Federal Communications Commission
Washington, D.C. 20554
March 18, 2014
In Reply Refer To:
Released: March 18, 2014
Donald E. Martin, Esq.
Donald E. Martin, P.C.
P.O. Box 8433
Falls Church, VA 22041
Margaret L. Miller, Esq.
Gray Miller Persh LLP
1200 New Hampshire Ave., N.W.
Washington, DC 20036
Michael Couzens, Esq.
Law Office of Michael Couzens
6536 Telegraph Ave.
Oakland, CA 94609
Alan Korn, Esq.
Law Office of Alan Korn
1840 Woolsey Ave.
Berkeley, CA 94703
WFCL(FM), Nashville, TN
Facility ID No. 69816
File Nos. BRED-20120326AEY
Petition to Deny
Assignment of License
We have before us: (1) the above-referenced applications to renew (“Renewal Application”) and
assign (“Assignment Application”) the license of Vanderbilt Student Communications, Inc. (“VSC”) for
noncommercial educational (“NCE”) FM Station WFCL(FM), Nashville, Tennessee, (“Station”) to
Nashville Public Radio (“Nashville”); (2) a Petition to Deny the Renewal Application (“Renewal
Petition”) filed on July 2, 2012, by WRVU Friends & Family (“Friends”); (3) an Informal Objection
against the Assignment Application (“Assignment Objection”), filed by Friends on September 12, 2012;
and (4) related pleadings.1 For the reasons set forth below, we grant the extension motions, deny the
Renewal Petition; deny the Assignment Objection; and grant the Renewal and Assignment Applications.
On June 7, 2011, VSC and Nashville signed two documents: a
management and programming agreement (“MPA”) and an asset purchase agreement (“APA”). Under
the MPA, Nashville, subject to the supervision and control of VSC, is to produce and acquire
programming, administer Station activities, provide for “engineering maintenance and support for Station
facilities, financial management, accounting service, routine engineering services and assist VSC’s
compliance with laws and regulations applicable to the operation of the Station.”2 VSC maintained
responsibility for oversight of finances and material changes in programming3 and for all employees on
VSC’s payroll,4 and for “operating the Station in compliance with all laws, rules, policies, and regulations
of the FCC.”5 VSC also reserved “ultimate responsibility for all activities in connection with FCC license
renewals, applications for facility changes and such other filings and reports as may be required by the
FCC.”6 Under the APA, Nashville would buy the Station for a purchase price of $3.35 million. Upon
signing, Nashville paid VSC a $300,000 “deposit,” to be credited against the purchase price at closing.
The APA also provides that, if Nashville, in coordination with VSC, did not initiate filing a Commission
assignment application within one year of the APA’s signing date, it was to pay a second cash deposit of
$150,000 (together, “Deposits”), also credited against the purchase price.7 The APA stipulates that VSC
will keep interest earned on the Deposits, regardless of the ultimate disposition of the Deposits
themselves.8 In the event of a termination of the APA without a breach by either party, VSC would repay
the entire amount of the Deposit.9 If VSC breached the agreement, Nashville would be entitled to return
of the Deposit.10 If Nashville breached the agreement, VSC would keep the entire Deposit.11
1 In regard to the Renewal Application, VSC filed a Motion for Extension of Time and an Opposition on July 31,
2012, and August 8, 2012, respectively. Friends filed a Motion for Extension of Time on August 13, 2012, and a
Reply on August 23, 2012. Nashville filed its Objection on September 25, 2012, and VSC filed its Petition on
September 26, 2012. We grant the consent motions by both parties and consider the VSC Opposition and Friends’
2 MPA at § 1(a) and 1(a)(a).
at § 1(c).
at § 6.
at § 5(a).
7 APA at §§ 2(b) and 5(b). The APA was signed on June 7, 2011, and the Assignment Application was filed on
August 8, 2012, so we assume that the second cash deposit was paid.
at § 2(b).
§ 19 (d)(ii).
at §§ 19(d)(iii). This is VSC’s sole remedy. Id.
Renewal Application. Pleadings.
Renewal Petition. On March 26, 2012, VSC timely filed the
Renewal Application. In the July 2, 2012, Renewal Petition, Friends asks the Commission to designate
for hearing the Renewal Application or defer action on it until VSC withdraws the purchase agreement or
until VSC makes a formal application for assignment.12 Friends states that it was injured by the loss of
Station programming and culture which served as a resource for artists, a platform from which to launch
careers, and a community voice.13
In support of its challenge to the Renewal Application, Friends alleges that: (1) VSC’s Board
violated its charter and acted ultra vires
by signing the MPA because the VSC Charter of Incorporation
sets forth only one purpose – the “operation, publication, and dissemination of student communication
media at Vanderbilt University” -- and does not allocate to VSC the catchall power to engage in “things
necessary and proper” and does not authorize the “piecemeal sale of assets;”14 (2) VSC did not have
power to authorize the MPA because, due to reported and unreported “substantial” and “abrupt”15 Board
changes between August 27, 2004, and March 26, 2012, VSC violated Section 310(d) of the
Communications Act of 1934, as amended (“Act”), and the mandate that substantial changes in NCE
governing boards must be approved on FCC Form 315;16 (3) the Deposits violate Section 73.503(c) of the
Rules, as applied in University of San Francisco
”), because they constitute consideration for the
sale of air time;17 (4) the MPA constitutes an unapproved transfer of control, a violation of Section 310(d)
of the Act, because18 VSC no longer sets “policy or practice in any way,” as exemplified by the MPA’s
“outlandish provision” allowing Nashville to withdraw if VSC unreasonably interferes with management or programming
;”19 and (5) the Commission cannot find that VSC acted in the public interest for purposes
of Station license renewal20 during the last renewal cycle because it is contractually obligated to sell to
12 Renewal Petition at 1.
at Attachment B, Slomowicz Declaration at 1.
