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In re Application of BOOTH AMERICAN CO., DETROIT, MICH. For Construction Permit for

New Class A FM Broadcast Station in Saginaw, Mich.

 

File No. BPH-6132

 

FEDERAL COMMUNICATIONS COMMISSION

 

14 F.C.C.2d 136

 

May 15, 1968

 


 

JUDGES:

 

   The Commission, by Commissioners Bartley, Acting Chairman; Lee, Cox, Wadsworth, and Johnson, with Commissioners Cox and Johnson dissenting and issuing a statement, granted the application of Booth American Co. for a construction permit for a new class A FM broadcast station in Saginaw, Mich. For channel No. 292, 106.3 Mc.

 


 

DISSENTBY: COX; JOHNSON

 

DISSENT:

 

   DISSENTING OPINION OF COMMISSIONERS KENNETH A. COX AND NICHOLAS JOHNSON

 

Regional Concentration of Control of Media (In re Application of Booth American Co. for a New FM in Saginaw, Mich. -- BPH -- 6132)

 

   Introductory Statement

 

   Booth American Co. owns broadcasting properties -- principally in the State of Michigan. It seeks Commission approval to acquire another: an FM station in Saginaw. On May 15, 1968, we dissented to the Commission's authorization of this additional acquisition.

 

   This opinion is a revision of our original statement in the case. In the original version we said, "Booth American owns nine newspapers and now 10 radio stations in [a] 40-county area [principally in Michigan] * * *." n1 That statement was in error. Booth American is owned by John L. Booth and his family. Booth Newspapers Inc. (which owns the nine newspapers) is controlled by cousins of John L. Booth. We regret any inconvenience that may have been caused by this misstatement and are issuing this revision to clear up the record.

 

   n1 Our original opinion in this matter was issued as FCC Public Notice 17052, May 16, 1968.

 

   There may well have been changes in ownership since May 15, 1968. For example, it has recently come to our attention that the Ypsilanti Press (the smallest paper, and the second Booth paper in Washtenaw County) was sold to Panax Corp. on July 1, 1968. No information in the record before us, however, warrants our altering the facts before us on May 15, 1968.

 

   We should note, however, that our desire to specify precisely the interrelationships of that parties in this matter has by now led us on a rather extended odyssey to an understanding of media control in Michigan that is quite as disturbing as our original findings.

 

    [*137] We began with a concern about a single man or family controlling a substantial accumulation of broadcast properties within a relatively limited area. The risk, of course, is that this regional concentration of control of the mass media holds the potential for the stifling of dissenting views, the failure to provide the very diversity of information and opinion that our national system of 7,500 locally oriented stations is designed to encourage. It is a risk that is made all the more severe if broadcast ownership is in any way related to newspaper ownership in the same area. There is such a relationship in this case. We had thought it was one of common ownership. It is not.

 

   We should perhaps note at this point that the FCC station ownership reports do indicate the names of all owners of over 1-percent interest in a licensee. n2 They do not list properties of the licensee nor do they list properties owned by major shareholders of the licensee. n3 The only records of the ownership of privately held newspapers and magazines (which do not hold broadcast licenses) are maintained by the Post Office Department (because of the second-class mailing privileges involved). n4 Post Office reports do not list the percentage ownership of the shareholders. FCC and Post Office records are public, but are not published in useful form. And information about family relationships, interlocking directorates, banking and law firm relationships, and institutional ownership is often impossible to uncover. The short of the matter is that the American people -- dependent upon the integrity of the mass media for their very participation in a meaningful democracy -- may find themselves (and their governmental representatives) hard pressed to find out who really controls their daily diet of information [*138] and opinion. We believe this state of affairs is intolerable in a nation such as ours. The kind of information with which we are here dealing should be readily available to American citizens and officials in public libraries throughout this country. n5

 

   n2 47 CFR sec. 1.615 (1968); see also FCC from 323.

