When there is a desire to allow another organization to take over the operations of a licensed LPFM station, this cannot be done immediately. Instead, the licensee (also known as the "assignor") and the new organization (also known as the "proposed assignee") must jointly file an Assignment of Authorization application to get consent from the FCC for the transaction. This transaction cannot be completed until the FCC consents to the assignment through a grant of the application. Once granted, the transaction can take place. Once the transaction is completed and the licensee of the LPFM station (before the transaction) is satisfied, then they will file a Consummation Notice with the FCC. Once the Consummation Notice is filed, then the station will be licensed to the new organization.
LPFM stations are considered noncommercial educational (NCE) stations and have the same eligibility standards as larger full-service/full-power NCE broadcast stations.
LPFM stations can only be licensed to bona fide non-profit organizations, government agencies and tribal entities. They are not licensed to individuals, partnerships, for-profit LLCs, for-profit corporations or any other similar for-profit corporate structure. The "owner" of the station is the nonprofit corporation, not the individual. Individual people on the board are only caretakers of the corporation. Nonprofit corporations must be registered with the state and must meet all state laws regarding minimum number of board members. An IRS 501(c)(3) charity status is not required to be an FCC licensee. LPFM licensees that are not governments or tribes must be educational organizations or accredited educational institutions with a specific educational purpose. The FCC will only authorize an organization to be a LPFM (or full-service noncommercial station) licensee if they can demonstrate that the radio station will be used to advance their organization's educational objectives by providing programming that will "instruct" or "teach" the community, whether for credit or not. Not all programming on a station must be educational in that manner.
All programming must be non-commercial. LPFM stations are NOT for any organization or other group of people (or for that matter one person) who wishes to make a profit by "running their own radio station". The FCC has strict policies on what can be broadcast over an LPFM/NCE station. Those violating the rules regarding commercials can find their organizations being liable for forfeitures (fines) starting in the tens of thousands.
The assignment of license process also requires the current LPFM/NCE station to play on the air, a public notice message once or twice a week to advise of the pending assignment application and to provide information for members of the public who wish to object or otherwise comment on the transaction to make themselves heard before the FCC. As long as all information is in order, the average turnaround time from filing to grant is 45 to 60 days. Sometimes though, this can take longer based on staff workload or issues discovered with the assignment application.
A small number of LPFM stations may be subject to a "holding period" where in the first four years of licensed operation of the station (exclusive of any periods the station has been silent) may require that the proposed assignee would otherwise qualify for at least the same number of points that the LPFM station did when they filed during the LPFM filing window. A list of stations subject to this requirement can be found at https://recnet.com/pledges. Unbuilt original construction permits are not assignable until 18 months from the original grant date have passed.
LPFM stations cannot be sold for a profit. "Consideration" is money or anything of value either paid or promised in exchange for the station. While constructed non-LPFM broadcast stations can be sold for a profit, LPFM has a strict control that limits consideration to that of any tangible goods (such as transmitters, EAS and antennas) that will be transferred to the new organization in the transaction. The maximum amount reimbursable on equipment is what the organization paid for it. If the station paid $5,000 for a transmitter, then they can ask for $5,000. One time costs for construction can also be considered only if the the incoming party gets to enjoy the items constructed. One time costs for consultants, engineers and attorneys used to prosecute the most receive construction permit and license application as well as to prosecute the assignment application can be reimbursable.
Examples of items which cannot be compensated include:
- Monthly expenses such as utilities (electricity, water, gas, telephones, etc.)
- Rentals and leases (including buying out a lease).
- Real estate that will not be exclusively used for the LPFM station (i.e. also used as a residence, organization business, income property, etc.)
- Equipment received as a donation (equipment received at a discount is only reimbursable to whatever the station paid for it).
- Music licensing
- Software licensing
- Consulting services related to programming or any station operations not related to the prosecution of certain applications
- Past consulting, engineering or legal fees related to the filing of renewal applications or other required FCC filings (such as ETRS filings)
- Equipment not directly related to the operation of the radio station (stage lighting, music equipment, etc.)
- "In kind" donations or any agreements to provide ongoing donations to the proposed assignee's organization.
If an LPFM station is being transferred to another organization in exchange for consideration, the assignment application must include an itemized schedule of all equipment being transferred and other justifiable expenses. The LPFM license itself has no value.