14 Renewal Petition at 6.
at 8, citing Transfers of Control of Certain Non-Stock Entities,
Notice of Inquiry, 4 FCC Rcd 3403, 3408
(1989) (“Transfers of Control
at 12-13 and Attachment A. Friends cites several incidences of unreported Board turnover that, it claims,
undercut the Board’s authority and amount to an unapproved transfer of ownership, in violation of Section 309(b) of
the Act and Section 73.3540 of the Rules. Specifically, Friends alleges that VSC replaced five of eight voting board
members between August 2004 and August 2005 (Renewal Petition at 11-12); four of eight voting members
between August 2005 and September 2006; and the same between August 2007 and 2008. Renewal Petition at 12-
14. Friends acknowledges, however, that between March, 2010, and August, 2010, VSC reported a 55.5 percent
turnover on a minor change FCC Form 316 (File No. BTCED-20100826AFX granted on September 9, 2010), and
then, in the ten months between September 22, 2010, and July 14, 2011, VSC similarly reported a 50 percent change
in Board membership on an FCC Form 316 (File No. BTCED-20110704ADH, granted on August 25, 2011). Id.
. at 15-18, citing University of San Francisco
, Order, 27 FCC Rcd 5674, 5674 (MB 2012) (finding that both
assignor and assignee violated 47 C.F.R. § 1.17, and assignor violated 47 C.F.R. § 73.503(c)).
18 Renewal Petition at 18.
at 20-21 citing MPA at § 3(b) (emphasis in Renewal Petition), citing as precedent Birach Broadcasting Co.,
Notice of Apparent Liability for Forfeiture and Order, 25 FCC Rcd 2644, 2645 (EB 2010); James A. Kay
, 396 F.3d
1184, 1188 (D.C. Cir. 2005) and K.I.D.S.-TV6
, Notice of Apparent Liability, 15 FCC Rcd 20212 (EB 2000), aff’d
Forfeiture Order, 16 FCC Rcd 5495 (EB 2001).
20 47 U.S.C. §309(a).
another entity.21 Friends concludes that Nashville violated the Rules by entering into an MPA under
which it assumed full control of the Station and violates policies applicable to such agreements. Friends
argues that the MPA here is similar to the one at issue in USF,
where the Bureau sanctioned both assignor
and assignee.22 Given those alleged similarities, Friends recommends the Bureau sanction Nashville and
conclude that it is unfit to be assignee.23
VSC Opposition. In opposition, VSC claims that Friends lacks standing to file a petition to deny
in this proceeding because its injury cannot be redressed by the remedy requested in the Renewal Petition;
it claims that the Commission’s scope of review in renewal proceedings does not reach agreements such
as the MPA or the APA; and Friends does not present any argument that logically supports the notion that
it could be made whole through denial of the Renewal Application.24
Substantively, VSC claims that the Board’s actions are not ultra vires
because its charter
authorizes it to enter into agreements such as the MPA. It quotes the charter as authorizing VSC to
“receive property, real, personal or mixed, by purchase, gift, devise or bequest, sell the same
the proceeds toward the promotion of the objects for which it was created, or hold any such property and
apply the income and profits towards such objects.”25 Overall, VSC argues that, in any event, the
Commission does not engage in debates about the legitimacy of corporate status or actions under state
VSC claims that failure to report the Board’s turnover is not a Rule violation. First, it argues that
Friends misinterprets and incorrectly relies upon Transfers of Control
because, as a mere Notice of
Inquiry, it is a proposed guideline, not a rule.27 Even were it a codified rule, VSC claims, such rule would
not apply to VSC’s “gradual” Board changes for a “membership organization” such as VSC. VSC also
claims that, even if its Board changes were considered to be “sudden” as opposed to gradual, they do not
affect the continuing, basic, nature of the entity itself, as required in Transfers of Control
. Thus, VSC
argues that, even if Transfers of Control
were applied here, VSC would not need to file any application
related to its Board membership changes because there has always been continuity of control. The
“shifts” in Board membership, VSC avers, “have never evinced a coup or an effort by a certain faction or
outside party to take control of the corporation,”28 because Vanderbilt University always has been and
remains the sole member of VSC.29 Finally, VSC underscores that the Commission decides such matters
on a case-by-case basis.30
21 Renewal Petition at 22.
, 27 FCC Rcd at 5674.
23 Renewal Petition at 26.
24 Renewal Opposition at 3.
at 4-5 (emphasis in original) and Exhibit 1, Memorandum Of Thomas J. Sherrard, Esq. (“Sherrard Letter”)
(arguing that, under Tennessee law, the commitment of VSC’s Board to the proposed sale of the Station is not ultra
and Vanderbilt University is not required to approve the proposed sale by VSC to Nashville).
26 Renewal Opposition at 5-6 citing Aspen FM, Inc
., Memorandum Opinion and Order, 12 FCC Rcd 17852, 17855
(1997), and Abundant Life, Inc
., Memorandum Opinion and Order, 16 FCC Rcd 4972, 4974 (2001).
