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In re Applications of WBOK, INC. (ASSIGNOR) AND STARR WBOK, INC. (ASSIGNEE) For Assignment of License of WBOK, New Orleans, La.; WLOK, INC. (ASSIGNOR) AND STARR WLOK, INC. (ASSIGNEE) For Assignment of License of WLOK, Memphis, Tenn.; KYOK, INC. (ASSIGNOR) AND STARR KYOK, INC. (ASSIGNEE) For Assignment of License of KYOK, Houston, Tex.; and LITTLE ROCK GREAT EMPIRE BROADCASTING, INC. (ASSIGNOR) AND KXLR, INC. (ASSIGNEE) For Assignment of License of KXLR, Little Rock, Ark.

 

File Nos. BAL-6535, BAL-6536, BAL-6537, BAL-6547

 

FEDERAL COMMUNICATIONS COMMISSION

 

17 F.C.C.2d 844 (1969)

 

RELEASE-NUMBER: FCC 69-508

 

May 13, 1969 Adopted

 


 

ACTION: 

 

MEMORANDUM OPINION AND ORDER

 

BY THE COMMISSION: COMMISSIONERS BARTLEY AND JOHNSON DISSENTING AND ISSUING STATEMENTS.

 

[*844]  1.  The Commission has before it for consideration the above captioned applications.

 

2.  Starr Broadcasting Group, Inc., is the 100-percent owner of the four assignees, and a grant of the applications will give it its seventh AM station.  Starr's present broadcast interests, all 100 percent, are KOZN and KOWH(FM), Omaha, Nebr.; KUDL, Fairway, Kans.; KCJC(FM), Kansas City, Kans.; and KISD, Sioux Falls, S. Dak.

 

3.  After sale of 73.3 percent of Starr's stock to the public as part of the financing scheme for the acquisitions, de facto control will rest with the following, who are presently the 100 percent owners of Starr: William F. Buckley, Jr. (16.9 percent stock ownership after the public issue), the commentator and owner of the National Review, and Peter H. Starr (8.4 percent) and Michael Starr (1.4 percent), who are brothers associated with Buckley in his broadcasting endeavors.

 

4.  The purchase prices of the stations are as follows: WBOK, $700,000 (cash); WLOK, $900,000 (cash); KYOK, $1,390,000 (cash); KXLR, $450,000 (payable $50,000 in cash at closing and $29,000 more during the first year).  Starr Broadcasting Group is financially qualified  [*845]  to purchase and operate the stations.  The bulk of the financing will be provided by the public offering of 73.3 percent of Starr's stock, which is guaranteed to net $2,737,800, and a $1,500,000 bank loan from the Chemical Bank New York Trust Co.

                                               

First-year    needs

 

Purchase price of WBOK                                                                           $700,000

Purchase price of WLOK                                                                            910,250

Purchase price of KYOK                                                                            1,390,000

Payments on KXLR purchase                                                                    79,000

Repayments of principal on Chemical Bank loan                                       200,000

Interest payments on Chemical Bank loan                                                 125,500

Commitment fee on Chemical Bank loan                                                    3,750

Payments to underwriter of stock issue for financial services other

than in connection with the stock issue                                                      34,500

Excess of current liabilities over current assets of Starr Broadcasting

Group.  Omitted from current liabilities is $60,000 due during next

year on the purchase of KOZN and KOWH(FM) since they were

purchased from Buckley himself                                                                 643,678

Total                                                                                                           4,086,678

 

Loan in connection with KXLR purchase on which no payment is due

for the first 15 months                                                                                 $50,000

Loan from Chemical Bank New York Trust Co.  Interest rate is 8.25

percent.  Principal is to be repaid in 10 quarterly payments of $50,000

each, followed by 40 quarterly payments of $62,500 each.  The loan is

conditioned on Starr Broadcasting Group's netting at least $2,392,-

000 from the proceeds of the sale of its stock                                            1,500,000

Net proceeds from sale of 73.3 percent of Starr Broadcasting Group's

stock                                                                                                           2,737,800

Projected cash flow of stations to be acquired                                           333,871

Total                                                                                                           4,621,671

 

