FEDERAL COMMUNICATIONS COMMISSION
14 F.C.C.2d 713; 14 Rad. Reg. 2d (P & F) 113
RELEASE-NUMBER: FCC 68-931
September 11, 1968
The Commission, By Commissioners Hyde, Chairman; Bartley, Lee, Cox, Wadsworth, and Johnson, with Commissioner Johnson dissenting and issuing statements, Commissioner Cox issuing a statement, and Chairman Hyde concurring and issuing a statement, issued the following letter to National Broadcasting Co.
[*713] NATIONAL BROADCASTING CO., 30
GENTLEMEN: This is with reference to a complaint by the Honorable Neal Smith regarding broadcasts by Chet Huntley over the NBC Radio Network on May 27 and June 10, 1968, and your response to the Commission's request for your comment thereon.
The Commission's inquiry into the subject of Congressman Smith's complaint has revealed the following facts:
On May 27, 1968, NBC broadcast a commentary by Huntley assailing the Wholesome
Meat Act of 1967 which extended Federal meat inspection to new areas of the
meat industry, including the boning and cutting operations of Edmund Mayer,
(2) On June 10, 1968, NBC broadcast another commentary by Huntley in which he again attacked meat inspection requirements and cited them as an injustice to farmers and ranchers, creating the impression that the new meat inspection law adversely affected cattle growers. Much earlier, on November 22, 1967, Huntley had broadcast still another commentary critical of proposals to extend Federal meat inspection requirements.
During the period of these broadcasts, Huntley owned a cattle ranch in
In addition, on February 22, 1968, Huntley commented favorably on the position
of cattle growers with respect to food-marketing methods and a civil suit
instituted by cattlemen and cattle associations against grocery chains
"alleging violation of anti-monopoly and anti-price-fixing laws." At
the time of the broadcast, he owned a ranch in
Further, the New York Times of March 20, 1964, reported that on the previous
day Huntley had broadcast an NBC radio commentary against importation of
Australian beef and that in an interview with Jack Gould of the Times later in
the day, Huntley had said that "upon reflection perhaps he should have
disclosed to his listeners that he now had a private business interest in one
phase of the beef industry." Huntley also was quoted as stating that he
was feeding 500 head of cattle on his farm at
In his complaint, Congressman Smith cited the above financial interests of Huntley and his relationship with principals of Edmund Mayer and stated in part:
Because most of those who heard the attack on the Wholesome Meat Act would not know that he has such a relationship, and the NBC affiliates which carried his program would probably not be aware of this situation either, I believe Huntley should have revealed to his listeners in the course of his strong and patently biased May 27 editorial that he has a corporate and personal relationship with persons in the meat industry who have been required to meet the Federal sanitation and operating standards.
Smith also asserted that the May 27 commentary contained gross misstatements of fact. He stated that Department of Agriculture records revealed that contrary to Huntley's statement, none of the meat inspectors hired in the New York City area were truck drivers, and added that if Huntley had knowledge of the bribery of meat inspectors indicated in his commentary it was his responsibility to report the facts to proper authorities.
In response to the Commission's request for its comment on these matters, NBC acknowledged the financial interests of Huntley in cattle growing and feeding set forth above and stated that his commentaries were reviewed and approved by an NBC news editor. NBC [*715] asserted however, that since Huntley had no financial interest in any enterprise which was subject to Federal meat inspection laws, it did not believe "that the public interest or principles of good journalism required a disclosure during the course of the programs of * * * Huntley's interests in these ventures." Neither NBC nor any accompanying statement by Huntley offered any answer to Smith's assertion that some of Huntley's statements on May 27 were lacking in factual basis, or Smith's comment that if Huntley had knowledge of acceptance of bribes by Federal meat inspectors it was his duty to report it to the proper authorities.
By letter dated July 17, Congressman Smith commented on NBC's response. He pointed out that although the network and Huntley had correctly asserted that cattle growing and feed lot ventures were not subject to the Wholesome Meat Act of 1967, "his comments in the June 10 NBC broadcast left the very strong impression that farmers and ranchers were adversely affected by the act." Smith stated that since NBC had not questioned the material submitted by Huntley, "one must therefore conclude that both Huntley and NBC must have agreed at that time that cattle-growing and feed-lot ventures were affected by the act," whereas NBC 's response to the Commission had now drawn a different conclusion.
2. CONFLICT-OF-INTEREST ISSUE
We have made clear in previous rulings that –
* * * a licensee has an obligation to exercise special diligence to prevent improper use of its radio facilities when it has employees in a position to influence program content who are also engaged in outside activities which may create a conflict between their private interests and their roles as employees of the station. * * *
(Crowell-Collier Broadcasting Corp., 14 FCC 2d , 8 Pike and Fischer, R.R. 2d, 1080. See also, Gross Telecasting, Inc., 14 FCC 2d 239, where we held that a licensee who editorialized on a matter in which it was financially interested (i.e., a controversy involving an airport concession which it owned and operated), had "* * * a responsibility to reveal to the broadcast audience the extent and nature of its private interest." These rulings do not establish any novel policy.
The licensee is responsible for the integrity of its news operations. To insure that integrity, the licensee must exercise reasonable diligence to determine whether or when one of its news employees is properly discharging his news functions in connection with a matter as to which he has a significant private interest which might reasonably be thought to have an effect on the discharge of that function. There are, of course, a variety of factual situations which might confront the licensee and a corresponding variety of actions which it might take. It might determine that the conflict is of a minimal or insignificant nature, or that it is so great as to call for the substitution of another, disinterested news employee to deal with this particular matter, or that while there could be said to be a significant conflict, broadcast journalism would be best served by permitting the employee to continue his duties while divulging the nature of the conflict to the audience, so that they are made aware of the fact that in this instance the commentator does [*716] have a significant private interest in the matter he is discussing. In short, here as in so many areas, the licensee is called upon to make reasonable, good faith judgments as to the nature of any conflict and the remedial action, if any, called for.
Similarly, we do not believe it appropriate for this agency to specify the particular route to be taken by a licensee in order to exercise reasonable diligence in this area. One method which might be used would be to require periodic statements of the interests of employees, with the obligation to keep them current. The licensee, particularly in small broadcast operations, might pursue other methods (e.g., making clear the principle against undisclosed conflicts of interest and requiring disclosure in any doubtful situation). Here again, the choice is one for reasonable, good faith judgment of the licensee. However, where a conflict matter is or clearly should be known to the licensee, it has a special duty to take appropriate steps to ascertain the full facts and to take whatever remedial action is called for Cf. Crowell-Collier Broadcasting Corp., supra.
With this as background, we turn to consideration of this aspect of the case. An NBC news editor, who has authority to question the material broadcast, reviews commentaries such as those presented by Huntley; this review procedure was followed in these instances. We also note initially that you set forth your general position in this area as follows:
With regard to the general principle raised by your inquiry, NBC News reporters have high personal and professional standards of journalistic competence and integrity, and * * * they would not "express opinions" in their broadcasts on controversial issues in which they had personal financial interests. Accordingly, NBC News has not found it necessary to publish a policy dealing with the precise situation described in your inquiry. It has, however, included in its overall policies a statement that "NBC newsmen must avoid situations or behavior which might detract from the integrity of the news they report" which broadly would include the situation assumed in your question.
This rather vague way of proceeding would appear inadequate as a general course in light of the history of this case. Viewing the specific factual situation, we find that NBC did not exercise reasonable diligence in light of information publicly available and information brought to its attention, in the following respects:
As early as March 11, 1964, NBC was made aware of Huntley's interest in a phase
of the beef industry (see item 5, p. 2, where the New York Times noted that on
March 11, Huntley invited the
A substantial conflict of interest appears also to have existed with respect to
Huntley's commentary of February 22, 1968; yet NBC again apparently broadcast
no disclosure of such interest. In the
broadcast Huntley commented favorably upon the filing of an antitrust suit by
cattlemen against grocery chains
[*717] and upon contentions of
beef growers that various departments of the Federal Government were more
concerned with maintaining low prices for consumers than with keeping cattle
growers and farmers prosperous. At the
time, Huntley was an officer, director, and stockholder in Group 21, and owned
We stress that NBC should have been aware of these facts. For, since NBC had reason to be aware of Huntley's interests in cattle growing and cattle feeding and knew of his effort to lend his name to a brand of beef to be sold by the Mayer firm, it had the responsibility to inquire into the nature of his outside business interests when Huntley submitted for its approval commentaries dealing with the cattle or meat business.
(iii) As to the May 27 and June 10, 1968, broadcasts, we agree that the conflict-of-interest principle need not generally be extended to professional, personal, or business relationships which involve no element of financial gain or loss. But this matter does not end with that statement, in light of the facts here. First, we note again that in view of NBC's awareness of financial interests of Huntley in the livestock business and of one abortive attempt to lend his name to a brand of beef, it had particular reason to ascertain his current financial interests in this area each time Huntley presented for its approval a commentary advocating a viewpoint on a controversial issue connected with the livestock and meat business. This was certainly so in the case of the May 27 and June 10 broadcasts, and indeed in the latter broadcast the commentary itself claimed that the meat inspection requirements were an injustice to farmers and ranchers, thus creating the impression that they adversely affected cattle growers. NBC, however, failed to look into the possible conflict situation, never therefore ascertained the facts set forth in (3), pages 1-2, above, and consequently never focused on what appropriate action, if any, was called for in these circumstances. (See p. 4, supra.) the above record over the period stretching from 1964 to the present shows a failure to exercise reasonable diligence or to fulfill public interest requirements in this important area. Our holding is of course limited to the facts of this case.
