Source: https://www.fcc.gov/document/vanderbilt-student-communications-inc?contrast=highContrast
Timestamp: 2015-05-27 07:16:16
Document Index: 175652339

Matched Legal Cases: ['§ 1', '§ 1', '§ 6', '§ 5', '§ 2', '§ 2', '§ 19', '§ 19', '§ 19', '§ 1', '§ 73', '§ 3', '§309']

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Vanderbilt Student Communications, Inc..
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DA 14-362
In Reply Refer To: 1800B3-MMReleased: March 18, 2014
Donald E. Martin, Esq.Donald E. Martin, P.C.P.O. Box 8433Falls Church, VA 22041
Margaret L. Miller, Esq.Gray Miller Persh LLP1200 New Hampshire Ave., N.W.Suite 800Washington, DC 20036
Michael Couzens, Esq.Law Office of Michael Couzens6536 Telegraph Ave.Suite B-201Oakland, CA 94609
Alan Korn, Esq.Law Office of Alan Korn1840 Woolsey Ave.Berkeley, CA 94703
WFCL(FM), Nashville, TN
Facility ID No. 69816Vanderbilt Student Communications, Inc.File Nos. BRED-20120326AEY
License Renewal Petition to Deny
BALED-20120808ABQ
Assignment of License Informal Objection
We have before us: (1) the above-referenced applications to renew (“Renewal Application”) and assign (“Assignment Application”) the license of Vanderbilt Student Communications, Inc. (“VSC”) fornoncommercial educational (“NCE”) FM Station WFCL(FM), Nashville, Tennessee, (“Station”) to Nashville Public Radio (“Nashville”); (2) a Petition to Deny the Renewal Application (“Renewal Petition”) filed on July 2, 2012, by WRVU Friends & Family (“Friends”); (3) an Informal Objection against the Assignment Application (“Assignment Objection”), filed by Friends on September 12, 2012;and (4) related pleadings.1 For the reasons set forth below, we grant the extension motions, deny the Renewal Petition; deny the Assignment Objection; and grant the Renewal and Assignment Applications.
Background. Agreements. On June 7, 2011, VSC and Nashville signed two documents: a
management and programming agreement (“MPA”) and an asset purchase agreement (“APA”). Under the MPA, Nashville, subject to the supervision and control of VSC, is to produce and acquireprogramming, administer Station activities, provide for “engineering maintenance and support for Station facilities, financial management, accounting service, routine engineering services and assist[] VSC’s compliance with laws and regulations applicable to the operation of the Station.”2 VSC maintained responsibility for oversight of finances and material changes in programming3 and for all employees on VSC’s payroll,4 and for “operating the Station in compliance with all laws, rules, policies, and regulations of the FCC.”5 VSC also reserved “ultimate responsibility for all activities in connection with FCC license renewals, applications for facility changes and such other filings and reports as may be required by the FCC.”6 Under the APA, Nashville would buy the Station for a purchase price of $3.35 million. Uponsigning, Nashville paid VSC a $300,000 “deposit,” to be credited against the purchase price at closing. The APA also provides that, if Nashville, in coordination with VSC, did not initiate filing a Commission assignment application within one year of the APA’s signing date, it was to pay a second cash deposit of $150,000 (together, “Deposits”), also credited against the purchase price.7 The APA stipulates that VSC will keep interest earned on the Deposits, regardless of the ultimate disposition of the Deposits themselves.8 In the event of a termination of the APA without a breach by either party, VSC would repaythe entire amount of the Deposit.9 If VSC breached the agreement, Nashville would be entitled to return of the Deposit.10 If Nashville breached the agreement, VSC would keep the entire Deposit.11 1 In regard to the Renewal Application, VSC filed a Motion for Extension of Time and an Opposition on July 31, 2012, and August 8, 2012, respectively. Friends filed a Motion for Extension of Time on August 13, 2012, and a Reply on August 23, 2012. Nashville filed its Objection on September 25, 2012, and VSC filed its Petition on September 26, 2012. We grant the consent motions by both parties and consider the VSC Opposition and Friends’ Reply. 2 MPA at § 1(a) and 1(a)(a).3 Id.4 Id. at § 1(c).5 Id. at § 6.6 Id. at § 5(a).7 APA at §§ 2(b) and 5(b). The APA was signed on June 7, 2011, and the Assignment Application was filed on August 8, 2012, so we assume that the second cash deposit was paid.8 Id. at § 2(b).9 Id. § 19(d)(1).10 Id. § 19 (d)(ii).11 Id. at §§ 19(d)(iii). This is VSC’s sole remedy. Id. 2
