In re Application of THE STOCKHOLDERS OF BEAUMONT BROADCASTING CORP

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In re Application of THE STOCKHOLDERS OF BEAUMONT BROADCASTING CORP. (TRANSFERORS) AND A. H. BELO CORP. (TRANSFEREE) For Consent to Transfer of Control of Beaumont Television Corp., Licensee of Station KFDM-TV, Beaumont, Tex.

File No. BTC-5853

FEDERAL COMMUNICATIONS COMMISSION

17 F.C.C.2d 577 (1969)

RELEASE-NUMBER: FCC 69-494

May 7, 1969 Adopted

ACTION:

MEMORANDUM OPINION AND ORDER

BY THE COMMISSION: COMMISSIONERS BARTLEY AND JOHNSON DISSENTING AND ISSUING STATEMENTS; COMMISSIONER COX CONCURRING AND ISSUING A STATEMENT.

[*577] 1. The Commission has before it the above-captioned application for consent to the voluntary transfer of control of Beaumont Television Corp., licensee of station KFDM-TV, Beaumont, Tex., from the stockholders of Beaumont Broadcasting Corp. to A.H. Belo Corp.

2. A.H. Belo Corp., the proposed assignee, is engaged primarily in newspaper publication and communications. Belo Corp.'s only other broadcast interests consist of three sister stations in Dallas, Tex. (WFAA, WFAA-FM and WFAA-TV). Belo Corp. publishes the Dallas Morning News (daily and Sunday) and through a subsidiary (News-Texas, Inc.), it publishes newspapers in a number of small communities in the Dallas area. (The effect of these mass media interests is considered below.) Additionally, Belo Corp. owns Communications Realty, Inc. (a Dallas real estate company), has a 25-percent interest in Big D Productions (a Dallas-based producer of outdoor hunting and fishing films), and owns 50 percent of the land and TV antenna tower used by station WFAA-TV and KRLD-TV in Dallas, and WBAP-TV, Fort Worth.

3. Control of Belo is exercised by the trustees of the G.B. Dealey Trust, which owns 70.9333 percent of the corporation's voting stock. The three trustees are related by family privity and own in their own right the following percentages of Belo stock; H. Ben Decherd: .7156 percent; Joe M. Dealey: .7156 percent; and James M. Monroney, Jr.: 1.1879 percent. Several stockholders who are not members of the Dealey family own less than 1 percent stock interests. The only non-Dealey owning more than 1 percent is Joe A. Lubben, who holds a 2.5285 percent interest in Belo in his own name and is trustee of two family trusts which collectively own approximately 2.6 percent of Belo's stock. All Belo stockholders are Dallas residents and for the most [*578] part are employees of Belo's newspaper companies or its broadcast stations. Several stockholders serve as officers or directors of local Texas companies engaged in a variety of nonbroadcast businesses: oil production, oil royalty companies, real estate, cotton compressing, etc. One Belo director (D. Gordon Rupe) has less than 25 percent interest in several out-of-state companies engaged in real estate investment, etc.

4. Proposed programming is as follows:

Past Percent Proposed Percent

News 8.7 7.99

Public affairs 2.55 2.36

All other 6.6 6.6

Belo proposes 16 minutes of commercial matter in any 60-minute segment. Transferee states this norm "* * * may be waived to a limited and reasonable extent in the case of programs presenting women's services, features, shopping guides, fashion shows, demonstrations, and similar material." Belo would restrict this "* * * waiver due to special program types" to no more than 1 clock hour per broadcast day. Deviations from the norm might also occur to a limited extent in the following situations: (a) for "make goods" where commercial time has been preempted by emergency programs of special or unusual public significance, n1 or for power or equipment failure; (b) for fluctuations due to schedule disruptions resulting from an excess of commercial material in 1 clock hour and a shortage in another where average for hours affected would not exceed the normal maximum; (c) during political campaigns for announcements or programs by or on behalf of candidates, or in periods of disruption when other advertising media such as newspapers are not available; and (d) for such other exceptions as may be recognized as permissible at any time under the NAB code. These variations will not be permitted to exceed normal maximums by more than 2 minutes per clock hour.

n1 Programs contemplated here are those relating to events such as assassinations of prominent persons, the Cuban missile crisis, important space developments, disaster of national or regional significance, such as earthquakes or forest fires. It is expected that these events will in all probability happen less than six times a year.

