In re Application of COOS COUNTY BROADCASTING CO

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In re Application of COOS COUNTY BROADCASTING CO., INC. (ASSIGNOR) AND WHITE MOUNTAIN BROADCASTING CO., INC. (ASSIGNEE) For Consent to the Assignment of the Licenses of Stations WMOU and WMOU-FM, Berlin, N.H.

File Nos. BAL-6346 and BALH-1135

FEDERAL COMMUNICATIONS COMMISSION

16 F.C.C.2d 440 (1969)

RELEASE-NUMBER: FCC 69-121

February 11, 1969 Adopted

BY THE COMMISSION: COMMISSIONERS BARTLEY AND H. REX LEE CONCURRING IN THE RESULT; COMMISSIONER COX CONCURRING AND ISSUING A STATEMENT; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT.

[*440] We have before us for consideration the above-entitled application for the assignment of the licenses of stations WMOU and WMOU-FM, from Coos County Broadcasting Co., Inc., to White Mountain Broadcasting Co., Inc. The application contains a request for a waiver of the interim processing procedures contained in our notice of proposed rulemaking (multiple ownership rules) docket No. 18110, released March 28, 1968.

1. On March 28, 1968, we issued a notice of proposed rulemaking (docket No. 18110) which proposed, inter alia: "No license for an FM broadcast station shall be granted to any party if such party already owns or controls an unlimited time standard broadcast * * * station in the market applied for * * *." We also stated: "* * * applications filed during the pendency of this rulemaking which would be within the scope of the proposed rules will not be acted on until the Commission has determined the action to be taken on the proposed rule."

2. On August 2, 1968, the applicants filed an application requesting the Commission's consent to the assignment of the licenses of class IV AM station WMOU and WMOU-FM, Berlin, N.H., to the White Mountain Broadcasting Co., Inc. They requested that the Commission waive its interim processing procedure, supra, and grant the application. We have reviewed everything before us and conclude that a grant will serve the public interest.

3. In reviewing the application we noted that the assignor advised the Commission that the filing occurred because of a death in the family of the principal. We also noted that Berlin, N.H., whose population [*441] is 17,821, has a vacant FM channel that has been available to any qualified applicant but which has not elicited any interest.

4. From our analysis of the application, we conclude that the assignee is legally, financially, and otherwise qualified to be the licensee of stations WMOU and WMOU-FM. In view of all the circumstances, we find that the public interest, convenience, and necessity will be served by a grant of the assignment of the licenses of stations WMOU and WMOU-FM to White Mountain Broadcasting Co., Inc. Therefore, the above application is approved subject to the outcome of the rulemaking proceeding in docket No. 18110.

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.

CONCURRING STATEMENT OF COMMISSIONER KENNETH A. COX

I concur in the action granting this transfer application. It is inconsistent with our proposal, in docket No. 18110, to bar ownership of more than one full-time broadcast station in a particular market. However, we have made our grant subject to the outcome of that rulemaking proceeding.

I do not think the majority is of the view that the whole class of AM-FM combinations should not be subject to the proposed rule, as Commissioner Johnson suggests. Certainly that is not my position. Nor are we hereby announcing a change of heart and mind. Having made this grant subject to the outcome of the rulemaking proceeding, we can require divestiture of the FM station if we eventually conclude that the public interest would be better served by that result. I think it better to do this than to compel a surrender of the FM license, either now or later, with resultant loss of service to the public. If we decide that the AM and FM facilities should be separately owned, a transfer of the FM license would provide continued service to the public, rather than cutting service off to wait for some future applicant to restore it.

I agree that it is precisely in small communities like Berlin that combined ownership of broadcast facilities -- especially if in the hands of the owner of the local newspaper -- poses some of the most serious problems we face in the field of ownership. In a number of cases I have voted to resolve Commissioner Johnson's difficult choice between early FM service and resulting barriers to the development of independent broadcast service in favor of waiting for someone to provide an additional independent voice and outlet for local expression. But here we are dealing with an existing combination -- not the creation of a new one. I think it less serious to permit this condition to continue until the conclusion of our rulemaking than to permit further concentration during that time.

I therefore concur in the result reached here.

DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

The Commission today waives its interim policy prohibiting ownership of more than one full-time broadcast property in a single market and grants transfer applications for both the full-time AM station [*442] WMOU and WMOU-FM in Berlin, N.H., to the same owner. I dissent.

There are two basic reasons that militate against a statutory finding that the public interest will be served by Commission approval in this case. First, the Commission has the entire question of media competition in local communities under review in its one-to-a-market rulemaking (docket No. 18110). The Commission began the rulemaking in March 1968, with the intention of an expeditious resolution, but has recently granted the fifth extension of time for filing comments -- extensions sought by those who oppose the proposed rules. At the time the rules were proposed the Commission adopted an interim policy deferring action on applications in conflict with the proposed rules -- rules which the U.S. Department of Justice has urged should be broadened and strengthened. As the court held in reversing the Commission with regard to this very rulemaking, the Commission cannot infer a public interest finding to approve an individual case after it has already expressed grave doubts as to the approval of an entire class of cases to which that individual case belongs. Joseph v. F.C.C., 13 P & F Radio Reg., 2116 (1968). The majority must come forward with some effort at rational analysis of its result -- however convincing. Fortunately for the majority, Commissioner Cox has made such an effort. But they have not seen fit to associate themselves with it.

