In Re Applications of TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND CAPITAL CITIES BROADCASTING CORP. (ASSIGNEE) For Assignment of License of Station WFIL-TV, Philadelphia, Pa.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND CAPITAL CITIES BROADCASTING CORP. (ASSIGNEE) For Assignment of License of Station WNHC-TV, New Haven, Conn.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND CAPITAL CITIES BROADCASTING CORP. (ASSIGNEE) For Assignment of License of Station KFRE-TV, Fresno, Calif.; CAPITAL CITIES BROADCASTING CORP. (ASSIGNOR) AND LEE ENTERPRISES, INC. (ASSIGNEE) For Assignment of License of Station WSAZ-TV, Huntington, W. Va.; CAPITAL CITIES BROADCASTING CORP. (ASSIGNOR) AND ALBANY TELEVISION, INC. (ASSIGNEE) For Assignment of Licenses of Station WTEN (TV), Albany, N.Y., together with satellite Station WCDC(TV), Adams, Mass.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND WFIL, INC. (ASSIGNEE) For Assignment of License of Station WFIL, Philadelphia, Pa.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND RICHER COMMUNICATIONS, INC. (ASSIGNEE) For Assignment of License of Station WFIL-FM, Philadelphia, Pa.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND WESTERLY BROADCASTING CO. (ASSIGNEE) For Assignment of License of Station WNHC, New Haven, Conn.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND METRO CONNECTICUT MEDIA, INC. (ASSIGNEE) For Assignment of License of Station WNHC-FM, New Haven, Conn.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND KFRE BROADCASTING, INC. (ASSIGNEE) For Assignment of License of Station KFRE, Fresno, Calif.; TRIANGLE PUBLICATIONS, INC. (ASSIGNOR) AND STEREO BROADCASTING CORP. (ASSIGNEE)
For Assignment of License of Station KFRE-FM, Fresno, Calif.
File No. BAPLCT-105; File No. BALCT-409; File No. BALCT-411; File No BALCT-408; File Nos. BALCT-410 and BALTTV-81; File No. BAL-7167; File No. BALH-1406; File No. BAL-6970; File No. BALH-1384; File No. BAL-6994; File No. BALH-1412
FEDERAL COMMUNICATIONS COMMISSION
28 F.C.C.2d 80
RELEASE-NUMBER: FCC 71-209
February 26, 1971 Released
Adopted February 24, 1971
MEMORANDUM OPINION AND ORDER
BY THE COMMISSION: COMMISSIONERS BARTLEY AND JOHNSON CONCURRING AND ISSUING STATEMENTS.
[*81] 1. We have before us for consideration the above-entitled applications for consent to the assignment of broadcasting authorizations.
2. The applications involve a series of related and mutually contingent transactions. Under the "basic transaction", Capital Cities would acquire from Triangle Publications, Inc., WFIL (AM, FM and TV), Philadelphia, Pennsylvania; WNHC (AM, FM and TV), New Haven, Connecticut; and KFRE (AM, FM and TV), Fresno, California and Triangle's television program Syndication Business. The total consideration for this basic transaction is $110,000,000. While Capital Cities would acquire nine broadcast stations, it proposes to retain and operate only three of them -- the television outlets in Philadelphia, New Haven and Fresno (BAPLCT-105; BALCT-409 and BALCT-411). Pursuant to its agreement with Triangle, Capital Cities will dispose of the remaining six AM and FM stations to separate buyers (BAL-7167, BALH-1406, BAL-6970, BALH-1384, BAL-6994, and BALH-1412). n1 In order to comply with the multiple ownership rules, Capital Cities then proposes under related application to assign the licenses of two of its presently held television stations -- WTEN-TV, Albany, New York, together with its satellite station, WCDC(TV), Adams, Massachusetts; and WSAZ-TV, Huntington, West Virginia (BALCT-408, BALCT-410 and BALTTV-81).
n1 Pursuant to the basic agreement of February 13, 1970, Capital Cities has called upon Triangle to file assignor's portions of the applications covering sales to separate buyers. The contracts of sale, however, are between Capital Cities and the separate buyers.
3. We have carefully considered all the applications and we find that all of the proposed assignees are legally, technically, financially and otherwise qualified to acquire the authorizations they seek; that all have conducted surveys of the needs and interests of the communities they wish to serve and propose a programming service responsive to ascertained needs, and that a grant of all the applications would serve the public interest, convenience and necessity. In the interest of brevity, we forego extended discussion of those aspects of the applications which present no problems. However, the public interest requires that [*82] certain major aspects of the transactions be discussed in detail. We refer here to the Top-50 policy, and to the propriety of the "package" transaction and spinoffs. n2
n2 The matters considered here were raised in a Petition to Intervene and Deny filed by Citizens Communications Center (CCC) on its own behalf and on behalf of a Law School Study Group. As noted hereinafter, that petition was withdrawn. Certain expenses were paid by Capital Cities to persons designated by petitioners as minority representatives with whom Capital Cities was to consult in its ascertainment of community needs. These expenses, totaling something over $5,000, raise a question under our decision in KCMC, Inc., 25 FCC 2d 603 (1970), on appeal sub, nom. Office of Communication of the United Church of Christ v. Federal Communications Commission, No. 24,672, C.A.D.C. However, since the payments here are fully consummated and are of minimal significance in the present context, we need not decide whether it comes within our KCMC holding. We note here finally that even though the matters under discussion were raised by CCC, they are the type of matters which would in any event have been raised independently by the Broadcast Bureau. Certain minor matters -- alleged diminution of service at some of the stations and a claim that one of the assignee's involvement in antitrust litigation required a hearing -- were also raised by CCC. Substantial amendments to the applications make it unnecessary to consider these minor matters.