 

   n3 The Commission has a number of different forms on which information concerning ownership and the economic interests or relationships of persons associated with licensees are filed. These application forms are not consistent in the information requested and there appears to be no systematic requirement that information filed when a licensee first acquires a station be updated.

 

   An applicant may first acquire a station either through the process of filing for a new station on FCC form 301 (application for authority to construct a new broadcast station) (this application must also be filed when major modifications are made in the facilities of a station) or by seeking approval for purchase of a station on FCC forms 314 or 315 (application for consent to assignment (or transfer of control) of broadcast station construction permit or license). In either case the applicant must file information concerning who owns or has an interest in (directly or indirectly) the applicant; the interests of the applicant or the immediate family of any of the applicant's principals in other broadcast stations or applications; and, finally, information "concerning the occupation, business, and financial interests, at the present time and during the past 5 years of the applicant and of each party to this application * * *." This material is to include "principal" occupations and businesses but also anywhere there is or was a 25-percent interest or an official relationship. See FCC forms 301, 314, and 315.

 

   The Commission's ownership form (form 323) requires only that those who have an interest in the licensee report it; that stock transactions and changes in directors be reported and that other broadcast interests be disclosed. The renewal form (form 303) requires that any interest in other broadcast stations be disclosed; and a listing of all other businesses in which applicant, officers, directors, or principal stockholders have a 25-percent interest.

 

   Thus the most complete information about a Commission licensee is accumulated at the time the applicant first becomes a licensee, and there is no systematic requirement that this information be updated in the Commission's files. The only updating of the information originally filed comes when a licensee seeks a new station either by a construction permit or through purchase.

 

   Apparently in this case Booth American did not file the required information in its application for a new FM construction permit. Sec. II of BPH-6132 simply refers to past filed renewal or ownership forms for other Booth American stations, which, as we have noted above, do not contain the information required in an application for a new station.

 

   n4 Once a year every owner of a publication having second-class mail privileges must file an ownership report on Post Office Form 3526: Statement of Ownership, Management, and Circulation. See 39 U.S.C. sec. 4369 (1964); 39 CFR sec. 132.6 (1968).

 

   The Securities and Exchange Commission requires every issuer of a security registered with the SEC to file periodic reports in order to maintain on a current basis the information contained in the registration statement. Such information includes "* * * directors, officers, and underwriters, and each security holder of record holding more than 10 percent * * *." See 15 U.S.C. secs. 77aa, 781, 78m (1964); SEC form 3; SEC form 4; 17 CFR sec. 240.16a-1 through sec. 240.16a-10 (1968).

 

   n5 There are some publications which incidentally and with various degrees of accuracy publish information concerning the ownership of media. There are no regular publications which analyze ownership. Some of the informational publications include: Editor and Publisher Yearbook, CATV and Station Coverage Atlas, Television Factbook, Broadcasting Yearbook, Ayer Directory of Newspapers and Periodicals, Bowker Book Annual of Library and Book Trade Information.

 

   On May 15 we knew that Booth American, controlled by John L. Booth and his family, owned 10 radio stations in the 40-county area bounded by Muskegon and Saginaw on the north and South Bend and Toledo (both just over the Michigan border) on the south. These included: Jackson (WIBM-AM, WBBC-FM), South Bend (WJVA-AM, WRBR-FM), Detroit (WJLB-AM, WMZK-FM), Toledo (WTOD-AM, WKLR-FM), and Saginaw (WSGW-AM, and the new FM permit just granted). The company also owns AM and FM stations in Kokomo and Cleveland -- bringing its total to the FCC maximum of 14.

 

   Even if this were the end of the matter we would still urge, as we said on May 15:

 

   In granting this new FM station the Commission must find that the public interest will be served. It is [our] view that the Commission can not legitimately make that finding without further inquiry into the circumstances of this case in view of the extensive media holdings of this company. n6

 

   n6 FCC Public Notice 17052, May 16, 1968, p. 2. Since that time we have discovered that the Booth family holdings include even more than the 10 (or 14) stations we then had in mind and more than an interest in the nine newspapers of Booth Newspapers, Inc.

