In the Matter of WHDH, INC.,
Docket No. 8739 File No.
BPCT-248; Docket No. 11070 File No. BPCT-1657;
Docket No. 15204 File No. BRCT-530; Docket No. 15205
File No. BPCT-3164;
Docket No. 15206 File No. BPCT-3170; Docket No. 15207
File No. BPCT-3171
FEDERAL COMMUNICATIONS COMMISSION
16 F.C.C.2d 1 (1969); 15 Rad. Reg.
2d (P & F) 411
RELEASE-NUMBER: FCC 69-82
January 22, 1969 Adopted
COMMISSIONER
BARTLEY FOR THE COMMISSION: CHAIRMAN HYDE ABSTAINING FROM VOTING AND ISSUING A
STATEMENT; COMMISSIONER ROBERT E. LEE DISSENTING AND ISSUING A STATEMENT;
COMMISSIONER COX NOT PARTICIPATING; COMMISSIONER JOHNSON
CONCURRING AND ISSUING A STATEMENT; COMMISSIONER H. REX LEE ABSENT.
I. Introduction
1. The history of this proceeding may be found
in the initial decision of Hearing Examiner Herbert Sharfman (FCC 66D-47,
released August 15, 1966), and will not,
therefore, be set forth here. However,
it will be helpful to an understanding of the manner in which this proceeding
has reached its present posture if certain background facts are mentioned
briefly. In September of 1962, the
Commission released a decision n1 in which it affirmed its earlier decision of 1957 (22 FCC 767, 13 R.R.
507), n2
reinstated the grant of the application of WHDH, Inc. (WHDH) for authority to
construct and operate a new television broadcast station on channel 5, Boston,
Mass., and denied the competing applications of Greater Boston Television Corp.
and Massachusetts Bay Telecasters, Inc.
In addition, the Commission granted the applications (BLCT-761 and
BLCT-762) of WHDH for licenses to cover construction permit, and issued such
licenses for a period of 4 months only.
Both WHDH and Greater Boston appealed from that decision. When WHDH filed its application for renewal
of license, new and competing applications for the channel 5 facility were
filed by Charles River Civic Television, Inc. (
n1 33 FCC 449, 24 R.R. 255.
n2 Appeals were taken from the
Commission's 1957 and 1962 decisions to the United States Court of Appeals for
the District of Columbia Circuit. Those
appeals are pending before the court, and the court has retained jurisdiction
of the cases.
n3 As of the time of designation
for hearing, 65 percent of the stockholders of Greater Boston II held 73.68
percent of the stock of Greater Boston Television Corp., or Greater Boston
I. Although the Commission was aware
that the composition of Greater Boston I and Greater Boston II was
substantially the same, and normally Greater Boston II would be dismissed for
this reason, the Commission determined that it would be inequitable to require
dismissal of that application since the extended term of WHDH's operation under
temporary authority deprived Greater Boston II of the opportunity to file a
competing application against an ordinary renewal.
2. After the appeals from the September 1962
decision had been argued but before the court had announced its decision, Mr.
Choate of WHDH died. Consequently, the
U.S. Court of Appeals for the District of Columbia Circuit, on April 16, 1964,
remanded the proceeding to afford the Commission the opportunity to consider
whether and to what extent the changed conditions arising from Choate's death
affect the awards to WHDH. n4 The Court indicated that Choate's
death might also be pertinent to the proceeding already designated for hearing
on comparative issues, that the evidence as to the merits and demerits of WHDH,
absent Choate, might be material to both proceedings, and that the Commission
could appropriately adopt a procedure which would permit the taking of this
evidence only once. Thereupon, the
Commission by memorandum opinion and order (FCC 64-404) released May 8, 1964,
reopened the record in dockets Nos. 8739 and 11070 (concerning the WHDH and
Greater Boston I initial applications), and remanded the proceeding for hearing
and initial decision on the following issues:
n4 Greater Boston Television Corp.
v. Federal Communications Commission, 344 F. 2d 552, 2 R.R. 2d 2040. The court
retained jurisdiction of the cases.
(1) To
determine the changes made by WHDH, Inc. as a result of the death of Robert B.
Choate; and
(2) To determine, in light of the evidence
adduced pursuant to the above issue and the absence of Mr. Choate, whether the
Commission's decision of September 25, 1962, in dockets Nos. 8739 and 11070
should be modified, and, if so, in what respects such decision should be
modified. n5
n5 The following possibilities
were contemplated by the Commission: whether the grant to WHDH should be
reaffirmed, whether a grant should be made to Greater Boston Television Corp.
(Greater Boston I), or whether there should be no grant in dockets Nos. 8739
and 11070 in the circumstances.
The Commission contemplated that
the hearing examiner would determine the above issues first in his initial
decision, and then treat the issues in dockets Nos. 15204-15207 in the same
document. The Commission also
consolidated the reopened proceedings in dockets Nos. 8739 and 11070 with the
proceedings in dockets Nos. 15204-15207 for the limited purpose of taking
evidence as to the effect of Choate's death on the WHDH applications in these
proceedings. It was further provided
that all applicants in dockets Nos.
15204-15207 would be permitted to address themselves to the question of
the extent to which the operating record and experience of WHDH on channel 5
should be considered and the weight to be accorded, in the event that its
application in docket No. 15204 is determined to be one for renewal of license
or is treated as one for initial license.
3. The issues in this proceeding, either as
included by the Commission or as added by the Review Board, are as follows:
To
determine the changes made by WHDH, Inc. as a result of the death of Robert B.
Choate.
To
determine, in light of the evidence adduced pursuant to the above issue and the
absence of Mr. Choate, whether the Commission's decision of September 25, 1962
in docket Nos. 8739 and 11070 should be modified, and if so, in what respects
such decision should be modified.
To
determine what efforts have been made by Greater Boston TV Co., Inc. to
ascertain the programming needs and interests of the area its application
proposes to serve and the manner in which it proposes to meet such needs and
interests.
To determine
whether Greater Boston TV Co., Inc. has reasonable assurance of being able to
secure its proposed antenna site.
To
determine, with respect to the stockholders, directors, and officers of WHDH,
Inc.'s parent corporation, the Boston Herald-Traveler Corp., the information
required by section II of FCC form 301, and, in light of the evidence adduced,
to determine whether WHDH, Inc. is legally qualified.
