Docket No. 15619 File No.
BPCT-3319; Docket No. 15620 File No. BTCT-3333
FEDERAL COMMUNICATIONS
COMMISSION
8 F.C.C.2d 279 (1967); 10
Rad. Reg. 2d (P & F) 50
RELEASE-NUMBER: FCC 67-611
May 19, 1967 Adopted
COMMISSIONER LOEVINGER FOR THE COMMISSION: COMMISSIONERS BARTLEY AND
LEE CONCURRING IN THE RESULT AND ISSUING STATEMENTS; COMMISSIONER JOHNSON
DISSENTING AND ISSUING A STATEMENT.
[*279] 1. Farragut Television Corp. (Farragut) and Peoples
Broadcasting Corp. (Peoples) are competing applicants for a construction
permit for a new television broadcast station on UHF channel 47 in Columbus,
Ohio. Farragut is a District of Columbia corporation with five
stockholders who are residents of the Washington, D.C., metropolitan
area. Farragut's five principals own majority stock interests in the
permittees of new UHF television stations to operate in St. Paul, Mann.
(channel 29), and San Jose, Calif. (channel 48); and four of the five
principals have a majority stock interest in the permittee of a new UHF
television station in St. Louis, Mo. (channel 30). n1 Peoples, an Ohio
corporation organized in 1946 to engage in the broadcast business, is the
wholly owned subsidiary of Nationwide Mutual Insurance Co. Nationwide is
a mutual insurance company which is owned by its 2,500,000 policyholders, of
which 25 percent reside in Ohio and, of this percentage, 25 percent reside in
the Columbus metropolitan area. The principal offices of both Nationwide
and its subsidiary are located in Columbus. At present, the broadcast
interests of Peoples consist of the following: Stations WRFD and WRFD-FM
[*280] in Columbus; stations WGAR and WGAR-FM in Cleveland; and stations
WATE-AM and WATE-TV in Knoxville, tenn.
n1 Two of Farragut's principals hold a minority
interest in a 1-kw daytime standard broadcast facility in Lancaster, N.Y., but
we attach no decisional significance to this interest.
2. By an order released September 10, 1964, we designated the two
applications for hearing in a consolidated proceeding. On July 28, 1965,
after commencement of the hearing, but prior to its conclusion, the Commission
adopted its Policy Statement on Comparative Broadcast Hearings, 1 FCC 2d 393,
which governs the disposition of this proceeding (1 FCC 2d at 399). Therein we
said that the two primary objectives toward which the process of comparison is
directed are: (1) The best practicable service to the public; and (2) maximum
diffusion of control of media of mass communications. We consider these
objectives to be compatible and believe that in most instances they will
complement each other. In this case, Hearing Examiner H. Gifford Irion concluded,
on the basis of his view of these objectives and their application, that
Peoples' application should be granted, because the area familiarity of its
principals and "the record of Peoples in the Columbus community, both
itself as an institution and through its executives, better portends a service
in the public interest than would be the proposal of a corporation, all of
whose stockholders are strangers to the Columbus area" (5 FCC 2d 104 at
118-119). The Review Board reversed and granted the application of
Farragut. Taking into account the broadcast interests of the competing
applicants and their principals, the Review Board concluded that the Farragut
proposal "will better achieve the Commission's goal of maximum diffusion
of mass communications media," and the achievement of this objective was
deemed to be the decisive factor (5 FCC 2d 93 at 95, 100). With respect to
Peoples, the Review Board held that no person with an ownership interest or who
would be in a position comparable to an owner of the applicant proposed to
participate in day-to-day station operations, and it, therefore accorded no
credit to that applicant for integration of ownership with management or for
area familiarity.
3. As we emphasized in our Policy Statement, "a general statement
cannot dispose of all problems or decide cases in advance" (1 FCC 2d at
394). Unusual situations require special consideration and the policies
enunciated by the Commission must be applied in the light of the specific facts
in each case. This case involves more than a mere determination of which
of two competing applicants in a close case should be awarded a construction
permit. The factual situation here raises important issues of first
impression concerning interpretation and application of our Policy
Statement. Furthermore, on the basis of facts which are essentially
undisputed, the hearing examiner and the Review Board reached opposite
conclusions as to how the objectives of the Policy Statement would be best
achieved. These were the special considerations which prompted us to
grant review of the Review Board's determination (FCC 66-1189, released Dec.