5. Belo's ascertainment of community needs complies with applicable Commission policies. The major communities served by KFDM-TV are Beaumont, Port Arthur, and Orange, Tex. Three Belo executives -- Belo's vice president and treasurer, the general manager who has charge of all Belo's broadcast activities in Dallas, and the assistant to the general manager -- personally interviewed 19 community leaders in these communities. These persons represent a cross-section of interests (religious, judicial, civic, business, educational, etc.) in the communities involved. Community needs ascertained by these interviews are as follows: (a) improvements of the community's educational system; it was ascertained there is a critical need for a junior college and a medical school, (b) provision of better housing for low-income persons, (c) better medical care for the indigent, and (d) improvement of intergroup relations, particularly those between the races, between [*579] high- and low-income groups, and between various other majority and minority groups in the community. Transferee has set forth in exhibit 8 the suggestions received from persons interviewed and its evaluation of the same. To meet ascertained needs, transferee proposes to retain several programs which meet specialized needs (religious programs, children's programs, and a weekly 30-minute farm program). Additionally, Belo will carry CBS public affairs programs including "Twenty-first Century" and "Face the Nation." Transferee also proposes to present periodically programs on which community leaders will, from KFDM-TV studios, "* * * carry on a meaningful dialog with citizens of the area by answering questions submitted by telephone or * * * letter, with a view to providing the public with more information concerning the issues involved in dealing with a particular problem of the community."(Exhibit 9, p. 2.) Transferee will further offer its facilities to mayors of several communities for discussion of major local issues. The same offer will be extended to representatives of other groups (labor, business, civic, etc.) "* * * who bespeak the interests which make up the community." To satisfy community needs, Belo initially proposes to present programs of at least 30-minute duration in prime time at least once every month and to provide at least 30 minutes every week in a weekend time period for a continuing series. Finally, transferee proposes to increase the activities of the news department to provide greater in-depth coverage of local news.

6. As noted above, Belo owns three stations in Dallas, and publishes the Dallas Morning News (daily and Sunday). Belo's subsidiary publishes a weekly newspaper in Farmers Branch-Carrolton (circulation 1,017). It also publishes newspapers (daily, except Saturday) in the following communities: Arlington, Grand Prairie, Irving, Hurst-Euless, Garland, Richardson, and McKinney. The aggregate circulation of these daily papers is 46,209, with individual circulation ranging from less than 3,500 to 12,000. All this newspaper publishing activity is in the Dallas area. The communities are all in the environs of Dallas, with the most distant one (McKinney) being approximately 30 miles north of Dallas. These community papers have no circulation in Dallas. Fewer than 100 copies daily or Sunday of the Dallas Morning News are circulated in KFDM-TV's home county of Jefferson. Belo states further that circulation of the News is likewise negligible in all of the other counties lying in whole or in part within the KFDM-TV predicted grade B contour. It further notes that only "* * * in Angelina County (75 miles northwest of Beaumont) of which only a small portion falls within the KFDM-TV grade B contour does circulation of the News exceed 100 copies. Even there, however, circulation is less than 400 copies."

7. There is no basis for concluding that Belo has an undue concentration of control of mass communication media in the Dallas-Fort Worth area. Dallas has assigned to it three VHF stations and three UHF stations. All VHF stations are operating; one is licensed to Belo (WFAA-TV)and one is an educational station. One of the UHF stations (KDTV-TV, licensed to Doubleday Broadcasting) is in operation, another (KMEC-TV) is dark, pending an assignment to another [*580] owner, and the third (KLIF-TV, licensed to McLendon Corp.) is not yet operating. Dallas also receives a grade A signal from two commercial VHF stations in Fort Worth (WBAP-TV and KTVT), one commercial UHF station (KFWT) and one educational UHF station in Richardson (KRET-TV). Dallas proper has assigned to it five full-time and three daytime AM stations, and 10 FM stations. Nine fulltime and two daytime AM stations assigned to Fort Worth and neighboring communities (Denton, Sherman, Terrell, McKinney, etc.) put a 2-mv./m. signal over Dallas or parts thereof, and eight FM stations assigned to Fort Worth and surrounding communities put a 60-dbu signal over the Dallas city limits. Belo's Morning News competes with the Dallas Times-Herald, with latest circulation listed in the footnote below. n2 There are two dailies published in the Fort Worth metropolitan area -- the Star-Telegram and the Press. The two Dallas papers have a negligible circulation in Fort Worth (less than 3 percent of the combined Fort Worth city zone circulation of the Fort Worth dailies), and the two Fort Wort dailies have a similarly negligible circulation in Dallas. There are 36 weekly and one triweekly newspapers published in communities surrounding the Dallas-Fort Worth areas. These 37 newspapers have a combined circulation of 111,985 readers.

n2 See the following table:

Daily Saturday Sunday

Dallas Morning News:

Total circulation 236,267 276,380

Dallas city zone circulation 139,135 152,990

Dallas Times-Herald (evening):

Total circulation 216,209 192,275 256,250

Dallas city zone circulation 156,227 142,090 176,874

8. The Beaumont-Port Arthur area is served by the following mass media:

Television stations. -- KFDM-TV (CBS), KJAC-TV (NBC), KBMT-TV (ABC).

Newspapers. -- Beaumont Enterprise, Beaumont Journal, Port Arthur News, Orange Leader.

Radio stations. -- Beaumont, 4 AM stations; Beaumont, 4 FM stations; Port Arthur, 2 AM stations; Port Arthur, 2 FM stations; Orange, 1 AM station; Port Neches, 1 AM station.

