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FCC Supersedes Local Court in License Dispute

Reiterates that a station license is a ‘valuable privilege’ that does not confer a property right

A ruling this week from the FCC reinforces a key business reality that most broadcast owners already understand: A station license, unlike its physical assets, is not subject to a mortgage, lien or similar “property right.”

The commission — which says it usually accommodates decisions of state courts — has ruled that a court in Puerto Rico exceeded its authority in ordering a broadcaster to turn over the license of WEGA(AM) in Vega Baja to help satisfy a financial judgment. The FCC had been asked to OK the involuntary assignment to Carmelo Santiago Roman, owner of VI/MAN Broadcasting System Corp., after the local court ordered station owner A Radio Co. to turn over cash, the license and other property to a court-appointed “bailee” pending a final court order in their financial dispute.

Both sides then presented arguments to the FCC explaining their legal views about the license transfer.

Peter Doyle, FCC Chief of the Media Bureau’s Audio Division, notes in the decision that the FCC’s “long-standing policy is to accommodate the actions of state courts, thereby avoiding conflicts between state and federal authority, unless a public interest determination under the Act would compel a different result … The commission thus defers to judicial determinations in many areas,” including bankruptcy and contractual disputes.

However, Doyle continued, the FCC “retains exclusive authority to license broadcast stations,and when a state court’s decision is contrary to commission policy, the commission is neither bound by the state court order nor need take action to allow the order to be carried out.”

It is well established, the FCC wrote, that a broadcast license does not confer a property right but rather is “a valuable privilege to utilize the airwaves.” Doyle reiterated an FCC finding dating to the 1960s: “The extraordinary notion that a station license issued by this commission is a mortgageable chattel in the ordinary commercial sense is untenable.”

A license, unlike a station’s physical assets, is not subject to a mortgage, security interest, attachment or similar property right, he said. What’s more, licenses are subject to the FCC’s consent before any transfer.

Thus, Doyle now has ruled, the decision of the court in Puerto Rico to “attach” the license of WEGA is invalid from the outset. (He added that the application also had been submitted on an incorrect form.)

It’s unclear where this will leave the court process and financial dispute. At last word, the FCC said, the court had granted a stay in its own proceedings.