Docket No. 15619 File No. BPCT-3319; Docket No. 15620 File No. BTCT-3333
FEDERAL COMMUNICATIONS COMMISSION
8 F.C.C.2d 279 (1967); 10 Rad. Reg. 2d (P & F) 50
RELEASE-NUMBER: FCC 67-611
May 19, 1967 Adopted
COMMISSIONER LOEVINGER FOR THE COMMISSION: COMMISSIONERS BARTLEY AND LEE CONCURRING IN THE RESULT AND ISSUING STATEMENTS; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT.
[*279] 1. Farragut Television Corp. (Farragut) and Peoples Broadcasting Corp. (Peoples) are competing applicants for a construction permit for a new television broadcast station on UHF channel 47 in Columbus, Ohio. Farragut is a District of Columbia corporation with five stockholders who are residents of the Washington, D.C., metropolitan area. Farragut's five principals own majority stock interests in the permittees of new UHF television stations to operate in St. Paul, Mann. (channel 29), and San Jose, Calif. (channel 48); and four of the five principals have a majority stock interest in the permittee of a new UHF television station in St. Louis, Mo. (channel 30). n1 Peoples, an Ohio corporation organized in 1946 to engage in the broadcast business, is the wholly owned subsidiary of Nationwide Mutual Insurance Co. Nationwide is a mutual insurance company which is owned by its 2,500,000 policyholders, of which 25 percent reside in Ohio and, of this percentage, 25 percent reside in the Columbus metropolitan area. The principal offices of both Nationwide and its subsidiary are located in Columbus. At present, the broadcast interests of Peoples consist of the following: Stations WRFD and WRFD-FM [*280] in Columbus; stations WGAR and WGAR-FM in Cleveland; and stations WATE-AM and WATE-TV in Knoxville, tenn.
n1 Two of Farragut's principals hold a minority interest in a 1-kw daytime standard broadcast facility in Lancaster, N.Y., but we attach no decisional significance to this interest.
2. By an order released September 10, 1964, we designated the two applications for hearing in a consolidated proceeding. On July 28, 1965, after commencement of the hearing, but prior to its conclusion, the Commission adopted its Policy Statement on Comparative Broadcast Hearings, 1 FCC 2d 393, which governs the disposition of this proceeding (1 FCC 2d at 399). Therein we said that the two primary objectives toward which the process of comparison is directed are: (1) The best practicable service to the public; and (2) maximum diffusion of control of media of mass communications. We consider these objectives to be compatible and believe that in most instances they will complement each other. In this case, Hearing Examiner H. Gifford Irion concluded, on the basis of his view of these objectives and their application, that Peoples' application should be granted, because the area familiarity of its principals and "the record of Peoples in the Columbus community, both itself as an institution and through its executives, better portends a service in the public interest than would be the proposal of a corporation, all of whose stockholders are strangers to the Columbus area" (5 FCC 2d 104 at 118-119). The Review Board reversed and granted the application of Farragut. Taking into account the broadcast interests of the competing applicants and their principals, the Review Board concluded that the Farragut proposal "will better achieve the Commission's goal of maximum diffusion of mass communications media," and the achievement of this objective was deemed to be the decisive factor (5 FCC 2d 93 at 95, 100). With respect to Peoples, the Review Board held that no person with an ownership interest or who would be in a position comparable to an owner of the applicant proposed to participate in day-to-day station operations, and it, therefore accorded no credit to that applicant for integration of ownership with management or for area familiarity.
3. As we emphasized in our Policy Statement, "a general statement cannot dispose of all problems or decide cases in advance" (1 FCC 2d at 394). Unusual situations require special consideration and the policies enunciated by the Commission must be applied in the light of the specific facts in each case. This case involves more than a mere determination of which of two competing applicants in a close case should be awarded a construction permit. The factual situation here raises important issues of first impression concerning interpretation and application of our Policy Statement. Furthermore, on the basis of facts which are essentially undisputed, the hearing examiner and the Review Board reached opposite conclusions as to how the objectives of the Policy Statement would be best achieved. These were the special considerations which prompted us to grant review of the Review Board's determination (FCC 66-1189, released Dec. 29, 1966). Oral argument was held before the Commission on March 16, 1967.
