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In re Application of WILLIAM L. FOX, IRWIN C. FOX, DOROTHY KOTIN, BENSON APARTMENT CORP., AND FOX BROTHERS MANAGEMENT CORP. (TRANSFERORS) AND TAFT BROADCASTING CO. (TRANSFEREE)

For Transfer of Control of WIBF Broadcasting Co., Permittee of Station WIBF-TV, Philadelphia, Pa.

 

File No. BTC-5790

 

FEDERAL COMMUNICATIONS COMMISSION

 

17 F.C.C.2d 876 (1969)

 

RELEASE-NUMBER: FCC 69-495

 

May 7, 1969 Adopted

 


 

ACTION:

MEMORANDUM OPINION AND ORDER

 

 

BY THE COMMISSION: COMMISSIONER BARTLEY DISSENTING; COMMISSIONER ROBERT E. LEE CONCURRING AND ISSUING A STATEMENT; COMMISSIONERS COX AND H. REX LEE ABSTAINING FROM VOTING; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT.

 

OPINION:

 

[*876] 1. We have before us the above-referenced application for transfer of control of WIBF Broadcasting Co., permittee of station WIBF-TV, Philadelphia, Pa., from the stockholders of WIBF Broadcasting Co. to Taft Broadcasting Co. n1 Also before us is a "petition to deny or dismiss or for other relief" filed by TelePrompTer Corp., permittee of a CATV system in Trenton, N.J.; North Penn Cablevision, Inc., franchisee of CATV systems in Lansdale, Pa., and surrounding communities; General CATV, -nc., franchisee of a CATV system in Burlington County, N.J.; and Norristown Distribution Systems, Inc., franchisee of a CATV system in Norristown, Pa. (The CATV companies will hereinafter be collectively referred to as "petitioners".) WIBF Broadcasting and Taft Broadcasting have filed individual oppositions to the petition to deny, and petitioners have filed a single reply to the oppositions.

 

n1 WIBF Broadcasting is also the licensee of WIBF-FM, Jenkintown, Pa. Taft Broadcasting, however, does not propose to acquire the FM station and assets pertaining to the FM operation have been excluded from the contract. The WIBF stockholders propose to assign the FM license to a new corporation controlled by them (Fox Broadcasting Co.) and an application to cover this pro forma assignment has been filed (BAPLH-102).

 

2. A question to be determined at the threshold is whether petitioners have standing to file a petition to deny under section 309(d) of the Communications Act, 47 U.S.C. 309(d). Petitioners claim they do, alleging that they "* * * are prospective operators of CATV systems which currently operate or are proposed in communities within the grade A contour of WIBF-TV." (Petition to deny, p. 2.) Further in support of their claim to standing, petitioners note that WIBF Broadcasting [*877] has filed petitions with the Commission to limit petitioners' CATV activity in the Philadelphia area on the ground that CATV operations will fragment WIBF-TV's audience and deprive it of the opportunity to become an economically viable operation. Petitioners assert that WIBF Broadcasting's unrelenting efforts to bar CATV operations in the Philadelphia area, coupled with similar opposition by the licensees of two other Philadelphia stations (WPHL-TV and KYW-TV), "* * * has been instrumental in barring implementation of petitioners' CATV proposals." (Petition to deny, p. 3.) Then citing Federal Communications Commission v. Sanders Bros. Radio Station, 309 U.S. 470, petitioners conclude that "in view of economic and other considerations raised by WIBF in its CATV pleadings relating to petitioners' CATV activity," they have standing to file the instant petition. Both WIBF Broadcasting and Taft deny petitioners' standing. While Taft concedes that its position on CATV proposals in the Philadelphia area will remain substantially the same as WIBF's, it points out that petitioners' reliance on Sanders Bros. radio Station is inapposite and that opposition to CATV proposals is not a basis for a claim to standing. WIBF Broadcasting notes that petitioners have not attempted to show they will suffer any injury as a result of Taft's operation station WIBF-TV, and that petitioners' real objective is to retaliate against WIBF Broadcasting because of its efforts to limit CATV activities in the Philadelphia area. Petitioners' reply attempts to clarify the basis on which standing is claimed. Petitioners note they "* * * claim standing as a competitor of WIBF, and a prospective competitor of Taft" and that Taft -- because of its financial resources and its intention to oppose CATV proposals in the Philadelphia market -- will be in a position to intensify opposition to CATV systems, thus causing an adverse impact on petitioners' interests.

 

3. We hold that petitioners lack standing to file their petition to deny. The essence of petitioners' claim is that they are in competition with WIBF Broadcasting and will be in competition with Taft if the transfer application is approved. The point is made explicit by petitioners' reply. But in petitioners' own words, they "* * * are prospective operators of CATV systems which currently operate or are proposed in communities" within WIBF-TV's grade A contours. (Petition to deny, p. 2 (emphasis added).) The prospective nature of petitioners' competitive position vis-a-vis the applicants is underscored by petitioners' own pleadings, which disclose that TelePrompTer is the "permittee" of a CATV system, while North Penn, General CATV, and Norristown Distribution Systems are each the "franchisee" of CATV systems. That petitioners are only potential competitors of WIBF and Taft is further emphasized by the petition to deny, which indicates (p. 2) that petitioners have pending before the Commission notices of commencement of local service or requests for waivers relating to carriage of television signals on their CATV systems. In our view, Sanders standing assumes an actual state of competition, not the future prospect thereof. It is true, of course, that WIBF Broadcasting has opposed CATV activity in the Philadelphia market, and it appears that Taft will continue this opposition. Still, legal opposition to CATV operations is not tantamount to competition, and we must agree with [*878] the applicants that petitioners' reliance on Sanders Bros. Radio Station, supra, is inapposite. n2 And since a retaliatory filing -- the ground on which petitioners initially predicated standing -- is not a recognized ground for standing, it is clear petitioners are not parties in interest to the transfer application, and that their petition to deny must be dismissed. Nevertheless, petitioners have raised important public interest questions regarding Taft's proposed acquisition of WIBF-TV, which we consider below.

 

n2 In a sense, petitioners' status is akin to that of an applicant who seeks to participate in proceedings involving a facility other than the one he has applied for. It is established that a mere applicant does not have standing to participate in proceedings on another application on the basis of a claim that he is in competition. Mansfield Journal Co. v. Federal Communications Commission, 84 U.S. D.C. 341, 173 F. 2d 656, 4 R.R. 2133. The pendency of petitioners' CATV petitions before the Commission underscores the fact that petitioners are as yet only applicants.

