In the Matter of WHDH, INC.,
Docket No. 8739 File No. BPCT-248; Docket No. 11070 File No. BPCT-1657;
Docket No. 15204 File No. BRCT-530; Docket No. 15205 File No. BPCT-3164;
Docket No. 15206 File No. BPCT-3170; Docket No. 15207 File No. BPCT-3171
FEDERAL COMMUNICATIONS COMMISSION
16 F.C.C.2d 1 (1969); 15 Rad. Reg. 2d (P & F) 411
RELEASE-NUMBER: FCC 69-82
January 22, 1969 Adopted
COMMISSIONER BARTLEY FOR THE COMMISSION: CHAIRMAN HYDE ABSTAINING FROM VOTING AND ISSUING A STATEMENT; COMMISSIONER ROBERT E. LEE DISSENTING AND ISSUING A STATEMENT; COMMISSIONER COX NOT PARTICIPATING; COMMISSIONER JOHNSON CONCURRING AND ISSUING A STATEMENT; COMMISSIONER H. REX LEE ABSENT.
1. The history of this proceeding may be found
in the initial decision of Hearing Examiner Herbert Sharfman (FCC 66D-47,
released August 15, 1966), and will not,
therefore, be set forth here. However,
it will be helpful to an understanding of the manner in which this proceeding
has reached its present posture if certain background facts are mentioned
briefly. In September of 1962, the
Commission released a decision n1 in which it affirmed its earlier decision of 1957 (22 FCC 767, 13 R.R.
reinstated the grant of the application of WHDH, Inc. (WHDH) for authority to
construct and operate a new television broadcast station on channel 5, Boston,
Mass., and denied the competing applications of Greater Boston Television Corp.
and Massachusetts Bay Telecasters, Inc.
In addition, the Commission granted the applications (BLCT-761 and
BLCT-762) of WHDH for licenses to cover construction permit, and issued such
licenses for a period of 4 months only.
Both WHDH and Greater Boston appealed from that decision. When WHDH filed its application for renewal
of license, new and competing applications for the channel 5 facility were
filed by Charles River Civic Television, Inc. (
n1 33 FCC 449, 24 R.R. 255.
n2 Appeals were taken from the Commission's 1957 and 1962 decisions to the United States Court of Appeals for the District of Columbia Circuit. Those appeals are pending before the court, and the court has retained jurisdiction of the cases.
n3 As of the time of designation for hearing, 65 percent of the stockholders of Greater Boston II held 73.68 percent of the stock of Greater Boston Television Corp., or Greater Boston I. Although the Commission was aware that the composition of Greater Boston I and Greater Boston II was substantially the same, and normally Greater Boston II would be dismissed for this reason, the Commission determined that it would be inequitable to require dismissal of that application since the extended term of WHDH's operation under temporary authority deprived Greater Boston II of the opportunity to file a competing application against an ordinary renewal.
2. After the appeals from the September 1962 decision had been argued but before the court had announced its decision, Mr. Choate of WHDH died. Consequently, the U.S. Court of Appeals for the District of Columbia Circuit, on April 16, 1964, remanded the proceeding to afford the Commission the opportunity to consider whether and to what extent the changed conditions arising from Choate's death affect the awards to WHDH. n4 The Court indicated that Choate's death might also be pertinent to the proceeding already designated for hearing on comparative issues, that the evidence as to the merits and demerits of WHDH, absent Choate, might be material to both proceedings, and that the Commission could appropriately adopt a procedure which would permit the taking of this evidence only once. Thereupon, the Commission by memorandum opinion and order (FCC 64-404) released May 8, 1964, reopened the record in dockets Nos. 8739 and 11070 (concerning the WHDH and Greater Boston I initial applications), and remanded the proceeding for hearing and initial decision on the following issues:
n4 Greater Boston Television Corp. v. Federal Communications Commission, 344 F. 2d 552, 2 R.R. 2d 2040. The court retained jurisdiction of the cases.
(1) To determine the changes made by WHDH, Inc. as a result of the death of Robert B. Choate; and
(2) To determine, in light of the evidence adduced pursuant to the above issue and the absence of Mr. Choate, whether the Commission's decision of September 25, 1962, in dockets Nos. 8739 and 11070 should be modified, and, if so, in what respects such decision should be modified. n5
n5 The following possibilities were contemplated by the Commission: whether the grant to WHDH should be reaffirmed, whether a grant should be made to Greater Boston Television Corp. (Greater Boston I), or whether there should be no grant in dockets Nos. 8739 and 11070 in the circumstances.
The Commission contemplated that the hearing examiner would determine the above issues first in his initial decision, and then treat the issues in dockets Nos. 15204-15207 in the same document. The Commission also consolidated the reopened proceedings in dockets Nos. 8739 and 11070 with the proceedings in dockets Nos. 15204-15207 for the limited purpose of taking evidence as to the effect of Choate's death on the WHDH applications in these proceedings. It was further provided that all applicants in dockets Nos. 15204-15207 would be permitted to address themselves to the question of the extent to which the operating record and experience of WHDH on channel 5 should be considered and the weight to be accorded, in the event that its application in docket No. 15204 is determined to be one for renewal of license or is treated as one for initial license.
3. The issues in this proceeding, either as included by the Commission or as added by the Review Board, are as follows:
To determine the changes made by WHDH, Inc. as a result of the death of Robert B. Choate.
To determine, in light of the evidence adduced pursuant to the above issue and the absence of Mr. Choate, whether the Commission's decision of September 25, 1962 in docket Nos. 8739 and 11070 should be modified, and if so, in what respects such decision should be modified.
To determine what efforts have been made by Greater Boston TV Co., Inc. to ascertain the programming needs and interests of the area its application proposes to serve and the manner in which it proposes to meet such needs and interests.
To determine whether Greater Boston TV Co., Inc. has reasonable assurance of being able to secure its proposed antenna site.
To determine, with respect to the stockholders, directors, and officers of WHDH, Inc.'s parent corporation, the Boston Herald-Traveler Corp., the information required by section II of FCC form 301, and, in light of the evidence adduced, to determine whether WHDH, Inc. is legally qualified.