3. THE "FAIRNESS DOCTRINE"
Having broadcast presentations by Huntley of one side of controversial issues of public importance, NBC had the responsibility under the Fairness Doctrine to afford a reasonable opportunity for the presentation of conflicting viewpoints on such issues. (Sec. 315(a); In the Matter of Editorializing by Broadcast Licensees, 13 F.C.C. 1246.) In this respect, NBC stated that Huntley's commentaries are part of a total NBC network schedule of many hours per week; that "Normally, over a period of time, the audience has the opportunity to be informed as to the views on the other side"; that "news of the passage of the Wholesome Meat Act of 1967 and the reasons therefore were probably carried on NBC network programs at the time of the consideration of the legislation and prior to these broadcasts by Huntley"; [*718] that in the present case NBC granted the request of Congressman Smith to state his views and offered time to Miss Betty Furness for the same purpose, and that "We believe that we have covered this issue fairly (no issue has been raised that we have not) and will continue to cover news and views on this issue, based on our reasonable, good faith judgment in the particular circumstances."
NBC's conduct fell short of compliance with the requirements of the Fairness Doctrine. We note specifically that Huntley made a strong attack on the new Wholesome Meat Act, stating, inter alia, that "In New York, this reporter knows, truck drivers and other employees of the wholesale district are now quitting their jobs to become Federal inspectors and they talk openly of the 'fringe benefits.' The fringe benefits are moneys under the table in return for that misleading inspection stamp." Whether or not this constituted a personal attack (and there is a question as to the existence of an identified group) there is no question but that NBC was under an affirmative obligation to encourage the presentation of contrasting viewpoints; thus, it could not reasonably expect that the other side of the particular charge set forth above, concerning the alleged movement of truck drivers and others into inspection employment in order to receive bribes, would be covered in its routine news presentations concerning the passage of the act. NBC, however, took no steps to achieve compliance with the Doctrine. Fairness would appear to have been achieved in the end only because of the action of Congressman Smith "knocking on the licensee's door."
Finally, we believe that in the context of these special circumstances, NBC should address itself to the issue of distortion of news as to the statement by Huntley quoted in the preceding paragraph. (See Report on Editorializing by Broadcast Licensees, supra, at pp. 1254-1255.) We stress that we are not saying that any deliberate distortion occurred here, but only that NBC's comments are required so that the record may be complete.
Thus, you appear to have fallen short of your responsibilities with respect to the matters set forth with regard to disclosure of Huntley's interests in the matter on which he commented and with regard to the Fairness Doctrine. You are requested to submit a statement directed to these matters within 30 days and to discuss any revision in procedures which is contemplated.
Commissioner Johnson dissented and issued the attached statement; Chairman Hyde concurred and issued the attached statement; Commissioner Cox issued a separate statement attached; Commissioner Johnson issued a separate further statement attached.
BY DIRECTION OF THE COMMISSION, BEN F. WAPLE, Secretary.
CONCURBY: HYDE; COX; JOHNSON
CONCURRING STATEMENT OF CHAIRMAN HYDE
The majority opinion is lengthy, and the dissent even lengthier. Since I concur fully in the majority opinion, I shall comment only briefly on the dissent. I believe that comment is called for because the approach of the dissent, if adopted, would pose a very grave threat to a basic purpose of the first amendment and the Communications Act -- the promotion of robust, wide-open debate so as to contribute to the informed electorate so vital to the proper functioning of a democratic society.
First, it is necessary to set out the issue before us. It is whether NBC acted consistently with the public interest with respect to the Chet Huntley broadcasts in light of the conflict of interest situation as to Huntley. There are no facts before us raising the conflict of interest issue in the context of the "conglomerate RCA/NBC," as the dissent puts in. Indeed, there have been no such facts brought to our attention at any time during the long operation of the NBC stations. Nor is the conflict of interest issue as to a news commentary unique to a conglomerate; it can arise with NBC, as in this case, or a local station, as in the previous case, Gross Telecasting, Inc., 14 FCC 2d 239 (1968).
to the crucial issue, the dissent does not quarrel with the factual analysis,
but rather the majority's disposition of the matter. We pointed out where NBC had failed in its responsibilities,
requested a statement as to what corrective steps would be taken by NBC, and
set forth general guidance to all licensees through the issuance of a public
notice. n40 The dissent would set for hearing the pending renewal application of
n40 I would also note that we did not, as claimed by the dissent, "brush-off" Senator Hart's thoughtful letter. After commending the particular approach advocated by the Senator, we set out, in our general discussion, the public interest responsibilities of the licensee in this important area.
Commission, from its inception, has sought to encourage the presentation of
controversial issue programming. Thus,
it stated in the Editorializing Report, 13 F.C.C. 1246, 1299, that radio spectrum
has been allocated to broadcasting basically because of the contribution
broadcasting can make to an informed electorate by presenting fairly
discussions of issues of public importance.
See section 315(a) of the Communications Act of 1934, as amended. The
Supreme Court has stressed the "profound national commitment "under
the first amendment, to robust, wide-open debate. N.Y. Times Co. v. Sullivan, 376
[*740] Clearly, to promote such robust, wide-open debate, there must be tolerance for non-malicious error -- tolerance in the defamation field (see N.Y. Times Co. v. Sullivan, supra) and tolerance in fairness related areas in the broadcast field. In the Editorializing Report, we were at pains to stress that an honest mistake would not place a license in jeopardy (13 F.C.C. at pp. 1255-1256). To pick one other example out of a long list, in the Pacifica Foundation case (36 F.C.C. 147 (1964)), where we stated that the airwaves could not properly be relegated to the presentation of only the bland, the inoffensive, we determined not to set the licenses for renewal hearing, even though the licensee had not fully met certain representations as to licensee responsibility, because the errors were isolated in nature.
We have here a pioneer licensee, NBC, which has therefore a record of over three decades of operation and which has presented countless controversial issue programs in this long period. To my knowledge, this is the first time that the Commission has ever found this licensee to have acted incorrectly in the news or journalism field. For example, we have never before found a violation of the fairness doctrine as to this licensee. It has acted incorrectly as to these matters involving Huntley; its policies have been lax and should be tightened. But to say that because this is so -- that because of this single contravention in the news field, we intend to hold hearings on the pending renewal of license, is to lose all perspective. More important, such lack of tolerance for error carries one clear message to the broadcast industry: "Stay away from controversial issue programing; if you err in this field, the licensing agency will take action looking to your execution."
Leave aside any legal question raised by such an approach. It is very bad policy. Such a tight-fisted approach does not facilitate the presentation of controversial issue programming for which the Commission has allocated so much spectrum space; it does not promote the robust, wide-open debate upon which this Nation has staked its all; it does not serve "the public interest in the larger and more effective use of radio" (sec. 303(g) of the Communications Act). It is, in a word, stifling.
SEPARATE STATEMENT OF COMMISSIONER KENNETH A. COX
I share many of the concerns expressed in Commissioner Johnson's dissenting statement. In particular, I am deeply troubled by the trend toward greater and greater concentration of control of the broadcast media and by the corollary that more and more stations are coming under the control of corporations or individuals having many other economic interests which may exert subtle – and often indiscernible -- pressures upon the stations' presentation of the news and comment which are so vital to an informed public.
However, I also share Chairman Hyde's concern lest we act in such a way as to hamper broadcast journalism by establishing such severe penalties for error or misconduct that few licensees will be willing to engage in aggressive news coverage and commentary.
I think our action here is more effective than Commissioner Johnson recognizes. I believe that RCA/NBC will regard it as more than a meaningless reprimand, and will take reasonable steps to avoid the [*741] risk of further incidents of this kind. Similarly, I believe that all other licensees will be given strong incentive to investigate their own operations and to establish procedures to prevent undisclosed financial interests from tainting the news. We have recognized that Senator Hart's proposal that commentators file a periodic disclosure of financial interests would be one good way to deal with this problem. In view of the fact that this is only the second instance – at least during my time at the Commission -- of a failure to disclose that a licensee or one of its news personnel had an undisclosed interest in a matter commented upon, I think our action here is appropriate.
I enthusiastically join in the statements of Chairman Hyde and Commissioner Cox insofar as they urge that this Commission should constantly be on guard against actions of government -- especially this agency -- that might impede "robust, wide-open debate" or "aggressive news coverage and commentary." (My only regret is that the majority cannot muster as much concern about corporate impediments to independent journalism.) I wish to associate myself with their desire that neither their actions nor my dissenting opinion will have that effect. n41 My differences with their conclusions are detailed in my separate dissenting opinion. n42
n41 I am no more persuaded that complying
with elementary principles of avoiding conflict of interest will impede
broadcast journalism than by arguments that the fairness doctrine or equal time
requirements have this effect. All
civilized society requires some "rules of the game," and professional
journalists have long been willing to suffer the inhibitions of, for example,
insuring the accuracy of their stories and honoring release dates.
