A Sad Situation detailed

First I will not reveal call letters and names as this was told to me in confidence many years back when it happened. Here are the details:

Talk radio was becoming a big deal. An AM in excellent ground conductivity was more or less a smaller regional station covering a few counties. The owner was up in years and had seen his AM lose to FM music formats. When a fellow known to the owner offered to lease the station, the old man figured it was a good deal, giving him time to enjoy his twilight years. For ease, we call this station KAAA.

There was an FM in town that had been acquired by a Christian ministry and they acquired two more FM stations in nearby counties. They were operating as a non-profit and were doing well as the only source of Christian programming. They simulcast on all 3 FMs. For ease we will call these stations KBBB, KCCC, KDDD.

Back to the AM station, KAAA. The fellow that leased the AM, KAAA converted the station to a talk format. It seems the lease had a clause where the man leasing the station would have the first option to buy the AM, KAAA if it was to be sold.

The owner of the AM station, KAAA became ill and died a few years into the lease. Naturally the station was in limbo as everything was settled and the owner’s son got the station. In fact the guy leasing the station had hoped to eventually buy it.

The teller of the story said the son knew, as it was in the contract, that the fellow leasing the station, KAAA had the first right of refusal to purchase the AM station. Maybe that wasn’t in the contract. I never saw it. Maybe the guy leasing the AM, KAAA couldn’t come up with the cash. All of that is speculation on my part.

As the story goes, the Christian ministry approached the son about buying the AM station, KAAA…really trading for the AM, KAAA plus the son would pay them some cash from the Dad‘s life insurance. The son got all 3 Fms (KBBB, KCCC, KDDD) and the Christian ministry got the AM, KAAA. The son got with a broker that shopped them around and found buyers. In short, it took the son out of radio as he had no interest in being in the business.

As told to me, the ministry was having trouble with the obligations of three class As and could use a little extra cash and lowered operating costs. They could see an infusion of some cash and lower monthly operating expenses a bit while letting the son get something off the trade by selling the three FMs.

For the guy leasing the AM station, KAAA, he figured things might not work out nicely, so he went to the county seat up the road and bought the struggling AM daytimer there. For ease, we call this station KEEE. He had engineering work done and discovered they could go directional and cover much of the area the AM station, KAAA, covered. He immediately filed for the CP. This was right when the owner of KAAA had died. KEEE had been bleeding money a few years with a satellite delivered nostalgia format, so the guy leasing KAAA and buying KEEE took KEEE dark awaiting the approval of the CP to upgrade.

The deal with the Christian ministry happened rather quickly and quite frankly happened a little faster than he could get his construction permit approved. If you’ll recall, getting a CP about 25 or more years back was a long drawn out process especially when it was a directional AM.

The fellow had worked hard and smart, building the leased station up to about $45,000 a month in billing. He had bought the AM station, KEEE in the next county for a small down and several years of monthly payments. In fact he got the price down low because he wasn’t going to need the tower site once he got approved with that construction permit.

So here’s the guy with years building $45,000 in monthly billing, his livelihood, on an AM station, KAAA that had been sold to that Christian ministry. He feels he has been damaged by breech of contract but going to court was just not financially feasible. The ministry wanted the AM station, KAAA immediately once the sale went through. They kicked him off.

Why he couldn’t wrangle the lease to include those 3 FMs (KBBB, KCCC, KDDD) is an unanswered question for me, but it seems the arrangement was the Christian ministry would be heard on all 3 FMs (KBBB, KCCC, KDDD) and the AM (KAAA) for a few transitional months. That kept the FMs on air so they could be marketed by a broker.

The guy that leased the AM (KAAA) was now out in the cold, no frequency to put his programming on and at risk in loosing all the business he labored to get. The FCC even told him the CP for KEEE was fine and would get approved…maybe 2 to 4 weeks. He had to do something today or go under.

Simply put, if the owner had allowed him the use of the KEEE AM daytimer’s tower site, the coverage was only a small portion of the area where his original listeners were on the bigger AM, KAAA. And the owner really wasn’t interested in leasing. He really wanted an outright purchase of the site and told him to get a loan to buy it. It was good farmland.

He unwisely got a friend, a tower guy, to start on the towers. They were short sticks, under 200 feet. Doing all he could on the sly, he got the AM, KEEE going before the CP was approved. I was shocked. This guy didn’t seem the type. As he put it, it was either going to live under a bridge or hope he didn’t get caught. But he did get caught.

The FCC rejected the CP for KEEE. As he put it, the FCC did it because he acted before the CP was issued, not because it was flawed. Those were his words. The original tower site was the only authorized site. I have to ask why not just put KEEE back on at the original site to save what he could. I admit, in being told about this, that question came in hindsight.

The end result was the guy defaulted. The AM station, KEEE, he was buying went back to the owner and the guy telling the story found a gig elsewhere, walking away from all his obligations pretty much penniless. He lived in a travel trailer a few years before he was back on his feet. I understand KEEE went back on under the original owner. No word on what happened there. It was a 1kw. daytimer.

