§ 73.3597   Procedures on transfer and assignment applications.

   (a)  If,  upon the examination of an application for FCC consent to an
   assignment of a broadcast construction permit or license or for a transfer
   of control of a corporate permittee or licensee, it appears that the station
   involved has been operated on-air by the current licensee or permittee for
   less  than one year, the application will be designated for hearing on
   appropriate issues unless the FCC is able to find that:

   (1) The permit or license was not authorized either through the Minority
   Ownership Policy or after a comparative hearing or, in the case of low power
   TV and TV translator stations, the permit or license was not authorized
   after a lottery in which the permittee or licensee benefited from minority
   or diversity preferences;

   (2) The application involves an FM translator station or FM booster station
   only;

   (3) The application involves a pro forma assignment or transfer of control;
   or

   (4) The assignor or transferor has made an affirmative factual showing,
   supported by affidavits of a person or persons with personal knowledge
   thereof, which establishes that, due to unavailability of capital, to death
   or disability of station principals, or to other changed circumstances
   affecting the licensee or permittee occurring subsequent to the acquisition
   of the license or permit, FCC consent to the proposed assignment or transfer
   of control will serve the public interest, convenience and necessity.

   (5) the assignee or transferee has made an affirmative factual showing,
   supported by affidavits of a person or persons with personal knowledge
   thereof, which established that the proposed transaction would involve an
   assignment or transfer to a minority-owned or minority controlled entity in
   furtherance of our Minority Ownership Policy.

   (b)(1) The commencement date of the one-year period set forth in paragraph
   (a) of this section shall be the date on which the station initiated program
   tests in accordance with § 73.1620 or § 74.14.

   (2) In determining whether the station has been operating on-air for one
   year, the FCC will calculate the period between the date of initiation of
   program tests (as specified in paragraph (b)(1) of this section) and the
   date the application for transfer or assignment is tendered for filing with
   the FCC.

   (c)(1) As used in paragraphs (c) and (d) of this section:

   (i) Unbuilt station refers to an AM, FM, or TV broadcast station or a low
   power  TV  or TV translator station for which a construction permit is
   outstanding, and, regardless of the stage of physical completion, as to
   which program tests have not commenced or, if required, been authorized.

   (ii) Seller includes the assignor(s) of a construction permit for an unbuilt
   station, the transferor(s) of control of the holder of such construction
   permit, and any principal or such assignor(s) or transferor(s) who retains
   an interest in the permittee or acquires or reacquires such interest within
   1 year after commencing program tests.

   (iii) The provisions of paragraphs (c) and (d) of this section apply only to
   mutually exclusive noncommercial educational applications filed on or after
   the  release  of  the  Report  and Order in MM Docket 98-43, where the
   construction permit is issued pursuant to settlement agreement.

   (2) The FCC will not consent to the assignment or transfer of control of the
   construction  permit  of  an  unbuilt  station  if  the  agreements or
   understandings between the parties provide for, or permit, payment to the
   seller of a sum in excess of the aggregate amount clearly shown to have been
   legitimately and prudently expended and to be expended by the seller, solely
   for preparing, filing, and advocating the grant of the construction permit
   for the station, and for other steps reasonably necessary toward placing the
   station in operation.

   (3)(i) Applications for consent to the assignment of a construction permit
   or  transfer  of  control  shall,  in the case of unbuilt stations, be
   accompanied by declarations both by the assignor (or transferor) and by the
   assignee (or transferee) that, except as clearly disclosed in detail in the
   applications, there are no agreements or understandings for reimbursement of
   the seller's expenses or other payments to the seller, for the seller's
   retention of any interest in the station, for options or any other means by
   which the seller may acquire such an interest, or for any other actual or
   potential  benefit  to the seller in the form of loans, the subsequent
   repurchase of the seller's retained interest, or otherwise.

   (ii)  When the seller is to receive reimbursement of his expenses, the
   applications of the parties shall include an itemized accounting of such
   expenses, together with such factual information as the parties rely upon
   for the requisite showing that those expenses represent legitimate and
   prudent outlays made solely for the purposes allowable under paragraph
   (c)(2) of this section.