4. Before reaching the merits of this proceeding, we must dispose of one preliminary matter. By our December 29, 1966, order granting review, we authorized each party to file a brief on or before January 30, 1967, and a reply brief on or before February 13, 1967. Peoples filed a brief on January 30, 1967, but Farragut did not, electing instead to [*281] submit only a reply brief on February 13, 1967. Claiming that it was prejudiced by this procedure, Peoples petitioned for leave to file a reply brief and tendered a reply brief for filing. Farragut opposed the petition and, in addition, petitioned for leave to file comments on the reply brief in the event Peoples' petition were granted, and it tendered the pleading for filing. We intended by our December 29, 1966, order that the parties should state their positions fully and fairly by January 30, 1967, and that all written submissions in this proceeding be made on or before February 13, 1967. In view of the pleadings and briefs filed with the Review Board and with the Commission, and the presentation of oral arguments by the parties to both the Review Board and the Commission, it is inconceivable that either party will be prejudiced by our refusal to permit the filing of additional briefs. Accordingly, we will deny the petitions to file further briefs.
5. We conclude, as did the Review Board, that neither applicant merits a preference on the criterion of preparation and planning. The critical issues here are whether, or to what extent, Farragut merits a preference for diversification of control of the media of mass communications; whether, or to what extent, Peoples is entitled to credit for ownership participation in the management of station affairs; and, finally, whether Peoples should be accorded a preference for its past broadcast record.
6. Attaching decisive weight to the ownership by Peoples of a standard broadcast station (WRFD) and an FM station (WRFD-FM) in Columbus, the Review Board awarded a substantial preference to Farragut for diversification of control of the mass media. In reaching this conclusion, we believe the Board failed to consider the particular circumstances of the case before it. We agree, as the Board held, that the broadcast interests of an applicant in the principal community to be served will normally be of most significance and that the existence of competing mass media does not eliminate from consideration the factor of area concentration of control. However, we do not believe that the existence of other media in the area in which the applicant has no interest may be ignored in determining the weight to be accorded the element of local diversification. The same significance does not attach to the ownership of other broadcast facilities in a community where there exists a diffusion of control of the mass media as where the applicant is the owner of all the community's broadcast facilities and other communications media. Thus, contrary to the Review Board's holding, the operation in the community of three commercial VHF television stations, one educational UHF television station, six standard broadcast stations, and seven FM stations by licensees other than Peoples must be considered in weighing the preference for Farragut arising from local diversification of control. Furthermore, the preference arising from the local situation must be considered in relation to the ownership and control by the parties of mass communications media in other areas. In view of Farragut's interests in three UHF construction permits, there is not a large difference between applicants insofar as the goal of achieving maximum diffusion of control of mass media is concerned. We, therefore, conclude, taking both local and overall diversification [*282] into account, that Farraut is entitled at most to a slight preference over Peoples in this area of comparison.
7. The second objective of the Policy Statement is whether either applicant offers greater assurance of providing better service to the public. The determination of this question rests, in large part, on whether and to what extent the owners, or those having personal interest and responsibility comparable to owners, will participate in the daily affairs of the station. Farragut proposes no day-to-day ownership participation in station operations, and none of its principals is, or will become, a resident of the service area. Peoples, on the other hand, claims a substantial preference for integration of ownership and management. The Review Board rejected Peoples' claim to such a preference, and the validity of that determination in this case presents important and difficult issues.
