In re Application of BOOTH AMERICAN
CO.,
New Class A FM Broadcast Station in
File No. BPH-6132
FEDERAL COMMUNICATIONS COMMISSION
14 F.C.C.2d 136
May 15, 1968
JUDGES:
The
Commission, by Commissioners Bartley, Acting Chairman; Lee, Cox, Wadsworth, and
Johnson, with Commissioners Cox and Johnson
dissenting and issuing a statement, granted the application of Booth
American Co. for a construction permit for a new class A FM broadcast station
in
DISSENT:
DISSENTING
OPINION OF COMMISSIONERS KENNETH A. COX AND NICHOLAS JOHNSON
Regional
Concentration of Control of Media (In re Application of Booth American Co. for
a New FM in
Introductory
Statement
Booth
American Co. owns broadcasting properties -- principally in the State of
This
opinion is a revision of our original statement in the case. In the original version we said, "Booth
American owns nine newspapers and now 10 radio stations in [a] 40-county area
[principally in
n1 Our original opinion in this matter was
issued as FCC Public Notice 17052, May 16, 1968.
There
may well have been changes in ownership since May 15, 1968. For example, it has recently come to our
attention that the Ypsilanti Press (the smallest paper, and the second Booth
paper in
We
should note, however, that our desire to specify precisely the
interrelationships of that parties in this matter has by now led us on a rather
extended odyssey to an understanding of media control in
[*137] We began with a concern about a
single man or family controlling a substantial accumulation of broadcast
properties within a relatively limited area.
The risk, of course, is that this regional concentration of control of
the mass media holds the potential for the stifling of dissenting views, the
failure to provide the very diversity of information and opinion that our
national system of 7,500 locally oriented stations is designed to
encourage. It is a risk that is made
all the more severe if broadcast ownership is in any way related to newspaper
ownership in the same area. There is
such a relationship in this case. We
had thought it was one of common ownership.
It is not.
We
should perhaps note at this point that the FCC station ownership reports do
indicate the names of all owners of over 1-percent interest in a licensee. n2 They do not list properties of the licensee nor do
they list properties owned by major shareholders of the licensee. n3
The only records of the ownership of privately held newspapers and magazines
(which do not hold broadcast licenses) are maintained by the Post Office
Department (because of the second-class mailing privileges involved). n4
Post Office reports do not list the percentage ownership of the shareholders. FCC and Post Office records are public, but
are not published in useful form. And
information about family relationships, interlocking directorates, banking and
law firm relationships, and institutional ownership is often impossible to
uncover. The short of the matter is
that the American people -- dependent upon the integrity of the mass media for
their very participation in a meaningful democracy -- may find themselves (and
their governmental representatives) hard pressed to find out who really controls
their daily diet of information
[*138] and opinion. We believe this state of affairs is
intolerable in a nation such as ours.
The kind of information with which we are here dealing should be readily
available to American citizens and officials in public libraries throughout
this country. n5
n2 47 CFR sec. 1.615 (1968); see also FCC
from 323.
n3 The Commission has a number of
different forms on which information concerning ownership and the economic
interests or relationships of persons associated with licensees are filed. These application forms are not consistent
in the information requested and there appears to be no systematic requirement
that information filed when a licensee first acquires a station be updated.
An applicant may first acquire a station
either through the process of filing for a new station on FCC form 301
(application for authority to construct a new broadcast station) (this
application must also be filed when major modifications are made in the
facilities of a station) or by seeking approval for purchase of a station on
FCC forms 314 or 315 (application for consent to assignment (or transfer of
control) of broadcast station construction permit or license). In either case the applicant must file
information concerning who owns or has an interest in (directly or indirectly)
the applicant; the interests of the applicant or the immediate family of any of
the applicant's principals in other broadcast stations or applications; and,
finally, information "concerning the occupation, business, and financial
interests, at the present time and during the past 5 years of the applicant and
of each party to this application * * *." This material is to include
"principal" occupations and businesses but also anywhere there is or was
a 25-percent interest or an official relationship. See FCC forms 301, 314, and 315.
The Commission's ownership form (form 323)
requires only that those who have an interest in the licensee report it; that
stock transactions and changes in directors be reported and that other
broadcast interests be disclosed. The
renewal form (form 303) requires that any interest in other broadcast stations
be disclosed; and a listing of all other businesses in which applicant,
officers, directors, or principal stockholders have a 25-percent interest.
Thus the most complete information about a
Commission licensee is accumulated at the time the applicant first becomes a
licensee, and there is no systematic requirement that this information be
updated in the Commission's files. The
only updating of the information originally filed comes when a licensee seeks a
new station either by a construction permit or through purchase.
