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In the Matter of FORMULATION OF POLICIES RELATING TO THE BROADCAST RENEWAL APPLICANT, STEMMING FROM THE COMPARATIVE HEARING PROCESS

 

Docket No. 19154

 

FEDERAL COMMUNICATIONS COMMISSION

 

27 F.C.C.2d 580

 

RELEASE-NUMBER: FCC 71-159

 

February 23, 1971 Released

 

 Adopted February 17, 1971 


JUDGES:

BY THE COMMISSION: COMMISSIONERS BURCH, CHAIRMAN; JOHNSON, AND H. REX LEE CONCURRING AND ISSUING STATEMENTS; COMMISSIONER BARTLEY DISSENTING; COMMISSIONER WELLS DISSENTING AND ISSUING A STATEMENT.


OPINION:

 [*580]  1.  On January 15, 1970, the Commission issued its policy statement on comparative hearings involving regular renewal applicants (22 FCC 2d 424). The crux of this policy statement concerned the rendering of "substantial service" by the renewal applicant.  If the latter has rendered such service, without substantial defects, he will be preferred over newcomers; if not, he obtains no preference against the newcomer, and, while the ultimate issue will be determined on the comparative criteria, obviously has a handicap since he is then competing as one who chose to deliver less than substantial service to the public.  The Commission noted that the term "substantial", of necessity, lacks mathematical precision, but was nevertheless a perfectly appropriate standard, much used in statutes.  It pointed to the dictionary definition, "strong, solid, firm, much, considerable, ample, large, of considerable worth or value; important." 22 FCC 2d at 426. Finally, the Commission stated that the hearing process would be critical in implementation of this standard (22 FCC 2d at p. 426):

"The renewal applicant would have a full opportunity to establish that his operation was a 'substantial' one, solidly meeting the needs and interests of his area, and not otherwise characterized by serious deficiencies.  He could, or course, call upon community leaders to corroborate his position.  On the other hand, the competing party would have the same opportunity in the hearing process to demonstrate his allegation that the existing licensee's operation has been a minimal one.  And he, too, can call upon community leaders to testify to this effect if this is, indeed, the case.  The programming performance of the licensee in all programming categories (including the licensee's response to his ascertainment of community needs and problems) is thus vital to the judgment to be made.  Further, although the matter is not a comparative one but rather whether substantial service has been rendered, the efforts of like stations in the community or elsewhere to supply substantial service is also relevant in this critical judgment area.  There would, of course, be the necessity of taking into account, pertinent standards which are evolved by the Commission in this field."

2.  The purpose of this Notice is to explore whether some pertinent standards can be evolved in the area of television broadcasting.  The  [*581]  reason for restricting the inquiry to television is that our preliminary study of renewals has focused on this area.  It clearly constitutes a most important beginning point.  In view of their present problems, we exclude from our discussion within (pars. 3-5) the independent UHF stations.

3.  Clearly, any possible guidelines must be general in nature; there is no way, we repeat, to delineate with mathematical precision what constitutes "substantial service." However, the issue in this inquiry is whether it is appropriate to focus on two critically important areas, and to give some prima facie indication of what constitutes substantial performance in these areas.  The areas are local programming, and programming designed to contribute to an informed electorate.  The reason for focus on these two areas is obvious.  The Congressional scheme of TV allocations is based on local outlets.  See Sections 307(b), 303(s); S. Rept. No. 1526, 87th Cong., 2d Sess.; H. Rept.  No. 1559, 87th Cong., 2d Sess.  If a television station does not serve in a substantial manner as a local outlet -- if it is, in effect, a network spigot or mere purveyor of non-local film programming, it is clearly not meeting its crucial role.  Similarly, we have stated that the reason we have allotted so much spectrum space to broadcasting is because of the contribution which it can make to an informed electorate.  See Report on Editorializing by Broadcast Licensees, 13 FCC 1246, 1248 (1949). If a broadcaster does not make such a contribution in a substantial fashion, he is again undermining the basic allocations scheme.

