FCC Eases Way for Station Sales

Lawyers repel bid to make buyers liable for prior owners' transgressions
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The FCC has backed off an effort to make new buyers responsible for the sins of previous station owners.

Communications lawyers balked when the commission tried to modify “tolling agreements,” which allow the agency to approve a license renewal and sale while still investigating a complaint. The commission wanted to make the buyer liable, a prospect that could have killed some transactions.

“If you are a buyer and the FCC says that in order to get the deal done, you have to sign on to potential liability for an indecency violation that starts at $325,000 a pop, the potential liability could be extraordinary, particularly if you were buying a small-market TV station worth $3 million,” said one attorney, who along with others asked not to be identified because they have cases pending before the commission. “Who's going to buy it when there are a couple of $325,000 wild cards out there?”

The bureau backed off within the last couple of weeks, he said, after getting push-back from the communications bar.

“Never before has the commission tried to hold a buyer liable for what the seller did,” said another veteran Washington communications attorney.

He said he believed the move would have been illegal, a violation of the Administrative Procedures Act.

If so, there would have been some irony there, since that was the grounds on which the Second Circuit Court of Appeals called into question the FCC's indecency enforcement of fleeting profanities.

To help clear up the backlog of TV station transfers and license renewals held up by a raft of unresolved indecency fines, including those against CBS stations for Without a Trace and NBC for the singer Bono's “F***ing brilliant” comment, the FCC began to allow stations to sign the agreements, which gives the FCC extra time to look into the complaints in exchange for allowing a station deal to go through.

“The FCC has for the last several years fairly routinely granted tolling agreements, which suspends the statute of limitations generally applicable to indecency so that license renewals can get granted, especially on the TV side, and transactions can be completed,” said one of the attorneys.

'A Big Help'

“Most network affiliates had been tied up with some fine,” said another, “so the tolling agreements were a big help.”

Deals cannot be approved, or licenses renewed, when there is an outstanding complaint, so owners looking to sell their stations have agreed to extend the FCC's statute of limitations on taking some action, giving it another two or three years, depending on the agreement.

According to two attorneys familiar with negotiations over the agreements, the bureau has also been seeking an “indefinite” amount of time in some cases to review the complaints.

An FCC spokesman would not comment specifically about the tolling agreements, saying each one was a separate negotiation.

But an FCC source familiar with the agreements points out that the commission is trying to preserve the ability to pursue the complaints without delaying the transactions, which in some cases might mean seeking an open-ended review timetable.

The commission could use the extra time. With its profanity crackdown in limbo and a lower-court decision being appealed to the Supreme Court, and its fleeting-nudity policy before the judges of yet another court, it is not expected to act on any of the pending complaints until it has some resolution on how to proceed from either the court or the Congress. That likely won't come until sometime next year.

E-mail comments to john.eggerton@reedbusiness.com

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