In Re
Applications of: A. H. BELO CORP. (WFAA-TV), DALLAS, TEX.
For Renewal
of Broadcast License; WADECO, INC., DALLAS, TEX.
For
Construction Permit for New Television Broadcast Station
Docket No. 19744 File No. BRCT-33;
Docket No. 19745 File No. BPCT-4453
FEDERAL COMMUNICATIONS COMMISSION
40 F.C.C.2d 1131
RELEASE-NUMBER: FCC 73-542
May 24, 1973 Released
Adopted May 23, 1973
JUDGES:
BY THE COMMISSION: COMMISSIONER JOHNSON CONCURRING IN PART AND DISSENTING IN PART
AND ISSUING A STATEMENT; COMMISSIONER H. REX LEE CONCURRING AND ISSUING A
STATEMENT; COMMISSIONER HOOKS ABSENT
OPINION:
[*1131] 1. The
Commission has before it for consideration the above-captioned applications,
one requesting a renewal of license to operate on channel 8, Dallas, Texas, and
the other requesting a construction permit for a new television broadcast
station to operate on channel 8, Dallas, Texas.
2. Based on the information contained
in the application of WADECO, Inc., cash in the amount of $2,799,000 will be
needed for the construction and first three months cost of operation of the
proposed station, consisting of down payment on equipment -- $625,000; two
months principal and interest payments on equipment -- $93,750; other items --
$417,000; three months cost of operation -- $1,618,250; n1 and grant fee -- $45,000. To
meet its cash needed requirement, the applicant relies upon paid-in stock
subscriptions, stock subscription agreements and a $2,500,000 bank loan from
the Castle Trust Company Limited. In an amendment filed November 2, 1972,
the applicant indicated in section II, paragraph 11, FCC Form 301, that 118,940
shares have been subscribed and 78,060 shares had been issued, for a total of
197,000 shares. The information contained in the application demonstrates
that the stock subscribers can meet their respective stock subscription
commitments to the applicant. However, on May 8, 1973, the applicant
submitted a balance sheet dated February 28, 1973, which conflicts with the
information contained in section II, paragraph 11 in that different amounts of
stock issued and subscribed are specified. [*1132] Moreover,
the balance sheet appears to be internally inconsistent since on the asset
side, stock subscriptions receivable of 116,055 are listed whereas, on the
liabilities side, capital stock subscribed, but not issued, is shown as
116,250. With respect to the stock subscriptions already paid in, the
applicant's balance sheet shows $2,783.51 in cash and $78,541.47 in pre-paid
expenses. Since the pre-paid expenses have not been itemized in order to
show that they relate to the total construction costs set forth in section III,
paragraph 1(a), it cannot be determined whether the applicant can receive
credit for these pre-paid expenses.
n1 As in similar cases in the past, we will not
apply the standard set forth in Ultravision Broadcasting Co., 1 FCC 2d 544
(1965). Rather we will apply our former standard which required an applicant to
demonstrate that it has sufficient funds to construct and operate the proposed
station for three months without revenues. Orange Nine, Inc., 7 FCC 2d
788 (1967). In this connection, it is noted that the Commission's TV Broadcast
Financial Data Report for 1972 reveals that the Dallas-Fort Worth television
broadcast stations generated revenues on an average in excess of the
applicant's anticipated first year operating costs ($6,473,000).
3. With respect to the
proposed $2,500,000 bank loan, since the Castle Trust Company Limited has
stated that it is "willing to arrange for a loan", this does not
constitute a commitment by the bank to provide the funds. n2 In the event that the applicant is
able to satisfactorily demonstrate the availability of all of the funds upon
which it relies, the applicant will still need additional funds in order to be
considered financially qualified. Consequently, appropriate financial
issues have been specified.
n2 In this connection, it should be noted that the proposed
bank loan adequately sets forth the terms of principal repayment, the security
required and the rate of interest to be charged.
4. Except as indicated by the
issues set forth below, WADECO, Inc., is qualified to construct, own and
operate the proposed new television broadcast station. Except for the
matters discussed in paragraph 5 below, A. H. Belo Corporation is qualified to
own and operate television broadcast station WFAA-TV. The applications
are, however, mutually exclusive in that operation by the applicants as
proposed would result in mutually destructive interference. The
Commission is, therefore, unable to make the statutory finding that a grant of
the applications would serve the public interest, convenience and necessity,
and is of the opinion that they must be designated for hearing in a
consolidated proceeding on the issues set forth below.
5. It should be noted that on
September 9, 1970, UHF, Inc., instituted a civil suit in the United States District
Court for the Northern District of Texas, Dallas Division (Civil Action No.