 

   The Booth Family

 

   The Booth empire was originally organized by John L. Booth's father (Ralph Booth) and uncle (George G. Booth, Ralph Booth's brother). The children of George G. Booth (who have ownership interests in Booth Newspapers) include Henry S. Booth, Warren S. Booth, Florence Booth Beresford, and Grace Booth Wallace. Their ownership is supplemented by that of George G. Booth family trusts and foundations. The Cranbrook Foundation (Henry S. Booth, chairman of the board of trustees) owns 70 percent of the Cranbrook Foundation 1960 Supplemental Trust which, in turn, owns about 20 percent of Booth Newspapers. John L. Booth's immediate family includes his wife and sons, John II and Ralph II. (Together they own 44.64 percent of Booth American which, together with his 55.36-percent interest, constitutes all ownership interest in the company. n7

 

   n7 The information in this paragraph comes from a variety of sources.

 

   Booth Newspapers, Inc., was begun by the Booth brothers in conjunction with five other persons. See Triad transcript (note 13 infra) 5589, 5599, 5862-66. The interest of the Cranbrook Foundation and the Cranbrook Foundation 1960 Supplemental Trust is detailed at p. 36, note 1 of a publication titled "Cranbrook Financial Reports for the Years Ending June 30, 1967-1966-1965" (November 1967). Also see FCC form 323 (ownership) filed for WWJ-AM-FM-TV by the Evening News Association; BPH-6132, the application for an FM station in Saginaw, Mich., filed by Booth American; and subcommittee chairman's report to Subcommittee No. 1, House Select Committee on Small Business (sixth installment), "Tax-Exempt Foundations and Charitable Trusts: Their Impact on Our Economy" 287 (1968).

 

    [*139] Booth Newspapers owns papers in the same 40-county area in which Booth American owns stations: Ann Arbor, Bay City, Flint, Grand Rapids, Jackson, Kalamazoo, Muskegon, Saginaw, and Ypsilanti. Most have circulations from 30,000 to 60,000. (Flint and Grand Rapids are 110,000 and 130,000; Ypsilanti is 13,000.)

 

   What we have since discovered, however, is that the same individuals who own Booth Newspapers also have substantial interests in one of Detroit's (and therefore, Michigan's) major newspapers, the Detroit Evening News (circulation 700,000). Warren S. Booth owns 2.18 percent and is chairman of the board; Henry S. Booth owns 1.75 percent and is a director; Florence Booth Beresford owns 3.48 percent, Grace Booth Wallace owns 1 percent and the Cranbrook Foundation 1960 Supplemental Trust owns 6.1 percent.

 

   And the Evening News Association (which is the company name for the paper) also owns one of Detroit's three major VHF television outlets (there is a fourth VHF station across the river in Windsor, Ontario), NBC-affiliate WWJ-TV as well as WWJ-AM and WWJ-FM. (The net weekly circulation of WWJ-TV is estimated at 1,513,900 homes, or roughly 5 million persons.)

 

   Cable Television

 

   Booth American not only owns the maximum possible number of radio stations, but is also heavily involved in cable television. Booth American presently has systems operating or planned for Holland, Jackson (Summit-Leoni), Muskegon (with permits for Laketon Township, Muskegon Heights, Muskegon and Norton Townships, and Roosevelt Park), and Saginaw (also to serve Zilwaukee -- permits include Carrollton Township). This not only gives the company the power to select (to some degree) which television stations' signals will be seen by the people in those communities, but also the opportunity to provide programming of its own on a local channel. n8

 

   n8 Cable television provides television service by multi-channel wire into a subscriber's home. Normally more channels are provided than the subscriber can receive off the air. The cable system company exercises some choice, subject to FCC rules, as to what channels will be carried by the cable system. In addition a cable company may originate local programs over one of the cable channels. See 47 CFR sec. 74.1100-09 (1968), Second Report and Order, 2 FCC 2d 725 (1966). Two recent Supreme Court cases have dealt with FCC regulation of cable television and the copyright liability of the cable operator under the copyright law. See United States v. Southwestern Cable Co., decided June 10, 1968 (13 P. & f. radio Reg. 2d 2045); Fortinightly Corp. v. United Artists Television, Inc., decided June 17, 1968 (13 P. & F. Radio Reg. 2d 2061).