To
determine whether a grant of the application of WHDH, Inc. would be consistent
with the provisions of section 73.636 of the Commission's rules.
To
determine whether a grant of the application of Whdh/, Inc. would be consistent
with the provisions of section 310(a)(5) of the Communications Act of 1934, as
amended.
To
determine whether the control of WHDH, Inc. and the Boston Herald-Traveler
Corp. has been transferred without Commission authorization in violation of
section 310(b) of the Communications Act.
To
determine, in view of the facts developed under the foregoing issue, [transfer]
whether WHDH, Inc. possesses the requisite character qualifications to be a
Commission licensee.
To
determine on a comparative basis which of the operations proposed in the
above-captioned applications would best serve the public interest, convenience
and necessity in light of the significant differences among the applicants as
to:
(a) The
background and experience of each, bearing on its ability to own and operate
the proposed television broadcast station.
(b) The
proposals of each with respect to the management and operation of the proposed
television broadcast stations.
(c) The programming services proposed in each
of the above-captioned applications.
To
determine, in light of the evidence adduced pursuant to the foregoing issue,
which of the applications should be granted.
4. Hearing Examiner Herbert Sharfman concluded,
with respect to the issues added because of Choate's death, that no material
changes have been made by WHDH as a result of Choate's death, and that
reevaluation of the original record made by WHDH and Greater Boston would
advance neither the interests of either applicant nor the overriding public
interest in the ending of this lengthy proceeding. Accordingly, he concluded that modification of the Commission's
decision of September 25, 1962, would not serve the public interest. Examiner Sharfman held further that the
questions of comparative demerit, if any, to be assessed against WHDH because
of Choate's ex parte contacts, and the effect of Choate's death, can be argued
effectively and with greater overall expedition in the renewal proceeding. After having resolved favorably the
noncomparative issues relating to WHDH, and unfavorably such issues relating to
Greater Boston II, the examiner ultimately preferred WHDH's application on a
comparative basis. Accordingly, he
recommended that the application of WHDH, Inc. for renewal of license be
granted, and that the competing applications be denied.
5. Oral argument on the exceptions to the
initial decision was held before the Commission, en banc, on September 5, and
6, 1967. Each party was afforded the
opportunity to address itself to the question of the applicability in this
proceeding of the Commission's Policy Statement on Comparative Broadcast
Hearings, 1 FCC 2d 393, 5 R.R. 2d 1901 (1965). The Commission's rulings on the
exceptions to the initial decision are set forth in the appendix to this
decision. We have reviewed the
examiner's findings of fact in light of the exceptions, and we are of the view
that they are substantially accurate and complete. Accordingly, they are adopted with the modifications noted herein
and in the appendix. However, we view
those findings as warranting substantially different conclusions and a
different ultimate result. For the
reasons set forth below, our judgment is that grant of the application of
Boston Broadcasters, Inc. would best serve the public interest, convenience and
necessity.
II. Petition for Leave To Amend and Request for
Amendment Pursuant to Section 1.65 of the Commission's Rules n6
n6 Two
petitions of BBI may be disposed of at this point: (a) on Feb. 6, 1967, BBI
requested a 1-day extension of time within which to file its reply to
exceptions. The request is unopposed,
and it will be granted, and (b) on Nov. 6, 1966, BBI requested waiver of sec.
1.227(c) of the rules to permit the filing of briefs exceeding 50 pages in
length. The request will be dismissed
as moot inasmuch as no one of the parties filed briefs approaching this
limitation.
6. Petition for leave to amend. On September 29, 1967, Charles River Civic
Television, Inc. (Charles River) requested permission to amend its application
to reflect the death, on September 6, 1967, of Mr. Ernest Henderson, a director
of Charles River and the holder of 2,000 shares of
7. Request for amendment pursuant to section 1.65
of the Commission's rules. On August
18, 1967, BBI filed a petition requesting that the Commission require WHDH to
amend its application, pursuant to section 1.65 of the rules, to bring it up to
date with respect to alleged personnel, programming, and ownership changes
which, BBI alleges, are of decisional significance. As to personnel, BBI asserts that substantial changes have
occurred in the staff personnel assigned to the television operation
exclusively and in the executive personnel of the television station. Based upon schedules for a 2-week period in
the TV magazine section of the Boston Sunday Herald, BBI states that
programming changes of such magnitude as to require an amendment have occurred
in the operation of WHDH-TV. Moreover,
BBI contends that one Joseph Linsey has been characterized by Mr. Akerson as a
"major stockholder" in Herald-Traveler, n7 and that WHDH should file an
amendment to reflect this ownership change.
n7 BBI refers to an article in the
Wall Street Journal of July 25, 1967, wherein Akerson is alleged to have made
this statement.
8. WHDH and the Broadcast Bureau oppose BBI's
request. In substance, WHDH denies the
allegations made by BBI, stating that the majority of the television station's
employees are still employed by the station, and some changes have occurred as
a result of normal turnover in station operation. In particular, WHDH asserts that it is not true that Mr. McGrath,
the executive vice-president and a director of WHDH, Inc., and who is also the
general manager of the television station, no longer is connected with the
station. With regard to programming,
WHDH asserts that no changes of any substantial character have occurred in its
programming. Concerning ownership
changes, WHDH states that Mr. Linsey does not own directly or indirectly a
reportable interest in Herald-Traveler stock, and that "there is no rule,
regulation or policy of the Commission which would make his ownership of less
than 1 percent of the stock of decisional significance in the instant
proceeding."
9. We agree with WHDH and the Broadcast Bureau
that the showing submitted by BBI does not warrant our entering an order that
the WHDH application be updated pursuant to section 1.65 of the rules. We believe that if there were real substance
to BBI's allegations, BBI would have asked that the record herein be reopened
and that the proceeding be remanded for further hearing under an issue to
determine whether WHDH, Inc., had failed to comply with the provisions of
section 1.65 of the Commission's rules.
To support that request, BBI necessarily would have been required to
submit a far more substantial showing.
See section 1.229 of the rules.
Additionally, in light of the action which we take herein with respect
to the WHDH application, no useful purpose would be served by granting the
relief requested, even if it were otherwise appropriate to do so. BBI's request will, therefore, be denied.