Conflict-of-interest standards are well known, and proudly enforced, throughout
the print and broadcasting journalism fraternity. (See almost any issue of the
n42 To the argument that self-serving abuses by the mass media are rare I would simply say, "let's look at the record" -- and those partial references to it cited in footnotes 5, 9, 10, 12, 29, 37, 38 of my Dissenting Opinion, as well as the textual discussion at p. 718. To the argument that NBC has been guilty of only this one minor incident, I would point to (1) the fact that Chet Huntley 's broadcast included five instances over 4 1/2 years not one -- including one after Congressman Smith's complaint; (2) the charges of RCA manipulation of NBC in the Philco case, Philco Corp. v. FCC, 293 F. 2d 864 (D.C. Cir. 1961); (3) the court's questioning of our renewal of NBC's licenses after denying renewal to a station owned by participants in NBC quiz scandals, Melody Music, Inc. v. FCC, 4 P. & F. Radio Reg. 2d 2029 (D.C. Cir. 1965); and (4) our recent ruling that NBC 's broadcast of the Hollywood Golden Globes Awards "substantially misled the public." ( National Broadcasting Co., 12 F.C.C. 2d 778, 780 (1968).)
DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON
"[We] who are responsible to the public in this filed [of broadcasting] must bear in mind that very often 'he who pays the fiddler calls the tune' * * * Broadcasting stations should not be simply house organs grinding out the tune of big business interests which own them -- and there is some evidence that this is a real danger today." -- Senator Warren G. Magnuson, Senate Report 2769 (1956).
[*719] The Commission today finds that RCA-owned NBC has permitted its facilities to be used in ways that serve the economic self interest of one of its most influential newsmen, Chet Huntley. This licensee behavior is a direct violation of the FCC ruling that –
[A] licensee has an obligation to exercise special diligence to prevent improper use of its radio facilities when it has employees in a position to influence program content who are also engaged in outside activities which may create a conflict between their private interests and their roles as employees of the station. * * * When complete insulation cannot be affected, a licensee should take extraordinary measures to insure that no program matter is presented as a result of such practices. n1
n1 Crowell-Collier Broadcasting Corp., 8 P. & F. Radio Reg. 2d 1080, 1081-82
The Commission's position in this case is, moreover, supported by statute. Sec. 317 provides:
"All matter broadcast by any radio station for which any money, service or other valuable consideration is directly or indirectly paid, or promised to or charged or accepted by, the station so broadcasting, from any person, shall, at the time the same is so broadcast, be announced as paid for or furnished, as the case may be, by such person. * * * The licensee of each radio station shall exercise reasonable diligence to obtain from its employees, and from other persons with whom it deals directly in connection with any program or program matter for broadcast, information to enable such licensee to make the announcement required by this section." (Communications Act of 1934, sec. 317(a)(1) and (c), 47 U.S.C. sec. 317 (1964).)
The case is, in my judgment, one of the most significant ever to come before this agency. It is important because of:
(1) The full implication of RCA/NBC top management. -- The principal question raised by this case is RCA/NBC's fitness to be a broadcast licensee given its management's apparent attitudes about the propriety of the use of broadcast stations in ways that serve economic self-interest -- whether of the corporation or its employees. Those attitudes are clearly expressed in RCA/NBC's replies to the FCC's inquiries regarding the Huntley incidents. n2 RCA/NBC's attitudes about self-serving uses of broadcast journalism may involve an employee's interest this time, and its own corporate interests next time -- the principles are the same.
n2 See letters from Howard Monderer, NBC, to William B. Ray, FCC, July 12, 1968 (attached as app. F), and Aug. 6, 1968.
My own impression is that economically self-serving indiscretions by newsmen are rare; most of my acquaintance have the highest professional standards, and would have sought to avoid incidents of this kind. That Huntley happened to be the employee personally involved in this case merely personalizes and dramatizes management's offense. His role is interesting, his case significant; but it is management's action, management's ratification, management's implication which is in issue here. Huntley may be a very popular, experienced and influential newsman. He is not, however, a licensee of this Commission. RCA is.
Generally, when the networks have been caught in a payola or quiz scandal, top management has been able to excuse itself by offering up a sacrificial "fall guy." Here that is not possible. The serious offense has been committed by RCA/NBC management -- not by Huntley. Management knew of his interests, had called him down on an earlier abuse, and cleared and approved his statements for broadcast (including [*720] those involved in this inquiry). n3 It has written its own indictment in its answers to the inquiries of this Commission.
n3 RCA/NBC advised the Commission:
"Huntley selected the topic and wrote the script for each of the programs involved. In accordance with the normal procedure for the two series, the scripts and audio recordings for the two programs were reviewed prior to broadcast by an NBC News editor. The editor has the authority to, and on occasion does, question material submitted by Huntley. Such questioning may lead to editing or rejection of material deemed unsuitable for broadcast. If there is a difference of opinion between Huntley and the editor as to the content of a program, the management of NBC News resolves the difference. The editor approved these two programs." (Letter from Howard Monderer, NBC, to William B. Ray, FCC, July 12, 1968, attached as app. F. And see n. 18, infra.)
Management's position, in short, is that nothing has happened which is illegal, or even violates "principles of good journalism;" that RCA/NBC has no rules governing conflict of interest, that none are needed, and that none will be forthcoming. n4 Nothing management can now do can erase this revealing display of its brazen indifference to, or ignorance of, one of the central principles of responsible broadcasting: the need to insure the unimpeachable integrity and independence of broadcast journalism. n5 Central to that integrity is the need to maintain the reality and the appearance of no "conflict between * * * [newsmen's] private interests and their roles as employees," to quote once again from Crowell-Collier. n6
n5 TV Guide recently editorialized on the subject in a most timely and articulate way:
"In this political year it is especially important that broadcasters avoid any indication of bias in news reports. * * * Television is the chief source of news information for a majority of Americans. It is therefore all the more vital that its credibility as an objective news source be maintained." (TV Guide, Aug. 3, 1968, p. 4.)
The coverage of the conventions and
elections are, of course, one of the most sensitive areas of potential news
management in a free society. Edward P.
Morgan has asked, "What if some wealthy scoundrel decided to back some
unprincipled demagogue for president and bankrolled an equivalent saturation
campaign on TV?"
And see Jack Gould's account of the broadcasting industry's efforts in 1968, if not to elect a President, at least to assure that none would run on a platform taking note of television's possible relation to violence. The New York Times, Sept. 2, 1968, p. 37.
n6 8 P. & F. Radio Reg. 2d 1081 (1966).
RCA/NBC management's attitude about these incidents (and, by necessary implication, about corporate conflict of interest as well) raise issues that are so serious, in my judgment, as to necessitate our setting for hearing, on our own motion, the next RCA/NBC station license renewal to come before us: KNBC, Los Angeles, which is now pending (filed September 1, 1968, for renewal December 1, 1968).
(2) The example it provides of abuse by conglomerate corporate licensees generally. -- One suspects that the opportunity afforded conglomerate corporate licensees to use their mass media as part of their advertising or public relations programs must be almost irresistible. But examples are hard to come by. Why?
(a) Broadcasting's product is the ephemeral cotton candy of entertainment and journalism. There are no published and publicly available [*721] written records of its output; even audio and video recordings are, for practical purposes, publicly inaccessible. So analysis and critique turn on the off-chance that someone who cares is listening, and fortuitously recording, at the precise moment when some abuse occurs -- and that he will subsequently make the effort to report and follow up on the matter.
What appears to be self-interest is often camouflaged by "news
judgment." How would one "prove" that RCA/NBC gives more
coverage to space shots and NASA news (or the Vietnam war) than it would if it
were not a major space and defense contractor?
(Defense business was 18 percent of RCA's total sales in 1967. n7)
How does one investigate any possible relationships between NBC's coverage of
foreign governments and RCA's corporate relations with those governments? (In
1967 alone, RCA established major new investments in
n7 RCA 1967 Ann. Rep., p. 4. I would not, of course, suggest any necessary relationship, and am not even personally acquainted with the facts, but Erwin Knoll reports for The Progressive (September 1968, p. 19) that: "High school students this year are being shown an Army film called "Those Who Lead: Follow the Leaders to ROTC," billed as "A Report by Chet Huntley." "There are two kinds of people, those who lead and those who follow," Huntley tells the kids, "Those who take ROTC are those who want to lead."
n8 1967 RCA Ann. Rep., p. 4.
n9 Letter from Howard Monderer, NBC, to William B. Ray, FCC, Aug. 6, 1968.
it is difficult to detect the presence of news serving economic interests, it is
virtually impossible to detect the omission of legitimate news items to serve
economic interests. For an example of a
thoroughgoing attempt worth an E for effort and an M.A. degree, see Dorthea
Smith, "A Comparison of Television News Broadcasts: BBC, CBC, CBS and NBC
(June 1968; University of Missouri Library,
a revealing example of the difficulty of evaluating such "reasonable, good faith judgments" involves a recent story prepared for Life magazine.
Life's business editor, Chris Welles, did an investigative piece on the oil industry's fear of competition and attempts to suppress the use of oil shale. Life's editor was quoted as saying about the article, in the course of making some minor editorial suggestions prior to publication, "In general, I think there's a good story here and some good reporting. * * *" The story was set in type, and scheduled for the Mar. 1, 1968, issue. It never appeared.
The author, Mr. Welles, is reported as saying, "I'm almost positive" it was killed because of oil company-advertiser pressure; and that "it was an open secret around Life's editorial offices that salesmen feared vigorous reaction from oil company advertisers." Life's managing editor, George P. Hunt, is reported as saying "oil shale obviously is a sensitive subject that could have an effect on advertising revenue. * * * 'But that had nothing to do with our pulling out the story.'"