8. While recognizing that individuals holding positions of personal interest and responsibility in nonstock corporate applicants have been treated by the Commission as participating owners for integration purposes, the Review Board concluded that this principle was inapplicable to Peoples. The Board reasoned that Peoples is a stock corporation with an identifiable owner, Nationwide; that the officers and directors of Nationwide are the individuals who may be deemed to be its owners, not those of Peoples; and that since none of the officers or directors of Nationwide n2 would participate in the daily affairs of the proposed operation, Peoples could claim no ownership participation. In some circumstances we might look to the stockholders of a parent corporation as the real owners of a subsidiary. In the circumstances of this case that reasoning is unrealistic. Peoples is a separate corporate subsidiary, organized by Nationwide for the purpose of operating broadcasting stations and functioning with substantial independence in such activities. This is true even though the membership of the boards of directors of the two corporations largely coincide. Since all of the policyholders of Nationwide are owners, with equal votes, there is no individual or small group with a substantial proprietary interest in Nationwide or with the power to control the actions of its management. Thus, the subsidiary is substantially independent and there is reasonable prospect of stability in the ownership and management arrangements.
n2 Neither Evans nor Campbell is an officer or director of Nationwide.
9. We hold that in the case of a mutual corporation or its subsidiary, as with certain nonprofit corporations, the circumstances may be such that we can find the same kind of assurance of providing a better service to the public as is present in conventional cases of integration of substantial ownership with a significant management role. We believe that is true here with principals such as Evans and Campbell, in the light of their long and important association with Peoples' broadcast operations, especially in Columbus itself. Not to recognize the significance of their past contributions to these operations, and what it portends for the character of the service of the station proposed here, simply on the ground that they are officers of Peoples but not of Nationwide, would be to elevate form over substance. We, therefore, [*283] believe that the Review Board did not realistically appraise the added assurance provided by their part in Peoples' application.
10. But under our Policy Statement on Comparative Broadcast Hearings, supra, at pages 395-396, the preference to be awarded Peoples is a slight one. First, we note that Evans has now retired and his proposed participation in station affairs as a consultant, therefore, adds nothing to Peoples' integration showing. n3 With respect to Pollock, the proposed general manager, his promotion to vice president is entitled to no decisional weight, since the record is devoid of any indication that in the initial stages of the operation he will have any influence in determining policy. n4 Bowman Doss has held positions of responsibility in both Nationwide and Peoples for many years, but there is no record showing that he will play a significant role in the operation of the proposed facility. A different situation, however, is presented with respect to Campbell. Although Peoples concedes that, by reason of Evans' retirement, Campbell will now assume greater responsibility for the operation of Peoples' other broadcast facilities, he continues, nevertheless, to be an individual who would, in the event of a grant, devote a substantial portion of his time to the management of the station, and during the years involved in the initial operation, a major portion of his time to the station. As executive vice president of Peoples, Campbell has been responsible for the supervision of the licensee's broadcast operations, and he has participated in the formulation of broadcast policy since 1962. Since 1953, Campbell has been a resident of Columbus, where he has been active in a variety of civic affairs. He is an experienced broadcaster and his experience includes supervision of broadcast facilities in the community to be served. On the other hand, on the facts here and particularly since Campbell will not be devoting full time to the station, the preference to Peoples, based on his participation and background and experience in the Columbus area, is not a major one. See Policy Statement, supra.
n3 We accord no decisional significance to Peoples' representation that Evans, as a consultant, will devote more time to the proposed station than has been indicated on the record. As we held in the Policy Statement, no weight is given to merely consultative positions (1 FCC 2d at 395).
n4 At the hearing, Campbell testified that he did not believe Pollock would be ready to assume substantial responsibility for station affairs until 3 to 5 years after the station becomes operational.
11. Finally, we consider Peoples' contention that it merits a substantial preference for its record of past performance, particularly for its service to Columbus, where Peoples has operated a standard broadcast station since 1947. The examiner found that Peoples' past record reflected a "commendable attention to the public interest at all cultural levels and in all aspects," and the Review Board commented that Peoples had "submitted a showing of many meritorious programs broadcast over its various stations." However, both the examiner and the Review Board concluded that Peoples did not make such a showing of "unusually good performance" as to merit credit in this area of comparison under the terms of the Policy Statement. We believe that Peoples must be accorded a significant preference for its past broadcast record.
