HARVEY RADIO LABORATORIES, INC. (ASSIGNOR), AND WKBG, INC.
(ASSIGNEE) For Assignment of Construction Permit for TV Station, Channel 56,
Cambridge, Mass., and for Licenses of WXHR (AM) and WXHR-FM, Boston, Mass.
BAL-5831 BALH-910 BAPCT-388
6 F.C.C.2d 898, 8 Rad. Reg. 2d (P & F) 660
October 20, 1966
On October 20, 1966, the Commission en banc, by Commissioners Hyde (Chairman), Bartley, Lee, Cox, Loevinger, Wadsworth, and Johnson, granted assignment of licenses of AM-FM stations and construction permit for TV station to WKBG, Inc.; consideration $1,750,000 and agreement not to compete in radio or TV broadcasting within 25 miles of Boston State House for 10 years. WKBG, Inc., is 50 percent owned by Globe Newspaper Co., which has no other broadcast interests, and 50 percent by Kaiser Broadcasting Corp., which controls four UHF TV stations and one FM station. WXHR-TV is now off the air.Chairman Hyde issued a concurring statement, Commissioner Loevinger issued a concurring statement in which Commissioner Lee joined, Commissioner Wadsworth issued a concurring statement, and Commissioners Bartley, Cox, and Johnson issued dissenting statements.
CONCURRING STATEMENT OF CHAIRMAN HYDE
I am satisfied that the applicant has made a compelling showing justifying a grant of the application without hearing under our interim policy. I do not construe this action as a reproach to that policy nor as being determinative of any issues pending in the 'top fifty' proceeding. However, in applying the interim policy I do not believe that the hard realities and substantial hazards which have attended major market UHF efforts may be overlooked. Successful operation of an independent UHF-TV station in a major market already served by four VHF-TV stations is indeed enhanced when the applicant possesses the requisite background and financial resources, as in the case at present. At the present state of UHF television development, it is my opinion that the proposed assignment presents the opportunity to make the station reasonably competitive and, therefore, able to provide a significant service to the public.
A grant of the assignment will transfer the station to an experienced television broadcaster (all of whose television interests are in UHF) who has joined forces with a local group with deep community roots. Together they present a substantial plan for restoring the UHF station to the air and diversifying further the program choices available to the Boston metropolitan area in a manner responsive to ascertained community needs. This is the second case in recent months in which the Commission has found it appropriate to permit acquisition of a Boston UHF station by a group with ownership in other large markets. Cf. New Boston Television, Inc., 7 Pike & Fischer R.R. 2d 857 (1966). In both cases I believe that we are making possible a substantial contribution to the establishment of UHF on a viable and competitive basis. For the foregoing reasons I concur in the Commission's order.
CONCURRING STATEMENT OF COMMISSIONER LOEVINGER, JOINED IN BY COMMISSIONER LEE
The policy which the Commission should -- and does -- try to follow is that diversity of program sources in broadcasting should be encouraged and that the Commission should, within its jurisdiction, forbid transactions which tend to lessen competition unduly or to create monopolistic control in any market or economic area. Establishment of a numerical limit on the number of broadcasting licenses that may be controlled by a single enterprise undoubtedly serves this policy but is necessarily arbitrary, as any quantitative limit is arbitrary. The advantages of effectiveness and specificity justify such an arbitrary limitation so long as the limit -- even though arbitrary in its numerical nature -- is within the range of reasonableness. Further, the differentiation between large and small markets for the purposes of such a limitation is more reasonable than the establishment of a single numerical limitation applicable to all markets. Consequently, the attempt to formulate a policy or rule applicable to the 'top fifty' markets is an improvement on the multiple ownership rules that make no differentiation among markets.
Similarly, however, it seems to me that a rule or policy on this subject should differentiate between kinds of stations -- particularly between VHF and UHF television stations. Realistically, VHF stations are more profitable and prosperous at the present time than UHF stations. Realistically, also, there is need for enterprises that are relatively strong financially to help develop UHF, and there is no evidence of any present tendency toward undue concentration of control of UHF stations. Consequently, I am satisfied that there is no danger to the public interest in maintenance of a healthy competition within the field of broadcasting by allowing a single enterprise to have as many as five UHF stations in the 'top fifty' markets. Accordingly, I concur in the Commission order.
