ROCKING M RADIO, INC
Washington, D.C. 20554
February 12, 2010
DA 10-242In reply refer to:
Released February 12, 2010
Rocking M Radio, Inc.
℅ Christopher Imlay, Esq.
Booth, Freret, Imlay and Tepper
14356 Cape May Road
Silver Spring, MD 20904
Steckline Communications, Inc.
℅ James P. Riley, Esq.
Divina S. Sashkin, Esq.
Fletcher, Heald and Hildreth
1300 North 17th St. 11th Floor
Arlington, VA 22209
Rocking M Radio, Inc.KXXX(AM), Colby, Kansas
Facility No. 37125
KRDQ(FM), Colby Kansas
Facility No. 37124
KGNO(AM), Dodge City, Kansas
Facility No. 37130
KAHE(FM), Dodge City, Kansas
Facility No. 37131
KZRD(FM), Dodge City, Kansas
Facility No. 13010
KZRS(FM), Great Bend, Kansas
Facility No. 37129
KSOB(FM), Larned, Kansas
Facility No. 7990
KNNS(AM), Larned, Kansas
Facility No 7991
KZUH(FM), Minneapolis, Kansas
Facility No. 37127
KMMM(AM), Pratt, Kansas
Facility No. 27126
KSMM(FM), Liberal, Kansas
Facility No. 37120
Request for a Declaratory Ruling
We have before us a Request for Declaratory Ruling (the “Request”) filed on March 17,
2008, by Rocking M Radio, Inc. (“Rocking M”), licensee of the referenced stations (collectively
“Stations”).1 Rocking M requests the Commission to declare whether certain provisions of
affiliation agreements (the “Affiliation Agreements”) between Rocking M and Steckline
Communications, Inc. (“SCI”)2 conform to the Commission’s Rules (the “Rules”) and policies.
We grant Rocking M’s Request to the extent set forth below.
Background.Lesso, Inc. (“Lesso”), a predecessor licensee of the Stations, entered into
Affiliation Agreements, in 1996, with Mid-America Ag Network and Mid-America News
Network, (individually, the “Network”, collectively, the “Networks”) both owned by Mid-
America Ag Network, Inc. At that time, Lawrence Steckline held a majority interest in Lesso and
an 88% interest in Mid-America Ag Network, Inc. His son, Gregory Steckline, owned the
remaining 12% interest in Mid-America Ag Network, Inc.3
The Affiliation Agreements have a perpetual term, but may be terminated by either of the
Networks.4 Unless released by the Networks, a licensee remains liable for performance of the
Affiliation Agreements if the licensee changes a station’s format, if a successor licensee fails to
perform the Affiliation Agreements, or if the station is “cancelled.”5 Each successive licensee of
the Stations, including Rocking M, has assumed the Affiliation Agreements.
In 2005, Lawrence Steckline sold the assets of Mid-America Ag Network, Inc. –
including the Affiliation Agreements – to SCI, owned by his son Gregory Steckline.6 Currently,
SCI, under the trade name Mid-America Network, operates the two Networks.
1 On March 26, 2008, Steckline Communications, Inc. filed an unopposed Motion for Extension of Time to
Respond. Although the Commission does not routinely grant extensions of time, we will do so in this
instance in the interest of a complete record and because neither party is prejudiced thereby. On April 11,
2008, Steckline Communications, Inc. filed Comments on Request for Declaratory Ruling and Opposition
to the Conclusions Argued for in the Request (the “Comments”) On May 14, 2008, Rocking M filed a
Reply to Comments on Request for Declaratory Ruling and Opposition to the Conclusions Argued for in
the Request (the “Reply to Comments”). On June 23, 2008, SCI filed a Supplement to Comments on
Request for Declaratory Ruling (the “Supplement”). On July 11, 2008, Rocking M filed a Response to
Supplement to Comments on Request for Declaratory Ruling (the “Response to Supplement”). On July 28,
2008, SCI filed a Reply to Response to Supplement to Comments (the “Reply to Response”). On July 11,
2008, Rocking M filed a complaint with the Commission’s Enforcement Bureau concerning the agreements
discussed herein. On Nov. 7, 2008, Rocking M sent a letter, directed to Commission staff, requesting an
expedited ruling on its Request. On Nov. 12, 2008, SCI sent a letter, directed to Commission staff, urging
the Commission to expend whatever time was required to fully consider this matter. The letters, which
were not filed with the Commission’s Secretary are not part of the record. In any event, Rocking M’s
Request has been handled in the normal course and the issues raised in the letters are, therefore, moot.
2 SCI is the licensee of stations KIUL(AM), Garden City, Kansas, KYUL(AM), Scott City, Kansas, and
KGSO(AM), Wichita, Kansas.
3 See Comments, Ex. A at 1.
4 Rocking M furnished copies of two of the Affiliation Agreements with its Request. See Request at Ex. A.
The initial term of the Affiliation Agreements is 120 months and, absent termination by the Networks, the
agreements continue in force, automatically, for consecutive 60 month periods, ad infinitum. See id. The
first Affiliation Agreement requires the stations to broadcast eight of Mid-America News Network’s state
news and sports programs per day and eight commercials. The second Affiliation Agreement requires the
stations to broadcast 15 of Mid-America Ag Network’s agricultural programs and 15 commercials per day.
5 See Request, Ex. A.
6 When he sold the assets of Mid-America Ag Network, Inc. to his son, Lawrence Steckline retained the
use of the corporate name Mid-America Ag Network, Inc. See Comments, Ex. A at 1. Mid-America Ag
Network, Inc. currently is the licensee of station KWLS(FM), Winfield, Kansas.