 

4. Petitioners first argue that since WIBF Broadcasting has consistently opposed CATV proposals on the ground that WIBF-TV needed protection from competition in order to survive, transferors should not now be permitted to sell the WIBF-TV "* * * at an unconscionable profit" to a major multiple owner. The claim is made that WIBF's principals will convert a capital investment of only $310,000-$1,400,000 in a little more than 3 years of operation. However, on the basis of affidavit of William L. Fox (attached to WIBF Broadcasting's opposition), petitioners concede that any profit realized on the transfer will be in the neighborhood of $500,000. But even conceding this, petitioners continue to maintain that the sale should not be permitted, mainly in view of the "top 50" and "duopoly" problems discussed below.

 

5. The "out-of-pockets" doctrine has no applicability here, even though technically control of a permittee is involved. n3 WIBF-TV has been in commercial operation since May 14, 1965. WIBF-TV is an unaffiliated UHF station and is the only operating television station in the Philadelphia market not licensed to a multiple owner. The station has lost money from the beginning, despite transferors' considerable efforts (including expenditure of $355,000 on improvements) to put WIBF-TV on a profitable basis. Operating losses for 1965, 1966, and 1967 were $261,970.98, $566,426.21, and $802,450, respectively. As of August 31, 1968, the cumulative deficit from operation amounted to $2,156,638, and that figure will be higher at closing. Because of the station's financial condition, lending institutions have been unwilling to advance further funds to the station and in consequence, WIBF Broadcasting has had to borrow extensively from Fox family corporations. Transferors concede their capital investment in the permittee is $310,000. But additional loans by the Fox family corporations will bring transferors' investment to a figure in excess of $3,100,000. Assuming the closing had taken place on December 31, 1968, transferors would have realized a profit of $553,225 on the sale of WIBF-TV. Of course, the closing has not yet taken place, so this figure will be pared further by operating losses for 1969, by brokerage fees (with two claims totaling $240,000 already outstanding), and by a potential expense of up to $100,000 in engineering costs to assure [*879] that WIBF-TV's main antenna structure does not interfere with the signal of WRCP (AM). In view of these considerations, it seems obvious that on the sale of WIBF-TV, the Fox family will recover at most their capital investment and loans which Fox family corporations have made to the permittee. Considering the substantial efforts of the transferors to put the station on a profitable basis, petitioners' claims that transferors have abandoned the public for an unconscionable profit are without merit.

 

n3 An application for a license to cover the outstanding permit is pending before the Commission (BLCT-1681).

 

6. Taft is presently the licensee of the following television stations:

 

 

ARB ranking according to NET weekly circulation

Call letters

Location

 

 

 

 

WKRC-TV

Cincinnati, Ohio

16

WGR-TV

Buffalo, N.Y

21

WDAF-TV

Kansas City, Mo

23

WTVN-TV

Columbus, Ohio

28

WBRC-TV

Birmingham, Ala

40

WNEP-TV

Scranton, Pa n1

69

 

n1 Wilkes-Barre-Scranton market.

 

WIBF-TV is located in the fourth-ranked market under ARB net weekly circulation figures. In view of Taft's ownership of five stations in the top 50 television markets, its proposal to acquire another station in those markets is subject to the "compelling public interest showing" specified in the Commission's report and order released February 9, 1968, terminating the proposed rulemaking in docket 16068 (12 R.R. 2d 1501). Petitioners contend that Taft's compelling public interest showing is inadequate. Petitioners make no significant challenge to the specifics of Taft's lengthy "compelling public interest showing," and this approach is confirmed by their reply, in which petitioners note (Reply, p. 6) that they "* * * do challenge the conclusions reached by Taft on the basis of its data." But what petitioners ignore is that Taft has set forth substantial reasons why it should be permitted to acquire WIBF-TV. Taft points out that the competitive picture in Philadelphia makes it unlikely an independently owned UHF station can survive there. Competition from television stations there comes from three entrenched network-affiliated VHF stations, two UHF stations which are in the hands of multiple owners, and one educational station. According to July 1968 ARB figures, WIBF-TV received only a 2-percent share of the metropolitan Philadelphia television viewing audience. This is in contrast to the other two UHF stations, which respectively had shares of 5 and 6 percent, and in sharp contrast to the audiences enjoyed by network-affiliated VHF stations, with the least-viewed VHF station receiving a 26-percent share. In support of its proposal to acquire WIBF-TV, Taft notes that it has the know-how and the financial resources to underwrite losses of the station while it is being made competitive. n4 In terms of [*880] public benefits, Taft proposes to spend $500,000 on new equipment, to seek authority to move the station's main studios from Jenkintown to Philadelphia, and to increase annual expenditures for programming by at least $250,000 annually. Taft further indicates that in response to ascertained community needs, it will undertake to present over WIBF-TV programs related to the needs of Negroes and the economically disadvantaged, and prime-time discussion programs for coverage of problems which are of local concern. In the absence of any significant challenge by petitioners to the demonstrable public benefits which would flow from approval of the application, we hold that petitioners' attack on Taft's "compelling public interest showing" is without merit. n5

 

n4 As the Commission noted when it terminated the rulemaking in docket 16068 and enunciated the new top-50 policy, the growth of UHF could be fostered by encouraging the entry of persons with the know-how and financial resources. See Report and Order, 12 R.R. 2d 1501 at 1506.

 

n5 Petitioners quarrel with transferors' efforts to sell WIBF-TV to an owner not associated with mass media interests. But transferors have demonstrated to our satisfaction that they unsuccessfully attempted to sell to local groups who do not have mass media interests (Food Fair, Superior Tube Co., Jerrold Corp., the Philadelphia Gas Works), to local groups with such interests (the Evening Bulletin company), and to two nationally known entertainers who are considered by Philadelphians as local personalities. All of these persons or groups (including further several out-of-town broadcasting companies) lost interest in the station after studying its financial history and assessing the prospects for the station's success in the immediate future. Only Taft submitted a firm bid and has evidenced a willingness to take over the station.

 

7. Petitioners finally argue that overlap of the grade B signal contours of Taft's Scranton station (WNEP-TV) and WIBF-TV precludes approval of the application, and that the applicants' request for a waiver of the duopoly rules should be denied. Scranton lies northwest of Philadelphia. The contour maps attached to the waiver request indicate that the overlap of grade B contours occurs in an area southeast of Scranton and northwest of Philadelphia, approximately midway between the two cities. The overlap amounts to only 13.3 percent of the area within the calculated grade B contour of WNEP-TV, and 14.5 percent of the area within the calculated grade B contour of WIBF-TV. The waiver request further notes that for all practical purposes, Scranton and Philadelphia are different and separate markets. Taft's Scranton station is network affiliated and competes with other Scranton network affiliates for national, regional, and local advertisers, and to some extent, with Philadelphia stations for national and regional advertisers. WIBF-TV, on the other hand, is an independent UHF station which competes essentially with other Philadelphia television stations -- primarily the other two unaffiliated UHF outlets -- for advertising directed primarily to the Philadelphia market. In requesting a waiver of section 73.636(a)(1) of the rules, Taft also notes that grade B overlap here is based on the propagation curves contained in section 73.699 of the rules. However, the Commission itself has recognized that these curves may not accurately reflect propagation of UHF signals and in docket 16004, the Commission has proposed to adopt a different set of curves. Taft points out that under the propagation curves proposed in docket 16004, there would be no overlap of grade B contours between WEEP-TV and WIBF-TV.