4.  We thus single out these two areas: (1) local programming and (2) informed electorate programming (i.e., news and public affairs), and turn now to what figures should be proposed in these areas for the comment of interested persons.  In resolving that matter, we have had, necessarily, to rely upon our judgment and experience as to what should constitute "substantial service" in order to achieve the all important basic allocation goals delineated above.  However, it would make no sense to propose goals which are unrealistic, so we have also undertaken a study of all renewal applicants in the television markets.  Based on that study, we do not believe our proposals to be unrealistic because in each of these categories, substantial numbers of broadcasters are meeting the proposed guidelines.  There are three caveats to be noted in this respect.  We have no data in some areas; thus, the form does not now require information on public affairs programming in prime time.  The figure which we have selected for comment (3% of prime time or about an hour a week) appears to us to be both reasonable and realistic one, called for to achieve the above noted basic allocations goal.  The second caveat is the extent to which we should take into account the different revenue posture of stations.  We believe that as a general matter we should exempt the unprofitable station from these guidelines.  It is for that reason that for the present (i.e., until they become profitable), we have excluded from this inquiry the independent UHF stations.  Similarly, in the unlikely event that any other station losing money were to find itself in a comparative renewal hearing, the station could show the inapplicability of these guidelines because of its financial posture; judgment of its operation would thus have to be on an ad hoc basis, directed to the particular facts.  But aside  [*582]  from this consideration of unprofitability, there is also the issue whether, based on the study, different guideline figures are not appropriate for stations with lesser revenue figures.  To take this factor into account, we propose, for the most part, a range in these categories.  The high end of the range would apply to the station in the top 50 markets with revenues over $5,000,000, while the low end would apply to the station with revenues below $1,000,000; a station with revenues between these figures would fall appropriately within the range (with, we stress, no specification of a precise, decimal-point figure but rather a general or "ball-park" figure).  The appropriate revenue bracket would be denoted on the renewal or annual form, by checking a box.  We specifically ask for comments directed to this question of the appropriate range, and to facilitate such comments, will make public our study data.  n1 The third caveat has to do with the area of programming designed to contribute to an informed electorate.  In view of the clear, close relationship between news and public affairs programming, comments are requested whether these two categories should not be viewed together, with one overall figure and leeway for the licensee to make judgment within that figure.  Thus, a station in a very large community might make the judgment to concentrate on public affairs programming, in light of the very intensive news efforts of several other stations in the community.  Or, a station, if it judged it a more effective way of illuminating issues, might increase its news programming as against public affairs, with the insertion in such news programming of substantial segments dealing with public affairs discussions.

5.  With this as necessary background, we now set out the following proposed figures as representing substantial service:

(i) With respect to local programming, a range of 10-15% of the broadcast effort (including 10-15% in the prime time period, 6-11 p.m., when the largest audience is available to watch).

(ii) The proposed figure for news is 8-10% for the network affiliate, 5% for the independent VHF station (including a figure of 8-10% and 5%, respectively in the prime time period).

(iii) In the public affairs area, the tentative figure is 3-5%, with, as stated, a 3% figure for the 6-11 p.m. time period.

 

These figures are, of course, tentative ones set forth for comment by the interested parties.

6.  There are a number of obvious considerations as to the above inquiry.  First, as stated, it does not constitute the complete picture as to whether a station is rendering substantial service.  Thus, it does not deal with every programming category.  We believe that not every category is susceptible to the drawing of general guidelines.  For example, there may be substantial agricultural interest in one area, and virtually none in another.  As to such variables, only individual inspection, perhaps in the hearing process, could definitively delineate whether substantial service was being rendered in every respect.  This point merits emphasis; we have no intention, now or at any future time, to try to delineate that X% of time need be devoted to a particular programming area such as agriculture, religious, etc. Second, even  [*583]  as to the two general areas where we think we can usefully set forth overall guidelines for the reasons set forth in par. 3, supra, we point out that the guidelines, if adopted, would not be a requirement that would automatically be definitive, either for or against the renewal applicant.  Thus, if the applicant did not meet these guidelines, he could still argue in a comparative hearing that his service was substantial, using means such as described in par. 1, supra; he might point to an exceptional qualitative effort, e.g., an exceptional dedication of funds, staff and other resources to compensate for the lesser quantitative showing.  On the other hand, the fact that a renewal applicant did meet these general guidelines would not preclude the contention at renewal or at a comparative hearing that his service was not substantial in these two areas.  An applicant could devote a most substantial percentage of his time to public affairs, for example, but with coverage solely of issues like canoe safety, rather than the issues that are truly of "great public concern" in the area.  See Red Lion Bctg. Co. v. F.C.C., 395 U.S. 367, 394 (1969). In local programming the licensee again could have a substantial percentage figure and yet not serve "equitably and in good faith" the needs of significant groups within his service area.  See Report and Statement of Policy re: Commission's En Banc Programming Inquiry, 20 Pike & Fischer, R.R. 1901 (1960); Capitol Bctg. Co., 38 FCC 1135, 1139-40 (1965). Here again, this would be a matter for particularized assessment, with the testimony of community leaders of particular significance.  See par. 1, supra.  There could of course also be substantial issues as to compliance with bedrock policies such as the fairness doctrine, the antidiscrimination rules, or over-commercialization.  In short, the general guidelines are just that -- general or prima facie indications of substantial service, not definitive mathematical models.  Even so, these general guidelines would appear useful and helpful, both to the industry and to the interested public.  For they would give a general indication of what is called for, at least quantitatively, to meet substantial public interest requirements in these two critically important areas.  Finally, we stress that assuming guidelines were to be adopted on the basis of this notice, such guidelines would not then become fixed or immutable.  Clearly, in a field as "dynamic" as this (see FCC v. Pottsville Bctg. Co., 309 U.S. 134, 138), it would be necessary to review them in the light of experience and changing conditions and thus to determine at appropriate intervals whether they should be revised, upwards or downwards.