 

   The Commission after hearing recently authorized CATV program origination in San Diego, Calif. (other CATV systems originate without formal Commission authorization). See Midwest Television, Inc., FCC 68-662,     FCC 2d    .

 

   Booth American also owns operating CATV systems in Cadillac and Manistee, Mich.; Blacksburg, Christiansburg, Danville, and Pulaski, Va. It has systems planned for Kokomo and Howard County, Ind.; Marion, Ohio; and a 90-percent interest in a franchise for Rocky Mount, N.C. 38 Television Factbook (services volume) 558a (1968).

 

   Family Relationships

 

   The FCC's policies regarding maximum station ownership and duopoly (stations with overlapping signals) are designed to encourage [*140] diversity of information and opinion in this country. n9 We believe they should be interpreted with that spirit in mind.

 

   n9 The Commission's rules on multiple ownership prohibit "concentration of control of * * * broadcasting in a manner inconsistent with public interest, convenience, or necessity." Specifically rules on duopoly prohibit common ownership or control of two AM (or FM) radio stations whose signals of a certain strength (1 mv/m) overlap; or two TV stations whose grade B contours overlap. In addition the common ownership of more than seven AM, seven FM, or seven television stations (five of which may be VHF) is deemed inconsistent with the public interest. See 47 CFR secs. 73.35, 73.240, 73.636 (1968). The Commission has recently proposed to limit the common ownership of full-time broadcast properties in a single market. See 33 F.R. 5315 (Apr. 3, 1968.)

 

   When there is but a single individual or corporation involved the rules are relatively easy of application. The problems arise in the case of family relationships, interlocking directorates, and common banking or other professional or institutional ties.

 

   Consider, for example, the case of two stations (station 1 and station 2) with overlapping signals. Station 1 and station 2 could not both be owned by Mr. A or by a single corporation. Mr. A may own station 1 and B own station 2. Can the "A and B partnership," or "A and B corporation," own both 1 and 2? No. What if A and B are in partnership in other ventures but separately own the two stations? What if A and B are brothers, father and son, or cousins? What if C sits on the board of directors of both A, Inc., and B, Inc.?

 

   There are numerous FCC cases governing such situations. n10 Our position would be that individual cases must be resolved on their merits, but that any relationship the holds the potential for multiple media influence raises a presumption that should cause the FCC pause. When serious it should be the basis for further inquiry -- normally through hearings.

 

   n10 For example, the Commission recently designated for hearing the FM application of Brian E. Cobb for Reno, Nev. Cobb's father owns an FM station in Reno and applicant proposed a common address for the two stations. He had originally proposed to rely on his father for financing, equipment, and services as temporary chief engineer. After receiving a pre-hearing letter from the Commission Cobb proposed only to consult his father and to move from the common address if necessary. Nevertheless the Commission concluded that a serious question remained regarding whether the stations would be under common control in contravention of sec. 73.240(a)(1) of the Commission's rules. See Letter to Brian E. Cobb, FCC 6,-193, Feb. 21, 1968; In re Application of Brian E. Cobb, FCC 68-452 (docket No. 18135, Apr. 24, 1968). It is unfortunate for Cobb that his father did not instead own a profitable AM or TV station in Reno, in which case the Commission's duopoly rules would not apply.