 

8. Petitioners have not refuted the ARB data on which the waiver request is based, nor is there any challenge to the contention that Scranton and Philadelphia are separate and different markets. Moreover, petitioners have not addressed themselves to that portion of the waiver [*881] request which indicates that no portion of the overlap area receives less than eight grade B television signals, and that a majority of the overlap area receives between 10 and 16 grade B signals. Instead, petitioners address themselves to the dual policy objectives of the multiple ownership rules -- the fostering of competition and the need to bar a single group from obtaining an inordinate potential for shaping public opinion -- and an alleged inability of the stations to improve their facilities in the future if they are put under common ownership. Petitioners also suggest that grade B overlap here could be increased by expansion of the stations' signals by CATV systems. In refutation of these arguments, Taft notes -- correctly, we think -- that the Commission has not considered CATV carriage of a given station beyond its grade B contours as relevant in determining compliance with the present duopoly rule. n6 Taft also argues that contentions based on the future ability of the stations to expand their coverage areas are largely specious because both WNEP-TV and WIBF-TV presently operate with near maximum capacity, and because Taft does not contemplate any increase in the power or antenna height of either station in the foreseeable future. As for petitioners' reliance on the pending cross-ownership rulemaking (docket 18397), Taft states that this proceeding has no bearing here because Taft owns no CATV systems in Pennsylvania or elsewhere.

 

n6 Petitioners' "promotional map" purporting to show the extent to which another Philadelphia station, WPHL-TV, is carried on CATV systems beyond its grade B contours "* * * but within or near WNEP's" does not, of course, constitute a showing that WIBF-TV's grade B contours have been bloated in the manner speculated on by petitioners.

 

9. Admittedly, the grade B overlap is an aggravating factor here, but in the circumstances, we think a waiver of section 73.636(a)(1) has been justified. That waiver request must be judged against the background of the Philadelphia television market. It is certain the station cannot continue on its present unprofitable course and its end is near unless it can obtain a capital infusion sufficient to make it competitive with entrenched Philadelphia stations owned by other multiple owners. n7 Ideally, the diversification policy would best be served by putting WIBF-TV in the hands of a group with no mass media interests, or at least relatively free of such interests. n8 But the economic realities of the Philadelphia market and the prospects for a turn around in the profit picture of WIBF-TV are such that all groups -- except Taft -- lost interest. Taft's willingness to underwrite losses while the station is being made competitive is a persuasive factor in granting a waiver here. This conclusion is fortified by the demonstrable public benefits which we have found will flow from approval of the application. Moreover, a waiver is not inconsistent with the policy objectives of the duopoly rules. Petitioners have not refuted Taft's showing that there is ample service from competing stations whose grade B reach serve the overlap area. And since the stations serve essentially different markets and have little common viewership [*882] in the overlap area, there is no serious prospect that Taft will have an inordinate effect in controlling public opinion in this area. Finally, we note that under the proposed propagation curves in docket 16004, there would be no grade B overlap. As the Commission stated shortly before it gave public notice of the rulemaking in docket 16004, it would continue to use the field intensity chart in figure 9 of section 73.699 of the rules for the purpose of the overlap rules. But it further stated that pending the adoption of new propagation curves, "* * * as a matter of policy, in the meantime individual cases in which the applicant can show that it is in the public interest to use different criteria will be dealt with on an ad hoc basis. * * *" See Memorandum Opinion and Order, 3 R.R. 2d 1556 at 1558. In another assignment proceeding (assignment of permit for station WCAN, Milwaukee, Wis., BAPCT-390, approved Dec. 21, 1966) involving grade B overlap, the Commission permitted a multiple owner (Field Communications Corp.) to acquire a UHF permit where grade B overlap did not exist under the proposed new curves. We think the demonstrated public interest in the survival of WIBF-TV and promotion of the growth of UHF broadcasting justifies use of the proposed curves here.

 

n7 Competing multiple owners in the Philadelphia market are CBS, Triangle Publications (ABC affiliation), Westinghouse Broadcasting Co. (NBC). Kaiser Broadcasting Corp. (independent), and U.S. Communications Corp. (independent), a subsidiary of AVC Corp.

 

n8 Even petitioners concede the latter point in their arguments (Reply, p. 4) that it would be preferable to permit the Philadelphia Bulletin company -- owner of a daily newspaper and Philadelphia FM station -- to acquire WIBF-TV. Discussions with the Bulletin company were terminated after the Commission gave notice of its proposed "one-to-a-customer" rules in docket 18110.

 

10. We find that there are no substantial or material questions which bar a grant of the application, and that a transfer of control of WIBF Broadcasting Co. to Taft Broadcasting Co. would serve the public interest, convenience, and necessity. Accordingly, It is ordered, That section 73.636(a)(1) of the rules, Is waived and that the application for transfer of control of WIBF Broadcasting Co. from William L. Fox, Irwin C. Fox, Dorothy Kotin, Benson Apartment Corp., and Fox Brothers Management Corp. to Taft Broadcasting Co., Is granted.

 

11. It is further ordered, That the "Petition to Deny or Dismiss or for Other Relief" filed by TelePrompTer Corp., North Penn Cablevision, Inc., General CATV, Inc., and Norristown Distribution Systems, Inc., Is dismissed.

 

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.

 


 

CONCURRING STATEMENT OF COMMISSIONER ROBERT E. LEE

 

I concur with the majority in granting the application for assignment of license of WIBF, Philadelphia, to the Taft Broadcasting Co.

 

It is not a closely guarded secret that to operate a UHF TV station in such a market as Philadelphia with three VHF and two UHF competitors, it takes financial resources and know-how which are not often found.

 

[*883] It is apparent that multiple owners have an edge in bidding for syndicated programs in a given TV market. The price for syndicated programs varies from market to market. Hence, even if the multiple owners had no competitive advantage the cost of running a truly competitive television station in such a market as Philadelphia can be trying, to say the least, to a licensee of moderate means.

 

Moreover, the network stations have independent means to effectively gather local news. Combine this with the clout provided by the network news and you find an independent nonmultiple-owned station has a difficult uphill fight in such a situation.

These matters are common knowledge in the industry as well as with those of us at the Commission.

