In re Application of GEORGE P. MOONEY, ROBERT E. CRENSHAW, ET AL. (TRANSFERORS) AND GEORGE P. MOONEY, ROBERT E. CRENSHAW, ET AL. (TRANSFEREES) For Transfer of Control of Mooney Broadcasting Corp., Sole Stockholder of Mooney-WMAK, Inc. Licensee of Station WMAK, Nashville, Tenn.
File No. BTC-5779
FEDERAL COMMUNICATIONS COMMISSION
17 F.C.C.2d 404 (1969)
RELEASE-NUMBER: FCC 69-356
April 9, 1969 Adopted
BY THE COMMISSION: COMMISSIONER BARTLEY DISSENTING AND ISSUING A STATEMENT IN WHICH COMMISSIONER JOHNSON JOINS. COMMISSIONER COX ABSTAINING FROM VOTING.
[*404] We have before us the aforementioned application.
1. Mooney Broadcasting Corp., the parent
corporation of Mooney-WMAK, Inc., licensee of station WMAK,
2. The transfer of control application heretofore mentioned results from the sale of Mooney Broadcasting Corp. stock to the public in order to acquire additional funds for station operation. As a result of that sale, the transferor herein has relinquished de jure control of Mooney Broadcasting Corp., but has retained de facto control which means that management of the station above described will remain in the hands of the transferor. We find no trafficking in broadcast licenses.
3. In view of these circumstances, we conclude: (a) That a grant of this application will serve the public interest, convenience, and necessity; and (b) that section 1.597 of our rules should be waived in the public interest and the application Granted.
4. Accordingly, section 1.597 of the Commission's rules is waived and the above application is Granted.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
I vote to set the applications for evidentiary hearing on issues of waiving the 3-year rule, trafficking, financial qualifications, and how the public interest would be served by the licensee's becoming a publicly held corporation.
The applicant has not shown, in my opinion, good cause for waiver of the 3-year rule. Exhibit 1 of both applications states as "good cause" that a primary concern of the 3-year rule "was to assure that a licensee had time to perfect his program proposals so as to render a meritorious program service"; that "no changes are proposed in the operations and/or programming" of the stations; and that "Accordingly, there will be a continuity of service to the public." In a letter of December 10, 1968, from the applicant's legal counsel, it is stated that "The public stock offering is necessary to alleviate financial stress." Section 1.597, the "3-year rule," provides that such application "will be designated for hearing on appropriate issues pursuant to section 309 (b) of the Communications Act of 1934, as amended", unless the Commission is able to find that, in pertinent part, there is unavailability of capital, death or disability of station principals, or other changed circumstances affecting the licensee since acquisition of the license. The applicant makes no such showing, and the Commission has made no such finding.
In my opinion, this transaction raises a serious question of trafficking. The transaction itself involves an "increase of capitalization from 10,000 to 1,000,000 shares" and the sale of 150,000 shares to the public at $8 a share for a total of $1,200,000, less $180,000 for underwriting fees, and a net of $1,020,000. Thus, the present stockholders, on an investment of $63,500, parlay their control into a $1,020,000 deal, $220,000 of which "will be used for general corporate purposes and future expansion." [Emphasis added.] Moreover, there would be 250,000 outstanding shares which, offered to the public at the same price of $8 a share, would net another $2 million, or a total of approximately $3,020,000 (from an initial investment of $63,500). That is, in my opinion, a brazen attempt to traffick in ownership of broadcast licenses.
The foregoing is, of course, a proposal (which the Commission majority approves). If the public does not buy the stock, the applicant would not be financially qualified to effectuate this transfer of control as proposed. I believe that the Commission is in no position to rest a finding of financial qualification on a guess that the public will buy the stock. The proposal seems to be a contingent application -- contingent upon successful sale of the stock to the public -- and the Commission rules preclude the acceptance of contingent applications. Certainly, a grant should not be made until resolution of the financial qualification issue in an evidentiary hearing.
The Commission cites no reason in support of the public interest being served by this transaction of turning the licensee into a publicly held corporation. To the contrary, the public interest could well be derogated by the instant proposal. In a corporation, the stock of [*406] which is widely traded either over-the-counter or on the exchanges, maintaining an attractive price of the stock and attractive dividends can become paramount and, thus, relegate to lesser consideration the operation of the stations in the public interest. The stations can well become investment tools instead of servants to the public interest.
In view of the foregoing, I dissent to the waiver and the grant and vote for an evidentiary hearing on the foregoing matters.