THE TOP-50 ISSUE
4. Apart from its Huntington and Albany television stations which are to be disposed of under the related applications, Capital Cities is the licensee of KTRK-TV (Houston, Texas) and WTVD-TV (Durham, North Carolina). Both stations are in the Top-50 television markets. Under ARB rankings, Houston is the 27th market and Raleigh-Durham is ranked 49th. Two of the three television stations Capital Cities proposes to acquire from Triangle are in the Top-50 markets. WFIL-TV (Philadelphia) is in the 4th ranked market, and WNHC-TV (New Haven) in the 12th. Given these market rankings, CCC contended in its Petition to Deny that acquisition of WFIL-TV and WNHC-TV was subject to the Top-50 policy and could only be justified by the "compelling public interest showing" of benefits versus detriment to the public interest, specified in the Report and Order in Docket 16068, 12 RR 2d 1501, 1507. CCC also argued the proposed retention of WFIL-TV and WNHC-TV under common control raised a question of regional concentration under the rule of Witchita-Hutchinson Co., Inc., 19 FCC 2d 433.
5. although acquisition of the Philadelphia and New Haven outlets would not -- as suggested by CCC -- triple the television audience which could be reached by Capital Cities Top-50 stations, Capital Cities concedes that on a cumulative net weekly circulation basis its potential TV audience would increase from 2,440,804 TV homes to 4,761,435 TV homes. Nevertheless, in its Opposition, Capital Cities argued that the more stringent standard under the Top-50 policy does not apply to an exchange of stations, in which the number of Top-50 stations will remain constant. In any event, Capital Cities urges that this question need not be decided since Capital Cities substantially amended its applications on December 30, 1970, by submitting a "compelling public interest showing."
6. At this point, we mention matters which occurred after the CCC petition was filed. After filing, representatives of Capital Cities held a series of consultations with CCC officials and representatives of minority groups in Philadelphia, New Haven and Fresno to determine if there were any basis on which the CCC charges could be resolved. An outgrowth of these consultations was the Minority Program [*83] Project, a $1,000,000 programming commitment by Capital Cities, discussed more fully below, and on January 4, 1971, CCC withdrew its Petition to Deny. In essence, while CCC had some reservations about the "package" form of the applications and the proposed spinoffs, CCC stated it felt the overall public interest would be served by prompt approval of the applications. In CCC's view, amendments to the applications prompted by the CCC petition and subsequent undertakings -- and especially the Minority Program Project -- lent assurances that the public interest would be served. ("Withdrawal of Petition to Intervene and to Deny," paragraphs 7 et seq.)
7. We turn to applicability of the Top-50 policy to these applications. Despite Capital Cities urging this matter need not be decided in the particular context here, the issue is too important to be left in a state of limbo. The question here is one of interpretation, and must be resolved within the framework of special problems concerning the Top-50 television markets -- the Commission's expressed concern with the accelerating trend toward concentration of group ownership in the largest population centers and a fear that the future growth of UHF television might follow the same pattern. See Television Multiple Ownership Rules, 5 RR 2d 1609, 1613 para. 10 (1965). We concede that the Report and Order terminating the proposed rulemaking in Docket 16068 and specifying ad hoc consideration of Top-50 applications under the "compelling public interest showing" standard does not explicitly cover an exchange of stations within the Top-50 markets where overall holdings remain constant. But to exempt such exchanges -- particularly transactions of the magnitude involved here -- from the special policy requirements would be to exalt form over substance. For the asserted inapplicability of the Top-50 policy here depends largely on the accidents of form. For example, if Capital Cities first disposed of one of its present Top-50 stations (as it proposes in part to do under the related applications), its later acquisition of WFIL-TV and WNHC-TV would clearly fall within the letter of the policy.
8. The special concerns which underpin the Top-50 policy require that we look beyond mere form and focus on substance. Where an applicant "up-markets" -- as Capital Cities concedes it is doing here -- we see no sound policy reason why the Top-50 policy should be considered inapplicable. And the need for a "compelling public interest showing" is especially important where up-marketing takes place within the Top-50 markets, because the very purpose of such a move is to increase the Top-50 homes which the applicant's stations will serve. And the additional concentration of group ownership stemming from such Top-50 audience increases -- the principal policy concern of the Top-50 policy -- makes it entirely reasonable to require an applicant to justify the transactions under the special public interest standard. Accordingly, we hold that the Top-50 policy applies to an exchange of stations within the Top-50 television markets, even though the total number of Top-50 stations involved remains fixed.