29, 1966). Oral argument was held before the Commission on March 16,
1967.
4. Before reaching the merits of this proceeding, we must dispose
of one preliminary matter. By our December 29, 1966, order granting
review, we authorized each party to file a brief on or before January 30, 1967,
and a reply brief on or before February 13, 1967. Peoples filed a brief
on January 30, 1967, but Farragut did not, electing instead to
[*281] submit only a reply brief on February 13, 1967. Claiming that
it was prejudiced by this procedure, Peoples petitioned for leave to file a
reply brief and tendered a reply brief for filing. Farragut opposed the
petition and, in addition, petitioned for leave to file comments on the reply
brief in the event Peoples' petition were granted, and it tendered the pleading
for filing. We intended by our December 29, 1966, order that the parties
should state their positions fully and fairly by January 30, 1967, and that all
written submissions in this proceeding be made on or before February 13,
1967. In view of the pleadings and briefs filed with the Review Board and
with the Commission, and the presentation of oral arguments by the parties to
both the Review Board and the Commission, it is inconceivable that either party
will be prejudiced by our refusal to permit the filing of additional
briefs. Accordingly, we will deny the petitions to file further briefs.
5. We conclude, as did the Review Board, that neither applicant
merits a preference on the criterion of preparation and planning. The
critical issues here are whether, or to what extent, Farragut merits a
preference for diversification of control of the media of mass communications;
whether, or to what extent, Peoples is entitled to credit for ownership
participation in the management of station affairs; and, finally, whether
Peoples should be accorded a preference for its past broadcast record.
6. Attaching decisive weight to the ownership by Peoples of a
standard broadcast station (WRFD) and an FM station (WRFD-FM) in Columbus, the
Review Board awarded a substantial preference to Farragut for diversification
of control of the mass media. In reaching this conclusion, we believe the
Board failed to consider the particular circumstances of the case before
it. We agree, as the Board held, that the broadcast interests of an
applicant in the principal community to be served will normally be of most
significance and that the existence of competing mass media does not eliminate
from consideration the factor of area concentration of control. However,
we do not believe that the existence of other media in the area in which the
applicant has no interest may be ignored in determining the weight to be
accorded the element of local diversification. The same significance does
not attach to the ownership of other broadcast facilities in a community where
there exists a diffusion of control of the mass media as where the applicant is
the owner of all the community's broadcast facilities and other communications
media. Thus, contrary to the Review Board's holding, the operation in the
community of three commercial VHF television stations, one educational UHF
television station, six standard broadcast stations, and seven FM stations by
licensees other than Peoples must be considered in weighing the preference for
Farragut arising from local diversification of control. Furthermore, the
preference arising from the local situation must be considered in relation to
the ownership and control by the parties of mass communications media in other
areas. In view of Farragut's interests in three UHF construction permits,
there is not a large difference between applicants insofar as the goal of
achieving maximum diffusion of control of mass media is concerned. We,
therefore, conclude, taking both local and overall diversification
[*282] into account, that Farraut is entitled at most to a slight
preference over Peoples in this area of comparison.
7. The second objective of the Policy Statement is whether either
applicant offers greater assurance of providing better service to the
public. The determination of this question rests, in large part, on
whether and to what extent the owners, or those having personal interest and
responsibility comparable to owners, will participate in the daily affairs of
the station. Farragut proposes no day-to-day ownership participation in
station operations, and none of its principals is, or will become, a resident
of the service area. Peoples, on the other hand, claims a substantial
preference for integration of ownership and management. The Review Board
rejected Peoples' claim to such a preference, and the validity of that
determination in this case presents important and difficult issues.
8. While recognizing that individuals holding positions of
personal interest and responsibility in nonstock corporate applicants have been
treated by the Commission as participating owners for integration purposes, the
Review Board concluded that this principle was inapplicable to Peoples.