Rocking M changed its Liberal, Kansas, stations, KSMM-FM7 and KSMM(AM),8 to a
Spanish language format and advised SCI that the stations would no longer broadcast SCI’s
English language programs or commercials.9 SCI responded by demanding carriage of the
programs and commercials unless an alternative solution could be reached.10 The parties did not
reach an alternative solution; Rocking M discontinued SCI’s programming on KSMM-FM and
KSMM(AM) and SCI filed suit in state court for breach of contract.11
Rocking M requests pursuant to Section 1.2 of the Commission’s Rules that the
Commission issue a Declaratory Ruling to resolve what Rocking M characterizes as uncertainty
concerning whether the Affiliation Agreements, and SCI’s attempted enforcement thereof,
comport with the Commission’s Rules and policies, including whether the Affiliation Agreements
afforded Lesso (in the person of its majority shareholder, Lawrence Steckline) an impermissible
reversionary right to use the facilities of the Stations when Lesso assigned the Stations’ licenses
to Great Empire Broadcasting, Inc.12
7 The station’s prior call sign was KSLS(FM) and sometimes is referred to as such in the attachments to the
8 The station’s prior call sign was KYUU(AM) and sometimes is referred to as such in the attachments to
9 See Reply to Response at Ex. B.
10 See Request at Ex. B.
11 Although Rocking M changed both its Liberal, Kansas, stations to a Spanish language format, the lawsuit
alleges breach of contract only with respect to Rocking M’s operation of Liberal, Kansas, station KSMM-
FM (formerly KSLS(FM) and referred to as such in the lawsuit). See Reply to Response at Ex. A (a
petition filed in the Eighteenth Judicial District Court, Sedgwick County, Kansas, seeking damages in
excess of $ 75,000). Rocking M’s station, KSMM(AM) (formerly KYUU(AM)) was “deleted” from the
Affiliation Agreements in 1998 for reasons not disclosed in the record. See Request, Ex. A (handwritten
annotations). Subsequently, SCI proposed to certain of its “affiliates,” including Rocking M, that they
could decline to broadcast SCI’s programs but had to continue to broadcast the related commercials, i.e.,
“the affiliates will be obligated only to broadcast the commercial spot announcements which SCI will
provide to them with the programming.” Supplement at 2. SCI also stated that it would not enforce its
Affiliation Agreements with stations KIMB(AM) and KMMJ(AM), which are not owned by Rocking M, to
the extent those agreements prohibited certain format changes, barred broadcast of any other agricultural
programming, and provided for injunctive relief in the event of breach. Id. SCI also stated that it intended
to give its affiliates the option of amending the perpetual duration terms in their Affiliation Agreements to
provide for a maximum term of forty years. Id.
12 Request at 1. Rocking M presents the following issues for resolution: (1) “Can a broadcast licensee enter
into a network affiliation agreement or programming agreement obligating that licensee to air programming
and/or commercial matter in perpetuity or for whatever period the program provider should decide to
provide the programming? If so, is the broadcast licensee bound to air whatever programming or
commercial matter is provided by the network or program provider? (2) If a broadcast licensee enters into
a network affiliation or programming agreement and then later chooses to change the station’s broadcast
format in such a way that the programming provided under the programming agreement becomes
inconsistent with or inappropriate for the new format (in the exercise of reasonable discretion of the
licensee) is the licensee nevertheless obligated to continue to air the programming or commercial
announcements provided by the network or program provider, or alternatively to have to pay substantial
damages to the program provider for breach of the network or programming agreement? (3) May a
broadcast licensee consistent with the control obligations inherent in Section 310(d) of the Communications
Act of 1934, obligate itself to air certain programming or to incur substantial penalties if the licensee fails
to air the programming at any point in the future during which the program provider provides programming
under the agreement? (4) Where a program provider once owned a substantial interest in a broadcast
station subject to a program agreement, can that provider, consistent with 47 C.F.R. § 73.1150, enforce a
programming agreement originally entered into at the time that the program provider owned the interest in
that station, against a subsequent licensee of that same broadcast station, forcing the subsequent licensee to
SCI opposes the Request, contending that Lawrence Steckline is not a principal of SCI
and, therefore, that SCI retains no reversionary interest in the Rocking M Stations.13 It also
contends that its proposed undertaking not to enforce certain provisions of the Affiliation
Agreements, and its allowing affiliates the option of modifying the term of the Affiliation
Agreements, obviates the need for a declaratory ruling.14 It argues that the Affiliation
Agreements are typical of similar agreements entered into by television networks when they sell
owned and operated stations to third parties.15
Discussion.As explained below, a licensee must maintain, and may not delegate, “the
flexibility to address the needs and interests of its local communities, to react to changing
audience tastes and preferences, to respond to other competitors in the market, and to select its
programming accordingly.”16 The Commission will refuse to approve applications for
assignment of license or transfer of control when, as part of the transaction, there are agreements
restricting a licensee’s ultimate rights to determine programming.17 Moreover, the Commission
has explicitly countenanced the use of liquidated damages provisions in otherwise permissible
agreements;18 however, the Commission has noted that excessive liquidated damages for breach
or an unreasonably lengthy brokerage agreement could bring into question a licensee’s control of
a station.19 Moreover, should an assignor or assignee falsely certify, in an assignment
application, that the agreements for acquisition of a station comply with the Commission’s Rules
and policies, the Commission may institute enforcement proceedings based on such false
air the programming provided by that program provider under threat of a damage award? (5) Must a
licensee, in order to comply with the control requirements of Section 310(d) of the Commission’s rules
(sic), preserve for the licensee and not delegate to a third party the absolute right to determine what
programming should be aired on the station and to be free from incurring substantial penalties as the result
of the exercise of the licensee’s discretion in determining what programming is best suited to the needs and
interests of the public?” Request at 2-3. Following assignment of the Stations’ licenses to Great Empire
Broadcasting, Inc., the licenses were reassigned, seriatim, to Goldstar Communications, Waitt Radio, NRG
License Sub, LLC and Rocking M. See Request at 5.