5.  WBOK, WLOK, and KYOK presently have a Negro-oriented format, and the applications propose to continue this orientation.  In all three cases the applicant conducted elaborate surveys of community needs, starting by reading up generally on problems facing Negroes today.  Proposed programming for WBOK is news, 7 percent; public affairs, 2.5 percent; all other, 7.4 percent; and maximum commercial matter, 18 minutes; with exceptions up to 20 minutes for elections, Christmas, Easter, back-to-school, and emergencies.  WBOK is one of two Negro-oriented stations out of about 10 New Orleans AM stations, and with the Negro population of New Orleans being about 35 percent of the total, the assignee plans to retain the present orientation.  The assignee conducted 23 interviews with authorities on the local Negro community and community leaders both white and Negro representing government, service organizations, religion, education, labor, and business.  Then, after consultation with a professor who is an expert in sampling from Xavier University, a local Negro institution, a questionnaire was devised and used in 195 interviews with members of the local black community.  The assignee found that the greatest need was for information on jobs, government services, elections, Negro history and culture, civil rights, and consumer protection.  The assignee proposes to meet these needs with several specific  [*846]  programs and by setting up an information service to answer inquiries on day-to-day problems of listeners.  Examples of the programs proposed are a weekly 15-minute program to be done by the mayor's black public relations assistant explaining the workings of local and State government, how to get action on a complaint, and the often complicated questions which appear on the ballot in referendums; programs interviewing success stories, educators, and placement experts to show the availability of good jobs to those who obtain an education; a 15-minute weekly program featuring a black businessman to make listeners aware of the possibility of starting black-owned businesses; programs on people and events in black history; and programs offering information on housing, family services, welfare, health, consumer protection, safety, and available jobs.  The station will also work with youth to train them for positions in radio and cooperate with a local group offering information and assistance to blacks interested in business by holding sessions on promotion and advertising.  In accordance with preferences expressed by those interviewed, the emphasis in music to be broadcast will be on soul, rhythm and blues, rock, and jazz.  However, other types will also be broadcast.

 

6.  Proposed programming for WLOK is news, 8 percent; public affairs, 3 percent; all other, 7.5 percent; and maximum commercial matter, 18 minutes; with exceptions up to 20 minutes for elections, Christmas, Easter, back-to-school, and emergencies.  Out of the nine AM stations in Memphis, WLOK is one of the two aimed at the Negro population, which comprises about 30 percent of the total population there.  To determine community needs, assignee conducted interviews with 23 community leaders, both white and Negro, including authorities on and representatives of the black community, business and labor leaders, and representatives of social, civic, and fraternal groups and of local government.  A questionnaire was then devised in cooperation with a representative of a local Negro college, Le Moyne College, and interviews based on it were undertaken with 104 members of the local black community.  The assignee found a need for information on employment, consumer protection, Negro history and culture, and for black-white dialogue.  To meet these needs, the assignee proposes a daily program on successful black businessmen produced in cooperation with the Small Business Administration; a daily program on modern black history and current events; a daily program featuring black members of the establishment, e.g., policemen and government employees; and continuation of a 5-minute daily NAACP report on topics of current interest to the black community.  The assignee will also provide an information service for information on job opportunities and offer training in broadcasting.  The assignee will broadcast a variety of music, emphasizing soul, rhythm and blues, rock, and, jazz.

 

7.  Proposed programming for KYOK is news, 8.5 percent; public affairs, 3.2 percent; all other, 7.4 percent; and maximum commercial matter, 18 minutes; with exceptions up to 20 minutes for elections, Christmas, back-to-school, and emergencies.  Of the 10 AM stations  [*847]  in Houston, Only KYOK and a daytime-only station are aimed at the Negro population, which comprises about 25 percent of the total population there.  To determine community needs, the assignee interviewed 25 community leaders, both white and Negro, including authorities on the local Negro community, and representatives of government, service organizations, religion, education, labor, and business.  A questionnaire was devised with an expert on sampling and on the Negro population in general from Texas Southern University, a local Negro institution, and 140 interviews with members of the local black community based on its were undertaken.  The assignee found a need for information on employment, government services, public issues, Negro history and culture, and business development utilizing funds now available for black capitalism.  To meet these needs, the assignee proposes programs covering proposed legislation before and during sessions of the State legislature and explaining the potential effect of developments on the black community; a half hour weekly program on which government and current problems will be discussed by guests from local and State government; a 15-minute weekly program on which a city official will answer questions frequently asked of Houston's minority group office at city hall; a 1 hour weekly discussion program moderated by a member of the State legislature; a 15-minute weekly consumer news program in conjunction with the Better Business Bureau; a half hour weekly program on landmark events in black history.  In music broadcasts, the emphasis will be on soul, rhythm and blues, rock, and jazz.