9. Upon careful consideration of the amendments to the applications covering acquisition of WFIL-TV, WNHC-TV and KFRE-TV, n3 [*84] including the Minority Program Project, we are persuaded that Capital Cities has made the required "compelling public interest showing". n4
n3 Amendment, Dec. 30, 1970, to BAPLCT-105, BALCT-409, and BALCT-411, portion entitled "Showing As to Multiple Ownership and Public Interest Benefits That Will Result From Grant."
n4 While not raised in the CCC petition, Albany Television's proposed acquisition of WTEN-TV and its satellite, WCDC-TV, are also subject to the Top-50 policy. This matter is consider separately below.
10. A grant of the present applications would reduce local concentration of broadcast media in four major communities, separating the ownership of AM, FM and TV stations in Philadelphia, New Haven and Fresno and separating the ownership of WROW (AM & FM), Albany (licensed to Capital Cities) from that of companion Station WTEN (TV). In light of our "one to a market" rule and our efforts to encourage the voluntary separation of AM, FM and TV facilities through the issuance of tax certificates under Section 1071 of the Internal Revenue Code, n5 this result of a grant must be regarded as a major public benefit.
n5 See Tax Certificates, 19 RR 2d 1831 (1970).
11. Secondly, a grant would eliminate the common ownership of WFIL-TV and WLYH-TV, Lebanon, which have substantially overlapping Grade B coverage areas. Simultaneously, it would reduce Triangle's TV stations in Pennsylvania from three to two, reduce Capital Cities' TV stations in New York from two to one and separate the Triangle stations on the Eastern seaboard (WFIL-TV and WNHC-TV) from those further inland (WLYH-TV, WFBG-TV and WNBF-TV). Thus, it would clearly reduce concentration of control over television media serving Pennsylvania. n6
n6 The Grade B coverage areas of WLYN-TV, wfil-tv/ and WFBG-TV cover most or Pennsylvania; WNBF-TV, Binghamton, also serves a substantial portion of northeastern Pennsylvania.
12. As to the concentration inherent in continued common ownership of WNHC-TV and WFIL-TV, Capital Cities has demonstrated that both stations are subjected to an extraordinary amount of competition both in their own markets and from adjacent markets. The great bulk of the population served has a minimum of five competing commercial television services; much of that population has as many as 15 or more other commercial alternatives; and the two stations are far from dominant in the region.
13. Moreover, unlike the proposed transferee in Wichita-Hutchinson, supra, Capital Cities has no other television stations and no daily newspapers in the area of concern (whether it be the "Baltimore to Boston Megopolis" or that area plus the State of Pennsylvania). Its only mass media in the area are radio stations WPAT (AM & FM), Paterson, New Jersey, and WPRO (AM & FM), Providence, Rhode Island, which are subject to substantial competition in their own markets. n7 In Wichita-Hutchinson, the applicant had "extensive media interests" in two states and sought to "enlarge the linear sphere of [its] influence to include a third state." Wichita-Hutchinson Co., Inc., 20 FCC 2d 951, 952, 17 RR 2d 1235, 1237 (1969). The issue of "undue" regional concentration arose because of this "... increased area in [*85] which the transferee would have a voice..." (20 FCC 2d at 953, 17 RR 2d at 1237). We do not face here either extensive pre-existing regional concentration or a proposal that such concentration as may exist be substantially increased. There is rather proposed a decrease in regional concentration, particularly in Pennsylvania but also in the other relevant areas.
n7 In addition, if radio stations are to be considered, a grant would bring four entirely new and separate radio owners to the area, operating WFIL (AM), WFIL-FM, WNHC (AM), and WNHC-FM.
14. Third, on the national level, the proposed increase in the audiences which Capital Cities stations would reach is offset by an equally substantial increase in the competition to which Capital Cities would be subjected -- a factor clearly relevant under Section 73.636(a)(2) of the Rules. The Capital Cities stations to be sold (WSAZ-TV and WTEN) now compete against only two or three other commercial stations and have substantial shares of the available audience (50% in the case of WSAZ-TV (Huntington) and 37% in the case of WTEN (Albany)). The stations it would acquire in the Top-50 markets (WFIL-TV and WNHC-TV) compete against five or more other commercial stations in the heart of their market areas and have far smaller shares of the market audience (26% and 28%).
15. This increased competition reduces any concern with the increase in the seizes of Capital Cities potential audiences, because the gain in potential audience involves viewers with the widest choice of service. Moreover, since Lee Enterprises, Inc. (proposed assignee of WSAZ-TV) has no present interests in the Top-50 markets, a grant would actually increase the number of separate television owners serving those markets.
