Assignment of License / Transfer of Control

Whenever there is a significant change in who is controlling a broadcast station, FCC approval is required.  Such changes fall into two different categories:

  • An assignment of license is used when the station is changing to a different nonprofit organization.
  • transfer of control is used when the station is remaining in the same nonprofit organization but the parties to the station (board members) have been changed by at least 50% from the last time the FCC has been notified of the board member makeup of the organization.

Assignment of license

Assignment applications can be filed:

  • During the original 3-year construction period after the construction permit has been granted for at least 18 months.  This way, if an organization is unable to build the station, they can "assign" the station to another qualified nonprofit organization who will have the remainder of the 3-year term to construct and license the station.
  • Once the station is fully licensed, at any time, however the small number of LPFM stations that used their points during the filing window to cause a competing application to be dismissed are subject to the "4 year rule" restrictions outlined below.

Information required for an assignment

Assignment applications must be filed prior to the transaction to sell/give the station to the other organization and that sale/donation of the station must be first approved by the FCC.  The following information is required for an assignment application:

  • The legal name of the new corporation (the assignee). 
  • The contact information of the assignee such as mailing address, phone number, e-mail address, contact representatives, etc. 
  • Information regarding the board members including name, residential address, title and percentage of the votes.  (For nonprofit organizations, the individual board members have no assets. The assets belong to the nonprofit).
  • Certification that the board members meet all of the basic requirements such as adverse actions, character issues, alien ownership rules and not being denied benefits under the US Anti Drug Act.
  • An educational statement describing the new organization, their educational purpose and how the radio station will be used to further that educational purpose.  (The FCC has been cracking down on educational statements lately.  While all programming does not have to be educational in nature, the new organization needs to describe how the radio station will educate the community.  Using words like "teach" and "instruct" in the statement can go a long way).
  • A statement that the new organization meets the requirements for being an FCC licensee under §73.853 and §73.860 of the rules.  This includes that either the headquarters of the assignee is within 20/10 miles of the transmitting antnenna or that 75% of the board members are located within 20/10 miles of the transmitting antenna.  (10 miles for Neilsen Audio Top 50 markets, 20 for all other areas)  Also, that the station meets all of the ownership caps of LPFM stations (does not own any other broadcast facility).
  • A statement that the applciation complies with §73.865 stating that it was not subject to points in the 2013 window, and if it was subject to points in the 2013 window and it has not been 4 years since the station was first licensed (exclusive of silent periods), that the new organization meets the same or more points (and in some cases, meets the local presence date requirements), or a statement that the station has been licensed fo more than 4 years.  For a list of stations subject to the "4 Year Rule", see the REC Pledge List.
  • State documentation demonstrating the nonprofit status such as articles of incorporation.

Starting on November 18, 2020, these applications will be filed through LMS using the option Assignment of Authorization non-pro forma.  The application will include the electronic signatures of the assignor (the current organization) and the assignee (the new organization).

Asset Purchase Agreements/maximum sales price

In cases where monetary or non-monetary consideration is made for an LPFM station, an asset purchase agreement (APA) or other description of the terms of the sale must be made.  Asset purchase agreements are considered contracts and are drafted by attorneys (REC does not handle the preparation of an APA, but we will file an APA that was already drafted and signed).  With the new rules that went into effect on October 30, 2020, sale prices are no longer limited to just the depreciated value of the equipment.  The maximum sale price is limited to the capital costs of constructing the station including the costs to build the studio (if it is included in the deal), the costs of constructing the tower (if that is included in the deal) and the amount paid for the station equipment (transmitter, antenna, studio gear, etc.).  Recurring charges such as electricity, rent, leases, music licensing, employee wages and benefits, etc. cannot be included.  In addition, any "voluntary donation" up and above the capital costs may not be factored in.  The APA/details should include an itemized schedule of how the value of the sale was calculated (list each item, including make and model numbers using the amount actually paid, not the vendor's list price... in other words, if you got a discount on the equipment, you must pass that discount on to the assignee).

Donations of stations to other organizations where no consideration is involved does not require an APA or sale details, but an attachment must clearly state that the station is being assigned for no consideration.

Public Notice requirement

When an application is filed to assign an LPFM license, an over-the-air public notice must be made.  If the station is silent, then the notice can be placed on the station's website.

