The FCC closed its investigation of a management agreement between the University of San Francisco and the Los Angeles–based Classical Public Radio Network June 7 after each of the parties agreed to pay the federal government $25,000 as part of a consent decree.
The commission found that the university and the music network violated FCC rules when CPRN made monthly payments to USF for airing CPRN programming on its FM station, KUSF. The arrangement, part of a complex transaction to maintain a full-time classical music station in San Francisco, allowed CPRN to program the channel after negotiating a deal to purchase it for $3.75 million in January 2011.
Conclusion of the investigation clears the way for the license transfer to proceed.
The commission said the parties had not intentionally misrepresented details of their interim agreement, which dictated monthly payments from CPRN to USF while they awaited FCC approval of the license transfer. Such arrangements are common in transactions in transfers of noncommercial educational (NCE) stations.
CPRN is a subsidiary of KUSC, the L.A. classical station owned by the University of Southern California. It began operating KUSF in January 2011 and paid USF $5,000 a month for the first 120 days of the agreement. The amounts then increased to $7,000 per month. Payments ended in June 2011, when the FCC sent a letter to USF and CPRN asking for details about the arrangement.
The FCC’s investigation determined that the payments violated a commission rule preventing noncommercial stations from receiving financial consideration for airing programming. Consideration must not exceed “the furnishing of the program and the costs incidental to its production and broadcast,” according to the rule.
In a letter accompanying the consent decree, FCC Media Bureau Chief William Lake recognized that the practice was not uncommon. “. . . [W]e acknowledge that they were following a practice that developed in past NCE radio transactions, in apparent violation of the rule, without our knowledge,” he wrote.
But he continued, “I hope that our Consent Decree in this case will remind NCE licensees that they cannot monetize their licenses by selling program time for a profit.”
“This was something that had been on their minds for a while, and this became their opportunity to look deeper into it,” says Brenda Barnes, president of KUSC, regarding the FCC’s decision.
The commission’s handling of the matter could affect other management agreements elsewhere in the country. Even after this decision, the FCC’s rules remain unclear, says communications attorney Ernie Sanchez. “The big concern I have is that these consent decrees become a substitute for articulated reasons and detailed legal decisions that cite precedent,” Sanchez says. “. . . It gives no guidance about how to do things better in the future.”