9. On the basis of the foregoing considerations, it is apparent that Belo Corp.'s mass communications media interests in the Dallas-Fort Worth area are consistent with the Commission's multiple ownership rules, and that approval of the referenced transfer application would also be consistent with those rules and established precedents. In view of this, and in view of Belo Corp.'s financial and legal qualifications, we find that a grant of the application would serve the public interest, convenience, and necessity.

10. Accordingly, It is ordered, That the application for consent to the voluntary transfer of control of Beaumont Television Corp., [*581] licensee of station KFDM-TV, Beaumont, Tex., from the stockholders of Beaumont Broadcasting Corp. to A.H. Belo Corp., Is granted.

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.

CONCURRING STATEMENT OF COMMISSIONER KENNETH A. COX

I concur in the action granting consent to the transfer of control of the licensee of KFDM-TV in Beaumont, Tex. I would have been happier if the transferor had found a buyer with no media interests in Texas. However, this transaction is not inconsistent with the standard we considered earlier in our top 50 market rulemaking proposal (since terminated by a 4 to 3 vote), it does not contravene our proposals in docket 18110, and the transferee is not a conglomerate in any significant sense. I therefore concur.

DISSENTING STATEMENT OF COMMISSIONER ROBERT T. BARTLEY

The showing made in the application is inadequate for me to make an affirmative determination that the transfer could be expected to bring about an improvement in the general structure of broadcasting. Accordingly, I vote for an evidentiary hearing to determine whether the transfer would serve the public interest, convenience, and necessity.

DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

This case involves the transfer of a $5 million television stat9on in Beaumont, Tex. The station is to be sold to a new owner who is already a substantial media owner in the State -- owning one of the two daily newspapers in Dallas and a major TV-AM-FM there, as well as seven daily newspapers in the Dallas environs.

I dissent.

This is not the first time that this TV station, KFDM-TV, was to be sold. In 1968 the Commission had before it an application from these applicants to sell the station to the owner of the only daily newspapers in Beaumont. Only after intervention and protest by the Department of Justice did the Commission even indicate that a hearing would be required before Commission approval could be granted. The parties quietly dropped that proposal.

Now the Commission has before it a different proposal -- different in the extent to which classical antitrust analysis can be brought to bear -- but similar in that concentration of media in the State of Texas is increased. It is also different in that the Department of Justice -- which understandably finds it difficult to intervene in every instance of potential malfeasance by this Commission -- is not now a party.

The corporation acquiring the station -- A.H. Belo Corp. -- already owns the Dallas Morning News (circulation 236,267 daily, and 276,380 Sunday); WFAA-TV-AM-FM, the ABC affiliate in Dallas; and seven neighboring newspapers. WFAA (AM) shares two AM channels with another AM -- WBAP (AM) -- which, in turn, is owned by Carter Publications, Inc., publisher of Fort Worth Star-Telegram, one of the two daily Fort Worth papers, and also owner of a TV and [*582] FM station there. The principals of A.H. Belo Corp. are also involved in a number of nonbroadcast interests, giving rise to the types of concern expressed in the Commission's notice of inquiry into the ownership of broadcast properties by entities with significant nonbroadcast interests. ( Conglomerate Corp. Licensees, 16 F.C.C. 2d 436 (1969).) In addition to its media holdings, Belo is involved in real estate, production of hunting and fishing films, oil production, oil royalty companies, cotton compressing, and owns 50 percent of the land and TV antenna tower used by its own station and that of KRLD-TV, Dallas, and WBAP-TV, Fort Worth.

The principal issue in this case is simple -- but I fear that the majority has confused it. The question is not whether some reason can be found as to why this application should not be approved. That is the burden which must be sustained by the Department of Justice before the courts. But the burden before this agency is upon the applicants; they must show how the public interest will be served by approving this application. The detrimental impact is obvious -- the political and economic power of the A.H. Belo Corp. in the State of Texas will be enhanced substantially. The opportunity for "diverse and antagonistic voices" (see Associated Press v. United States, 321 U.S. 1, 20 (1944), quoted with approval by the Commission most recently in its one-to-a-market rulemaking, F.C.C. 68-332 (1968)) to present information and ideas to the people of Texas will decrease. It is incumbent upon the parties to come forward with some explanation as to how the public will benefit from this transaction. There is not one iota of evidence or rationale presented in the application. None has been put forward by our staff, nor by the majority of the Commissioners. The majority opinion is disturbingly silent on this crucial point, while reciting all the reasons it believes there are no local concentration problems.

It is decisions like this that add credence to those FCC critics who charge that "your every wish is our command" is the polestar by which this Commission navigates its way through the sea of private economic interests that appear before us. The FCC's imprimatur of public interest can be purchased with cheap and tarnished intellectual coin indeed when decisions like this one can find their way into the official FCC Reports.

I dissent.