The Board reasoned that Peoples is a stock corporation with an identifiable
owner, Nationwide; that the officers and directors of Nationwide are the
individuals who may be deemed to be its owners, not those of Peoples; and that
since none of the officers or directors of Nationwide n2 would participate in
the daily affairs of the proposed operation, Peoples could claim no ownership
participation. In some circumstances we might look to the stockholders of
a parent corporation as the real owners of a subsidiary. In the
circumstances of this case that reasoning is unrealistic. Peoples is a
separate corporate subsidiary, organized by Nationwide for the purpose of
operating broadcasting stations and functioning with substantial independence
in such activities. This is true even though the membership of the boards
of directors of the two corporations largely coincide. Since all of the
policyholders of Nationwide are owners, with equal votes, there is no
individual or small group with a substantial proprietary interest in Nationwide
or with the power to control the actions of its management. Thus, the
subsidiary is substantially independent and there is reasonable prospect of
stability in the ownership and management arrangements.
n2 Neither Evans nor Campbell is an officer or
director of Nationwide.
9. We hold that in the case of a mutual corporation or its
subsidiary, as with certain nonprofit corporations, the circumstances may be
such that we can find the same kind of assurance of providing a better service
to the public as is present in conventional cases of integration of substantial
ownership with a significant management role. We believe that is true
here with principals such as Evans and Campbell, in the light of their long and
important association with Peoples' broadcast operations, especially in
Columbus itself. Not to recognize the significance of their past contributions
to these operations, and what it portends for the character of the service of
the station proposed here, simply on the ground that they are officers of
Peoples but not of Nationwide, would be to elevate form over substance.
We, therefore, [*283] believe that the Review Board did not
realistically appraise the added assurance provided by their part in Peoples'
application.
10. But under our Policy Statement on Comparative Broadcast
Hearings, supra, at pages 395-396, the preference to be awarded Peoples is a
slight one. First, we note that Evans has now retired and his proposed
participation in station affairs as a consultant, therefore, adds nothing to
Peoples' integration showing. n3 With respect to Pollock, the proposed
general manager, his promotion to vice president is entitled to no decisional
weight, since the record is devoid of any indication that in the initial stages
of the operation he will have any influence in determining policy. n4 Bowman
Doss has held positions of responsibility in both Nationwide and Peoples for
many years, but there is no record showing that he will play a significant role
in the operation of the proposed facility. A different situation,
however, is presented with respect to Campbell. Although Peoples concedes
that, by reason of Evans' retirement, Campbell will now assume greater
responsibility for the operation of Peoples' other broadcast facilities, he
continues, nevertheless, to be an individual who would, in the event of a
grant, devote a substantial portion of his time to the management of the
station, and during the years involved in the initial operation, a major
portion of his time to the station. As executive vice president of
Peoples, Campbell has been responsible for the supervision of the licensee's
broadcast operations, and he has participated in the formulation of broadcast
policy since 1962. Since 1953, Campbell has been a resident of Columbus,
where he has been active in a variety of civic affairs. He is an
experienced broadcaster and his experience includes supervision of broadcast
facilities in the community to be served. On the other hand, on the facts
here and particularly since Campbell will not be devoting full time to the
station, the preference to Peoples, based on his participation and background
and experience in the Columbus area, is not a major one. See Policy
Statement, supra.
n3 We accord no decisional significance to
Peoples' representation that Evans, as a consultant, will devote more time to
the proposed station than has been indicated on the record. As we held in
the Policy Statement, no weight is given to merely consultative positions (1
FCC 2d at 395).
n4 At the hearing, Campbell testified that he
did not believe Pollock would be ready to assume substantial responsibility for
station affairs until 3 to 5 years after the station becomes operational.
11. Finally, we consider Peoples' contention that it merits a
substantial preference for its record of past performance, particularly for its
service to Columbus, where Peoples has operated a standard broadcast station
since 1947. The examiner found that Peoples' past record reflected a
"commendable attention to the public interest at all cultural levels and
in all aspects," and the Review Board commented that Peoples had "submitted
a showing of many meritorious programs broadcast over its various
stations." However, both the examiner and the Review Board concluded that
Peoples did not make such a showing of "unusually good performance"
as to merit credit in this area of comparison under the terms of the Policy
Statement. We believe that Peoples must be accorded a significant
preference for its past broadcast record.