13 Comments at 2.
14 See Reply to Response at 2-5.
15 See id. at 6-7 and Ex. C (Stock and Asset Purchase Agreement between Outlet Broadcasting, Inc., NBC
Sub (WCMH), LLC, et al. and Media General, Inc.)
16 Cumulus Licensing, LLC, Letter, 21 FCC Rcd 2998, 3005 (MB 2006) (“Cumulus”) (citing National Ass’n
for Better Broadcasting, Letter, 55 FCC 2d 800 (1975) (“NABB”) ( “[t]his duty [for programming
decisions] cannot be delegated and a licensee cannot, even unilaterally, foreclose its discretion and
continuous responsibility to determine the public interest and operate in accordance with that
determination”)). In deciding whether there has been a transfer or delegation of these licensee rights, the
Commission determines, inter alia, who has ultimate control of a station’s programming. See Southwest
Texas Public Broadcasting Council, Letter, 85 FCC 2d 713, 715 (1981); Alabama Educational Television
Commission, Memorandum Opinion and Order, 33 FCC 2d 495, 508 (1972).
17 See Cumulus, 21 FCC Rcd at 3005-3006 (a prohibition against an assignee instituting certain formats on
its stations “improperly infringes on [the assignee’s] programming responsibilities” and must be deleted
from a sales agreement).
18 See Revision of Radio Rules and Policies, Memorandum Opinion and Order and Further Notice of
Proposed Rule Making, 7 FCC Rcd 6387, 6402 (1992) (“Revision of Radio Rules”), recon. granted in part,
Second Memorandum Opinion and Order, 9 FCC Rcd 7183 (1994) (Commission will not interfere with
parties decisions regarding liquidated damages).
19 See id. See also 1998 Biennial Regulatory Review - Streamlining of Mass Media Applications Rules and
Processes, 13 FCC Rcd 23056, 23224 (1998). See Form 314 Instructions - Time Brokerage/Local Market
Agreements, Worksheet, Items 2 (a)-(b)) (requiring explanatory exhibit if agreement has an excessive fee
or penalty for termination).
certification.20 It is a violation of Section 310(d) of the Act if a program supplier seeks judicial
enforcement of any provision of an affiliation agreement that abridges a licensee’s right to
Licensee Control Over Programming. The Commission’s has consistently interpreted
Section 310(d) of the Communications Act of 1934, as amended (the “Act”) to require that a
licensee retain ultimate control over programming.22 In cases involving Local Management
Agreements (LMAs), time brokerage agreements or affiliation agreements, the right of a licensee
to terminate agreements or reject programming has been a paramount consideration in the
Commission’s analysis of whether the agreements constituted a transfer of control.23 Similarly,
the Commission has rejected agreements with members of the public that restrict licensees to
“fixed and unchangeable types and amounts of programming.”24
Here, the Affiliation Agreements bind Rocking M to broadcast fixed amounts of
agricultural and news and sports programming and commercials, in perpetuity, notwithstanding
the fact that Rocking M has elected to change a station to a foreign language format in which
SCI’s English-language programming and commercials would be of limited interest to the
20 See Mid Atlantic Network, Inc., Memorandum Opinion and Order and Notice of Apparent Liability for
Forfeiture, 23 FCC Rcd 7582, 7589-7590 (MB 2008) (“Mid Atlantic”) (finding violation but not assessing
forfeiture because Commission approval of assignment application had become final.) See also FCC Form
314, Section II, Item 3.
21 See Mid Atlantic, 23 FCC Rcd at 7590. See also Citicasters, Inc., Notice of Apparent Liability for
Forfeiture, 16 FCC Rcd 3415, 3420 (EB 2001) (“Citicasters”), application for review denied, 16 FCC Rcd
14137 (2001), recon. denied, 17 FCC Rcd 1997 (2002) ($ 25,000 forfeiture imposed when a proposed
assignee of a license obtained a restraining order from a state court to enforce a time brokerage agreement
which required the assignor licensee to accept programming from the proposed assignee (“[i]t is a violation
of the Communications Act to invoke remedies for breach, including injunctive or other equitable relief,
that impinge on such control, without obtaining prior Commission consent.”)).
22 E.g., Network Affiliated Stations Alliance (NASA) Petition for Inquiry into Network Practices and Motion
for Declaratory Ruling, Declaratory Ruling, 23 FCC Rcd 13610, 13611 (2008) (“NASA Declaratory
23 See, e.g., Choctaw Broadcasting Corp., Memorandum Opinion and Order, 12 FCC Rcd 8534, 8539
(1997) (LMA approved where licensee retained right to terminate if agreement was contrary to the public
interest or otherwise inconsistent with licensee’s obligations as a Commission licensee); Gisela Huberman,
Esq., Letter, 6 FCC Rcd 5397, 5398 (MMB 1991) (LMA approved where licensee had unqualified right to
terminate on 90 days notice); J. Dominic Monahan, Esq., Letter, 6 FCC Rcd 1867 (MMB 1991) (mutual
right to terminate brokerage agreement if programming fails to serve audience needs or is otherwise
contrary to public interest); Roy M. Speer, Memorandum Opinion and Order and Notice of Apparent
Liability, 11 FCC Rcd 18393, 18418 (1996) (“Speer”) (subsequent history omitted) (affiliation agreement
approved where licensee was functionally endowed with veto power over programming with no resultant
penalty); Manahawkin Communications Corp., Memorandum Opinion and Order, 17 FCC Rcd 342, 348
(2001) (time brokerage agreement approved where licensee had right to reject programming not meeting
24 NABB 55 FCC 2d at 802 (disapproving licensee’s agreement with citizens group that restricted licensee
to “fixed and unchangeable types and amounts of programming” (citing Ellen S. Agress, Letter, 54 FCC 2d
1238 (1975) (“Agress”) (rejecting agreement imposing a quota for minority programming and
employment)); Cumulus, 21 FCC Rcd at 3005-3006 (striking provision in agreement requiring licensee to
change programming format); Twin States Broadcasting Inc., Memorandum Opinion and Order, 42 FCC
2d 1091 (1973) (rejecting agreement requiring licensee to change programming format under certain
circumstances and expressing a Commissioner’s concern over “willingness of some licensees, in an
apparent attempt to avoid the Commission's processes, to abrogate their obligations as public trustees and
turn over to third parties responsibilities which are uniquely their own.” Id. (Separate Statement of
Commissioner Richard E. Wiley)).