Special
Issues Relating to WHDH
10. No extended discussion is necessary with
respect to the noncomparative issues which were addressed to WHDH. Those issues inquired into: the legal
qualifications of WHDH; whether a grant of the WHDH application would be
consistent with the provisions of section 73.636 of the Commission's rules
(concerning multiple ownership); whether a grant of the WHDH application would
be consistent with the provisions of section 310(a)(5) of the Communications
Act (citizenship requirements); and whether control of WHDH, Inc. and the
Boston Herald-Traveler Corp. has been transferred without Commission
authorization in violation of section 310(b) of the Communications Act. Except for the aspect of the latter issue
which relates to de facto control, we agree with the conclusions which the
examiner reached on these issues. The question
of de facto control will be treated subsequently in connection with the
standard comparative issue.
11. The recent issuance of a report and order in
docket No. 15627 n8
provides added support for the examiner's conclusion that WHDH is not disqualified
under section 73.636 of the rules relating to multiple ownership. This question arose principally because Lill
& Co., which acquired a reportable interest in Herald-Traveler stock, is
the record holder for Television-Electronics Fund, Inc., of a reportable
interest in five other Commission licensees, four of whom are multiple owners
of VHF-TV stations with a combined total of 20 TV stations. n9 In addition to those reasons asserted by the
examiner, we conclude that the report and order in docket No. 15627 is also
dispositive of the multiple ownership issue inasmuch as the Commission's
multiple ownership rules have been amended to increase from 1 percent to 3
percent the percentage of stock which investment entities may own in specified
broadcast licensees.
n8 In the Matter of Amendment of
Sections 73.35, 73.240 and 73.636 of the Commission's Rules Relating to
Multiple Ownership of Standard, FM and Television Broadcast Stations, 13 FCC 2d
357, released June 17, 1968.
n9 As of July 20, 1965, Lill &
Company held 7600 shares of Herald-Traveler stock, of which
Television-Electronics Fund, Inc., is the beneficial owner. As nominee for that Fund, Lill & Company
also holds the following stock: 115,000 shares (2.48 percent) of American
Broadcasting Cos., Inc.; 35,000 shares (2.57 percent) of Capitol Cities
Broadcasting Corp.; 2.42 percent of Storer Broadcasting Co.; 30,000 shares
(1.158 percent) of Scripps-Howard Broadcasting Co.; and 95,000 shares (1.02
percent) of Zenith Radio Corp.
Special
Issues Relating to Greater
12. Two disqualifying, noncomparative issues
were directed to Greater Boston II which the examiner determined adversely to
that applicant. Those issues related
to: (a) the efforts made by Greater Boston II to ascertain the programming
needs and interests of the area its application proposes to serve and the
manner in which it proposes to meet such needs and interests; and (b) the
question whether Greater Boston II has reasonable assurance of being able to
secure its proposed antenna site. We
agree with the examiner's adverse resolution of these issues (initial decision
paragraphs 712-717). Accordingly,
Greater Boston II is disqualified and is not entitled to comparative
consideration with the other applicants.
We also agree with the examiner's conclusion at paragraph 793 of his
initial decision that even if comparative consideration were given to Greater
Boston II's application, the showings thereunder are unimpressive.
III. The Status of WHDH Under the Standard Comparative
Issue
13. Two questions are presented in connection
with WHDH's status under the standard comparative issue: (a) are Mr. Choate's
ex parte contacts, in light of his death, still to be treated as a factor in
the comparative evaluation; and (b) is the Commission's policy statement on
comparative broadcast hearings fully applicable to this proceeding?
14.The
Examiner concluded that because of Mr. Choate's death his ex parte contacts are
no longer a factor in the comparative evaluation. In reaching this conclusion, the examiner discussed the
contentions of Charles River and BBI to the effect that Choate's death did not
terminate the consequences of his ex parte contacts because WHDH
"ratified" his actions by reelecting him to office while WHDH was
under a cloud, and because individual directors of WHDH in testimony herein did
not voice disapproval of his conduct.
The examiner also considered and rejected Charles River's contention
that because Choate's conduct, the effect of which is impossible to assess, was
calculated to influence the Commission during the course of the first
comparative proceeding which resulted in a grant to WHDH, his conduct must be
held to pervade the grant itself and cannot be purged by either the subsequent
conduct of WHDH or by Choate's death.
The exceptions of
15. In responding at oral argument to the
question of the applicability herein of the Commission's policy statement on
comparative broadcast hearings, supra, each of the parties, with the exception of
Greater Boston and WHDH, stated that the policy statement is applicable. Greater
n10 In addition, we stated that,
as in regular comparative hearings, evidence relating to programming proposals
and to character will not be entertained in the contested renewal proceeding
unless first specifically put in issue by the hearing order or on subsequent
enlargement of the issues upon a threshold factual showing that a distinctive
difference or deficiency exists and is worth exploring.
16. Contrary to the position of WHDH, we do not
believe that applying the policy statement to this proceeding would require
reopening the record so that the case may be retried on that basis. No element of surprise affecting the
fairness of the hearing exists inasmuch as we did not adopt new criteria in the
policy statement which would call for the introduction of new evidence; rather,
we restricted the scope somewhat of existing factors and explained their
importance more clearly. Thus, we shall
apply the principles of the policy statement to this proceeding, and as we
proceed with the comparative discussion we shall determine the weight to be
accorded the various factors of difference between the renewal applicant, WHDH,
and the competing applicants.
IV. Evaluation of Comparative Criteria
17. Our basic disagreement with the examiner's
conclusions lies in the preferred status which he gave to WHDH "not
because it is an applicant for renewal but because it has an operating record
and its very existence as a functioning, manned station to advance against its
opponents, whose promises, after all, are as yet just so much talk." Thus,
the examiner decided that the traditional mode of comparing mutually exclusive
applicants, "in the mechanical or point-by-point manner especially
advocated by BBI", would have been a sterile exercise. In his judgment, the cardinal probative
attribute -- for good or bad -- of WHDH was its operating record. The examiner's thinking is highlighted by
the following quotation from his conclusions:
In the
present case WHDH should have cashed in its chips and gone home before the game
started if it were forced to depend on its conformity to the traditional
standards for preference. Its
integration is small. Only if its long
identification with the community through newspaper and station operation were
regarded as a near-substitute for local ownership because it has enabled the
applicant to acquire a knowledge of the community, could it claw a foothold. Facing the cleverly designed organizations
and preparatory campaigns of locallyowned, civically active opponents, each
integrated to a different degree but more than it is, and proposing managerial
direction by fairly experienced persons, WHDH's prognosis would be poor unless
it could rely for a clincher on its operating record unabated by any
substantial "character" or other defects.