 


 

DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

 

In its haste to deprive the public of "the only operating television station in the Philadelphia market not licensed to a multiple owner" (majority opinion, p. 4), the majority today flagrantly violates both the Commission's top-50-market ruling and its duopoly rules, denies four vitally interested CATV firms the standing to protest the transfer on public-interest grounds, and substantially increases the number of television homes (from 4,238,500 to 6,055,500) within the reach of this country's 12th largest corporate multiple broadcast station owner. n1 In so doing, the majority actually finds, not just that the transfer is consistent with the public interest, but that it is actually compelled by the public interest. To reach this startling conclusion, the majority is forced to create out of whole cloth a new a priori doctrine of television market structure which can only have catastrophic consequences for the future of independent television in this country. This a priori [*884] rule apparently postulates that independent UHF stations have such difficulty surviving in markets where the other stations are owned or controlled by multiple-station owners that the UHF allocations not so owned must be turned over to multiple-station, mixed media, or conglomerate corporations, for only these are seen to have the necessary know-how and financial resources for large-market survival. I find this hypothesis completely unsupported by logic or fact, and must accordingly register my strong dissent.

 

n1 The number of television homes within the reach of Taft Broadcasting Co.'s seven television stations was calculated by adding the number of television homes in each county in which a Taft station has any net weekly circulation. Although a few of these homes may not now regularly watch Taft stations, this figure seems more accurately to reflect the potential audience available to Taft in the future -- taking into consideration improvements in transmission equipment and in CATV carriage for outlying districts. The figures for the seven Taft stations are as follows:

 

 

WKRC-TV

Cincinnati, Ohio

1,019,800

WGR-TV

Buffalo, N.Y

621,700

wdaf-tv/

Kansas City, Mo

747,500

WTVN-TV

Columbus, Ohio

800,700

WBRC-TV

Birmingham, Ala

644,500

WNEP-TV

Scranton-Wilkes-Barre, Pa

404,300

Total

 

4,238,500

WIBF-TV

Philadelphia, Pa

1,817,000

Grand total

 

6,055,500

 

 Figures are taken from "Television Factbook, Station Volume" (1968).

 

The majority's decision permits Taft Broadcasting Co. to purchase UHF television station WIBF-TV in Philadelphia, Pa., the country's fourth-largest television market, from locally owned WIBF Broadcasting Co. Taft Broadcasting Co., the transferee, is now permitted to own and control seven television stations (all but one of which are in the top 50 national markets, and five of which are in the top 30 markets), five AM stations, and five FM stations -- a total of 17 broadcast properties. Its seven television stations have net weekly circulation in counties containing more than 6,055,500 television homes -- approximately 11 percent of all the television homes in the United States. n2 The majority closes its eyes to this substantial increase in the concentration over this country's broadcast media despite clear violations of both this Commission's top-50-market concentration of control doctrine, contained in 47 CFR Section 73.636(a)(2) (1969) and the Commission's report and order terminating rulemaking in docket 16068, 12 P. & F. Radio Reg. 2d 1501 (1968), and its duopoly rules, contained in 47 CFR Section 73.636(a)(1) (1969). The extent of these violations are best seen in the context of the structure of the Philadelphia television market, the unique position of station WIBF-TV as Philadelphia's only operating commercial television station not licensed to a multiple owner, and the media dominance of Taft Broadcasting Co., a multiple-station owner with interests in many and diverse areas of the economy.

 

n2 ARB finds there were 56,374,100 television homes in the United States as of September 1967. "Television Factbook, Services Volume," 81-a (1968). This figure is divided into 6,055,500, the number of television homes within the reach of Taft stations, to obtain the figure of 11 percent.

 

The Philadelphia market is the fourth-largest television market in the country. Its most powerful television station, WFIL-TV, has net weekly circulation in counties containing more than 2,634,500 television homes. "Television Factbook, Stations Volume," 600-b (1968). Apart from station WIBF-TV, the market has five operating commercial television stations and one permittee, and except for WIBF-TV, [*885] every one of these five operating stations is controlled by nonlocal multiple-station owners:

 

Philadelphia

station

 

Channel and affiliation

Owner and other broadcast interests

 

KYW-TV

Channel 3,

Westinghouse (group W), owns and operates WBZ-AM-TV, Boston; KYW-AMFM, Philadelphia; KPIX-TV, San Francisco; KDKA-AM-TV, Pittsburgh;

WINS-AM, New York; WOWO-AM,

Fort Wayne; WIND-AM, Chicago;

KFWB-AM, Los Angeles.

 

 

NBC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WFIL-TV

Channel 6,

Triangle Publications, owns and

Operates WFIL-AM-FM, Philadelphia; WNBF-AM-FM-TV, Binghampton; WFBG-AM-FM-TV, Altoona; WLYH-TV, Leba-non; WNHC-AM-FM-TV, New Haven;

KFRE-AM-FM-TV, Fresno; also owns

Philadelphia Inquirer, Philadelphia Daily

News, Seventeen magazine, TV Guide,

and other publishing interests.

 

 

 

 

 

ABC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WCAU-TV

Channel 10,

Columbia Broadcasting System (CBS), owns and operates WCBS-AM-FM-TV, New York; WBBM-AM-FM-TV, Chicago;

KNXT-AM-FM-TV, Los Angeles;

WCAU-AM-FM, Philadelphia; KMOX-

AM-FM-TV, St. Louis; KCBS-AM-FM,

San Francisco; WEEI-AM-FM, Boston.

 

 

CBS.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WPHL-TV

Channel 17,

U.S. Communications Corp., owns or controls: KEMO-TV (CP), San Francisco; WBMO-TV, Atlanta; WSCO-TV, News-port-Cincinnati; WECO-TV, Pittsburgh; KDJO-TV, Houston.

 

 

NBC, ABC.

 

 

 

 

 

 

 

 

 

 

WKBS-TV

Channel 48,

Kaiser Broadcasting Stations, operates:

WKBD-TV, Detroit; KBSC-TV, Coro-

na; KFOG-FM, San Francisco; KHBK-

TV, San Francisco; has 90 percent of

WKBG-TV and WJIB-FM, Boston;

WCAS-AM, Cambridge; and WKBF-TV,

Cleveland.

 

 

independent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seven Arts Broadcasting Co., Inc., a subsidiary of Warner Brothers-Seven Arts, has an outstanding construction permit for WGTI-TV, channel 23. Its starting date is unreported. Philadelphia also has one operating educational station, WUHY-TV, on channel 35.