station’s listeners. Although the Affiliation Agreements do allow Rocking M to reject specific
programs – but not commercials – on a case-by-case basis, the underlying Affiliation
Agreements, themselves, may not be terminated by Rocking M, thus impermissibly binding
Rocking M to fixed types and amounts of the Networks’ programming.
SCI’s Recourse to State Court. Rocking M claims that SCI’s filing suit in state court to
enforce the Affiliation Agreements is contrary to the holding in the Citicasters decision, i.e.,
Rocking M argues that the “suit attempts to seek equitable relief from a court that effectively
restricts a licensee’s ability to control programming policies and decisions.”25 We disagree.
Review of the petition that SCI filed in state court,26 discloses that SCI seeks only monetary
damages, not an injunction or other equitable relief, thus making Citicasters, and the subsequent
Mid Atlantic Network decision27 – both of which were confined to complaints for equitable relief
– inapposite here.28 Thus, SCI has properly brought its private contractual dispute with Rocking
M concerning money damages before a local court of competent jurisdiction.29 The Commission
does not decide such contractual matters.30
We note that the Commission has imposed additional limitations in the context of
television network affiliation agreements, prohibiting the imposition of monetary penalties on
television affiliates in the narrow context of preemptions protected by the “right to reject” rule,
Section 73.658(e).31 That rule is inapplicable to the Affiliation Agreements. The Commission
has not imposed a similar restriction with regard to radio LMAs or any other type of radio
programming agreement. As noted above and to the contrary, it has concluded that reasonable
liquidated damages are consistent with Section 310(d) requirements. We hold that reasonable
monetary damages relating to an otherwise enforceable agreement and subject to limitations
imposed by Commission rule are permissible.
25 Response to Supplement at 7 and n.7 (citing Citicasters, 16 FCC Rcd at 3420).
26 See Reply to Response, Ex. B.
27 See Mid Atlantic, 23 FCC Rcd at 7589-7590 (apparent violation of 47 U.S.C. § 310(d) and 47 C.F.R.
§ 73.3540 when seller sought and received injunction restricting format that buyer could employ).
28 Rocking M’s contention that the lawsuit seeks equitable relief apparently rests on SCI’s seeking money
damages and “such other and further relief as the Court deems just.” Reply to Response, Ex. B. We take
notice that the quoted phrase is commonplace legal “boilerplate” and that SCI has not pleaded for specific
equitable relief in its complaint.
29 Licensees are not insulated against a program supplier seeking money damages for breach of a
programming agreement. Mid Atlantic, 23 FCC Rcd at 7586 (“a violation of the Act and the Commission’s
Rules is an “issue separate and distinct from the issue of whether the . . . Agreement is enforceable under
state contract law” (citing Citicasters, 16 FCC Rcd at 3419 (“assessment of licensee obligations under the
Act is not an adjudication of contractual rights and responsibilities)). See also Air Virginia, Hearing
Designation Order, 17 FCC Rcd 5423, 5435 (2002). (“The fact that the TBA provides for penalties for the
unilateral termination of the agreement does not mean that Air Virginia is not without recourse to terminate
the agreement. Such contractual provisions provide only that the terminating party may be subject to
penalties for breach of contract under applicable state law.”); Edwin L. Edwards, et al., Memorandum
Opinion and Order and Notice of Apparent Liability, 16 FCC Rcd 22236, 22255 (2001) (“while damages
may be an appropriate remedy for a licensee's breach of an LMA, the staff stated that a licensee must
remain free to choose who will program its station”).
30 It is well established that the Commission is not the proper forum for adjudication of such disputes. See
John R. Kingsbury, Memorandum Opinion and Order, 71 FCC 2d 1173 (1979); John F. Runner, Receiver
(KBIF), Memorandum Opinion and Order, 36 RR 2d 773 (1976); Transcontinent Television Corp.,
Memorandum Opinion and Order, 21 RR 945 (1961).
31 47 C.F.R. § 73.658(e); see also NASA Declaratory Ruling, 23 FCC Rcd at 13612.