After the story was pulled Mr. Welles was given a $2,000 raise and made entertainment editor. When he subsequently sold the oil shale story to Harper's he was fired. (Harper's editor Willie Morris, whose first experience with oil and gas industry pressure came as a crusanding editor of the University of Texas ' Daily Texan in the course of reporting and editorializing about the Harris Natural Gas Act, is reported as saying the article "is among the best ever written about oil shale.") Now, Life maintains, the story was killed because, as Mr. Hunt says, "It didn't turn out to be the definitive piece on oil shale that we wanted to do * * * [it] required a kind of sophistication that just does not come through." See the Wall Street Journal, July 30, 1968, p. 13, col. 2.
I relate this story not to support -- or contest -- the truth of the positions of the various participants in this particular oil shale controversy. I use the incident, rather, to illustrate the extreme difficulty confronting any conscientious and independent individual -- especially a government official -- in investigating and evaluating charges of news management. It is this difficulty which, in my judgment, argues in favor of discouraging conglomerate ownership of mass media in the first place, rather than permitting and then trying to police it.
[*722] (c) Finally, most of the
examples of abuse do not take a form that can be seen in the light of day. Outside phone calls encouraging stories, or
urging their suppression, are not recorded, or reported, and may not even be
acknowledged to one's fellow employees.
Memoranda encouraging corporate obedience are not made public -- with
rare, and revealing, exception. n10 And the most effective forms of communication to
employees are informal: the off-hand remark, who gets the promotions, which
items get used and which are killed.
Eventually, with sufficient inbreeding, similar social status, and
abundant income, n11 the individuals [*723]
in any organization can reach the point where virtually everyone really
does think very much alike; "What's good for Conglomerate, Inc., is good
n10 Variety recently reported the efforts
of the management at WCBS (CBS' flagship station in
"Gentlemen, this has got to stop once and for all. If I have to spell it out for you I will: CBS owns the New York Yankees. There are many people in this organization who are vitally interested in how the Yankees fare on the field. To find out they listen to WCBS radio. It's up to us to tell them and tell them quickly.
"Whenever the Yanks play ball one television set is to be on the game and one of the news desk radios is to be tuned in to WHN, which broadcasts the games. In case you don't know, channel 11 televises the games.
"It is the responsibility of every man in this shop, not just the desk assistants, to see that we move in this area. You cannot rest for an instant whenever a Yankee game is in progress. If that sounds melodramatic, then so be it. The simple facts of life are that all our jobs depend on the littlest of details, And this is by no means the littlest of our problems." (Variety, May 28, 1968, p. 25.)
One early instance of news management by
intra-corporate memoranda having had an effect on the conscience of the
Congress is reported in the second volume of Erik Barnouw's "History of
Broadcasting in the
"In the mid-1930's WLW, one of the
stations of the Crosley Radio Corp., was the only American station authorized
to operate at 500,000 watts. Calling itself
'The Nation's Station,' it covered the
"During his second week, memoranda flowing to his desk included one which read: 'No reference to strikes is to be made on any news bulletin broadcast over our stations.' A few days later came a similar memorandum: 'Our news broadcasts * * * will not include mention of any strikes. This also includes student strikes and school walkouts.' Another memorandum invited WLW personnel to make suggestions to management. Corwin, in no sense protesting, decided to make a suggestion. He pointed out that if, at some future time, newspaper headlines told of a spectacular strike, it would seem strange for WLW to ignore it. Would not listeners lose some of their confidence in WLW? Two days later the business manager, summoning Corwin, told him that the station had regretfully decided to abolish his job.
* * *
"When [Powel] Crosley appeared at an FCC hearing in 1936, [Commissioner George Henry] Payne questioned him about his directives barring news of strikes. Crosley denied any such directive. Unfortunately for Crosely, the FCC had photostats of them, provided by the American Civil Liberties Union -- which had had them in its files since receiving them from Norman Corwin.
"Some broadcasters apparently considered Payne's injection of such issues into the superpower hearings an outrage. Broadcasting called it 'the most brazen piece of political demagoguery we have ever seen perpetrated at a public hearing on radio * * * bureaucracy at its worst.' It had, said Broadcasting, 'not the remotest connection with the subject of allocations or superpower.' Not everyone agreed. In 1938 the U.S. Senate adopted a resolution offered by Senator Wheeler opposing any power over 50,000 watts. In 1939 WLW's experimental use of 500,000 watts was finally ended; the station went back to 50,000 watts." (Barnouw, "The Golden Web," 85, 95 (bound galley edition, published October 1968; copyright, Oxford University Press); and see n. 38, for text of internal ABC memorandum regarding "suggestion" for news coverage by ITT.)
n11 On July 10, 1968, Huntley wrote Congressman Smith regarding this case, saying, "In my profession this is known as a 'flap."' He went on to characterize his investments:
"I must point out to you that my total investment in the livestock industry amounts to 21 head of pedigreed beef stock with a total value, I should judge, not over $20,000; and 1,500 shares of Group 21, Inc., for which I paid $10 a share. My interest in Group 21 amounts to about 2.3 percent of the stock. I have never received a dividend from it nor have I received even reimbursement for expenses borne in attending the several board meetings. Thus my total financial interest in the livestock industry amounts to about 2 percent of my net worth. The complete detail of my holdings is set forth in the enclosed affidavit which I have furnished NBC at its request." (Letter from Chet Huntley, NBC, to Congressman Neal Smith, July 10, 1968.)
Chet Huntley's characterization of a $35,000 investment as but "2 percent of my net worth" would place his current net worth at approximately $1.75 million.
For all of these reasons, therefore, a publicly acknowledged brazen flouting of rather elemental principles of conflicit of interest takes on a greater significance than it otherwise would as an individual case. n12 There is legitimate question as to whether democracy should needlessly take the risks of turning over the people's airwaves to conglomerate corporate licensees in any case. At the very least, this particular case study suggests a full Commission review of the practices of conglomerate corporate licensees generally, and the promulgation of general conflict of interest standards, may well be timely.
n12 An exhaustive list of intra-conglomerate pressures would, of course, be impossible. But two recent examples may prove particularly illustrative.
In late 1965, the Reader's Digest Association purchased the book publishing firm of Funk & Wagnalls. Funk & Wagnalls subsequently contracted to publish Samm Sinclair Baker's "The Permissible Lie" -- an expose of the advertising industry. Over 5,000 copies of the book had been printed, bound and readied for distribution to retail bookstores earlier this year when suddenly the Reader's Digest Association withdrew the book from the market. (It was eventually sold to, and distributed by, the World Publishing Co.) According to published reports of the incident, publication of the volume was cancelled by Reader's Digest Association because it was determined that attacks on advertising abuses (however good for the book business) would not serve the greater business interests of the Reader's Digest Association. See, e.g., "Advertising's Permissible Lie," Saturday Review, Aug. 10, 1968, p. 51; "Indigestion at the Digest," Time, June 14, 1968, p. 81.
An even more dramatic and ironic instance of conglomerate pressure on the media arose at this Commission, during the ABC-ITT merger hearing before the FCC examiner. A central issue in the case was whether ITT -- which was seeking to acquire ABC -- would be tempted to influence the media to serve ITT's own gargantuan economic interests. As the evidence was being submitted on this question, we were suddenly confronted with the startling testimony of three respected news reporters then covering the hearings: ITT representatives had been engaging in blatant pressure tactics designed to influence news reports of those very hearings. ABC-ITT Merger, 9 F.C.C. 2d 546, 593-597 (1967).
For enumeration of other examples and discussion, see ABC-ITT Merger, 7 F.C.C. 2d 245, 296-304 (1966). Advertiser pressure on program content is further evidence of the well developed -- indeed extreme -- sense of corporate consciousness of image, and unconsciousness of program integrity. Stories of advertisers' attempts (successfully) to influence the program content of television shows sponsored by them to better serve corporate purpose are legion -- and startling. It is difficult to understand (or believe) that these same corporation, once they own stations or networks, continue to exercise influence as advertisers upon the media owned by others, but make no effort whatsoever to affect the content of the media they own. See examples collected in Rucker, "The First Freedom," 105-107, 217-223 (1968), and Optowsky, "TV: The Big Picture," 69-80 (1962).
The facts of this case. -- The Huntley incidents involve a major piece of
legislation, The Wholesome Meat Act, and a complaint filed by a sponsoring
n13 Congressman Smith's letter of June 6, 1968, is attached in full as app. B. See also his statement, and copy of letter to NBC President Julian Goodman, at 114 Congressional Record H4818-20 (daily edition, June 11, 1968).
n14 See, e.g., his affidavit, attached as app. E.
(4) Finally, I regret to say, the case is significant for what it indicates about the FCC. -- Here is another example of the Commission's inclination to emit "sound and fury signifying nothing" so far as conglomerate corporate licensees' transgressions are concerned.
We find RCA/NBC guilty of having violated its legal responsibilities as a commercial broadcaster. We have concluded (1) that the licensee repeatedly allowed its facilities to be used for the propagation of views that would tend to serve the economic self-interest of one of its most influential newscasters; (2) that the licensee's permissiveness [*724] was both unreasonable and unsupportable, since it had full knowledge of the newscaster's economic interests; and (3) that the licensee's procedures designed to prevent such abuses by newscasters are inadequate and not in the public interest. For reasons discussed, I conclude these findings compel another: that there is no reason to believe RCA/NBC has any better understanding of its own conglomerate corporate conflict of interest requirements than it has of its employees' responsibilities.
