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In Re Application of TWIN STATES BROADCASTING, INC. (ASSIGNOR) AND THE MIDWESTERN BROADCASTING CO. (ASSIGNEE) For Assignment of License of WGLN(FM) (now WXEZ(FM), Sylvania, Ohio

 

 File No. BALH-1561

 

FEDERAL COMMUNICATIONS COMMISSION

 

35 F.C.C.2d 969

 

RELEASE-NUMBER: FCC 72-583

 

June 30, 1972 Released

 

 Adopted June 28, 1972

 

 


JUDGES:

BY THE COMMISSION; CHAIRMAN BURCH ABSENT; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT.


OPINION:

1.  The Commission has before it the application for assignment of license of WGLN(FM) n1 to the Midwestern Broadcasting Co., which was granted pursuant to authority delegated to the Broadcast Bureau on February 22, 1972, a Petition for Reconsideration filed by The Citizens Committee to Keep Progressive Rock, and responsive pleadings.  The principal question raised by the Petition concerns the assignee's change of the station's musical program format from "progressive rock", which format was adopted by the assignor while the assignment application was pending, to middle of the road music. 

n1 On May 1, 1972 the WGLN call letters were changed to WXEZ.

2.  A brief description of the background of WGLN will be helpful to a better understanding of the matters presented by the Petition.  WGLN is licensed to Sylvania, Ohio which is a suburb of Toledo.  It commenced operating on November 22. 1968 with a musical format of "country and western".  In March 1971 its musical format was changed to "Golden Oldies" which is described as "hit 'top-40' records from prior years".  On August 9, 1971 the subject application was filed seeking permission to assign the WGLN license to Midwestern Broadcasting Corp. which is the licensee of Station WOHO, Toledo, Ohio.  In the application, assignee represented that it, "proposes to program generally middle-of-the-road music which may include some contemporary, folk and jazz, similar to what [the] station is currently programming".

On August 31, 1971 the station hired Mr. Dorian Paster, the manager of a local record store, to do a "progressive rock" program from 10 p.m. to 2 a.m. each evening.  Thereafter, in mid-October WGLN commenced programming full-time "progressive rock".  On February 22, 1972 the Commission's Broadcast Bureau, by delegated authority, granted the WGLN assignment application.  The parties consummated that transaction on March 1, 1972 and on March 16, 1972, with the Commission's permission, the station was temporary shut down in order to facilitate a change in the studio location.  The subject petition was filed on March 27, 1972.  Subsequently, on May 4, 1972 the station was returned to the air.

3.  The fundamental question raised by this Petition is whether the purchaser of WGLN(FM) may change the station's music format from a "youth oriented-Progressive Rock" format (which the station had been programming between mid-October 1971 and mid-March 1972) to a "middle of the road" format, without a public interest.  n2 The petitioner also attempts to raise subsidiary questions as to whether the applicants misrepresented to the station employees or to the Commission as to the assignee's plans to change the WGLN musical format; whether assignee's proposal to duplicate on WGLN some of the programming of its Toledo station (WOHO-AM) contravenes Section 307(b) of the Communications Act; and whether assignee had made a sufficient "unavailability of capital" showing under Section 1.597 (the Commission's "three year rule".)

n2 Sylvania is a suburb of Toledo, with 10 stations operating in the market which present a diversity of musical formats.

4.  With regard to the main question presented concerning the change of the station's musical format, we view the facts here as very much analogous to those which were before the Commission in WCAB, Inc., 21 RR 2d 146, 27 FCC 2d 743 (1971). That case involved the assignment of license of WTOS(FM), Wauwatosa, Wisconsin (a suburb of Milwaukee) which had been programming a "youth oriented progressive rock" musical format since March of 1969, during which time the station was operating at a loss.  Petitions to Deny the application were filed which protested the assignee's plans to change the format to an "easy listening" musical format.  In granting the WTOS application, the Commission stated in part as follows:

