In Re Applications of TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND CAPITAL CITIES BROADCASTING CORP. (ASSIGNEE) For Assignment of License of Station WFIL-TV, Philadelphia, Pa.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND CAPITAL CITIES BROADCASTING CORP. (ASSIGNEE) For Assignment of License of Station WNHC-TV, New Haven, Conn.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND CAPITAL CITIES BROADCASTING CORP. (ASSIGNEE) For Assignment of License of Station KFRE-TV, Fresno, Calif.; CAPITAL CITIES BROADCASTING CORP. (ASSIGNOR) AND LEE ENTERPRISES, INC. (ASSIGNEE) For Assignment of License of Station WSAZ-TV, Huntington, W. Va.; CAPITAL CITIES BROADCASTING CORP. (ASSIGNOR) AND ALBANY TELEVISION, INC. (ASSIGNEE) For Assignment of Licenses of Station WTEN (TV), Albany, N.Y., together with satellite Station WCDC(TV), Adams, Mass.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND WFIL, INC. (ASSIGNEE) For Assignment of License of Station WFIL, Philadelphia, Pa.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND RICHER COMMUNICATIONS, INC. (ASSIGNEE) For Assignment of License of Station WFIL-FM, Philadelphia, Pa.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND WESTERLY BROADCASTING CO. (ASSIGNEE) For Assignment of License of Station WNHC, New Haven, Conn.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND METRO CONNECTICUT MEDIA, INC. (ASSIGNEE) For Assignment of License of Station WNHC-FM, New Haven, Conn.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND KFRE BROADCASTING, INC. (ASSIGNEE) For Assignment of License of Station KFRE, Fresno, Calif.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND STEREO BROADCASTING CORP. (ASSIGNEE)
For
Assignment of License of Station KFRE-FM, Fresno, Calif.
File No. BAPLCT-105; File No.
BALCT-409; File No. BALCT-411; File No BALCT-408; File Nos. BALCT-410 and
BALTTV-81; File No. BAL-7167; File No. BALH-1406; File No. BAL-6970; File No.
BALH-1384; File No. BAL-6994; File No. BALH-1412
FEDERAL COMMUNICATIONS COMMISSION
28 F.C.C.2d 80
RELEASE-NUMBER: FCC 71-209
February 26, 1971 Released
Adopted February 24, 1971
ACTION:
MEMORANDUM
OPINION AND ORDER
JUDGES:
BY THE COMMISSION: COMMISSIONERS
BARTLEY AND JOHNSON CONCURRING AND ISSUING STATEMENTS.
OPINION:
[*81] 1. We have
before us for consideration the above-entitled applications for consent to the
assignment of broadcasting authorizations.
2. The applications involve a
series of related and mutually contingent transactions. Under the
"basic transaction", Capital Cities would acquire from Triangle
Publications, Inc., WFIL (AM, FM and TV), Philadelphia, Pennsylvania; WNHC (AM,
FM and TV), New Haven, Connecticut; and KFRE (AM, FM and TV), Fresno,
California and Triangle's television program Syndication Business. The
total consideration for this basic transaction is $110,000,000. While
Capital Cities would acquire nine broadcast stations, it proposes to retain and
operate only three of them -- the television outlets in Philadelphia, New Haven
and Fresno (BAPLCT-105; BALCT-409 and BALCT-411). Pursuant to its
agreement with Triangle, Capital Cities will dispose of the remaining six AM
and FM stations to separate buyers (BAL-7167, BALH-1406, BAL-6970, BALH-1384,
BAL-6994, and BALH-1412). n1
In order to comply with the multiple ownership rules, Capital Cities then
proposes under related application to assign the licenses of two of its
presently held television stations -- WTEN-TV, Albany, New York, together with
its satellite station, WCDC(TV), Adams, Massachusetts; and WSAZ-TV, Huntington,
West Virginia (BALCT-408, BALCT-410 and BALTTV-81).
n1 Pursuant to the basic agreement
of February 13, 1970, Capital Cities has called upon Triangle to file
assignor's portions of the applications covering sales to separate
buyers. The contracts of sale, however, are between Capital Cities and
the separate buyers.
3. We have carefully
considered all the applications and we find that all of the proposed assignees
are legally, technically, financially and otherwise qualified to acquire the
authorizations they seek; that all have conducted surveys of the needs and
interests of the communities they wish to serve and propose a programming
service responsive to ascertained needs, and that a grant of all the
applications would serve the public interest, convenience and necessity.
In the interest of brevity, we forego extended discussion of those aspects of
the applications which present no problems. However, the public interest
requires that [*82] certain major aspects of the transactions be
discussed in detail. We refer here to the Top-50 policy, and to the
propriety of the "package" transaction and spinoffs. n2
n2 The matters considered here were
raised in a Petition to Intervene and Deny filed by Citizens Communications
Center (CCC) on its own behalf and on behalf of a Law School Study Group.