With
regard to WHDH's past broadcast record, Examiner Sharfman concluded ultimately
that as a whole such record is favorable.
The superiority of WHDH's claims to renewal against those of its
competitiors for initial authorization, the examiner stated, rests on a basis
of achievement, theirs on promises, often glittering, but of relatively
uncertain and unestablished validity.
18. In our judgment, the examiner's approach to
this proceeding places an extraordinary and improper burden upon new applicants
who wish to demonstrate that their proposals, when considered on a comparative
basis, would better serve the public interest.
In fairness to the examiner, it should be pointed out that he followed
what he understood to be the Commission's policy in proceedings of this nature,
as expressed in Hearst Radio, Inc. (WBAL), 6 R.R. 994 (1951), and Wabash Valley
Broadcasting Corporation (WTHI-TV), 35 FCC 677, 1 R.R. 2d 573 (1963). Thus, in
"Hearst" the determining factor in the Commission's decision was
"the clear advantage of continuing the established and excellent service *
* * [of the existing station] when compared to the risks attendant on the
execution of the proposed programming of * * * [the new applicant] excellent
though the proposal may be." The Commission also gave serious
consideration to the high degree of probability of continuation of existing
desirable performance as against paper proposals which, on the basis of that
record, the Commission was not convinced could be fulfilled. "
19. With the experience gained from deciding
comparative proceedings in the years subsequent to both the "Hearst" and
"
A.Past
Broadcast Record
20. As the policy statement states, past records
are considered to determine whether the record shows: (i) unusual attention to
the public's needs and interests, such as special sensitivity to an area's
changing needs through flexibility of local programs designed to meet those
needs, or (ii) either a failure to meet the public's needs and interests or a
significant failure to carry out representations made to the Commission. In the latter connection, the Commission
stated that the fact that such representations have been carried out does not
lead to an affirmative preference for the applicant, since the Commission
expects, as a matter of course, that a licensee will carry out representations
made to the Commission.
21. Considering the record of WHDH-TV in this
light, it is clear from the examiner's findings of fact that the only valid
conclusion which can be reached is that the record is one within the bounds of
average performance. In short,
WHDH-TV's record does not demonstrate unusual attention to the public's needs
or interests. This determination is
also consistent with the examiner's conclusion that as a whole the record of
WHDH-TV is favorable. Yet, we also agree
with the examiner that the quality of this overall performance is lessened to
some degree by WHDH's failure, on occasion, to provide for the discussion of
certain controversial problems of local interest, and by its failure to
editorialize.
22. Charles River and BBI assert in their
exceptions that WHDH is to be charged with a failure to match performance with
promise because many of the programs proposed by it when it first submitted a
non-network proposal were not carried when it revised its entire program
schedule so as to accommodate its affiliation with a network, shortly after the
grant of its application for construction permit in 1957. As the examiner's findings indicate, few
programs were retained from the original program proposal, and changes were
made in these to reflect the network operation. However, we agree with the examiner's disposition of this
matter. As he stated, when WHDH
received its original award it did not receive a preference for either its
program policies or its proposed program service. At the time of the original grant in 1957, the Commission knew of
WHDH's possible network operation, and when HDH filed its application for
license in late 1957, it advised the Commission that it was going to be a
network affiliate and carry network programs.
It filed no new program schedule with the license application, nor was
it requested to do so. Thus, as the
examiner held, the mere fact of departure from the particulars of its
non-network schedule proposals, required as it was by the practicalities of
network operation, cannot be held against WHDH. Indeed, this record does not present a clear opportunity to
compare WHDH's promises with its performance inasmuch as the record does not
contain a program proposal, based upon network affiliation, which can be
compared with the renewal showings.
23. In view of the foregoing, the past broadcast
record of WHDH will not enter into the comparative evaluation.
24. The past broadcast record compiled by Mr.
Jones of Charles River is available for consideration inasmuch as he has an ownership
interest in Charles River and is the majority stockholder (as well as the
president, treasurer, general manager and a director) of Charles River
Broadcasting Co. which is the licensee of stations WCRB-AM and FM in Waltham,
Mass. Although that licensee wholly owns the stock of another corporation which
is the licensee of an FM station (WCRQ-FM) in
25. Based upon his extensive findings in this
connection, the examiner concluded that "WCRB is preeminently a 'good
music' station -- and its record in its specialty is excellent -- with
considerable news and some other non-musical programs. It is and thinks of itself as a regional
station, but pays some attention to
26. In view of the foregoing, the past broadcast
record of Mr. Jones will not enter into the comparative evaluation.
B.
Diversification of the Media of Mass Communications
27. As noted in the policy statement,
diversification is a factor of first significance since it constitutes a
primary objective in the Commission's licensing scheme. The benefits derived from diversification
have been set forth in many cases decided by the courts and by the Commission,
and they need not be recited in detail here.
n12
When compared with Charles River and BBI, WHDH manifestly ranks a poor third
because of its ownership of a powerful standard broadcast station, an FM
station, and a newspaper in the city of
n12 Recognizing that radio and
television broadcast stations play an important role in providing news and
opinion, it is important in a free society to prevent a concentration of
control of the sources of news and opinion.
See United States v. Storer Broadcasting Co., 351 U.S. 192;
Scripps-Howard Radio, Inc. v. Federal Communications Commission, 89 U.S. App.
D.C. 13, 189 F. 2d 677, cert. den. 342
28. The desirability of maximizing the diffusion
of control of the media of mass communications in
29. Although conceding that it has never
editorialized, WHDH contends that this is a factor which minimizes any question
of concentration of control flowing from the common ownership of newspaper and
broadcast interests. We disagree with
this contention. Licensees have an
obligation to devote a reasonable amount of their broadcast time to the
presentation of programs on controversial issues of public importance to their
communities. Editorializing by
Broadcast Licensees, 13 FCC 1246 (1949). If anything, the failure to
editorialize demonstrates the wisdom of the Commission's policy in favor of a
maximum diffusion of control of the media of mass communications.