The majority's discussion of this case demonstrates some considerable familiarity with the facts and their far-reaching implications. Unfortunately, that insight is not, in my judgment, matched by the majority's sanction: a "nasty letter." It is this chasm between my colleagues' factual insight and their inappropriate disposition of this most serious complaint that prompts my dissent.
Nothing is more important to a fully functioning democracy than a free flow of accurate and relevant information and diverse and independent opinion. There are many sources of the pollution that occasionally finds its way into democracy 's mainstream. It would be impossible, and inappropriate, for the FCC to attempt to deal with all of them. But there is one cause of tincture that is very much our business: the use of the mass media for the propagation of information and opinion selected (or omitted) not on the basis of its inherent truth, relevance or usefulness, but because of its impact upon the economic interests of the licensee.
This threat is always serious. But it is absolutely devastating in an era of growing conglomerate corporate control of the mass media. As the mass media become smaller and smaller enterprises within larger and larger conglomerate structures, we should not be surprised to find corporation decision makers decreasingly informed and concerned about the ethics and professionalism of journalism. n15 On the contrary, the more likely discovery is that the acquisitive, manipulative impulse to interrelate enterprises -- which leads conglomerates to amass holdings in the communications industry in the first place -- will be carried over into their operation to serve the larger interests of the parent company.
n15 RCA grossed over $3 billion in 1967, to make it number 15 on Fortune's list of the top 500 corporations. It now includes Hertz Rental Cars and Random House, the book publisher, among its many conglomerate interests. NBC News -- while substantial by almost any other standard ("the world's largest") – is almost lost in the shadow of such corporate enterprise (the annual report boasts NBC News' "yearly expenditures approaching $100 million"). RCA 1967 Ann. Rep., pp. 3, 17.
To the extent that the circumstances of this case demonstrate the ease and aplomb with which this self-service may be accomplished, I believe that we have a duty to record now, in unequivocal terms, a policy that any licensee that fails to insure the presentation of economically disinterested views will be called upon to justify why the retention of its broadcasting license is in the public interest.
THE CHET HUNTLEY INCIDENTS
Huntley has been an RCA/NBC network "personality" for 12 years.
Preceding this, he spent 18 years as a newscaster in
Throughout Huntley's various programs, the implication is clear that the selection and rejection of news items and opinions is a function of his own independent news judgment (and that of the NBC News organization) -- uninfluenced by his extraneous economic interests, or those of RCA, RCA subsidiaries, NBC, advertisers or other employees. It is this assumption, indeed, which is fundamental to Huntley's credibility and influence as a newscaster.
And it is this same assumption which is so sharply challenged by the complaint submitted by Congressman Neal Smith and this Commission's own investigation. Five specific instances of Chet Huntley commentaries on subjects related to his economic interests in cattle and meat businesses have now been identified:
March 19, 1964, Huntley vigorously criticized the importation of inexpensive
Australian beef, which, according to his comments as reported in the New York
Times, n16 has the effect of "depressing
the price of beef and bringing ruin to the pastures and feedlots" of this
nation. At the time of this broadcast,
Huntley was feeding approximately 500 head of cattle on his $150,000 farm in
n16 The New York Times, Mar. 20, 1964, p. 67, col. 1.
n17 In December 1965 Huntley was quoted as
saying he was feeding 900 head on the
n18 The network's reasoning turned principally on the fact that its contract with Huntley prohibited product endorsement without network consent, and that "meatpackers or distributors disagreeing with his views might be reluctant to advertise on the network" -- not that a conflict of interest was involved. Huntley was reported to have said that "at no time did NBC officials express a lack of confidence in his qualifications to discuss the beef industry impartially." (But RCA/NBC did then acknowledge, which is revealing, that it was undesirable for a newsman to be identified with "an issue in which it might appear that he had a vested interest.") The New York Times, Mar. 31, 1964, p. 71, col. 3.
November 22, 1967, Huntley broadcast a commentary critical of the pending
Wholesome Meat Act. In his brief
remarks he alleged that the bill would "inflict new costs and a little
more bureaucracy upon all the rest of us * * * public and meat industry
alike." n19 It was this same month that Huntley
n19 Chet Huntley "Emphasis" broadcast, NBC Radio Network, Nov. 22, 1967.
n20 See Huntley's deposition of July 24, 1968.
February 22, 1968, Huntley broadcast a commentary highly favorable to the
antitrust suit brought against grocery chain stores by cattlemen. He also commented favorably on the
contentions of some feed growers that various Federal agencies were
inordinately concerned with maintaining low consumer prices, while at the same
time ignoring the pressing need for maintaining farmers' and feed growers'
prosperity. n21 By this time Huntley, with his
n21 Chet Huntley "Emphasis" broadcast, NBC Radio Network, Feb. 22, 1968.
n22 Des Moines Sunday Register, Dec. 12, 1965, p. 1-F, and Huntley's deposition of July 10, 1968, attached as app. E.
On May 27, 1968, Huntley renewed his criticism of the Wholesome Meat Act, which, on April 1, 1968, had become applicable to the boning and cutting operations of Edmund Mayer, Inc. Huntley asserted in this broadcast, "meat wholesalers in New York and other cities are being thrown out of business because their buildings or equipment cannot meet the arbitrary standards demanded by Federal inspectors * * * [who] talk openly of the 'fringe benefits.' The fringe benefits are moneys under the table in return for that misleading
inspection stamp." n23
n23 Chet Huntley "Emphasis" broadcast, NBC Radio Network, May 27, 1968, attached as app. A. The "moneys under the table" charge has never been documented, justified, or retracted.
June 10, 1968 -- after Congressman Smith had filed his complaint of June 6 --
Huntley reiterated his criticism of the Wholesome Meat Act and implied that its
provisions were working a hardship on farmers and ranchers in the cattle
growing business. (He argued:
"Mrs. Consumer, your meat is now so clean you may choke on it.")
Huntley, during this same month -- and after the FCC's investigation had begun
-- consummated the sale of his
n24 Chet Huntley "Emphasis" broadcast, NBC Radio Network, June 10, 1968, attached as app. C., Huntley's deposition of July 24, 1968.
My colleagues and I have carefully reviewed Huntley's commentaries (two of which I have attached in full as appendixes) and the attendant circumstances of Huntley's cattle and meat interests from 1961 to the present.
We agree, I believe, that the evil lies in the appearance, the potential, for economically self-serving uses of a licensed facility. We do not, because we need not, find that Chet Huntley's motivation or intention was to use RCA's facilities to serve his own self-interest; nor that he was following the suggestions of his business associates in the cattle and meat business; nor that he did, in fact, personally profit from his broadcast comments. Indeed, we are told his affection for the cattle and meat business finds its origins in a ranching boyhood; n25 his present investments may be motivated as much by nostalgia as Mammon. All that is really beside the point. The "conflict of interest" arises because RCA/NBC permitted Huntley to, and he did in fact, comment about matters in which he had an economic interest.
n25 An associate in Group 21, Inc., Gerald Pearson, is quoted as saying about Huntley:
"He'll talk cattle 24 hours a day if you'll listen to him and he has some real sound ideas on cattle feeding.
"It isn't just a hobby with him. His heart and soul are in the cattle business and practically every spare minute of his time is spent on the farm." (Des Moines Sunday Register, Dec. 12, 1965, p. 1-F.) Huntley commented to Congressman Smith:
"What I do have an abiding interest
in is the livestock industry, having been brought up on a
are also in substantial agreement that some of Huntley's commentaries raise
conflict of interest questions. We
appear to differ, however, about the remaining broadcasts. In my view, it should not matter that some
of the commentaries written and announced by Huntley -- and approved by RCA/NBC
management -- were related to the meatpacking industry alone. Both
[*727] RCA and Huntley attempt
to distinguish between his interests in the cattle-feeding business and his
commentaries about the meatpacking business -- the latter being covered by the
Wholesome Meat Act of 1967. But
Huntley's own interlocking role in all aspects of these farm-to-market
industries belies this distinction. He sits
on the board of directors of Group 21, along with two directors of Edmund
Mayer, Inc., and who principals of the Spencer Packing concern. Group 21 buys cattle from ranchers and
fattens them for sale to Spencer Packing. Spencer Packing, in turn, butchers
the cattle and prepares the meat for resale to Edmund Mayer, Inc., a
n26 See nn. 13, 22, supra.
Even if one were to assume, arguendo, that these relationships were insufficient basis for finding a conflict of interest, Huntley's own broadcast remarks cast doubt on his belief, at the time of the commentaries, that the Wholesome Meat Act was entirely divorced from his own economic interests. Huntley now contends that "for the life of me, I cannot see how fluctuations of prices or costs in the wholesale and retail areas of the meat industry have any effect on the financial status of cattle feeders and cattle growers." n27 However, this position is markedly different from that which he took on the air on June 10, 1968. At that time, Huntley clearly suggested that Federal consumer-oriented legislation (including the Wholesome Meat Act) was taking advantage of the farmer and rancher. n28
n27 Letter from Chet Huntley, NBC, to Congressman Neal Smith, July 10, 1968.
n28 Huntley said:
"Betty Furness is hot stuff in
"Insofar as the farmer is concerned Betty Furness is bad news for she represents the consumer-directed, consumer-oriented, consumer-aware power of the Federal Government. That's where the votes are -- with the consumer. Forget the farmer. Who cares which way he votes? His numbers are shrinking and what can he do -- he's not going to go on strike. The poor old goat can be depended upon to continue producing the food and fiber and then disposing of it at give-away prices." (Chet Huntley "Emphasis" broadcast, NBC Radio Network, June 10, 1968.)