As noted hereinafter, that petition was withdrawn. Certain expenses were
paid by Capital Cities to persons designated by petitioners as minority
representatives with whom Capital Cities was to consult in its ascertainment of
community needs. These expenses, totaling something over $5,000, raise a
question under our decision in KCMC, Inc., 25 FCC 2d 603 (1970), on appeal sub,
nom. Office of Communication of the United Church of Christ v. Federal
Communications Commission, No. 24,672, C.A.D.C. However, since the
payments here are fully consummated and are of minimal significance in the
present context, we need not decide whether it comes within our KCMC
holding. We note here finally that even though the matters under
discussion were raised by CCC, they are the type of matters which would in any
event have been raised independently by the Broadcast Bureau. Certain
minor matters -- alleged diminution of service at some of the stations and a
claim that one of the assignee's involvement in antitrust litigation required a
hearing -- were also raised by CCC. Substantial amendments to the
applications make it unnecessary to consider these minor matters.
THE TOP-50 ISSUE
4. Apart from its Huntington
and Albany television stations which are to be disposed of under the related
applications, Capital Cities is the licensee of KTRK-TV (Houston, Texas) and
WTVD-TV (Durham, North Carolina). Both stations are in the Top-50
television markets. Under ARB rankings, Houston is the 27th market and
Raleigh-Durham is ranked 49th. Two of the three television stations
Capital Cities proposes to acquire from Triangle are in the Top-50
markets. WFIL-TV (Philadelphia) is in the 4th ranked market, and WNHC-TV
(New Haven) in the 12th. Given these market rankings, CCC contended in
its Petition to Deny that acquisition of WFIL-TV and WNHC-TV was subject to the
Top-50 policy and could only be justified by the "compelling public
interest showing" of benefits versus detriment to the public interest,
specified in the Report and Order in Docket 16068, 12 RR 2d 1501, 1507. CCC
also argued the proposed retention of WFIL-TV and WNHC-TV under common control
raised a question of regional concentration under the rule of
Witchita-Hutchinson Co., Inc., 19 FCC 2d 433.
5. although acquisition of the
Philadelphia and New Haven outlets would not -- as suggested by CCC -- triple
the television audience which could be reached by Capital Cities Top-50
stations, Capital Cities concedes that on a cumulative net weekly circulation
basis its potential TV audience would increase from 2,440,804 TV homes to
4,761,435 TV homes. Nevertheless, in its Opposition, Capital Cities
argued that the more stringent standard under the Top-50 policy does not apply
to an exchange of stations, in which the number of Top-50 stations will remain
constant. In any event, Capital Cities urges that this question need not
be decided since Capital Cities substantially amended its applications on
December 30, 1970, by submitting a "compelling public interest
showing."
6. At this point, we mention
matters which occurred after the CCC petition was filed. After filing,
representatives of Capital Cities held a series of consultations with CCC
officials and representatives of minority groups in Philadelphia, New Haven and
Fresno to determine if there were any basis on which the CCC charges could be
resolved. An outgrowth of these consultations was the Minority
Program [*83] Project, a $1,000,000 programming commitment by
Capital Cities, discussed more fully below, and on January 4, 1971, CCC
withdrew its Petition to Deny. In essence, while CCC had some
reservations about the "package" form of the applications and the
proposed spinoffs, CCC stated it felt the overall public interest would be
served by prompt approval of the applications. In CCC's view, amendments
to the applications prompted by the CCC petition and subsequent undertakings --
and especially the Minority Program Project -- lent assurances that the public
interest would be served. ("Withdrawal of Petition to Intervene and
to Deny," paragraphs 7 et seq.)
7. We turn to applicability of
the Top-50 policy to these applications. Despite Capital Cities urging
this matter need not be decided in the particular context here, the issue is
too important to be left in a state of limbo. The question here is one of
interpretation, and must be resolved within the framework of special problems
concerning the Top-50 television markets -- the Commission's expressed concern
with the accelerating trend toward concentration of group ownership in the
largest population centers and a fear that the future growth of UHF television
might follow the same pattern. See Television Multiple Ownership Rules, 5
RR 2d 1609, 1613 para. 10 (1965). We concede that the Report and Order
terminating the proposed rulemaking in Docket 16068 and specifying ad hoc
consideration of Top-50 applications under the "compelling public interest
showing" standard does not explicitly cover an exchange of stations within
the Top-50 markets where overall holdings remain constant. But to exempt
such exchanges -- particularly transactions of the magnitude involved here --
from the special policy requirements would be to exalt form over
substance. For the asserted inapplicability of the Top-50 policy here
depends largely on the accidents of form. For example, if Capital Cities
first disposed of one of its present Top-50 stations (as it proposes in part to
do under the related applications), its later acquisition of WFIL-TV and
WNHC-TV would clearly fall within the letter of the policy.
8. The special concerns which
underpin the Top-50 policy require that we look beyond mere form and focus on
substance. Where an applicant "up-markets" -- as Capital Cities
concedes it is doing here -- we see no sound policy reason why the Top-50 policy
should be considered inapplicable. And the need for a "compelling
public interest showing" is especially important where up-marketing takes
place within the Top-50 markets, because the very purpose of such a move is to
increase the Top-50 homes which the applicant's stations will serve. And
the additional concentration of group ownership stemming from such Top-50
audience increases -- the principal policy concern of the Top-50 policy --
makes it entirely reasonable to require an applicant to justify the
transactions under the special public interest standard. Accordingly, we
hold that the Top-50 policy applies to an exchange of stations within the
Top-50 television markets, even though the total number of Top-50 stations
involved remains fixed.
