In re Application of MADISON COUNTY BROADCASTING CO

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In re Application of MADISON COUNTY BROADCASTING CO., INC. (ASSIGNOR) AND AVCO BROADCASTING OF CALIFORNIA (ASSIGNEE) For Assignment of License of WRTH, Wood River, Illinois

File No. BAL-6480

FEDERAL COMMUNICATIONS COMMISSION

16 F.C.C.2d 471 (1969); 15 Rad. Reg. 2d (P & F) 618

RELEASE-NUMBER: FCC 69-120

February 7, 1969 Adopted

BY THE COMMISSION: COMMISSIONERS BARTLEY AND JOHNSON DISSENTING AND ISSUING STATEMENTS; COMMISSIONER ROBERT E. LEE ISSUING A SEPARATE STATEMENT; COMMISSIONER COX DISSENTING; COMMISSIONER H. REX LEE CONCURRING AND ISSUING A STATEMENT

[*471] 1. We have before us the above captioned application for assignment of the license for Station WRTH, Wood River, Ill. to Avco Broadcasting of California. n1 The assignee or related companies have been Commission licensees since 1948. We have passed on their qualifications many times since 1948 and found them to be fully qualified and operating in the public interest. Avco's other broadcast interests are located in Cincinnati, Ohio; Dayton, Ohio; Columbus, Ohio; Indianapolis, Ind.; Washington, D.C.; San Antonio, Tex., and San Francisco, Calif.

n1 A telegram was received on Jan. 29, 1969, from WTAF-TV, Marion, Ind., requesting that action be withheld on the WRTH application to permit filing of a petition. Action cannot be withheld on the basis of a telegram, and no formal or informal pleading has been filed since receipt of the telegram.

2. On the basis of our review of the subject application, we find the assignee is fully qualified in all respects to be the licensee of station WRTH. WRTH provides service for the following cities in Illinois: Wood River, Alton, Bethalto, Hartford, Roxawa, East Alton, Edwardsville. The cities are located in the greater St. Louis, Mo. statistical area. WRTH also serves a substantial part of St. Louis, Mo.

3. Field trips to the area were made by the president of the assignee, vice president and technical assistant to the president and a number of others to better familiarize themselves with the area. Thirty-eight community leaders were interviewed including leaders in religious affairs, education, business, youth groups, charities, police, NAACP, executive director Pride, etc. in depth programming consultations. Other methods of ascertaining the needs and interests of the public to be served were also employed.

[*472] 4. "One of the most frequently mentioned needs * * * was an expressed need for the further development of the already starting cohesive efforts between various groups working for area progress." The assignee also mentioned that it had a conversation with the president of the Alton chapter of the NAACP, during which needs of the "black community" were discussed. "The first of these is a need for proper exposition of the various programs which are designed to provide an honest opportunity for all citizens to work and live in proper surroundings. This need will be accommodated * * *."

5. Other community needs were identified and the assignee included a number of typical and illustrative programs which it proposes as follows: "Madison County Closeup"; "Symposium"; "What's Going on in Greater St. Louis"; "Today in Madison County"; "Call for Action"; "This Week in School"; "This Week in Springfield" etc.

6. The assignee proposes to operate station WRTH 163 hours during a typical week. Generally it proposes to program as follows:

Hours Minutes Percent of total time on air

News 21 10 13.0

Public affairs 2 30 1.54

All other programs, 3 30 2.15

exclusive of entertainment and sports

7. Avco proposes a good music format for station WRTH. It pointed out that this format, coupled with its other programing will provide a service that none of the 15 other stations serving the WRTH primary service area is presently providing.

8. For its proposed commercial practices at WRTH Avco proposes to limit the maximum amount of commercial matter in any 60-minute segment to 18 minutes.

9. The station being acquired by the assignee is in Wood River, Ill., which in turn is in the St. Louis, Mo. market and the acquisition thereof presents no question of regional or national concentration of control. Wood River is about 230 miles from the assignee's nearest station in Indianapolis. A grant of the application would be consistent with the Commission's multiple ownership rules and our policies established thereunder. The applicant is qualified in all respects and we find, therefore, that a grant of the above-entitled application would serve the public interest, convenience and necessity. Accordingly, the above-entitled application Is granted.

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.

STATEMENT BY COMMISSIONER ROBERT E. LEE

The dissenting opinion of Commissioner Nicholas Johnson omits, from the quotation of the Crosley case, the following paragraph: n1

n1 The dissent does not make clear the degree of this omission.