30. The foregoing incidents reduce the favorable
consideration which might otherwise accrue to WHDH because of the number of
competing media in
31. As between Charles River and BBI, BBI merits
a slight preference on the diversification factor, for, as the examiner
concluded, BBI is virtually free of any media alliance and Charles River's
media connection is"trivial by comparison locally and only tenuously
suggested nationally." (See Intial Decision, paragraph 796.)
C. Integration of Ownership With Management
32. In securing the best practicable service,
full-time participation in station operation by owners is a factor of
substantial importance because it is inherently desirable that legal
responsibility and day-to-day performance be closely associated. Moreover, there is a likelihood of greater
sensitivity to an area's changing needs, and of programming designed to serve
these needs, to the extent that the station's proprietors actively participate
in the day-to-day operation of the station.
In this area of comparison, we agree with the examiner's conclusion that
both
33. As between
34. The critically important consideration here
is the degree to which those individuals having ownership interests in
35. Although all of Charles River's stock will be
held ultimately by the Charles River Civic Foundation, we agree with the
examiner's conclusion that
n13 We agree with the examiner's
conclusion that Mr. Saudek cannot count as a principal for integration
purposes, since he has no ownership interest even in the
36. While both
D. Proposed Program Service
37. The hearing herein was conducted under
procedures which permitted extensive showings with respect to proposed program
service as well as the means which were employed in formulating the proposals
to meet the area's needs and interests.
As the examiner's initial decision demonstrates,
n14 As the examiner stated,
"Even WHDH, an operating station, paid deference to the importance of a
formalized ascertainment of public tastes by offering evidence about its
program committee * * *."
38. With regard to the respective program
proposals themselves, decisional significance is accorded only to material and
substantial differences between the applicants' proposed program plans. Substantial differences are considered to the
extent that they go beyond ordinary differences in judgment and show a superior
devotion to public service. Although an
unusual attention to local community matters for which there is a demonstrated
need may be urged, there is no assumption that an unusually high percentage of
time to be devoted to local or other particular types of programs is
necessarily to be preferred. Minor
differences in the proportions of time allocated to different types of programs
are not considered. This is so because
precisely formulated program plans may have to be changed not only in details
but in substance to take account of new conditions at the time a successful
applicant commences operation. Against
this background, it is clear, as the examiner's findings show, that
39.
One aspect of BBI's program proposal in particular merits
discussion. BBI proposes to devote 36.3
percent n15
of its 160.5 hours of weekly programming to local live programs. In contrast, WHDH's 1962 renewal application
composite week showing for local live programming is 22 percent, and
n15 While BBI proposed that 45.3
percent, or over 72 hours, of its weekly programming would be local live, 9
percent of that total would consist of taped repeats.
40. We do not believe that BBI is entitled to a
preference for its proposed 24-hour operation for 5 days a week, Tuesday
through Saturday, because adequate hours of operation are proposed by Charles
River and WHDH.
41. There is one feature of Charles River's
programming proposal which warrants the assessment of a slight demerit against
that applicant.Charles River Civic Foundation will ultimately own all of the
stock of the Charles River applicant.
To retain the foundation's tax exemption as a charitable organization,
no substantial part of its activities may, pursuant to the Internal Revenue
Code, include carrying on propaganda or otherwise attempting to influence
legislation. In addition, the code
permits tax exemption only if the organization "does not participate in or
intervene in (including the publishing or distributing of statements) any
political campaign on behalf of any candidate for public office." The
indenture of trust creating the foundation contains language of similar
import. Thus, although the applicant
Charles River itself would pay taxes, it appears that, as found be the examiner
(id., par. 236), because of the ownership of all of its stock by the foundation,
the Internal Revenue Service may take the position that the applicant would be
bound by the provisions of the code relating to exempt organizations. Although Charles River proposes to
editorialize, it is manifest that there are limitations on the amount of time
that could be devoted to controversial questions which may be legislatively
related, and that such limitations are not found in ordinary television station
operations. To this extent, then, the
proposed operation of Charles River suffers in comparison with that of
BBI. The result is that a slight
demerit is assessed against Charles River on this score.
42. In weighing the slight demerits which have
been assessed against BBI and Charles River, we conclude that they are
offsetting in nature, and that neither applicant is entitled to a preference
over the other in the matter of proposed program service. In the overall weighing process, we conclude
that no one of the applicants merits a preference over the others regarding
proposed program service. Thus, WHDH's
program service would be a continuation of service which has been determined to
be one within the bounds of average performance only, and in essence the
proposals of Charles River and BBI are no more than average in nature inasmuch
as there are present in neither proposal substantial differences, going beyond
ordinary differences in judgment, which show a superior devotion to public
service.
E. Other
Factors
43. A question to be resolved is whether an
unauthorized transfer of de facto control occurred upon the election of a new
president (Akerson) of Herald-Traveler.
Based upon his extensive findings of fact, the examiner concluded that
"[because] of the peculiar but not unique situation of the Herald-Traveler
in which management (the president) is in actual control, the election of a new
president in fact created a new locus of control." In this regard, the
examiner stated that the presidential dominance exercised by Winslow was
continued by Choate and Akerson. The
examiner held that it is unfair to hold WHDH accountable for failing to realize
that the "transfusion of icon" from Winslow to Choate and from Choate
to Akerson demanded prior Commission approval inasmuch as there is no
Commission precedent requiring that prior approval should be obtained before a
given individual is appointed or elected to be an officer of a licensee
corporation. We disagree with the
examiner's conclusions in this respect, and, for the reasons which are given
hereafter, we hold that an unauthorized transfer of de facto control has
occurred.
44. The following facts are illustrative of the
actual control centered in Akerson (also Choate and Winslow, earlier). The Herald-Traveler Board of Directors is not
a center of de facto or actual control; that board has never given any
instructions as to the voting of WHDH stock or the election of directors; the
board does not discuss station policies, practices, or programming; except for
submitting capital outlays over $100,000 to the Herald-Traveler Board for its
consideration, Choate was, and Akerson is, empowered to take any action thought
necessary for the operation of the television station; when Choate was ill,
Akerson performed his duties without further direction from the board; and when
the board passed its resolution after Choate's death that there had not been,
and would not be, any change in station policies, at least five members of the
board did not know what policies they were leaving unchanged. Against this background, and in light of the
Commission's desire to be put on notice regarding the acquisition of any de
facto control, it is clear that a transfer of control application should have
been filed by WHDH.