 

8.  For KXLR proposed programming is news, 8.3 percent; public affairs, 2.8 percent; all other, 6.5 percent; and maximum commercial matter, 18 minutes; with exceptions up to 20 minutes during periods of heavy advertising, such as Christmas and Easter and during political campaigns, which exceptions would not occur in more than 15 percent of the broadcast hours of any given week and in no more than 5 weeks a year.  To determine community needs, the assignee interviewed 19 community leaders and 37 additional area residents.  Based on the preferences of those interviewed and analysis of the program offerings of other area stations, the assignee proposes to continue the station's country and western format.  The assignee found that there was a need for discussion of issues and presentation of news pertaining to North Little Rock, as distinguished from Little Rock.  The assignee proposes to broadcast a weekly half hour to 1 hour discussion program on which participants will discuss local issues and to beef up local news gathering efforts.  A daily 1-hour farm program will be carried which will emphasize information that has to do with the major products of the farms in Arkansas.  Religious programming will be continued in response to the desires of the listeners.

 

9.  The applications do not present a problem of concentration of control of media of communications.  A grant of them would give Starr seven AM stations, the maximum allowed by the multiple-ownership rules.  The four stations are geographically separated from Starr's present three AM and two FM stations in Kansas, Nebraska, and South Dakota, and they are also separated from each other.  Further,  [*848]  a grant of the WBOK, WLOK, and KYOK applications would disperse the concentration of control of the assignors, whose principals also own the licenses of WGOK, Mobile, Ala., and WXOK, Baton Rouge, La., in a portion of the South, particularly in the area between New Orleans, Baton Rouge, and Mobile.  The fact that WBOK, WLOK, and KYOK serve a specialized market which the others do not, further dispels any suggestion of concentration of control.

 

10.  The applicants are legally, technically, and financially qualified.  Based on the information before us, we consider that a grant of the applications would serve the public interest, convenience and necessity.  Accordingly, the above-captioned applications are hereby Granted.

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.

 


 

DISSENTING STATEMENT OF COMMISSIONER ROBERT T. BARTLEY

 

The Commission's actions in this matter grant consent to assignments of four stations to assignees owned 100 percent by Starr Broadcasting Group, Inc.

Three of the stations, WBOK, WLOK, and KYOK, have commonly owned assignors, and the fourth, KXLR, has a separate assignor.

 

The Starr Broadcasting Group also has stations KOZN and KOWH-FM, Omaha, Nebr.; KUBL, Fairway, Kans.; KCJC-FM, Kansas City, Kans.; and KISD, Sioux Falls, S. Dak.  No showing is made as to how the addition to the Starr Broadcasting Group of the four stations here involved in this multiple ownership situation would serve the public interest.  To the contrary, I believe that a serious question exists as to concentration of control.

 

The applicant's showing on its proposed financing of these transactions and of the operation of the nine resulting stations is not one from which I can make the affirmative statutory finding that the applicant is financially qualified.

 

Also, there is no showing as to how turning the Starr Broadcasting Group into a publicly held corporation would serve the public interest.  To the contrary, the public interest could well be derogated.  In a corporation the stock of 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 could well become investment tools instead of servants to the public interest.

 

The assignees' showings in these applications on ascertainment of community needs do not appear to meet the requirements of the Commission's public notice of August 22, 1968.

 

The assignor of the fourth station, KXLR, gives as its reason for the assignment a desire to be free to pursue other business opportunities in the market, which, in my opinion, raises a serious question as to whether the sale is to purchase other broadcast interests and traffic in broadcast licenses.

In view of the foregoing, I vote to set the applications for evidentiary hearing on issues with respect to the above matters.