Broadcasting stations, unlike any other enterprise in our economy, are affected with unique considerations of the public interest. They are licensed, but are not common carriers. They have special public responsibilities but are privately owned and managed. They cannot exist without a license from this Commission, but our power is limited as to the individual performance. They are a tremendous social force in the field of public affairs but, in most cases, are commercial enterprises managed for profit. Upon the operations of stations much depends in implementing a free and democratic society, but the Commission is enjoined to limit its surveillance to that of a general review. Broadcasting can be a dynamic force among free people or in the wrong hands a stagnant instrument of reaction. Operation in the public interest requires the presentation of civic, cultural, entertainment, educational and religious programs; discussions of controversial issues, full and fair reporting of the news; equal opportunity to all sides of opposing public issues for the use of the facility; and an otherwise balanced program schedule to meet the needs of the community.

One of the issues before the Commission in the Crosley case was the applicable policy where a transferee has other extensive business interests. The paragraph omitted from the dissent quotation, sets forth the statutory limits and the specific test for a determination [*476] that the proposed operation is in the public interest. n2 Based on the complete quotation, after deciding to grant the assignment, the majority concluded that any denial of the transfer because the transferee is engaged in other business activities must be predicated on the notion that all large business concerns are unfit to hold a broadcast license (11 F.C.C. 3, 16). Such holding was specifically avoided in the Crosley case. Rather, the case holds that an applicant with extensive interests in other business concerns, or in current usage, conglomerate, is not per se suspect.

n2 "Operation in the public interest requires the presentation of civic, cultural, entertainment, educational and religious programs; discussions of controversial issues, full and fair reporting of the news; equal opportunity to all sides of opposing public issues for the use of the facility; and an otherwise balanced program schedule to meet the needs of the community."

Discussion of the ABC-ITT merger case and adverse facts, alleged to have been found in that proceeding, add nothing to the disposition of this case. The dissent states that Avco is a longstanding licensee and there is no information that it has abused its trust. n3 The dissent fails to deal with any of the public interest factors which the majority utilized in the Crosley case. (See footnote n2)

n3 Subsequent to preparation of this statement, there was eliminated from the dissent the following sentence: "I have no information that it has abused its trust."

The dissent suggests that the Commission lacks information on Avco's other business interests and that the application fails to contain table II information on the parent corporation. Exhibit 4, attached to the assignees part of the application, contains for the parent corporation a separate and complete section II, page 3 (items 11-18) and tables I and II. Further, there is no need to consult sources outside the Commission to determine the other business interests of Avco. Detailed information is contained in our files. See applications for the assignment of license for stations WOAI and WOAI-TV granted in September 1965, the ownership report which contains a letter of September 6, 1967, relative to an offer of The Paul Revere Corp. to purchase Avco stock and exhibit 2 attached to the Avco application to renew the license for stations KYA and KOIT filed August 29, 1968. n4

n4 Such files contain information with respect to Avco Broadcasting of California, Avco Broadcasting Corp., and Avco Corp. Of necessity all information will not be contained in every file since the Avco interests in broadcasting goes back over two decades. Such information is more complete than that cited from Poor's 1968 Register of Corporations.

The dissent expresses concern over the purchase price and the actual area to be served. The purchase price is arrived at between the two parties dealing at arms length and reflects a business judgment not involving the Commission. Avco also makes it clear that WRTH has been a Wood River station which also serves greater St. Louis and that Avco will continue to serve this same area with improved programing and service. Any different statement by Avco would be a real basis for Commission concern in that WRTH under Avco ownership would then be proposing less service, thus withdrawing a service for the public which it now has.

CONCURRING OPINION OF COMMISSIONER H. REX LEE

I join the majority decisions to approve the transfer of WTVM (TV), Columbus, Ga., and WTVC(TV), Chattanooga, Tenn., to Fuqua [*477] Industries, Inc.; of WRTH, Wood River, Ill. to Avco Broadcasting Co.; and KBIG, Avalon, Calif. and KBIG-FM, Los Angeles, Calif. to Bonneville International Corp.

I take such action because the proposed transfers conform to existing Commission laws, regulations, and public interest standards. The FCC, through orderly procedure, has established rules and guidelines in the realm of media concentration. But these rules do not go far enough. They do not specifically spell out the line of public interests which broadcasters may serve in the fulfillment of substantial public objectives.