12. A record of past performance provides an indication of the
quality of the performance which may be expected from a broadcaster
[*284] in the future, and we emphasized the importance of this
comparative criterion in the Policy Statement. Therein we stated that
favorable consideration for past performance is merited where the broadcaster
has demonstrated "unusual attention to the public's needs and interests,
such as special sensitivity to an area's changing needs through flexibility of
local programs to meet those needs * * *" (1 FCC 2d at 398) Through
WRFD-AM, Peoples has concentrated upon service to meet the particular needs of
the rural population of central Ohio. To accomplish this objective,
Peoples has staffed WRFD's farm department with three full-time farm
broadcasters. Numerous programs, both regular and special, of particular
interest to those engaged in agriculture have been provided over the
years. WRFD's news and public affairs staff consists of five full-time
newsmen who have not only provided coverage of local and State affairs but have
provided national and international coverage as well. WRFD-FM directs its
programming more to the urban audience and appears to provide a well-balanced
program service. Furthermore, throughout the period of its operations in
Columbus, Peoples has staffed its stations with individuals who have
demonstrated the vision and the ability to operate broadcast facilities in
response to the current needs of its listeners, and to meet such needs by
timely programs, on both a regular and a special basis, of which a large
percentage is locally originated. Peoples' past record portends a superior
performance in the operation of the proposed station, and it merits a
substantial preference in this category.
13. From the foregoing, it appears that Farragut has earned a slight
preference in the area of local diversification of control of the media of mess
communications. Local diversification is, of course, an important factor,
but its significance is diminished here because of the numerous competing
broadcast operations in Columbus, and the other broadcast interests of both
applicants. In our view, the preference received by Farragut for
diversification is clearly outweighed by the affirmative favorable qualities
demonstrated by Peoples in areas of comparison in which that applicant has
earned preferences. We believe that Peoples' proposal, which shows a
record of quality broadcast service to the community to be served, which
contemplates participation in daily station operations of a resident principal
with considerable broadcast experience and area familiarity and which provides
greater assurance that a substantial effort will be made to ascertain and meet
the ever-changing needs of the community in the operation of the proposed
station, is more likely to fulfill the Commission's objective of the best
practicable service to the public than the Farragut proposal which is lacking
in these respects. We, therefore, conclude that the public interest would
be better served by a grant of Peoples' application.
14. Accordingly, it is ordered, That the petition, filed on
February 23, 1967, by Peoples Broadcasting Corp., for leave to file a reply
brief Is denied; that its accompanying brief Is rejected; and that the petition
filed on March 6, 1967, by Farragut Television Corp., for leave to file
comments Is desmissed as moot; and
15. It is further ordered, That the application of Peoples
Broadcasting Corp. for a construction permit for a new television
broadcast [*285] station to operate on channel 47 in Columbus,
Ohio, Is granted; and that the application of Farragut Television Corp. for a
construction permit for like facilities Is denied.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
STATEMENT OF COMMISSIONER ROBERT T. BARTLEY CONCURRING IN THE RESULT
I concur in the result of granting the application of Peoples
Broadcasting Corp. I agree that, as set forth in our Policy Statement on
Comparative Broadcast Hearings, diversification of control of media of mass
communications is a primary factor in comparative considerations.
It is my position that in diversification of control of media, a
licensee's facilities, i.e., AM, FM, TV, make up a broadcast unit. As
technical advancements were made, and an AM licensee added FM and TV to enhance
its broadcast service to the community, I believe the public interest was
benefited. Thus, I find generally that a proposal to add a facility to
such a locally oriented unit is preferable to that of a multiple owner with
facilities in a number of cities.
STATEMENT OF COMMISSIONER ROBERT E. LEE
I concur in the result and invite attention to my statement issued on
the Policy Statement on Comparative Broadcast Hearings (1 FCC 2d 393 at 404).
STATEMENT OF COMMISSIONER JOHNSON REGARDING THE COLUMBUS, OHIO,
TELEVISION COMPARATIVE PROCEEDING
When more than one applicant requests a given television channel,
Commission procedure calls for their qualifications to be compared in the
selection of the winning applicant. This case involves a comparative
hearing for UHF television channel 42 in Columbus, Ohio. There are two
applicants for the channel, Farragut Television Corp. and Peoples Broadcasting
Corp. A hearing examiner's initial decision awarded the channel to
Peoples. The Review Board overturned this decision. The case comes
before the Commission on appeal from the Board. And the Commission has
reawarded the channel to Peoples. I dissent.