27 Renewal Opposition at 7, citing Transfers of Control
, 4 FCC Rcd at 3408.
28 Renewal Opposition at 10.
VSC underscores that “the basic core ownership structure and governance mechanisms have remained
citing Storer Communications, Inc. v. FCC
, 763 F.2d 436, 442 (D.C. Cir. 1985).
Regarding claims of an unauthorized transfer of control, VSC highlights that the MPA grants it
“supervision and control” over Nashville,31 and it maintains its own oversight of personnel, programming,
and finances. VSC argues that it is not “outlandish” to include a clause in the MPA that terminates the
agreement if VSC interferes with management or programming; it is a safety valve provision found in
many contracts, allowing a party the right to withdraw.32 As evidence that it maintains control, VSC
submits a declaration from Chris Carroll, Director of Student Media for VSC, indicating that he
frequently communicates and conferences with staff of Nashville about programming to ensure adequate
supervision. He indicates that VSC maintains its own oversight of personnel, programming, and finances
and maintains a fully rule-compliant main studio for the Station, complete with staffing and technical
capabilities. He further states that VSC operates a stand-alone Internet program stream produced at the
main studio that could take over complete broadcast operations if need be.33
In answer to Friends’ contention that the Commission cannot find for renewal purposes that VSC
acted in the public interest, VSC claims that the obligation to sell to Nashville is not an obstacle to license
renewal. It argues that the Commission “routinely” grants renewal applications for stations changing
In response to allegations of a Section 73.503 violation, VSC says that without “first hand
evidence of actual conduct” there is no reason for the Commission to indulge in Friends’ speculation
about what it believes lies beyond the words of the APA and MPA.35 VSC submits the Carroll
Declaration as a first hand, sworn account to support its claim, as Carroll was reportedly “involved in the
thick” of the sale negotiations.36 Carroll states that Nashville had asked for “a holding period” between
purchase agreement execution and closing, and VSC “felt that it should be compensated for waiting.”37
Accordingly, Carroll states, Nashville agreed to compensate VSC for the wait.38
Renewal Reply. Friends claims, in regard to ultra vires
acts by the VSC Board, that the charter
language cited by VSC is mere “boilerplate”39 and, even if considered, does not override the more specific
statement that requires all “means, assets, income or other property” to be “employed, directly or
indirectly” in accomplishing “legitimate means of its creation.”40 Friends states that the only “express
purpose” for which VSC was created was to publish and disseminate student communication media at
Vanderbilt University, not to sell the Station.41 Friends challenges the Sherrard Letter’s conclusions and
31 Renewal Opposition at 7.
at 18 and Exhibit 2, Declaration of Chris Carroll (“Carroll Declaration”) at 1.
34 Renewal Opposition at 21. For example, VSC cites Roger Williams University
, Order, 25 FCC Rcd 2710 (MB
2010) and File No. BALFT-20111026AEY. Id.
35 Renewal Opposition at 14.
37 Carroll Declaration at 1-2.
Carroll emphasizes that the payments were not intended as compensation for airtime. Carroll Declaration at 2.
39 Renewal Reply at 4.
attempts to distinguish the facts here from the cases Sherrard cites. It argues that, while the Sherrard
Letter may accurately characterize state law, it is irrelevant to the central argument: that under Tennessee
Law, a decision by a nonprofit corporation to sell “substantially all” of its assets must be approved by the
members.42 Here, Friends states, Vanderbilt University is the sole member of VSC, and it has not given
such approval.43 Friends claims that the Commission has examined State law and observed that “a
corporation’s existence can be a relevant Commission inquiry,”44 and that compliance with state law
certainly is a relevant concern here.45
In regard to the alleged Rule violation for unauthorized transfer of control, Friends claims the
Commission has adopted “general guidelines” to provide certainty in assessing control questions.46 It
agrees with VSC that the Commission decides such cases on a case-by-case basis and cites the
Instructions to FCC Form 316, but argues that the VSC Board of Directors underwent two majority
changes -- between March and August of 2010 and between August of 2010 and August of 2011 -- each
of which should have triggered the filing of an FCC Form 315. Furthermore, Friends states that an
independent discrete facility is not, “by itself” indicative of ultimate control.47 It claims the Carroll
Declaration is “narrowly drafted, legalistic and uncorroborated…unaccompanied by exhibits or other
Finally, Friends claims that VSC’s examples of situations in which the Commission has granted a
renewal application slated for assignment are “factually distinguishable” from this situation because those
cases did not involve licensees who “prematurely abandoned control of station operations or routinely
violated Commission Rules and both were uncontested.”49
. A petition to deny a license renewal application must, pursuant to Section 309(d) of
the Act,50 provide properly supported allegations of fact that, if true, would establish a substantial and
material question of fact that grant of the application would be prima facie
inconsistent with Section
309(k) of the Act,51 which governs our evaluation of an application for license renewal. Specifically,
Section 309(k)(1) provides that we are to grant the renewal application if, upon consideration of the
at 5-6. Finding that the issue of proper action or ratification hinges on whether the sale of the Station
constituted a sale of “substantially all” assets, Friends then attempts distinguish the Sherrard Letter’s discussion of
similar language interpreted under the laws of the State of Delaware; it concludes that notwithstanding what may be
the law in Delaware, the sale here is of “substantially all” assets because “it involves a most important asset within
the core mission and a Core Division.” Id.