9. Upon careful consideration
of the amendments to the applications covering acquisition of WFIL-TV, WNHC-TV
and KFRE-TV, n3 [*84] including the
Minority Program Project, we are persuaded that Capital Cities has made the
required "compelling public interest showing". n4
n3 Amendment, Dec. 30, 1970, to
BAPLCT-105, BALCT-409, and BALCT-411, portion entitled "Showing As to
Multiple Ownership and Public Interest Benefits That Will Result From
Grant."
n4 While not raised in the CCC
petition, Albany Television's proposed acquisition of WTEN-TV and its
satellite, WCDC-TV, are also subject to the Top-50 policy. This matter is
consider separately below.
10. A grant of the present
applications would reduce local concentration of broadcast media in four major
communities, separating the ownership of AM, FM and TV stations in
Philadelphia, New Haven and Fresno and separating the ownership of WROW (AM
& FM), Albany (licensed to Capital Cities) from that of companion Station
WTEN (TV). In light of our "one to a market" rule and our
efforts to encourage the voluntary separation of AM, FM and TV facilities
through the issuance of tax certificates under Section 1071 of the Internal
Revenue Code, n5 this result of a grant must be
regarded as a major public benefit.
n5 See Tax Certificates, 19 RR 2d
1831 (1970).
11. Secondly, a grant would
eliminate the common ownership of WFIL-TV and WLYH-TV, Lebanon, which have
substantially overlapping Grade B coverage areas. Simultaneously, it
would reduce Triangle's TV stations in Pennsylvania from three to two, reduce
Capital Cities' TV stations in New York from two to one and separate the
Triangle stations on the Eastern seaboard (WFIL-TV and WNHC-TV) from those
further inland (WLYH-TV, WFBG-TV and WNBF-TV). Thus, it would clearly
reduce concentration of control over television media serving
Pennsylvania. n6
n6 The Grade B coverage areas of
WLYN-TV, wfil-tv/ and WFBG-TV cover most or Pennsylvania; WNBF-TV, Binghamton,
also serves a substantial portion of northeastern Pennsylvania.
12. As to the concentration
inherent in continued common ownership of WNHC-TV and WFIL-TV, Capital Cities
has demonstrated that both stations are subjected to an extraordinary amount of
competition both in their own markets and from adjacent markets. The
great bulk of the population served has a minimum of five competing commercial
television services; much of that population has as many as 15 or more other
commercial alternatives; and the two stations are far from dominant in the
region.
13. Moreover, unlike the
proposed transferee in Wichita-Hutchinson, supra, Capital Cities has no other
television stations and no daily newspapers in the area of concern (whether it
be the "Baltimore to Boston Megopolis" or that area plus the State of
Pennsylvania). Its only mass media in the area are radio stations WPAT
(AM & FM), Paterson, New Jersey, and WPRO (AM & FM), Providence, Rhode
Island, which are subject to substantial competition in their own
markets. n7 In Wichita-Hutchinson, the
applicant had "extensive media interests" in two states and sought to
"enlarge the linear sphere of [its] influence to include a third
state." Wichita-Hutchinson Co., Inc., 20 FCC 2d 951, 952, 17 RR 2d 1235,
1237 (1969). The issue of "undue" regional concentration arose because
of this "... increased area in [*85] which the transferee
would have a voice..." (20 FCC 2d at 953, 17 RR 2d at 1237). We do not
face here either extensive pre-existing regional concentration or a proposal
that such concentration as may exist be substantially increased. There is
rather proposed a decrease in regional concentration, particularly in
Pennsylvania but also in the other relevant areas.
n7 In addition, if radio stations
are to be considered, a grant would bring four entirely new and separate radio
owners to the area, operating WFIL (AM), WFIL-FM, WNHC (AM), and WNHC-FM.
14. Third, on the national
level, the proposed increase in the audiences which Capital Cities stations
would reach is offset by an equally substantial increase in the competition to
which Capital Cities would be subjected -- a factor clearly relevant under
Section 73.636(a)(2) of the Rules. The Capital Cities stations to be sold
(WSAZ-TV and WTEN) now compete against only two or three other commercial
stations and have substantial shares of the available audience (50% in the case
of WSAZ-TV (Huntington) and 37% in the case of WTEN (Albany)). The
stations it would acquire in the Top-50 markets (WFIL-TV and WNHC-TV) compete
against five or more other commercial stations in the heart of their market
areas and have far smaller shares of the market audience (26% and 28%).
15. This increased competition
reduces any concern with the increase in the seizes of Capital Cities potential
audiences, because the gain in potential audience involves viewers with the
widest choice of service. Moreover, since Lee Enterprises, Inc. (proposed
assignee of WSAZ-TV) has no present interests in the Top-50 markets, a grant
would actually increase the number of separate television owners serving those
markets.