Rocking M, however, asserts that the mere prospect of money damages for breach of the
Affiliation Agreements has a chilling effect on Rocking M’s ability to exercise the degree of
control necessary to program its stations in the public interest.32 We note that, although the
Commission has cautioned that agreements that impose excessive penalties or provide for
excessively high liquidated damages for breach may bring a licensee’s control of a station into
question,33 it has not suggested that there is a comparable threat with respect to actual damages
for breach of an otherwise valid portion of a contract. Indeed, were the Commission to foreclose
actual damages, licensees could ignore their program-related contractual obligations with
impunity, to the detriment of program suppliers and with no concomitant benefit to the listening
Term of the Affiliation Agreements. In Revision of Radio Rules, the Commission stated
that, if a licensee entered into “an unreasonably lengthy brokerage agreement, [a] licensee's
control of its station may be questioned.”34 That control concern applies with equal force to
programming agreements more generally. Agreements with a perpetual duration – such as the
Affiliation Agreements – are per se “unreasonably lengthy” and unacceptable because they
inhibit a licensee’s ability to structure its programming to be responsive to the current needs of its
audience.35 A licensee’s ability to meet those needs “can be freely exercised only if program
plans or structure remain flexible. This carries with it the licensee's obligation to refrain from
taking any action by contract or otherwise which constitutes restrictions or impediments to
reasonable flexibility and thus to change.”36 The Commission contemplates “that licensees will
retain the flexibility necessary to respond to ever-changing audience tastes and preferences; to the
extent that flexibility is diminished we believe responsiveness will be inhibited.”37 Programming
agreements having a perpetual term are facially inconsistent with licensees’ obligation not to
enter into agreements that restrict or impede their ability to retain control over programming
pursuant to Section 310(d) of the Act, i.e., licensees may not be “forced into an ongoing and
indefinite affiliation with [a program supplier].” 38 Accordingly, we find that the term of the
Affiliation Agreements is in conflict with Section 310(d) of the Act and unenforceable.
Impermissible Reversionary Interest. Section 73.1150(a) of the Rules39 states that "[i]n
transferring a broadcast station, the licensee . . . may not reserve the right to use the facilities of
the station for any period whatsoever." When Lesso’s licenses were assigned to Great Empire
Broadcasting, Inc., Lawrence Steckline was a principal both of the licensee, Lesso,40 and of Mid-
America Ag Network, Inc., the owner of the Networks and SCI’s predecessor. A portion of the
consideration for the assignment of the Stations’ licenses was that Mid-America Ag Network,
Inc. – after consummation of the assignment – would continue to have “ongoing access to a
32 See Request at 8.
33 See Revision of Radio Rules, 7 FCC Rcd at 6387.
34 Id. at 6402.
35 Rocking M asserts that it initiated Spanish language programming on its Liberal, Kansas, stations in
response to “changing demographics in southwestern Kansas.” Request at 7.
36 Grand Canyon Broadcasters, Letter, 9 FCC 2d 830, 831 (1967) (citing New Mexico College of
Agriculture and Mechanical Arts, 5 RR 976 (1949)); and Churchill Tabernacle v. FCC, 160 F.2d 244 (D.C.
Cir. 1947) (rejecting 100 year right to broadcast time on a station).
37 Twin States Broadcasting, Inc., Memorandum Opinion and Order, 42 FCC 2d 1091, 1092 (1973) (“Twin
38 Speer, 11 FCC Rcd at 18431-18432 (provisions in agreement stricken where they “effectively insure that
[the licensee] will be forced into an ongoing and indefinite affiliation with [a program supplier]”).
39 47 C.F.R. § 73.1150(a).
40 Lawrence Steckline was an 88% principal and Gregory Steckline was a 12% principal of Lesso.
number of its [the America Ag Network, Inc.] important affiliate stations.”41 This “ongoing
access” to the facilities of the stations was assured because (a) the Affiliation Agreements, as a
practical matter, ran with the station licenses,42 and (b) the Affiliation Agreements had a perpetual
SCI argues that there was no prohibited reservation of right to use the stations’ facilities
because “Lesso was a wholly separate entity, financially and operationally from Mid-America Ag
Network.”44 Nonetheless – at the time the licensees were assigned to Great Empire Broadcasting,
Inc.45 – there was an identity of interest between Lesso and its “sister company” Mid-America Ag
Network, Inc.46 That interest persists today because Gregory Steckline – originally a principal in
Mid-America Ag Network, Inc. – remains as the sole principal of the successor company, SCI.47
We therefore disagree with SCI that Lesso was “a wholly separate entity” from Mid-America Ag
Network, Inc.48 The two corporations – Mid Atlantic Ag Network, Inc. and Lesso – were alter
egos of the Stecklines. Because Lawrence Steckline held a majority interest in both entities, he
was able to introduce adhesive provisions into the Affiliation Agreements that overwhelmingly
favored Mid-America Ag Network, Inc. and bound successive licensees, in perpetuity, to
provisions that only the Stecklines could terminate.
SCI, itself, has conceded that the Affiliation Agreements were intended to ensure that
Mid-America Ag Network, Inc. had perpetual, reversionary, “ongoing access” to its affiliate
stations notwithstanding changes in station ownership or format. We conclude, therefore, that the
self-dealing between Lesso and Mid-America Ag Net, Inc. resulted in Affiliation Agreements
whereby the Stecklines impermissibly “reserve[d] the right to use the facilities of the station[s]”49
in clear violation of Section 73.1150(a) of the Rules.
The fact that Great Empire Broadcasting, Inc., and successor licensees, including Rocking
M, may have knowingly acquiesced to the programming restrictions imposed by the Affiliation
Agreements does not legitimize the agreements as SCI implies.50 Parties may not escape a
41 Request at Ex. B (emphasis supplied). (“As part of the transaction, the purchaser of the stations
expressly agreed that it would leave in place and honor all of the long-term MAAN affiliation agreements
(which included both ag affiliation agreements and news affiliation agreements). The price for which
Lesso and the Stecklines were willing to sell these stations was determined with the recognition that the
affiliation agreements would remain in place, thereby providing MAAN with ongoing access to a number
of its affiliate stations.”)
42 See Request, Ex. A. (If an assignor did not require an assignee to assume the Affiliation Agreements, or
if the Affiliation Agreements were assumed but not performed by the assignee, the assignor remained liable
“to perform its duties and obligations under this agreement.”
43 See id. (Initial 120 month term with “automatic” renewal for subsequent 60 month terms at the sole
option of Mid-America Ag Network (owned by SCI)).