In view of this situation, a hearing is not deemed necessary. The scope of questions addressed to media concentration is narrowly confined by FCC multiple ownership rules. In these cases, this results in neither the public interests nor the interests of fairness in administrative due process being served by an evidentiary hearing. Even in such an examination, the lack of standards makes it difficult for the interested parties, including the public, to present evidence, and for the Commission to make a sound judgment. The argument is noted that under existing Commission procedures, the hearing process is frequently the equivalent of a denial -- if for no other reason than the amount of time and expense consumed by it. It is hoped these two hardships of the hearing process can be alleviated through the development of new procedural standards which may be applied when needed.

Nevertheless, there is concern in various quarters about the growth of media concentration. The political, social, and economic influence, concentrated in a few broadcast facilities, raises fears -- a dimension of which cannot be dispelled by the Commission's multiple-ownership rules.

The FCC's examination of this problem must keep pace with the changing complexion of the broadcast industry. In this period of change, the FCC is in transition between its existing rules and the formulation of new standards. This means that parties to Commission transfer proceedings also find themselves in a difficult position. It is often impossible for them to prior assess whether their transfer proposals will constitute a prohibited media concentration. In fact, there is virtually no way of knowing what is or is not prohibited. These difficulties are magnified because the FCC lacks adequate standards by which to judge the nature of these new developments. This not only creates problems for the Commission, but causes confusion within the broadcasting industry.

Therefore, I am pleased that the Commission is issuing a public notice of inquiry. It is hoped that the inquiry will result in the formulation of more precise standards which will better serve the public interest, as well as afford the broadcasting industry an opportunity to see where it stands.

The Commission should consider the findings which emerge from such an inquiry in processing normal filings. For certainly, if standards are derived by which a more meaningful test of public benefits can be proved, the course of future actions will be carefully distinguished. In sum, I stress that I intend to examine future cases very carefully to determine what public benefits will result.

DISSENTING STATEMENT OF COMMISSIONER ROBERT T. BARTLEY

In the absence of rules prohibiting continuing concentration of the broadcasting structure, the only alternative is through the hearing process where case law can be applied. The mere pendency of an inquiry will not serve to halt the present trend. In the interim, I believe we should institute hearings where concentration is increased.

[*473] DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

At the outset it is suggested that the aviation corporation is disqualified because it is engaged in extensive manufacturing enterprises and has large investments in other fields. In short, it is said that this is an instance of big business taking over radio broadcasting. This presents a grave policy problem.

* * *

The dangers inherent in licensing a radio station to a company whose principal business interests lie in other fields are, of course, that the station will become a mere adjunct of the principal business and be operated to forward that interest at the expense of public service; or that its operations may reflect only the social, economic or political views of its owners; or that the station will be operated in the way calculated to return the largest revenue without regard to public service. Powel Crosley, Jr., 11 F.C.C. 14-15 (1945).

So wrote the majority in a famous FCC case approving after hearing the first broadcast acquisition by what is now Avco Corp. There were three dissenters, and a forceful opinion by Commissioners Walker and Durr. But the die was cast. Today the Commission approves the acquisition by Avco of its 12th broadcast property, an AM station in Wood River, Ill. I dissent to that acquisition without further Commission investigation.

To the extent this Commission has a policy on the conglomerate holding of broadcast properties it is apparently that only telephone companies cannot also be broadcasters. Beyond that, any other corporation can hold broadcast properties without regard to possible conflicts between corporate interests and the public interest in broadcasting. For example, the Commission, over the protests of the Department of Justice and its own Broadcast Bureau, twice approved the acquisition of ABC by ITT despite direct evidence of the likelihood of ITT influence on the decisionmaking of ABC as a broadcast corporation and as a licensee presenting news and other programing. One may conclude that the Commission's policy toward conglomerates is to approve their acquisition of broadcast properties except for the most severe evidence of abuse (which the conglomerates are unlikely to present to us) and to conduct no investigations which would present evidence upon which rational evaluations could be made of conglomerate influence in the mass media.

What is there about Avco Corp. that suggests further investigation? One would look in vain to its application for information. Avco Broadcasting of California, the new licensee, is a subsidiary of Avco Broadcasting Corp., which in turn is a subsidiary of Avco Corp. With regard to Avco Corp., exhibit 5 of the application notes: "Information as to ownership of Avco Corp. was filed in F.C.C. Ownership Report as of 31 July 1968." That ownership report indicates the owners of more than 1 percent of Avco Corp. stock, and the principal officers and directors. In addition data on the other Avco broadcast holdings is listed: an AM-TV in Cincinnati, Ohio; a TV in Dayton, Ohio; a TV in Columbus, Ohio; a TV in Indianapolis, Ind.; an AM-FM in Washington, D.C.; an AM-TV in San Antonio, Tex.; and an AM-FM in San Francisco, Calif.

