LPFM MX applicants: Don't be left holding the bag.
Opening dialogue with your competing applicants can go a long way in such a limited time, even if you are the only tentative selectee.
Now that the LPFM Points Public Notice has been released, I am sure that there is some excitement, some surprise and even some disagreement. We are now into 60 and 90-day deadlines to move forward to resolve these MX Groups as much as we can. The key to making this work right for as many applicants is for MX applicants to start talking to each other.
Tentative Selectees
Applicants that show on the FCC public notice Attachment A in bold and those who show on REC’s Window Tracker with a yellow background are tentative selectees. This means that your application has the most points in your MX Group. As of October 20, 2024:
39 MX Groups have a single tentative selectee.
40 MX Groups have two tentative selectees.
6 MX Groups have three tentative selectees.
2 MX Groups have four or more tentative selectees.
Let’s see how the FCC will handle each of these situations and what will happen.
Single Tentative Selectee Groups
In these groups, one applicant has the lead score and there is one or more applicants with a lower score. If no one does anything and the 90 days pass, the one or more applicants who were not tentative selectees will be dismissed for insufficient points. The tentative selectee will be granted a construction permit for unlimited (24/7) operation. If the tentative selectee had pledged the main studio and local origination programming points, they will be subject to those pledges.
Two Tentative Selectee Groups
In these groups, two applicants are tied with the same score and there may or may not be other applicants in the group with lower scores that are not tentative selectees.
If everyone just sits back and waits until the FCC takes action, the two tentative selectees will be subject to an involuntary time share arrangement. For these time shares, there will be two time slots, 3AM to 3PM and 3PM to 3AM. The FCC will look at the Established Community Presence (ECP) date that was included on the application. Staff will reach out to the applicant with the oldest ECP date and offer them a choice of those two time slots. Whichever slot they don’t take will be assigned to the other applicant.
Tentative selectee applicants who default to involuntary time sharing leveraged their points to gain a construction permit and therefore would be subject to the pledges, regardless of whether there was a third applicant in the MX Group that was dismissed with insufficient points. There is also another very negative side-effect of involuntary time shares that we will mention in a bit.
Three Tentative Selectee Groups
In these groups, three applicants are tied with the same score and there may or may not be other applicants in the group with lower scores that are not tentative selectees.
Like with the two tentative selectee groups, if everyone just sits back and does nothing, the MX Group will go to involuntary time sharing. There are three time slots that will be used: 2AM-10AM, 10AM-6PM and 6PM-2AM. In this case, staff will reach out to the group members to get their choices of time slots in preference order. The applicant with the oldest ECP date will get their first choice, followed by the second oldest applicant who will get their first choice, unless it was already taken, then it goes to the second choice. The youngest of the organizations will get whatever remains.
Like with the two selectee groups, these tentative selectees will be subject to their points pledges and non-renewable licenses.
More Than Three Tentative Selectees
These groups will work in the same way that the three tentative selectee groups work except that the only groups that will be considered are the ones with the three oldest ECP dates on their application. Any remaining lead applicants, even though they were originally tentative selectees, they will be dismissed as they have lost in the tie breaker (the three oldest organizations).
Once the top three oldest applicants have been identified, the FCC then follows the same procedure above for three tentative selectee groups.
REC has prepared a matrix of different potential outcomes based on the size of MX Group, the types of applicants that are in it and what they do. You can view that at https://recnet.com/lpfm-mx-scenarios.
Some Discussion and Action Can Prevent The Pledges
For some LPFMs, especially with smaller budgets, you may find that the main studio and local programming pledges will be financially burdensome. But you pledged these things to get an advantage and there will be an expectation that those pledges be fulfilled.
Helping Out With Amendments
One way to get out of the pledges is for your application or another one in the group to be amended to specify a different channel and possibly location in order to break out of the group. While we understand in some situations, there may be not alternatives that meet the FCC’s §73.807 distance separation requirements, in some cases, there may be some hope.
All applicants (tentative selectee or not) should have a group discussion, try to identify other available channels and encourage the filing of amendments that will make this work. You can use the FCC LPFM Channel Finder Tool to get an initial look at potential availability. If you think there may be a chance that one or more stations could change to a different channel, that applicant should contact their consultant if they used one or they can contact REC Networks for assistance.
Once they break out of the MX Group, they will be considered a singleton and it could expedite their grant. Also, they will not be subject to the pledges, even if they were one of the original tentative selectees. If only one group member remains on the originally filed for channel, they will not be subject to pledges.
Having tentative selectees break out the group could also reduce the chances for involuntary time shares and points pledge obligations.
Universal Settlement Agreements
Applicants may enter into universal settlements. A universal settlement involves all applicants in the group. Aspects of a universal settlement can include:
Major amendments to other channels (must be done within the first 60 days),
Major or minor amendments to move sites to break the MX Group (stations must be separated by at least 23.5 km on co-channel or 13.5 km on first-adjacent channel). (Major amendments must be done within the first 60 days.)
Voluntary time share agreements involving two or three of the tentative selectee applicants.