 

Yet this picture of the Philadelphia market remains incomplete without some mention of Triangle Publications, Inc., one of the most powerful media giants in the world. Triangle Publications' mixed media newspaper-broadcast station cross-ownership interests dominate the Philadelphia market, and Triangle Publications, in turn, is dominated by its absolute owner, Walter Annenberg, owner of 51 percent of the corporation's voting stock, and beneficial owner of 87 percent of such stock. See generally, Fonzi, "Annenberg," Philadelphia Magazine, April 1969, page 64. In addition to owning the Philadelphia market's top-rated radio station, one of its three major television stations, and a total of 16 radio and television stations in all (listed above), Triangle Publications owns two of Philadelphia's three daily newspapers, the Philadelphia Inquirer and the Philadelphia Daily News, owns the New York Morning Telegraph (racing paper), five [*886] regional editions of the Daily Racing Form, TV Guide, Seventeen magazine printing, distribution, merchandising and promotional outlets, and CATV outlets in Binghamton, N.Y., New Haven, Conn., three major CATV firms in Pennsylvania, and one in Fresno, Calif. The Morning Telegraph is reported to have revenues of over $15 million from sales alone; Seventeen's monthly circulation is over 1.5 million; and TV Guide's gross revenue may exceed $100 million a year. Triangle's radio and television division, which includes its CATV operations, reportedly grosses more than $100 million in revenues each year. The list of Triangle ownership interests also includes I.T.A. Electronics, a broadcast equipment manufacturing firm, Educasting Systems, a method of teaching by radio, and numerous real estate holdings. See Fonzi, Philadelphia Magazine, supra at 67-70. The six Philadelphia market commercial stations in 1967 earned approximately $45,041,578 in total broadcast revenues (after payment of commissions, talent, and program sales) and earned $14,626,477 in total broadcast income (before Federal income taxes). See FCC TV Broadcast Financial Data -- 1967. There is little doubt that Triangle's WFIL-TV, with the largest net weekly circulation of any Philadelphia television station, earned a lion's share of the market's revenues.

 

The Commission today acts to increase the multiple-station owner control in the Philadelphia market -- despite its many prior protestations that its multiple ownership rules seek to "promote diversification of program and service viewpoints as well as to prevent any undue concentration of economic power contrary to the public interest * * *." Report and Order on Multiple Ownership, 18 F.C.C. 288, 291-92 (1953); see Report and Order in docket 16068, 11 F.C.C. 2d 646 (1968). The majority has thus, in its own words, approved the sale and transfer of control of "the only operating television station in the Philadelphia market not licensed to a multiple owner" (majority opinion, p. 4), from the locally owned WBIF Broadcasting Co. to the powerful multiple-station owner, Taft Broadcasting Co., which already owns one television station in Pennsylvania and two in nearby Ohio.

 

Taft Broadcasting Co.'s other broadcasting interests outside Philadelphia include the following:

 

Station

Affiliation

Location

Market rank

 

 

 

(ARB)

WKRC-AM-FM-TV

ABC

Cincinnati, Ohio

16

WTVN-AM-FM-TV

ABC

Columbus, Ohio

28

WBRC-AM-FM-TV

ABC, CBS

Birmingham, Ala

40

WGR-AM-FM-TV

NBC

Buffalo, N.Y

21

WDAF-AM-FM-TV

NBC

Kansas City, Mo

23

WNEP-TV (UHF)

ABC

Scranton-Wilkes-Barre, Pa

69

WIBF-TV (UHF)

Independent

Philadelphia, Pa

4

 

All of Taft's stations, except for WNEP-TV, are in the top 50 national television markets, and now five of the seven television stations are in the top 30. In addition to broadcast properties, Taft owns all the stock of Hanna-Barbera Productions, Inc., which primarily produces cartoons and other animated features for television; and Fouad-Said [*887] Productions, Inc., a company which develops and rents mobile film production units. Taft's current assets exceed its liabilities by almost $9 million, and its after-tax income in 1968 was $8,055,030.

 

Ownership of Taft Broadcasting Co. is apparently concentrated primarily in the hands of Taft family members (or trustees for Taft family members) who hold approximately 36 percent of Taft's outstanding common shares. Yet much of Taft's stock is publicly held. For example, McGraw-Hill Publishing owns approximately 3 percent of Taft's stock, and up to a few days ago the Bank of America held approximately 6.6 percent. n3 However, many other banks also hold Taft stock in the name of various nominees, a number of which, to this date, have not been disclosed. It is therefore impossible to determine with any degree of accuracy the true identity of those persons or interests who own substantial portions of the assignee. n4

 

n3 Within the past few days this has been reduced to 5 percent, the only beneficial holder of more than 1 percent having sold its interest. Under our rules only those bank beneficiaries holding more than 1 percent of a licensee's stock need reveal themselves.

 

n4 On April 21, 1969, I delivered a statement before the House Banking and Currency Committee on H.R. 6778, a bill to amend the Bank Holding Company Act of 1956. I there noted that to the best of my memory, I could not recall one occasion during my 3 years at the Commission when it ever "questioned a licensee's association with banks or other financial institutions * * *." Part of the problem, as I saw it, was the difficulty the Commission has had in obtaining enough information even to determine whether "our multiple-ownership rules were being complied with in those situations in which banks in one way or another hold the stock of broadcast licenses." To illustrate this difficulty, I picked just one example from all the broadcast licensees in the United States. That example happened to be, wholly coincidentally, the Taft Broadcasting Co.

 

It today comes as no great surprise to learn, therefore, that since my testimony new information concerning bank connections with this very company have been disclosed. The appearance of this new information merely underscores my concerns as I stated them before the House Banking and Cirrency Committee: namely, that banks are involved in broadcasting to a substantially but generally undisclosed extent; that no one has attempted to determine whether this involvement is in the public interest; and that the FCC does not even systematically seek to obtain the information necessary to assess this banking involvement.

 

The developments of the past week with regard to the only example I cited are revealing. Who knows what an investigation of other publicly held licensees might disclose?

 

In response to a special inquiry from the Commission's staff, legal counsel for Taft Broadcasting Co. submitted to the Commission on May 6, 1969, a letter listing all the banks and other institutions holding 1 percent or more of Taft's stock. According to that letter, the following banks hold 1 percent or more of Taft's shares (1 percent is 34,373 shares): Bank of America (now approximately 5 percent); Continental Illinois National Bank (2.1 percent); Bankers Trust Co., New York, N.Y. (1.4) percent); Title Insurance and Trust Co., Los Angeles, Calif. (1.9 percent); Wells Fargo Bank, San Francisco, Calif. (3 percent); First National Bank of Jersey City, N.J. (2.3 percent); Cleveland Trust Co., Cleveland, Ohio (3 percent); Merrill, Lynch, Plerce, Fenner & Smith, Inc. (1.75 percent). Legal counsel for Taft "made a check of the current ownership of its shares held by banks and other institutions holding 1 percent or more of its shares, to determine whether there might be any ownership inconsistent with the Commission's multiple-ownership rules." It concluded:

 

This check has now been completed and we can advise the Commission that there are no holdings of Taft stock which are inconsistent with the Commission's rules.