CONCURRING STATEMENT OF COMMISSIONER WADSWORTH
I agree with the result reached in this case, which is to grant Commission consent to the assignment of licenses of stations WXHR and WXHR-FM, and the construction permit for WXHR-TV to WKBG, Inc. However, since I dissented to the original adoption of the Commission's so-called 'interim policy' relating to assignments of television authorizations in the 'top fifty' markets, I would not have applied that requirement of any special showing or justification in this case. Therefore, I would not have to reach the question of the adequacy of the showing advanced by the proposed assignee.
DISSENTING STATEMENT OF COMMISSIONER BARTLEY
I dissent because in my opinion the information submitted in support of a grant without hearing is inadequate to meet the compelling showing requirement of our interim policy on acquisition of TV stations in the 'top fifty' markets.
DISSENTING STATEMENT OF COMMISSIONER COX
I must dissent, as I did to the authorization of the transfer of another UHF station in Boston a short time ago. New Boston Television, Inc., 7 R.R. 2d 857 (1966). The majority continues to flout our interim policy limiting acquisition of television stations in the 'top fifty' markets, while indicating that it still favors the objectives of that policy.
Chairman Hyde is satisfied that applicant has made a compelling showing justifying a grant here, but he does not in any way indicate what that showing consists of. His further comments are simply general observations about the financial hazards of major market UHF operations. There is no showing that the added service of this station is critically needed in Boston, which now has three commercial VHF, one commercial UHF, and one educational VHF stations in operation. The station here involved has been off the air for many years, and while I suppose it is always in the public interest to provide an added broadcast service if this can be accomplished in accordance with our policies, if that is all the Chairman has in mind, then, obviously, every transfer would be granted without regard to the issue of concentration.
The Chairman further notes that the transfer here is to an experienced television broadcaster. But here, as in so many cases, we can substitute the words 'multiple owner.' It is possible to find people experienced in broadcasting in capacities other than ownership, but such people can never successfully bid for stations offered for sale if the Commission is willing to give the inside track to multiple owners who already have a substantial advantage in terms of their ability to raise funds with which to bid up the price. The Chairman also refers to the fact that Kaiser 'has joined forces with a local group with deep community roots.' Nothing is said, however, to indicate that this local group consists of the owners of one of the two principal newspapers in Boston, thus posing another form of the media concentration problem. While Chairman Hyde says that this action should not be regarded as determining any of the issues pending in our 'top fifty' market proceeding, it seems to me that each additional waiver grant on a slender showing, or no showing at all, seriously undercuts the consideration the Commission is supposed to be giving to the matter now out for rulemaking.
Commissioner Loevinger regards the protection of diversity of program sources as desirable, and agrees that the use of a numerical limitation undoubtedly serves this Commission policy. He recognizes, as we all must, that the use of such a limit is necessarily arbitrary, but points to the advantages of effectiveness and specificity which can be obtained in this way, saying only that the number selected must be in the range of reasonableness. Further, he agrees that some differentiation must be made between large and small markets for the purpose of such limits and concedes that our attempt to formulate a policy applicable to the 'top fifty' markets is an improvement over the multiple-ownership rules now in effect, which take no cognizance of market size.
However, Commissioner Loevinger says that our policy should differentiate between VHF and UHF television stations, on the ground that the former are more profitable. He, therefore, suggests that we need relatively stronger enterprises to help develop UHF, although the Commission, with Commissioner Loevinger concurring, specifically stated that it had decided to use the 50 market concept, among other reasons, because of 'the availability of ample economic support for individual, local ownership of both VHF and UHF stations in these markets.' I know of no evidence to rebut this judgment; all we have had are indications that multiple owners are paying higher prices for permits of off-the-air stations, or for the acquisition of faltering operating stations, than others can afford. While the obtaining of the highest possible price is undoubtedly in the private interest of the sellers concerned, it is the essence of our entire proposal in this area that the public interest is not served in this process if it results in the aggregation of more and more stations in the major markets into fewer and fewer hands.