Voluntary withdrawal of application.
In the case of these agreements, all applicants have set their fate and therefore points will not be used. Therefore, the remaining tentative selectee applicant(s) would not be subject to the pledges. In addition, tentative selectee applicants agreeing to a voluntary time share would prevent the licenses from being non-renewable.
In these types of settlement agreements, it is possible to include provisions in there where there is a level of consideration (reimbursement) involved for any activity that removes a conflict. The full policy on this can be found in §73.3525 of the FCC Rules.
Settlement agreements will need to include the following:
The reasons why it is considered that the agreement is in the public interest;
A statement that the application was not filed for the purpose of reaching or carrying out such an agreement;
A certification that neither the applicant nor its principals has received any money or other consideration in excess of the legitimate and prudent expenses of the applicant;
The exact nature and amount of any consideration paid or promised;
An itemized accounting of the expenses for which it seeks reimbursement; and
The terms of any oral agreement relating to the dismissal or withdrawal of its application.
Legitimate and prudent expenses are those expenses reasonably incurred by an applicant in preparing, filing, prosecuting, and settling its application for which the reimbursement is being sought.
Avoiding The Non-Renewable License Condition
If an application is defaulted to an involuntary time share, it will include a condition that the license will not be renewable. Considering that the next renewal cycle will have licenses expiring between 2027 and 2030, depending on the state, it is in everyone’s best interest to avoid this condition. We have mentioned the ways to avoid involuntary time sharing, such as through doing a major amendment to break out of the MX Group and become singleton and through a settlement agreement. The other way is through a voluntary time share agreement, which we will talk about next.
Keep in mind too, if your MX Group does default to involuntary time share and the construction permits are granted with the non-renewable condition, it is possible to subsequently file a voluntary time share agreement at a later time in order to remove the condition, even if that agreement is for the same hours.
The bottom line here is that the FCC just wants everyone to talk to each other!
Voluntary Time Share Agreements
A voluntary time share agreement can include two or three applicants. The FCC no longer allows time share agreements of more than three applicants. Voluntary time share schedules can be very flexible meaning that they can specific specific hours on specific days of the week. Each time share proponent must propose at least 10 hours of operation per week and two or three applicants can’t propose operations during the same times (simultaneous operation). Only the tentative selectees can enter into a time share agreement.
In the 8 MX Groups where there are three or more tentative selectees, two applicants can enter into a voluntary time share agreement. In this case, the points of both applicants will be aggregated into a higher score. For example:
There are three applicants: A, B and C and they have 5 points each;
Applicants A and B enter into a voluntary time share agreement during the 90-day period;
If the time share agreement is accepted, then Applicants A and B’s points will be aggregated and they will be credited with 10 points each.
Because Applicant C, who did not participate in the time share only has 5 points, their application will be dismissed for insufficient points.
Applicants A and B will both be simultaneously granted construction permits with the time sharing condition. Since the time sharing was voluntary, there will be no condition for non-renewable license. Applicants A and B will be subject to any points pledges they made.
Unilateral Withdrawals
Any applicant in the MX Group can request that their application be withdrawn from consideration. The withdrawal should include a statement that the request was unilateral and not a part of a settlement agreement and that no consideration (payment) was made or promised in connection with the withdrawal.
REC encourages applicants, especially those who are not tentative selectees to voluntarily withdraw if:
After 30 days, there are no Petitions to Deny or Informal Objections against the tentative selectee(s), which, if found to have merit could change the outcome and result in the declaration of a new tentative selectee(s).
If, after extensive searching, it is shown that the applicant has no other viable solution for continuing with the LPFM application due to a lack of available channels.
In MX Groups with only two applicants, the voluntary withdrawal of one will result in the other becoming singleton and not subject to any points pledges.
If the tentative selectee wants to assure that their station will not be subject to pledges, they should reach out to the other applicant and enter into a settlement agreement with reimbursement for the withdrawing station’s expenses. For the withdrawing station, this will give them back the money they already invested in this endeavor and for the prevailing applicant, it removes the main studio and local programming requirements, which may result in savings in the long run.
Now Is The Time To Talk!
For the betterment of the MX Group, I encourage at least one member of each MX Group to start making outreach to the other applicants. Use the contact information on their broadcast application. Go to the board members if there is no response the first time. If it is clear that they are represented by an attorney, please attempt to contact them through their attorney.
Applicants coming in with a plan will help speed up the grant process and take a huge load off of the FCC staff.
The next window may not be for several years. There are some in staff who may not want another window again. We must be easy on staff and respect their time and hard work they are putting into the post-window handling.
If you have a burning question and you do not have your own consultant or attorney available. Please contact Michelle Bradley, CBT at REC Networks first before calling FCC staff. Even though I am not an attorney and can’t give legal advice, I can give advice based on experience with the LPFM service that goes back to before there was an LPFM service. The advice is always free, but donations are always welcome.
Good luck to everyone during this 90 day exercise. Let’s get those CPs granted and built so we can all make some great radio!