16. Finally, Capital Cities
refers both to its past record n8 and to a
unique plan for public service programming at the three television stations to
be acquired -- the Minority Program Project. After consulting with
petitioners and minority group leaders in Philadelphia, New Haven and Fresno,
Capital Cities proposes to commit a total of $1,000,000 over a three-year
period to developing programs which reflect the views, aspirations, problems
and culture of blacks and Spanish-surnamed minority groups within the service
areas of the three television stations. Such programming will be produced
(1) by individual Capital Cities stations, (2) by a Capital Cities corporate
production unit, and/or (3) by outside sources whose efforts would be funded
wholly or partially by Capital Cities. Capital Cities anticipates the
effort will produce sufficient programming to allow each of the subject
stations to telecast a minimum of 6 hours of programming in this field per year
(with each program at least 1/2 hour in length) and that a minimum of 50% of
such programs will be telecast in prime time (6-11 p.m. on weekdays and 5-11
p.m. on weekends in the Eastern Time Zone).
n8 Capital Cities points to its
corporate program production unit, responsible for world-wide television
coverage of the Eichmann trial in Jerusalem and the Peabody Award-winning
programs "Verdict for Tomorrow" (based on the Eichmann trial) and
"The Secret of Michelangelo: Every Man's Dream" (an exploration of
Michelangelo's Sistine Chapel ceiling, broadcast by the ABC network), as well
as Lowell Thomas' "Patrol Into the Unknown" (a study of the people of
New Guinea broadcast by the NBC network), among other programs. It shows
also that the capacities of this production unit have been integrated with the
resources of individual Capital Cities stations in a series of programs titled
"A Visit with Franz E. Winkler, M.D.", featuring interviews on a
range of "psychosexual and mental hygiene problems", including
changes occurring within the American family and their impact on society at
large.
[*86] 17. while
retaining full control over fund expenditure and the production and scheduling
of programs, Capital Cities proposes to engage in substantial consultations
with advisory committees composed of minority group leaders in Philadelphia,
New Haven and Fresno concerning the manner in which funds will be spent and
programs are planned and produced. It will give "great weight and
careful consideration" to any objection by an advisory committee as to the
topic of a particular program in the project; if it declines to broadcast a
program recommended by a committee or rejects a programming proposal by a
committee, it will provide a written statement of its reasons upon written
demand therefore.
18. Without going further into
the details of the project, n9 Capital
Cities obviously has made a major programming commitment to convey the views of
racial and ethnic minority groups to the public at large. We note in
passing that the minorities involved are those to whom national policy and our
rules in the field of employment discrimination are largely addressed.
See Nondiscrimination Employment Practices of Broadcast Licensees, 18 FCC 2d
240, 244 par. 8, 16 RR 2d 1561, 1566 par. 8 (1969); 23 FCC 2d 430, 431 par. 3,
19 RR 2d 1571, 1572 par. 3 (1970). We note also that the Minority Program
Project responds substantially to our urging that broadcasters go beyond the
requirements of national policy and our rules and seek as a matter of
conscience to meet the overriding challenge of the times by promoting increased
understanding among the races. See Nondiscrimination Employment Practices
of Broadcast Licensees, 13 FCC 2d 766, 773-5, 13 RR 2d 1645, 1655-7 (1968); 18
FCC 2d 240, 245, 16 RR 2d 1561, 1567 (1969).
n9 Details are set out in the
amendment of Dec. 30, 1970 to the television applications.
19. In view of the foregoing,
we conclude that, Capital Cities has demonstrated the public benefits flowing
from a grant of the subject applications would outweigh any detriment. n10 We conclude also that no significant issue of undue
regional concentration is presented.
n10 The fact that deconcentration
might be maximized by assignment of the three stations to a buyer whose
television interests do not bring him within the limits of the Top-50 policy
does not preclude a grant. See Metropolitan Television Co., 13 FCC 2d
346, 352, note 9.
Charges Relating to the
"Package" Form of the Transactions -- Alleged Trafficking and Alleged
Violation of the "Three-Year" Rule.
20. It was alleged in the
withdrawn Petition to Deny that the spinoffs violated the
"three-year" rule, and any spinoffs at a profit without rendering
service amounted to trafficking.
21. It is settled that passing
stations through a conduit buyer such as Capital Cities who has no intention of
operating the stations but intends immediately to spin them off to other
buyers, does not constitute a violation of the "three-year"
rule. This was decided recently -- in 1968 -- in connection with Atlantic
States Industries (now ASI Communications) acquisition of six stations from
Cleveland Broadcasting Company, the retention of some stations and spinoff of
others to comply with the one-to-a-market. In view of this and other
Commission actions permitting acquisition of "packages" subject to a
requirement of immediate divestiture of holdings which conflict with the
[*87] one-to-a-market rules, there is no "three-year" problem
here. See, e.g., Shenandoah Life Stations, 19 FCC 2d 704 and King Louis
International, Inc., 24 FCC 2d 508. Nor do such spinoffs via a conduit buyer
amount to trafficking. See Howe, 14 FCC 219 and Don Lee Broadcasting
System, 15 FCC 501, in both of which the Commission specifically rejected
arguments that collateral spinoffs involved trafficking.