7.  The above proposal focuses on the renewal applicant in relation to the criterion of substantial service where there are competitors.  That concept clearly has great relevance to the renewal process generally since it constitutes the critically important competitive spur.  See Policy Statement, supra.  There are other revisions or proposals generally applicable in this renewal television field which should be briefly noted and which, we believe, complement the foregoing proposal:

(i) A renewal applicant would be required to list the most important problems or concerns facing his area during the twelve months preceding filing of his application which, in his opinion, were most serious or important.  He would then be required to list all the programs he has presented during that same period which dealt with  [*584]  these issues, giving the name of each program, the date, time and duration of its broadcast, and a brief description of the program.  At yearly intervals (specifically on September 1), the broadcast licensee would again prepare the information set out in the first two sentences of this subsection (i).  This information would be an attachment to a shortened form which he would prepare at this annual interval, setting out, inter alia, his performance in the above described categories (local; news; public affairs).

(ii) As proposed in Docket No. 19153, the licensee would also make announcements at specified intervals, concerning his obligation to serve the needs and interests of his area and, if appropriate, his renewal application.

8.  In view of the policy considerations discussed, we would propose not to require the extensive survey now incumbent upon the new of this proposal to simplify our procedures is that there is no need at renewal for a new, detailed survey; the licensee should have been digging in each year of his operation to ascertain and meet needs, and would have maintained a continuing stream of contacts with interested individuals, leaders, and groups.  In short, when it comes to renewal -- to a question of performance consistent with the public interest standard -- it is substance, not form, which is of critical importance.  See par. 9, infra.

9.  We stress this point of community involvement.  The above proposals in par. 7 are geared to a continuing dialogue between station and community -- not a triennial spurt; to actual performance in crucial areas rather than elaborate surveys; and, finally, to reliance upon community leaders and groups, both to point up the need for any further inquiry by the Commission at renewal time or to spur substantial performance by the possibility of filing of a competing application.  See Policy Statement, supra.  By facilitating both awareness of the station's performance in critical areas throughout the license term and a continuing participation by the public, we believe that we are acting in a manner fairer to the licensee and fairer to the interested public.  None of these proposals, we emphasize, is designed in any way to dictate a particular program or format.  They do indicate areas where the licensee must focus in view of sound and basic allocations policy.  But the programming to be chosen to implement these policies is a matter for the licensee's judgment, after giving appropriate and good faith attention to the area's needs and interests.  Since that is so, the Commission intends to place great reliance on community interest and participation in the renewal process.  If the approach is successful in the area here under consideration, a simplified approach to renewal, with emphasis on community feed-back, will be considered for other broadcast areas.  However, we intend to complete our study of this television area, and to gain experience therefrom, before turning to its consideration elsewhere.

10.  If adopted, there is the question of the applicability of the new policy criteria as to substantial service.  It would be clearly unfair to make such policies immediately applicable to the renewal applicants and judge their performance in hearings on policies which were not yet formulated or known to them; rather, if adoption of these general  [*585] criteria is found to be warranted, there should be an appropriate time interval (e.g., 12 months) afforded licensees to meet these guidelines.  We ask for comment on that time period.  Any comparative hearings involving renewal applicants before that period would be governed by the present, more amorphous standards, with showings along the lines of the policy set out in par. 1, supra.  In short, there would be a moratorium not on the filing of competing applications but on the applicability of these general criteria.

11.  The foregoing proposal thus constitutes the basis of an inquiry to explore whether it is feasible or appropriate to give greater guidance with respect to the critically important concept in our 1970 Policy Statement of "substantial service." If it is not feasible or appropriate, one obvious alternative is simply to develop our policies in this area through a series of ad hoc decisions, with any overall policy awaiting the accumulation of greater experience.  We have of course reached no final or tentative conclusion, but rather would stress our openness to all alternatives or suggestions as to what action would best serve our objective and, in the final analysis, the "public interest in the larger and more effective use of radio" (Section 303(g) of the Communications Act of 1934, as amended).

