications not only help to clarify the clauses that can be contained in affiliation agreements, but also give broadcasters insights as to what kinds of provisions can be included in any agreement by which one party provides programming to a broadcast station licensee, including agreements such as LMAs.

 The Commission’s Order sets out standards governing the network-station relationship that insure that the licensee maintains control over programming and other basic operational decisions of their station.  From this basic principal, the following specifics were adopted:

  • Station licensees have an unfettered right to reject network programming that they believe is contrary to the public interest, "unsatisfactory" or "unsuitable
  • Stations can preempt network programming when the licensee thinks there is some other programming which is of greater national or local importance.
  • If a preemption is done for one of these reasons, the affiliation agreement cannot impose monetary or non-monetary penalties or limit the amount of such preemptions
  • Affiliation agreements cannot give networks the right to "option" time in the future unless they make a commitment to fill that time with programming.   This is important in a multichannel digital context, as it prevents networks from tying up time on a second or third channel that they might or might not use.

Continue Reading Setting the Standards for the TV Network-Affiliate Relationship – Guidance for LMAs and Other Programming Relationships