Apparently in this case Booth American did
not file the required information in its application for a new FM construction
permit. Sec. II of BPH-6132 simply
refers to past filed renewal or ownership forms for other Booth American
stations, which, as we have noted above, do not contain the information
required in an application for a new station.
n4 Once a year every owner of a
publication having second-class mail privileges must file an ownership report
on Post Office Form 3526: Statement of Ownership, Management, and
Circulation. See 39 U.S.C. sec. 4369
(1964); 39 CFR sec. 132.6 (1968).
The Securities and Exchange Commission
requires every issuer of a security registered with the SEC to file periodic
reports in order to maintain on a current basis the information contained in
the registration statement. Such
information includes "* * * directors, officers, and underwriters, and
each security holder of record holding more than 10 percent * * *." See 15
U.S.C. secs. 77aa, 781, 78m (1964); SEC form 3; SEC form 4; 17 CFR sec.
240.16a-1 through sec. 240.16a-10 (1968).
n5 There are some publications which
incidentally and with various degrees of accuracy publish information
concerning the ownership of media.
There are no regular publications which analyze ownership. Some of the informational publications
include: Editor and Publisher Yearbook, CATV and Station Coverage Atlas,
Television Factbook, Broadcasting Yearbook, Ayer Directory of Newspapers and
Periodicals, Bowker Book Annual of Library and Book Trade Information.
On
May 15 we knew that Booth American, controlled by John L. Booth and his family,
owned 10 radio stations in the 40-county area bounded by Muskegon and Saginaw
on the north and South Bend and Toledo (both just over the Michigan border) on
the south. These included:
Even
if this were the end of the matter we would still urge, as we said on May 15:
In
granting this new FM station the Commission must find that the public interest
will be served. It is [our] view that
the Commission can not legitimately make that finding without further inquiry
into the circumstances of this case in view of the extensive media holdings of
this company. n6
n6 FCC Public Notice 17052, May 16, 1968,
p. 2. Since that time we have discovered that the Booth family holdings include
even more than the 10 (or 14) stations we then had in mind and more than an
interest in the nine newspapers of Booth Newspapers, Inc.
The
Booth Family
The
Booth empire was originally organized by John L. Booth's father (Ralph Booth)
and uncle (George G. Booth, Ralph Booth's brother). The children of George G. Booth (who have ownership interests in
Booth Newspapers) include Henry S. Booth, Warren S. Booth,
n7 The information in this paragraph comes
from a variety of sources.
Booth
Newspapers, Inc., was begun by the Booth brothers in conjunction with five
other persons. See Triad transcript
(note 13 infra) 5589, 5599, 5862-66. The interest of the Cranbrook Foundation
and the Cranbrook Foundation 1960 Supplemental Trust is detailed at p. 36, note
1 of a publication titled "Cranbrook Financial Reports for the Years
Ending June 30, 1967-1966-1965" (November 1967). Also see FCC form 323 (ownership) filed for WWJ-AM-FM-TV by the
Evening News Association; BPH-6132, the application for an FM station in
Saginaw, Mich., filed by Booth American; and subcommittee chairman's report to
Subcommittee No. 1, House Select Committee on Small Business (sixth
installment), "Tax-Exempt Foundations and Charitable Trusts: Their Impact
on Our Economy" 287 (1968).
[*139] Booth Newspapers owns papers in
the same 40-county area in which Booth American owns stations:
What
we have since discovered, however, is that the same individuals who own Booth
Newspapers also have substantial interests in one of
And
the Evening News Association (which is the company name for the paper) also
owns one of
Cable
Television
Booth
American not only owns the maximum possible number of radio stations, but is
also heavily involved in cable television. Booth American presently has systems operating or planned for
n8 Cable television provides television
service by multi-channel wire into a subscriber's home. Normally more channels are provided than the
subscriber can receive off the air. The
cable system company exercises some choice, subject to FCC rules, as to what
channels will be carried by the cable system.
In addition a cable company may originate local programs over one of the
cable channels. See 47 CFR sec. 74.1100-09 (1968), Second Report and Order, 2
FCC 2d 725 (1966). Two recent Supreme Court cases have dealt with FCC
regulation of cable television and the copyright liability of the cable
operator under the copyright law. See
The
Commission after hearing recently authorized CATV program origination in
Booth
American also owns operating CATV systems in Cadillac and
Family
Relationships
The
FCC's policies regarding maximum station ownership and duopoly (stations with
overlapping signals) are designed to encourage
[*140] diversity of information
and opinion in this country. n9 We believe they should be interpreted with that
spirit in mind.
n9 The Commission's rules on multiple
ownership prohibit "concentration of control of * * * broadcasting in a
manner inconsistent with public interest, convenience, or necessity."