45. Although it may be generally true that in
the ordinary situation a routine change in officers should be reported to the
Commission within 30 days after the event, the fact of the change of the locus
of actual control demonstrated here places the matter in an entirely different
posture. Section 310(b) of the
Communications Act of 1934, as amended, provides in substance that no station
license shall be transferred, assigned, or disposed of in any manner,
voluntarily or involuntarily, directly or indirectly, or by transfer of control
of any corporation holding such license, to any person except upon application
to the Commission and upon finding by the Commission that the public interest,
convenience, and necessity will be served thereby. Section 1.541 of the Commission's rules, which was promulgated
pursuant to section 310(b) of the act, provides, in pertinent part, that within
30 days after the occurrence of a death or legal disability of one who is
directly or indirectly in control of a corporation which is a licensee, an
application on FCC Form 316 is to be filed requesting consent for involuntary
transfer of control of that corporation to another person or entity. Thus, WHDH had an obligation to file such an
application not because the licensee corporation had a change in officers but because
the change in question involved a transfer of actual control, and of "the
power to dominate the management of the corporate affairs" of the licensee
corporation. Cf. Western Gateway Broadcasting Corporation, 6
R.R. 1325 (1951). That the nature of the control exercised by Akerson (and,
preceding him, by Winslow and Choate), constitutes "control" for the
purposes of section 310 of the act is beyond question; as early as the Powel
Crosley, Jr. case n16
the Commission expressed its view that nothing in section 310(b) of the act
restricts "control" to a majority of the stock or to any definite
percentage of stock. The 1.541 of the Commission's rules, which was promulgated
pursuant to Commission there stated: n17 3 R.R. 6 (1945). We believe that a
realistic definition of this term [control] includes any act which vests in a
new entity or individual the right to determine the manner or means of
operating the licensee and determining the policy that the licensee will
pursue.
This
policy has been followed in a number of decisions since the Crosley case.
n17 See, e.g., ABC-Paramount
Merger Case, 8 R.R. 541, Town and Country Radio, Inc., 15 R.R. 1035 (1960), and
WWIZ, Inc., 2 R.R. 2d 169, aff'd sub nom.
The Lorain Journal Company v. Federal Communication Commission, 351 F 2d
824, cert. denied, 383 U.S. 967.
46. In our judgment, therefore, WHDH was
obligated to file an application for consent to involuntary transfer of control
when Winslow and Choate died, and when Choate, in the first instance, and then
Akerson succeeded to the office of president.
However, because WHDH has never attempted to misrepresent to, or conceal
from, the Commission the facts bearing on ownership and control, the
circumstances presented here do not reflect so adversely on the character
qualifications of the licensee as to warrant its absolute
disqualification. The facts of the
unauthorized transfers of control do, however, enter into the comparative
evaluation, and in this regard WHDH receives a demerit.
V. Summation
47. Greater Boston II is disqualified and is not
entitled to comparative consideration with the other applicants because of its
failure to meet the two disqualifying issues which were directed against
it. Even if comparative consideration
were given to its application, its showings thereunder, as the examiner
concluded, are unimpressive.
48. Both Charles River and BBI must be preferred
to WHDH under the diversification and integration criteria. In addition, a demerit attaches to the WHDH
applicant because of the unauthorized transfers of control which have occurred.
49. As between Charles River and BBI, BBI is
entitled to a slight preference on the diversification factor, and to a
significant preference on the integration factor. As noted earlier herein, WHDH's past broadcast record and the
past broadcast record of Jones of Charles River do not enter into the
comparative evaluation for the reasons given in the discussion of such
records. We also concluded that no one
of the applicants merits a preference over the others regarding the proposed
program service.
50. Because of its superiority under the
diversification and integration criteria, we conclude that the public interest,
convenience, and necessity will be best served by a grant of the application of
Boston Broadcasters, Inc., and by denial of the renewal application of WHDH,
Inc. and denial of the applications of Charles River Civic Television, Inc. and
Greater Boston TV Co., Inc.
51. Accordingly, It is ordered, That the
unopposed request of Boston Broadcasters, Inc., filed February 6, 1967, for a
1-day extension of time within which to file its reply to exceptions Is
granted.
52. It is further ordered, That the request of
Boston Broadcasters, Inc., filed November 6, 1966# for waiver of section
1.277(c) of the rules to permit the filing of briefs exceeding 50 pages in
length Is dismissed as moot.
53. It is further ordered, That the petition of
Charles River Civic Television, Inc. for leave to amend its application, filed
September 29, 1967, Is granted, and the amendment Is accepted.
54. It is further ordered, That the request for
amendment pursuant to section 1.65 of the rules, filed by Boston Broadcasters,
Inc. on August 18, 1967, Is denied.
55. It is further ordered, That the application
of Boston Broadcasters, Inc. for a construction permit for a new television
broadcast station to operate on channel 5 in Boston, Mass., Is granted; that
the application of WHDH, Inc. for renewal of license of station WHDH-TV Is
denied; and that the applications of Charles River Civic Television, Inc. and
Greater Boston TV Co., Inc. for construction permits for a new television
broadcast station to operate on channel 5 in Boston, Mass., Are denied.
56. It is further ordered, That no date will be
specified at this time for termination of the operation of station WHDH-TV
inasmuch as portions of these consolidated proceedings, as noted hereinabove,
are yet to be determined by the United States Court of Appeals for the District
of Columbia Circuit, and as to which the Court retained jurisdiction when it
remanded the proceeding for further proceedings consistent with its opinion.
57. It is further ordered, That the General
Counsel of the Federal Communications Commission Is directed to report these
proceedings and this decision forthwith to the United States Court of Appeals
for the District of Columbia Circuit.
FEDERAL
COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
STATEMENT
OF CHAIRMAN HYDE
I have
abstained from voting in this case.
This case has roots extending far back and has always been a difficult
one, at least for me.
On the
first round I voted against WHDH, Inc. (see 22 FCC 767, 13 R.R. 507). On the
second round, in light of certain changed circumstances, I cast my vote for
WHDH, Inc. (see 33 FCC 449, 24 R.R. 255). This is now the third round and it is
no less difficult for me to choose among these competing applicants.
