Succession Planning – the flip side of localism

Having watched the comings and goings of radio stations now for several years, I want to bring up a subject for the FCC to consider as it rethinks local radio.

One of the societal benefits of “Big Corporations” compared with Sole Proprietors is that Corporations with professional management don’t “die” when an owner dies. A CEO can be replaced, a shareholder’s widow can sell her stock. But a company owned and run by one individual often dies when that owner dies.

I’ve now seen several small market sole proprietor owner/operators die suddenly. Their widow may not have the knowledge, money or skills to continue to run the stations. Frequently the station licenses go into receivership at the direction of the probate judge. The obligation of the receiver is to conserve assets until the probate is completed, which can take years. The stations may be turned off and go dark.  They might be set to just  languish playing voicetracked satellite music 24 hours a day.  

Either way, they are not providing any value to their community and providing the critical public value that is sought in the search for local control.   By the time the estate probate is completed, the radio stations may be either literally or figuratively dead.  The staff has moved on, the advertisers have left, the station’s awareness in the community has faded.  They no longer are on anyone’s car radio pushbuttons.  A community languishing with crippled radio stations is not satisfying the Public Interest mandate of the 1934 Act.

Proposal:  Require all radio stations that are sole proprietors,  Single person LLCs or closely held corporations to file a written formal succession plan in the event the owner dies or becomes unable to continue operating the station.    The documentation prepared in advance must specify who will become the station(s) manager along with a statement of their qualifications, a written will indicating how the radio company assets is to be divided, and contingent funding in place – through life insurance, long term disability insurance and or an irrevocable trust – to ensure that the station(s) will remain adequately funded while the estate is probated and/or the station(s) sold to new owners. 

An owner who dies without properly planning for his death affects more than just his family.   His failure to arrange his affairs can damage the entire community, and the more stations one owner controls, the wider the damage.   Returning radio to “local” control means the FCC really needs to look at both sides of the responsibility of “Operating in the Public Interest”.

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