The applications for an FM station in theHonoluluarea date back to 1996. One company was said to be a mere shell formed to create the illusion of being local; the other was said to have turned over 60% of its principals.
Three applicants actually filed mutually exclusive applications for the allotment — Maka’ainana Broadcasting Company Ltd., Calvary Chapel of Honolulu Inc., and Bible Broadcasting Network. The battle boiled down to MBC and CCHI.
MBC was designated as the tentative selectee on the basis of points awarded for diversity and a local presence. However, CCHI said that MBC did not do anything whatsoever at the local office it had established and had no community involvement.
MBC admitted that it was formed solely to pursue the application, but it wasn’t able to produce a whole lot in the way of documenting its legitimacy as a local business. For example, discussing its pursuit of a radio business, it said that “MBC’s principals have regularly conferred concerning programming plans.”
The FCC finally said, in 2007, that “…the mere local address of an applicant was not sufficient to entitle it to receive points as an established local applicant: ‘It has never been our intent to award the established local applicant credit to organizations engaged in virtually no activities in the community of interest . . . A shell organization’s mere paper existence for two years or more [does not satisfy the standard].’”
MBC fought back against CCHI becoming the tentative selectee, saying that its high turnover on its board of directors. The FCC said MBC’s petition on the matter was “misguided.” The intent of rules requiring a certain amount of stability in among an applicant’s principals was to prevent maneuvering to within an organization to gain control of a station.
The FCC has no problem with gradual organic change, particularly within a noncommericial organization. Since the changes at CCHI occurred gradually since the process began in 1996, it is not a problem.