 

By letter dated May 12, 1969, however, counsel for Taft informed the Commission that the Cleveland Trust Co. had just discovered that it also holds in an insurance trust 12 1/2 percent of Tribune Publishing Co., licensee of stations KTNT-AM, KTNT-FM, and KTNT-TV in Tacoma, Wash. Although the shares in Tribune Publishing Co. were voted by the executor of the trust for the widow of the trustor, and neither the executor nor the widow have any reportable interest in Taft, the Cleveland Trust Co.'s holding of more than 1 percent of Taft's stock and, at the same time, more than 1 percent of another broadcast licensee's stock, may have violated this Commission's multiple-ownership rules (contained in 73.636). In any event, the bank has decided formally to assign to the trustee all voting responsibility for the Tribune Publishing Co. shares. This 11th-hour incident vividly illustrates how difficult it is to discover the identity of persons owning interests in broadcast licensees. Established Commission procedures often make it next to impossible to discover even patent violations of Commission rules.

 

Of particular interest are the varied and diverse business occupations and nonbroadcasting financial interests of Taft's many officers and directors. These interests may be summarized by stating that Taft's officers and directors have directorship or other interests in the following [*888] corporate institutions: six banks or other financial institutions, three insurance companies, Pan American Airways, real estate firms, Wald Manufacturing Co., Terminal Warehouse, Inc., The Dixie Terminal Co., Bristol-Meyers Co., Cincinnati Gas & Electric Co., Fox Paper Co., Pollack Steel Co., Standard & Poors Corp. (subsidiary of McGraw-Hill), Sorg Paper, Standard Register Co., Emery Indistries, Le Blond Machine Tool Co., Sabin Robbins Paper Co., Hanna-Barbera, Hanna-Barbera Record Sales (subsidiary), Fouad-Said Productions, Peterson, Howell & Heather, Inc. (Montreal, Canada), Drackett Co., McGraw-Hill Publishing Co., numerous nonpublic corporations owned by individual entertainment artists ( including David Niven, Lana Turner, Rod Steiger, Mia Farrow, Cornel Wilde, etc.), and the law firm of Koteen & Burt in Washington, D.C.

 

Lest it be thought that these many financial and industrial interlocking corporate directorships are completely divorced from the operations of Taft Broadcasting Co., it should be noted that legal counsel for Taft is Koteen & Burt, Washington, D.C. (Television Factbook, stations vol. 609-b (1968)), and Dudley S. Taft, an officer of Taft Broadcasting Co., is an associate of Koteen & Burt. Further, in order to finance the transfer of WIBF-TV, Taft Broadcasting has established unsecured lines of credit with the First National Bank of Cincinnati ($2,500,000) and the Fifth Third Union Trust Co. ($2,500,000). Not surprisingly, directors of Taft are also directors of these two banks. Mr. Charles S. Mechem, Jr., chairman of executive committee and chief executive officer of Taft since 1967, is a director of the First National Bank of Cincinnati, and Roger Drackett, a director of Taft, is also a director of the Fifth Third Union Trust Co. (of Cincinnati).

 

Before the transfer of WIBF-TV to Taft Broadcasting, the six Taft television stations had net weekly circulation in counties with 4,238,500 television homes. The addition of WIBF-TV in Philadelphia has increased this figure by almost 50 percent to 6,055,500 television homes. One would have thought that the size and importance of the Philadelphia market, the already high concentration of media control in the hands of a few resident and nonresident multiple-station owners, the enormous financial power of Taft Broadcasting Co., the wide-ranging nonbroadcasting interests of its directors, and the Commission's top 50 markets multiple-owner rulings and "duopoly" regulations, all would have caused the instant denial of the petitions for transfer of WIBF-TV. Yet apparently quite the opposite is true. One can only conclude that prior Commission utterances on the topic of undue concentration of control of the broadcast media are meaningless. A brief review of these utterances is therefore instructive.

 

In December 1964, the Commission released an interim proposal stating that applications for acquisition of VHF stations in the top 50 national markets would be designated for hearing if their grant would give an owner more than one VHF station in the top 50 markets. The majority stated:

 

We do not believe that this degree of multiple-ownership concentration in the largest population centers is desirable. While we do not now propose a divestiture of existing interests, we have determined that the trend toward concentration in the VHF service is sufficiently serious to require the immediate adoption of an interim polity (3 P & F Radio Reg. 2d 909, 910-11 (1964)). [*889] Shortly thereafter, the Commission initiated rulemaking to prevent acquisition of more than three television stations in the top 50 markets, no more than two of which could be VHF's. In so doing, the majority said:

 

It is axiomatic that American industry generally should be effectively competitive and that undue concentration of power should be avoided. * * * Basic competitive principles are particularly important in the licensing of broadcast stations: First, because we are dealing with the most influential of all communications media; and second, because we are required for technical reasons to limit and control entry into the broadcast field (5 P & F Radio Reg. 2d 1609, 1611 (1965)).

 

In February 1968, this rulemaking was terminated. The Commission majority reaffirmed that the "twofold purpose of the Commission's multiple-ownership rules is to promote maximum competition among broadcasters and the greatest possible diversity of programming sources and viewpoints" (12 P & F Radio Reg. 2d 1501 (1968)). It then decided to deal with the problems of concentration of control in the top 50 markets on a case-by-case basis to achieve greater flexibility but promised by "continue carefully to scrutinize every acquisition must meet an extremely high burden of proof before applications tending to increase concentration of control in the top 50 markets would be granted:

 

[We] will expect a compelling public interest showing by those seeking to acquire more than three stations (or more than two VHF stations) in those markets. The compelling showing should be directed to * * * demonstrating, with full specifics, how the public interest would be served by a grant of the application -- that is, the benefits in detail that are relied upon to overcome the detriment with respect to the policy of diversifying the sources of mass media communications to the public (12 P & F Radio Reg. 1501, 1507 (1968)). (Emphasis supplied.)

 

And what are these public interest showings which the majority today finds so "compelling" -- especially in light of the majority's statement that "[ideally,] the diversification policy would best be served by putting WIBF-TV in the hands of a group with no mass media interests. * * *"? (Majority opinion, p. 7.) The majority's response is contained in the following single sentence:

 

[The] competitive picture in Philadelphia makes it unlikely an independently owned UHF station can survive there (majority opinion, p. 5).