Specifically rules on duopoly prohibit common ownership or control of two AM
(or FM) radio stations whose signals of a certain strength (1 mv/m) overlap; or
two TV stations whose grade B contours overlap. In addition the common
ownership of more than seven AM, seven FM, or seven television stations (five
of which may be VHF) is deemed inconsistent with the public interest. See 47 CFR secs. 73.35, 73.240, 73.636
(1968). The Commission has recently
proposed to limit the common ownership of full-time broadcast properties in a
single market. See 33 F.R. 5315 (Apr.
3, 1968.)
When
there is but a single individual or corporation involved the rules are
relatively easy of application. The
problems arise in the case of family relationships, interlocking directorates,
and common banking or other professional or institutional ties.
Consider,
for example, the case of two stations (station 1 and station 2) with
overlapping signals. Station 1 and
station 2 could not both be owned by Mr. A or by a single corporation. Mr. A may own station 1 and B own station 2.
Can the "A and B partnership," or "A and B corporation,"
own both 1 and 2? No. What if A and B
are in partnership in other ventures but separately own the two stations? What if A and B are brothers, father and
son, or cousins? What if C sits on the
board of directors of both A, Inc., and B, Inc.?
There
are numerous FCC cases governing such situations. n10 Our position would be that
individual cases must be resolved on their merits, but that any relationship
the holds the potential for multiple media influence raises a presumption that
should cause the FCC pause. When
serious it should be the basis for further inquiry -- normally through
hearings.
n10 For example, the Commission recently
designated for hearing the FM application of Brian E. Cobb for
For
a further discussion of the Commission's actions concerning the concept of
control under its multiple ownership rules see Radio Athens, Inc. v. F.C.C.,
F. 2d (D.C. Cir. 1968) (No. 21,476,
decided July 9, 1968).
In
this case, as it turns out, there is more than a mere family relationship
between the descendants of the two brothers who began the Booth family media
interests. It is true that Booth
American does not own newspapers. But John
L. Booth (who personally, with his children, owns all of that company) does
have an ownership interest in Booth Newspapers and sits on that company's board
of directors. Counsel for Booth
American advises that this interest constitutes "slightly more than 8
percent" of the stock of Booth newspapers. n11 Presumably this computation of 8
percent includes all of John L. Booth's newspaper interests -- for they are
scattered, and the Post Office records do not indicate percentages of
ownership. He is listed not only
individually, but also in connection with trusts involving the [*141]
National Bank of
n11 Letter from Marcus Cohn to
Commissioner Johnson, May 27, 1968, p. 1.
n12 The "Statement of Ownership,
Management, and Circulation" filed with the Post Office Department on
Sept. 30, 1967, for the Flint Journal, one of the Booth newspapers, lists under
the heading "Principal Stockholders of Booth Newspapers, Inc." the
following:
John L. Booth,
John L. Booth and Louise Camper Booth,
trustees under agreement with Mary B. Booth, dated Apr. 16, 1951; care of
National Bank of
The Detroit Bank & Trust Co.,
trustees, under agreement dated Apr. 1, 1944 with
John L. Booth,
Other Booths mentioned as principal stockholders include
Florence Booth Beresford, Henry S. Booth, Warren S. Booth, Virginia Booth
Vogel, and Grace Booth Wallace. An
additional owner is Booth Broadcasting Co. -- apparently a subsidiary of Booth
American.
In
addition, other sources list total interests of the Detroit Bank & Trust as
5.2 percent of Booth Newspapers (0.8 percent sole voting rights and 4.4 percent
partial voting rights) and 16.1 percent of the Evening News Association (5.8
percent sole voting rights and 10.3 percent without voting rights), and the
National Bank of Detroit as holding 9.6 percent of Booth Newspapers (3.8
percent in sole voting rights and 5.6 percent [sic] without voting
rights). See staff of Domestic Finance
Subcommittee of the House Committee on Banking and Currency, "Commercial
Banks and Their Trust Activities: Emerging Influence on the American Economy"
505, 507 (1968).
Roughly
10 years ago, in a comparative hearing, the Commission found John L. Booth's
relationship to Booth Newspapers to be only "of slight significance"
in evaluating the criterion of diversification of mass media. n13
We do not consider ourselves bound by this finding now, some 10 years later, in
considering the wisdom of a hearing.