 


 

[*849]  DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

 

I feel compelled to register my strong dissent to the majority's action in this proceeding.  I fail to see how the block-transfer of four successful and closely contiguous AM stations to any one person or corporation can serve the public interest, convenience, and necessity, as the majority finds, in light of this Commission's firm commitment to diversity of ownership in the broadcast media.  Yet today's decision involves much more than even this.  Specifically, the majority makes five basic and serious errors: First, the transferee, Starr Broadcasting Group, Inc., is already the multiple owner of three AM and two FM stations in the tri-state area of Kansas, Nebraska, and South Dakota.  Yet despite the fact that Starr Broadcasting Group, Inc., has suffered substantial operating losses for the past 2 years, the majority now hands them four additional stations to operate without a finding that Starr has the experience or capacity to operate these stations in light of its past record.  Second, the transferee proposes to float the entire transaction on the basis of a public stock offering (in which the attempt will be made to sell 73.3 percent of the stock in a corporation whose net loss was $2.42 per share in fiscal year 1967 and $2.81 per share in fiscal year 1968), together with a $1.5 million bank loan.  Yet there has been no showing that the public interest will not be harmed, much less benefited, from public ownership of almost three-fourths of the corporation.  Third, the majority hands to the transferee more than 50 percent of the Negro-oriented audiences in the major Southern cities of New Orleans, Memphis, and Houston without giving serious thought to the public interest implications involved.  Fourth, the majority approves these four transfers without any hard evidence that multiple-station ownership of these four Southern stations will not violate the Commission's strong policies against concentration of control contained in section 73.35 of our rules.  And fifth, the majority approves the transfers in question while, at the same time, the Securities and Exchange Commission believes it does not have enough information from Starr to warn the public adequately of the risks involved in its purchasing Starr's stock.  I will detail these grounds after a brief description of Starr Broadcasting Group, Inc.

 

Starr Broadcasting Group, Inc., is owned by three persons: William F. Buckley, Jr., noted commentator and owner of the National Review, who owns 63.3 percent of its stock; Peter H. Starr, who owns 31.7 percent of its stock; and Michael F. Starr, who owns 5 percent of its stock.  The corporation is licensee of the following radio stations:

 

Station        Location                         Date of purchase

                  

KOZN         Omaha, Nebr                 1966

KOWH-FM  Omaha, Nbr                   1966

KUDL          Kansas City, Kans.  n1   1967

KCJC (FM) Kansas City, Kans         1967

KISD Sioux Falls, S. Dak                  1966

 

n1 KUDL is allocated to Fairway, Kans., a suburb of Kansas City.

 

[*850]  Starr Broadcasting was also a 38-percent owner of Topeka Television, Inc., a recent applicant for a construction permit for a new television station in Topeka, Kans. (docket No. 16970).  The application was denied after hearing for the failure of Mr. Buckley to appear and testify as to his willingness and ability to supply the collateral for a necessary bank loan.  See Topeka Television, Inc., 11 P. & F. Radio Reg. 2d 66 (1967).

 

The prior financial performance of Starr Broadcasting has not been impressive.  According to the Form S-1 registration statement filed by Starr Broadcasting Group, Inc., with the Securities and Exchange Commission, Starr's statement of consolidated operations for its existing five stations indicates a net loss of $145,102 for fiscal year 1967 (ending June 30), a net loss of $168,633 for fiscal year 1968, and a net loss of $8,730 for the 3-month period from July 1 to September 30, 1968.  ("Registration Statement," p. 6.) In other words, for the 2-year and 3-month period for which figures are available, extending from July 1, 1966, to September 30, 1968, the five stations owned by Starr Broadcasting Group, Inc., accumulated a total deficit of $322,465.  ("Registration Statement," p. 6.)

 

The first-year financial needs of Starr Broadcasting have been estimated at $4,086,678.  This figure does not include any operational losses from the existing five stations.  It does include, however, among other things, the $643,678 which represents the corporation's 1967 excess of current liabilities over current assets -- a figure which does not include $60,000 owned to Mr. Buckley since 1967.