But there is nothing in the application on Avco Corp.'s other economic interests despite the fact that question 15c of section II, F.C.C. form 314 specifically requires table II information on the [*474] business and financial interests of the parent corporation. Avco in exhibit 5 perhaps means to fulfill the requirement by noting: "Additional information regarding Avco Corp. can be supplied upon request." But of course the Commission has made no such request. n1

n1 Commissioner Robert Lee suggests that a review of the Commission's files would reveal fully the ultimate licensee's interests. His statement does not make it completely clear whether he understands the difference between Avco Broadcasting of California, Avco Broadcasting Corp., and Avco Corp. Whatever may be the case, however, the applicant has failed to either provide the required information or make reference to existing Commission files which would contain this information. And those files Commissioner Robert Lee cites are either incomplete or contain a hodge-podge of out-of-date data.

Sources other than the application are more helpful. Poor's 1968 Register of Corporations, Directors, and Executives -- indicates that Avco's sales are in the $600-700 million class (broadcasting is $20-30 million -- roughly 3 percent), with 38,000 employees. Its principal products are listed as airplane and industrial engines and parts, aircraft frame components, missile and space products, defense and industrial electronics, ordnance heating equipment, mechanized farm equipment, TV and radio broadcasting, financial services, and abrasives. The Defense Department lists Avco as the 12th largest defense contractor with annual contracts totaling $583 million. (The listed figures may not be for comparable time periods.)

Commissioners Walker and Durr noted almost 25 years ago: "If to this concentration of economic power there is added the tremendous power of major broadcasting facilities, * * * the result is the creation of a respository of power able to challenge the sovereignty of government." Id. at 34. It should be noted that Avco is a longstanding Commission broadcast licensee.

But I do not believe that this Commission should continue its policy of approving every conglomerate broadcast ownership change that reaches our bench without some serious effort to evaluate the impact of conglomerate ownership on the performance of broadcasting, especially in the area of news and public affairs. n2 To do nothing is totally irresponsible.

n2 The Commission's simultaneously issued conglomerate inquiry is hardly a substitute for a hearing in this case. I have discussed the implications of that inquiry and today's three cases generally in my dissenting opinion today, In re Application of John Poole Broadcasting Co., Inc., F.C.C. 69-118 (1969).

There are two additional matters of concern in this application. The Commission approves the sale for a sliding price which, according to page 7 of the asset purchase agreement, will vary between $3,095,000 and $3,345,000 depending on how well WRTH -- licensed to Wood River, Ill. -- does in the December 1968 ARB ratings for St. Louis, Mo. To the uninitiated, this information should clear up any misapprehension about the importance of ratings in broadcasting. Its reflection of the desire to maximize profits and capital gains is obvious. It also suggests that WRTH is, and will be, more interested in serving St. Louis than in programming for the comparatively smaller town of Wood River which it has been licensed to serve. And Avco adds to the suspicion by noting that it "will substantially better the facility and render a still greater and improved programming service to the people of Wood River and the greater St. Louis area." This de facto reallocation question is a common one to which the Commission gives wholly inadequate attention.

[*475] The other matter involves the majority's summary slap in the face to yet another outsider who seeks to upset the smooth workings of the agency-multiple-owner subgovernment. I have recently been informed that a footnote has just been added to the majority's opinion. I am told that it will read, in its entirety, as follows:

A telegram was received on January 29, 1969 from WTAF-TV, Marion, Ind., requesting that action be withheld on the WRTH application to permit filing of a petition. Action cannot be withheld on the basis of a telegram, and no formal or informal pleading has been filed since the receipt of the telegram.

WTAF-TV (UHF channel 31, Marion, Ind.) is owned, according to FCC records, by a Mr. Anthony R. Martin Trigona. Apparently he has no other broadcast interests. Too bad. Upon examining Mr. Trigona's telegram, I discover that it contains some very interesting charges conveniently omitted in the majority's reference. He says, among other things:

WTAF-TV will file a Sherman Antitrust action against CBS, ABC, Avco and Corinthian Broadcasting companies for conspiracies in restraint of trade and attempts to destroy WTAF-TV by withholding network affiliations. * * *

Needless to say, none of us can know at this juncture anything about the merits of the charges raised. To ignore them, however, stands in stark contrast not only to our obligation to serve the public interest, but to our oft-professed interest in doing something for UHF television. To ignore them also suggests the possibly reckless nature of rushing through an item like this on a Saturday afternoon. They are also generally supportive of the kinds of concerns I feel about this case, and the other two we today approve.

I dissent.