I do not believe that whatever distinctions may exist between the meatpacking industry and the cattle-feeding business are exculpatory for RCA/NBC. The licensee permitted one of its employees to blur that distinction when addressing the public in the subject of the Wholesome Meat Act. It cannot now come forward and support its position by the claim that, after all, what its employee said was not true.
In fact, of course, subtle shadings and legalistic arguments about the precise nature of Huntley's interests really miss the point -- whether advanced by RCA/NBC or by this Commission. For the reality is, as we all know, that lobbying efforts are often substantially supported by symbiotic relationships. For example, the highway program is supported by such diverse interests as the trucking, oil, and [*728] cement industries, among others. Subsidized ship operators have worked to support the lobbying efforts of American shipyards. The same principle applies to various facets of the agricultural and food industries.
Indeed, the shocking effort of RCA/NBC to urge such intricate needlework upon this Commission is itself further cause for alarm. Should RCA be free from the obligations to avoid corporate conflict of interest when it provides editorial and public relations support to one of its major suppliers or customers? n29 But for the licensee's rather extraordinary arguments in this case, one would have assumed the question answered itself.
n29 RCA's Hertz, for example, announced
plans in 1967 to purchase 100,000 1968 cars and trucks -- "the largest
vehicle order ever placed by any business organization." RCA 1967 Ann.
Rep., p. 18. Might this not provide
some incentive to soften NBC's treatment of another piece of consumer
legislation: auto safety? It has been alleged, for example, that RKO-General, a
multiple broadcast station owner and a subsidiary of General Tire, used General
Tire's purchasing power to force Aerojet to use Hertz rental cars because Hertz
advertised on RKO's broadcast stations.
If such leverage is motivated by such remote dependence upon Hertz are
we to assume it is impossible for Hertz' owner? See deposition of James B. Filson, taken Nov. 15, 1967 in
RCA/NBC's position is clear: "We do not believe we are required to ascertain the other business interests of all the persons with whom our news correspondents may have business relationships, and to make announcements on our programs that such third persons have such interests." (Letter from Howard Monderer, NBC, to William B. Ray, FCC, Aug. 6, 1968. Needless to say, the argument is not only generally inappropriate, it is specifically irrelevant in this case. The network had no need to go to such lengths; the facts regarding Huntley's cattle and meat interests and associates were (or ought to have been) well known to RCA/NBC management.)
Huntley has been over the years, and is now, engaged in business ventures with men who (through other business interests) are directly affected by the legislation he has attacked. He has been over the years, and is now, economically involved in businesses with a symbiotic relationship to those covered by the legislation involved. That RCA/NBC believes there is even any question about the impropriety of allowing Huntley access to tens of millions of Americans to further the economic interests of himself, his business associates and friends leaves me stupefied.
THE RCA IMPLICATIONS
The central question in this matter, however, is not Huntley's accuracy for detail, or his good judgment in commenting on matters in which he has an economic interest. These circumstances only pose for this Commission the larger question of what policies licensees must adopt to insure that news and commentary will reach the public untainted by the economic self-interest of the licensee and its employees.
The urgent necessity for some guidelines should now be evident. We are on the threshold -- if, indeed, we have not already passed it -- of being a nation whose major mass communications outlets are principally controlled by vast monolithic corporations with far-flung subsidiary enterprises, each of which makes its own demands on the mass media. The dangers presented by such a pattern of ownership are clear.
The likelihood that corporate baronies will be dismantled or delimited in the future seems slight -- whether by Congress, executive branch [*729] legislative proposals, Department of Justice action, or the FCC. Instead of increasing diversity of control in the mass media, we must gird for the prospect of increasing centralization in the hands of a few virtually omnipotent corporate powers. n30
n30 Johnson, "The Media Barons and the Public Interest," The Atlantic Monthly, June 1968, p. 43.
If this is to be the look of the future, it is all the more imperative that we reject -- immediately and unequivocally -- the thinking of RCA/NBC, as it has been exposed before us in this case. In answer to our initial letter of inquiry, asking for an explanation of RCA/ NBC's permissiveness toward Huntley's commentaries, RCA/NBC ruffled its peacock feathers proudly and sent back this somewhat piqued reply (the full text of which is appended to this opinion):
With regard to the general principle raised by your inquiry, NBC News reporters have high personal and professional standards of journalistic competence and integrity, and * * * they would not "express opinions" in their broadcasts on controversial issues in which they had personal financial interests. Accordingly, NBC News has not found it necessary to publish a policy dealing with the precise situation described in your inquiry. * * * n31
n31 Letter from Howard Monderer, NBC, to William B. Ray, FCC, July 12, 1968,
attached as app. F.
Surely RCA/NBC's television mascot does not view the problems of the world with its head beneath the sand. The corporation knows perfectly well that "the precise situation described" in our original letter of inquiry was not a vague hypothetical picked casually from thin air. It was a series of specific examples of highly questionable conduct by an employee of RCA/NBC. Whether or not these transgressions were made in good faith, although unwisely, is no longer the issue. What is now before us is a problem of RCA/NBC management's own making: a demonstrated indifference to (or ignorance of) the "principles of good journalism" which it claims to have followed, an unwillingness to admit its error, and an absolute refusal to take corrective measures to ensure that well-established Commission policy is hereafter followed scrupulously.
Serious question has now been raised, in my view, as to whether this Commission can confidently entrust to RCA the responsibility and trusteeship of a broadcasting license. This licensee has had knowledge of Huntley's outside business interests since at least 1964, when he staged for the benefit of the news media a "beef-tasting dinner" to promote "Chet Huntley Nature Fed Beef." Indeed, RCA/NBC was then instrumental in advising Huntley to discontinue his public promotion of this meat. n32 Huntley's commentaries must be cleared through management's representatives anyway, as a matter of corporate policy. n33 Thus, RCA/NBC had the means, as well as good reason, to continue its efforts to ensure that Huntley would not allow his admittedly great concern over the beef industry's travails to intrude on his objectivity. Beyond that, RCA should recognize that other employees are equally susceptible to impulses arising from their outside economic interests -- or the interests of RCA. Yet, from the evidence before us today, it would appear that RCA/NBC has continued to trust to the good judgment of its employees -- without bothering to [*730] clarify for them RCA's policies respecting personal and corporate conflicts of interest.
n32 See n. 18, supra.
n33 See n. 3, supra.
RCA/NBC's arguments about the Fairness Doctrine only lend further support to the impression that it may still not fully comprehend what this case is all about. It urges that its innocence is somehow beyond question by virtue of its offer of "equal time" to Congressman Smith to reply to Mr. Huntley. n34 Such an act, and argument, suggest either deliberate obfuscation of the issue or incredible naiveté. The problem is not that RCA/NBC refuses to present all sides of controversial issues of public importance -- when it is caught, and is requested to do so (although that may sometimes be an issue, and, as the majority finds, it did not comply with its affirmative obligation to seek out contrary views in this case). The problem is that RCA/NBC sees nothing wrong with dishonoring its sacred journalistic trust by permitting its facilities to be used in the name of "news and public affairs" in ways that promote the economic self-interests of its employees -- or, presumably, the corporation, its business associates, and friends.
n34 Letter from Howard Monderer, NBC, to William B. Ray, FCC, Aug. 6, 1968.
RCA/NBC's behavior constitutes an open, brazen disregard for Commission policies of the greatest sensitivity and seriousness. I have already quoted this Commission's ruling in Crowell-Collier Broadcasting Corp.: [A] licensee has an obligation to exercise special diligence to prevent improper use of its radio facilities when it has employees in a position to influence program content who are also engaged in outside activities which may create a conflict between their private interests and their roles as employees of the station. * * * When complete insulation cannot be affected, a licensee should take extraordinary measures to insure that no program matter is presented as a result of such practices. n35
n35 Crowell-Collier Broadcasting Corp., 8 P. & F. Radio Reg. 2d 1080, 1081-82 (1966).
It would be difficult to state this obvious, commonsense journalistic truth with greater clarity.
It is true that any one of a number of means might be adopted by licensees to insure compliance with this policy. Periodic employee statements might be called for by the licensee, showing all outside interests; publication of Commission rules and licensee procedures for public disclosure of outside interests might be effective; employees might merely be prohibited from participating in programming material related to their economic interests; they could be required to make a disclosure of their interests during the program; a licensee might even wish to establish rules prohibiting programming personnel from engaging in outside business activities (rules similar to those applicable to Government employees n36). That a particular solution may be unattractive to a given licensee is not responsive. The solutions to conflict of interest problems are varied, and necessarily depend in part upon [*731] circumstances. All that is called for is good faith, and a serious effort by a licensee to understand, and effectively meet, its responsibility. n36
n36 The Government-wide proscription provides fines and imprisonment for an employee who participates in any matter in which he has a financial interest. 18 U.S.C. sec. 208 (1964). The Communications Act provides:
"No member of the Commission or person in its employ shall be financially interested in the manufacture or sale of radio apparatus or of apparatus for wire or radio communication; in communication by wire or radio or in radio transmission of energy; in any company furnishing services or such apparatus to any company engaged in communication by wire or radio or to any company manufacturing or selling apparatus used for communication by wire or radio; or in any company owning stocks, bonds, or other securities of any such company. * * *" (47 U.S.C. 154(b) (1964). These provisions are codified in the FCC's rules at 47 CFR sec. 19.735-204 1968).)