44 Renewal Reply at 6-7 citing Pacifica Foundation
, 36 FCC 2d 147 (1964) cited in Black Television Workshop
Memorandum Opinion and Order, 6 FCC Rcd 6525 at 6526 (1991).
45 Renewal Reply at 6, citing Blue Lake Academy, Inc.,
Letter, 20 FCC Rcd 12066 (MB 2005) (“Blue Lake”)
46 Renewal Reply at 7.
50 47 U.S.C. § 309(d).
., § 309(k). See
, WWOR-TV, Inc.
, Memorandum Opinion and Order, 6 FCC Rcd 193, 197 n. 10 (1990), aff’d sub nom. Garden State Broadcasting L.P. v. FCC
, 996 F.2d 386 (D.C. Cir. 1993), reh’g denied
(D.C. Cir. Sept.
application and pleadings, we find that: (1) the station has served the public interest, convenience, and
necessity; (2) there have been no serious violations of the Act or the Rules; and (3) there have been no
other violations that, taken together, constitute a pattern of abuse.52 If, however, the licensee fails to meet
that standard, the Commission may deny the application, after notice and opportunity for a hearing under
Section 309(d) of the Act, or grant the application “on terms and conditions that are appropriate, including
a renewal for a term less than the maximum otherwise permitted.”53
Procedural Issue: Standing.
The Commission accords party-in-interest status to a petitioner who
demonstrates either that he/she resides in the service area of the station that is the subject of the petition or
that he/she listens to or views the station regularly and that such listening or viewing is not the result of
transient contacts with the station.54 To do so, the petitioner must provide an affidavit or declaration that
establishes such standing.55 The Commission has permitted organizations to establish standing provided
that the affidavit of the organization’s member fulfills these requirements.56 Here, the Slomowicz
Declaration, sworn under penalty of perjury, states that many of the members of Friends reside within the
service area of the Station and all members of Friends “are listeners or former listeners” of the Station’s
programming.57 Accordingly, Friends has listener standing to file the Renewal Petition.
Substantive Issues: Ultra Vires
Acts. Friends claims that the Board’s adoption of the APA and
MPA violated its powers as set forth in its charter and was ultra vires
. Whether the Board did so is a
matter of state corporate law. The Commission generally will not deny an application based on a licensee
or permittee's non-compliance with state corporate law “where no challenge has been made in the State
., § 309(k)(1). The renewal standard was amended to read as described in the text by Section 204(a) of the
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996). See Implementation of Sections 204(a)
and 204(c) of the Telecommunications Act of 1996 (Broadcast License Renewal Procedures)
, Order, 11 FCC Rcd
53 47 U.S.C. §§ 309(k)(2), 309(k)(3).
54 See Tabback Broadcasting Company,
Memorandum Opinion and Order, 15 FCC Rcd 11899, 11900 n. 3 (2000)
citing Maumee Valley Broadcasting, Inc.,
Memorandum Opinion and Order, 12 FCC Rcd 3487, 3488-3489 (1997), as modified by CHET-5 Broadcasting, L.P
., Memorandum Opinion and Order, 14 FCC Rcd 13041 (1999).
(discussing how the Commission amended party in interest requirements to include a petitioner who demonstrates
either that it is a resident of the station's service area or
that the petitioner listens to or views the station regularly,
and that such listening or viewing is not the result of transient contacts with the station).
55 See Infinity Broadcasting Corp. of California
, Memorandum Opinion and Order, 10 FCC Rcd 9504, ¶ 10 (1995)
citing Petition for Rulemaking to Establish Standards for Determining the Standing of a Party to Petition to Deny a
, Memorandum Opinion and Order, 82 FCC 2d 89, 99 (1980) (discussing the affidavit
requirements for organizational standing); see also Niles Broadcasting Company
, Memorandum Opinion and Order,
7 FCC Rcd 5959, 5959 (1992) (finding organization lacked standing for failure to establish in affidavit that a
member had party-in-interest status).
56 See Hispanic Broadcasting Corp
., Memorandum Opinion and Order, 18 FCC Rcd 18834, 18835 n.4 (2003)
(affidavit of organization’s president stating that he resided within the service area of one of 65 radio station licenses
that sought to be transferred was sufficient to demonstrate standing to challenge the entire transaction); AMFM, Inc
Memorandum Opinion and Order, 15 FCC Rcd 16062, 16077 (2000) (same individual's declaration established
organization’s standing to challenge AMFM/Clear Channel merger); see also Adelphia Communications
, Memorandum Opinion and Order, 21 FCC Rcd 8302 (2006) (declarations of Free Press Policy
Director and National Hispanic Media Coalition President that, inter alia
, their members resided in areas served by
Comcast, Time Warner Cable, and Adelphia established organizations' standing to challenge proposed acquisition of
Adelphia by Comcast and Time Warner).