Renewal Application. Pleadings. Renewal Petition. On March 26, 2012, VSC timely filed the Renewal Application. In the July 2, 2012, Renewal Petition, Friends asks the Commission to designate for hearing the Renewal Application or defer action on it until VSC withdraws the purchase agreement or until VSC makes a formal application for assignment.12 Friends states that it was injured by the loss of Station programming and culture which served as a resource for artists, a platform from which to launch careers, and a community voice.13 In support of its challenge to the Renewal Application, Friends alleges that: (1) VSC’s Board violated its charter and acted ultra vires by signing the MPA because the VSC Charter of Incorporation sets forth only one purpose – the “operation, publication, and dissemination of student communication media at Vanderbilt University” -- and does not allocate to VSC the catchall power to engage in “things necessary and proper” and does not authorize the “piecemeal sale of assets;”14 (2) VSC did not have power to authorize the MPA because, due to reported and unreported “substantial” and “abrupt”15 Board changes between August 27, 2004, and March 26, 2012, VSC violated Section 310(d) of the Communications Act of 1934, as amended (“Act”), and the mandate that substantial changes in NCE governing boards must be approved on FCC Form 315;16 (3) the Deposits violate Section 73.503(c) of the Rules, as applied in University of San Francisco (“USF”), because they constitute consideration for the sale of air time;17 (4) the MPA constitutes an unapproved transfer of control, a violation of Section 310(d) of the Act, because18 VSC no longer sets “policy or practice in any way,” as exemplified by the MPA’s “outlandish provision” allowing Nashville to withdraw if VSC unreasonably interferes with management or programming;”19 and (5) the Commission cannot find that VSC acted in the public interest for purposes of Station license renewal20 during the last renewal cycle because it is contractually obligated to sell to 12 Renewal Petition at 1.13 Id. at Attachment B, Slomowicz Declaration at 1.14 Renewal Petition at 6.15 Id. at 8, citing Transfers of Control of Certain Non-Stock Entities, Notice of Inquiry, 4 FCC Rcd 3403, 3408 (1989) (“Transfers of Control”).16 Id. at 12-13 and Attachment A. Friends cites several incidences of unreported Board turnover that, it claims,undercut the Board’s authority and amount to an unapproved transfer of ownership, in violation of Section 309(b) of the Act and Section 73.3540 of the Rules. Specifically, Friends alleges that VSC replaced five of eight voting board members between August 2004 and August 2005 (Renewal Petition at 11-12); four of eight voting members between August 2005 and September 2006; and the same between August 2007 and 2008. Renewal Petition at 12-14. Friends acknowledges, however, that between March, 2010, and August, 2010, VSC reported a 55.5 percent turnover on a minor change FCC Form 316 (File No. BTCED-20100826AFX granted on September 9, 2010), and then, in the ten months between September 22, 2010, and July 14, 2011, VSC similarly reported a 50 percent change in Board membership on an FCC Form 316 (File No. BTCED-20110704ADH, granted on August 25, 2011). Id. at 10-12. 17 Id. at 15-18, citing University of San Francisco, Order, 27 FCC Rcd 5674, 5674 (MB 2012) (finding that both assignor and assignee violated 47 C.F.R. § 1.17, and assignor violated 47 C.F.R. § 73.503(c)).18 Renewal Petition at 18.19 Id. at 20-21 citing MPA at § 3(b) (emphasis in Renewal Petition), citing as precedent Birach Broadcasting Co., Notice of Apparent Liability for Forfeiture and Order, 25 FCC Rcd 2644, 2645 (EB 2010); James A. Kay, 396 F.3d 1184, 1188 (D.C. Cir. 2005) and K.I.D.S.-TV6, Notice of Apparent Liability, 15 FCC Rcd 20212 (EB 2000), aff’d, Forfeiture Order, 16 FCC Rcd 5495 (EB 2001).20 47 U.S.C. §309(a).
