A local marketing agreement is a contract used in commercial radio that allows station owners to program and manage other stations without purchasing the license for that station. This type of agreement, often called an LMA, arose in the early 1990s to address the ownership restrictions under which companies could only own 12 radio stations nationally and only one AM and one FM station in each market. The LMA is a legal tool designed to maximize profits in a strict regulatory environment.

Regulatory agreements are timed in accordance with the owner's license renewal date and can range from one to six years. LMAs are often used to bridge the gap between entering into a sales contract for a radio station and final FCC approval of the sale, which can take several months and leaves both the buyer and seller in a risky limbo.

Public Radio Use

This type of agreement is also common in public radio. A 1994 video called "Positioning Your Radio Station by Randy Michaels" addresses the deregulation and subsequent explosion of new FM radio stations. As of 2015, the FCC recorded more than 6,600 commercial FM radio stations, more than 4,700 AM commercial stations, and more than 4,000 educational radio stations. In addition, they count more than 6,300 FM translators and boosters and more than 1,000 low power FM stations, for more than 22,800 total stations all in competition with satellite radio and streaming services.

LMA Advantages and Disadvantages

Advantages of an LMA include:

  • The ability to transfer station operation without selling or buying a license.
  • The ability to step away from day-to-day station administration while maintaining overall control.
  • Providing an avenue to run a successful radio station while avoiding competing priorities and other organizational politics.

Disadvantages of this type of agreement include:

  • The licensee remains responsible for FCC regulatory compliance.
  • The management agreement can be terminated by the licensee if he or she does not approve of the programming provided.

To alleviate the impact of these disadvantages, it's important for the licensee and operator to maintain a strong ongoing relationship with open communication for an LMA arrangement to succeed.

Sample Clauses and Excerpts

A local marketing agreement should indicate that both parties are entering into an LMA, the date that the contract commences, and the station in question. State that the operator of the station will continue to comply with programming obligations, that the seller has no liability, and that the LMA can be terminated without warning if these terms are not met.

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