When friends get too close


D.B.Zwirn was a financial backer of radio group Tama Broadcasting Inc., licensee of several stations in Florida and Georgia. A complainant charged that Zwirn had entered into an LMA with Tama that went beyond the bounds of such agreements and into the unauthorized transfer of control zone.

Although both parties denied that such a transfer has taken place, they did agree to a consent decree with the FCC to terminate the matter without admission of any wrongdoing. The presidents of the two companies will make sure, in consultation with their legal advisors and employees, that the proper arm’s length licensee/lessee terms are being observed.

The decree includes the usual voluntary contribution to the US treasury, in this case for $18K.

RBR/TVBR observation: The way we understand it, a licensee can farm out programming to a second party (sort of like becoming a network affiliate, when you think about it); it can assign sales responsibilities (sort of like bringing in a consultant); it can farm out backroom operations (kind of like hiring a temp service to catch up on the filing); but in the end, the licensee must have the final say in how a station is being run. Proving beyond a shadow of a doubt that a licensee has abdicated this responsibility is a pretty steep challenge. The fact that the parties agreed to decree would suggest that there may be a spark or two underneath all the smoke, but that the smoking gun still wasn’t obvious, so all concerned will save time and expense.

What is particularly interesting about this particular agreement is that in a way, the voluntary contribution is LMA’d. The FCC did not assign a figure for Zwirn to pay and another for Tama – rather, it said the $18K is the total contribution from the two, with their respective contributions apparently left up to them in another opaque backroom decision.