 

This means that one, several, or all of Starr's five existing stations are operating at a substantial loss.  I sympathize perfectly with these negative revenues.  I know very well how difficult it is to operate a radio station with financial success -- even 2 or 3 years after the initial purchase.  It is my feeling, however, that a corporate licensee with five stations on its hands, some or all of which are operating at a loss, should at least not be given four more stations until things take a turn for the better.  There will inevitably be the temptation, for example, to subsidize the losses of one station with the profits of another -- particularly where, as here, the corporation is publicly held, and its management wishes to present a rosy financial picture to its stockholders.  Whereas such potential balance sheet manipulations may to some extent soothe the dispositions of the corporation's stockholders, it inevitably means that funds earned by the successful stations and once available for improved programming may no longer be accessible.  Further, common sense would indicate that one money-losing station, to say nothing of up to five, would require the full and undivided attention of all available corporate managerial talent.  By virtually doubling the number of stations controlled by the licensee, the Commission majority makes it more difficult for the directors of Starr Broadcasting to focus their efforts on the corporation's currently unsuccessful stations.

 

I do not understand why Starr wishes to purchase four additional stations when its five present stations are operating at a loss -- unless, of course, Starr wishes to offset its current losses against the profits of the four stations to be acquired, thereby creating a more attractive  [*851]  (and marketable) financial package.  Whatever may or may not be the corporate interest in this transaction, I certainly fail to understand how the majority concludes that this proposal will promote the public interest -- especially in light of the danger that the profits from the successful stations will be drawn off to feed the unsuccessful ones.  As Starr Broadcasting has made no affirmative showing on this point, I must dissent to the transfer on this first ground alone.

 

A second reason for my inability to join the majority involves the fact that Starr Broadcasting will be three-fourths publicly held.  The bulk of the financing for the block-purchase of the four AM stations in question is to come from a bank loan and the proceeds of a public stock offering.  As the following purchase prices are involved, this financing must perforce be substantial:

                  

Station:                                    Purchase price

WBOK (cash)                          $700,000

WLOK (cash)                          910,250

KYOK (cash)                           1,390,000

KXLR (cash plus payments)    450,000

Total                                        3,450,250

 

To obtain these sums, Starr Broadcasting first intended to sell to the public 56.4 percent of its stock.  This estimate has recently been revised, however.  Apparently due to current market conditions, Starr now proposes to sell 73.3 percent (338,000 shares at $9 per share) to the public.  This will mean that, should all the stock be sold, Mr. Buckley will retain only 16.9 percent of the corporation's ownership; Mr. P. Starr will hold 8.4 percent of its stock; and Mr. M. Starr will hold 1.4 percent.  The majority speculates that Mr. Buckley will still retain de facto control under this proposal.  Reassuring as this belief is, I do not see how it can be supported.  With 73.3 percent of the corporation's stock up for sale, it does not seem impossible that someone may purchase more than 16.9 percent of the total stock -- thereby giving him de facto control of the corporation.  There is the substantial possibility, therefore, that shortly after today the nine stations owned by Starr Broadcasting may be under the control of persons or corporations not presently before this Commission.

 

In addition, the management of a publicly held corporation is naturally concerned with its public image as reflected in its financial statements and stock dividends.  Thus, for example, it may be financially desirable to distribute the corporation's earnings out to the shareholders in dividends rather than devoting them to improved programming.  I do not say this inevitably will be the case.  But I do feel it is a possible danger, and do not feel I can, consistent with my obligation to serve the public interest, vote for the four transfers in question without some assurance from the transferees, or the majority, that programming and not stock market considerations will govern the operations of the transferee's stations.  I would have thought the public was deserving of much more caution than the majority shows today.

 

My third objection to the four transfers in question involves the potential dominance by the transferee of the Negro-oriented audiences  [*852]  in major communities in a four-state area.  Stations WBOK, WLOK, and KYOK have what is described as a "Negro-oriented" format of soul music, rhythm and blues, rock music and jazz.  In response to public surveys, the applications propose, in addition to their basic music format, a number of public service programs which will provide the black communities in New Orleans, Memphis, and Houston with information concerning jobs, government services, elections, Negro history and culture, civil rights, and consumer protection.  I find these programming proposals admirable.  My fear, however, is that the specific programs proposed will not be produced by each individual station in response to the needs of its own community, but rather manufactured like replaceable parts in an assembly line and sent in duplicate form to the New Orleans, Memphis, and Houston stations.