This is the first major action in which the Commission has been called
upon to apply the Policy Statement on Comparative Broadcast Hearings adopted in
1965 (1 F.C.C. 2d 393 (1965)). Prior to that statement there was no policy or
procedure at this Commission which attracted more unanimous or consistent
condemnation than its "comparative hearings." Virtually every
commentator who examined the problem concluded that the various factors which
the Commission took into account in evaluating competing applications were so
diverse, uneven, and sometimes contradictory that it was a rare case in which
one or more different results could not be reasonably supported.
Professor [*286] William K. Jones commented that "it seems
generally agreed that the large number of comparative criteria, the
complexities surrounding their application, the shifting emphases
accorded the underlying policy objectives, all contribute to a degree of
uncertainty and unpredictability that is probably unsurpassed in any other
decisional context." Jones, "Licensing of Major Broadcast Facilities
by the Federal Communications Commission," 64 (Administrative Conference
of the United States, Committee on Licenses and Authorizations, 1962). At
one time, the uncertainty of the standards which the Commission was applying in
comparative cases left its decisions open to the implication that political
considerations, more than anything else, determined how newspapers would fare
in license applications. See Schwartz, "Comparative Television and
the Chancellor's Foot, 47 Geo. L.J. 655, 690-693 (1959). Professor Louis Jaffe
accused the Commission of employing "spurious criteria, used to justify
results otherwise arrived at." Jaffe, "The Scandal in TV
Licensing," Harper's Magazine, September 1957, pages 77, 79. But
even when the taint of political machination had dissipated, the cry was still
heard that the Commission was applying no consistent standards. The
observer was still left with the uneasy feeling that extraneous considerations
could again dominate the comparative hearing process. And it was Judge
Henry J. Friendly's call for the development of workable standards (Friendly,
"The Federal Administrative Agencies," 53-73 (1962)) which seems to
have provided the impetus for the Commission's new 1965 Policy Statement.
Unfortunately, the course of this case seems to indicate either that
the Policy Statement was no improvement or, more likely, that the Commission --
perversely or ingenuously -- will not allow the sorely needed standards to
guide its decision-making. A hearing examiner, guided by that Statement,
awarded the permit to one party, Peoples. The Review Board, agreeing with
some of the examiner's reasoning and disagreeing with the remainder, reached
the opposite conclusion and awarded the permit to Farragut. The
Commission, with reasoning quite unlike that of either the examiner or the
Review Board (and disagreeing with both in some particulars on which they had
agreed), now reverses the Review Board, thus reinstating the conclusion which
the examiner had reached. From that opinion I am compelled to dissent,
and two of my fellow Commissioners have also indicated separate views.
Thus, whatever else may be said of the new Statement, it cannot be credited
with very good marks in this first test of its ability to advance the cause of
predictable results from easily applicable standards.
The Policy Statement states two objectives toward which the comparative
process is directed: The best practicable service to the public and a maximum
diffusion of control of the media of mass communications. Then several
relevant factors in pursuing these objectives are enunciated, three of which are
involved in this decision. They are (a) diversification of control of the
media of mass communications; (b) full-time participation in station operation
by owners (referred to as the "integration of ownership and
management"); and (c) past broadcast record.
[*287] The first difficulty in this case arises because the
two applicants, Peoples and Farragut, both control multiple broadcasting
properties or permits. Thus each presents the possibility that awarding
the station to it will increase concentration of control of the broadcast
media. Diversification of control is one of the objectives of the Policy
Statement. But the configuration of the respective interests of the two
applicants is such that each presents decidedly different aspects of the concern
we normally refer to under the single rubric "concentration of
control." Farragut controls three permits for UHF television stations, but
these are located in widely scattered parts of the country. Peoples'
broadcast properties are more diverse in kind -- one VHF television station,
three AM, and two FM radio stations -- but much more heavily concentrated
geographically. As I have intimated before, Paris-Bourbon County
Broadcasting, Inc., 6 F.C.C. 2d 894 (1967) (concurring statement), concentration
of ownership in a single locality is at least different from, and is
potentially more harmful than, decentralized multiple ownership. The
Policy Statement recognizes this, at least qualitatively, when it says,
Other interests in the principal community proposed to be served will
normally be of most significance, followed by other interests in the remainder
of the proposed service area and, finally, generally in the United
States. However, control of large interests elsewhere in the same State
or region may well be more significant than control of a small medium of
expression (such as a weekly newspaper in the same community). 1 F.C.C.
