File failure put multi-million Class A sale at risk


MoneyKM LPTV of Chicago’s WOCH-CA failed to file required reports on children’s TV programming, and neither were the reports in the station’s public file. This is a bad enough situation without any additional complications, but in this case, a sale to NRJ Holdings hung in the balance.

The station failed to product the reports throughout 2010 and 2011 and for the first five months plus change of 2012.

The cost was $13K — $3K for the failure to file the reports, and $10K for failing to have the reports in the public file.

The penalty in this case is a blessing – many such situations resulted in loss of Class A status for LPTVs in 2012.

That would have been devastating to KM, because it’s pending sale of the station is worth considerably more than $13K – try $7.4M on for size.

The FCC had already put this matter in motion at the time of the deal was filed with the Media Bureau, and the deal was contingent on its resolution without damage to the station’s Class A status.

Right up front in the definitions section, the contract states, “‘FCC Letter of Inquiry Satisfactory Resolution Date’ means the date on which the FCC issues a decision with respect to the FCC Letter of Inquiry that does not revoke or rescind the Seller’s authority to operate the Station as a Class A station or modify the license for the Station from Class A status to a different status.”

The loss of Class A status is serious, but it is especially serious in major markets where airspace is limited and where the incentive auctions are being counted on the most to provide spectrum for other wireless services. Class A stations will be allowed to participate in the program or not as they see fit; LPTV stations on the other hand are at risk of being shut down and are not invited to the auction.

RBR-TVBR observation: We know for a fact that low power owners have been feeling the FCC’s heat. One piece of evidence that has not gone unnoticed by the licensees is the declassification of many Class As down to LPTV status for the same infraction for which WOCH was penalized.

The declassified licensees brought their fate down upon themselves to a certain extent, by failing to respond to the FCC’s inquiries on the matter. The result of the declassification is the loss of protection for the license and the right to participate in the incentive auction program.

That would be an expensive loss in this case – by working with the FCC as every licensee should, KM has managed to get hit with a $13K fine that on this occasion must feel very much like a major victory.