To determine whether a grant of the application of WHDH, Inc. would be consistent with the provisions of section 73.636 of the Commission's rules.
To determine whether a grant of the application of Whdh/, Inc. would be consistent with the provisions of section 310(a)(5) of the Communications Act of 1934, as amended.
To determine whether the control of WHDH, Inc. and the Boston Herald-Traveler Corp. has been transferred without Commission authorization in violation of section 310(b) of the Communications Act.
To determine, in view of the facts developed under the foregoing issue, [transfer] whether WHDH, Inc. possesses the requisite character qualifications to be a Commission licensee.
To determine on a comparative basis which of the operations proposed in the above-captioned applications would best serve the public interest, convenience and necessity in light of the significant differences among the applicants as to:
(a) The background and experience of each, bearing on its ability to own and operate the proposed television broadcast station.
(b) The proposals of each with respect to the management and operation of the proposed television broadcast stations.
(c) The programming services proposed in each of the above-captioned applications.
To determine, in light of the evidence adduced pursuant to the foregoing issue, which of the applications should be granted.
4. Hearing Examiner Herbert Sharfman concluded, with respect to the issues added because of Choate's death, that no material changes have been made by WHDH as a result of Choate's death, and that reevaluation of the original record made by WHDH and Greater Boston would advance neither the interests of either applicant nor the overriding public interest in the ending of this lengthy proceeding. Accordingly, he concluded that modification of the Commission's decision of September 25, 1962, would not serve the public interest. Examiner Sharfman held further that the questions of comparative demerit, if any, to be assessed against WHDH because of Choate's ex parte contacts, and the effect of Choate's death, can be argued effectively and with greater overall expedition in the renewal proceeding. After having resolved favorably the noncomparative issues relating to WHDH, and unfavorably such issues relating to Greater Boston II, the examiner ultimately preferred WHDH's application on a comparative basis. Accordingly, he recommended that the application of WHDH, Inc. for renewal of license be granted, and that the competing applications be denied.
5. Oral argument on the exceptions to the initial decision was held before the Commission, en banc, on September 5, and 6, 1967. Each party was afforded the opportunity to address itself to the question of the applicability in this proceeding of the Commission's Policy Statement on Comparative Broadcast Hearings, 1 FCC 2d 393, 5 R.R. 2d 1901 (1965). The Commission's rulings on the exceptions to the initial decision are set forth in the appendix to this decision. We have reviewed the examiner's findings of fact in light of the exceptions, and we are of the view that they are substantially accurate and complete. Accordingly, they are adopted with the modifications noted herein and in the appendix. However, we view those findings as warranting substantially different conclusions and a different ultimate result. For the reasons set forth below, our judgment is that grant of the application of Boston Broadcasters, Inc. would best serve the public interest, convenience and necessity.
II. Petition for Leave To Amend and Request for Amendment Pursuant to Section 1.65 of the Commission's Rules n6
n6 Two petitions of BBI may be disposed of at this point: (a) on Feb. 6, 1967, BBI requested a 1-day extension of time within which to file its reply to exceptions. The request is unopposed, and it will be granted, and (b) on Nov. 6, 1966, BBI requested waiver of sec. 1.227(c) of the rules to permit the filing of briefs exceeding 50 pages in length. The request will be dismissed as moot inasmuch as no one of the parties filed briefs approaching this limitation.
6. Petition for leave to amend. On September 29, 1967, Charles River Civic
Television, Inc. (Charles River) requested permission to amend its application
to reflect the death, on September 6, 1967, of Mr. Ernest Henderson, a director
of Charles River and the holder of 2,000 shares of
7. Request for amendment pursuant to section 1.65 of the Commission's rules. On August 18, 1967, BBI filed a petition requesting that the Commission require WHDH to amend its application, pursuant to section 1.65 of the rules, to bring it up to date with respect to alleged personnel, programming, and ownership changes which, BBI alleges, are of decisional significance. As to personnel, BBI asserts that substantial changes have occurred in the staff personnel assigned to the television operation exclusively and in the executive personnel of the television station. Based upon schedules for a 2-week period in the TV magazine section of the Boston Sunday Herald, BBI states that programming changes of such magnitude as to require an amendment have occurred in the operation of WHDH-TV. Moreover, BBI contends that one Joseph Linsey has been characterized by Mr. Akerson as a "major stockholder" in Herald-Traveler, n7 and that WHDH should file an amendment to reflect this ownership change.
n7 BBI refers to an article in the Wall Street Journal of July 25, 1967, wherein Akerson is alleged to have made this statement.
8. WHDH and the Broadcast Bureau oppose BBI's request. In substance, WHDH denies the allegations made by BBI, stating that the majority of the television station's employees are still employed by the station, and some changes have occurred as a result of normal turnover in station operation. In particular, WHDH asserts that it is not true that Mr. McGrath, the executive vice-president and a director of WHDH, Inc., and who is also the general manager of the television station, no longer is connected with the station. With regard to programming, WHDH asserts that no changes of any substantial character have occurred in its programming. Concerning ownership changes, WHDH states that Mr. Linsey does not own directly or indirectly a reportable interest in Herald-Traveler stock, and that "there is no rule, regulation or policy of the Commission which would make his ownership of less than 1 percent of the stock of decisional significance in the instant proceeding."
9. We agree with WHDH and the Broadcast Bureau that the showing submitted by BBI does not warrant our entering an order that the WHDH application be updated pursuant to section 1.65 of the rules. We believe that if there were real substance to BBI's allegations, BBI would have asked that the record herein be reopened and that the proceeding be remanded for further hearing under an issue to determine whether WHDH, Inc., had failed to comply with the provisions of section 1.65 of the Commission's rules. To support that request, BBI necessarily would have been required to submit a far more substantial showing. See section 1.229 of the rules. Additionally, in light of the action which we take herein with respect to the WHDH application, no useful purpose would be served by granting the relief requested, even if it were otherwise appropriate to do so. BBI's request will, therefore, be denied.