But I am unconvinced that RCA/NBC has demonstrated to this Commission a capacity to comprehend the purpose of and need for such rules, a willingness to adopt appropriate procedures, or, once adopted, the character to give serious commitment to their enforcement. RCA/NBC's failure to exercise reasonable diligence in the regulation of its employees extends over a 4-year period. And, unlike the situation recently resolved in Gross Television, Inc., this licensee 's laxity has been repeated and uncontrived. n37
n37 Gross Telecasting, Inc., 14 F.C.C. 2d
239 (1968). Station WJIM-TV,
Consequently, I do not believe that a further letter of inquiry, as proposed by my colleagues, will serve either purpose for which it is intended. It is unlikely to be viewed by RCA as a punitive measure; and it is equally unlikely, in my estimation, to help protect the public from a continued pattern of such abuse in the future.
I believe that the circumstances of this case, combined with RCA/NBC's petulant and self-serving responses, warrant a thorough investigation into this corporate licensee's competence to continue as a commercial broadcaster. To require less, it seems to me, is to merely postpone the inevitable concussion which this Commission will have to suffer when it awakens to a communications industry firmly in the grasp of conglomerate corporations who feel no responsibility for taking the very minimal steps of establishing and publicizing corporate policies respecting conflicts of interest.
IMPLICATIONS FOR CONGLOMERATE LICENSEES GENERALLY
The repercussions of this case will be with us for a long time to come. Beyond the immediate problem of the RCA licenses, it has raised significant questions respecting the need for full review of industry practices respecting conflicts of interest -- especially for networks, multiple station owners, and conglomerate corporate licensees. Such licensees are always quick to provide this Commission with pious assurances that their journalistic responsibilities will never be abused to sub serve the more mundane objectives of economic gain alone. n38 Yet, as we [*732] have seen here, one individual can, without obvious design, use an entire radio network to serve his purposes. The ease with which it has been done, and the tranquility with which RCA views its doing, raises, for me, grave questions about other conglomerates' ability to resist the temptation of similarly molding the mass media to fit their own corporate purposes whenever necessary.
n38 In the ITT-ABC Merger case, for example, ITT assured us -- "* * * without reservations that the broadcasting operations of ABC will be kept separate from other ITT operations, and the operations of ABC will be performed unaffected by commercial, communications or other similar interests of ITT. * * * It is the greatest disservice that anyone can do in that company, to violate this relationship of complete integrity for the news." (ITT-ABC hearing transcript (docket No. 16828) pp. 168, 555.)
Subsequently the following ABC internal memorandum was brought to our attention:
"AMERICAN BROADCASTING CO.
"To: Simon B. Siegel
Date: July 20, 1966
"From: Elmer W. Lower
"Several weeks ago you relayed to me
a suggestion by Mr. Howard Van Zandt of the
"We looked into this in
"He will try to do two things:
"(1) Gather material, fact and film, for some spot Radio and Television broadcasts.
"(2) Determine whether there is enough material to make an hour Documentary for the 1966-67 season. If there is, it would have to be done later with a full camera crew.
"It looks promising. We will keep you posted." (ITT-ABC Merger, docket No. 16828, exhibit J323.)
Bryce W. Rucker has authored a recently published full-length book dealing with many of these issues under the title "The First Freedom." It is well documented, and very readable. In his concluding chapter he offers this disturbing paragraph of understatement:
Clearly, who owns the mass media is of vital concern to all of us. Those persons can and do determine what information and interpretations the American people receive. It is an unusual person who disseminates information detrimental to his economic interests. We have seen ample evidence, and we have only scratched the surface, that the interests of the media owners and those of the general public at times conflict. n39
n39 Rucker, "The First Freedom," 221-222 (1968).
Surely the public interest responsibilities of the FCC to scratch more than the surface exceed those of Rucker. And yet, in spite of the evidence before it, I am not even sure this Commission feels an itch.
There is no trust higher, no responsibility greater, than that imposed upon the owners of radio and television stations. It is they who provide the pure stream of information which makes possible intelligent self-government by an informed American citizenry. There are risks in permitting large corporations with far-flung economic interests to own radio and television stations. For stations may sometimes be used to spread propaganda (or withhold information and opinion) in order to serve selfish economic interests of the licensee, its management or employees. Rigged quiz shows and disk jockey payola are one thing. And they were thought to be a pretty big thing at one time. But when radio and television news and opinion can be corrupted by one of the oldest -- RCA/NBC -- and most respected -- Chet Huntley -- it is a devastating blow to the broadcasting industry and to our country. The FCC has found that RCA management, having been warned, has continued to permit Huntley to use his power and prestige with the American people to editorialize against the Wholesome Meat Act when he and his business associates had investments in companies affected by the act. If this could have happened how can we know that RCA/NBC coverage of the war, the elections, or the space program, may not be influenced by the company's economic interests in Government contracts -- or its coverage of foreign affairs tailored to serve its relations with foreign governments? I believe the charges before us, [*733] and the implications they bear, should be investigated more fully, and immediately, by this Commission. This case involves nothing less than broadcasting's relation to the foundation of our very system of government -- an honestly and independently informed electorate – and the responsibility for its consequences ultimately comes to rest upon those of us who now man this Commission.
With this discussion of the Chet Huntley commentaries about the meat business as background, I believe we should --
Hold hearings in which RCA/NBC should be directed to show cause why its
continued operation of FCC-licensed KNBC,
(2) Conduct a general inquiry into possible abuses, and current policies and procedures, of other conglomerate and multi-media licensees regarding conflict of interest to consider Commission rules or proposed legislation;
(3) Give thorough and favorable consideration to thoughtful suggestions from Senator Hart regarding public disclosure of commentators' financial interests (his letter is attached as app. D, but was given a polite brush-off by the Commission);
(4) Investigate and encourage means by which publicly available repositories might be established to receive transcripts of the networks' news and public affairs programs.
In view of my colleagues' unwillingness to consider any (let alone all) of these suggestions I must respectfully dissent.
APPENDIX A. HUNTLEY PERSPECTIVE, MAY 27, 1968
want to quote from a speech delivered recently by Dr. Oscar Sussman, doctor of
veterinary medicine at
That in a moment following this message.
is another quote from Dr. Sussman: "In recent weeks Betty Furness and
Ralph Nader, two self-styled protectors of the 'public weal' have led a
bandwagon of mob psychologists and public relations experts in clobbering one
of the major food industries of the
later, Dr. Sussman said, "The worst aspect of the situation caused by Mr.
Nader and Miss Furness is that the public has been lulled into a false sense of
where the deception lies.
Further, there was no need for the Federal program's of any untoward results from having eaten noninspected, locally inspected, or State inspected meats in this country.
meat wholesalers in
Here is one of their arbitrary rules: No sawdust on the floors for certain types of establishments. If a side of beef should fall off a hook the Federal inspectors demand that it fall on a greasy floor rather than into harmless sawdust.
This is what the Wholesome Meat Act has turned loose on the country, at a cost of millions of dollars.
APPENDIX B. SMITH LETTER, JUNE 6, 1968
MR. ROSEL H. HYDE,
Federal Communications Commission,
DEAR MR. HYDE: I am writing with regard to the policies relating to editorial comments. My questions are prompted by an editorial comment made by Chet Huntley on May 27, 1968, and broadcast by the NBC radio network. This editorial, a copy of which is enclosed, was carried on NBC's "Perspective on the News," and made certain allegations regarding the Wholesome Meat Act of 1967. My office has made some preliminary inquiries regarding this matter with the staff of the Commission's Complaints and Compliance Division, but some questions remain unanswered.
believe the editorial did not discuss the issue fairly and contained gross
misstatements of fact. Huntley stated
that "truck drivers and other employees of the wholesale district (in
Huntley's reference to "moneys under the table" is tantamount to an allegation of illegal activity on the part of the Federal inspectors, but he offers no facts to substantiate this serious charge. If some employer is paying his inspectors to permit the sale of unfit meat, it is in the public interest that this illegal activity be uncovered, and is a responsibility of any citizen knowing of it to report it. Since lay inspectors work under the supervision of a professional supervisor and several inspectors see the same animal during the inspection process, buying off inspectors would require cooperation and a conspiracy by several persons. If such a case is known, it is surely Huntley's responsibility to report it to proper authorities. While one such case was uncovered several years ago, it is obviously a situation that would seldom exist rather than being a common occurrence as one would assume by the editorial comment.
I have written to Julian B. Goodwin, president of NBC, requesting that I be given the opportunity to reply to Huntley's editorial. A copy of my letter to Goodwin is enclosed.
have established to my satisfaction that Huntley has a close corporate
relationship with Alfred and Ludwig Mayer, both of whom are associated with
Edmund Mayer, Inc.,
am also advised that Robert and Gerald Pearson, both of
Because most of those who heard the attack on the Wholesome Meat Act would not know that he has such a relationship, and the NBC affiliates which carried his program would probably not be aware of this situation either, I believe Huntley should have revealed to his listeners in the course of his strong and patently biased May 27 editorial that he has a corporate and personal relationship with persons in the meat industry who have been required to meet the Federal sanitation and operating standards.
