The Media Bureau of the Federal Communications Commission has reached what is believed to be the first in up to three decisions on the LPFM stations that would eventually be referred to as the “Charlottesville 5”.
The Charlottesville 5 stations included WREN-LP, WXRK-LP, WVAI-LP and WPVC-LP, all licensed to Charlottesville, VA; as well as WKMZ-LP, Ruckersville, VA. The licenses of WPVC-LP and WKMZ-LP would be subsequently cancelled and therefore, only three of the stations remain today.
During the last renewal period for radio stations, all five stations filed their renewal applications. Those renewal applications were met by petitions to deny and informal objections filed by Tidewater Communications, LLC, a subsidiary of Saga Communications. In their pleadings, Tidewater claimed that the Charlottesville 5 stations engaged with a cooperative as well as questionable relationships with an entity called “Experience Media” and another called “Experience Sales”, thus suggesting some form of common relationship between the stations that may have violated the LPFM restriction on multiple ownership
Tidewater also claimed that the Charlottesville 5 stations were engaging in commercial advertising, made misrepresentations to the FCC on issues such as cross-ownership due to familial interests, not engaging in educational programming consistent with their original educational statement and not meeting their pledge to broadcast local programming eight hours per day.
In defense, the Charlottesville 5 stations responded that the cooperative was a separate entity set up to pool funds from all of the cooperative members in order to pay the expenses for common studio and transmitter sites. Experience Media and Experience Sales were third-party contractors that were used to solicit potential underwriting leads for the five stations.
In 2019, REC’s Michelle Bradley, in her personal blog spoke at great length about this situation. Bradley did raise some issues with the relationships with the Experience companies, specifically around who the underwriters would write the checks to. If the relationship is that the Experience companies are mainly “headhunters” for potential station underwriting revenue and that the companies are paid by the stations as opposed to the underwriters paying the Experience companies for the placement of announcements, then there would not be an issue. Bradley took no issue with the cooperative stating that if the cooperative was formed for the sole purpose of sharing facilities, it only makes sense to have one company interface with outside creditors such as property management companies.
The decision released today only deals with WREN-LP, licensed to Genesis Communications, Inc. In the Bureau’s decision, they acknowledged that the structure that the Charlottesville 5 stations took was highly unusual for LPFM stations.
On the subject of the cooperative, the Bureau took a similar position as REC that as long as the cooperative agreement does not call for the common management or operation of the individual stations and that the entity was established for the pooling of funds in a “shared services agreement” and as a result does not raise any substantial or material question of fact as to whether §73.860(e) was violated. Section 73.860(e) of the FCC Rules prohibits LPFM stations from engaging in management, operating or time brokerage agreements with other low-power or full-service broadcast stations. As such, the Bureau determined that the cooperative did not have any attributable interests in any of the stations.
On Experience Media and Experience Sales, the Bureau determined that because the Experience companies, on their own did not have any broadcast holdings and because contract language between the stations and the Experience companies stated that the agreements “did not create a partnership or joint venture” between the stations and is “exclusively a contract for service”, they do not rise to the point of any substantial or material question of fact as to whether §73.860(e) was violated.
The Bureau also dismissed Tidewater’s claims regarding educational programming stating that “licensees are entitled to broad discretion in the scheduling, selection and presentation of programming”. The Bureau restates the fact that there is nothing in the Communications Act or the FCC Rules that bars any LPFM station from modifying their program offerings (from what was on their original educational statement) as long as those offerings continue to advance the educational objectives of the licensee. The Bureau also dismissed Tidewater’s “8 hour rule” claim as it was not applicable in this case because WREN-LP was granted as a singleton and therefore not required to fulfill the points pledges. None of the Charlottesville 5 stations appear on REC’s list of LPFM stations subject to the 2013 Point Pledges.
The Bureau did find that WREN-LP was involved in a violation of §73.855(a) through a familial relationship. Specifically, the spouse of one of the WREN-LP’s board members was on the board of WKMZ-LP, thus creating a conflict. Since WKMZ-LP subsequentially cancelled their license, the Bureau is not taking any enforcement action on this issue.
On the subject of running commercial advertising, the Media Bureau and Genesis (WREN-LP) reached a Consent Decree, which includes a $1,000 civil penalty payment and a two-year shortened license term upon payment of the civil penalty.
The Bureau announced that there will be subsequent decisions released regarding the other two remaining stations, WXRK-LP and WVAI-LP.
REC’s position is that the Bureau made the right decision on controversy surrounding the cooperative. As long as the cooperative existed only for the pooling of funds to maintain common studio and transmission facilities, there should be no controversy. We are very concerned over the Bureau’s “kid glove” handling of the controversies surrounding the Experience companies. REC finds this method of “selling” underwriting, especially with a rate card to raise concerns whether the stations engaged in time sales in violation of §399b(a)(2) of the Communications Act using the Experience companies as a “front”. As REC stated five years ago, it all boils down to who the underwriters wrote the checks to.
This case has brought the issue of perceived common or “shadow” ownership of multiple LPFM stations front and center. Let this be a warning to LPFM stations that are currently engaged in simulcast operations to assure that while two stations may be sharing programming, that each station is fully isolated from any other station on the subject of programming, management and operations and that each station has its own governing board that makes independent decisions for that station alone.
We also further warn LPFM stations that are engaged in programming formats that are more likely to be commercially mainstream (such as CHR, AC, Oldies, Retro, Country, AOR, etc.) as opposed to those that are normally associated with noncommercial radio, they run a much higher risk of meeting objections by commercial broadcasters, especially if the station is otherwise involved in operations that violate the Rules or the Communications Act, such as carrying underwriting acknowledgement messages that do not comply with the FCC’s Policy on the Nature of Noncommercial Educational broadcasting. REC Networks does provide a Compliance Guide to provide assistance in preparing proper underwriting acknowledgements that are voiced by the station, speaking to the listener, thanking the underwriter for helping to bring programming to the local community. We further note that the smaller the market the LPFM station is in, the more vulnerable they are to such complaints by commercial stations. Likewise, the Bureau’s decision does uphold the fact that you cannot use direct family members (spouses, parent-child and siblings) in order to circumvent ownership rules. While we are concerned that WREN-LP only had a $1,000 civil penalty for the underwriting announcements, we will acknowledge that there may be something in the record that justified such a low amount for WREN-LP specifically.
Finally, like what was stated five years ago from this shop, the actions of Tidewater/Saga should not be considered as “bullying”. If the broadcast of commercial advertising was not in the equation, then we could agree that there may have been nit-picking rising to the point of bullying. Based on the overall circumstances in this specific situation, Saga was justified in filing their objection. In the end, we ended up with published precedence on the questions of facility cooperatives and “underwriting headhunters” in LPFM, which, if executed correctly, does not rise to a Rules violation.
As always, for legal advice, please contact an attorney.