another entity.21 Friends concludes that Nashville violated the Rules by entering into an MPA under which it assumed full control of the Station and violates policies applicable to such agreements. Friends argues that the MPA here is similar to the one at issue in USF, where the Bureau sanctioned both assignor and assignee.22 Given those alleged similarities, Friends recommends the Bureau sanction Nashville and conclude that it is unfit to be assignee.23
VSC Opposition. In opposition, VSC claims that Friends lacks standing to file a petition to deny in this proceeding because its injury cannot be redressed by the remedy requested in the Renewal Petition; it claims that the Commission’s scope of review in renewal proceedings does not reach agreements such as the MPA or the APA; and Friends does not present any argument that logically supports the notion thatit could be made whole through denial of the Renewal Application.24
Substantively, VSC claims that the Board’s actions are not ultra vires because its charter authorizes it to enter into agreements such as the MPA. It quotes the charter as authorizing VSC to“receive property, real, personal or mixed, by purchase, gift, devise or bequest, sell the same and apply the proceeds toward the promotion of the objects for which it was created, or hold any such property and apply the income and profits towards such objects.”25 Overall, VSC argues that, in any event, the Commission does not engage in debates about the legitimacy of corporate status or actions under state law.26
VSC claims that failure to report the Board’s turnover is not a Rule violation. First, it argues that Friends misinterprets and incorrectly relies upon Transfers of Control because, as a mere Notice of Inquiry, it is a proposed guideline, not a rule.27 Even were it a codified rule, VSC claims, such rule would not apply to VSC’s “gradual” Board changes for a “membership organization” such as VSC. VSC also claims that, even if its Board changes were considered to be “sudden” as opposed to gradual, they do not affect the continuing, basic, nature of the entity itself, as required in Transfers of Control. Thus, VSC argues that, even if Transfers of Control were applied here, VSC would not need to file any application related to its Board membership changes because there has always been continuity of control. The “shifts” in Board membership, VSC avers, “have never evinced a coup or an effort by a certain faction or outside party to take control of the corporation,”28 because Vanderbilt University always has been and remains the sole member of VSC.29 Finally, VSC underscores that the Commission decides such matters on a case-by-case basis.30 21 Renewal Petition at 22.22 USF, 27 FCC Rcd at 5674.23 Renewal Petition at 26.24 Renewal Opposition at 3.25 Id. at 4-5 (emphasis in original) and Exhibit 1, Memorandum Of Thomas J. Sherrard, Esq. (“Sherrard Letter”) (arguing that, under Tennessee law, the commitment of VSC’s Board to the proposed sale of the Station is not ultra vires and Vanderbilt University is not required to approve the proposed sale by VSC to Nashville).26 Renewal Opposition at 5-6 citing Aspen FM, Inc., Memorandum Opinion and Order, 12 FCC Rcd 17852, 17855 (1997), and Abundant Life, Inc., Memorandum Opinion and Order, 16 FCC Rcd 4972, 4974 (2001). 27 Renewal Opposition at 7, citing Transfers of Control, 4 FCC Rcd at 3408.28 Renewal Opposition at 10.29 Id. VSC und