16. Finally, Capital Cities refers both to its past record n8 and to a unique plan for public service programming at the three television stations to be acquired -- the Minority Program Project. After consulting with petitioners and minority group leaders in Philadelphia, New Haven and Fresno, Capital Cities proposes to commit a total of $1,000,000 over a three-year period to developing programs which reflect the views, aspirations, problems and culture of blacks and Spanish-surnamed minority groups within the service areas of the three television stations. Such programming will be produced (1) by individual Capital Cities stations, (2) by a Capital Cities corporate production unit, and/or (3) by outside sources whose efforts would be funded wholly or partially by Capital Cities. Capital Cities anticipates the effort will produce sufficient programming to allow each of the subject stations to telecast a minimum of 6 hours of programming in this field per year (with each program at least 1/2 hour in length) and that a minimum of 50% of such programs will be telecast in prime time (6-11 p.m. on weekdays and 5-11 p.m. on weekends in the Eastern Time Zone).
n8 Capital Cities points to its corporate program production unit, responsible for world-wide television coverage of the Eichmann trial in Jerusalem and the Peabody Award-winning programs "Verdict for Tomorrow" (based on the Eichmann trial) and "The Secret of Michelangelo: Every Man's Dream" (an exploration of Michelangelo's Sistine Chapel ceiling, broadcast by the ABC network), as well as Lowell Thomas' "Patrol Into the Unknown" (a study of the people of New Guinea broadcast by the NBC network), among other programs. It shows also that the capacities of this production unit have been integrated with the resources of individual Capital Cities stations in a series of programs titled "A Visit with Franz E. Winkler, M.D.", featuring interviews on a range of "psychosexual and mental hygiene problems", including changes occurring within the American family and their impact on society at large.
[*86] 17. while retaining full control over fund expenditure and the production and scheduling of programs, Capital Cities proposes to engage in substantial consultations with advisory committees composed of minority group leaders in Philadelphia, New Haven and Fresno concerning the manner in which funds will be spent and programs are planned and produced. It will give "great weight and careful consideration" to any objection by an advisory committee as to the topic of a particular program in the project; if it declines to broadcast a program recommended by a committee or rejects a programming proposal by a committee, it will provide a written statement of its reasons upon written demand therefore.
18. Without going further into the details of the project, n9 Capital Cities obviously has made a major programming commitment to convey the views of racial and ethnic minority groups to the public at large. We note in passing that the minorities involved are those to whom national policy and our rules in the field of employment discrimination are largely addressed. See Nondiscrimination Employment Practices of Broadcast Licensees, 18 FCC 2d 240, 244 par. 8, 16 RR 2d 1561, 1566 par. 8 (1969); 23 FCC 2d 430, 431 par. 3, 19 RR 2d 1571, 1572 par. 3 (1970). We note also that the Minority Program Project responds substantially to our urging that broadcasters go beyond the requirements of national policy and our rules and seek as a matter of conscience to meet the overriding challenge of the times by promoting increased understanding among the races. See Nondiscrimination Employment Practices of Broadcast Licensees, 13 FCC 2d 766, 773-5, 13 RR 2d 1645, 1655-7 (1968); 18 FCC 2d 240, 245, 16 RR 2d 1561, 1567 (1969).
n9 Details are set out in the amendment of Dec. 30, 1970 to the television applications.
19. In view of the foregoing, we conclude that, Capital Cities has demonstrated the public benefits flowing from a grant of the subject applications would outweigh any detriment. n10 We conclude also that no significant issue of undue regional concentration is presented.
n10 The fact that deconcentration might be maximized by assignment of the three stations to a buyer whose television interests do not bring him within the limits of the Top-50 policy does not preclude a grant. See Metropolitan Television Co., 13 FCC 2d 346, 352, note 9.
Charges Relating to the "Package" Form of the Transactions -- Alleged Trafficking and Alleged Violation of the "Three-Year" Rule.
20. It was alleged in the withdrawn Petition to Deny that the spinoffs violated the "three-year" rule, and any spinoffs at a profit without rendering service amounted to trafficking.
21. It is settled that passing stations through a conduit buyer such as Capital Cities who has no intention of operating the stations but intends immediately to spin them off to other buyers, does not constitute a violation of the "three-year" rule. This was decided recently -- in 1968 -- in connection with Atlantic States Industries (now ASI Communications) acquisition of six stations from Cleveland Broadcasting Company, the retention of some stations and spinoff of others to comply with the one-to-a-market. In view of this and other Commission actions permitting acquisition of "packages" subject to a requirement of immediate divestiture of holdings which conflict with the [*87] one-to-a-market rules, there is no "three-year" problem here. See, e.g., Shenandoah Life Stations, 19 FCC 2d 704 and King Louis International, Inc., 24 FCC 2d 508. Nor do such spinoffs via a conduit buyer amount to trafficking. See Howe, 14 FCC 219 and Don Lee Broadcasting System, 15 FCC 501, in both of which the Commission specifically rejected arguments that collateral spinoffs involved trafficking.
