While the FCC allowed the sale of KUSF(FM), San Francisco, from the University of San Francisco to the University of Southern California’s Classical Public Radio Network, the situation serves as a cautionary tale to other noncoms that air-time payments to NCEs are limited to reimbursement for operating expenses.
Under a consent decree worked out between the stations and the commission, both universities make a voluntary contribution of $50,000 to the U.S. Treasury and the FCC’s investigation ends.
What got the stations into hot water was their language in a presale Public Service Operating Agreement which they submitted to the commission as part of the assignment application.
Under the PSOA, in exchange for making airtime available to CPRN, CPRN reimbursed USF for any expenses incurred in delivering and broadcasting CPRN programming, such as broadband, electric power and phone expenses incurred at the transmitter site, plus regulatory fees and insurance. Additionally, CPRN agreed to pay USF $5,000 per month for the first 120 days the POSA was in effect and $7,000 a month for the rest of the first year.
Documentation provided by USF shows it collected over $38,000 in PSOA fees from CPRN, plus nearly $10,000 in tower cost reimbursement, from January through July, 2011. The PSOA fees ended when the FCC’s Media Bureau sent a Letter of Inquiry about the arrangement to both parties.
The commission says the universities violated the rule barring NCEs from receiving payment for program time “unless they are limited to reimbursement of operating expenses,” according to Media Bureau Chief Bill Lake.
The universities also unintentionally made false certifications that the deal complied with commission rules and policies, according to the FCC.
Yet, the commission acknowledged the universities didn’t try to hide the brokerage arrangement. In fact, “We acknowledge that they were following a practice developed in past NCE radio transactions, in apparent violation of the rule, without our knowledge,” said Lake in a statement about the decision.
Lake hopes the consent decree reminds NCEs “they can’t monetize their licenses by selling program time for profit.” He encouraged NCE licensees or their programmers to ask the commission in advance how the rule might affect a transaction.
As part of the consent decree, the agency cleared the transaction; the $3.75 million deal closed Thursday.