This entire situation, together with information that the there has previously been some questions raised concerning other broadcasts, causes me to ask the following questions:
(1) What is the F.C.C. policy regarding such situations?
(2) What policy has NBC and other networks established with regard to editorializing by its commentators on public issues in which the commentator or persons influencing the nature of the editorial comment have a personal or an economic interest, or which involves the viewpoint of a firm or persons with whom they have a corporate relationship?
(3) Is there a code of ethics relating to substantiating assumptions used as facts, or using misstatements of fact, upon which conclusions in editorial comments are based?
(4) If there is such a code, how is it enforced, and if there is no such code, is one being developed?
I respectfully request that the Commission make an investigation of the situation referred to in the above letter and use it as one example in answering the above questions.
NEAL SMITH, Member of Congress.
APPENDIX C. HUNTLEY EMPHASIS COMMENT, JUNE 10, 1968
Furness is hot stuff in
Insofar as the farmer is concerned Betty Furness is bad news, for she represents the consumer-directed, consumer-oriented, consumer-aware power of the Federal Government. That's were the votes are -- with the consumer. Forget the farmer. Who cares which way he votes? His numbers are shrinking and what can he do -- he's not going to go on strike. The poor old goat can be depended upon to continue producing the food and fiber and then disposing of it at give-away prices.
Betty and all the Bettys of this country are continuing to enjoy the greatest bargain in food prices that the world has ever known, and the farmer is still being taken advantage of.
a sample of the way the injustice goes.
The Bettys recently got terribly excited about clean meat. Sure, let's face it, there is such a thing
as dirty meat, but any city or any community or any State with any kind of
sanitation laws could have eliminated the real culprits in the dirty meat
business and without putting another cost factor on the product. But oh no! All the Bettys in the
The fact is that 99 9/10 percent of all meat has always been clean but the Bettys had to have a cause and they went out after the one-tenth of 1 percent offender with a 10-ton tank, when all was needed was a fly swatter.
thanks to the Bettys of Washington and the city halls we now have Federal
inspection of hundreds of thousands of additional places where meat is handled
or stored. Thanks to the armies of Bettys
on Government payrolls we now have inspectors enforcing their nonsense and
insane rules. The book says a building
in which meat is hung must be sealed with this or that. Result?
There isn't a building in the city of
Thanks to the Bettys of Washington another cost has been added to meat and the grower doesn't get a penny of it.
Mrs. Consumer, you meat is now so clean you may choke on it.
APPENDIX D. HART LETTER, JULY 5, 1968
DEAR MR. CHAIRMAN: Recent reports of a conflict of interest by Chet Huntley raises a question that has concerned me for some years.
According to the reports, Huntley -- while holding considerable interests in the meat producing and packing industry -- has engaged in heavy editorializing against the Wholesome Meat Inspection Act of 1967 and its principal advocates.
The media has frequently and properly criticized Congress for neglecting to require periodic financial disclosure by its members.
This year a very limited disclosure system was voted but it could hardly be termed adequate. Since 1962, I have annually made public my outside interests and income but I must confess that few other members have demonstrated enthusiasm for the idea as a general practice.
Still, I cling to the notion that it is a good idea for Congress and I submit that it would be an equally good idea for media commentators.
In molding public opinion, it must be conceded that the media has an even greater influence than Congress. And certainly no one disputes its ability to influence events and force decisions.
It seems to me that one good way to protect broadcasters from embarrassing questions -- and the public from a wider credibility gap -- would be for the Federal Communications Commission to require media commentators to file an annual disclosure of financial interest.
This sort of public record information would certainly give the nation's audiences a better way of evaluating the angle from which a commentator leans into the news.
I would be very grateful if you can let me know your reaction to this proposal.
PHILIP A. HART, Chairman.
APPENDIX E. HUNTLEY DEPOSITION, JULY 10, 1968
CHET HUNTLEY, being duly sworn deposes and says:
1. I have no financial interest of any kind in the meat industry, whether it be packing, distribution, wholesale or retail.
2. I am listing in this affidavit the only financial interests which I have ever had in the livestock industry.
3. I am one of approximately 85 stockholders in
Group 21, Inc., a corporation which operates a feed lot in
4. Group 21, Inc., buys cattle, feeds and fattens them for market, and eventually sells the cattle to meatpackers, Group 21, Inc., also provides a custom feeding service for cattle growers in the area who prefer to make their own sales to packers. The operations of Group 21, Inc., are not subject to Federal meat inspection laws.
5. Congressman Smith in his letter to the
Federal Communications Commission dated June 6, 1968, mentions certain
individuals with whom I am said to have a close corporate relationship. The facts are that Alfred Mayer, Ludwig
Mayer, Gerald L. Pearson, and Robert H. Pearson are stockholders and directors
of Group 21, Inc. Alfred Mayer is its
president. The Mayers are principals in
Edmund Mayer, Inc., a
6. From 1961 to 1967 I owned a farm and feed
7. In November 1967, I bought a cattle ranch in
8. Except for my 2.3-percent interest in Group 21, Inc., my only remaining financial interest in the cattle industry is the ownership of 21 head of pedigreed livestock worth about $20,000. These two investments in the livestock industry represent about 2 percent of my net worth.
APPENDIX F. MONDERER LETTER, JULY 12, 1968
BROADCASTING CO., INC.,
DEAR MR. RAY: This is in response to your letter of June 11, 1968, requesting NBC's comments on two broadcasts by Chet Huntley discussing the Wholesome Meat Act of 1967. The programs, "Chet Huntley: Perspective on the News" of May 27, 1968, and "Emphasis" of June 10, 1968, were carried over the facilities of the NBC radio network.
In accordance with its policy of providing for the expression of different view-points on issues of public importance, NBC offered Congressman Neal Smith and Miss Betty Furness, Special Assistant to the President for Consumer Affairs, leading proponents of the Wholesome Meat Act of 1967, an opportunity to present views contrary to those expressed by Huntley. Miss Furness declined the opportunity. Congressman Smith accepted, and his reply was carried on the NBC radio network on June 17, 1968, during the "Chet Huntley: Perspective on the News" time period.
Your letter requests a statement on three specific points. The first point is:
"(1) Whether Huntley wrote either commentary or was influential in choosing the subject matter and treatment."
Huntley selected the topic and wrote the script for each of the programs involved. In accordance with the normal procedure for the two series, the scripts and audio recordings for the two programs were reviewed prior to broadcast by an NBC News editor. The editor has the authority to, and on occasion does, question material submitted by Huntley. Such questioning may lead to editing or rejection of material deemed unsuitable for broadcast. If there is a difference of opinion between Huntley and the editor as to the content of a program, the management of NBC News resolves the difference. The editor approved these two programs.
The second point on which you request a statement is:
"(2) Whether Huntley has the business and personal relationships reported by Congressman Smith."
has supplied us with the enclosed affidavit outlining his association with the
cattle growing industry. There is also
enclosed a copy of a letter which Huntley has written Congressman Smith concerning
some of the statements in the Congressman's letter to the Commission. From these enclosures it appears that
Huntley has no financial interest in the wholesale or retail meat industry or
in any enterprise which is subject to the Federal meat inspection laws. He does own 21 head of pedigreed cattle and
1,500 shares of Group 21, Inc., which operates a feed lot in
In our judgment, the nature of Huntley's interests in cattle growing and feed lot ventures -- which are not subject to the Wholesome Meat Act of 1967 – did not disqualify him from commenting on that act. For the same reason, we do not believe that the public interest or principles of good journalism required a disclosure during the course of the two programs of Huntley's interests in these ventures.
The third point on which you request a statement is:
"(3) Whether it is your policy to permit commentators to express opinions on controversial issues in which they have financial interests without revealing such interests at the time of the broadcast."
As stated above, we do not believe that the instances referred to were ones where on NBC newsman expressed opinions on controversial issues in which he had a financial interest. With regard to the general principle raised by your inquiry, NBC News reporters have high personal and professional standards of journalistic competence and integrity, and on the basis of their own standards, they would not "express opinions" in their broadcasts on controversial issues in which they had personal financial interests. Accordingly, NBC News has not found it necessary to publish a policy dealing with the precise situation described in your inquiry. It has, however, included in its overall policies a general statement that: "NBC newsmen must avoid situations or behavior which might detract from the integrity of the news they report," which broadly would include the situation assumed in your question.
For reasons outlined above, we do not believe that policy was violated by Huntley's broadcasts, and the Commission's letter to Crowell-Collier, to which you refer in your letter to us, is therefore inapposite.
We have examined the scripts of all of Huntley's radio and television newscasts since January 1, 1968. We were able to find only one other program which dealt in any way with the meat industry, an "Emphasis" broadcast on the NBC radio network of February 22, 1968. A copy of the script for that program, which does not refer to the Wholesome Meat Act of 1967, is enclosed.
We estimate that Huntley has appeared on approximately 375 news and commentary programs on the NBC radio and television networks since January 1, 1968. It seems to us that Huntley's attention to the problems of the meat industry could hardly be described as unusual on this record. There were no references at all to the subject in his 115 television appearances and only three commentaries on radio out of a total of 260 programs.
Very truly yours,