FCC green lights protested Texas transaction


FCCNeither “gross incompetence” nor “wanton disregard of … disclosure requirements” shall stay a $100K Texas deal from its appointed FCC approval, despite two petitions asking the FCC to slam on the regulatory brakes.

The deal which was to send KWRD-AM Henderson TX from Jerry Russell d/b/a The Russell Company to Hanszen Broadcasting drew objections from Larry G. Fuss and counsel for Phillip Burr.

One of the first things that Fuss seized on was Russell’s failure to note other stations in which he had an interest other than to assert that his company “…believes it is the licensee of KOFY(AM),” a station licensed to Gilmer TX. Fuss said Russell was principle owner of Community Broadcast Group, licensee of an AM in Tyler TX, and sole owner of M.R.S. Ventures Inc., holder of 12 licenses in various locations.

They also claimed that the he had a long list of unpaid fines for various FCC infractions, and that “…Russell, Community and MRSVI all engage in ‘shoddy’ radio station business practices, such as disregarding contractual and other legal obligations.”

Fuss claims that he is owed money by Russell.

Hanszen pointed out that at the time of the KWRD deal, all of the Russell stations had been silent for over a year, where therefore automatically deleted, and that Russell was under no obligation to report ownership of non-existent stations. It also said that all outstanding fines appear to have been paid.

Burr said he had an LMA to buy KWRD, which due to allegedly-missed LMA payments, Russell terminated it just prior to contracting the sell the station to Hanszen. The matter is in court, and Hanszen said all Burr has done is demonstrate that there is a legal dispute in progress that is out of the FCC’s realm.

The FCC checked into the status of the silent stations, and found that they were indeed silent, a fact which was never reported to the Commission. At this point, Russell’s explanations began to shift – it said it didn’t report some of them because sales or transfers of the licenses to creditors were pending and that failure to list them was simply an error.

In the end, it was determined that neither Fuss nor Burr had standing in the transaction for KWRD. That is not to say they did not have legitimate gripes with Russell, just that the KWRD transaction was deemed an inappropriate venue for airing them out.

The FCC said that “Russell’s failure to notify the Commission that his each of his 12 separate stations was off the air evidences some combination of gross incompetence and wanton disregard of his disclosure obligations.”

In fact, based on Russell’s responses in the investigation of this matter, the FCC did delete a number of stations including KZEY(AM), Tyler, Texas (Facility ID No. 12809); Station KPBQ-FM, Pine Bluff, Arkansas (Facility ID No. 52619); Station KZYP(FM), Pine Bluff, Arkansas (Facility ID No. 33726); KOTN(AM) Pine Bluff, Arkansas (Facility ID No. 4236); KCLA(AM), Pine Bluff, Arkansas (Facility ID No. 33725); KRKD(FM), Demott, Arkansas (Facility ID No. 86857); KZYQ(FM), Lake Village, Arkansas (Facility ID No. 16551); WRKG(FM), Drew, Mississippi (Facility ID No. 16552); WDTL-FM, Cleveland, Mississippi (Facility ID No. 16557); WZYQ(FM), Mound Bayou, Mississippi (Facility ID No. 43900); and WDSK(AM), Cleveland, Mississippi (Facility ID No. 16554).

Despite all of this, the FCC essentially said there was nothing it could do. Despite Russell’s shifting explanation for not listing other broadcast interests, the fact was the he had no other interests at the time the KWRD transaction was filed, so the answer was truthful whether intentionally so or not.

The FCC said it could fine Russell $5K for not reporting stations going silent – but it can’t fine a non-FCC licensee, which gets Russell off that particular hook since he no longer has any existent stations.

The FCC also said it could basically do naught but find that the parties were qualified to execute the transaction, so it had no basis to deny it.

It did place a hurdle ahead of any further ownership by Russell, however:
“(1) Jerry Russell shall not in the future acquire an attributable interest in any Commission licensee or permittee without advance notice and a full showing that he will fully discharge all Commission obligations relating to such license or permit; (2) should Jerry Russell propose to hold an attributable interest in any applicant for a Commission authorization, he must submit this showing and a copy of this Memorandum Opinion and Order with the application.”