12. A record of past performance provides an indication of the quality of the performance which may be expected from a broadcaster [*284] in the future, and we emphasized the importance of this comparative criterion in the Policy Statement. Therein we stated that favorable consideration for past performance is merited where the broadcaster has demonstrated "unusual attention to the public's needs and interests, such as special sensitivity to an area's changing needs through flexibility of local programs to meet those needs * * *" (1 FCC 2d at 398) Through WRFD-AM, Peoples has concentrated upon service to meet the particular needs of the rural population of central Ohio. To accomplish this objective, Peoples has staffed WRFD's farm department with three full-time farm broadcasters. Numerous programs, both regular and special, of particular interest to those engaged in agriculture have been provided over the years. WRFD's news and public affairs staff consists of five full-time newsmen who have not only provided coverage of local and State affairs but have provided national and international coverage as well. WRFD-FM directs its programming more to the urban audience and appears to provide a well-balanced program service. Furthermore, throughout the period of its operations in Columbus, Peoples has staffed its stations with individuals who have demonstrated the vision and the ability to operate broadcast facilities in response to the current needs of its listeners, and to meet such needs by timely programs, on both a regular and a special basis, of which a large percentage is locally originated. Peoples' past record portends a superior performance in the operation of the proposed station, and it merits a substantial preference in this category.
13. From the foregoing, it appears that Farragut has earned a slight preference in the area of local diversification of control of the media of mess communications. Local diversification is, of course, an important factor, but its significance is diminished here because of the numerous competing broadcast operations in Columbus, and the other broadcast interests of both applicants. In our view, the preference received by Farragut for diversification is clearly outweighed by the affirmative favorable qualities demonstrated by Peoples in areas of comparison in which that applicant has earned preferences. We believe that Peoples' proposal, which shows a record of quality broadcast service to the community to be served, which contemplates participation in daily station operations of a resident principal with considerable broadcast experience and area familiarity and which provides greater assurance that a substantial effort will be made to ascertain and meet the ever-changing needs of the community in the operation of the proposed station, is more likely to fulfill the Commission's objective of the best practicable service to the public than the Farragut proposal which is lacking in these respects. We, therefore, conclude that the public interest would be better served by a grant of Peoples' application.
14. Accordingly, it is ordered, That the petition, filed on February 23, 1967, by Peoples Broadcasting Corp., for leave to file a reply brief Is denied; that its accompanying brief Is rejected; and that the petition filed on March 6, 1967, by Farragut Television Corp., for leave to file comments Is desmissed as moot; and
15. It is further ordered, That the application of Peoples Broadcasting Corp. for a construction permit for a new television broadcast [*285] station to operate on channel 47 in Columbus, Ohio, Is granted; and that the application of Farragut Television Corp. for a construction permit for like facilities Is denied.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
STATEMENT OF COMMISSIONER ROBERT T. BARTLEY CONCURRING IN THE RESULT
I concur in the result of granting the application of Peoples Broadcasting Corp. I agree that, as set forth in our Policy Statement on Comparative Broadcast Hearings, diversification of control of media of mass communications is a primary factor in comparative considerations.
It is my position that in diversification of control of media, a licensee's facilities, i.e., AM, FM, TV, make up a broadcast unit. As technical advancements were made, and an AM licensee added FM and TV to enhance its broadcast service to the community, I believe the public interest was benefited. Thus, I find generally that a proposal to add a facility to such a locally oriented unit is preferable to that of a multiple owner with facilities in a number of cities.
STATEMENT OF COMMISSIONER ROBERT E. LEE
I concur in the result and invite attention to my statement issued on the Policy Statement on Comparative Broadcast Hearings (1 FCC 2d 393 at 404).
STATEMENT OF COMMISSIONER JOHNSON REGARDING THE COLUMBUS, OHIO, TELEVISION COMPARATIVE PROCEEDING
When more than one applicant requests a given television channel, Commission procedure calls for their qualifications to be compared in the selection of the winning applicant. This case involves a comparative hearing for UHF television channel 42 in Columbus, Ohio. There are two applicants for the channel, Farragut Television Corp. and Peoples Broadcasting Corp. A hearing examiner's initial decision awarded the channel to Peoples. The Review Board overturned this decision. The case comes before the Commission on appeal from the Board. And the Commission has reawarded the channel to Peoples. I dissent.