44 Comments at 3.
45 See id.
46 SCI’s counsel describes Lesso and Mid-America Ag Network, Inc. as “sister companies.” Request Ex. B
at 1. But see Comments at 2 (“[u]nfortunately, Lesso has been mischaracterized [by SCI’s own counsel] as
having been the ‘sister company’ to Mid-America Ag Network, Inc.”).
47 See Comments at Ex. A. (Declaration of Gregory R. Steckline: “I am the 100% owner of all of the
assets, debt, equity, and voting interest in Steckline Communications, Inc.”)
48 Cf. Nos Communications Inc. et al., Order to Show Cause and Notice of Opportunity for Hearing, 18
FCC Rcd 6952, 6954 n.4 (2003). (Finding parties jointly and severally liable because “Although NOS,
ANI, and NOSVA are set up as different corporations, they apparently share the same offices, directors,
and major shareholders.”)
49 47 C.F.R. § 73.1150(a).
50 See Comments at 3. (“Rocking M can hardly claim to have been unaware of the terms and agreements”.)
Commission Rule by agreeing to violate it. Any provision in a programming agreement that
forecloses a licensee from making independent programming judgments is void ab initio. The
provision will not be given effect by the Commission,51 and does not bind subsequent licensees.52
Television Network Affiliation Agreements. SCI contends that the Affiliation Agreements
are permissible because they do not differ, substantially, from the asset purchase agreement and
network affiliation agreement that SCI appended to its Reply to Response, whereby NBC
assigned licenses of network-owned television stations to a third party.53 We disagree.
As an initial matter, the submitted NBC affiliation agreement is for a fixed five and one-
half year term with no “automatic” extensions - it is not perpetual as are the Affiliation
Agreements.54 Second, the agreement does not “run with the license,” i.e., the NBC affiliate
licensee is not obliged to require a subsequent licensee to assume the agreement under penalty of
remaining liable for performance of the agreement, as with the Affiliation Agreements.55 Third,
unlike the Affiliation Agreements here at issue, the NBC affiliation agreement requires
compliance with Section 78.658 of the Rules. This rule contains specific provisions concerning a
television licensee’s right to reject programs, and was adopted to protect television station
autonomy and responsibility for broadcast material.56 Finally, under NBC’s affiliation
agreement, NBC has no right to the “facilities of the station” – the licensee may reject any content
– including commercial content – it reasonably believes is contrary to the public interest. The
Affiliation Agreements, by comparison, allow the licensee to reject program material under
certain circumstances but have no comparable provisions respecting commercial material.57
Thus, under SCI’s interpretation of the Affiliation Agreements, even if a licensee declines to
broadcast the Networks’ programs, it still must broadcast the commercials associated with those
programs.58 Such provisions that are “absolutely binding” on licensees are inconsistent with
licensees’ obligation to retain independent control over material broadcast on their stations.59
51 See NABB, 55 FCC 2d at 801, 802 (to the extent an agreement surrenders a licensee’s programming
responsibility to others “it cannot be considered by the Commission as having any force and effect.”) Id.
(citing NBC v U.S., 319 U.S. 190 (1943)).
52 See NABB, 55 FCC 2d at 802 (licensee has “no right or authority to make the provisions of the
Agreement . . . binding on any future assignee . . .).
53 Reply to Response at 5-6 and Ex. C (excerpts from asset purchase agreement between NBC Sub WCMH,
LLC, et al. and Media General, Inc.) and Ex. D (excerpts from redacted copy of network affiliation
agreement between NBC and Media General Communications, Inc.).
54 See Reply to Response, Ex. D at 1.
55 Id. at 7-8. See supra n.52.
56 See 47 C.F.R. § 73.658; Reply to Response at 2. See also NASA Declaratory Ruling, 23 FCC Rcd at
13611 (“Affiliates, as the licensees of local television stations, must retain ultimate control over station
programming, operations and other critical decisions with respect to their stations, and network affiliations
must not undercut this basic control. Retention of this control by Commission licensees is required by
Section 310(d) of the Communications Act and the Commission’s Rules.”)
57 The Affiliation Agreements provide that stations may reject an SCI agricultural or news program and
substitute a program of “outstanding local or national importance.” Request, Ex. A at 2. The Affiliation
Agreements, however, as they stand now, contain no provisions whereby licensees may reject SCI’s
commercials. Id. SCI has proposed to amend the Affiliation Agreements so that a licensee may reject
commercials it deems “unsatisfactory, unsuitable or contrary to the public interest.” Supplement at 2-3.
SCI has not, however, implemented the proposed amendment.
58 See Reply to Response at 4 (“stations electing not to air the programming must nevertheless air the
commercials in order to uphold their end of the bargained-for contracts”). SCI has notified its affiliates that
they may reject a particular commercial spot that an affiliate deems “unsatisfactory, unsuitable or contrary
to the public interest.” In the event an affiliate rejects a commercial spot, however, it is obligated to
SCI’s Agreements With Other Licensees. Rocking M calls attention to affiliation
agreements SCI has with other licensees, containing provisions Rocking M deems more onerous
than those in its Affiliation Agreements. It includes a copy of an agreement between Mid-
America Ag Network and Steckline Communications, LLC, in its capacity as licensee of station
KIMB-AM, Kimball, Nebraska.60 That agreement contains a specific provision that the licensee
may not change to a foreign language format and that the “format of the Station will not be
changed so as to render network programming inappropriate for broadcast on the station.”61 It
binds the licensee not to broadcast the agricultural programming of any other network or news
provider.62 It also gives SCI the right to acquire additional commercial time at fixed rates.63 The
licensee’s obligation to broadcast Mid-America Ag Network’s commercials may be enforced by
injunction.64 The term of the agreement, unless sooner terminated by SCI, is 40 years.65
Subsequent licensees are bound by the agreement and the licensee is liable if a subsequent
licensee does not perform.66 We agree with Rocking M that such provisions are inconsistent with
licensees’ obligation to retain independent control over material broadcast on their stations.67
Proposed Modification of the Agreements. In deciding this matter, we have dealt with the
Affiliation Agreements submitted with the pleadings. We note, however, that SCI has proposed
to amend the Affiliation Agreements so that licensees may elect a maximum 40-year term and
have the option of discontinuing SCI’s programming - but must continue broadcasting SCI’s
broadcast a replacement spot. Supplement at 2-3. SCI has not incorporated its “notification” as an
amendment to the Affiliation Agreements.