 

In support of this simply unbelievable statement, the majority offers only the comment that competition in the Philadelphia market comes from three entrenched network-affiliated VHF stations and two UHF stations in the hands of multiple owners, that WIBF-TV received only a 2-percent share of the metropolitan Philadelphia television viewing audience in July 1968, and that WIBF-TV sustained operating losses during the years 1965, 1966, and 1967. This is all. The majority does not even deal with the well known fact that new television stations in almost any market, whether VHF or UHF, almost always sustain rather substantial operating losses during the first few years of their existence. These early losses are no doubt compensated for by the comfortable profits or capital gains which soon accrue to [*890] most of their owners. One has only to recall that most established television stations earn an average 100 percent annual return on investment in tangible property. The FCC's annual TV broadcast financial data for 1967, for example, indicates that the six Philadelphia commercial stations earned over $14 million in total broadcast income (before taxes). Surely the earnings potential in the country's fourth largest national market can sustain an additional UHF station. The fact that WIBF-TV sustained operating losses after only a few years of operation can hardly support the proposition that an independent station not held by a multiple owner cannot survive in the Philadelphia market. As for the statement that the three network-affiliated VHF's are entrenched, little needs to be said. The essential question is whether a sufficiently large number of people will watch and therefore support the programming of the non-network affiliated stations. The answer to this question is not to be found in the majority's rhetoric.

 

The majority states that WIBF-TV's shaky financial condition has made lending institutions "unwilling to advance further funds to the station and in consequence, WIBF Broadcasting has had to borrow extensively from Fox family corporations" (majority opinion, p. 4). We are not told how actively WIBF-TV attempted to obtain operating funds from local financial institutions, nor are we told whether WIBF merely found it financially convenient (and profitable) to use in-house financing, thereby paying the interest from one corporate pocket to another. We are not told that Fox family corporations are unable to sustain the operations of WIBF-TV until it becomes profitable. And we are not told whether the Fox family's management of WIBF-TV was simply so bad that no amount of funding could have saved it. It may well be that the majority today gives away Philadelphia's last operating independent television station to a large multiple owner merely because the station's present owners lack the judgment or experience to operate a commercially viable television venture. What has possibly resulted from managerial inexperience in one station in one market should not be adopted as the sine qua non for approval of all large market transfers.

 

Finally, the majority suggests that only Taft Broadcasting Co. has the financing or experience to purchase WIBF-TV, and that local Philadelphia groups without mass media interests who might be willing to purchase WIBF-TV simply cannot be found (majority opinion, pp. 5-6, n. 5). In light of the massive economic power in the Philadelphia area, this contention is simply unbelievable. The American Banker's 1969 Director and Banking "Who's Who", for example, states that as of December 31, 1968, the 10 leading Philadelphia banks had well over $8 billion in total deposits. (These figures do not include those many Philadelphia banks with deposits under $10 million, nor other lending institutions in the area such as savings and loan institutions, credit unions, and the like.) The City and County Data Book for 1962, containing data from 1960 which is now more than 9 years old, indicates the aggregate yearly income of Philadelphia's population is almost $4 billion -- a figure no doubt substantially lower than the present figure, nearly a decade later. Recently, the American Banker, economy (in the April 29, 1969, page 30, reported that "[the] regional [*891] Philadelphia area) remains strong and the outlook is for a continued expansion. * * *" One simply does not have to continue. I cannot believe that the city of Philadelphia lacks individuals or corporations with the capital and know-how to operate WIBF-TV. n5 To suggest otherwise -- and, indeed, to create a per se rule of television market entrance which postulates a priori that only large multiple owners can successfully compete in this nation's large markets -- borders on fantasy.

 

n5 Superior Tube Co. of Pennsylvania, for example, has applied to the Commission to purchase WDCA-TV in Washington, D.C. Superior Tube has no other broadcast interests. If a Pennsylvania purchaser can be found for a Washington station, I would think one could be found for a Pennsylvania station.

 

Despite the majority's lamentations over WIBF Broadcasting Co.'s operating losses over the past few years, it should be noted that WIBF is by no means selling to Taft at a loss. It is calculated by the parties that the station's purchase price will approximate $4,500,000 -- not a miserly sum for a broadcast property to which reportedly "lending institutions have been unwilling to advance further funds. * * *" (Majority opinion, p. 4.) Nor have the transferors actually invested anything more than a pittance -- $310,000 -- in WIBF-TV in the form of capital investment. The Commission majority today allows the transferors to pull out of their negligible investment with scarcely a nod to the public interest -- and at a profit as well. In light of the fact that the majority is, at the same time, writing of Philadelphia's last operating independent station, one would have hoped for a little more.

 

Unable convincingly to demonstrate the compelling public interest showing required by past Commission policies for approval of a license transfer, the majority attempts to buttress its conclusion by recitals of the benefits which will supposedly flow to the public from Taft Broadcasting Co.'s stewardship of WIBF-TV. It finds that a few (highly questionable) considerations comprise "substantial reasons" why Taft is viewed as meeting the compelling burden of proof required of it. First, Taft proposes to spend approximately $500,000 on new color equipment (majority opinion, p. 5). The majority neglects to note that WIBF-TV already has color capacity, Television Factbook, Stations Volume 601-b (1968), and fails to state why it feels that additional color equipment will improve WIBF-TV's immediate financial picture. Second, Taft proposes to increase annual programming expenditures by $250,000. In actual fact, an examination of Taft's transfer application reveals that news programming on WIBF-TV will only be increased 0.2 percent, public affairs will only be increased 0.7 percent, and all other nonentertainment programming will be increased only 2.2 percent. In light of Taft's present financial posture (current assets exceeding liabilities by almost $9 million, and a 1968 after-tax income of over $8 million), it seems difficult to accept the majority's contention that Taft's programming proposals constitute a compelling public benefit. Third, Taft proposes to present programs "related to the needs of Negroes and the economically disadvantaged" as well as prime time discussion programs on problems of local concern (majority opinion, p. 5). However, as Taft proposes [*892] to hire just one person to supervise all programming other than news, entertainment, and sports, one wonders how serious this commitment is. Taft's real expenditures -- an additional $200,000 a year for new programming -- will be devoted, not to locally oriented programming, but to syndicated entertainment programming. The majority apparently feels that the public interest benefits that flow from network reruns are compelling.

 

Finally, the majority accepts whole hog Taft's self-proclaimed expertise in its statement: "Taft notes that it has the know-how and the financial resources to underwrite losses of the station while it is being made competitive." (Majority opinion, p. 5.) It is not clear why Taft has any know-how above or beyond that of any other reasonably competent corporate management. It may be true, for example, that Taft bought a losing station, WKYT-TV, in Lexington, Ky., in 1958, and has since made it show a profit. But it is not clear why the majority feels that only a multiple-station owner such as Taft can accomplish this with WIBF-TV.

 

In short, the majority's patently ineffective attempts to find a compelling public interest in the transfer of WIBF-TV make a mockery of its professed commitment to "promote diversification of program and service veiwpoints as well as to prevent any undue concentration of economic power contrary to the public interest. * * *" Report and Order (12 P & F Radio Reg. 2d 1501 (1968).) The results, however, are far more than tragi-comic. Philadelphia, more than almost any other market in the country, desperately needs a locally oriented and controlled television station with independent views, news and opinion. The majority's opinion today almost guarantees that this need will never be fulfilled.