22. There remains the matter of whether Capital Cities might profit on the spinoffs. Pursuant to the Commission's request, Capital Cities furnished a "Statement as to Price" indicating the allocation of valuations among the assets being acquired from Triangle. Elsewhere, Capital Cities has conceded it is impossible to determine whether it will profit or lose from the spin-offs, and that the form was dictated not from any profit motives but by the larger conveniences of Mr. Annenberg and the need to comply with the known objectives of the one-to-a-market rules. (Opposition, pp. 30 to 31.) But Capital Cities argues that practical factors afford safeguards. Capital Cities' incentive to realize the maximum price for the spin-off properties does not differ from Triangle's, but the ability of Capital Cities to obtain the maximum price is sharply limited by the need to sell within a short time, without regard to prevailing market conditions, in order to permit completion of the overall transaction. Moreover, the bulk of any cash Capital Cities receives from the spinoffs must be paid immediately to Triangle and applied to Capital Cities' debt to Triangle in reverse order of maturity. Thus, Capital Cities does not have the use of the spinoff proceeds over the contract lives. Additionally, instruments of debt received from the spinoff buyers must be assigned to Triangle without relieving Capital Cities of any obligation. Thus, any profit is remote and highly deferred and carries continued risks so long as the spinoff buyers have not discharged their obligations. (Footnote, Opposition, p. 32.) The opposition further notes the form of the transaction does not invite degradation of program service to enhance salability, or disruption of service by short-term turnovers, or CP "squatting" -- the substantive evils at which anti-trafficking policies are aimed. Rather, the package transaction permits a breakup of AM-FM-TV combinations, a result determined to be in the public interest under the recently announced tax certificate policy.
23. We wish to underscore one point -- that our approval is limited to the applications under consideration. Nothing is intended to suggest that we will give blanket approval to any and all "spinoff" transactions. Future applications involving such proposals will be carefully scrutinized to see that they serve the overall public interest and contain adequate safeguards to prevent abuses which would be contrary to the public interest.
24. Albany Television's proposal to acquire the WTEN-TV license is subject to the Top-50 policy. We find that Albany Television has made a "compelling public interest showing." We note first that the Top-50 stations controlled by Albany Television's parent corporation are not in the most populous markets. The related stations are WPRI-TV, Providence, Rhode Island (18th under ARB rankings), and WJRT-TV, Flint, Michigan (47th). Albany-Schenectady-Troy is [*88] ranked 45th. The geographical dispersion and size of the markets are relevant factors here. See Metropolitan Television, supra. Moreover, a grant of the Albany Television, Inc. application would separate the ownership of WTEN from that of companion radio stations WROW (AM & FM), thereby advancing the goals of our "one-to-a-market rule. As noted, we have sought to encourage voluntary assignments of this type. Tax Certificates, 19 RR 2d 1831 (1970). The de-concentration to be achieved is particularly significant in light of the fact that Albany is the capital of New York State. Separation would increase the number of independent, competing sources of news concerning activities of the state government available to the public, as well as the sources of news concerning the state at large available to those who play a part in its government.
25. Secondly, the applicant makes a series of programming proposals, based upon the experience of its other stations and its ascertainment of needs in the Albany area, which are clearly meritorious. Thus, it propose to utilize "mini-documentaries" scheduled in prime time to provide maximum exposure for a wide range of community problems, to develop a black written, produced and performed program series designed to bring the station's viewers a better appreciation of black problems and aspirations, and to offer free time and production facilities to a wide array of political candidates in local and state elections, who ordinarily get little exposure in any medium. The fact that these proposals, while responsive to needs ascertained, are based on a substantial record of performance in the same fields at other stations lends them a solidity and credibility they might otherwise lack.
26. Finally, Westerly Broadcasting, the proposed assignee of WNHC-AM (New Haven) points out that there will be 1 mv/m overlap between WNHC-AM and assignee's Westerly, Rhode Island station, WERI. A waiver is requested, based on the fact that the overlap occurs on Long Island due to the high conductivity of Long Island Sound, that the entire overlap area is eliminated by co-channel interference, and that the overlap occurs in an area which, because of the need for circuitous overland travel of almost 200 miles, is not marketwise part of the areas served by WERI and WNHC. In these circumstances, a waiver is warranted. See The Tidewater Broadcasting Co., 2 FCC 2d 364.
27. In view of the foregoing and our careful examination of all the applications, we find that the overall public interest, convenience, and necessity would be served by approval of all the applications.