This is the first major action in which the Commission has been called upon to apply the Policy Statement on Comparative Broadcast Hearings adopted in 1965 (1 F.C.C. 2d 393 (1965)). Prior to that statement there was no policy or procedure at this Commission which attracted more unanimous or consistent condemnation than its "comparative hearings." Virtually every commentator who examined the problem concluded that the various factors which the Commission took into account in evaluating competing applications were so diverse, uneven, and sometimes contradictory that it was a rare case in which one or more different results could not be reasonably supported. Professor [*286] William K. Jones commented that "it seems generally agreed that the large number of comparative criteria, the complexities surrounding their application, the shifting emphases accorded the underlying policy objectives, all contribute to a degree of uncertainty and unpredictability that is probably unsurpassed in any other decisional context." Jones, "Licensing of Major Broadcast Facilities by the Federal Communications Commission," 64 (Administrative Conference of the United States, Committee on Licenses and Authorizations, 1962). At one time, the uncertainty of the standards which the Commission was applying in comparative cases left its decisions open to the implication that political considerations, more than anything else, determined how newspapers would fare in license applications. See Schwartz, "Comparative Television and the Chancellor's Foot, 47 Geo. L.J. 655, 690-693 (1959). Professor Louis Jaffe accused the Commission of employing "spurious criteria, used to justify results otherwise arrived at." Jaffe, "The Scandal in TV Licensing," Harper's Magazine, September 1957, pages 77, 79. But even when the taint of political machination had dissipated, the cry was still heard that the Commission was applying no consistent standards. The observer was still left with the uneasy feeling that extraneous considerations could again dominate the comparative hearing process. And it was Judge Henry J. Friendly's call for the development of workable standards (Friendly, "The Federal Administrative Agencies," 53-73 (1962)) which seems to have provided the impetus for the Commission's new 1965 Policy Statement.
Unfortunately, the course of this case seems to indicate either that the Policy Statement was no improvement or, more likely, that the Commission -- perversely or ingenuously -- will not allow the sorely needed standards to guide its decision-making. A hearing examiner, guided by that Statement, awarded the permit to one party, Peoples. The Review Board, agreeing with some of the examiner's reasoning and disagreeing with the remainder, reached the opposite conclusion and awarded the permit to Farragut. The Commission, with reasoning quite unlike that of either the examiner or the Review Board (and disagreeing with both in some particulars on which they had agreed), now reverses the Review Board, thus reinstating the conclusion which the examiner had reached. From that opinion I am compelled to dissent, and two of my fellow Commissioners have also indicated separate views. Thus, whatever else may be said of the new Statement, it cannot be credited with very good marks in this first test of its ability to advance the cause of predictable results from easily applicable standards.
The Policy Statement states two objectives toward which the comparative process is directed: The best practicable service to the public and a maximum diffusion of control of the media of mass communications. Then several relevant factors in pursuing these objectives are enunciated, three of which are involved in this decision. They are (a) diversification of control of the media of mass communications; (b) full-time participation in station operation by owners (referred to as the "integration of ownership and management"); and (c) past broadcast record.
[*287] The first difficulty in this case arises because the
two applicants, Peoples and Farragut, both control multiple broadcasting
properties or permits. Thus each presents the possibility that awarding
the station to it will increase concentration of control of the broadcast
media. Diversification of control is one of the objectives of the Policy
Statement. But the configuration of the respective interests of the two
applicants is such that each presents decidedly different aspects of the concern
we normally refer to under the single rubric "concentration of
control." Farragut controls three permits for UHF television stations, but
these are located in widely scattered parts of the country. Peoples'
broadcast properties are more diverse in kind -- one VHF television station,
three AM, and two FM radio stations -- but much more heavily concentrated
geographically. As I have intimated before, Paris-Bourbon County
Broadcasting, Inc., 6 F.C.C. 2d 894 (1967) (concurring statement), concentration
of ownership in a single locality is at least different from, and is
potentially more harmful than, decentralized multiple ownership. The
Policy Statement recognizes this, at least qualitatively, when it says,
Other interests in the principal community proposed to be served will normally be of most significance, followed by other interests in the remainder of the proposed service area and, finally, generally in the United States. However, control of large interests elsewhere in the same State or region may well be more significant than control of a small medium of expression (such as a weekly newspaper in the same community). 1 F.C.C. 2d 393, 394-395 (1965).
