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To Pay or Not to Pay

That was the question but a recent FCC decision clarifies what registration fees nonprofits pay

A decision rescinded by the Federal Communications Commission’s Media Bureau helps clarify when a nonprofit broadcaster does (and does not) need to pay regulatory fees — even if that nonprofit’s translator is rebroadcasting commercial content.

Two North Carolina FM translators licensed by Radio Training Network (RTN) have license to rebroadcast programming of the digital WDCG(HD2) channel of WDCG(FM), which is licensed to Capstar TX. RTN filed a renewal application for the two translators in July 2019 but soon after saw an objection filed by Triangle Broadcasting, which said the translators were operating as commercial stations and that RTN had neglected to pay the associated regulatory fees.

Triangle said in its objection that the two translators are rebroadcasting the programming of a commercial station (the one licensed to Capstar, itself a commercial entity) and that broadcasting commercial programming is inconsistent with RTN’s charitable purpose. This is problematic, Triangle argued, because Capstar may exercise control over the translators and could have an ownership interest in RTN.

[Read: FCC Rejects Call to Let Two Licenses Expire Over Nonprofit Kerfuffle]

As a basis for its argument, Triangle pointed to the nonprofit entity Positive Alternative Radio (PAR), which pays regulatory fees for commercial translators.

This is not the first time Triangle has placed such an argument in front of the FCC. In one of its recent objections to the commission, Triangle claimed that two Georgia translators have been operating ostensibly as commercial stations because they rebroadcast commercial FM stations.

RTN countered Triangle’s objections by saying that it is a qualified, nonprofit, tax-exempt entity under section 501(c)(3) of the Internal Revenue Service Code and is therefore exempt from paying regulatory fees on all of its licensed stations as laid out under FCC Rules.

According to RTN, the exemptions it receives are based on its status as a nonprofit entity. RTN said that as a nonprofit in the state of Georgia, it is fully recognized as a nonprofit entity and is permitted to generate business income as long as it primarily engages in activities that accomplish one or more tax-exempt purposes.

RTN added that its status as a nonprofit entity —  not the commercial nature of the programming it rebroadcasts — serves as the determining factor for assessing regulatory fees.

In its reply, Triangle argued that regardless of its nonprofit exemption, the FCC Rules also require broadcasters to adhere to another section of the rules, which provides that a noncommercial translator will only be used for the advancement of educational programming. The nonprofit exemption cannot be valid, Triangle argued, because RTN’s translator station is rebroadcasting noncommercial programming.

The Audio Division initially determined that even though RTN is a nonprofit entity, the translators are operating as commercial translators and thus RTN should be required to pay regulatory fees. RTN then paid those fees to avoid its application being dismissed but it said again that it should be exempt from paying regulatory fees on all of its licensed station, regardless of the nature of the translators’ programming.

RTN said that the programming and nature of the primary station are irrelevant in determining whether a translator is exempt from regulatory fees. The bureau erred here, RTN said, when it found that the nonprofit exemption applies only to nonprofit or noncommercial activity and argued that the nonprofit exemption applies to a licensed based solely on its status as a nonprofit.

The Media Bureau looked again at this case and in the end, agreed with RTN — the broadcaster is recognized as a nonprofit organization and is exempt from paying regulatory fees for the translators. RTN demonstrated that it meets the nonprofit requirements laid out by the commission, which is all that is required to obtain exemption from regulatory fees, the FCC said.

The commission said that operation of a commercial translator does not affect a broadcaster’s status as a nonprofit entity with either the IRS or the State of Georgia. The commission generally defers to the IRS on whether a licensee is complying with Internal Revenue Code.

The FCC also rejected Triangle’s argument that RTN should pay regulatory fees because another nonprofit, PAR, paid regulatory feels for translator stations rebroadcasting commercial programming. The FCC said PAR’s failure to claim nonprofit exemption is irrelevant in this case. Finally, the commission said that Triangle did not properly explain how Capstar, the commercial station, has any attributable interest in the aforementioned translator.

As a result, the Media Bureau rescinded the first Audio Division decision (in which RTN was charged regulatory fees) and it denied the objection filed by Triangle.