 

   For a further discussion of the Commission's actions concerning the concept of control under its multiple ownership rules see Radio Athens, Inc. v. F.C.C.,     F. 2d     (D.C. Cir. 1968) (No. 21,476, decided July 9, 1968).

 

   In this case, as it turns out, there is more than a mere family relationship between the descendants of the two brothers who began the Booth family media interests. It is true that Booth American does not own newspapers. But John L. Booth (who personally, with his children, owns all of that company) does have an ownership interest in Booth Newspapers and sits on that company's board of directors. Counsel for Booth American advises that this interest constitutes "slightly more than 8 percent" of the stock of Booth newspapers. n11 Presumably this computation of 8 percent includes all of John L. Booth's newspaper interests -- for they are scattered, and the Post Office records do not indicate percentages of ownership. He is listed not only individually, but also in connection with trusts involving the [*141] National Bank of Detroit and the Detroit Bank & Trust Co., which own stock in Booth Newspapers. n12

 

   n11 Letter from Marcus Cohn to Commissioner Johnson, May 27, 1968, p. 1.

 

   n12 The "Statement of Ownership, Management, and Circulation" filed with the Post Office Department on Sept. 30, 1967, for the Flint Journal, one of the Booth newspapers, lists under the heading "Principal Stockholders of Booth Newspapers, Inc." the following:

 

   John L. Booth, Detroit, Mich.

 

   John L. Booth and Louise Camper Booth, trustees under agreement with Mary B. Booth, dated Apr. 16, 1951; care of National Bank of Detroit, Detroit, Mich.

 

   The Detroit Bank & Trust Co., trustees, under agreement dated Apr. 1, 1944 with

 

   John L. Booth, Detroit, Mich.

 

Other Booths mentioned as principal stockholders include Florence Booth Beresford, Henry S. Booth, Warren S. Booth, Virginia Booth Vogel, and Grace Booth Wallace. An additional owner is Booth Broadcasting Co. -- apparently a subsidiary of Booth American.

 

   In addition, other sources list total interests of the Detroit Bank & Trust as 5.2 percent of Booth Newspapers (0.8 percent sole voting rights and 4.4 percent partial voting rights) and 16.1 percent of the Evening News Association (5.8 percent sole voting rights and 10.3 percent without voting rights), and the National Bank of Detroit as holding 9.6 percent of Booth Newspapers (3.8 percent in sole voting rights and 5.6 percent [sic] without voting rights). See staff of Domestic Finance Subcommittee of the House Committee on Banking and Currency, "Commercial Banks and Their Trust Activities: Emerging Influence on the American Economy" 505, 507 (1968).

 

   Roughly 10 years ago, in a comparative hearing, the Commission found John L. Booth's relationship to Booth Newspapers to be only "of slight significance" in evaluating the criterion of diversification of mass media. n13 We do not consider ourselves bound by this finding now, some 10 years later, in considering the wisdom of a hearing. Moreover, we must note that the Commission had earlier concluded, in 1949, that Booth "receives his principal income from dividends upon his 17,212 shares of stock in Booth Newspapers, Inc., which has a total of 500,000 outstanding stock shares." n14 Booth was not at that time a director of Booth Newspapers He is now. And his 8-percent interest would today represent about 40,000 shares. n15 An examination of the 1958 Triad hearing record reveals that Booth's interest in Booth Newspapers was an important issue in the case. And that record also showed that there had been personal antagonism between John L. Booth and the principal owners of Booth Newspapers. n16 Once again, however, we do not believe ourselves bound by evidence some 10 years out of date.

 

   n13 Triad Television Corp., 16 P. 3 F. Radio Reg. 501, 671 (1958).

 

   n14 Booth Radio Stations, Inc., 4 P. & F. Radio Reg. 616, 626 (1949).

 

   n15 In view of the fact that the Cranbrook Foundation's 70,354 shares produced dividends of $309, 524 in 1966, his 40,000-share interest would represent an annual income of about $175,000. Subcommittee chairman's report to Subcommittee No. 1, House Select ComTrusts: Their Impact on Our Economy" 287 (1968).