2d 393, 394-395 (1965).
In this case Peoples has two broadcast properties in Columbus, the very
city where it now seeks a third, and two in Cleveland, the largest city in the
State, located only 150 miles from Columbus. Both these situations were
recognized in the Policy Statement as embodying more danger than concentration
in the country generally, yet the Commission is able to salvage only a
"slight preference" for Farragut over Peoples in this regard.
The ostensible reason for this nonchalance in evaluating the extent to
which Peoples will aggravate the concentration of control of the media in Ohio
is the existence of "other media in the area in which the applicant
(Peoples) has no interest." The other media, to which the Commission makes
specific reference, are three VHF television stations, one educational UHF
television station, six AM radio stations, and seven FM radio stations.
Of course, I agree that the existence of competing media in Columbus makes the
danger from concentration of control less severe. But I cannot conclude,
as does the Commission, that these other media reduce the danger so much as to
call for only a "slight preference" for Peoples' rival. If the
Commission in promulgating the Policy Statement had wished to minimize the
demerit to be given where there were competing media in the locality, it would
have made no sense to say, as it did, that "control of large interests
elsewhere in the State or region" may be of special significance.
The State or region will always have numerous competing media, the coverage of
many of which will not overlap with that being awarded.
[*288] Moreover, the Commission has failed completely to
examine the real extent of this alleged diversity in Columbus. The
majority parades Columbus' 17 other broadcasting stations, but it does not
mention that three of those properties are owned by Taft Broadcasting Co., which
has three other Ohio stations among its numerous properties; that one of the
television stations is owned by Avco Broadcasting Corp., a major multiple owner
nationally with two other Ohio stations; that the only other commercial
television station is owned by one of the local daily newspapers; and that all
the FMs in the city save one are jointly owned by (and to a great extent carry
the same programs as) the AMs. In other words there are eight different
owners of broadcast properties in Columbus, not 18, and of those eight, seven
are owners of other media outlets. Media diversity is far from rampant in
Ohio's State capital.
The majority finds a preference for Peoples because of its integration
of ownership and management, which offsets Farragut's "slight preference"
on diversity. Let us examine the logic of this preference. Peoples,
it should be explained, is a broadcasting subsidiary of Nationwide Mutual
Insurance Co., a nonstock company owned by its 2 1/2 million
policyholders. It might reasonably be asked how Peoples proposes to
integrate its numerous owners into the management of channel 42. The
Policy Statement indicates that a comparative preference will be given to an
applicant which proposes to integrate ownership and management of the station,
so that "legal responsibility and day-to-day performance [may] be closely
associated." 1 F.C.C. 2d 393, 395 (1965). It seems clear that the
intention, wisely and necessarily, was to restrict such preferences largely to
individuals or small groups which own stations and can become meaningfully
involved in their management. For the Statement notes that integration
"frequently complements the objective of diversification, since
concentrations of control are necessarily achieved at the expense of integrated
ownership." 1 F.C.C. 2d 393, 395 (1965) [emphasis added]. This would
seem to indicate the far more sensible conclusion that credit for integration
of ownership and management is simply inapplicable to widely held companies in
which the "owners" are really only "investors." But the
Commission has decided that officers of broadcasting subsidiaries of nonstock
companies can be counted as "owners" for integration purposes.
