Enforcement Bureau NALs threaten loss of license for abdication of control
The FCC’s Enforcement Bureau has dropped two notices of apparent liability (NALs, in the vernacular) – each to the tune of $15,000 – on Birach Broadcasting Corporation (BBC). According to the NALs, BBC improperly handed control of its two Michigan AM stations over to the stations’ respective time brokers. The FCC also dinged BBC for failing to staff each station’s main studio with a BBC managerial employee and a BBC staff-level employee. You can read the NALs here and here. If you’re a licensee with one or more stations LMA’d out to other folks, it would be worth your time to check them out.
BBC’s trouble began in April, 2005, when FCC agents inspected the two stations, one in Zeeland, the other in nearby Rockford. According to the NALs, no BBC employees were present at either station. Instead, non-owners were there pumping out their own programming with no formal time brokerage agreement (“TBA”, a/k/a “LMA”) in sight at either station. Perhaps thinking, incorrectly, that he was helping BCC out, one programmer told the inspectors that the station was being operated on BBC’s behalf “pursuant to a ‘handshake’” TBA.)
Perhaps disturbed by the situation, the Bureau fired off a Letter of Inquiry (LOI) to BBC. (Actually, the Bureau could not have been that disturbed, since it took them not quite two years from the date of the inspections to get the LOI out the door.) The LOI asked BBC to cough up any written TBAs it had. In response, BBC provided nothing entitled “Time Brokerage Agreement”, just some invoices signed by BBC and the programmers – one of which specified that the “Customer is responsible for any legal problem caused to the Station” – but no TBAs.
As to main studio staffing, BBC said its owner was responsible for operation of the stations. But according to the FCC’s records, that gentleman’s business address was roughly two hours away from the stations. Wouldn’t that, um, impair his ability to run them? No problem, said BBC’s counsel: given the state of technology, station operations can be supervised remotely. Be that as it may, though, BBC advised the Bureau that, after the inspections, BBC had hired a management-level employee to work half-time at WMFN and half-time at WMJH.
The Bureau was not favorably impressed with BBC’s response to the LOI. (But, again, the Bureau could not have been that unfavorably impressed, since nearly three years passed between BBC’s response and issuance of the NALs.)
According to the NALs, BBC essentially admits that, prior to the LOI, the time brokers: provided the programming the stations’ aired; paid the salaries and wages of the personnel who operated the stations; handled the marketing and finances at the stations; and bore sole responsibility for ensuring compliance with various FCC requirements (like maintenance of the public inspection files and performance of EAS tests). BBC, for its part, was responsible for the maintenance of each station’s physical plant.
The lack of any formal TBA didn’t help matters, since (according to the Bureau) Commission rules technically require each TBA to be in writing (and kept in the station’s public inspection file, to boot). Plus, any TBA is supposed to reflect that the licensee has ultimate authority over the operation of the station, including specifically control over station finances, personnel and programming. The absence of formal TBAs undercut BBC’s assertion that de facto control of the station had not passed to the programmers.
Regarding station staffing, the Bureau cited the policy, established nearly 20 years ago, that a licensee must, “at a minimum, maintain full-time managerial and full-time staff personnel” at the main studio. So BBC’s arrangement – which amounted to a single licensee rep splitting his time, long distance, between two non-co-located stations – fell about three full-time employees short.
The thrust of the Commission’s TBA and main studio policies is that the licensee must be in a position at any time to take over the station’s reins. Even when a full-time TBA is in place, the licensee must be a presence, “a stand-alone entity”, at the station, ready to run the operation. This concept may occasionally be overlooked by a licensee who, having arranged for a TBA, suddenly feels free of responsibility for station operation. As BBC’s experience demonstrates, any such sense of freedom is a dangerous illusion.
How dangerous? Well, in BBC’s case, the initial price tag set in the NALs is a total of $30K, in addition to which BBC must report within 60 days regarding its steps to bring its stations back into compliance with the FCC’s requirements. If BBC does not fully reassert control over the stations, the Bureau ominously assures that further sanctions – including, possibly, loss of license – may be in store.
It remains to be seen whether these NALs mark the beginning of a crack-down on TBAs – after all, the time line (inspections in 2005, NALs issued five years later) hardly suggests any urgency on the FCC’s part here. But given the size of the proposed fines and the threat of further sanctions (including, possibly, the ultimate sanction), licensees engaged in TBAs would be well advised to make sure their houses are in order before the Feds drop by for a visit.