Special Issues Relating to WHDH
10. No extended discussion is necessary with respect to the noncomparative issues which were addressed to WHDH. Those issues inquired into: the legal qualifications of WHDH; whether a grant of the WHDH application would be consistent with the provisions of section 73.636 of the Commission's rules (concerning multiple ownership); whether a grant of the WHDH application would be consistent with the provisions of section 310(a)(5) of the Communications Act (citizenship requirements); and whether control of WHDH, Inc. and the Boston Herald-Traveler Corp. has been transferred without Commission authorization in violation of section 310(b) of the Communications Act. Except for the aspect of the latter issue which relates to de facto control, we agree with the conclusions which the examiner reached on these issues. The question of de facto control will be treated subsequently in connection with the standard comparative issue.
11. The recent issuance of a report and order in docket No. 15627 n8 provides added support for the examiner's conclusion that WHDH is not disqualified under section 73.636 of the rules relating to multiple ownership. This question arose principally because Lill & Co., which acquired a reportable interest in Herald-Traveler stock, is the record holder for Television-Electronics Fund, Inc., of a reportable interest in five other Commission licensees, four of whom are multiple owners of VHF-TV stations with a combined total of 20 TV stations. n9 In addition to those reasons asserted by the examiner, we conclude that the report and order in docket No. 15627 is also dispositive of the multiple ownership issue inasmuch as the Commission's multiple ownership rules have been amended to increase from 1 percent to 3 percent the percentage of stock which investment entities may own in specified broadcast licensees.
n8 In the Matter of Amendment of Sections 73.35, 73.240 and 73.636 of the Commission's Rules Relating to Multiple Ownership of Standard, FM and Television Broadcast Stations, 13 FCC 2d 357, released June 17, 1968.
n9 As of July 20, 1965, Lill & Company held 7600 shares of Herald-Traveler stock, of which Television-Electronics Fund, Inc., is the beneficial owner. As nominee for that Fund, Lill & Company also holds the following stock: 115,000 shares (2.48 percent) of American Broadcasting Cos., Inc.; 35,000 shares (2.57 percent) of Capitol Cities Broadcasting Corp.; 2.42 percent of Storer Broadcasting Co.; 30,000 shares (1.158 percent) of Scripps-Howard Broadcasting Co.; and 95,000 shares (1.02 percent) of Zenith Radio Corp.
Issues Relating to Greater
12. Two disqualifying, noncomparative issues were directed to Greater Boston II which the examiner determined adversely to that applicant. Those issues related to: (a) the efforts made by Greater Boston II to ascertain the programming needs and interests of the area its application proposes to serve and the manner in which it proposes to meet such needs and interests; and (b) the question whether Greater Boston II has reasonable assurance of being able to secure its proposed antenna site. We agree with the examiner's adverse resolution of these issues (initial decision paragraphs 712-717). Accordingly, Greater Boston II is disqualified and is not entitled to comparative consideration with the other applicants. We also agree with the examiner's conclusion at paragraph 793 of his initial decision that even if comparative consideration were given to Greater Boston II's application, the showings thereunder are unimpressive.
III. The Status of WHDH Under the Standard Comparative Issue
13. Two questions are presented in connection with WHDH's status under the standard comparative issue: (a) are Mr. Choate's ex parte contacts, in light of his death, still to be treated as a factor in the comparative evaluation; and (b) is the Commission's policy statement on comparative broadcast hearings fully applicable to this proceeding?
Examiner concluded that because of Mr. Choate's death his ex parte contacts are
no longer a factor in the comparative evaluation. In reaching this conclusion, the examiner discussed the
contentions of Charles River and BBI to the effect that Choate's death did not
terminate the consequences of his ex parte contacts because WHDH
"ratified" his actions by reelecting him to office while WHDH was
under a cloud, and because individual directors of WHDH in testimony herein did
not voice disapproval of his conduct.
The examiner also considered and rejected Charles River's contention
that because Choate's conduct, the effect of which is impossible to assess, was
calculated to influence the Commission during the course of the first
comparative proceeding which resulted in a grant to WHDH, his conduct must be
held to pervade the grant itself and cannot be purged by either the subsequent
conduct of WHDH or by Choate's death.
The exceptions of
15. In responding at oral argument to the
question of the applicability herein of the Commission's policy statement on
comparative broadcast hearings, supra, each of the parties, with the exception of
Greater Boston and WHDH, stated that the policy statement is applicable. Greater
n10 In addition, we stated that, as in regular comparative hearings, evidence relating to programming proposals and to character will not be entertained in the contested renewal proceeding unless first specifically put in issue by the hearing order or on subsequent enlargement of the issues upon a threshold factual showing that a distinctive difference or deficiency exists and is worth exploring.
16. Contrary to the position of WHDH, we do not believe that applying the policy statement to this proceeding would require reopening the record so that the case may be retried on that basis. No element of surprise affecting the fairness of the hearing exists inasmuch as we did not adopt new criteria in the policy statement which would call for the introduction of new evidence; rather, we restricted the scope somewhat of existing factors and explained their importance more clearly. Thus, we shall apply the principles of the policy statement to this proceeding, and as we proceed with the comparative discussion we shall determine the weight to be accorded the various factors of difference between the renewal applicant, WHDH, and the competing applicants.
IV. Evaluation of Comparative Criteria
17. Our basic disagreement with the examiner's conclusions lies in the preferred status which he gave to WHDH "not because it is an applicant for renewal but because it has an operating record and its very existence as a functioning, manned station to advance against its opponents, whose promises, after all, are as yet just so much talk." Thus, the examiner decided that the traditional mode of comparing mutually exclusive applicants, "in the mechanical or point-by-point manner especially advocated by BBI", would have been a sterile exercise. In his judgment, the cardinal probative attribute -- for good or bad -- of WHDH was its operating record. The examiner's thinking is highlighted by the following quotation from his conclusions:
In the present case WHDH should have cashed in its chips and gone home before the game started if it were forced to depend on its conformity to the traditional standards for preference. Its integration is small. Only if its long identification with the community through newspaper and station operation were regarded as a near-substitute for local ownership because it has enabled the applicant to acquire a knowledge of the community, could it claw a foothold. Facing the cleverly designed organizations and preparatory campaigns of locallyowned, civically active opponents, each integrated to a different degree but more than it is, and proposing managerial direction by fairly experienced persons, WHDH's prognosis would be poor unless it could rely for a clincher on its operating record unabated by any substantial "character" or other defects.