28. Accordingly, IT IS ORDERED, That, (1) the applications for assignment of the licenses of Stations WFIL-TV (Philadelphia, Pennsylvania), WNHC-TV (New Haven, Connecticut) and KFRE-TV (Fresno, California) from Triangle Publications, Inc. to Capital Cities Broadcasting Corporation, ARE GRANTED;
(2) the application for assignment of the license of Station WSAZ-TV (Huntington, West Virginia) from Capital Cities Broadcasting Corporation to Lee Enterprises, Inc., IS GRANTED;
(3) the application for assignment of the license of Station WTEN (TV), Albany, New York (together with Satellite Station WCDC (TV), Adams, Massachusetts) from Capital Cities Broadcasting Corporation to Albany Television, Inc., IS GRANTED;
[*89] (4) the application for assignment of the license of Station WFIL (Philadelphia, Pennsylvania) from Triangle Publications, Inc. to WFIL, Inc., IS GRANTED;
(5) the application for assignment of the license of Station WFIL-FM (Philadelphia, Pennsylvania) from Triangle Publications, Inc. to Richer Communications, Inc., IS GRANTED;
(6) the request of Westerly Broadcasting Co. for a waiver of Section 73.35(a)(1) of the Commission's Rules respecting common ownership of Stations WNHC and WERI, IS GRANTED, and the application for assignment of the license of Station WNHC (New Haven, Connecticut) from Triangle Publications, Inc. to Westerly Broadcasting Co., IS GRANTED;
(7) the application for assignment of the license of Station WNHC-FM (New Haven, Connecticut) from Triangle Publications, Inc. to Metro Connecticut Media, Inc., IS GRANTED;
(8) the application for assignment of the license of Station KFRE (Fresno, California) from Triangle Publications, Inc. to KFRE Broadcasting, Inc., IS GRANTED; and
(9) the application for assignment of the license of Station KFRE-FM (Fresno, California) from Triangle Publications, Inc. to Stereo Broadcasting Corporation, IS GRANTED.
29. IT IS FURTHER PROVIDED, That, the grant of the applications covering acquisition of WFIL-TV, WNHC-TV and KFRE-TV by Capital Cities Broadcasting Corporation, IS SUBJECT to whatever final action the Commission may take in Docket No. 18751 on the Bankers Petition, in the matter of amendment of Sections 73.35, 73.240, and 73.636 of the Commission's multiple ownership rules.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
CONCURBY: BARTLEY; JOHNSON
CONCURRING STATEMENT OF COMMISSIONER ROBERT T. BARTLEY
I concur in the assignments. From the uncontroverted showings in support of the applications, I believe that the transactions can be expected to bring about an improvement in the general structure of broadcasting. The foremost improvement, in my opinion, is diversification of control of mass media. Other improvements, obtaining with respect to various of the ultimate assignments, are the fostering of competition among broadcast stations, integration of ownership and management, local residence or direct supervision of the station.
It appears from the showings made that each of the assignees has ascertained the needs of its community and will broadcast programs to meet those needs.
The circumstances surrounding the withdrawal of the original petition to deny are not crystal clear; however, it is claimed that neither the parties to the withdrawal nor their attorneys received any consideration, and I have no reason to question their claim. The payments referred to in footnote 2 were made for out-of-pocket expenses to individuals in conjunction with further efforts by Capital Cities to ascertain community needs.
This package transaction does have, in my opinion, a number of undesirable features. Also, I would have preferred to see Capital [*90] Cities remain more flexible in its determination of community needs and programs to meet such needs. Capital Cities has represented, however, that it will retain control over programming under the Minority Program Project, and I rely upon that representation.
I concur in the assignments because I believe that, on balance, the advantages to the public interest outweigh the disadvantages.
The Federal Communications Commission has today approved one of the largest assignment and transfer matters ever brought before this Commission. We have before us a $110,000,000 transaction involving eleven separate applications; the lawyers' papers alone occupy more than three feet of shelf space.
Capital Cities proposes to acquire nine broadcast stations from Triangle Publications, retaining three major television outlets (in Philadelphia, Pennsylvania, New Haven, Connecticut, and Fresno, California), and to "spin-off" three AM-FM combinations in the same cities to separate purchasers for a total spin-off price of $14,555,000. In related applications, Capital Cities would also dispose of its present Huntington. West Virginia, and Albany, New York, television outlets in order to comply with this Commission's multiple ownership rules. All of the applications are contingent on each other and become terminable if the Commission fails to approve any one of the 11 applications.
While this unwieldly "package" transaction smoothes over several significant problems, which I will discuss briefly below, I nevertheless concur in the Commission's approval of Capital Cities' acquisitions. The grounds for my concurring vote are two: (1) The proposed $1,000,000 Minority Program Project represents the first such negotiated agreement between local citizens and a broadcaster growing out of an assignment and transfer case. Such innovation is commendable and to be encouraged. But for this feature I would have dissented to this transaction. Even with it, I may not find it possible to approve comparable assignments in the future. But, for this case, it seemed most appropriate to concur. (2) The assignment will result in some de-concentration of group ownership on national and regional levels.
My concerns about the present trend toward media concentration and the dangers inherent in the growth of powerful "media barons" have been set out in detail elsewhere. See. N. Johnson, How to Talk Back to Your Television Set 43-78 (1970), and Johnson and Hoak, Media Concentration: Some Observations on the United States Experience, 56 Iowa L. Rev. 267 (1970).