57 Slomowicz Declaration at 1.
courts and the determination is one that is more appropriately a matter of State resolution.”58 Friends
argues that we addressed corporate existence in Blue Lake
, and whether the Board complied with state
law is an equally important concern here. However, we did not analyze or interpret state law in that case;
rather, we simply referred to the state database of corporations to verify the existence of the applicant as a
corporation recognized by state law because the applicant applied as a corporation in the LPFM filing
window.59 Moreover, we did so because the applicant’s corporate status was a threshold eligibility
requirement set forth in the Rules and the Act.60 Here, the question is the scope of the Board’s power as
bestowed in the corporate charter, not whether applicant was or was not recognized by the state as a legal
entity for purposes of eligibility under the Rules and the Act. Additionally, Friends offers no evidence of
any action in state courts regarding VSC’s compliance with corporate laws. This is a question
appropriately left to local courts of appropriate jurisdiction. Accordingly, this argument requires no
Reported and Unreported Board Turnover. Friends alleges that VSC’s Board lacked authority to
enter into the MPA because it failed to timely and accurately report its majority control changes. The
question of whether VSC’s board lacked authority to enter into the MPA is a matter of state law that we
will not address for the reasons discussed above. However, compliance with Section 310(d) of the Act is
directly relevant to our Section 309(k) analysis and therefore will be considered.
In the Transfers of Control
proceeding, the Commission proposed that if the Board of a
membership organization or governmental entity underwent a gradual, yet “ultimately” majority change,
it would need only be reported as appropriate on the licensee's ownership reports.61 Because the Transfers of Control
proceeding was merely a Notice of Inquiry and the proposals there were never
codified into the Rules or adopted by the Commission,62 we have not formally adopted standards for what
constitutes a change in control of a non-stock NCE entity that would require prior Commission approval
on a long-form FCC Form 315.63 Because Friends has not provided any evidence that undercuts VSC’s
showing with respect to changes in the VSC Board, we accept VSC’s explanation that there has always
been continuity of control, that the Board membership changes “have never evinced a coup or an effort by
58 Aspen FM, Inc.,
Memorandum Opinion and Order, 12 FCC Rcd 17852, 17855 (1997)) (citing North American
Broadcasting Co., Inc
., 15 FCC 2d 979 (1969).
59 Id. See also Hammock Environment and Educational Community Services,
Letter, 25 FCC Rcd 12804, 12807
(MB 2010) (“Confirming [applicant’s] eligibility does not, contrary to [its] protests, require us to interpret Florida
law. Rather, the purpose of our inquiry was to determine whether [applicant] took the requisite steps to receive
recognition from the State of Florida prior to filing its Application.”).
60 Blue Lake,
20 FCC Rcd at 12068-69 (addressing the corporate existence of a low power FM applicant because the
Rules required such applicants to certify eligibility upon application).
61 Transfers of Control
, 4 FCC Rcd at 3408. A sudden change in the majority of the governing board, however,
would be considered an insubstantial transfer of control, subject to “modified [Form 316] short form” consent
Here, apart from the two “short form” FCC Form 316 applications VSC filed in 2010 and 2011, see
note 16, supra,
VSC filed timely Ownership Reports (File Nos. BOA-20040401ATM; BOA-20060321ADA; BOA-
20080303ACM; BOA-20100302AAQ; and BOA-20120326AEX), each of which reported relevant Board changes.
62 See, e.g., Creation of a Low Power Radio Service,
Third Report and Order and Second Further Notice of Proposed
Rulemaking, 22 FCC Rcd 21912, 21921 (2007) (“We will apply the Non-Stock Transfer NOI
to appropriate LPFM
licensees, and thus, will interpret a sudden change of a governing board's majority as an insubstantial transfer for
which approval must be sought on an FCC Form 316 (“short form”) broadcast application.”)
63 See, e.g., Texas Educational Broadcasting Co-operative,
Memorandum Opinion and Order and Notice of
Apparent Liability, 22 FCC Rcd 13038 (MB 2007) (rejecting allegation of unauthorized transfer of control of non-
profit board of directors that experienced incremental changes due to two-year terms of directors).
a certain faction or outside party to take control of the corporation,”64 and that Vanderbilt University, as
the sole member of VSC throughout the period in question, has provided consistency in basic core
ownership structure and governance mechanisms.65 In light of these showings, there is no basis for
finding a violation of Section 310(d) due to the changes in the composition of the VSC Board between
August 27, 2004, and March 26, 2012.
Sale of Program Time. Next, Friends alleges that the MPA and the APA, read together, violate
Section 73.503(c) of the Rules, which prohibits radio stations from selling program time for a profit.66
Friends claims that the Deposits act like a purchase of airtime (e
, VSC keeps the interest on the
Deposits and, in the event of breach, may keep the Deposits), and VSC keeps the interest on the
Deposits.67 VSC counters that the Deposits compensated VSC for the waiting period before
consummation.68 In USF
the contract was, on its face, contrary to the Rules because parties exchanged a
direct, regular, monthly payment (plus reimbursement of operating expenses) in exchange for
broadcasting time. Here, the Deposits are a credit towards the purchase price, do not appear to be related
in any way to the Station’s programming, and lack the built-in profit scheme of the USF
because they are not paid unconditionally. The Friends argument fails to recognize that the MPA and the
APA are separate contractual arrangements with no cross-default provision. For example, if VSC
breached the MPA and refused to allow Nashville to provide programming to the Station, that would not
affect the treatment of the Deposits under the APA. Similarly, the APA provides that VSC is entitled to
keep all of the accrued interest on the Deposits under any scenario, regardless of what may happen with
the MPA. Accordingly, we find that this case is not analogous to the USF
case, where there was a direct
contractual link between programming rights and payments in excess of operating expenses.
Accordingly, we reject this argument.
Transfer of Control in the MPA.