   (d)(1) Whenever an agreement for the assignment of the construction permit
   of an unbuilt station or for the transfer of control of the permittee of an
   unbuilt station, or any arrangement or understanding incidental thereto,
   provides for the retention by the seller of any interest in the station, or
   for any other actual or potential benefit to the seller in the form of loans
   or otherwise, the question is raised as to whether the transaction involves
   actual or potential gain to the seller over and above the legitimate and
   prudent out-of-pocket expenses allowable under paragraph (c)(2) of this
   section. In such cases the FCC will designate the assignment or transfer
   applications for evidentiary hearing. However, a hearing is not mandatory in
   cases coming within paragraph (d)(2) of this section.

   (2) It is not intended to forbid the seller to retain an equity interest in
   an unbuilt station which he is transferring or assigning if the seller
   obligates himself, for the period ending 1 year after commencing program
   tests, to provide that part of the total capital made available to the
   station,  up  to the end of that period, which is proportionate to the
   seller's equity share in the permittee, taking into account equity capital,
   loan capital, and guarantees of interest and amortization payments for loan
   capital provided by the seller before the transfer or assignment. This
   condition will be satisfied:

   (i) In the case of equity capital: By paid-in cash capital contributions
   proportionate to the seller's equity share;

   (ii) In cases where any person who has an equity interest in the permittee
   provides loan capital: By the seller's provision of that part of the total
   loan  capital provided by equity holders which is proportionate to the
   seller's equity share; and

   (iii) In cases where any person cosigns or otherwise guarantees payments
   under notes given for loan capital provided by nonequity holders: By similar
   guarantees  by  the  seller  covering that part of such payments as is
   proportionate to the seller's equity share. However, this condition shall
   not be deemed to be met if the guarantees given by persons other than the
   seller  cover,  individually or collectively, a larger portion of such
   payments than the ratio of the combined equities of persons other than the
   seller to the total equity.

   (3) In cases which are subject to the requirements of paragraphs (d)(2) (i),
   (ii) and (iii) of this section:

   (i) The assignee's (or transferee's) application shall include a showing of
   the anticipated capital needs of the station through the first year of its
   operation and the seller's financial capacity to comply with the above
   requirements, in the light of such anticipated capital needs.

   (ii) The FCC will determine from its review of the applications whether a
   hearing is necessary to ensure compliance with the above requirements.

   (iii) Compliance with the above requirements will be subject to review by
   the FCC at any time, either when considering subsequently filed applications
   or whenever the FCC may otherwise find it desirable.

   (iv) Within 30 days after any time when a seller is required to provide
   equity or loan capital or execute guarantees, the permittee shall furnish
   the FCC a written report containing sufficient details as to the sources and
   amounts  of  equity  capital  paid in, loan capital made available, or
   guarantees obtained as to enable the FCC to ascertain compliance with the
   above requirements.

   (v) No steps shall be taken by the permittee to effectuate arrangements for
   the  provision  of  equity or loan capital from sources not previously
   identified and disclosed to the FCC, until 30 days after the permittee has
   filed with the FCC a report of such arrangements and of provisions made for
   the seller's compliance with the above requirement.

   (vi) The provisions of paragraphs (d)(3) (iv) and (v) of this section shall
   cease to apply 1 year after commencing program tests.

   (4) Applications subject to this paragraph (d) of this section will, in any
   event,  be  designated  for  evidentiary hearing in any case where the
   agreements, arrangements or understandings with the seller provide for the
   seller's option to acquire equity in the station or to increase equity
   interests he retains at the time of the assignment or transfer of control.
   An evidentiary hearing will similarly be held in any case in which the
   assignee(s), transferee(s) or any of their principals, or any person in
   privity therewith, has an option to purchase all or part of the seller's
   retained or subsequently acquired equity interests in the station.

   [ 44 FR 38509 , July 2, 1979, as amended at  47 FR 24580 , June 7, 1982;  47 FR 55930 , Dec. 14, 1982;  48 FR 9012 , Mar. 3, 1983;  48 FR 27207 , June 13, 1983;
    50 FR 6946 , Feb. 19, 1985;  53 FR 36787 , Sept. 22, 1988;  63 FR 70050 , Dec.
   18, 1998]

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