The verbage for a public notice related to assignments would need to be recorded like this:

"On [DATE THE RENEWAL APPLICATION WAS FILED IN LMS], [NAME OF LICENSEE ORGANIZATION], licensee of [CALL LETTERS][STATION FREQUENCY][COMMUNITY OF LICENSE][STATE], filed an application with the Federal Communications Commission an assignment of license. Members of the public wishing to view this application or obtain information on how to file comments and petitions can visit www.fcc.gov/stationsearch and search in the list of [CALL LETTERS]'s filed applications."

After an assignment application is filed

Once the assignment application is filed in LMS, there will be a minimum 30 day delay.  This is to allow for public comments.  After the 30 days has lapsed and no informal objections or petitions to deny were received, the FCC will review the application to assure that it is compliant with the rules and then will grant the application.  The average turnaround time is about 45 days, longer if the FCC staff has any questions.

Once the application is granted, the transaction can take place.  The new organization will need to get their own FCC Registration Number (FRN) as they can't use the current one as that belongs to the assignor's organization.  Once the transaction is completed, a Consummation Notice must be filed with the FCC.  We will discuss that in a bit.

Transfer of Control

A Transfer of Control is filed whenever there is at least a 50% change in board membership since the original application or since the last time an assignment of license or transfer control application has been filed with the FCC.  This board member change can be sudden or gradual over time (40% before, 20% now, etc.).  

Effecitve October 19, 2020, Transfer of Control applications will be filed in LMS.  Make sure you use the option Transfer Control pro forma

The Transfer of Control application must include:

  • Any changes to contact information such as mailing address, phone number, e-mail address, contact representatives, etc. 
  • Information regarding the all of the board members including name, residential address, title and percentage of the votes.  (For nonprofit organizations, the individual board members have no assets. The assets belong to the nonprofit).  Transfer of Control applications must indicate the new board members, the outgoing board members and the board members remaining in the transaction.  "Before and after" voting percentages must also be entered on the form.
  • Certification that the board members meet all of the basic requirements such as adverse actions, character issues, alien ownership rules and not being denied benefits under the US Anti Drug Act.
  • A statement that the new board makeup meets the requirements for being an FCC licensee under §73.853 and §73.860 of the rules.  This includes that either the headquarters of the assignee is within 20/10 miles of the transmitting antnenna or that 75% of the board members are located within 20/10 miles of the transmitting antenna.  (10 miles for Neilsen Audio Top 50 markets, 20 for all other areas)  Also, that the station meets all of the ownership caps of LPFM stations (does not own any other broadcast facility).

The Transfer of Control application is electronically signed by both a representative of the old board and the new board (can be the same person if that person is remaining on the board after the board change takes place).

Public notice of pro forma Transfer of Control applications is not required.

In a Transfer of Control, the FRN remains the same.

Normally, Transfer of Control applications must be filed and be granted prior to the board change taking place, however, under the new rules, if a triggering board member change was made before filing, then the pro forma Transfer of Control application must be made within 30 days of the board member change. 

Transfer of Control applications normally take up to 14 days to process.

Once granted, the transfer can take place (if it has not been already).  Once the transfer takes place, a Consummation Notice must be filed with the FCC.

Consummation Notice

Once the assignment or transfer application has been granted by the FCC and the resulting transaction (sale or donation of the station or board member change) has taken place, the Consummation Notice needs to be filed with the FCC.  The Consummation Notice notifies the FCC that the transaction has taken place and the new entity/board has control of the sation.  The Consummation Notice is electronically signed by a representative of the assignor's organization or in a transfer of control, a representative of the old board of directors. 

Consummation Notices need to be filed within 30 days of the grant of the Assignment or Transfer of Control application.  If more time is necessary, a notice can be filed to extend consummation. 

If, after the grant of an assignment or transfer, the deal falls through and the station remains with the original organization/people, then a Consummation Notice is still filed with the indication that the assignor/transferor "did not consummate".

Consummation Notices for assignment of license will have a place to ener the FRN for the assignee's organization. 

Traditionally, Consummation Notices were filed in CDBS.  With the conversion to LMS, we believe this will be moved to that system.  The FCC has not yet provided information on how to file a Consummation Notice in LMS.

REC services for Assignments and Transfers

REC will provide filing assistance for Assignment and Transfer applications.  The client will be responsible for providing their own Asset Purchase Agreement or details of the sale including the schedule of costs.  Clients are responsible for obtaining a new FRN and preparing their organization's educational statement (we can help make improvements, but you know your organization best).  On assignment applications, we need to work with both the assignor and proposed assignee.  We only bill one of the two parties. 

For more information, please contact REC Networks at 1-844-REC-LPFM.