Likewise, our nation's courts have for years been aware of the importance of competitive media. They have been especially vigilant in enforcing the anti-trust laws when dealing with the structure and practices of the communications industries. The U.S. Supreme Court in 1953 said that "[a] vigorous and dauntless press is a chief source feeding the flow of democratic expression and controversy which [*91] maintains the institutions of a free society." Times-Picayune Publishing Co. v. U.S., 345 U.S. 594, 602 (1953). The Court of Appeals for the District of Columbia has placed an affirmative duty on the FCC to encourage competition. In Joseph v. FCC, 404 F. 2d 207 (D.C. Cir. 1968), the court said that "[the] public welfare requires the Commission to provide the 'widest possible dissemination of information from diverse and antagonistic sources' and to guard against undue concentration of control of communications power." Id. at 211, citing Associated Press v. U.S., 326 U.S. 1, 20 (1945) and Scripps-Howard Radio, Inc. v. FCC, 189 F. 2d 677, 683 (D.C. Cir. 1951), cert. denied, 342 U.S. 830 (1951).
Congress has delegated to the FCC great power to combat media concentration. The Communications Act of 1934 provides that no license shall be granted or renewed, 47 U.S.C. § 309(a) (1964), nor any sale of the station approved, 47 U.S.C. § 310(b) (1964), until the Commission makes an affirmative finding that the "public interest, convenience, and necessity" compels such action. While the Act contains no express language regarding concentration of ownership, the legislative history clearly indicates that Congress designated these sections, and their predecessor sections in the Radio Act of 1927, to prevent the growth of media monopolies contrary to the national interest. Cf., 67 Cong. Rec. 5478-80 (1926) and Pote v. Federal Radio Commission, 67 F. 2d 509 (D.C. Cir. 1933), cert. denied, 290 U.S. 680 (1933).
In essence, then, these sections allow the FCC to take a wide range of action which it finds to be in the public interest, to decrease the concentration of the media in this country.
Capital Cities concedes that the acquisition of the Triangle stations will increase the combined net-weekly circulation of its television homes from roughly 2.4 million to more than 4.6 million. * The Capital Cities acquisition will almost triple the potential number of television homes Capital Cities will serve in the top 50 markets.
* Following approval of these applications, Capital Cities will hold these licenses:
Hartford-New Haven, Conn
Despite this growth in television households for Capital Cities, the transfer of the Triangle stations in Philadelphia, New Haven, and Fresno, and Capital Cities' related sale of existing television holdings in Albany, New York, and Huntington, West Virginia, do provide some benefits as well.
Mass media control generally will be deconcentrated in the Philadelphia, New Haven, Fresno, and Albany markets; and a new competitor will be brought into the top 50 markets with Lee Enterprises acquisition of the Capital Cities television, WSAZ-TV, in Huntington. This is important.
[*92] Capital Cities Broadcasting has five non-broadcast interests. Capital Cities' major holding is the 100 percent ownership of Fairchild Publications, Inc., a publisher of trade journals and magazines. Capital Cities owns 80 percent of Pontiac Press Co., Pontiac, Michigan. The other interests include a three percent interest in Broadcast Music, Inc.; a 5.9 percent interest in Laser Link Corp., a firm founded to develop new technology for over-the-air television transmission; and a 40 percent interest in New York Subways Advertising, Inc.
On a regional basis, the sale of Triangle's WFIL-TV in Philadelphia will break the Grade B overlap chain between Triangle's three Pennsylvania stations, thus diminishing Triangle's voice in the Northeast generally, while bringing a new voice, that of Capital Cities, to Philadelphia and New Haven. In addition, the breakup of Capital Cities' three-station combination in Albany will promote diversification by reducing Capital Cities' outlets in an important state capital; the spin-offs will bring as many as six new owners into Philadelphia, New Haven, and Fresno.
The most heartening and innovative aspect of this complex assignment of licenses is the $1,000,000 Minority Program Project.
Agreements giving citizen committees in local communities a voice in broadcast programming, until recently relatively nonexistent, are now becoming commonplace. This pattern of negotiation with the broadcasters for improved programming and minority hiring has been followed in Texarkana, Rochester, Atlanta, Nashville, Memphis, Mobile, Youngstown, Chicago, and most notably in the transfer now before us. Cf., WSM, Inc., 25 FCC 2d 561 (1970); KCMC, Inc., 25 FCC 2d 603, 605 (1970); Chicago Broadcasters and Critics Reach Accord, N.Y. Times, March 3, 1971, at 87.
As a result of negotiations with Citizens Communications Center, a Washington, D.C., public-interest law firm, minority group members including Negroes, Puerto Ricans, and Chicanos in Philadelphia, New Haven, and Fresno, Capital Cities has agreed to commit $1,000,000 over the next three years to develop programming reflecting minority problems. Capital Cities has agreed to Produce and pay for enough programming to fill at least six hours of air time, half of it in prime time, on each of the three television stations over the next year. No less than $333,000 per year will be deposited in a minority-controlled bank, with $135,000 earmarked for Philadelphia, $110,000 for New Haven, and $88,333 for Fresno.
