Peconic Public Broadcasting has been jumping through hoops all summer trying to scare up enough cash to acquire WLIU-FM Southampton NY, a feat it seemingly accomplished during the latter days of September 2010. But somebody is questioning whether or not it grabbed the reins of the station prematurely.
One of the most common types of LMA’s occurs as part of a station transaction, the good old reliable LMA until closing. This type of arrangement allows the buyer to get a running start operating the station while the transaction awaits FCC approval, a perfectly legitimate business agreement as long as the seller retains ultimate control of the station.
Somebody complained to the FCC that the parties in this $800K transaction jumped the gun, alleging that Peconic was in control at WLIU-FM and that seller Long Island University had abandoned its responsibilities.
Both parties denied that there was a premature transfer of control.
The FCC spelled out how an LMA should work, writing, “A licensee may, however, delegate day-to-day functions to an agent pursuant to a time brokerage agreement or to a local marketing or management agreement without engaging in an unauthorized transfer of control. Such delegation must be limited, however, to ensure that the licensee retains ultimate control of basic station policies. The touchstone of control ‘is not divining who executes the station’s programming, personnel and finance responsibilities,’ but rather who establishes policies governing these three areas and exercises ultimate control. To ensure the appropriate level of control, licensees engaged in a time broker or in a local marketing or management agreement ‘should be ready and able to operate independently from the broker at anytime it believes the arrangement does not fulfill its public interest responsibilities.’”
The FCC and the buying and selling parties opted to enter into a pair of consent decrees rather than pursue the dispute. Both Peconic and Long Island U. will adopt compliance plans, report to the FCC once annually for a period of three years, and make a $5K voluntary contribution to the US Treasury. According to terms of the agreements, the school will do so in one lump sum within 30 days. Peconic will make 10 monthly payments of $500 to arrive at the same figure.
Neither Long Island U nor Peconic is admitting to any wrong-doing, and there will be no blemish on their FCC record as a result of the consent decrees.