22. There remains the matter
of whether Capital Cities might profit on the spinoffs. Pursuant to the
Commission's request, Capital Cities furnished a "Statement as to
Price" indicating the allocation of valuations among the assets being
acquired from Triangle. Elsewhere, Capital Cities has conceded it is
impossible to determine whether it will profit or lose from the spin-offs, and
that the form was dictated not from any profit motives but by the larger
conveniences of Mr. Annenberg and the need to comply with the known objectives
of the one-to-a-market rules. (Opposition, pp. 30 to 31.) But Capital
Cities argues that practical factors afford safeguards. Capital Cities'
incentive to realize the maximum price for the spin-off properties does not
differ from Triangle's, but the ability of Capital Cities to obtain the maximum
price is sharply limited by the need to sell within a short time, without
regard to prevailing market conditions, in order to permit completion of the
overall transaction. Moreover, the bulk of any cash Capital Cities
receives from the spinoffs must be paid immediately to Triangle and applied to
Capital Cities' debt to Triangle in reverse order of maturity. Thus,
Capital Cities does not have the use of the spinoff proceeds over the contract
lives. Additionally, instruments of debt received from the spinoff buyers
must be assigned to Triangle without relieving Capital Cities of any
obligation. Thus, any profit is remote and highly deferred and carries
continued risks so long as the spinoff buyers have not discharged their
obligations. (Footnote, Opposition, p. 32.) The opposition further notes
the form of the transaction does not invite degradation of program service to
enhance salability, or disruption of service by short-term turnovers, or CP
"squatting" -- the substantive evils at which anti-trafficking
policies are aimed. Rather, the package transaction permits a breakup of
AM-FM-TV combinations, a result determined to be in the public interest under
the recently announced tax certificate policy.
23. We wish to underscore one
point -- that our approval is limited to the applications under
consideration. Nothing is intended to suggest that we will give blanket
approval to any and all "spinoff" transactions. Future applications
involving such proposals will be carefully scrutinized to see that they serve
the overall public interest and contain adequate safeguards to prevent abuses
which would be contrary to the public interest.
MISCELLANEOUS MATTERS
24. Albany Television's
proposal to acquire the WTEN-TV license is subject to the Top-50 policy.
We find that Albany Television has made a "compelling public interest
showing." We note first that the Top-50 stations controlled by Albany
Television's parent corporation are not in the most populous markets. The
related stations are WPRI-TV, Providence, Rhode Island (18th under ARB
rankings), and WJRT-TV, Flint, Michigan (47th). Albany-Schenectady-Troy
is [*88] ranked 45th. The geographical dispersion and size of
the markets are relevant factors here. See Metropolitan Television,
supra. Moreover, a grant of the Albany Television, Inc. application would
separate the ownership of WTEN from that of companion radio stations WROW (AM
& FM), thereby advancing the goals of our "one-to-a-market rule.
As noted, we have sought to encourage voluntary assignments of this type.
Tax Certificates, 19 RR 2d 1831 (1970). The de-concentration to be
achieved is particularly significant in light of the fact that Albany is the
capital of New York State. Separation would increase the number of
independent, competing sources of news concerning activities of the state
government available to the public, as well as the sources of news concerning
the state at large available to those who play a part in its government.
25. Secondly, the applicant
makes a series of programming proposals, based upon the experience of its other
stations and its ascertainment of needs in the Albany area, which are clearly
meritorious. Thus, it propose to utilize "mini-documentaries"
scheduled in prime time to provide maximum exposure for a wide range of
community problems, to develop a black written, produced and performed program
series designed to bring the station's viewers a better appreciation of black problems
and aspirations, and to offer free time and production facilities to a wide
array of political candidates in local and state elections, who ordinarily get
little exposure in any medium. The fact that these proposals, while
responsive to needs ascertained, are based on a substantial record of
performance in the same fields at other stations lends them a solidity and
credibility they might otherwise lack.
26. Finally, Westerly
Broadcasting, the proposed assignee of WNHC-AM (New Haven) points out that there
will be 1 mv/m overlap between WNHC-AM and assignee's Westerly, Rhode Island
station, WERI. A waiver is requested, based on the fact that the overlap
occurs on Long Island due to the high conductivity of Long Island Sound, that
the entire overlap area is eliminated by co-channel interference, and that the
overlap occurs in an area which, because of the need for circuitous overland
travel of almost 200 miles, is not marketwise part of the areas served by WERI
and WNHC. In these circumstances, a waiver is warranted. See The
Tidewater Broadcasting Co., 2 FCC 2d 364.
27. In view of the foregoing
and our careful examination of all the applications, we find that the overall
public interest, convenience, and necessity would be served by approval of all
the applications.
28. Accordingly, IT IS
ORDERED, That, (1) the applications for assignment of the licenses of Stations
WFIL-TV (Philadelphia, Pennsylvania), WNHC-TV (New Haven, Connecticut) and
KFRE-TV (Fresno, California) from Triangle Publications, Inc. to Capital Cities
Broadcasting Corporation, ARE GRANTED;
(2) the application for assignment
of the license of Station WSAZ-TV (Huntington, West Virginia) from Capital
Cities Broadcasting Corporation to Lee Enterprises, Inc., IS GRANTED;
(3) the application for assignment
of the license of Station WTEN (TV), Albany, New York (together with Satellite
Station WCDC (TV), Adams, Massachusetts) from Capital Cities Broadcasting
Corporation to Albany Television, Inc., IS GRANTED;
[*89] (4) the
application for assignment of the license of Station WFIL (Philadelphia,
Pennsylvania) from Triangle Publications, Inc. to WFIL, Inc., IS GRANTED;
(5) the application for assignment
of the license of Station WFIL-FM (Philadelphia, Pennsylvania) from Triangle
Publications, Inc. to Richer Communications, Inc., IS GRANTED;
(6) the request of Westerly
Broadcasting Co. for a waiver of Section 73.35(a)(1) of the Commission's Rules
respecting common ownership of Stations WNHC and WERI, IS GRANTED, and the
application for assignment of the license of Station WNHC (New Haven,
Connecticut) from Triangle Publications, Inc. to Westerly Broadcasting Co., IS
GRANTED;
(7) the application for assignment
of the license of Station WNHC-FM (New Haven, Connecticut) from Triangle
Publications, Inc. to Metro Connecticut Media, Inc., IS GRANTED;
(8) the application for assignment
of the license of Station KFRE (Fresno, California) from Triangle Publications,
Inc. to KFRE Broadcasting, Inc., IS GRANTED; and
(9) the application for assignment
of the license of Station KFRE-FM (Fresno, California) from Triangle
Publications, Inc. to Stereo Broadcasting Corporation, IS GRANTED.