The Capital Cities agreement ** clearly amounts to an important breakthrough for public participation in the process of administration and governance of the public airwaves. It may well be that FCC licensees have the responsibility under law to provide such programming -- and more -- already. But the fact remains that they don't do it, and the FCC doesn't insist upon it. At a time of mounting public outrange [*93] against the excesses and abuses of the corporate dominance of American broadcasting, it is at least heartening to see that humble citizens can extract some public service commitment from big broadcasters.
** Detailed information on the project agreement is set out in the Dec. 30, 1970, amendment to the transfer application, which is on file at the Federal Communications Commission.
I fully concur in this innovative precedent.
Quite apart from the deconcentration and minority programming aspects of this transaction, the Capital Cities transfer presents major policy questions about which I continue to harbor deep reservations. As a preliminary matter, I would hope that the Commission's approval of this particular transfer will not have the general effect of establishing a precedent sanctioning future huge, basically unmanageable package transactions -- thus offering great potential for abuse. In short, the transfer before us is simply far too large for any one Commission, let alone any one commissioner, to scrutinize adequately.
The unfortunate tendency of such package transfers is to encourage a kind of "trade-off" mentality; "trade-off" in the sense that any concessions in the public interest appear to carry with them negative counter-concessions that do not come close to squaring with the 1934 Communications Act or this Commission's long-standing rules and policies.
As a general rule, I think it is important in discharging our public interest mandate that we approach each transfer of a station license on a case-by-case basis, weighing the merits of each assignment carefully. This careful scrutiny is simply not possible when a dozen stations, as here, are involved in a large, umbrella transaction.
Furthermore, I see three other facets of this multiple transfer that are difficult -- indeed, perhaps impossible -- to sequare with our public interest obligations. These are:
1. Conduit Purchasers: Under these applications, Capital Cities will dispose of the Triangle AM and FM outlets to six separate buyers. These so-called "spin-offs" raise a major policy question as to whether it is in the public interest to permit a licensee to delegate responsibilities for selling stations to a "conduit" buyer who arranges the spin-offs.
The Commission majority proceeds on the premise that there is ample Commission precedent for passing stations through a conduit buyer, like Capital Cities, who has no intention of operating the stations but intends instead immediately to spin them off to other buyers. Normally this would be viewed as a violation of our three-year rule. To be sure, there are perhaps two Commission cases that might suggest precedent allowing such conduit arrangements; but the idea has hardly taken deep root or ever evoked much real enthusiasm. It has rather been more a choice among distasteful alternatives. And isn't it clear by now that any spin-off at a profit, where the assignor renders no real service, amounts to something very close to the classic case of trafficking? Capital Cities maintains that it does not now know whether there will be any profit; so the trafficking charge is premature and speculative, the argument goes. Nevertheless, Capital Cities is basically up-marketing; it concedes as much. And given the rising value of [*94] broadcast properties, especially in substantial metropolitan area like Philadelphia and Hartford-New Haven, it is highly unlikely that Capital Cities would lose on the delegated transfers.
If our rules are to have any meaning, I would expect that the conduit sales would have to be made without profit. Cf., Shenandoah Life Stations, 19 FCC 2d 704, 707-708 (Commissioner Cox's separate statement).
2. Regional Concentration: Despite the substantial deconcentration effects of this transaction, other bothersome concentration problems linger. For example, the Grade B contours of WFIL-TV, Philadelphia, and WNHC-TV, New Haven, nearly overlap. Allowing Capital Cities to acquire two major stations (in the fourth largest, and 12 largest markets respectively) in the Northeast results in what amounts to an undesirable regional concentration of control of the mass media. Philadelphia WFIL-TV operates on channel 6 and is the primary ABC network affiliate in the Philadelphia area as well as serving large portions of populous New Jersey and all of Delaware. New Haven's WNHC-TV operates on channel 8 and is the primary ABC network affiliate for the New Haven-Hartford metropolitan area and the populous portions of central Connecticut. My own reservations about regional concentration have been amply set out in prior opinions. Booth American Co., 14 FCC 2d 136 (1968) (dissenting opinion of Commissioners Cox and Johnson); Wichita-Hutchinson Co., Inc., 19 FCC 2d 433 (1969); 20 FCC 2d 951, 954 (1969); WNVL-AM, FCC Public Notice 64035 (Feb. 9, 1971); Newport Broadcasting, FCC Public Notice 64704 (March 2, 1971).
3. Programming Proposals: Despite the breakthrough in programming established by the Minority Program Project, the assignment of the AM-FM combinations in Philadelphia, New Haven, and Freson may well result in a diminution of programming service as measured by the informal 5-1-5 (5 percent news, 1 percent public affairs, 5 percent all other) standard. The percentages bantered about in the filings are substantially in dispute. Under these circumstances, all of the AM-FM transfers are at best marginally acceptable or, more likely, woefully inadequate in terms of minimum programming of news, public affairs, and other non-entertainment fare.
In sum, I concur in the Commission's action today because of this decision's deconcentration of group ownership and our approval of the Minority Program Project. My vote in no way, however, endorses or approves the Commission's action with regard to conduit purchasers, regional concentration, or the programming problems I have outlined above.