Friends claims that the MPA is a “total relinquishment of
control” by VSC, unapproved by the Commission, in violation of Section 310(d) of the Act, which
prohibits the transfer of control of a station license, and any rights thereunder, without prior Commission
consent.69 Friends claims that, notwithstanding provisions in the MPA that preserve a level of theoretical
control by VSC over the Station, in reality VSC has abdicated control of the Station to Nashville through
64 Renewal Opposition at 10. Friends offers evidence of majority Board changes but does not speak to the issue of
internal control. We also note that VSC Bylaws state that three faculty voting board members shall serve three-year
terms and five student representatives shall serve two-year terms. Petition at Exhibit B, Vanderbilt Student
Communications Bylaws. Given that the majority of the Board is on two-year cycles, the turnover appears more a
result of term expiration than a take-over attempt.
65 Renewal Opposition at 10. See also Seven Locks Broadcasting Co.,
Hearing Designation Order, 94 FCC 2d 899,
902 (1983) (in the licensing context, declining to find evidence of a transfer of control partly because of timely and
accurate ownership report filings, indicating good faith).
66 Renewal Reply at 9. 47 C.F.R. § 73.503(c) provides that an NCE FM station may broadcast programs produced
by (or at the expense of, or furnished by) a third party if the licensee receives no consideration other than the
programming and the costs incidental to the production and broadcast of the programming. In the USF
Consent Decree among the Bureau and the parties found a violation of the rule occurred because a programmer
reimbursed the licensee’s operating expenses and also paid the licensee a fee of several thousand dollars a month to
air its programming. See
27 FCC Rcd at 5677.
67 Renewal Petition at 17.
68 Renewal Opposition at 15-16.
69 Renewal Petition at 18, citing 47 U.S.C. § 310(d). Friends’ transfer of control argument is based entirely
on the terms of the MPA and does not rely on any extrinsic evidence involving the conduct of the parties.
that agreement. In ascertaining whether a transfer or reversion of control has occurred, the Commission
traditionally looks beyond legal title to whether a new entity or individual has obtained the right to
determine the basic operating policies of the station.70 Specifically, the Commission looks to three
essential areas of station operation: programming, personnel, and finances, as well as an independent
operating presence at the station separate from the new entity or individual.71 We find that the MPA
complies with the Commission’s policies for time brokerage agreements in all respects.
With respect to programming, the MPA indicates that, although Nashville will program the
Station 24 hours per day, seven days per week, the programming aired by Nashville is to comply
specifically with VSC’s program standards; Nashville will not change the agreed-upon format without
VSC’s approval; VSC can “easily” resume programming the Station using a digital stream that is being
distributed via the Internet and produced in VSC’s studio facilities at the main studio location;72 and VSC
can preempt or reject any programming if VSC reasonably concludes it is not in the public interest or that
“alternate programming would better address local needs.”73 Any listener complaints or Commission
inquiries regarding programing aired on the Station are to be referred to VSC, although Nashville will
cooperate in preparing a response.74 VSC also retains the right to terminate the MPA immediately upon
written notice if, in the exercise of reasonable good faith, it finds that Nashville is operating the Station in
a manner contrary to the public interest.75
Friends places great weight on Nashville’s termination rights under the MPA. Friends argues that
it is “outlandish” to give Nashville the ability to terminate the MPA if VSC “unreasonably frustrates or
impedes effective management and programming of the Station by [Nashville].”76 We disagree, because
such a termination would not involve a significant financial penalty to VSC.77 A termination by Nashville
under this provision of the MPA would not jeopardize VSC’s rights under the APA, including its rights to
the Deposits. Instead, such a termination would only mean that VSC would remain responsible for
operating the Station as long as it owns the Station, consistent with its obligations as a licensee. In the
context of a $3.35 million sale transaction, Friends has not shown that this outcome represents a financial
penalty that is likely to influence VSC’s decisions as the licensee of the Station prior to closing. In fact,
this provision appears to recognize that VSC’s exercise of its prerogatives as the licensee of the Station
70 See WHDH, Inc.
, Memorandum Opinion and Order, 17 FCC 2d 856 (1969), aff'd sub nom. Greater Boston
Television Corp. v. FCC
, 444 F.2d 841 (D.C. Cir. 1970), cert. denied
, 403 U.S. 923 (1971).
71 See, e.g., Stereo Broadcasters, Inc.
, Decision, 87 FCC 2d 87 (1981), recon. denied
, 50 R.R.2d 1346 (1982).
We reject Friends’ claim that this situation is like the transfer of control in K.I.D.S.-TV6
, as that situation
involved complete relinquishment of licensee’s power, policymaking, and oversight capability. KIDS-TV6
of Apparent Liability, 15 FCC Rcd 20212 (EB 2000), aff’d
, Forfeiture Order 16 FCC Rcd 5495 (EB 2001).
Similarly, we find no merit to the argument that James A. Kay
supports Friends’ position, as almost none of the six
factors cited by the court as the factors it used to find a transfer of control are present here. See James A. Kay,
F.3d 1184, 1188 (D.C. Cir. 2005).
73 Id. See also
MPA Attachment 1: Statement of Station Policies of Licensee.
74 MPA at § 1(a)(a).
at § 3(a).
76 Renewal Petition at 18, citing MPA §3(b).
Instructions for FCC Form 314, Worksheet 3, Page 11, Question D.3(b) (if a time brokerage agreement
imposes an excessive fee or penalty upon a licensee for termination, it may not comply with Commission precedent
and an explanatory exhibit is required to explain why the agreement does not constitute an unauthorized transfer of
while the MPA is in effect could frustrate Nashville’s objectives under the MPA, to the point that
Nashville would want to terminate the MPA and play no role at the Station until closing under the APA.