 

Compounding its error, the majority also finds it necessary to waive the Commission's "duopoly" rules in order to grant the present application. These rules are contained in 47 C.F.R. section 73.636(a)(1), which state:

 

No license for a television broadcast station shall be granted to any party (including all parties under common control) if * * * [such] party directly or indirectly owns, operates, or controls one or more television broadcast stations and the grant of such license will result in overlap of the grade B contours of the existing and proposed stations, computed in accordance with 73.684 * * *.

 

The predicted grade B contour of WIBF-TV and the predicted grade B contour of Taft Broadcasting Co.'s station in Scranton, WNEP-TV, clearly and substantially overlap. The overlap area constitutes 13.3 percent of WNEP-TV's grade B contour, and 14.5 percent of WIBF-TV's grade B contour. The majority deprecates this overlap by use of the word, "only" -- "only 13.3 percent * * * and 14.5 percent." (Majority opinion, p. 6.) It neglects to note that the overlap segment is nearly a full one-seventh of the two stations' coverage areas, and embraces a population of roughly one-half million people.

 

The policies underlying the Commission's "duopoly" rules were stated in the 1964 report and order revising the multiple-ownership rules to incorporate fixed overlap standards (2 P & F Radio Reg. 2d 1588 (1964)). The Commission said:

 

The concept embodied in the rules is not complex: When two stations in the same broadcast service are close enough together so that a substantial number [*893] of people can receive both, it is highly desirable to have the stations owned by different people. This objective flows logically from two basic principles underlying the multiple-ownership rules. First, in a system of broadcasting based upon free competition, it is more reasonable to assume that stations owned by different people will compete with each other * * * than stations under the control of a single person or group. Second, the greater the diversity of ownership in a particular area, the less chance there is that a single person or group can have "an inordinate effect, in a political, editorial, or similar programming sense, on public opinion at the regional level." In this respect, the rules are based upon a view of the first amendment to the Constitution similar to that of the Supreme Court in the Associated Press case -- i.e., a notion that the Amendment "rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public."

 

In our notice of rulemaking, we placed particular emphasis upon the latter policy aspect underlying the "duopoly" rules * * *. (2 P & F Radio Reg. 2d at 1591-92.)

 

At the same time, the Commission considered the problem of waivers of its "duopoly" rules. In footnote 12, it stated: "A request for waiver of the rule showing, on its face, that application of the rule would be inappropriate would be entitled to a hearing" (2 P & F Radio Reg. 2d at 1594, n. 12). Today the majority grants an application for waiver which is by no means warranted on its face, and it does so without even ordering the previously required hearing. For this reason, the justifications advanced by the majority for waiver of a clear application of its duopoly rules bear close examination.

 

First, the majority argues that Scranton and Philadelphia are different and separate markets, and that WIBF-TV in Philadelphia and WNEP-TV in Scranton do not compete among each other for advertising revenues. It is not at all clear to me why this apparently unsupported statement is valid. I do not believe that any reasonably effective station management would write off an audience of close to one-half million people, unless, of course, that audience was written off to a sister station with overlapping propagation curves. In addition, the majority's argument does not even touch upon the second basic principle underlying the Commission's multiple-ownership rules: the need for the widest possible dissemination of information from diverse and antagonistic sources. Although the majority concedes that "[admittedly,] the grade B overlap is an aggravating factor (and) * * * the diversification policy would best be served by putting WIBF-TV in the hands of a group with no mass media interests * * *" (majority opinion, p. 7), it falls back on the untenable argument that the economic realities of the Philadelphia market require no less. As I have argued above, this argument is without merit.

 

The majority also contends that the Commission has pending in docket 16004 a rulemaking proceeding which might eventually adopt different standards for the calculation of grade B contours -- according to which there would be no grade B overlap between WIBF-TV and WNEP-TV. Quite apart from the accuracy of this statement, it ignores the fact that there are approximately 30 CATV systems operating within the overlap area, most of which no doubt carry both WIBF-TV and WNEP-TV. WIBF-TV can also reasonably be expected to expand its coverage area in the foreseeable future. Even if the standards for predicting grade B contours are changed, therefore, the [*894] two stations will in significant measure serve the same audience. And it was precisely this narrowing of the sources of information for a particular audience that the "duopoly" rules were designed to prevent. The majority also argues that the Commission in the past has "not considered CATV carriage of a given station beyond its grade B contours as relevant in determining compliance with the present 'duopoly' rule" (majority opinion, p. 7). This is, of course, irrelevant where parties violate the Commission's present "duopoly" rules without reference to CATV extensions of coverage, and where CATV coverage is an aggravating, not a determinative, factor.

 

The majority's treatment of the standing of several CATV systems to protest the transfer of WIBF-TV to Taft Broadcasting is equally unsatisfactory. The majority states that the CATV petitioners lack standing because they are prospective or potential competitors of Taft Broadcasting, not current or actual competitors. In the view of the majority, F.C.C. v. Sanders Brothers Radio Station, 309 U.S. 470 (1940), "assumes an actual state of competition, not the future prospect thereof" (majority opinion, p. 3).

 

The majority therefore ignores the fact that the CATV systems have no doubt expended substantial sums of money to obtain construction permits and franchises for the operation of CATV systems in areas affected by Taft interests. Yet the majority apparently holds them powerless even to appear before the Commission and present public interest-oriented arguments to protect their investments. The purpose of standing requirements is to prevent frivolous petitions and arguments by parties who have no real interest in the outcome of a case or proceeding. Here, the CATV system petitioners clearly have such an interest, and judging by their briefs, their arguments are by no means frivolous. What can possibly be gained by excluding the present CATV petitioners? The majority's holding will allow entrenched broadcasters to increase their economic power by purchasing additional stations, all to the potential detriment of their CATV competitors; yet it will bar those CATV competitors who have already committed themselves financially from raising objections. Certainly this result is dictated nether by precedent nor common sense.

 

Regardless of what the majority may say, its decision overlooks the Commission's requirement that a compelling showing of public interest be made before we waive our top 50 market policies or our present "duopoly" rules, and the decision can only decrease competition in the Philadelphia market. In has long been established Commission policy that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public. Today the majority steps back from this guideline. It does so in this Nation's fourth most powerful television market. It does so on the totally conjectural a priori assumption that only a multiple-station owner has the know-how, expertise or financial backing to operate an independent station in a market with other multiple-station owners. If this policy is followed, it will mean the end of independently owned stations in most of this country's major markets. I believe the Commission should seek to increase diversity in television, not [*895] decrease it. I believe the compelling public interest showing previously required in top 50 market situations was designed to do just that -- increase diversity -- and that the majority today ignores its most important guideline. And finally I believe that the Commission's "duopoly" rules were designed to preserve competition and diversity in this country's television markets. I cannot understand why the majority is willing to waive so much with so little justification.

 

I dissent.

 


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