I just stumbled over Frank Montero’s article regarding the collateralization of FCC licenses (RW Nov. 5, or radioworld.com). I applaud this. I have ranted and railed against the current policy for years until my friends and clients are tired of hearing about it.
It seems that every time the FCC has a chance to do something positive toward (a) moving the industry forward and/or (b) creating true opportunities for minorities, females and entrepreneurs, it goes 180 degrees the wrong way.
This goes all the way back to the 80-90 docket, pioneer preference points, comparative hearings, tax certificates, consolidation of ownership, “unjust enrichment” penalties and, underlying all this, the inability to mortgage licenses.
I’ve been brokering, owning and consulting for nearly 20 years and have worked in the industry since 1966. I’ve seen the total evolution from one perspective or another.
In that time I’ve seen only two small companies get SBA loans. I’ve tried unsuccessfully to create a private, unsecured incubator program for entrepreneurs. Without the ability to collateralize the license it just doesn’t fly. Until this past year I have never experienced a payee having to foreclose on a license. This year alone I have four cases. Unfortunately due to the inability to take a trust deed in the license, my clients have had a horrible time recovering their stations even after obtaining judgments of default and orders to compel the debtor to cooperate in filing a reversionary assignment application. I have one client who had a perfected Stock Pledge and he didn’t want to try to enforce it. Security Agreements are somewhat useful as a blunt instrument. Personal Guaranties are somewhat useful, but the ability to seize the license is the best and strongest security available.
I don’t know why we always cite a bankruptcy as an event of default when it just helps prolong the inevitable and forces the creditor to suffer even greater indignities. If we could simply collateralize the license, bankers would free up capital, and sellers would feel safer in carrying paper. I’ve even offered to guarantee a buyer’s performance provided I had a way of obtaining the license. Until that happens there’s no compelling reason for me to do that. If our goal is to make deals happen and protect the creditors at the same time, it’s truly time for the rules to be changed.
Frank, count me in when you’re ready to start a taskforce.
Brett Miller
MCH Enterprises Inc.
Paso Robles, Calif.