Moreover, we must note that the Commission had earlier concluded, in
1949, that Booth "receives his principal income from dividends upon his
17,212 shares of stock in Booth Newspapers, Inc., which has a total of 500,000
outstanding stock shares." n14
Booth was not at that time a director of Booth Newspapers He is now. And his 8-percent interest would today
represent about 40,000 shares. n15 An examination of the 1958 Triad hearing record reveals
that Booth's interest in Booth Newspapers was an important issue in the
case. And that record also showed that
there had been personal antagonism between John L. Booth and the principal
owners of Booth Newspapers. n16 Once again,
however, we do not believe ourselves bound by evidence some 10 years out of
date.
n13 Triad Television Corp., 16 P. 3 F.
Radio Reg. 501, 671 (1958).
n14 Booth Radio Stations, Inc., 4 P. &
F. Radio Reg. 616, 626 (1949).
n15 In view of the fact that the Cranbrook
Foundation's 70,354 shares produced dividends of $309, 524 in 1966, his
40,000-share interest would represent an annual income of about $175,000. Subcommittee chairman's report to
Subcommittee No. 1, House Select ComTrusts: Their Impact on Our Economy"
287 (1968).
n16 See the transcript of the testimony of
John L. Booth at pp. 5567ff in the Triad case (docket No. 11169) (note 13
supra), esp. at 5998-99.
There
is another facet of this case that bothers us.
Even if John L. Booth's 8 percent were deemed sufficiently small to
remove concern regarding his relation to the newspaper (which we are not
prepared to accept without a hearing), it is, as a matter of FCC regulation,
sufficiently large (over 1 percent) to prohibit Booth Newspapers from owning
broadcasting properties. n17 And yet, as we have seen, the same principals who
control Booth Newspapers have a substantial -- and perhaps a controlling --
interest in the Evening News Association (Detroit Evening News) which is the
licensee of very valuable radio and television properties in
n17 The rules cited in note 8 supra
provide in part "no license for a * * * broadcast station shall be granted
to any party * * * if such party, or any stockholder, officer, or director * *
* has any interest in * * * any other * * * broadcast station * * * if the
grant * * * would result in a concentration of control of * * * broadcasting in
a manner inconsistent with public interest, convenience, or necessity." In
the same rules the Commission declares as a per se violation of the public
interest the ownership of more than seven AM and seven FM radio stations. Thus, under these rules Booth Newspapers and
Booth American together could not own more than seven AM and seven FM radio
stations so long as John L. Booth had substantial ownership interests in both
companies.
CONCLUSION
[*142] We believe the geographical
concentration of Booth American's radio stations and cable television systems
in
We
do not believe this Commission should further exacerbate such power, by the
grant of this Saginaw FM station, without a thorough hearing and careful
inquiry into these issues.
APPENDIX:
APPENDIX
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Booth American |
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Radio |
CATV |
Booth newspapers |
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Toledo, Ohio |
WTOD-AM |
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WKLR-FM |
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South Bend, Ind |
WJVA-AM |
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WRBR-FM |
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Ann Arbor, Mich |
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Ann Arbor News
(daily |
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circulation
34,382). |
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Bay City, Mich |
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Bay City Times
(daily Circulation
39,918). |
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Detroit, Mich |
WJLB-AM |
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WMZK-FM |
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Flint, Mich |
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Flint Journal
(daily |
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circulation
111,376). |
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Grand Rapids,
Mich |
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Grand Rapids
Press (daily circulation
129,946). |
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Holland, Mich |
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Holland |
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Jackson, Mich |
WIBM-AM |
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Summit
Township, Leoni |
Jackson Citizen
Patriot |
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WBBC-FM |
Township. |
(daily
circulation 39,603). |
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Kalamazoo, Mich |
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Kalamazoo
Gazette (daily |
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circulation
57,224). |
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Muskegon, Mich |
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Muskegon,
Muskegon |
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Town- |
Muskegon
Chronicle (daily |
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ship, Muskegon
Heights, |
circulation
49,699). |
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North Muskegon,
Norton |
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Township,
Roosevelt Park |
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Saginaw, Mich |
WSGW-AM |
Saginaw, |
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Saginaw
Township, |
Saginaw News
(daily circulation
59,374). |
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New FM |
Carrollton
Township, |
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Zilwaukee. |
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Ypsilanti, Mich |
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Ypsilanti |
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Press n1 (daily |
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circulation 12,851). |
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n1 As noted in footnote 1, infra, the
Ypsilanti Press has apparently been sold.