 

   n16 See the transcript of the testimony of John L. Booth at pp. 5567ff in the Triad case (docket No. 11169) (note 13 supra), esp. at 5998-99.

 

   There is another facet of this case that bothers us. Even if John L. Booth's 8 percent were deemed sufficiently small to remove concern regarding his relation to the newspaper (which we are not prepared to accept without a hearing), it is, as a matter of FCC regulation, sufficiently large (over 1 percent) to prohibit Booth Newspapers from owning broadcasting properties. n17 And yet, as we have seen, the same principals who control Booth Newspapers have a substantial -- and perhaps a controlling -- interest in the Evening News Association (Detroit Evening News) which is the licensee of very valuable radio and television properties in Detroit.

 

   n17 The rules cited in note 8 supra provide in part "no license for a * * * broadcast station shall be granted to any party * * * if such party, or any stockholder, officer, or director * * * has any interest in * * * any other * * * broadcast station * * * if the grant * * * would result in a concentration of control of * * * broadcasting in a manner inconsistent with public interest, convenience, or necessity." In the same rules the Commission declares as a per se violation of the public interest the ownership of more than seven AM and seven FM radio stations. Thus, under these rules Booth Newspapers and Booth American together could not own more than seven AM and seven FM radio stations so long as John L. Booth had substantial ownership interests in both companies.

 

   CONCLUSION

 

    [*142] We believe the geographical concentration of Booth American's radio stations and cable television systems in Michigan, and the relationship of John L. Booth to the principals of Booth Newspapers (and the Detroit News), raise grave questions of regional concentration of control over the mass media in Michigan.

 

   Michigan is one of our leading States in manufacturing and agriculture. It is the seventh largest State by population, and sends 21 Congressmen to Washington. Substantial media power in Michigan can be translated into significant political power in Washington.

 

   We do not believe this Commission should further exacerbate such power, by the grant of this Saginaw FM station, without a thorough hearing and careful inquiry into these issues.

 


 

APPENDIX:

 

 APPENDIX

 

 

Booth American

 

 

Radio

CATV

Booth newspapers

Toledo, Ohio

WTOD-AM

 

 

WKLR-FM

 

South Bend, Ind

WJVA-AM

 

 

WRBR-FM

 

Ann Arbor, Mich

 

 

Ann Arbor News (daily

 

 

 

circulation 34,382).

Bay City, Mich

 

 

Bay City Times (daily

Circulation 39,918).

 

 

 

 

Detroit, Mich

WJLB-AM

 

 

WMZK-FM

 

Flint, Mich

 

 

Flint Journal (daily

 

 

 

circulation 111,376).

Grand Rapids, Mich

 

 

Grand Rapids Press (daily

circulation 129,946).

 

 

 

Holland, Mich

 

Holland

 

Jackson, Mich

WIBM-AM

 

 

 

Summit Township, Leoni

Jackson Citizen Patriot

 

WBBC-FM

Township.

(daily circulation 39,603).

Kalamazoo, Mich

 

 

Kalamazoo Gazette (daily

 

 

 

circulation 57,224).

Muskegon, Mich

 

Muskegon, Muskegon

 

 

 

Town-

Muskegon Chronicle (daily

 

 

ship, Muskegon Heights,

circulation 49,699).

 

 

North Muskegon, Norton

 

 

 

Township, Roosevelt Park

 

Saginaw, Mich

WSGW-AM

Saginaw,

 

 

 

Saginaw Township,

Saginaw News (daily

circulation 59,374).

 

New FM

Carrollton Township,

 

 

Zilwaukee.

 

Ypsilanti, Mich

 

 

Ypsilanti

 

 

 

Press n1 (daily

 

 

 

circulation 12,851).

   n1 As noted in footnote 1, infra, the Ypsilanti Press has apparently been sold.

 


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