3-4156-A), charging, among others, the A. H. Belo Corporation, the licensee of
WFAA-TV, and The Times Herald Printing Company, the licensee of station
KDFW-TV, Dallas, Texas, with violations of the Sherman Anti-trust Act by
entering into a contract, combination or conspiracy in restraint of trade, by
attempting to and monopolizing the television broadcast industry in the
Dallas-Fort Worth metropolitan area, and by seeking to and precluding the
plaintiff from competing in such market. The complainant further charges
that in furtherance of the alleged restraint of trade the above defendants have
(1) opposed the granting of cable television (CATV) rights to their parties,
attempted to delay CATV development in the Dallas metropolitan area and, at the
same time, sought to maintain the exclusive right to provide CATV services at a
date of their choosing, if ever; and (2) discriminated against UHF television
broadcast station KMEC, Dallas, Texas, by failing to provide in their
respective newspapers of general circulation program listings equivalent to
those accorded VHF television broadcast stations in the Dallas-Fort Worth
metropolitan area. On July 1, 1971, the principals of UHF, Inc., acting
through Civic Telecasting Corporation [*1133] formally petitioned
to deny the license renewal applications of A. H. Belo Corporation (BR-395),
BRH-1192, BRCT-33), Beaumont Television Corporation (BRCT-556), The Times
Herald Printing Company (BRCT-85), and Carter Publications, Inc. (BR-404,
BRH-539, BRCT-27), essentially on the same grounds raised in their civil
antitrust complaint (CA-3-4156-A). Action on the aforenoted license
renewal applications has been deferred pending the Commission's consideration
of the allegations set forth in the petition to deny. See FCC 73-543
adopted this date. Depending upon our disposition of the petition to
deny, however, further orders in this proceeding may be appropriate. n3
n3
Moreover, when action is taken on the petition to deny, we will also consider
the allegations raised by Mr. James T. Maxwell, President of Civic Telecasting
Corporation that A. H. Belo Corporation has engaged in prohibited ex parte
presentations.
6. A dispute also arose in
this case concerning possible changes in the integration of ownership and
management picture of station WFAA-TV. This dispute has caused us to
focus on the relationship between past record and integration of ownership and
management in the evaluation of the renewal applicant. See Letter to Mr.
Thomas M. P. Christensen, FCC 73-545. As we made clear, WFAA-TV as a
renewal applicant is judged solely on its past record -- not its
integration. Whether that record warrants a "plus of major significance"
( Citizens Communications Center v. FCC, 145 U.S. App. D.C. 32, 447 F 2d 1201,
decided June 11, 1971) is of crucial importance in the judgmental
process. As the Court there noted, the incumbent licensee with such a
"plus" can normally expect renewal in any comparative
challenge. In short, in the case of the renewal applicant there is no
need to rely upon presumptions (e.g., integration, local residence) as to how
the applicant will perform in this critical area of serving the needs and
interests of his area -- that whether his integration is zero or 100%, the
actual past performance speaks for itself and is the factor to be considered in
the evaluation of the renewal applicant in this respect.
7. Accordingly, IT IS ORDERED,
that pursuant to section 309(e) of the Communications Act of 1934, as amended,
the above-captioned applications ARE DESIGNATED FOR HEARING IN A CONSOLIDATED
PROCEEDING at a time and place to be specified in a subsequent Order, upon the
following issues:
1. To determine with respect
to the application of WADECO, Inc.:
(a) The number of shares of the
applicant corporation which have been issued and the number of shares which
have been subscribed.
(b) The extent to which the
applicant's pre-paid expenses are attributable to construction costs set forth
in section III, paragraph 1(a), FCC Form 301.
(c) Whether the applicant will have
available a $2,500,000 bank loan from the Castle Trust Company Limited, Nassau,
Bahamas.
(d) Assuming that all of the funds
upon which the applicant relies will be available to it, how the applicant will
obtain sufficient additional funds to be used for the construction and first
three months operation of the station.
(e) Whether, in view of the evidence
adduced under the preceding issues, the applicant is financially qualified.
2. To determine which of the
proposals would better serve the public interest.
3. To determine, in the light
of the evidence adduced pursuant to the foregoing issues, which of the
applications should be granted.
8. IT IS FURTHER ORDERED,
That, in the event of a grant of the renewal application of A. H. Belo
Corporation, its application will be subject to the following condition:
[*1134] That the grant
of this application is without prejudice to whatever action, if any, the
Commission may deem appropriate as a result of final action in the civil
antitrust proceeding entitled UHF, Inc. v. The Times Herald Printing Company,
T. H. Liquidating Company and The A. H. Belo Corporation, Civil Action No.
3-4156-A, filed September 9, 1970, in the United States District Court for the
Northern District of Texas, Dallas Division.
9. IT IS FURTHER ORDERED, That
to avail themselves of the oportunity to be heard, the applicants herein
pursuant to section 1.221(c) of the Commission's rules, in person or by attorney,
shall within twenty (20) days of the mailing of this Order, file with the
Commission, in triplicate, a written appearance stating an intention to appear
on the date fixed for the hearing and present evidence on the issues specified
in this Order.
10. IT IS FURTHER ORDERED,
That, the applicants herein shall pursuant to section 311(a)(2) of the
Communications Act of 1934, as amended, and section 1.594 of the Commission's
rules, give notice of the hearing within the time and the manner prescribed in
such rule, and shall advise the Commission of the publication of such notice as
required by section 1.594(g) of the rules.
FEDERAL
COMMUNICATIONS COMMISSION, BEN. F. WAPLE, Secretary.