59 See NABB, 55 FCC 2d at 802. (“Thus, if the Agreement and Commitment impose restrictions on
Metromedia which are absolutely binding, then these provisions curtail improperly the licensee's discretion
to make programming judgments in the public interest.”) The SCI Affiliation Agreements contain a
“savings clause” to the effect that “[n]othing herein contained shall require the Station to do any act or
thing which would constitute violation of any rule or regulation of the Federal Communications
Commission.” See Request, Ex. A at 2. That general clause cannot overcome the specific provisions of the
Affiliation Agreements and SCI’s attempt to enforce them. See id. (citing Agress, 54 FCC 2d at 1238).
60 Reply to Comments, Ex. A. The agreement is signed by Lawrence Steckline as president of Mid-
America Ag Network, owned by SCI, and Gregory Steckline as “manager” of the licensee, Steckline
Communications, LLC. Rocking M claims that the “flip flopping” of the roles of Lawrence Steckline and
Gregory Steckline – relative to earlier transactions in which Lawrence Steckline represented the licensee
and Gregory Steckline represented Mid-America Ag Network – shows a “complete identity of interest”
between Mid-America Ag Network and the licensees of the stations that initially entered into affiliation
agreements. See Reply to Comments at 6, n.3.
61 See id at 6, Ex. A at 1, ¶ 3.
62 See id. at 7, Ex. A at 1, ¶ 1.
63 Id., Ex. A at 2, ¶ 6.
64 Id., Ex. A at 3, ¶ 9.
65 See id. at 6, Ex. A at 2, ¶ 6.
66 See id. at 7, Ex. A at 3, ¶ 12. SCI states that it “intends” to inform licensees governed by these
agreements that it will not enforce the provisions concerning format changes and broadcast of agricultural
programs supplied by others. Supplement at 2. It has not, however, stated it would not enforce the
provisions of the agreement dealing with injunctive relief. We do not rely on SCI’s “intent” not to enforce
these provisions of the agreement, inter alia, because there is no record evidence that the intent has been
effectuated or that SCI would not enforce the injunctive relief provision. Moreover, an agreement not to
enforce an objectionable provision could be withdrawn at any time.
67 See NABB, 55 FCC 2d at 802. (“Thus, if the Agreement and Commitment impose restrictions on
Metromedia which are absolutely binding, then these provisions curtail improperly the licensee's discretion
to make programming judgments in the public interest.”)
commercials.68 We find, however, that, even with those changes, the Affiliation Agreements
would be “unreasonably lengthy”69 and otherwise unacceptable. A 40-year term is excessive,
given the dynamic state of the radio market, because it inhibits licensees from responding to
audience needs, e.g., by initiating foreign language or other programming incompatible with
SCI’s programming.70 Moreover, giving a licensee the option to discontinue SCI’s programming
while continuing to broadcast its commercials, without compensation, for as long as 40 years is a
penalty that likewise inhibits the licensee from providing programming responsive to community
needs. Also, should a licensee decline the options offered by SCI, it would remain subject to the
current Affiliation Agreements which, as established, supra, are inconsistent with licensees’
obligation to retain independent control of programming.
Conclusion.Under Section 1.2 of the Rules, the Commission “may . . . issue a
declaratory ruling terminating a controversy or removing uncertainty.”71 The Commission has
broad discretion whether to issue such a ruling.72 It will do so only when critical facts are
explicitly stated.73 We find that the record contains the requisite critical facts. Specifically, the
record discloses a pattern of self-dealing by the Stecklines, that resulted in Affiliation Agreements
which, in many material respects, are unilaterally favorable to SCI and contain provisions
inconsistent with the Commission’s Rules and policies governing licensee control over
programming and prohibiting the retention of reversionary rights when broadcast licenses are
We agree with Rocking M that Commission guidance on its Affiliation Agreements with
SCI would be useful in resolution of the instant controversy and such similar controversies as
may arise in connection with other licensees’ programming agreements. Therefore, pursuant to
Section 1.2 of the Rules, and the foregoing discussion, we respond to the specific issues requested
by Rocking M74 as follows:
Rocking M Issue #1. May a licensee enter into a network affiliation agreement with a
perpetual term (or a term dictated by the network) and, if so, is the licensee obligated to broadcast
whatever programming the network supplies?75
Network affiliation agreements with perpetual terms are per se “unreasonably lengthy”
and unacceptable because they inhibit a licensee’s ability to structure its programming to be
responsive to the needs of its audience. A licensee’s ability to meet those needs “can be freely
exercised only if program plans or structure remain flexible. This carries with it the licensee's
obligation to refrain from taking any action by contract or otherwise which constitutes restrictions
or impediments to reasonable flexibility and thus to change.”76 Thus, programming agreements
68 See Reply to Response at 2-3. See also supra n.58.
69 See Revision of Radio Rules, 7 FCC Rcd at 6402.
70 SCI notes that “it does not appear that the FCC has ever ruled that the duration of a contract for
commercial spot broadcasts is excessive.” See Reply to Response at 2-3. We observe, however, that the
Commission has not, until now, had the occasion to address that issue.
71 47 C.F.R. § 1.2.