Sometimes, assignments are "zero-dollar" meaning that the old organization is simply giving the station license and any equipment at no consideration to the proposed assignee. An assignment application is also appropriate if the organization is "spinning off" their radio operations into a separate organization entity with its own independent governance board.
For an assignment of license application, REC will need the following:
- For the current LPFM licensee (assignor), the FRN and its related password.
- The proposed assignee must obtain a FCC Registration Number (FRN). This uniquely identifies the new organization entity. The current FRN for the station is not transferable, even in the case of a spin-off of the radio portion of the organization. An FRN can be obtained by creating an account at the FCC's CORES system (https://apps.fcc.gov/cores) and then registering an FRN. REC will need the FRN assigned and your CORES password.
- Information about the proposed assignee's organization including:
- Copies of the governance documents from the state (such as articles of incorporation, bylaws, etc.). We can also try to attempt to locate the corporation through your state's Secretary of State office to determine eligibility of the organization. Please note that organizations must be in a current active status with the state. This means that all required annual reports and fees have been paid. The proposed assignee is expected to keep their corporation status current throughout the life of them holding the license. If the corporation is suspended. lapsed or otherwise not current, we will not file an application until the status is made good again at the state.
- The legal name of the organization, mailing address for the headquarters of the organization, physical address of the headquarters if different. The organization's main telephone number and email address.
- A contact representative. This does not have to be a board member, but a person who would be the contact point for the FCC or members of the general public in the future. For the contact representative, we will need name, address, telephone number and email address.
- We will need information about each board member for the proposed assignee, including:
- Legal name, residential address, telephone number and email address.
- Current citizenship. (Green cards/permanent resident status and temporary protected status is not considered as a US citizen. The FCC has specific rules related to non-citizens being on the board of any broadcast station.)
- The board member's title (president, treasurer, secretary, etc.) and the percentage of the vote they have on the board if not all members have equal representation on the board.
- Any information on past felony convictions, pending felony cases, incidents of fraud, discrimination or making false statements to the government. We are most interested in cases from the past 10 years.
- Whether or not any board member is currently being denied federal benefits under the Anti Drug Abuse Act. This is the same law that prevents someone with a past drug conviction a student loan. Sometimes, those denials are only for a period of time and they will age off. Consent for assignment applications will not be granted if any board member is denied benefits under this law.
- Whether or not any board member has received a Notice of Unlicensed Operation, Notice of Pirate Radio Operation, Notice of Apparent Liability or Forfeiture Notice from the FCC for previous incidents of unlicensed broadcasting (pirate radio).
- Whether or not any board member has an attributable interest (ownership, officer, director or board member) in another AM or FM radio station (commercial or noncommercial, including other LPFM stations), FM translator station, TV station (including TV translator and LPTV station) or any other media regulated by the FCC (such as a local newspaper or cable television company).
- For the proposed assignee's organization, we will need an educational statement, which describes the organization, their current educational objectives and provides information on how the radio station will advance their organization's educational objectives through "teaching" or "instruction". Favorable educational statements include information on specific educational radio programs proposed that will "teach" or "instruct" and/or a program grid noting the educational programs. Not all programming on the station must be educational.
- If consideration (money or other things of value) is involved in the transaction, then we will need to know the amount of the transaction and an itemized schedule of every item that makes up the consideration amount. If one was prepared, we will also need a copy of any asset purchase agreement.
- If there was no consideration involved, we just need to know that.
- For the assignor (the current LPFM licensee), we need the name and title of the board member that will appear in the certification/signatory section of the application on behalf of the assignor. No physical action is required on their part.
- For the proposed assignee (the organization that the station is being transferred to), we need the name and title of the board member that will appear in the certification/signatory section of the application on behalf of the assignor. No physical action is required on their part.
REC's current base fees as of August 2022 for assignment applications is $300 if there is no consideration or $400 if there is consideration. Additional fees may be quoted if the application involves any kind of complications that are outside of a normal assignment application. Once the assignment is granted, REC will file the Consummation Notice at no additional fees. This charge is per application, not per party and either party can make the payment to REC. The FCC does not charge any filing fees to LPFM stations.
REC must have a dialogue with both the assignor and the proposed assignee throughout the application process to assure that all parties have a full understanding of the process.
If you have any questions, please let us know!
