In Re Application of PANHANDLE BROADCASTING CO., INC. (WDTB-TV), PANAMA CITY, FLA. Application for License
Docket No. 19836 File No. BLCT-2237
FEDERAL COMMUNICATIONS COMMISSION
43 F.C.C.2d 264
RELEASE-NUMBER: FCC 73-1025
October 12, 1973 Released
Adopted October 3, 1973
JUDGES:
BY THE COMMISSION: COMMISSIONER ROBERT E. LEE ABSENT; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT; COMMISSIONERS H. REX LEE AND HOOKS CONCURRING IN THE RESULT.
OPINION:
[*264] 1. We have before us for consideration: (a) the captioned application; (b) the request of Panhandle Broadcasting, Inc. (Panhandle), for program test authority (PTA) for station WDTB-TV, filed in conjunction with the license application together with a request for partial waiver of condition attached to the grant; and (c) an informal objection from WJHG-TV, Inc., licensee of WJHG-TV, Panama City, Florida, opposing grant of PTA and requesting that the license application be designated for hearing.
2. On April 5, 1972, the Commission by Memorandum Opinion and Order, In re Application of Panhandle Broadcasting Company, Inc., 34 FCC 2d 460, granted Panhandle's application for permit to construct a new television broadcast station on channel 13, in Panama City, subject to the condition that no operating authority would issue until Denver T. Brannen and members of his immediate family dispose of their interests in stations WDLP (AM) and WPAP (FM) in Panama City. n1 On April 14, 1972, the Commission granted the assignment of license of station WDLP (AM) to Dae Broadcasting Company which grant was consummated. Additionally, an application to assign the license of station WPAP (FM) to the Deltona Corporation is now on file with the Commission.
n1 The condition was imposed in order to bring Panhandle into compliance with the Commission's one to a market rule (section 73.636) which provides, in pertinent part, that no license for a VHF television broadcast station will be granted if the Grade A contour of the proposed television station would encompass the entire community of license of a commonly owned, operated or controlled AM or FM broadcast station.
3. Subsequent to the Commission's action granting Panhandle's construction permit, information was brought to the Commission's attention in July 1973, which indicated that Panhandle's application involved either a possible violation of the conflict of interest regulations (section 107.1004) of the Small Business Administration (SBA) or that Panhandle may have misrepresented facts as to its ownership to the Commission in its application for construction permit. The SBA, [*265] which was also made aware of these facts, investigated the matter and as a result has advised the Commission that any allegations as to violation of section 107.1004 of its regulations is unfounded. The background facts, briefly, concern whether Mr. L. Charles Hilton, listed as a 25 percent shareholder in Panhandle was, in fact, the real party in interest, or whether he was merely the nominee of the Small Business Assistance Corporation of Panama City, Florida (SBAC), of which he was then president, which is a Small Business Investment Company (SBIC) licensed by SBA in which he also owned an interest through his ownership of stock in West Florida Bank Holding Company, Inc., the parent company of SBAC. The SBA regulations referred to, prohibit an SBIC from providing financing directly or indirectly to any of its officers, stockholders or other associates. Thus, if, in fact, Mr. Hilton, then president and stockholder in SBAC owned the Panhandle stock, it would have been a violation of the SBA regulations unless an exception had been granted.
4. Mr. Denver T. Brannen, chairman of the Board of Panhandle, and together with his wife, 40 percent stockholder and the prime mover in Panhandle, filed a sworn affidavit with the license application in which he states that at the time of incorporation, the initial issuance of stock included a 25 percent share to SBAC; that prior to filing the application, J. R. Arnold, president and majority stockholder of the holding corporation owning 100 percent of SBAC, and then a director and one of original incorporators of Panhandle, advised he was dropping out and that Mr. Hilton would take the stock; that Mr. Brannen assumed that Hilton was holding the stock for his own benefit; that he did not realize until January 1973, that Hilton was merely the nominee of SBAC; that there was never any intent to deceive the Commission; and that failure to disclose was merely an attempt to avoid the considerable time, difficulty and effort to gather all the information relative to the shareholders of SBAC and that the misrepresentation was an error of inadvertence.
5. WJHG-TV, in its letter urges that no operating authority should be issued and that the license application must be set for hearing. In support, WJHG-TV contends that since station WPAP (FM) still remains in the hands of the Brannen family, the divestiture condition has not been satisfied. Moreover, WJHG-TV asserts that there is a clear misrepresentation of facts to the Commission which Mr. Brannen's affidavit does not cure. In this connection, WJHG-TV argues that while the SBA was being advised that SBAC was the true owner of 25 percent of Panhandle's stock, this information was not filed with the Commission in order to avoid reporting to the Commission information regarding SBAC and its holding company. WJHG-TV also contends that even assuming the misrepresentation was not intentional, the explanation as to why it was perpetuated for two years is unsatisfactory and fails to show that Brannen could not have obtained the information or that other principals of Panhandle, who had actual knowledge, could not have supplied the information.
6. Despite the affidavit of Mr. Brannen, the Commission is of the view that substantial questions are raised by the facts before it as to [*266] the actual circumstances, whether there was a misrepresentation, and whether such misrepresentation was willful or repeated, and that these questions can only be resolved via a hearing in which evidence as to the facts and circumstances surrounding the matter maybe adduced. Accordingly, the application for license will be designated for hearing upon appropriate issues.
