Signage publicizes scrutiny over KUSF deal (Photo: J. Waits)
A local marketing agreement (LMA) is when a station owner permits another broadcaster to rent the station, taking over the programming and advertising for a fee. However, the station owner retains all rights and liabilities for the station, including the license. LMAs have often been used to let a large owner, like Clear Channel, operate another station in a market without violating local ownership limits, since the license remains in the hands of another entity.
LMAs are a little less common in the non-commercial world, in part because ownership limits rarely come into play, given that the non-commercial band makes up only a fifth of the dial. However, David Oxenford at the Broadcast Lab Blog seems to think that the FCC may address the issue at its April open meeting.
The agenda item is actually “Noncommercial Educational Station Fundraising for Third-Party Non-Profit Organizations.” With few exceptions, non-commercial broadcasters are only permitted to do on-air fundraising for themselves. Even though another non-profit may be different from a for-profit corporation to the IRS, to the FCC they are the same. So, a non-comm station that fundraises for another group is essentially violating the ban on advertising.
So it makes sense to assume this item will primarily deal with instances where the FCC issued waivers to stations allowing them to run on-air fundraisers for disaster relief efforts in situations like last year’s Japanese tsunami or the earthquake in Haiti. And while Oxenford agrees those kind of situations will be addressed, he also notes that the third-party fundraising issues can get complex when there is an LMA involved.
He doesn’t expand much more on the issue, but does point to the FCC’s letter of inquiry regarding the planned sale of University of San Francisco-owned KUSF to the Classical Public Radio Network (CPRN), and the LMA-like “Public Service Operating Agreement” to have CPRN programming air on KUSF prior to the sale being approved and finalized. Amongst several aspects of the agreement and sale, the FCC asked the applicants to “address specifically how the PSOA does not violate the prohibition on third-party fundraising, given that the PSOA permits CPRN to be the Station’s sole programmer and to retain all donations, underwriting receipts, and other Station support during the PSOA term.”
The Commission has issued no decision regarding its inquiry or approval of the KUSF sale. However, in light of the FCC’s questions CPRN appears to be playing it safe when it comes to raising funds on KUSF. In February CPRN’s Managing Director Brenda Barnes told Radio Survivor’s Jennifer Waits that they were “fundraising only on KDFC and the webstream, not on the stations we do not yet own (KUSF and the Los Gatos translator).”
There’s proposed rulemaking in the works, so we’ll find out later this month what the Commission has in mind, and whether it intends to clarify rules governing on-air fundraising by an entity renting out a non-commerical station. Nevertheless, I do think it’s likely the FCC will be unveiling proposals to clarify and simplify the process for non-commms to fundraise for more exceptional circumstances, like disaster relief.