In this case Peoples has two broadcast properties in Columbus, the very city where it now seeks a third, and two in Cleveland, the largest city in the State, located only 150 miles from Columbus. Both these situations were recognized in the Policy Statement as embodying more danger than concentration in the country generally, yet the Commission is able to salvage only a "slight preference" for Farragut over Peoples in this regard.
The ostensible reason for this nonchalance in evaluating the extent to which Peoples will aggravate the concentration of control of the media in Ohio is the existence of "other media in the area in which the applicant (Peoples) has no interest." The other media, to which the Commission makes specific reference, are three VHF television stations, one educational UHF television station, six AM radio stations, and seven FM radio stations. Of course, I agree that the existence of competing media in Columbus makes the danger from concentration of control less severe. But I cannot conclude, as does the Commission, that these other media reduce the danger so much as to call for only a "slight preference" for Peoples' rival. If the Commission in promulgating the Policy Statement had wished to minimize the demerit to be given where there were competing media in the locality, it would have made no sense to say, as it did, that "control of large interests elsewhere in the State or region" may be of special significance. The State or region will always have numerous competing media, the coverage of many of which will not overlap with that being awarded.
[*288] Moreover, the Commission has failed completely to examine the real extent of this alleged diversity in Columbus. The majority parades Columbus' 17 other broadcasting stations, but it does not mention that three of those properties are owned by Taft Broadcasting Co., which has three other Ohio stations among its numerous properties; that one of the television stations is owned by Avco Broadcasting Corp., a major multiple owner nationally with two other Ohio stations; that the only other commercial television station is owned by one of the local daily newspapers; and that all the FMs in the city save one are jointly owned by (and to a great extent carry the same programs as) the AMs. In other words there are eight different owners of broadcast properties in Columbus, not 18, and of those eight, seven are owners of other media outlets. Media diversity is far from rampant in Ohio's State capital.
The majority finds a preference for Peoples because of its integration of ownership and management, which offsets Farragut's "slight preference" on diversity. Let us examine the logic of this preference. Peoples, it should be explained, is a broadcasting subsidiary of Nationwide Mutual Insurance Co., a nonstock company owned by its 2 1/2 million policyholders. It might reasonably be asked how Peoples proposes to integrate its numerous owners into the management of channel 42. The Policy Statement indicates that a comparative preference will be given to an applicant which proposes to integrate ownership and management of the station, so that "legal responsibility and day-to-day performance [may] be closely associated." 1 F.C.C. 2d 393, 395 (1965). It seems clear that the intention, wisely and necessarily, was to restrict such preferences largely to individuals or small groups which own stations and can become meaningfully involved in their management. For the Statement notes that integration "frequently complements the objective of diversification, since concentrations of control are necessarily achieved at the expense of integrated ownership." 1 F.C.C. 2d 393, 395 (1965) [emphasis added]. This would seem to indicate the far more sensible conclusion that credit for integration of ownership and management is simply inapplicable to widely held companies in which the "owners" are really only "investors." But the Commission has decided that officers of broadcasting subsidiaries of nonstock companies can be counted as "owners" for integration purposes. And on this basis Peoples is given a preference largely because one officer of Peoples will devote a "substantial portion of his time" (though not all) "to the management of the station * * *." The Commission has earlier stated that "The criterion here is in terms of the integration of owners into day-to-day operation of the station, and not in terms of integration of officers and directors; and because he would not own stock in the corporation, Bernard (an 'integrated' officer) can be viewed only as an employee of the station * * *." Veterans Broadcasting Co., 38 F.C.C. 25, 43 (1965). (It is true that the Commission has in the past given integration credit to municipal governments as owners, for which, like Peoples, literal integration of ownership and management is impossible. City of Jacksonville, 12 P&F Radio Reg. 113, 180 (1956). But such a policy, while possessing no foundation in logic, might be predicated on some public policy encouraging cities to run [*289] stations. When applied to a business entity such as Nationwide and Peoples, the policy does not even have this tenuous redeeming feature.) There is no more incentive for officers of a nonstock company such as Nationwide or its subsidiary, Peoples, to operate the station conscientiously than there is for nonowning officers of any other business entity. And, as the Commission has recognized, if any business entity could obtain integration credit by making the proposed station manager an officer, the integration credit would be utterly meaningless. Farragut could then have reached the same position for which the Commission gives Peoples a preference merely by making the proposed station manager a vice president of its corporation. It is as simple as that. This would reduce the integration credit to an absurdity, yet it is the logical extension of the opinion the majority issues today. In the case of Peoples, the argument for integration credit is even further stretched because the supposedly "integrated" officer will be in charge of all of Peoples' seven stations, not just this new Columbus UHF.