29. IT IS FURTHER PROVIDED,
That, the grant of the applications covering acquisition of WFIL-TV, WNHC-TV
and KFRE-TV by Capital Cities Broadcasting Corporation, IS SUBJECT to whatever
final action the Commission may take in Docket No. 18751 on the Bankers
Petition, in the matter of amendment of Sections 73.35, 73.240, and 73.636 of
the Commission's multiple ownership rules.
FEDERAL COMMUNICATIONS
COMMISSION, BEN F. WAPLE, Secretary.
CONCURBY:
BARTLEY; JOHNSON
CONCUR:
CONCURRING STATEMENT OF COMMISSIONER
ROBERT T. BARTLEY
I concur in the assignments.
From the uncontroverted showings in support of the applications, I believe that
the transactions can be expected to bring about an improvement in the general
structure of broadcasting. The foremost improvement, in my opinion, is
diversification of control of mass media. Other improvements, obtaining
with respect to various of the ultimate assignments, are the fostering of
competition among broadcast stations, integration of ownership and management,
local residence or direct supervision of the station.
It appears from the showings made
that each of the assignees has ascertained the needs of its community and will
broadcast programs to meet those needs.
The circumstances surrounding the
withdrawal of the original petition to deny are not crystal clear; however, it
is claimed that neither the parties to the withdrawal nor their attorneys
received any consideration, and I have no reason to question their claim.
The payments referred to in footnote 2 were made for out-of-pocket expenses to
individuals in conjunction with further efforts by Capital Cities to ascertain
community needs.
This package transaction does have,
in my opinion, a number of undesirable features. Also, I would have
preferred to see Capital [*90] Cities remain more flexible in its
determination of community needs and programs to meet such needs. Capital
Cities has represented, however, that it will retain control over programming
under the Minority Program Project, and I rely upon that representation.
I concur in the assignments because
I believe that, on balance, the advantages to the public interest outweigh the
disadvantages.
CONCURRING OPINION OF COMMISSIONER
NICHOLAS JOHNSON
The Federal Communications
Commission has today approved one of the largest assignment and transfer
matters ever brought before this Commission. We have before us a $110,000,000
transaction involving eleven separate applications; the lawyers' papers alone
occupy more than three feet of shelf space.
Capital Cities proposes to acquire
nine broadcast stations from Triangle Publications, retaining three major
television outlets (in Philadelphia, Pennsylvania, New Haven, Connecticut, and
Fresno, California), and to "spin-off" three AM-FM combinations in
the same cities to separate purchasers for a total spin-off price of
$14,555,000. In related applications, Capital Cities would also dispose
of its present Huntington. West Virginia, and Albany, New York,
television outlets in order to comply with this Commission's multiple ownership
rules. All of the applications are contingent on each other and become
terminable if the Commission fails to approve any one of the 11 applications.
While this unwieldly
"package" transaction smoothes over several significant problems,
which I will discuss briefly below, I nevertheless concur in the Commission's
approval of Capital Cities' acquisitions. The grounds for my concurring
vote are two: (1) The proposed $1,000,000 Minority Program Project represents
the first such negotiated agreement between local citizens and a broadcaster
growing out of an assignment and transfer case. Such innovation is
commendable and to be encouraged. But for this feature I would have
dissented to this transaction. Even with it, I may not find it possible
to approve comparable assignments in the future. But, for this case, it
seemed most appropriate to concur. (2) The assignment will result in some
de-concentration of group ownership on national and regional levels.
I
Media Deconcentration
My concerns about the present trend
toward media concentration and the dangers inherent in the growth of powerful
"media barons" have been set out in detail elsewhere. See. N.
Johnson, How to Talk Back to Your Television Set 43-78 (1970), and Johnson and
Hoak, Media Concentration: Some Observations on the United States Experience,
56 Iowa L. Rev. 267 (1970).
Likewise, our nation's courts have
for years been aware of the importance of competitive media. They have
been especially vigilant in enforcing the anti-trust laws when dealing with the
structure and practices of the communications industries. The U.S. Supreme
Court in 1953 said that "[a] vigorous and dauntless press is a chief
source feeding the flow of democratic expression and controversy which
[*91] maintains the institutions of a free society." Times-Picayune
Publishing Co. v. U.S., 345 U.S. 594, 602 (1953). The Court of Appeals for the
District of Columbia has placed an affirmative duty on the FCC to encourage
competition. In Joseph v. FCC, 404 F. 2d 207 (D.C. Cir. 1968), the court
said that "[the] public welfare requires the Commission to provide the
'widest possible dissemination of information from diverse and antagonistic
sources' and to guard against undue concentration of control of communications
power." Id. at 211, citing Associated Press v. U.S., 326 U.S. 1, 20 (1945)
and Scripps-Howard Radio, Inc. v. FCC, 189 F. 2d 677, 683 (D.C. Cir. 1951),
cert. denied, 342 U.S. 830 (1951).