And on this basis Peoples is given a preference largely because one officer of
Peoples will devote a "substantial portion of his time" (though not
all) "to the management of the station * * *." The Commission has
earlier stated that "The criterion here is in terms of the integration of
owners into day-to-day operation of the station, and not in terms of
integration of officers and directors; and because he would not own stock in
the corporation, Bernard (an 'integrated' officer) can be viewed only as an
employee of the station * * *." Veterans Broadcasting Co., 38 F.C.C. 25,
43 (1965). (It is true that the Commission has in the past given integration
credit to municipal governments as owners, for which, like Peoples, literal
integration of ownership and management is impossible. City of
Jacksonville, 12 P&F Radio Reg. 113, 180 (1956). But such a policy, while
possessing no foundation in logic, might be predicated on some public policy
encouraging cities to run [*289] stations. When applied to a
business entity such as Nationwide and Peoples, the policy does not even have
this tenuous redeeming feature.) There is no more incentive for officers of a
nonstock company such as Nationwide or its subsidiary, Peoples, to operate the
station conscientiously than there is for nonowning officers of any other
business entity. And, as the Commission has recognized, if any business
entity could obtain integration credit by making the proposed station manager
an officer, the integration credit would be utterly meaningless. Farragut
could then have reached the same position for which the Commission gives Peoples
a preference merely by making the proposed station manager a vice president of
its corporation. It is as simple as that. This would reduce the
integration credit to an absurdity, yet it is the logical extension of the
opinion the majority issues today. In the case of Peoples, the argument
for integration credit is even further stretched because the supposedly
"integrated" officer will be in charge of all of Peoples' seven
stations, not just this new Columbus UHF.
The majority also assigns a preference to Peoples for its past
broadcast record. Because Peoples has a history of broadcasting
performance, it has had an opportunity, which neophyte Farragut has not, to
compile a past broadcast record of distinction. The Policy Statement
makes clear that only the extremes in past performance will be taken into
account:
A
past record within the bounds of average performance will be disregarded, since
average future performance is expected. Thus, we are not interested in
the fact of past ownership, per se, and will not give a preference because one
applicant has owned stations in the past and another has not. 1 F.C.C.2d 393,
398 (1965).
But neither the Review Board nor the hearing examiner could conclude
that Peoples' prior record was unusually good enough to merit a
preference. The Review Board noted that Peoples had had some meritorious
public service programming but also alluded to the unusual amount of spot
advertisements on one of the Peoples' stations. The majority is able to
cull nothing spectacular from Peoples' record and does not mention the
blemishes noted by the Review Board. Yet Peoples is inexplicably awarded
a preference for its past broadcast record.
It seems clear that what happens when the Commission relies on past
average programming performance as evidence of future distinguished conduct is
that credit is being given for having been a broadcaster in the past -- and
nothing else. The majority's treatment of the integration of ownership
and management leads to the same conclusion. If one applicant has been
broadcasting in a town over a period of years, of course he can point to some
programming well suited to the needs of that community. That is
supposedly what we require when we award a license. This is all the
majority has shown in the case of Peoples. And, of course, such an
applicant has some personnel available who are experienced in broadcasting to
that community, who can be given some responsibilities with regard to the new
station, and who can be made officers of the company. This, too, is a
description of the Peoples situation. In fact the Commission is rather
candid in expressing its reliance on Peoples' experience in Columbus
itself. The Peoples' [*290] officers, who represent the
"ownership" which will be integrated with management, are cited by
the majority for "their long and important association with Peoples'
broadcast operations, especially in Columbus itself" [emphasis
added]. And in examining People's past broadcast record, the majority
seems more concerned with Peoples' long and close association with Columbus
than with the quality of its programming service, per se.
And therein lies the irony. For when credit is given for having
broadcast in the community before, and for little else, the first and very
important criterion in comparative consideration -- diversification of the
ownership of the mass media -- is seriously undercut. The slight credit
which is given Farragut because Peoples owns Columbus stations can then be
taken away forth with by reference to Peoples' past broadcast record and
ownership-management integration.
And so we have come full circle to the very same evils which the Policy
Statement was designed to cure. We have one central fact in this case:
Peoples already owns Columbus stations. By manipulating this one fact,
either of the two possible results in this case is reached and supported by any
number of rationales.