12.  Authority for this inquiry is contained in Sections 4(i), 303, 307(d), 309, and 311(a) of the Communications Act of 1934, as amended.

13.  Pursuant to applicable procedures set forth in 1.415 of the Commission's Rules and Regulations, interested persons may file comments on or before May 3, 1971, and reply comments on or before June 3, 1971.  In accordance with the provisions of 1.419 of the Rules, an original and 14 copies of all comments, replies, briefs, and other documents shall be furnished the Commission.  All relevant and timely comments and reply comments will be considered by the Commission before final action is taken in this proceeding.  In reaching its decision in this proceeding, the Commission may also take into account other relevant information before it, in addition to the specific comments invited by this Notice.

 

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.


 

CONCURBY: BURCH; JOHNSON; LEE

 

CONCUR:

 [*587]

CONCURRING STATEMENT OF CHAIRMAN DEAN BURCH

In our 1970 Policy Statement on comparative hearings involving renewal applicants, we indicated that the critical concept of "substantial service" would be determined by the hearing process or by pertinent standards formulated by the Commission.  I recognize the need for the ad hoc process as to many facets of such a hearing.  In view of the considerations discussed in the majority opinion, there can be no all-embracing detailed rule or policy in this field.  But it seems to me that to the extent that it is feasible to do so, there are policy advantages to proceeding here in a general or overall fashion with respect to  [*588]  some of the important bedrock criteria.  It allows all interested persons to participate in formulating the appropriate standards, rather than having them fashioned by a series of narrow adjudications with limited parties.  It affords a much larger perspective than the record compiled by parties in one proceeding.  This method also eventually results in affording prior and general notice to the industry and the interested public as to what the general guidelines are -- obviously a fairer way to proceed.

I am aware that the matter is a difficult, sensitive one.  The genius of the American system is its pluralism -- its individuality.  Any governmental effort which undermines or thwarts that individuality is probably bad law and certainly bad policy.  I therefore fully subscribe to the statement in paragraph 6 that we will and must eschew ordaining that x% of time be devoted to agricultural, religious, etc., programming.

The Notice seeks to avoid that pitfall by concentrating on two bedrock general areas, local programming and programming designed to contribute to an informed electorate.  And the Notice is limited to television, which, unlike radio with its many specialized operations, is akin to a "general store." Even as so limited, there may be drawbacks to this or any percentage guideline approach.

However, I think that the approach is worthy of full exploration.  To paraphrase Winston Churchill's famous remark about democracy, this may be the worst way of proceeding except when you consider all other ways of proceeding.  Sooner or later -- generally or in ad hoc fashion, the agency must come to grips with the basic questions here raised.  I believe that it may well be both better and fairer to do so sooner and in a general inquiry than to await the slow accretion of policies formulated in narrow adjudications with limited records and limited participation by interested persons.  If the record of this inquiry establishes that it is not feasible to formulate general guidelines even in these limited areas, then we must await the judgment of the individual cases.  But we will at least have tried to explore a method which appears to be fairer to the interested groups, to the broadcasters, and above all to the public interest.


CONCURRING OPINION OF COMMISSIONER NICHOLAS JOHNSON

The history of this proceeding and my views on it, have been spelled out earlier.  Comparative Hearing on Renewal Applicants, 22 F.C.C. 2d 833, 841 (1970), reconsideration denied 24 F.C.C.2d 383, 386, (1970); Hearings on S. 2004 Before the Comm. Subcom. of the Senate Comm. on Commerce, 91st Cong. 1st Sess., ser. 91-18, pt. 2 at 398 (1969); "No We Don't," New Republic, Dec. 6, 1969, pp. 16-19; How to Talk Back to Your Television Set (1970).

Suffice it to say, the Commission is now obliged to deal, in some fashion, with the creation of a definition of "substantial performance."

Thus, while I cannot relax and enjoy it, I can at least bring myself to confront the inevitable.  Accordingly, I concur in the issuance of this Notice of Inquiry.

As I see it, we have two basic alternatives: (1) A "common law" case-by-case evolution of "substantial performance," or (2) an effort  [*589]  at general definition and promulgation as a general policy statement or rule.

The latter approach clearly has the advantages of (1) administrative ease, reducing our hearings and processing load substantially, and (2) reducing the sense of insecurity and instability in the industry when standards are vague, unarticulated or unknown.