With regard to WHDH's past broadcast record, Examiner Sharfman concluded ultimately that as a whole such record is favorable. The superiority of WHDH's claims to renewal against those of its competitiors for initial authorization, the examiner stated, rests on a basis of achievement, theirs on promises, often glittering, but of relatively uncertain and unestablished validity.
18. In our judgment, the examiner's approach to
this proceeding places an extraordinary and improper burden upon new applicants
who wish to demonstrate that their proposals, when considered on a comparative
basis, would better serve the public interest.
In fairness to the examiner, it should be pointed out that he followed
what he understood to be the Commission's policy in proceedings of this nature,
as expressed in Hearst Radio, Inc. (WBAL), 6 R.R. 994 (1951), and Wabash Valley
Broadcasting Corporation (WTHI-TV), 35 FCC 677, 1 R.R. 2d 573 (1963). Thus, in
"Hearst" the determining factor in the Commission's decision was
"the clear advantage of continuing the established and excellent service *
* * [of the existing station] when compared to the risks attendant on the
execution of the proposed programming of * * * [the new applicant] excellent
though the proposal may be." The Commission also gave serious
consideration to the high degree of probability of continuation of existing
desirable performance as against paper proposals which, on the basis of that
record, the Commission was not convinced could be fulfilled. "
19. With the experience gained from deciding
comparative proceedings in the years subsequent to both the "Hearst" and
A.Past Broadcast Record
20. As the policy statement states, past records are considered to determine whether the record shows: (i) unusual attention to the public's needs and interests, such as special sensitivity to an area's changing needs through flexibility of local programs designed to meet those needs, or (ii) either a failure to meet the public's needs and interests or a significant failure to carry out representations made to the Commission. In the latter connection, the Commission stated that the fact that such representations have been carried out does not lead to an affirmative preference for the applicant, since the Commission expects, as a matter of course, that a licensee will carry out representations made to the Commission.
21. Considering the record of WHDH-TV in this light, it is clear from the examiner's findings of fact that the only valid conclusion which can be reached is that the record is one within the bounds of average performance. In short, WHDH-TV's record does not demonstrate unusual attention to the public's needs or interests. This determination is also consistent with the examiner's conclusion that as a whole the record of WHDH-TV is favorable. Yet, we also agree with the examiner that the quality of this overall performance is lessened to some degree by WHDH's failure, on occasion, to provide for the discussion of certain controversial problems of local interest, and by its failure to editorialize.
22. Charles River and BBI assert in their exceptions that WHDH is to be charged with a failure to match performance with promise because many of the programs proposed by it when it first submitted a non-network proposal were not carried when it revised its entire program schedule so as to accommodate its affiliation with a network, shortly after the grant of its application for construction permit in 1957. As the examiner's findings indicate, few programs were retained from the original program proposal, and changes were made in these to reflect the network operation. However, we agree with the examiner's disposition of this matter. As he stated, when WHDH received its original award it did not receive a preference for either its program policies or its proposed program service. At the time of the original grant in 1957, the Commission knew of WHDH's possible network operation, and when HDH filed its application for license in late 1957, it advised the Commission that it was going to be a network affiliate and carry network programs. It filed no new program schedule with the license application, nor was it requested to do so. Thus, as the examiner held, the mere fact of departure from the particulars of its non-network schedule proposals, required as it was by the practicalities of network operation, cannot be held against WHDH. Indeed, this record does not present a clear opportunity to compare WHDH's promises with its performance inasmuch as the record does not contain a program proposal, based upon network affiliation, which can be compared with the renewal showings.
23. In view of the foregoing, the past broadcast record of WHDH will not enter into the comparative evaluation.
24. The past broadcast record compiled by Mr.
Jones of Charles River is available for consideration inasmuch as he has an ownership
interest in Charles River and is the majority stockholder (as well as the
president, treasurer, general manager and a director) of Charles River
Broadcasting Co. which is the licensee of stations WCRB-AM and FM in Waltham,
Mass. Although that licensee wholly owns the stock of another corporation which
is the licensee of an FM station (WCRQ-FM) in
25. Based upon his extensive findings in this
connection, the examiner concluded that "WCRB is preeminently a 'good
music' station -- and its record in its specialty is excellent -- with
considerable news and some other non-musical programs. It is and thinks of itself as a regional
station, but pays some attention to
26. In view of the foregoing, the past broadcast record of Mr. Jones will not enter into the comparative evaluation.
B. Diversification of the Media of Mass Communications
27. As noted in the policy statement,
diversification is a factor of first significance since it constitutes a
primary objective in the Commission's licensing scheme. The benefits derived from diversification
have been set forth in many cases decided by the courts and by the Commission,
and they need not be recited in detail here.
When compared with Charles River and BBI, WHDH manifestly ranks a poor third
because of its ownership of a powerful standard broadcast station, an FM
station, and a newspaper in the city of
n12 Recognizing that radio and
television broadcast stations play an important role in providing news and
opinion, it is important in a free society to prevent a concentration of
control of the sources of news and opinion.
See United States v. Storer Broadcasting Co., 351 U.S. 192;
Scripps-Howard Radio, Inc. v. Federal Communications Commission, 89 U.S. App.
D.C. 13, 189 F. 2d 677, cert. den. 342
28. The desirability of maximizing the diffusion
of control of the media of mass communications in
29. Although conceding that it has never editorialized, WHDH contends that this is a factor which minimizes any question of concentration of control flowing from the common ownership of newspaper and broadcast interests. We disagree with this contention. Licensees have an obligation to devote a reasonable amount of their broadcast time to the presentation of programs on controversial issues of public importance to their communities. Editorializing by Broadcast Licensees, 13 FCC 1246 (1949). If anything, the failure to editorialize demonstrates the wisdom of the Commission's policy in favor of a maximum diffusion of control of the media of mass communications.