Accordingly, we disagree that Nashville’s termination rights under the MPA demonstrate a transfer of
In regard to personnel, the MPA states that VSC bears “full responsibility for the hiring, firing
and compensation of the Station employees on [VSC’s] payroll.”79 Friends argues that Nashville “is
authorized to hold itself out” as manager and operator of the Station and enter into contracts “in
connection with its operation of the Station in the ordinary course of business.”80 However, the MPA
limits Nashville’s authority by stating that the contractual relationship is not one of joint venture or
partnership,81 and Carroll states that he periodically consults with and oversees Nashville management.82
Furthermore, VSC maintains the authority “to promulgate basic Station policies regarding personnel” and
“direct the day-to-day activities of [Nashville’s] employees working at the Station to the extent necessary
for the Station to comply with all legal requirements.”83
As for finances, Carroll states that VSC maintains the finances and pays from its own funds
transmitter site rental, utilities, personnel, contract engineering services and legal representation.84
Friends argues that the MPA delegates fundraising, financial recordkeeping and grant application to
Nashville.85 Indeed, the MPA states that Nashville “shall keep financial and accounting records of the
Station’s activities….”86 However, the MPA entitles VSC to conduct inspections; mandates periodic
financial reports; requires all grants to go through VSC review and approval; and fundraising is to be
conducted “in continuing consultation with Licensee.”87 Accordingly, we find that VSC has maintained
control because it reserved ultimate responsibility for the Station’s operation in all significant respects.
Public Interest Obligations.
Section 309(k)(1)(a) of the Act requires the Commission to find that
the licensee operated the station in the public interest.88 Friends argues that we cannot grant the renewal
application because VSC did not meet the required public interest obligations during the portion of the
78 See Paramount Stations Group of Kerrville, Inc
., Memorandum Opinion and Order, 12 FCC Rcd 6135 (1997),
and Appendix, 12 FCC Rcd at 6146 (Commission approves assignment of television station license where an
amendment to the termination clause in the time brokerage agreement gives both parties equal rights to terminate the
agreement, subject to paying specified damages of $1,000,000, representing approximately 3% of the sale price); Rocking M Radio, Inc.,
Letter, 25 FCC Rcd 1322, 1328 (MB 2010) (litigation over actual damages for breach of a
time brokerage agreement does not present the same transfer of control concern as a provision imposing excessive
penalties on a licensee for breach or termination).
79 MPA at §1(c).
82 Carroll Declaration at 1 (“I communicate frequently with the management and staff of Nashville Public
83 MPA at §14.
84 Carroll Declaration at 1.
85 Renewal Petition at 19.
86 MPA at §12.
at §4(a) and (b).
88 47 U.S.C. § 309(k)(1)(a).
license term that Nashville managed the Station and because it is contractually obligated to sell the
Station to Nashville. VSC states that there is no prohibition against renewing the license of a Station that
is under a sales contract because that contract does not change the renewal standards set forth in Section
309(k) of the Act. We agree. In fact, where assignment and renewal applications are both pending for a
station, the Commission generally will not act on the assignment application until it has granted the
renewal application, and the Commission has granted contested renewal and assignment applications
where petitioner has failed to establish a prima facie
case for premature and unauthorized transfer of
control.89 Accordingly, this allegation is meritless.
Conclusion Regarding License Renewal Application. We have examined the Renewal Petition
and find that it does not raise a substantial and material question of fact calling for further inquiry or
otherwise persuade us that to grant the Renewal Application would contravene the public interest,
convenience, and necessity. Accordingly, we deny the Renewal Petition. Moreover, we have evaluated
the Renewal Application pursuant to Section 309(k) of the Act, and we find that the Station has served the
public interest, convenience, and necessity during the subject license term; there have been no serious
violations of the Act or the Rules; and there have been no other violations which, taken together,
constitute a pattern of abuse. We therefore will grant the Renewal Application below.
Assignment Objection. On August 8, 2012, VSC filed the
Assignment Application. In the Assignment Objection, styled as a Petition to Deny, Friends asks that the
Commission delay action on the assignment until it addresses issues raised in the Renewal Petition,
namely: (1) that the MPA violated Section 73.503 of the Rules in light of the USF
holding; (2) the Board,
due to major sudden changes, some unreported to the Commission, lacked authority to enter into this sale
agreement; (3) State law required a ratification of the sale by the sole member of the entity, and this was
not done; and (4) Nashville violated Commission Rules by entering into the MPA under which Nashville
assumed full control of the station.90
Assignment Oppositions: Nashville. Nashville claims that the Assignment Objection does not
meet the requirements of Section 309(d) of the Act because it merely incorporates Friends’ arguments as
set forth in its Renewal Petition and is unsupported by affidavits of personal knowledge;91 it claims that
Friends has raised in the Assignment Objection no allegations either that VSC lacks the qualifications to
assign the station or that Nashville is not qualified to hold the Station license. Accordingly, Nashville
states that the Commission should dismiss the Assignment Objection, deny the Renewal Petition, and
grant the Renewal and Assignment applications. Substantively, Nashville argues that the Deposits are
“customary and appropriate consideration for the purchase of the station,”92 a usual “down payment”
found in “virtually all” broadcast station sales and reflect the time value of money.93 It also states that the
MPA was “very carefully crafted” to comply with Commission requirements, particularly licensee control
requirements, and Friends has made no allegations that the parties have violated the terms of the MPA,
arguing instead that the execution of the MPA is a “per se” unauthorized transfer of control.94
89 WVKO(AM), Columbus, Ohio
, Letter, 28 FCC Rcd 126 (MB 2013).
