A small business often makes changes in ownership to family members and sometimes employees. If you are a broadcaster, however, you must first get FCC approval if there is a transfer of control. The FCC will look at the “totality of the circumstances to see if a transfer has taken place, looking in particular at the station’s programming, personnel, and finances.
A station in Oregon, which was recently fined $16,000 by the FCC, is a case in point. In this case, the FCC found two unauthorized transfers of control.
First, the station had a purchase agreement with an employee in which the employee would receive an interest in its LLC for providing various administrative services as “sweat equity.” The FCC looked at whether the employee performed the required tasks and also the Article of Organization filed with the state. The FCC found that there had been a change in control without approval.
Second, the FCC focused on the sisters of the owners holding themselves out to the public as co-owners of the station. They held themselves out as co-owners on social media posts and said they changed the station’s programming format. The FCC noted:
“The Commission has opined that “regardless of what interest an entity or individual holds in a licensee, it may nonetheless be found to have exerted actual control of a station.”
Here, the FCC found that the public statements amounted to a de facto transfer of control.
Thus, stations that are family-owned should be careful about informal arrangements that may constitute a de facto change in ownership under the FCC’s rules.
You can access the FCC’s decision here.