In view
of my previous participation and finally the fact that my vote is not essential
to resolution of the matter, I have simply abstained.
CONCURRING STATEMENT OF COMMISSIONER NICHOLAS JOHNSON
This
case has a long and unfortunate history.
We are essentially reconsidering matters that were first addressed by
this Commission years before I came.
Normally I would not participate in such a case. In this instance, however, my participation
is necessary to constitute a working majority for decision. Accordingly, I concur in today's decision.
I feel
no passion about the selection of the ultimate winner. As the opinion makes clear, a weighing of
the merits of Charles River Civic Television, Inc., and Boston Broadcasters,
Inc., is not overwhelming. And, as I
have indicated elsewhere, I do not believe the comparative hearing process and
especially useful device for disposing of matters of this significance. Farragut Television Corp., 8 FCC 2d 279, 285
(1967).
But this
case is significant for other reasons.
In America's 11 largest cities there is not a single network-affiliated
VHF television station that is independently and locally owned. They are all owned by the networks, multiple
station owners, or major local newspapers.
The decision to not award channel 5 to the Herald-Traveler is supported
by good and sufficient reasons beyond the desire to promote diversity of media
ownership in Boston. And I take no
present position on the merits of continued newspaper ownership of broadcasting
properties in markets where there is competing media. But I do think it is healthy to have at least one station among
these politically powerful 33 network-affiliated properties in the major
markets that is truly locally owned, and managed independently of the other
major local mass media. It is a step,
however small, back toward the Commission's often professed but seldom
evidenced belief in the benefits of local ownership and media diversity. It is, at the very least, an interesting
experiment which will be watched carefully by many.
Nor is the
significance of this case limited to the impact on media ownership in
Boston. For the Commission also speaks
generally of situations in which a new competitor is seeking the right to
broadcast as against a present broadcast license holder. We suggest that the standards at renewal
time ought to be the same standards that would prevail if all applicants were
new applicants. In doing so the
Commission removes an ambiguity in its comparative hearing standards and procedures. In the words of the order
We
believe that this approach is sound, for otherwise new applicants competition
with a renewal applicant would be placed at a disadvantage if the renewal
applicant entered the contest with a built-in lead arising from the fact that
it has a record as an operating station.
More importantly, the public interest is better served when the
foundations for determining the best practicable service, as between a renewal
and new applicant, are more nearly equal at their outset. (par. 19)
Cases
are overruled where licensees with substantial media concentrations were able
to retain their license under a renewal comparative challenge. The door is thus opened for local citizens
to challenge media giants in their local community at renewal time with some
hope for success before the licensing agency where previously the only response
had been a blind reaffirmation of the present license holder.
DISSENTING
STATEMENT OF COMMISSIONER ROBERT E. LEE
I
dissent to the grant of a construction permit to Boston Broadcasters, Inc., for
channel 5 in Boston and vote to renew the application of WHDH, Inc., for this
channel. This is a comparative
proceeding between a renewal applicant and three new competing applicants. My major disagreement with the majority is
the basis for comparing these four applications. This comparative evaluation is likewise the basic reason assigned
by the majority for disagreeing with the Hearing Examiner's conclusion that
WHDH, Inc., should be preferred.
The
Commission's policy Statement on Comparative Broadcast Hearings, 1 FCC 2d 393,
5 R.R. 2d 1901, specifically holds that such policy is to apply to new
applications and "not with the somewhat different problems raised where an
applicant is contesting with a licensee seeking renewal of license."
Chairman Hyde summed up the difficulties in applying this policy to renewals
and competing applicants in his dissent to the Policy Statement as follows:
* * *
The filing of a new application -- organized accordingly to formula -- to
challenge a renewal applicant could lead to a facile but in many instances
unfair and arbitrary decisional process.
Is the Commission now ready to read out established broadcasters, not
locally owned, but otherwise without blemish in favor of the locally-owned
applicants? Is the Commission now ready
to read out established broadcasters who are without blemish, except that they
utilize competent personnel who do not have an ownership interest, in favor of
applicants who propose to operate the facilities personally? Is the Commission ready to accept a new
applicant formed to meet this preconceived mold in preference to an existing
broadcaster who does not fit into such mold regardless of other circumstances?
I
reluctantly concurred in the policy statement and stated then, and still
believe, that the preferred applicant could be one with newspaper and CATV
interests. For this reason, I
specifically reserved my right as to the weight to be assigned to the various
criteria in a given case. This is such
a case. Subsequent decisions of the
Commission n1 have further defined the policy with respect to renewals versus
competing applications but only with respect to the admissibility of evidence
pursuant to the policy but not the weight to be afforded such evidence. The majority here holds in effect that the
weight to be afforded the comparative factors in a renewal application is the
same as a new application. I believe
that the weight to be given such evidence is substantially reduced in view of
the renewal applicant's existing track record.
To hold otherwise would permit a new applicant to submit a "blue
sky" proposal tailor made to secure every comparative advantage while the
existing licensee must reap the demerits of hand-to-hand combat in the business
world, and the community it serves, in which it is virtually impossible to
operate without error or complaint, if for no other reason than there are
insufficient hours in the broadcast day with which to satisfy all the desires
of the public. A real question is
raised in my mind whether the new applicant in this situation is seeking to
satisfy the needs of the community or the policy of the Commission.
One
further comment is required on a renewal applicant which is unlike the case
where all applicants are initially seeking an outlet. Vast expenditures for facilities and goodwill have been made
which it would be inequitable to declare forfeited unless the licensee has
operated against the public interest.
n1 Seven
(7) League Productions, Inc., 1 FCC 2d 1597 (1965) and RKO General, Inc.
(KHJ-TV), FCC 66-503.
As with
the majority, I too accept the Hearing Examiner's findings of fact. In addition, with several minor exceptions,
I also accept his conclusions.
The
majority assigns comparative decisional significance to the diversification and
integration criteria with some minor demerit to WHDH, Inc. for unauthorized
transfer of control.