Congress has delegated to the FCC
great power to combat media concentration. The Communications Act of 1934
provides that no license shall be granted or renewed, 47 U.S.C. § 309(a)
(1964), nor any sale of the station approved, 47 U.S.C. § 310(b) (1964),
until the Commission makes an affirmative finding that the "public
interest, convenience, and necessity" compels such action. While the
Act contains no express language regarding concentration of ownership, the
legislative history clearly indicates that Congress designated these sections,
and their predecessor sections in the Radio Act of 1927, to prevent the growth
of media monopolies contrary to the national interest. Cf., 67 Cong. Rec.
5478-80 (1926) and Pote v. Federal Radio Commission, 67 F. 2d 509 (D.C. Cir.
1933), cert. denied, 290 U.S. 680 (1933).
In essence, then, these sections
allow the FCC to take a wide range of action which it finds to be in the public
interest, to decrease the concentration of the media in this country.
Capital Cities concedes that the
acquisition of the Triangle stations will increase the combined net-weekly
circulation of its television homes from roughly 2.4 million to more than 4.6
million. * The Capital Cities acquisition will almost triple the
potential number of television homes Capital Cities will serve in the top 50
markets.
* Following approval of these
applications, Capital Cities will hold these licenses:
|
Call letters |
Location |
Weekly circulation |
Market |
|
WFIL-TV |
Philadelphia,
Pa |
2,177,132 |
4th |
|
WNHC-TV |
Hartford-New
Haven, Conn |
886,285 |
12th |
|
KTRK-TV |
Houston,
Tex |
659,400 |
21st |
|
WKBW-TV |
Buffalo,
N.Y |
583,717 |
27th |
|
WTVD-TV |
Raleigh-Durham,
N.C |
413,663 |
49th |
|
KFRE-TV |
Fresno,
Calif |
246,862 |
84th |
Despite this growth in television
households for Capital Cities, the transfer of the Triangle stations in
Philadelphia, New Haven, and Fresno, and Capital Cities' related sale of existing
television holdings in Albany, New York, and Huntington, West Virginia, do
provide some benefits as well.
Mass media control generally will be
deconcentrated in the Philadelphia, New Haven, Fresno, and Albany markets; and
a new competitor will be brought into the top 50 markets with Lee Enterprises
acquisition of the Capital Cities television, WSAZ-TV, in Huntington.
This is important.
[*92] Capital Cities
Broadcasting has five non-broadcast interests. Capital Cities' major
holding is the 100 percent ownership of Fairchild Publications, Inc., a
publisher of trade journals and magazines. Capital Cities owns 80 percent
of Pontiac Press Co., Pontiac, Michigan. The other interests include a
three percent interest in Broadcast Music, Inc.; a 5.9 percent interest in
Laser Link Corp., a firm founded to develop new technology for over-the-air
television transmission; and a 40 percent interest in New York Subways
Advertising, Inc.
On a regional basis, the sale of
Triangle's WFIL-TV in Philadelphia will break the Grade B overlap chain between
Triangle's three Pennsylvania stations, thus diminishing Triangle's voice in
the Northeast generally, while bringing a new voice, that of Capital Cities, to
Philadelphia and New Haven. In addition, the breakup of Capital Cities'
three-station combination in Albany will promote diversification by reducing
Capital Cities' outlets in an important state capital; the spin-offs will bring
as many as six new owners into Philadelphia, New Haven, and Fresno.
II
Minority Programming
The most heartening and innovative
aspect of this complex assignment of licenses is the $1,000,000 Minority
Program Project.
Agreements giving citizen committees
in local communities a voice in broadcast programming, until recently
relatively nonexistent, are now becoming commonplace. This pattern of
negotiation with the broadcasters for improved programming and minority hiring
has been followed in Texarkana, Rochester, Atlanta, Nashville, Memphis, Mobile,
Youngstown, Chicago, and most notably in the transfer now before us. Cf.,
WSM, Inc., 25 FCC 2d 561 (1970); KCMC, Inc., 25 FCC 2d 603, 605 (1970); Chicago
Broadcasters and Critics Reach Accord, N.Y. Times, March 3, 1971, at 87.
As a result of negotiations with
Citizens Communications Center, a Washington, D.C., public-interest law firm,
minority group members including Negroes, Puerto Ricans, and Chicanos in
Philadelphia, New Haven, and Fresno, Capital Cities has agreed to commit
$1,000,000 over the next three years to develop programming reflecting minority
problems. Capital Cities has agreed to Produce and pay for enough
programming to fill at least six hours of air time, half of it in prime time,
on each of the three television stations over the next year. No less than
$333,000 per year will be deposited in a minority-controlled bank, with
$135,000 earmarked for Philadelphia, $110,000 for New Haven, and $88,333 for
Fresno.