Commissioner Loevinger says that there is no evidence of any present tendency toward undue concentration of control of UHF stations. If he thinks the present limitation of five VHF stations is reasonable -- and apparently he does -- then I think he should find some reason for concern in the list of permits held by the Overmyer Broadcasting Co. and the apparent plans of Kaiser to acquire five or more UHF stations in major markets. There is substantial evidence that it may be too late to deal effectively with concentration of VHF ownership in the major cities, unless we can require splitting up of holdings in connection with future transfers. Clearly, one of the main objectives of our proposed rule, and the interim policy which supports it, is to prevent the development of the same degree of concentration in UHF as presently exists in VHF. If we are right in our hope that whatever their difficulties in the near future, UHF stations in the major markets will eventually be successful, then Commissioner Loevinger's willingness to accept the proposition that everyone should be allowed to own five stations in the 'top fifty' markets means that he is willing to accept the same order of concentration in this newly developing segment of broadcasting as now exists in VHF television. I suppose one could even argue that his suggested limit of five UHF stations is discriminatory, because the existing rule would permit one entity to own five VHF's plus two UHF's in the top markets. No one in fact does so, at the present time, and the proposed tightening of the rules would prevent this from coming about. However, if we continue to disregard the proposed rule, and eventually abandon it, then it would seem to me that we would have a double standard permitting more extensive holdings for those multiple owners already entrenched in major-market VHF.
I concur in Commissioner Johnson's statement that we should hold the line until we have made up our mind as to proper direction to be taken, as a matter of policy, with respect to multiple ownership in the major markets. That was the whole purpose of the interim policy. We adopted that policy because of a conviction that the handling of transfers on an individual basis under the existing numerical limit was aggravating the concentration problem. We recognized, quite properly, that it might be shown in a special case that there was a compelling reason for a grant despite the interim policy. I simply cannot begin to find that kind of a showing here. In particular, the majority cannot find here, as it did in Channel 2 Corp., 6 R.R. 2d 855, that the transferor had made substantial but unsuccessful efforts to sell the station to a nonmultiple owner, or to a multiple owner whose interests would not conflict with the proposed rule. It seems clear here that the transferor initially attempted to effectuate a merger transaction, and when his efforts were unsuccessful, did not attempt an outright sale of the stations to anyone other than Kaiser. So even this ground for earlier action, which I find generally unpersuasive, is not available to the majority here.
I think it all boils down to the fact that the transferor wants to get the most money possible out of its rather tenuous hold on a UHF channel in Boston, and quite logically decided it could do better in this regard if it sold to a well-financed multiple owner. Kaiser simply wants to get as many UHF stations as it can in the top markets before the Commission adopts an effective limit, if it ever does so. Being an experienced and hard-headed business corporation, it obviously expects these stations to become profitable, and while they may never equal VHF stations in profitability, I think they will eventually become very substantial and influential mass media, held in a concentrated form which the Commission will be unable to reduce if it is ever permitted to come about. Additionally, Kaiser wants this transfer approved as quickly as possible to improve its competitive posture in relation to Storer Broadcasting Co., which the majority just recently permitted to buy the other commercial UHF station in Boston.
Where is the public interest in all of this? In the short run, the people of Boston will have the benefit of an added program service. In the long run, however, they will have lost the opportunity to have that service provided by local citizens without other media interests, and the people of all our other major markets will have similarly lost the protection against concentration of control sought in our proposed rule. The majority, in effect, says it does not see how it can deny Kaiser since it granted Storer. I think the answer is that it should not have granted Storer in reliance on its earlier grant of Channel 2 in Denver. I simply cannot agree that two wrongs make a right, or that the continued dilution of the objective of our multiple ownership rules is anything other than a serious below to the public interest.
This is a classic instance of the kind of issue that ought not be decided on a case-by-case basis.
Indeed, in this instance, the Commission is already on record with its realization of this truth. That, presumably, is why development of the 'top fifty' policy was undertaken.
Now that policy is under review. We have benefit of probing congressional hearings.The Commission has before it a thorough and thoughtful analysis by United Research, Inc. Other comments are worth consideration. There is much validity in the arguments of Commissioner Loevinger, concurring in this case. The Commission's original thinking in proposing the policy is worthy of great respect.
I take no position on the substance of our present proposed policy. I will when it has been given the thorough review and analysis it deserves. I certainly have serious questions about both the underlying conception of the problem and the precise formula offered as a solution.
Nevertheless, until the matter is finally resolved, I believe the most rational and administratively workable course for the Commission is to hold to its proposed policy as now drafted. Such a holding action seems to me a more just and responsible course. It would also provide more guidance for those in the industry who must be somewhat unsettled at best by the quantity of conflicting opinions produced by us today on this issue.