The majority also assigns a preference to Peoples for its past broadcast record. Because Peoples has a history of broadcasting performance, it has had an opportunity, which neophyte Farragut has not, to compile a past broadcast record of distinction. The Policy Statement makes clear that only the extremes in past performance will be taken into account:
A past record within the bounds of average performance will be disregarded, since average future performance is expected. Thus, we are not interested in the fact of past ownership, per se, and will not give a preference because one applicant has owned stations in the past and another has not. 1 F.C.C.2d 393, 398 (1965).
But neither the Review Board nor the hearing examiner could conclude that Peoples' prior record was unusually good enough to merit a preference. The Review Board noted that Peoples had had some meritorious public service programming but also alluded to the unusual amount of spot advertisements on one of the Peoples' stations. The majority is able to cull nothing spectacular from Peoples' record and does not mention the blemishes noted by the Review Board. Yet Peoples is inexplicably awarded a preference for its past broadcast record.
It seems clear that what happens when the Commission relies on past average programming performance as evidence of future distinguished conduct is that credit is being given for having been a broadcaster in the past -- and nothing else. The majority's treatment of the integration of ownership and management leads to the same conclusion. If one applicant has been broadcasting in a town over a period of years, of course he can point to some programming well suited to the needs of that community. That is supposedly what we require when we award a license. This is all the majority has shown in the case of Peoples. And, of course, such an applicant has some personnel available who are experienced in broadcasting to that community, who can be given some responsibilities with regard to the new station, and who can be made officers of the company. This, too, is a description of the Peoples situation. In fact the Commission is rather candid in expressing its reliance on Peoples' experience in Columbus itself. The Peoples' [*290] officers, who represent the "ownership" which will be integrated with management, are cited by the majority for "their long and important association with Peoples' broadcast operations, especially in Columbus itself" [emphasis added]. And in examining People's past broadcast record, the majority seems more concerned with Peoples' long and close association with Columbus than with the quality of its programming service, per se.
And therein lies the irony. For when credit is given for having
broadcast in the community before, and for little else, the first and very
important criterion in comparative consideration -- diversification of the
ownership of the mass media -- is seriously undercut. The slight credit
which is given Farragut because Peoples owns Columbus stations can then be
taken away forth with by reference to Peoples' past broadcast record and
And so we have come full circle to the very same evils which the Policy Statement was designed to cure. We have one central fact in this case: Peoples already owns Columbus stations. By manipulating this one fact, either of the two possible results in this case is reached and supported by any number of rationales.