The Capital Cities agreement **
clearly amounts to an important breakthrough for public participation in the
process of administration and governance of the public airwaves. It may
well be that FCC licensees have the responsibility under law to provide such
programming -- and more -- already. But the fact remains that they don't
do it, and the FCC doesn't insist upon it. At a time of mounting public
outrange [*93] against the excesses and abuses of the corporate
dominance of American broadcasting, it is at least heartening to see that
humble citizens can extract some public service commitment from big broadcasters.
** Detailed information on the
project agreement is set out in the Dec. 30, 1970, amendment to the transfer
application, which is on file at the Federal Communications Commission.
I fully concur in this innovative
precedent.
III
Questionable Trade-Offs
Quite apart from the deconcentration
and minority programming aspects of this transaction, the Capital Cities
transfer presents major policy questions about which I continue to harbor deep
reservations. As a preliminary matter, I would hope that the Commission's
approval of this particular transfer will not have the general effect of
establishing a precedent sanctioning future huge, basically unmanageable
package transactions -- thus offering great potential for abuse. In
short, the transfer before us is simply far too large for any one Commission,
let alone any one commissioner, to scrutinize adequately.
The unfortunate tendency of such
package transfers is to encourage a kind of "trade-off" mentality;
"trade-off" in the sense that any concessions in the public interest
appear to carry with them negative counter-concessions that do not come close
to squaring with the 1934 Communications Act or this Commission's long-standing
rules and policies.
As a general rule, I think it is
important in discharging our public interest mandate that we approach each
transfer of a station license on a case-by-case basis, weighing the merits of
each assignment carefully. This careful scrutiny is simply not possible
when a dozen stations, as here, are involved in a large, umbrella transaction.
Furthermore, I see three other
facets of this multiple transfer that are difficult -- indeed, perhaps
impossible -- to sequare with our public interest obligations. These are:
1. Conduit Purchasers: Under
these applications, Capital Cities will dispose of the Triangle AM and FM
outlets to six separate buyers. These so-called "spin-offs"
raise a major policy question as to whether it is in the public interest to
permit a licensee to delegate responsibilities for selling stations to a
"conduit" buyer who arranges the spin-offs.
The Commission majority proceeds on
the premise that there is ample Commission precedent for passing stations
through a conduit buyer, like Capital Cities, who has no intention of operating
the stations but intends instead immediately to spin them off to other
buyers. Normally this would be viewed as a violation of our three-year
rule. To be sure, there are perhaps two Commission cases that might
suggest precedent allowing such conduit arrangements; but the idea has hardly
taken deep root or ever evoked much real enthusiasm. It has rather been
more a choice among distasteful alternatives. And isn't it clear by now
that any spin-off at a profit, where the assignor renders no real service,
amounts to something very close to the classic case of trafficking? Capital
Cities maintains that it does not now know whether there will be any profit; so
the trafficking charge is premature and speculative, the argument goes.
Nevertheless, Capital Cities is basically up-marketing; it concedes as
much. And given the rising value of [*94] broadcast
properties, especially in substantial metropolitan area like Philadelphia and
Hartford-New Haven, it is highly unlikely that Capital Cities would lose on the
delegated transfers.
If our rules are to have any
meaning, I would expect that the conduit sales would have to be made without
profit. Cf., Shenandoah Life Stations, 19 FCC 2d 704, 707-708
(Commissioner Cox's separate statement).
2. Regional Concentration:
Despite the substantial deconcentration effects of this transaction, other
bothersome concentration problems linger. For example, the Grade B
contours of WFIL-TV, Philadelphia, and WNHC-TV, New Haven, nearly
overlap. Allowing Capital Cities to acquire two major stations (in the
fourth largest, and 12 largest markets respectively) in the Northeast results
in what amounts to an undesirable regional concentration of control of the mass
media. Philadelphia WFIL-TV operates on channel 6 and is the primary ABC
network affiliate in the Philadelphia area as well as serving large portions of
populous New Jersey and all of Delaware. New Haven's WNHC-TV operates on
channel 8 and is the primary ABC network affiliate for the New Haven-Hartford
metropolitan area and the populous portions of central Connecticut. My
own reservations about regional concentration have been amply set out in prior
opinions. Booth American Co., 14 FCC 2d 136 (1968) (dissenting opinion of
Commissioners Cox and Johnson); Wichita-Hutchinson Co., Inc., 19 FCC 2d 433 (1969);
20 FCC 2d 951, 954 (1969); WNVL-AM, FCC Public Notice 64035 (Feb. 9, 1971);
Newport Broadcasting, FCC Public Notice 64704 (March 2, 1971).
3. Programming Proposals:
Despite the breakthrough in programming established by the Minority Program
Project, the assignment of the AM-FM combinations in Philadelphia, New Haven,
and Freson may well result in a diminution of programming service as measured
by the informal 5-1-5 (5 percent news, 1 percent public affairs, 5 percent all
other) standard. The percentages bantered about in the filings are
substantially in dispute. Under these circumstances, all of the AM-FM
transfers are at best marginally acceptable or, more likely, woefully
inadequate in terms of minimum programming of news, public affairs, and other
non-entertainment fare.
IV
Conclusion
In sum, I concur in the Commission's
action today because of this decision's deconcentration of group ownership and
our approval of the Minority Program Project. My vote in no way, however,
endorses or approves the Commission's action with regard to conduit purchasers,
regional concentration, or the programming problems I have outlined above.