LMA

We see the acronym "LMA" in transaction reports, ratings reports, and other less formal articles. LMA stands for Local Marketing Agreement. On occasion I see it rendered as Local Management Agreement. Generally the former is the accepted term though in same ways the latter more accurately represents the transfer of power that actually occurs. The announcement usually reads like this:

"Champaign Partners LLC announced today it has entered into a long term Local Marketing Agreement (LMA) for WUIL-FM 107.9 JAMZ with DVH MANAGEMENT d/b/a PENDLETON BROADCASTING. The LMA for the Champaign-Urbana Radio Station will start May 1st 2009. At any time during the LMA, Pendleton Broadcasting has the right to purchase the station for $1.5 Million."

It's an agreement in which one broadcasting company agrees to operate a radio station owned by another licensee. The Broadcast Law Blog had a great article last month about a LMA violation that covered some of these points. It's worth reading. In it's most common application, the licensee is leasing the station and operating it like a franchise. There are three basic rules behind every LMA deal:

1. The licensee is legally responsible for the actions of the lessee. No matter what violations the lessee racks up, obscenity, indecency, EAS violations... the FCC fine goes to the licensee. Interestingly I hve seen LMA contracts that revert that responsibility to the lessee. The problem there is that the FCC will always collect from the licensee.

2. By law, a LMA must include the entire station's facilities studio transmitter, tower and all. the lessee cant sublease parts of the property not can the licensee lease parts to different parties.

3. The licensee must maintain 2 staff members (one of which must be a manager) at the LMA'd station's main studio. This is required even if the station is running syndicated programming or a satellite feed.

LMA's were governed by the sellers provisions under the communications act of 1934, relatively unchanged until August 5th 1999. That year the FCC addressed a conflict in law regarding the interpretation of an LMA. Previosu to that ruling, LMAs were not considered in ownership caps. Through LMAs a licensee could own and/or operate every single station in a market and sometimes they did. The FCC addressed this problem in MM Docket No. 87-154 and now LMA'd stations are counted toward the ownership cap on the lessee.