The comparative hearing process itself is somewhat of an anomaly when viewed in the total context of the Commission's method of assigning licenses. A person who wants to enter broadcasting has three alternatives. (a) He can buy a station from another licensee. To do so he need only find the right station at the right price in a free market, and meet certain minimum FCC qualifications. The Commission is prevented by congressional mandate from considering alternative buyers for a broadcast property. 47 U.S.C. 310(b) (1964). (b) He can apply to the FCC for a vacant channel and, provided he meets minimum qualifications and no one else competes for the channel, he is awarded a license. (c) If, when the potential station operator applies for a new license, someone else also applies, then both must go through the comparative hearing process which involves this extraordinarily expensive and time-consuming weighing of unrelated and noncomparable factors. (These burdens are, of course, instrumental in encouraging the purchase-of-stations rather than the comparative-hearing entry into broadcasting. A potential owner may be frightened away from a hearing in the first place, or bought out part way through.) If our comparative criteria are relevant in one context why not in the others? See concurring statement of Commissioner Lee, 1 F.C.C. 2d 393, 404 (1965).
There are other occasions when comparative hearings are used for determining broadcast licensees: When a competing applicant tries for a license that is up for renewal and in selecting among competing cities for a given frequency assignment. Comparative hearings at renewal time occur only rarely, and almost never result in the award of a license to the challenging applicant. Most license renewals are made in regular course to applicants, whether they have acquired their license through purchase, uncontested award, or Commission decision based on a comparative hearing. When applicants are from different communities, the determination must first be made as to which proposed service will result in the most fair, efficient, and equitable distribution of radio service, See Policy Statement on Section 307(b) [*291] Considerations for Standard Broadcast Facilities Involving Suburban Communities, 2 F.C.C. 2d 190 (1965).
It seems to me that this crazy quilt design for disposing of broadcast properties is unworkthy of a sophisticated administrative process. Without endorsing any specific proposal, I would like to see Congress and this Commission give serious consideration to alternative methods. Several commentators have suggested a type of auction in which a station is awarded to the highest bidder among minimally qualified candidates. See Levin, "Federal Control of Entry in the Broadcast Industry," 5, J. Law & Econ. 49 (1962); Levin, "Broadcast Regulation and Joint Ownership of Media," 175 (1960); Schwartz, "Comparative Television and the Chancellor's Foot," 47, Geo. L.J. 655, 696-697 (1959); Coase, "The Federal Communications Commission," 2, J. Law & Econ. 1 (1959). Even a random drawing or first-come basis for awarding licenses between competing applicants would save a great deal of time and expense and promise results no less arbitrary than our present comparative process -- as illustrated by the spectacle of this very case. Nor is the problem limited to commercial broadcast properties. The Commission must also allocate scarce frequencies to other competing services, such as land mobile (e.g., police cars, taxicabs), microwave, amateur operators, citizens band, and satellites. In every instance of allocating blocks of frequencies to competing services, as well as allocation within those blocks to competing applicants, the Commission is faced with analogous needs for criteria for choice. See Metgzer & Burris, "Radio Frequency Allocation in the Public Interest: Federal Government and Civilian Use," 4, Duquesne L. Rev. 1 (1965), and Johnson, "Frequency Nonmanagement and the More Effective Use of Radio," Communications, March 1967, page 16.
Even if we must live with the comparative process of allocating valuable commercial broadcast properties for some time to come, surely we can avoid the very evils which it was hoped the Policy Statement would cure. We can make more of an attempt to establish meaningful standards for rational evaluation of competing applicants. Using this case as an example, I think we can do away with the possibility of contradictory use of the same set of facts. For example, if we view diversification of ownership of the media in a given town as decidedly more important than having new broadcasting facilities in the hands of the town's experienced broadcasters, even if they are fairly capable -- as our Statement would seem to indicate -- then we could award any station to a qualified but inexperienced applicant if the competition held other local media. We could require very significant national holdings by the opponent to overcome a demerit based on ownership of local competing media. Such an approach would seem to me more sensible, and consistent with its Policy Statement, than what the Commission has done here. What is perhaps more important, it is clear.
If the majority disagrees with the policy judgments I would apply, I may object. But I would find almost any fairly certain rules preferable to the amorphous glob with which we deal today. I do not deny that difficult judgments will still have to be made, but as this Commission now applies the Policy Statement the difficult has become impossibly uncertain. And such uncertainty can only lead us back to the appearance, and potential reality, of arbitrariness.