7. We turn now to Panhandle's request for partial waiver of condition and for program test authority for station WDBT-TV. Our determination in this regard involves balancing the public's need for the proposed service against the necessity for resolution of Panhandle's qualifications and the policy involved in imposing the condition. There is presently only one television station (WJHG-TV, ABC) providing a local service to Panama City; thus, a grant of PTA would provide Panama City with its second local television outlet and its third network service (NBC). n2 Under the circumstances, we believe that the public interest is best served by permitting the introduction of this needed second local service subject to whatever action we may deem appropriate as a result of the hearing ordered herein. In so doing, we preserve the Commission's flexibility of action and, at the same time, do not impose an undue financial burden which could jeopardize the institution of a second local service to Panama City. n3 We also wish to make clear that in granting PTA to Panhandle, we have waived the condition on WDTB-TV's construction permit only to the extent of the timing of compliance not as to the condition.
n2 Station WTVY, Dothan, Alabama, provides predicted CBS service to the Panama City area.
n3 Panhandle has completed construction of the station in accordance with the specifications in the construction permit, has hired a staff and is ready to operate.
8. Accordingly, IT IS ORDERED, That pursuant to section 309(e) of the Commissions Act of 1934, as amended, the captioned application IS DESIGNATED FOR HEARING, at a time and place to be specified in a subsequent Order, upon the following issues:
1. To determine the facts and circumstances which led to the listing of L. Charles Hilton as a 25 percent stockholder in Panhandle Broadcasting Company, Inc., rather than Small Business Assistance Corporation of Panama City, Florida.
2. To determine whether Panhandle Broadcasting Company, Inc., or any of its officers and directors knew or should have known the actual facts concerning the relationship of the Small Business Assistance Corporation and L. Charles Hilton to Panhandle Broadcasting Company, Inc.
3. To determine in the light of the evidence adduced pursuant to the above issues whether Panhandle Broadcasting Company, Inc., or its officers and directors complied with the requirements of section 1.615 of the rules to report the true facts as to actual ownership as soon as these facts were known.
4. To determine in light of the evidence adduced pursuant to the foregoing issues whether Panhandle Broadcasting Company, Inc., or officers and directors misrepresented facts as to the ownership of Panhandle Broadcasting Company, Inc., and, if so, whether such misrepresentation of fact were willful, material or repeated.
5. To determine in light of the evidence adduced pursuant to the foregoing issues whether Panhandle Broadcasting Company, Inc., has the requisite qualifications to be a licensee of the Commission and whether grant of its application for license would serve the public interest, convenience and necessity.
9. IT IS FURTHER ORDERED, That, if on the basis of evidence adduced under issue (4) above, Panhandle Broadcasting Company, Inc., is determined to have willfully or repeatedly violated section 308 [*267] of the Communications Act or section 1.615 of the Commission's rules, it shall also be determined whether an Order of Forfeiture pursuant to section 506(b) of the Communications Act, in the amount of $10,000 or some lesser amount shall be issued.
10. IT IS FURTHER ORDERED, That this document also constitutes a Notice of Apparent Liability for violation of the Communications Act and the Commission's rules, but that inclusion of this notice does not in any way indicate what the initial or final disposition of the case should be, and that the Administrate Law Judge shall base his decision on the facts of the case above.
11. IT IS FURTHER ORDERED, That the burden of proceeding with the introduction of evidence and the burden of proof shall be on Panhandle Broadcasting Company, Inc.
12. IT IS FURTHER ORDERED, That to avail itself of the opportunity to be heard, the applicant 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.
13. IT IS FURTHER ORDERED, That the Secretary of the Commission send copies of this Order by Certified Airmail-Return Receipt Requested to Panhandle Broadcasting Company, Inc.
14. IT IS FURTHER ORDERED, That the divestiture condition attached to the construction permit IS WAIVED in part and the request for program test authority, for station WDTB-TV, Panama City, Florida, IS GRANTED subject to whatever action the Commission may deem appropriate as a result of the hearing ordered herein.
IT IS FURTHER ORDERED, That the information objections filed by WJHG-TV, Inc., ARE GRANTED to the extent indicated herein and DENIED in all other respects.
FEDERAL COMMUNICATIONS COMMISSION, VINCENT J. MULLINS, Acting Secretary.
DISSENT:
DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON
The Commission has today granted Program Test Authority to a television station permittee while simultaneously ordering him into hearing (on issues involving material misrepresentations in the permittee's ownership report) to determine whether the permittee "... has the requisite qualifications to be a licensee of the Commission and whether grant of the application would serve the public interest, convenience and necessity." Thus, while the Commission has serious questions about the applicant's qualifications to operate as a licensee, it has no qualms about allowing it to operate, perhaps for years during the hearing process, as a permittee.
The logic of this reasoning escapes me. I know of no regulation, rule of law, or of reason which warrants such a result.
[*268] Nor do I believe that the Commission's rationalization -- that the public somehow has an immediate need for its second local TV outlet and its third network service -- mitigates the unreasonableness of its decision. It seems to me far more important that we are satisfied that an applicant has met the basic, statutorily-mandated qualifications before we grant him authority to operate than it is to rush to provide a third or even second service to a community when to do so means we are authorizing operation by an applicant who has never satisfied us that he has the requisite qualifications to be a Commission licensee.
I believe the Commission should have denied the Program Test Authority until the questions concerning misrepresentations have been resolved. Accordingly, I dissent.