30. The foregoing incidents reduce the favorable
consideration which might otherwise accrue to WHDH because of the number of
competing media in
31. As between Charles River and BBI, BBI merits a slight preference on the diversification factor, for, as the examiner concluded, BBI is virtually free of any media alliance and Charles River's media connection is"trivial by comparison locally and only tenuously suggested nationally." (See Intial Decision, paragraph 796.)
C. Integration of Ownership With Management
32. In securing the best practicable service,
full-time participation in station operation by owners is a factor of
substantial importance because it is inherently desirable that legal
responsibility and day-to-day performance be closely associated. Moreover, there is a likelihood of greater
sensitivity to an area's changing needs, and of programming designed to serve
these needs, to the extent that the station's proprietors actively participate
in the day-to-day operation of the station.
In this area of comparison, we agree with the examiner's conclusion that
33. As between
34. The critically important consideration here
is the degree to which those individuals having ownership interests in
35. Although all of Charles River's stock will be
held ultimately by the Charles River Civic Foundation, we agree with the
examiner's conclusion that
n13 We agree with the examiner's
conclusion that Mr. Saudek cannot count as a principal for integration
purposes, since he has no ownership interest even in the
36. While both
D. Proposed Program Service
37. The hearing herein was conducted under
procedures which permitted extensive showings with respect to proposed program
service as well as the means which were employed in formulating the proposals
to meet the area's needs and interests.
As the examiner's initial decision demonstrates,
n14 As the examiner stated, "Even WHDH, an operating station, paid deference to the importance of a formalized ascertainment of public tastes by offering evidence about its program committee * * *."
38. With regard to the respective program
proposals themselves, decisional significance is accorded only to material and
substantial differences between the applicants' proposed program plans. Substantial differences are considered to the
extent that they go beyond ordinary differences in judgment and show a superior
devotion to public service. Although an
unusual attention to local community matters for which there is a demonstrated
need may be urged, there is no assumption that an unusually high percentage of
time to be devoted to local or other particular types of programs is
necessarily to be preferred. Minor
differences in the proportions of time allocated to different types of programs
are not considered. This is so because
precisely formulated program plans may have to be changed not only in details
but in substance to take account of new conditions at the time a successful
applicant commences operation. Against
this background, it is clear, as the examiner's findings show, that
One aspect of BBI's program proposal in particular merits
discussion. BBI proposes to devote 36.3
of its 160.5 hours of weekly programming to local live programs. In contrast, WHDH's 1962 renewal application
composite week showing for local live programming is 22 percent, and
n15 While BBI proposed that 45.3 percent, or over 72 hours, of its weekly programming would be local live, 9 percent of that total would consist of taped repeats.
40. We do not believe that BBI is entitled to a preference for its proposed 24-hour operation for 5 days a week, Tuesday through Saturday, because adequate hours of operation are proposed by Charles River and WHDH.
41. There is one feature of Charles River's programming proposal which warrants the assessment of a slight demerit against that applicant.Charles River Civic Foundation will ultimately own all of the stock of the Charles River applicant. To retain the foundation's tax exemption as a charitable organization, no substantial part of its activities may, pursuant to the Internal Revenue Code, include carrying on propaganda or otherwise attempting to influence legislation. In addition, the code permits tax exemption only if the organization "does not participate in or intervene in (including the publishing or distributing of statements) any political campaign on behalf of any candidate for public office." The indenture of trust creating the foundation contains language of similar import. Thus, although the applicant Charles River itself would pay taxes, it appears that, as found be the examiner (id., par. 236), because of the ownership of all of its stock by the foundation, the Internal Revenue Service may take the position that the applicant would be bound by the provisions of the code relating to exempt organizations. Although Charles River proposes to editorialize, it is manifest that there are limitations on the amount of time that could be devoted to controversial questions which may be legislatively related, and that such limitations are not found in ordinary television station operations. To this extent, then, the proposed operation of Charles River suffers in comparison with that of BBI. The result is that a slight demerit is assessed against Charles River on this score.
42. In weighing the slight demerits which have been assessed against BBI and Charles River, we conclude that they are offsetting in nature, and that neither applicant is entitled to a preference over the other in the matter of proposed program service. In the overall weighing process, we conclude that no one of the applicants merits a preference over the others regarding proposed program service. Thus, WHDH's program service would be a continuation of service which has been determined to be one within the bounds of average performance only, and in essence the proposals of Charles River and BBI are no more than average in nature inasmuch as there are present in neither proposal substantial differences, going beyond ordinary differences in judgment, which show a superior devotion to public service.
E. Other Factors
43. A question to be resolved is whether an unauthorized transfer of de facto control occurred upon the election of a new president (Akerson) of Herald-Traveler. Based upon his extensive findings of fact, the examiner concluded that "[because] of the peculiar but not unique situation of the Herald-Traveler in which management (the president) is in actual control, the election of a new president in fact created a new locus of control." In this regard, the examiner stated that the presidential dominance exercised by Winslow was continued by Choate and Akerson. The examiner held that it is unfair to hold WHDH accountable for failing to realize that the "transfusion of icon" from Winslow to Choate and from Choate to Akerson demanded prior Commission approval inasmuch as there is no Commission precedent requiring that prior approval should be obtained before a given individual is appointed or elected to be an officer of a licensee corporation. We disagree with the examiner's conclusions in this respect, and, for the reasons which are given hereafter, we hold that an unauthorized transfer of de facto control has occurred.