72 See Yale Broadcasting Co. v. FCC, 478 F.2d 594, 602 (1973).
73 See id. (citing Use of Broadcast Facilities by Candidates for Public Office, Public Notice, 24 FCC 2d
832, 885 (1970)).
74 The issues, as presented supra, are abbreviated summaries of Rocking M’s requested issues. For the full
text of the issues, see supra n.12.
75 See Request at 2.
76 Grand Canyon Broadcasters, Letter, 9 FCC 2d at 830. See also supra n.23; Speer,11 FCC Rcd at 18431-
18432 (provisions in agreement stricken where they “effectively insure that [the licensee] will be forced
into an ongoing and indefinite affiliation with [the program supplier]”).
with a perpetual, or indefinite, term are inconsistent with licensees’ obligation to retain control
over the programming of their stations pursuant to Section 310(d) of the Act.
An agreement binding a licensee to broadcast whatever programming a program supplier
furnished would represent an unauthorized transfer of control. A licensee must be free to reject
programming it reasonably deems unsuitable or contrary to the public interest and must be free to
substitute programming it deems to be of greater local or national interest.77
Rocking M Issue #2. Whether a licensee that changes programming format, thereby
rendering network programming inappropriate to the station’s audience, is nonetheless obligated
to continue broadcasting network programming or pay substantial damages to the program
supplier for breach of contract?
An agreement barring changes in program format is unacceptable – regardless of
provisions respecting damages – because it unduly restricts a licensee’s ability to be responsive to
the needs of the public and, hence, represents an assumption of control by the program supplier
inconsistent with Section 310(d) of the Act.78 The Commission may strike provisions of an
agreement - or the entire agreement - to the extent it bars format changes.79 However, an
otherwise enforceable agreement that provides for actual damages in the event of breach of
contract is permissible unless otherwise prohibited by Commission rule. Entitlement to such
damages, and the amount thereof, is a matter for the civil courts.80
Rocking M Issue #3. Whether a licensee, consistent with Section 310(d) of the Act, may
obligate itself to broadcast a network’s programming or incur substantial penalties for failure to
Any programming agreement assessing excessive liquidated damages or excessive
penalties for breach is inconsistent with Section 310(d) of the Act.81 However, an otherwise
enforceable agreement that provides for actual damages in the event of breach of contract is
permissible unless otherwise prohibited by Commission rule. Entitlement to such damages, and
the amount thereof, is a matter for the civil courts.
Rocking M Issue #4. Whether a program supplier with an ownership interest in a
broadcast licensee may enter into a programming agreement with that licensee and, thereafter,
enforce that agreement by seeking monetary damages against subsequent licensees who have
assumed the agreement?
Section 73.1150(a) of the Rules bars an assignor or transferor – whether a program
supplier or otherwise – from retaining any right to use the facilities of a station. To the extent that
an agreement includes a term that vests an assignor or transferor with rights to use the facilities,
e.g., does not contain provisions whereby a licensee reasonably may reject program content,
including commercial content, such term is void ab initio. The Commission will not give effect to
such an agreement and may require that provisions thereof – or the entire agreement – be stricken.82
A party, under Commission jurisdiction, that obtains a Court order requiring specific performance
77 See, e.g., NASA, 45 Comm. Reg. at 1256; Citicasters, 16 FCC Rcd at 3419-3420.
78 See Cumulus, 21 FCC Rcd at 3005-3006.
79 See Twin States, 42 FCC 2d at 1092 (striking a binding agreement for station to change to a progressive
rock format within three years under certain conditions).
80 The Commission has consistently held that it is not the proper forum for the resolution of private
contractual disputes. See John R. Runner, Receiver (KBIF), 36 R.R. 773, 778 (1976) and Decatur
Telecasting, Inc., Memorandum Opinion and Order, 7 FCC Rcd 8622 (MMB 1992).
81 See text accompanying n.19 supra.
82 See NABB, 55 FCC 2d at 803.
of such an agreement against a subsequent licensee would be subject to enforcement action by the
Rocking M Issue #5. Whether a licensee, pursuant to Section 310(d) of the Act must retain
the absolute right to determine what programming should be aired on the station? Is a licensee
which reasonably exercises this right free from substantial penalties arising from a breach in the
A provision in an agreement delegating to a third party the absolute right to determine
station programming will not be approved by the Commission whether or not the agreement
provides penalties for breach of such a provision. It is well established that licensees must retain
“the flexibility to address the needs and interests of its local communities, to react to changing
audience tastes and preferences, to respond to other competitors in the market, and to select its
programming accordingly.”84 However, reasonable monetary damages relating to an otherwise
enforceable agreement and subject to limitations imposed by Commission rule are permissible.
Decision/Action.We have granted the relief requested by Rocking M in its Request to
the extent indicated herein. Rocking M has a complaint pending before the Enforcement Bureau
concerning the Affiliation Agreements and SCI’s attempted enforcement of same, which
complaint, as noted supra, will be addressed separately by the Enforcement Bureau. Therefore,
we have not addressed the potential rule violations, or the consequences thereof, herein, except to
the extent necessary to be responsive to Rocking M’s Request for a Declaratory Ruling.
Accordingly IT IS ORDERED that the Request for a Declaratory Ruling filed by Rocking
M Radio, Inc. IS GRANTED TO THE EXTENT INDICATED HEREIN.
Peter H. Doyle
Chief, Audio Division
83 Assignors and assignees into such agreements would also be subject to enforcement action to the extent
that they falsely certified in their assignment applications that agreements related to the assignment
complied “fully with the Commission’s rules and policies.” FCC Form 314, Application for Consent to
Assignment of Broadcast Station Construction Permit or License, Sect. I, Item 3; Sect II, Item 3.
84 See supra n.16.
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