If general guidelines are to be used, we then reach the following issues.

First, there is a fundamental conceptual issue regarding the nature of "substantial." Is the FCC to determine levels of programming performance (or other criteria) which, if met, constitute "substantial" performance?  Is it theoretically -- and practically -- possible for all licensees to be "substantial" performers?

Or does "substantial" refer to the "best" performers -- necessarily a comparative evaluation?

The industry's arguments at the time (and later before this Commission), and the concern of public interest groups, I had always assumed the latter standard was what was desired and anticipated.

If the comparative approach is to be used, we must then address some crucial "details." What percentage of the broadcasters can be found to have demonstrated "substantial performance" -- 2%, 10%, 25%, 50%, 80%?

So far in this discussion we have not considered criteria.  That is, we have simply put the question, "regardless of the criteria used, once they are selected and applied, what percentage of the top performers will be deemed to be substantial?"

But once that has been resolved, we confront the question of criteria.  Are news, public affairs and local programming the only quantifiable measures?

As the notice now stands it is not necessarily a commitment to revise the performance levels upward in such manner as to continue to "protect" approximately the same percentage of broadcasters as the present levels.  Should it be?

In short, so far as I am concerned there are a great many open questions to be addressed in this inquiry -- even apart from the most fundamental misgivings as to why we painted ourselves into this corner in the first place.

I concur in the proposition that we have to move.  Aside from that, I'm open to suggestions on where we go.


CONCURRING STATEMENT OF COMMISSIONER H. REX LEE

I have concurred in putting out for inquiry the Commission's newly proposed renewal standards and definitions of substantial performance by television broadcast licensees.  As the Chairman states in his concurring opinion, the search for standards by all parties concerned is far preferable to the process of allowing such standards to evolve through adjudications standing on limited records and entirely on local public interests.

Nevertheless, I am concerned with the inclusiveness and generality of these standards and definitions.  Their broad brush and sweep tend to neglect economic realities and structural differences within the  [*590]  broadcasting industry.  While it may be entirely realistic and financially reasonable to impose these new requirements on television stations in the top fifty markets, the competitive and financial position of television stations in smaller markets seems to demand a search for different approaches.  In other words, wisdom would seem to dictate that the Commission, for renewal purposes, begin exploring the advisability of classifying broadcasting stations based on financial and competitive considerations rather than begging off the question with a statement that our guidelines may not be definitive or conclusive either in finding, or being unable to find, that the public interest has been served.

Moreover, there seems to be some degree of short-sightedness in a system of regulation which encourages local live origination, local news and public affairs by broadcasters in markets "bristling" with CATV activity where the importation of distant network signals undercut a broadcaster's efforts to meet his regulatory and public interest obligations.  The same may be said of the situation where small market broadcasters must cope with these severe local public interest requirements in the face of specialized programming demands imposed by competition and the growing law of community group rights.  Yet I am fearful that the generality of these new standards does not allow, with sufficient clarity, adequate exception or local variations which may be in the public interest.  Under any system of law it may be appropriate to leave certain questions unanswered.  But business enterprises need a higher standard of certainty in order that their operations may take place in an environment of relative stability.

These considerations, of course, should not paralyze the search for general standards.  It is for this reason that I have concurred.  But I do hope the various parties will provide us with sufficient information so that we may begin to address these questions.


DISSENTBY: WELLS

 

DISSENT:

DISSENTING STATEMENT OF COMMISSIONER ROBERT WELLS

Although many licensees will welcome the short range benefits of having numerical requirements to meet, I feel that in the long run this principle will not benefit either the licensee or the public.  I fear that setting quantitative standards will be the impetus for licensees to play this numbers game to satisfy the Commission.  If this occurs, the licensee will not be discharging his responsibility to operate the station in the public interest.  If this country is to enjoy truly diverse programming, we must leave some measure of flexibility to the licensee.  This policy will leave fewer decisions to management.

We are naive if we think that the licensee of a television station that is worth millions of dollars will take any chances on falling below our numerical floor.  If by meeting or exceeding these numbers he is practically assured of license renewal, there can be no doubt as to the course he will follow.  By meeting these requirements, he will have precluded the possibility of the public being in a position to have a meaningful impact on his performance.

 [*591]  I realize that handling renewals on a case-by-case basis is not the most expeditious way to discharge our responsibilities.  But, after all, the function of this agency is to render judgment, not necessarily to set hard and fast rules.  True, there will be leeway for some judgment under the proposal that the majority has sanctioned.  It will be minimal compared to the latitude which both the broadcaster and the public have a right to expect.  We have taken the easy road.

 


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