44. The following facts are illustrative of the actual control centered in Akerson (also Choate and Winslow, earlier). The Herald-Traveler Board of Directors is not a center of de facto or actual control; that board has never given any instructions as to the voting of WHDH stock or the election of directors; the board does not discuss station policies, practices, or programming; except for submitting capital outlays over $100,000 to the Herald-Traveler Board for its consideration, Choate was, and Akerson is, empowered to take any action thought necessary for the operation of the television station; when Choate was ill, Akerson performed his duties without further direction from the board; and when the board passed its resolution after Choate's death that there had not been, and would not be, any change in station policies, at least five members of the board did not know what policies they were leaving unchanged. Against this background, and in light of the Commission's desire to be put on notice regarding the acquisition of any de facto control, it is clear that a transfer of control application should have been filed by WHDH.
45. Although it may be generally true that in the ordinary situation a routine change in officers should be reported to the Commission within 30 days after the event, the fact of the change of the locus of actual control demonstrated here places the matter in an entirely different posture. Section 310(b) of the Communications Act of 1934, as amended, provides in substance that no station license shall be transferred, assigned, or disposed of in any manner, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby. Section 1.541 of the Commission's rules, which was promulgated pursuant to section 310(b) of the act, provides, in pertinent part, that within 30 days after the occurrence of a death or legal disability of one who is directly or indirectly in control of a corporation which is a licensee, an application on FCC Form 316 is to be filed requesting consent for involuntary transfer of control of that corporation to another person or entity. Thus, WHDH had an obligation to file such an application not because the licensee corporation had a change in officers but because the change in question involved a transfer of actual control, and of "the power to dominate the management of the corporate affairs" of the licensee corporation. Cf. Western Gateway Broadcasting Corporation, 6 R.R. 1325 (1951). That the nature of the control exercised by Akerson (and, preceding him, by Winslow and Choate), constitutes "control" for the purposes of section 310 of the act is beyond question; as early as the Powel Crosley, Jr. case n16 the Commission expressed its view that nothing in section 310(b) of the act restricts "control" to a majority of the stock or to any definite percentage of stock. The 1.541 of the Commission's rules, which was promulgated pursuant to Commission there stated: n17 3 R.R. 6 (1945). We believe that a realistic definition of this term [control] includes any act which vests in a new entity or individual the right to determine the manner or means of operating the licensee and determining the policy that the licensee will pursue.
This policy has been followed in a number of decisions since the Crosley case.
n17 See, e.g., ABC-Paramount Merger Case, 8 R.R. 541, Town and Country Radio, Inc., 15 R.R. 1035 (1960), and WWIZ, Inc., 2 R.R. 2d 169, aff'd sub nom. The Lorain Journal Company v. Federal Communication Commission, 351 F 2d 824, cert. denied, 383 U.S. 967.
46. In our judgment, therefore, WHDH was obligated to file an application for consent to involuntary transfer of control when Winslow and Choate died, and when Choate, in the first instance, and then Akerson succeeded to the office of president. However, because WHDH has never attempted to misrepresent to, or conceal from, the Commission the facts bearing on ownership and control, the circumstances presented here do not reflect so adversely on the character qualifications of the licensee as to warrant its absolute disqualification. The facts of the unauthorized transfers of control do, however, enter into the comparative evaluation, and in this regard WHDH receives a demerit.
47. Greater Boston II is disqualified and is not entitled to comparative consideration with the other applicants because of its failure to meet the two disqualifying issues which were directed against it. Even if comparative consideration were given to its application, its showings thereunder, as the examiner concluded, are unimpressive.
48. Both Charles River and BBI must be preferred to WHDH under the diversification and integration criteria. In addition, a demerit attaches to the WHDH applicant because of the unauthorized transfers of control which have occurred.
49. As between Charles River and BBI, BBI is entitled to a slight preference on the diversification factor, and to a significant preference on the integration factor. As noted earlier herein, WHDH's past broadcast record and the past broadcast record of Jones of Charles River do not enter into the comparative evaluation for the reasons given in the discussion of such records. We also concluded that no one of the applicants merits a preference over the others regarding the proposed program service.
50. Because of its superiority under the diversification and integration criteria, we conclude that the public interest, convenience, and necessity will be best served by a grant of the application of Boston Broadcasters, Inc., and by denial of the renewal application of WHDH, Inc. and denial of the applications of Charles River Civic Television, Inc. and Greater Boston TV Co., Inc.
51. Accordingly, It is ordered, That the unopposed request of Boston Broadcasters, Inc., filed February 6, 1967, for a 1-day extension of time within which to file its reply to exceptions Is granted.
52. It is further ordered, That the request of Boston Broadcasters, Inc., filed November 6, 1966# for waiver of section 1.277(c) of the rules to permit the filing of briefs exceeding 50 pages in length Is dismissed as moot.
53. It is further ordered, That the petition of Charles River Civic Television, Inc. for leave to amend its application, filed September 29, 1967, Is granted, and the amendment Is accepted.
54. It is further ordered, That the request for amendment pursuant to section 1.65 of the rules, filed by Boston Broadcasters, Inc. on August 18, 1967, Is denied.
55. It is further ordered, That the application of Boston Broadcasters, Inc. for a construction permit for a new television broadcast station to operate on channel 5 in Boston, Mass., Is granted; that the application of WHDH, Inc. for renewal of license of station WHDH-TV Is denied; and that the applications of Charles River Civic Television, Inc. and Greater Boston TV Co., Inc. for construction permits for a new television broadcast station to operate on channel 5 in Boston, Mass., Are denied.
56. It is further ordered, That no date will be specified at this time for termination of the operation of station WHDH-TV inasmuch as portions of these consolidated proceedings, as noted hereinabove, are yet to be determined by the United States Court of Appeals for the District of Columbia Circuit, and as to which the Court retained jurisdiction when it remanded the proceeding for further proceedings consistent with its opinion.
57. It is further ordered, That the General Counsel of the Federal Communications Commission Is directed to report these proceedings and this decision forthwith to the United States Court of Appeals for the District of Columbia Circuit.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
STATEMENT OF CHAIRMAN HYDE
I have abstained from voting in this case. This case has roots extending far back and has always been a difficult one, at least for me.