CONCURBY:
LEE; JOHNSON (In Part)
CONCUR:
CONCURRING STATEMENT OF COMMISSIONER
H. REX LEE
I concur in the Order which
designates for hearing in a consolidated proceeding the renewal application of
A. H. Belo Corporation for Station WFAA-TV (Channel 8, Dallas, Texas) and the
mutually exclusive application of WADECO, Inc. for the Channel 8
facilities. I also concur in the further Order which conditions grant of
Belo's renewal application on whatever action the Commission may deem
appropriate as a result of the Court's decision in a civil antitrust
[*1135] suit brought against Belo and other parties, charging the
defendants with monopolizing the television industry in the Dallas-Fort Worth
area. n1
n1 See UHF
Inc. v. The Times Herald Printing Company, T. H. Liquidating Company and the A.
H. Belo Corporation, Civil Action No. 3-4156-A, filed September 9, 1970, in the
United States District Court for the Northern District of Texas, Dallas
Division, Civic Telecasting Corporation has petitioned to deny the license
renewal applications of Belo for Stations WFAA-AM-FM-TV on essentially the same
grounds raised in the antitrust action. Action on the petition to deny is
being deferred until the Commission has received sufficient information
relating to the allegations made in the civil antitrust suit and the petition
to deny to permit the discharge of its statutory responsibilities.
However, I am concerned by the
inclusion of certain language in the designation Order, which attempts to
clarify an aspect of Commission policy applicable to a renewal-new applicant
comparative proceeding. In paragraph six of the Order, the Commission
indicates that WFAA-TV, as a renewal applicant, is to be judged solely on its
past broadcast record (citing Citizens Communications Center v. F.C.C., 145
U.S. App. D.C. 32, 447 F. 2d 1201 (1971)) and not on any "presumption"
as to the licensee's integration of ownership and management. While I may
concur with the general statement of policy that a licensee's actual past
performance is of crucial importance in a comparative proceeding and with the
need to clarify the scope of the comparative issue in a renewal-new applicant
proceeding, I cannot agree that an isolated designation Order is the proper
vehicle for the delineation of major policy by the Commission. The
general inquiry raised in Docket No. 19154 n2 is whether we can formulate some definitive
guidelines for application in a comparative proceeding involving a regular
renewal applicant and one or more competing applicants for the same
facilities. The Commission has already received numerous comments in Docket
No. 19154 and has held oral argument in the proceeding to determine what
factors will be used to evaluate a renewal applicant (e.g., past performance,
integration of ownership and management, diversification), and it seems obvious
that any major policy pronouncements in this important area of broadcast
regulation should be contained in a Report and Order in Docket No. 19154.
n2 See Notice of Inquiry in Docket No. 19154, 27 FCC
2d 580, adopted February 17, 1971. On August 4, 1971, the Commission
adopted a Further Notice of Inquiry (31 FCC 2d 443) in light of the Citizens
Communications Center decision and indicated that the Court of Appeals'
decision reinforces the need to resolve the matters at issue in Docket No.
19154.
Moreover, the Commission fails to
indicate whether the policy contained in the WFAA-TV designation Order applies
to all pending renewal-new applicant proceedings. If it does, it
apparently undercuts the approach employed in moline Television Corporation, 31
FCC 2d 263, 22 RR 2d 745 (1971), which was adopted by the Commission after the
Court of Appeals' decision in Citizens Communications Center and which
considered the integration factor to be relevant in the evaluation of a renewal
applicant. It seems unfair to both renewal and competing applicants to
modify important comparative criteria on an ad hoc basis rather than in the
context of a well-publicized Policy Statement. Therefore, while I may
concede that paragraph six of the designation Order is consistent with the
thrust of the Citizens Communications Center case and our proposals in Docket
No. 19154, I cannot agree that an individual hearing order is the appropriate
vehicle to enunciate such far-reaching policy. I would prefer to conclude
the inquiry in Docket No. 19154, which has been pending since February, 1971.
DISSENT:
OPINION OF COMMISSIONER NICHOLAS
JOHNSON, CONCURRING IN PART AND DISSENTING IN PART
While I concur with that portion of
the majority's opinion which designates a comparative hearing on the mutually
exclusive application of A. H. Belo Corporation and WADECO, Inc., to operate on
channel 8, Dallas, Texas, I cannot agree with the majority that the
accompanying assignments and transfers of control serve the public interest.
Rather, I tend to agree with WADECO
that these intricate assignments appear designed as a means to improve the
comparative position of the current WFAA-TV licensee. I can perceive no
other cogent purpose for these assignments, and despite the majority's language
suggesting that the position of WFAA's licensee will not be so improved, I must
admit that I have my doubts. For, sadly, such assurances are often mere
words -- words whose intent is easily lost through the months of hearings which
follow FCC designation orders.
In short, while I am not at all
persuaded that these assignment transactions serve the "public interest,
convenience or necessity, I am also fearful that their real intent will return
to haunt not only WADECO and not only those parties who have filed petitions to
deny against WFAA's license renewal applications, but also this Commission.