 

More importantly, however, the transfers of the New Orleans, Memphis, and Houston stations give to Starr Broadcasting over 50 percent of the Negro-oriented audiences in those markets.  WBOK in New Orleans is one of two Negro-oriented stations out of about 10 local AM stations, with the Negro population in the city comprising approximately 35 percent of the total.  WLOK in Memphis is one of two Negro-oriented stations out of nine local AM stations, with the local Negro population being about 30 percent of the total.  KYOK is the only nighttime Negro-oriented station in Houston, and one of two such daytime stations, out of 10 local AM stations.  In each city, therefore, Starr Broadcasting will control one of the only two broadcast outlets aimed at the communities' black populations.  To be sure, it is always possible for additional stations in the area to change their format to accommodate the needs of their communities' black residents.  Yet clearly there are rather high no-entry barriers in operation with respect to all kinds of formats and levels of programming; and the existence of two full-time Negro-oriented AM stations in a market does not appear conducive to a third.  One may suspect, therefore, that Starr's monopolistic control over radio programming designed to serve the Negro audiences in New Orleans, Memphis, and Houston will be difficult to dislodge.

 

The majority deals with this objection in one sentence: "The fact that WBOK, WLOD, and KYOK serve a specialized market which the others do not, further dispels any suggestion of concentration of control." (Majority opinion, at p. 6.) Precisely the opposite is the case.  The preliminary effort in excessive concentration of control matters is always to delimit the particular line of commerce involved.  For some purposes, it is sufficient merely to define the line of commerce relevant to broadcast station transfers as broadcasting, particularly when the transfers involve television and so few stations are allocated per market.  In the instant case, however, we cannot ignore the fact that WBOK, WLOK, and KYOK have successfully specialized their programming to serve the specific needs and desires of their communities' black radio audiences in three major cities.  If the line of commerce, therefore, is in part defined as Negro-oriented audiences in three large communities in a three-state area, it seems clear that the transfers will substantially concentrate market power and control  [*853] over sources of programming diversity in the hands of one corporate interest.  Contrary to the majority's assertion, therefore, the concentration of control issue is a real one.

 

I find this quasi-monopolistic concentration of control over a programming format to be particularly unfortunate in light of the lessons drawn by the Kerner Commission report on civil disorders.  The report attributed the sense of alienation and helplessness felt by many black residents of this country's large cities in part to a failure by the mass media to offer them some access to the broadcast forums they control.  I feel that one way to counteract this trend toward alienation and helplessness, at least with respect to the media, is to strive toward the goal of diverse and local ownership and control of community broadcast stations.  In an area of discussion where little is demonstrably clear, I have operated on the assumption that a station which is locally owned and controlled will tend to be more responsive to the needs of its audience than one that is owned by an absentee, multiple-station corporation.

 

The assumption may not be verifiable in every case.  Yet the majority has failed to disprove it to me in the instant case.  Absent any evidence (much less reasonably compelling proof) that the public will benefit from absentee ownership of its communications media by large multiple-station owners, I must continue to vote in favor of local ownership.  This assumption leads me to dissent to the majority's action.

 

Fourth, it should be made perfectly clear that the grant of the New Orleans, Memphis, Houston, and North Little Rock stations to Starr Broadcasting hands to that corporation a substantial and, I think, excessive degree of regional control over the media.  It is true that the four stations are each in different States.  But a quick glance at a map will dispel any illusion that vast distances separate them.  The four stations are grouped roughly into a rectangle.  No station is more than 250 miles from the center point of this rectangle.  The two closest stations, WLOK in Memphis and KXLR in North Little Rock, are only 130 miles apart.  One might easily drive between these two communities and never leave the range of one of these two stations.  The average distance between the four stations is approximately 280 miles -- no more than a good half day's driving time.  And it goes without saying that the four cities in question are four of the largest, most prosperous, and most important communities in the four-State area. 

 

The majority's decision today adds this four-station concentration to Starr Broadcasting's existing five-station chain.  This five-station chain extends in an almost straight line along Interstate Highway 29, from Sioux Falls, to Omaha, to Kansas City.  Starr Broadcasting's interests are separated by only the State of Missouri.  In light of the fact that Starr Broadcasting has purchased all nine of its radio stations within the past 3 years, it seems reasonable to assume that its purchases may continue at the same rapid rate.  It is certainly possible, therefore, that stations in Missouri will soon be added as the missing links in Starr's broadcasting chain.