On the first round I voted against WHDH, Inc. (see 22 FCC 767, 13 R.R. 507). On the second round, in light of certain changed circumstances, I cast my vote for WHDH, Inc. (see 33 FCC 449, 24 R.R. 255). This is now the third round and it is no less difficult for me to choose among these competing applicants.
In view of my previous participation and finally the fact that my vote is not essential to resolution of the matter, I have simply abstained.
This case has a long and unfortunate history. We are essentially reconsidering matters that were first addressed by this Commission years before I came. Normally I would not participate in such a case. In this instance, however, my participation is necessary to constitute a working majority for decision. Accordingly, I concur in today's decision.
I feel no passion about the selection of the ultimate winner. As the opinion makes clear, a weighing of the merits of Charles River Civic Television, Inc., and Boston Broadcasters, Inc., is not overwhelming. And, as I have indicated elsewhere, I do not believe the comparative hearing process and especially useful device for disposing of matters of this significance. Farragut Television Corp., 8 FCC 2d 279, 285 (1967).
But this case is significant for other reasons. In America's 11 largest cities there is not a single network-affiliated VHF television station that is independently and locally owned. They are all owned by the networks, multiple station owners, or major local newspapers. The decision to not award channel 5 to the Herald-Traveler is supported by good and sufficient reasons beyond the desire to promote diversity of media ownership in Boston. And I take no present position on the merits of continued newspaper ownership of broadcasting properties in markets where there is competing media. But I do think it is healthy to have at least one station among these politically powerful 33 network-affiliated properties in the major markets that is truly locally owned, and managed independently of the other major local mass media. It is a step, however small, back toward the Commission's often professed but seldom evidenced belief in the benefits of local ownership and media diversity. It is, at the very least, an interesting experiment which will be watched carefully by many.
Nor is the significance of this case limited to the impact on media ownership in Boston. For the Commission also speaks generally of situations in which a new competitor is seeking the right to broadcast as against a present broadcast license holder. We suggest that the standards at renewal time ought to be the same standards that would prevail if all applicants were new applicants. In doing so the Commission removes an ambiguity in its comparative hearing standards and procedures. In the words of the order
We believe that this approach is sound, for otherwise new applicants competition with a renewal applicant would be placed at a disadvantage if the renewal applicant entered the contest with a built-in lead arising from the fact that it has a record as an operating station. More importantly, the public interest is better served when the foundations for determining the best practicable service, as between a renewal and new applicant, are more nearly equal at their outset. (par. 19)
Cases are overruled where licensees with substantial media concentrations were able to retain their license under a renewal comparative challenge. The door is thus opened for local citizens to challenge media giants in their local community at renewal time with some hope for success before the licensing agency where previously the only response had been a blind reaffirmation of the present license holder.
DISSENTING STATEMENT OF COMMISSIONER ROBERT E. LEE
I dissent to the grant of a construction permit to Boston Broadcasters, Inc., for channel 5 in Boston and vote to renew the application of WHDH, Inc., for this channel. This is a comparative proceeding between a renewal applicant and three new competing applicants. My major disagreement with the majority is the basis for comparing these four applications. This comparative evaluation is likewise the basic reason assigned by the majority for disagreeing with the Hearing Examiner's conclusion that WHDH, Inc., should be preferred.
The Commission's policy Statement on Comparative Broadcast Hearings, 1 FCC 2d 393, 5 R.R. 2d 1901, specifically holds that such policy is to apply to new applications and "not with the somewhat different problems raised where an applicant is contesting with a licensee seeking renewal of license." Chairman Hyde summed up the difficulties in applying this policy to renewals and competing applicants in his dissent to the Policy Statement as follows:
* * * The filing of a new application -- organized accordingly to formula -- to challenge a renewal applicant could lead to a facile but in many instances unfair and arbitrary decisional process. Is the Commission now ready to read out established broadcasters, not locally owned, but otherwise without blemish in favor of the locally-owned applicants? Is the Commission now ready to read out established broadcasters who are without blemish, except that they utilize competent personnel who do not have an ownership interest, in favor of applicants who propose to operate the facilities personally? Is the Commission ready to accept a new applicant formed to meet this preconceived mold in preference to an existing broadcaster who does not fit into such mold regardless of other circumstances?
I reluctantly concurred in the policy statement and stated then, and still believe, that the preferred applicant could be one with newspaper and CATV interests. For this reason, I specifically reserved my right as to the weight to be assigned to the various criteria in a given case. This is such a case. Subsequent decisions of the Commission n1 have further defined the policy with respect to renewals versus competing applications but only with respect to the admissibility of evidence pursuant to the policy but not the weight to be afforded such evidence. The majority here holds in effect that the weight to be afforded the comparative factors in a renewal application is the same as a new application. I believe that the weight to be given such evidence is substantially reduced in view of the renewal applicant's existing track record. To hold otherwise would permit a new applicant to submit a "blue sky" proposal tailor made to secure every comparative advantage while the existing licensee must reap the demerits of hand-to-hand combat in the business world, and the community it serves, in which it is virtually impossible to operate without error or complaint, if for no other reason than there are insufficient hours in the broadcast day with which to satisfy all the desires of the public. A real question is raised in my mind whether the new applicant in this situation is seeking to satisfy the needs of the community or the policy of the Commission.
One further comment is required on a renewal applicant which is unlike the case where all applicants are initially seeking an outlet. Vast expenditures for facilities and goodwill have been made which it would be inequitable to declare forfeited unless the licensee has operated against the public interest.
n1 Seven (7) League Productions, Inc., 1 FCC 2d 1597 (1965) and RKO General, Inc. (KHJ-TV), FCC 66-503.
As with the majority, I too accept the Hearing Examiner's findings of fact. In addition, with several minor exceptions, I also accept his conclusions.
The majority assigns comparative decisional significance to the diversification and integration criteria with some minor demerit to WHDH, Inc. for unauthorized transfer of control.
