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The WRVU sale could face a roadblock in Tennessee's nonprofit law

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On June 7, Nashville NPR affiliate WPLN announced it had reached an agreement to buy the broadcast license for WRVU-91.1 FM from Vanderbilt Student Communications. The sale, which is not complete until the Federal Communications Commission officially transfers the license, already has a few hurdles to clear —for instance, WLPN must raise more than $3 million in the next 18 months to complete its purchase.

But perhaps more important is the legal arrangement that binds VSC to Vanderbilt University, giving the school more stake than some of its own officials might have realized in the actions of the student-run body. That, and a decision as to whether WRVU's broadcast license represents "substantially all" of VSC's assets, both have the potential to scotch the deal.

In a June 3 letter to Vanderbilt chancellor Nicholas Zeppos and the Vanderbilt Board of Trust (a copy of which was provided to the Scene), the nonprofit advocacy group WRVU Friends and Family lays out a provocative argument against the sale. Along with contravening VSC's stated mission of providing "realistic opportunities" in radio programming for VU students, the letter says, the sale would violate the Tennessee law that governs nonprofit corporations, because the university itself is a member of the VSC but was offered no input on the sale.

It certainly wasn't the group's first attempt to get the chancellor's attention on the matter, but it was perhaps the most galling. A source close to the Vanderbilt administration tells the Scene that a meeting of "top management" was called on June 17 to discuss the sale, and that officials expressed "reason for concern" regarding Vanderbilt's relationship with VSC.

Vanderbilt vice chancellor Beth Fortune says she is "not aware of any meeting." But in all previous communication with the Scene, the chancellor's office maintained VSC's independence from Vanderbilt — and vice versa — while directing all questions to VSC; in this case, they referred questions to David Williams, Vanderbilt's general counsel. Williams confirms Vanderbilt's membership in VSC, likening the relationship to that of a shareholder to a corporation. Even so, the sale of the WRVU broadcast license does not necessarily require member approval, Williams says, noting that a corporation can make any number of sales without consulting with shareholders.

"In selling assets, there are certain levels [where corporations] have to go back to the membership," he says. In this case, everything hinges on what level the WRVU sale occupies.

Under the Tennessee Nonprofit Corporation Act, a nonprofit corporation "may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property" only if the transaction is authorized by the corporation's board, its members and any other persons whose approval is required.

What it may come down to, then, is whether the WRVU broadcast license constitutes "substantially all" of VSC's assets. If so, Vanderbilt University, as sole member of VSC, would have to authorize the sale. In a meeting at Sarratt Student Center in September 2010, VSC board chair Mark Wollaeger characterized the WRVU broadcast license as "the one thing we have." A rhetorical flourish, perhaps, given that VSC oversees numerous operations, including The Vanderbilt Hustler, Orbis, The Torch and The Vanderbilt Review.

"Those would be an asset," Vanderbilt general counsel Williams says. "Whether or not they have some market sale [value], I don't know."

As to whether an audit of VSC's holdings could be required at some point is a matter for Attorney General Bob Cooper's office. Williams says the attorney general "has the right to look at any sale of assets" and to intervene — as Cooper did in the case of Fisk University's proposed sale of its Steiglitz art collection, bequeathed by Georgia O'Keeffe.

Sharon Curtis-Flair, director of communications for the attorney general's office, tells the Scene, "We are aware of the proposed transaction." She would not comment further. The choice of the word "proposed" is important: As Vanderbilt's Williams says, "They have some time to go on this sale."


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