90 Assignment Objection at 1-2.
91 Nashville Assignment Objection Opposition at 1-2.
at 4 (emphasis in original).
As evidence of this, Nashville argues, there is no refund or credit flowing back to it in the event of a
termination, and the contractual provisions reserve control of basic operating policies (personnel, programming and
finances) for VSC. Id.
Additionally, Nashville claims that there is no prohibition against renewing the license of a Station that is
under a sales contract because the pendency of a sale does not change the renewal standards set forth in
Section 309(k) of the Act.95
VSC. VSC alleges that Friends does not have standing to file the Assignment Objection because
it fails to provide any evidence that it is a party in interest, and does not include an affidavit of a person or
persons with personal knowledge of the facts and allegations in the Assignment Objection.96 VSC claims
that the Assignment Objection is deficient because, while referencing its arguments, it fails to attach,
repeat, or incorporate by reference the arguments it made in the Renewal Petition. VSC attaches and
incorporates by reference its Opposition to Renewal Petition.97
VSC again argues that the Commission should decline to consider the alleged ultra vires
deference to local authorities.98 As for Board turnover, VSC argues that there is a great deal of ambiguity
about what constitutes a transfer of control for a non-profit entity in cases where the turnover is gradual
and in the ordinary course of business.99 Here, according to VSC, the Board turnover it was “quiet and
regular” as well as gradual,100 did not involve a dispute, coup, merger or acquisition, and did not represent
a fundamental change of course for the entity.101
Pursuant to Section 309(e) of the Act, informal objections must provide properly
supported allegations of fact that, if true, would establish a substantial and material question of fact that
grant of the application would be prima facie
inconsistent with the public interest, convenience, and
necessity.102 The Assignment Objection does not carry that burden.
As an initial matter, we note that the Assignment Objection does not meet the
requirements of 309(d) of the Act103 because Friends did not provide an affidavit or declaration
96 VSC Assignment Objection Opposition at 1-2.
at 4 citing Blue Lake,
20 FCC Rcd 12066. VSC claims that Friends’ reliance on Blue Lake
because the question of VSC’s corporate existence is not at issue here. In the interest of maintaining orderly
pleading procedures, arguments raised in an opposition must respond to the petition. See Susan S. Mulkey Koontz
Communications Limited Partnership,
Memorandum Opinion and Order, 4 FCC Rcd 5520, 5522 (1989) (finding it
“inappropriate to raise new issues in an opposition to an application for review.”); Amendment of Section 73.202(B),
Table of Allotments, FM Broadcast Stations,
Memorandum Opinion and Order, 6 FCC Rcd 4579, n.1 (MB 1001)
(declining to consider new arguments raised in an opposition). Here, this argument responds to the Renewal Reply,
not the Assignment Objection. Accordingly, we will not consider VSC’s rebuttal argument.
99 VSC Assignment Objection Opposition at 5.
distinguishing Black Television Workshop
, 6 FCC Rcd 6525 (1991), cited by the Renewal Reply. This
argument also responds to an argument not raised in the Assignment Objection, see
note 98. For the reasons stated
therein, we will not consider it.
102 See, e.g., WWOR-TV, Inc
., Memorandum Opinion and Order, 6 FCC Rcd 193, 197 n. 10 (1990), aff'd sub nom.
Garden State Broadcasting L.P. v. FCC
, 996 F.2d 386 (D.C. Cir. 1993), rehearing denied
(Sep. 10, 1993); Area
Christian Television, Inc
., Memorandum Opinion and Order, 60 RR 2d 862, 864 (1986) (informal objections must
contain adequate and specific factual allegations sufficient to warrant the relief requested).
103 47 U.S.C. § 309(d).
establishing its qualifications to file a Petition to Deny and only briefly touched on the many allegations
in the Renewal Petition, noting only that it provided evidence in the renewal proceeding. Therefore,
Friends has not established that it has standing to file the Assignment Objection. We will, however, treat
it as an informal objection under Section 73.3587 of the Rules.104
In the Assignment Objection, Friends claims that the objections and
arguments it made in the Renewal Petition prove that an assignment would not be in the public interest.
Considering all the evidence before us, as discussed above, Friends has raised no substantial and material
question of fact that merits further inquiry regarding the Assignment Application. Further, we have
examined the Assignment Application and find VSC qualified to assign, and Nashville qualified to hold,
the Station license. Accordingly, we find that grant of the Assignment Application is in the public
. Accordingly, IT IS ORDERED, that the July 2, 2012, Petition to Deny and
September 12, 2012, Informal Objection filed by WRVU Friends & Family ARE DENIED.
IT IS FURTHER ORDERED, that Vanderbilt Student Communications, Inc.’s application (File
No. BRED-20120326AEY) for renewal of its license for Station WFCL(FM), Nashville, Tennessee, IS
IT IS FURTHER ORDERED, that the application (File No. BALED-20120808ABQ) for
assignment of the WFCL(FM) license to Nashville Public Radio, IS GRANTED.
Peter H. Doyle
Chief, Audio Division
cc: Mark J. Hetherington, Board Chair, Vanderbilt Student Communications, Inc.
Rob Gordon, President and General Manager, Nashville Public Radio