The comparative hearing process itself is somewhat of an anomaly when
viewed in the total context of the Commission's method of assigning
licenses. A person who wants to enter broadcasting has three
alternatives. (a) He can buy a station from another licensee. To do
so he need only find the right station at the right price in a free market, and
meet certain minimum FCC qualifications. The Commission is prevented by
congressional mandate from considering alternative buyers for a broadcast
property. 47 U.S.C. 310(b) (1964). (b) He can apply to the FCC for
a vacant channel and, provided he meets minimum qualifications and no one else
competes for the channel, he is awarded a license. (c) If, when the
potential station operator applies for a new license, someone else also
applies, then both must go through the comparative hearing process which
involves this extraordinarily expensive and time-consuming weighing of
unrelated and noncomparable factors. (These burdens are, of course,
instrumental in encouraging the purchase-of-stations rather than the
comparative-hearing entry into broadcasting. A potential owner may be
frightened away from a hearing in the first place, or bought out part way
through.) If our comparative criteria are relevant in one context why not in
the others? See concurring statement of Commissioner Lee, 1 F.C.C. 2d
393, 404 (1965).
There are other occasions when comparative hearings are used for
determining broadcast licensees: When a competing applicant tries for a license
that is up for renewal and in selecting among competing cities for a given
frequency assignment. Comparative hearings at renewal time occur only
rarely, and almost never result in the award of a license to the challenging
applicant. Most license renewals are made in regular course to
applicants, whether they have acquired their license through purchase, uncontested
award, or Commission decision based on a comparative hearing. When
applicants are from different communities, the determination must first be made
as to which proposed service will result in the most fair, efficient, and
equitable distribution of radio service, See Policy Statement on Section
307(b) [*291] Considerations for Standard Broadcast Facilities
Involving Suburban Communities, 2 F.C.C. 2d 190 (1965).
It seems to me that this crazy quilt design for disposing of broadcast
properties is unworkthy of a sophisticated administrative process.
Without endorsing any specific proposal, I would like to see Congress and this
Commission give serious consideration to alternative methods. Several
commentators have suggested a type of auction in which a station is awarded to
the highest bidder among minimally qualified candidates. See Levin,
"Federal Control of Entry in the Broadcast Industry," 5, J. Law &
Econ. 49 (1962); Levin, "Broadcast Regulation and Joint Ownership of
Media," 175 (1960); Schwartz, "Comparative Television and the
Chancellor's Foot," 47, Geo. L.J. 655, 696-697 (1959); Coase, "The
Federal Communications Commission," 2, J. Law & Econ. 1 (1959).
Even a random drawing or first-come basis for awarding licenses between
competing applicants would save a great deal of time and expense and promise
results no less arbitrary than our present comparative process -- as
illustrated by the spectacle of this very case. Nor is the problem
limited to commercial broadcast properties. The Commission must also
allocate scarce frequencies to other competing services, such as land mobile
(e.g., police cars, taxicabs), microwave, amateur operators, citizens band, and
satellites. In every instance of allocating blocks of frequencies to
competing services, as well as allocation within those blocks to competing
applicants, the Commission is faced with analogous needs for criteria for
choice. See Metgzer & Burris, "Radio Frequency Allocation in the
Public Interest: Federal Government and Civilian Use," 4, Duquesne L. Rev.
1 (1965), and Johnson, "Frequency Nonmanagement and the More Effective Use
of Radio," Communications, March 1967, page 16.
Even if we must live with the comparative process of allocating
valuable commercial broadcast properties for some time to come, surely we can
avoid the very evils which it was hoped the Policy Statement would cure.
We can make more of an attempt to establish meaningful standards for rational
evaluation of competing applicants. Using this case as an example, I think
we can do away with the possibility of contradictory use of the same set of
facts. For example, if we view diversification of ownership of the media
in a given town as decidedly more important than having new broadcasting
facilities in the hands of the town's experienced broadcasters, even if
they are fairly capable -- as our Statement would seem to indicate -- then we
could award any station to a qualified but inexperienced applicant if the
competition held other local media. We could require very significant national
holdings by the opponent to overcome a demerit based on ownership of local
competing media. Such an approach would seem to me more sensible, and
consistent with its Policy Statement, than what the Commission has done
here. What is perhaps more important, it is clear.
If the majority disagrees with the policy judgments I would apply, I
may object. But I would find almost any fairly certain rules preferable
to the amorphous glob with which we deal today. I do not deny that
difficult judgments will still have to be made, but as this Commission now
applies the Policy Statement the difficult has become impossibly
uncertain. And such uncertainty can only lead us back to the appearance,
and potential reality, of arbitrariness.