Petition to Deny Filed with the FCC on sale of 99.1, KFUO FM
PETITION TO DENY TRANSFER
November 29, 2009
-Petition dated November 9, 2009
-Objections Filed 11/18/2009 by T. Williams and A. W. Larson
-Petition dated November 30, 2009 by the Committee to Save KFUO-FM
-Petition dated November 30, 2009 by Radio Arts Foundation
And add the following causes:
I. There appears to be a defect in the actions of the Board of Directors of the Licensee which make it unable to act in this matter. The Board of Directors of the Licensee did not follow, and departed from, the laws of its State of Incorporation, Missouri, which specifies that a committee of the board shall consist of members of that board, and be appointed by the board.
II. The resolution creating the KFUO Committee at the meeting of 2008 February 14-16 specifies that
That the LCMS Board of Directors establish a committee of three members of the Board of Directors (appointed by the chairman of the Board of Directors) and three members of the Board for Communication Services (appointed by the chairman of the Board for Communication Services).
III. At some later point, one of the board members of the committee was removed from it in order to serve as its (paid) agent in the negotiations to sell KFUO FM. If no other member of the board was appointed to the committee (and the minutes do not reflect this), this would leave an already invalid board further in question, consisting of three members not from the board of directors, and two members from the board of directors, and one non-voting member of the board.
IV. The resolution of the Licensee's Board of Directors from the meeting of 2009 August 20 - 21 specified
That the KFUO Committee of the board be hereby authorized by the board and empowered to determine in its absolute and sole discretion if and when the corporation shall enter into an Asset Purchase Agreement for the sale of KFUO FM and upon what terms and conditions approximating those reported to the board, and to cause same to be done without further action by the board.
V. That committee, whose petition comes before the Commissioners as FCC Application BALH-20091026AAX, was improperly constituted according to Missouri law, and is invalid, and cannot act to transfer the control of the license. Missouri Revised Statues, Chapter 355, Nonprofit Corporation Law, Section 355.406, states:
Committees of the board.
355.406. 1. Unless prohibited or limited by the articles or bylaws, a board of directors may create one or more committees of the board and appoint members of the board to serve on them. Each committee shall have two or more directors, who serve at the pleasure of the board.
2. The creation of a committee and appointment of members to it must be approved by the greater of:
(1) A majority of all the directors in office when the action is taken; or
(2) The number of directors required by the articles or bylaws to take action under section 355.401.
3. Sections 355.376 to 355.401, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the board, apply to committees of the board and committee members as well.
4. To the extent specified by the board of directors or in the articles or bylaws, each committee of the board may exercise the board's authority under section 355.316.
5. A committee of the board may not:
(1) Authorize distributions to members, directors, officers, agents or employees except in exchange for value received;
(2) Approve or recommend to members dissolution, merger or the sale, pledge or transfer of all or substantially all of the corporation's assets;
(3) Unless otherwise stated in the bylaws or articles of incorporation, elect, appoint or remove directors or fill vacancies on the board or on any of its committees; or
(4) Adopt, amend or repeal the articles or bylaws.
VI. The likelihood of a challenge to the Licensee's actions to assign and transfer the license on the basis of the defect given above are high, and would undo the Commission's actions if it decided to grant the application to assign/transfer.
VII. While I do not allege
a Secretive and Collusive Bidding Process by Licensee, the remainder of the Petition to Deny dated November 29, 2009 is largely correct in assessing the impact of the transfer on the citizens of Saint Louis, who would be denied their only Classical FM station.
Secretive and Collusive Bidding Process by Licenseewhich is alleged, however, would never have materialized as an objection, and would have easily been disproven had the Licensee acted in greater candor. The use of executive session and the assignation of sole discretion and authority by the Board of Directors of the licensee to a (invalid) committee (which then reported in executive session) made such candor difficult, if not impossible.
VIII. The Licensee has compounded this impression by presenting to its members, the citizens of Saint Louis and the general public statements such as these on its web site:
There have been allegations of secrecy regarding the decision to sell KFUO-FM. Was information about the decision to sell the station made public?
The Synod’s board has been open about its intentions regarding the FM station. Since as early as February 2008, this item has been on the board meeting agenda. Minutes from board meetings are posted on the LCMS Web site...
When, in fact, the minutes from the last two years record that the Board of Directors has gone into executive session in every instance when KFUO FM was discussed. The minutes also record that the Chief Operations Officer's report does
not include legal expenses associated with KFUO FM activity.This further compounds the impression, if not the substance, of insufficient candor on the part of the Licensee.
IX. The proposed assignee claims it has
has sufficient net liquid assets on hand or from committed sources to consummate the transaction and operate the station for three months. Yet, according to the non-profit data analyst Guidestar, based on their form 990 and other filings, their net loss for the fiscal year ending May 31, 2008, was $107,468, and their cash on hand was $244,063. In addition, their indebtedness (
Loans and Notes) went from $0 on June 1, 2007, to $3,579,015 on May 31, 2008, which greatly offsets their listed increase of assets of $3,498,660 for the fiscal year ending in 2008. Even if they should be able to complete the initial transactions and payments, which is questionable, their ability to operate the station going forward may be crippled by insufficient funds.
X. Christian Contemporary Music, the format of the proposed assignee, is not under represented or under served in the Saint Louis area. Classical music will be, and in fact, will disappear from the FM band, should the transfer be approved.