The record shows that all of the WHDH, Inc. stock is owned by the Boston Herald-Traveler Corp. The Herald-Traveler publishes two daily and one Sunday newspaper. Five other newspapers are published in Boston, including the Christian Science Monitor and none of the other newspapers have an ownership interest in an AM, FM or TV station. After the record was closed, the Boston Globe acquired a 50-percent interest n2 in the New Boston Television, Inc., channel 38, in which Kaiser Broadcasting Co. also has a 50-percent interest. WHDH-FM is one of 12 FM stations in Boston and the immediate vicinity. WHDH-AM is one of three 50-kw stations, and 8 other AM stations with power up to 5 kw, which includes 3 daytime-only stations, in Boston and vicinity. Boston has 3 commercial VHF-TV stations, including WHDH-TV, 2 UHF commercial stations n3 and a VHF educational station. The Herald-Traveler's average combined daily circulation was 23 percent of the market and the paper is ranked first in display linage. Herald-Traveler also has a 50-percent ownership of Entron, Inc., which concern manufactures CATV equipment and has substantial ownership in 5 systems all of which are completely removed from the Boston market.
n2 This 50-percent interest was further reduced to 20 percent on October 21, 1968 (File No. BTC-5702).
n3 The record reflects one UHF station. Official notice of our files shows 2 UHF stations -- WSBK-TV, ch. 38, Boston and WKBG-TV, ch. 56, Cambridge-Boston.
I support, in principle, the policy that an applicant's interest in other mass communications media must be considered in our comparative analysis. The comparative weight to be assigned such evidence drops sharply where a healthy competitive situation exists from a number of other nonaffiliated media in the same market. To hold otherwise would mean that certain categories of applicants (such as newspapers) would be automatically precluded.
WHDH, Inc. has a renewal of license application before us. This license was granted without condition (except for the 4-month period) and, of necessity, was found qualified under all applicable sections of our act and rules. It was further clear that, as a renewal applicant, WHDH, Inc. could continue to operate the station until this proceeding is terminated under the Administrative Procedure Act. This being the case, weight must also be given "to the clear advantage of continuing an established and excellent service of the existing station" Hearst Radio, Inc. (WBAL), 6 R.R. 994 (1951); Wabash Valley Broadcasting Corporation (WTHI-TV), 35 FCC 677, 1 R.R. 2d 573 (1963). The policy statement must be interpreted in the light of these holdings particularly when it is recognized that the policy statement sets forth procedures of a general nature which "cannot dispose of all problems or decide cases in advance."
A similar weighing process must also be applied to the preference the majority awards to BBI on integration. While on paper, BBI shows up better than WHDH, Inc. on integration, this must be weighed in the light of the record which shows that WHDH, Inc. has done an above-average job in the past. This, to me, is a more accurate gage of the future than the theory, which I recognize as valid for new applicants, that an owner-manager who spends full time at the station should provide better public service than the absentee owner or one who devotes only part time to the station.
The majority does find some blemish on the WHDH, Inc., record and other matters are referred to but not resolved. The majority opinion does refer to ex parte contacts but this issue is not resolved. This nevertheless leaves a disparaging connotation as WHDH, Inc. is now in the position of being charged with a serious offense but its guilt or innocense is forever left in limbo. Both Special Examiner Horace Stern and Hearing Examiner Herbert Sharfman have reviewed the issue of alleged WHDH, Inc. ex parte contacts. Hearing Examiner Stern, without reservation, resolved this issue in favor of WHDH, Inc. Hearing Examiner Sharfman concluded that the ex parte matter was no longer a comparative factor. Reference is made to WHDH's failure to editorialize. We have no rule which requires a station to editorialize. Rather this responsibility ultimately devolves upon the individual licensee, Commission Palicy on Programming, 20 R.R. 1901, FCC 60-970.
The majority has refused to consider the WHDH past broadcast record because there is no clear way to compare promise vs. performance. This is so because the station obtained a network affiliate before it went on the air in 1957 and the network programming was not shown in the application. I have reviewed the programming of WHDH-TV as shown in the record and I find it above average; for example, 22 percent local live programming. However, assuming the WHDH-TV past programming is average, as found by the majority, the new application programming is not found to be above average. In such a case, preference should be given to the known past rather than speculative future promises.
The majority places some significant emphasis on a news scoop of the Herald-Traveler which was not given to WHDH-TV and the fact that in the 1954 hearing Herald-Traveler testified that it would not withhold news from WHDH-TV just because it published a newspaper. The record is also clear that the Herald-Traveler Board of Directors is not a center of de facto or actual control over WHDH, Inc. Rather than this incident demonstrating the evil of newspaper-TV station ownership, it could be concluded on this record that the newspaper and TV station, for all operational purposes, were independent of each other.
I agree with the majority in its conclusion that a de facto n4 change of control of WHDH did take place. There was no attempt to mislead or deceive the Commission and this violation is not the type which should be considered either as an absolute or comparative disqualification.
n4 Both the Hearing Examiner and the majority find that de jure control of WHDH, Inc. was unchanged.
Based on all the above, all the entire record in the proceeding, I find that the weight to be given the facts in this case, which both the majority and this dissent accept, dictate a grant of the renewal to WHDH, Inc.
I am very much afraid that this decision will be widely interpreted as an absolute disqualification for license renewal of a newspaper owned facility in the same market. Competing applications can be anticipated against most of these owners at renewal time. n5
n5 The 81st Congress and the 82d Congress considered a so-called "Newspaper Amendment" to the Communications Act. The then chairman of the FCC indicated at the hearing on this bill that "The principal intent of the section is, of course, to outlaw the possibility of any rule excluding newspaper owners from owning radio stations. There is no objection to this section." (Hearings before Subcommittee of Committee on Foreign and Interstate Commerce on S. 1973, 81st Cong., 1st sess. (1949), pp. 20-21.) The proposed amendment was not adopted because "It should be distinctly understood that in eliminating this section the committee has done so solely because the Commission is now following the procedure which was outlined in the section, has testified that it intends to follow that procedure, and that it is of the opinion that it has no legal or constitutional authority to follow any other procedure. (S. Rept. 751, 81st Cong., 1st sess. 2 (1950).)
[In the matter of WHDH, Inc. * * * docket No. 8739, et al.]
* * *