 

The majority deals with this issue in an offhanded and contradictory manner.  First, they state that the transfers "do not present a problem of concentration of control" -- even though the transfers will give Starr  [*854]  "the maximum (of seven full-time AM stations) allowed by the multiple ownership rules." (Majority opinion, at p. 5.) The majority then states that the transfers of WBOK, WLOK, and KYOK would disperse the concentration of control which their present owners hold.  The reason given is that the present owners of WBOK, WLOK, and KYOK also own WGOK in Mobile, Ala., and WXOK in Baton Rouge, La.  This means that the transferor owns stations in New Orleans, Baton Rouge, and Mobile.  It is significant to note that Mobile and New Orleans, for example, are approximately 130 miles apart, and the majority feels that the transfer of one of these stations will lessen the transferor's concentration of control.  Yet at the same time the majority approves the transfer of stations WLOK in Memphis and KXLR in Little Rock -- when these stations are also only 130 miles apart.  I do not see how the breakup of two jointly held stations only 130 miles apart can disperse concentration of control, while at the same time the transfer of two other stations only 130 miles apart to the same transferee does not present a problem of concentration of control.

 

The Commission's multiple ownership rules with respect to standard broadcast stations are contained in section 73.35(b) of its rules, which provide, in part, that "(no) license * * * shall be granted to any party * * * if the grant of such license would result in a concentration of control of standard broadcasting in a manner inconsistent with public interest, convenience, or necessity." This indicates to me that before we affirm transfers of more than one standard broadcast station to any party, we should require some affirmative showing that the transfer will not harm, and indeed will further, the public interest.  No such showing has been made by this applicant.  The majority, therefore, appears to read section 73.35(b) of our rules as providing that any transfer of up to seven full-time AM stations does not raise concentration of control questions, and will automatically be approved.  I must emphatically dissent to such an interpretation.

 

The fifth reason I am unable to join the majority is that it today acts to approve the transfer of four stations to Starr Broadcasting while, at the same time, the Securities and Exchange Commission is delaying its approval of the proposed stock offering until Starr can submit to it further information concerning the risks Starr's stock offering presents to the buying public.  The SEC requires that all corporations wishing to sell stock to the public must first file with it a registration statement and prospectus setting forth all the risks involved in the offering.  Starr's original prospectus, which it filed with the SEC some time ago, has not yet been given SEC approval.  On April 29, 1969, the SEC sent Starr a deficiency letter asking it, among other things, to amend its prospectus to update its financial information as of March 31, 1969, and to state the reasons why its present five stations have operated at losses during prior years.

Clearly this information, if supplied, would greatly influence this Commission's determination whether the proposed transfers will be in the public interest.  If, for example, it should appear from Starr's recent financial information that its five present stations are currently operating at substantial losses, or that the stations' prior losses were due to management inexperience or other reasons affecting Starr's  [*855]  ability to operate four additional stations, then that information might well affect our decision to approve the transfers in question.

 

Yet, to my knowledge, Starr has not filed the requested amendments with the SEC or the FCC.  And to my knowledge, the majority has not even attempted to discover precisely why the SEC believes that Starr has failed adequately to apprise the stock purchasing public of the risks involved in the proposed offering.  I do not believe this Commission should rule that a transfer of four AM stations to Starr, to be financed by a substantial stock offering, serves the public interest when, at the same time, the SEC believes it does not yet have enough information to warn the public of the risks involved in the stock offering.  I believe this Commission has at least as high an obligation of care toward the public with respect to the protection of its property as does the SEC with respect to potentially risky financial transactions.  I would at least postpone our decision until the SEC or the FCC has been apprised of all relevant information.

 

In sum, I am not convinced that the accumulation of broadcasting power presented by the applications dealt with today is justified by our guiding standard of the public interest.  I do not believe that either the financial past or future of Starr Broadcasting warrants the apparent confidence which the majority feels it has earned.  I believe the majority's decision will place in the hands of one absentee corporate owner an undue concentration of control over one of the few sources of information and entertainment available to the black communities in New Orleans, Memphis, and Houston.  And I believe the majority is today acting precipitously without potentially crucial information which our sister agency, the SEC, is currently seeking to obtain.

 

I dissent.

 


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