The
record shows that all of the WHDH, Inc. stock is owned by the Boston
Herald-Traveler Corp. The
Herald-Traveler publishes two daily and one Sunday newspaper. Five other newspapers are published in
Boston, including the Christian Science Monitor and none of the other
newspapers have an ownership interest in an AM, FM or TV station. After the record was closed, the Boston
Globe acquired a 50-percent interest n2 in the New Boston Television, Inc.,
channel 38, in which Kaiser Broadcasting Co. also has a 50-percent
interest. WHDH-FM is one of 12 FM
stations in Boston and the immediate vicinity.
WHDH-AM is one of three 50-kw stations, and 8 other AM stations with
power up to 5 kw, which includes 3 daytime-only stations, in Boston and
vicinity. Boston has 3 commercial
VHF-TV stations, including WHDH-TV, 2 UHF commercial stations n3 and a VHF
educational station. The
Herald-Traveler's average combined daily circulation was 23 percent of the
market and the paper is ranked first in display linage. Herald-Traveler also has a 50-percent
ownership of Entron, Inc., which concern manufactures CATV equipment and has
substantial ownership in 5 systems all of which are completely removed from the
Boston market.
n2 This
50-percent interest was further reduced to 20 percent on October 21, 1968 (File
No. BTC-5702).
n3 The
record reflects one UHF station. Official
notice of our files shows 2 UHF stations -- WSBK-TV, ch. 38, Boston and
WKBG-TV, ch. 56, Cambridge-Boston.
I
support, in principle, the policy that an applicant's interest in other mass
communications media must be considered in our comparative analysis. The comparative weight to be assigned such
evidence drops sharply where a healthy competitive situation exists from a
number of other nonaffiliated media in the same market. To hold otherwise would mean that certain
categories of applicants (such as newspapers) would be automatically precluded.
WHDH,
Inc. has a renewal of license application before us. This license was granted without condition (except for the
4-month period) and, of necessity, was found qualified under all applicable
sections of our act and rules. It was
further clear that, as a renewal applicant, WHDH, Inc. could continue to
operate the station until this proceeding is terminated under the
Administrative Procedure Act. This
being the case, weight must also be given "to the clear advantage of
continuing an established and excellent service of the existing station"
Hearst Radio, Inc. (WBAL), 6 R.R. 994 (1951); Wabash Valley Broadcasting
Corporation (WTHI-TV), 35 FCC 677, 1 R.R. 2d 573 (1963). The policy statement
must be interpreted in the light of these holdings particularly when it is
recognized that the policy statement sets forth procedures of a general nature
which "cannot dispose of all problems or decide cases in advance."
A
similar weighing process must also be applied to the preference the majority
awards to BBI on integration. While on
paper, BBI shows up better than WHDH, Inc. on integration, this must be weighed
in the light of the record which shows that WHDH, Inc. has done an
above-average job in the past. This, to
me, is a more accurate gage of the future than the theory, which I recognize as
valid for new applicants, that an owner-manager who spends full time at the
station should provide better public service than the absentee owner or one who
devotes only part time to the station.
The
majority does find some blemish on the WHDH, Inc., record and other matters are
referred to but not resolved. The
majority opinion does refer to ex parte contacts but this issue is not
resolved. This nevertheless leaves a disparaging
connotation as WHDH, Inc. is now in the position of being charged with a
serious offense but its guilt or innocense is forever left in limbo. Both Special Examiner Horace Stern and
Hearing Examiner Herbert Sharfman have reviewed the issue of alleged WHDH, Inc.
ex parte contacts. Hearing Examiner
Stern, without reservation, resolved this issue in favor of WHDH, Inc. Hearing
Examiner Sharfman concluded that the ex parte matter was no longer a
comparative factor. Reference is made
to WHDH's failure to editorialize. We
have no rule which requires a station to editorialize. Rather this responsibility ultimately
devolves upon the individual licensee, Commission Palicy on Programming, 20
R.R. 1901, FCC 60-970.
The
majority has refused to consider the WHDH past broadcast record because there
is no clear way to compare promise vs. performance. This is so because the station obtained a network affiliate
before it went on the air in 1957 and the network programming was not shown in
the application. I have reviewed the
programming of WHDH-TV as shown in the record and I find it above average; for
example, 22 percent local live programming.
However, assuming the WHDH-TV past programming is average, as found by the
majority, the new application programming is not found to be above
average. In such a case, preference
should be given to the known past rather than speculative future promises.
The
majority places some significant emphasis on a news scoop of the
Herald-Traveler which was not given to WHDH-TV and the fact that in the 1954
hearing Herald-Traveler testified that it would not withhold news from WHDH-TV
just because it published a newspaper.
The record is also clear that the Herald-Traveler Board of Directors is
not a center of de facto or actual control over WHDH, Inc. Rather than this
incident demonstrating the evil of newspaper-TV station ownership, it could be
concluded on this record that the newspaper and TV station, for all operational
purposes, were independent of each other.
I agree
with the majority in its conclusion that a de facto n4 change of control of
WHDH did take place. There was no
attempt to mislead or deceive the Commission and this violation is not the type
which should be considered either as an absolute or comparative disqualification.
n4 Both
the Hearing Examiner and the majority find that de jure control of WHDH, Inc.
was unchanged.
Based on
all the above, all the entire record in the proceeding, I find that the weight
to be given the facts in this case, which both the majority and this dissent
accept, dictate a grant of the renewal to WHDH, Inc.
I am
very much afraid that this decision will be widely interpreted as an absolute
disqualification for license renewal of a newspaper owned facility in the same
market. Competing applications can be
anticipated against most of these owners at renewal time. n5
n5 The
81st Congress and the 82d Congress considered a so-called "Newspaper
Amendment" to the Communications Act.
The then chairman of the FCC indicated at the hearing on this bill that
"The principal intent of the section is, of course, to outlaw the
possibility of any rule excluding newspaper owners from owning radio
stations. There is no objection to this
section." (Hearings before Subcommittee of Committee on Foreign and
Interstate Commerce on S. 1973, 81st Cong., 1st sess. (1949), pp. 20-21.) The
proposed amendment was not adopted because "It should be distinctly
understood that in eliminating this section the committee has done so solely
because the Commission is now following the procedure which was outlined in the
section, has testified that it intends to follow that procedure, and that it is
of the opinion that it has no legal or constitutional authority to follow any
other procedure. (S. Rept. 751, 81st
Cong., 1st sess. 2 (1950).)
Channel
5
[In the
matter of WHDH, Inc. * * * docket No. 8739, et al.]
APPENDIX
* * *