The question is if the story is actually correct as told, was there a solution with a positive result? If you as a broadcaster found yourself in the same situation, what would you do? While I respect the FCC as the entity that can say if I can work in the business I love, I found myself analyzing the risk. Sure, willingly breaking FCC Rules is not my choice but given the guy’s situation, I can understand how he figured it a fairly low risk since the fellow was told he’d have a CP in a few weeks and that technically it was fine. He felt trying to save that billing and risking things a few weeks was his best option. As he put it, taking all the parties to court would have taken the funds he needed and would not have saved his billing as all the court action would be too slow to save his business. As he put it, the money would have gone to lawyers rather than the station.

As I have not had such dealings I am wondering if the situation could have been resolved in the guy’s favor by either a court or temporary okay from the FCC. Maybe there are such options, I don’t know. I suppose I would have tried to get the FCC to allow me to build after explaining the situation. The FCC, at least now, seems to be quite understanding and willing to work with you when the unexpected happens.

Should the guy never be allowed to own a station or work in the radio industry because of his actions or do you think it should be forgiven?

As a disclaimer: the story is related as told to me. While the story as explained is accurate in details, the parties are fictional. Call letters are fictional. They have nothing to do with any station existing or that existed with those call letters if such stations exist.

Assuming the story is correct, IMHO the operator should have known the FCC's rules. You just do not go out make major changes in a facility with out an approved STA or CP. The lifetime ban is a bit harsh, and a good lawyer might be of some help. Assuming a 10 or 15 % net profit he should have some money in the bank for a rainy day.

I don't know all the specifics but I think a fatal mistake he made was to say he did not want the original tower site (KEEE). He did say when the CP had not been approved he went back to the guy and tried to lease the old tower site but the owner said it was only for sale, not for lease. Naturally he should not have acted without a CP in hand but I came away with the feeling the guy might have been short on cash by then and felt his work would have gone south on him without acting.

I haven't talked to the guy in years but I'm told he went in to business with a relative who holds the licenses on a couple of stations that he LMAs. So, essentially he recovered but his name is not on a license with the FCC. Although I have this information from a source I feel is reliable I can't say for sure this is accurate.

No one says he can't work at a station anymore. It's not like jocks are licensed. But holding a license should be out of the question.

With hindsight, his mistake was not suing the owner of KAAA, presuming he had a right of first refusal clause. Best case, he gets an restraining order against KAAA's owner preventing the sale, at least temporarily, worst case he gets monetary damages which allow him more time to wait on KEEE's upgrade.

Apologies for being late to the party here, but in reading the narrative, I think there are probably some missing critical details. I've never heard of the FCC slamming the door on an application, either because of incorrect design or jumping the gun on construction. The fact is you can buy and build whatever you want, it's your money. Where the Commission draws the line is when you try to operate it without approval. Would the Commission issued a NAL for operating a station without authorization? You bet! Would there be fines for each occurrence involved? Possibly. I've never heard the the FCC actually banning or refusing to move forward with an application for a legitimate CP.

Anything is possible I suppose, I've just not heard of the FCC regulating whether you choose to purchase a transmitter, antenna, whatever, as long as the equipment is type accepted and meets the CP requirements, if issued.

In fact while at meetings at the FCC regarding a competing TV application, it was common knowledge that we had already ordered a new directional UHF antenna because of the timing. At the time (in the late 90's) the Commission members in attendance said they didn't recommend purchasing antennas, but we spend money the way we wanted. In the end our application was accepted, and since the antenna was already on the tower and oriented correctly, we fired everything up, did our RF proof, NIER measurements, and filed a Form 302 the same week as the CP was issued. The Commission didn't question anything. Now had we been caught operating before the CP issuance, then it would be a different story. Remember too, the FCC of the 50's/60's and 21st Century, are completely different animals.

The sticking point, it seems was the guy filed the construction permit application and was forced from the original station before the construction permit was approved. Since he was told the application was fine and would get approved in a couple of weeks or so, the guy began broadcasting from the site designated in the construction permit application and was caught. Thus, he was broadcasting from an unauthorized site. He said the FCC really got upset when they learned the facility had been built out before FCC approval. I'm sure I was not told all the facts and this was years ago so I might have forgotten some.

When the owner of the station I work for applied for the frequency and before he got the construction permit, he bought the acreage figuring it a good investment regardless and set about clearing the land. The engineer on the project was really worried the FCC would figure out improvements had been made and not issue the CP. I thought that was rather paranoid. Now if he build a tower or two, maybe there could be some concern. Then again this was in the pre-auction days...the mid to late 1980s.

Around 1990, our owner at the time was seeking an upgrade for the company's flagship FM, from 6kw to 50kw, involving a new tower at a new site. Since it would be built on land owned by his mother-in-law, he went ahead and had the transmitter building put up, figuring if the CP wasn't granted, the building could be used for another purpose. But he was very careful no broadcasting equipment was installed until he had the CP in hand.