The Commission adopted its interim policy rather than setting all applications in conflict with the proposed rulemaking for hearing -- the hearing required when any substantial or material fact exists that might bar a finding that a grant of the application would serve the public interest. The concern expressed by the Commission in the proposed rules barring such applications would seem to constitute such a substantial or material question of fact. Joseph v. F.C.C., 13 P. & F. Radio Reg., 2116 (1968). The majority makes this grant subject to the outcome of that proceeding. But of course its action, here and in other cases, substantially overrides the interim policy and indicates substantial prejudgment of the issues in that proceeding.

If the majority is, in fact, of the view that a whole class of applications -- AM-FM combinations -- should not be subject to the one-to-a-market proposed rule such a decision should be made in the context of the general rulemaking proceeding. It makes no sense to select this case as a means of announcing such a change of heart and mind -- an ad hoc waiver involving severe prejudice to the rulemaking outcome, and in a manner sure to provoke a flood of similar applications that will whittle away at the proposed rules until nothing remains. The question of how to deal with FM stations in individual markets is one of crucial importance in the rulemaking -- FM stations located in small markets, FM's now attached to AM's, and FM's at the margin in large markets. It may be that some general exemption is warranted for AM-FM combinations under certain circumstances. I am completely open minded on these issues, and am hopeful we will get some intellectually competent and economically independent data and opinion on the issues in our proposed rulemaking. But general conclusions are by no means warranted as a result of the information provided to us in this case.

[*443] Secondly, the situation in Berlin, N.H., suggests that a close public interest question is involved -- a question warranting more serious discussion that the majority's blithe conclusion that the public interest will be served. There are only three stations in Berlin, and but two separate station owners. Except for FM there may be no additional radio stations in Berlin -- no additional separately owned, competing voices serving the community. (It is not clear whether any more AM stations can be put in Berlin -- or ever will be.) But presumably the intention of allocating spectrum to FM radio in the first place was to provide these additional voices. The intention will obviously be frustrated if these FM stations become mere adjuncts of the existing AM stations in this country.

If there are ever to be additional station owners in Berlin, one will have to be an independent FM station operator. At this stage of development conventional wisdom holds such an FM operation is impossible. And besides, says the majority opinion, there is another FM channel in Berlin for anyone who would care to try. But these statements do not detract from the fact that this Commission's action is retarding independent FM operation. Any FM would find the going difficult against two other AM stations. But it becomes virtually impossible when one of those AM stations owns an FM too -- the FM substantially duplicating the AM programming. The economies of scale for such an AM-FM (and the essential waste of spectrum space) are obvious -- and the resultant barrier to entry for independent FM operation is substantial. It is quite significant to note that virtually the only industry comments supporting the Commission proposed one-to-a-market rules come from independent FM stations facing AM-FM competition!

The Commission's choice in Berlin, and in the one-to-a-market proposal generally, requires a difficult balancing -- if we assume there are not adequate potential owners of independent FM stations in the smaller markets. We must weigh (1) the advantages of the early availability of FM radio service to a community in tandem with an AM, as against (2) the barriers to entry for subsequent independent FM operation such service creates. A policy decision in this area depends on the relative importance of the goals -- early FM service as against better possibilities of future competition. The decision also depends on an analysis of the parameters of the tradeoff between these goals -- an analysis, one hardly needs to add, which this Commission has never undertaken.

Based on this Commission's handling of its proceeding concerning network programming, the top 50 proposal, and even the one-to-a-market rules, there is substantial question as to whether this Commission can act forcefully and provide rational analysis of the issues concerning ownership of broadcast properties. This decision to go on granting applications in conflict with the proposed rules and its interim policy does not provide basis for optimism.

One could point to a different Commission judgment with regard to television. UHF-TV is television in a different frequency range with concomitant set conversion problems just as FM is radio broadcasting at frequencies different from AM. In television the Commission decided [*444] not to allow VHF stations to own UHF stations in the same market -- desiring the establishment of independent stations. (The Commission's radio duoply rules prohibit the joint ownership in any one market of two AM's or two FM's but permit ownership of two radio stations so long as they are an AM and FM.) The Congress and the Commission have found that TV sets should be capable of receiving both VHF and UHF stations. We do not require that radio receivers be capable of receiving AM and FM. It could be argued that early FM service induces the purchase of FM receivers, the sine qua non of independent FM operation. The point of all this is simply that the Commission doesn't know what the real effects of its policies are, and that it has tended to inconsistencies in these areas.

I regret, and dissent to, the Commission's resolution of the issues presented by the case before us.