In summation, we recognize that in a multi-station market like Milwaukee with 19 stations presenting a diversity of musical broadcast formats, the use of a particular specialized format by a particular station is not a static thing.  In our system of broadcasting, the decision as to which entertainment format to be used is primarily in the discretion of the licensee.  The licensee must, of course, take into consideration the needs and interests of the community; but the licensee may also weigh the economic considerations involved.  It has been our experience that in the quest for viability broadcast licensees not infrequently completely change or alter their musical formats in response to their considered judgments as to audience preferences and the competition from the then existing musical formats.  We are of the view that, on the facts before us, in such a market with a plethora of broadcast stations, any action by the Commission which would hamper the licensee's (or applicant's) flexibility in choosing or changing a particular format would be most unwise.  Here, as is often the case, a buyer, by changing the musical format, will attempt to convert WTOS from a losing station in dire financial straits... to a profitable one, which can render public service to the Milwaukee area.  (Footnotes omitted)

5.  In the case at hand WGLN has operated at a substantial loss during 1970 and 1971.  Since it commenced operating in 1968 it has changed its musical format from "country and western" to "Golden Oldies" to "Progressive Rock" and now to a "MOR" (middle of the road) format.  The last change from "Progressive Rock" by the assignee here, n3 has obviously displeased certain station employees and some persons who became accustomed to the "Progressive Rock" format during the five month period it was broadcast.  However, we cannot, in the circumstances before us, require the assignee here to continue a musical format which was commenced by the assignor while the assignment application was pending and which is against the assignee's business judgment and its judgment as to what musical programming will best serve the "tastes, needs and desires" of his licensed community.  Nor do the facts before us justify or require a hearing to determine the numbers in the community which would prefer a "Progressive Rock" musical format over a "MOR" format or the measure of advertiser support for such formats.  To do so would be tantamount to "locking in" a particular format and would severely impinge on the discretion and flexibility that a broadcaster must exercise in order to operate his station in the public interest.  In sum, as we stated in WCAB, Inc., in our system of broadcasting the decision as to the choice of entertainment formats is primarily in the discretion of the licensee and unless it is shown or appears to the Commission that the format choice is not reasonably attuned to the tastes and general interest of the community of license, we will not question the licensee's judgment in these matters. 

n3 It should be noted that WGLN did not have a "Progressive Rock" format when assignee contracted to buy it or when the assignment application was filed.  Certainly assignee should not be held responsible for the continuation of a format which was not in existence when it filed its application.  This factor clearly distinguishes this case from the decision in Citizens Committee (WGKA) v. FCC 436 F. 2d 263 D.C. Cir., (1970) and where the Court found that there was a substantial question as to whether the stations were operating at a loss.

6.  We have carefully considered the other contentions and allegations in the Petition and we are of the view that they do not raise substantial and material questions of fact which require a reversal of the grant of the WGLN assignment application and its designation for an evidentiary hearing.  We will first discuss the charge that assignee misrepresented its proposed musical format to the Commission and/or to the WGLN employees.

7.  The Petition alleges that the employees did not learn of the assignee's program proposals until March 1, 1972, the date of the closing, and that after the application was granted, the assignee's president and assistant manager told the employees that no program changes were contemplated.  No change was ever made in the program proposals in the assignment application.  Thus, the Petition alleges that Midwestern either misrepresented its plans to the WGLN (FM) employees, who were led to believe that the rock format would continue, or to the Commission since it never amended its application to conform to the alleged misrepresentations made to the employees and since in any event, its proposal for "middle of the road" music was in fact a change from "Golden Oldies" and not "similar to what the station is currently programming." The Opposition states that the assignee's president and assistant manager had said that the decision as to the nature of the station's programming was not absolutely immutable but at no time did either tell any employee that a final decision had been made to program progressive rock.  While there may be conflicting accounts or some confusion as to what was really said, this does not mean that there was misrepresentation.  The record clearly shows that no misrepresentation was made to the FCC, and even if there was some misunderstanding between the assignee and the station employees with respect to the assignee's intentions regarding the station's format, it would not, in the circumstances before us, require a denial of the assignment application.

8.  Midwestern's statement that its proposed programming was "similar to what the station is currently programming" is not misrepresentation even though the station was currently programming "Golden Oldies" and Midwestern proposed "middle of the road" music.  In fact a "Golden Oldies" format and a "middle of the road" format are similar.  n4

n4 For an explanation of the similarities of "oldie", "middle of the road", and "top-40" (carried by the assignee's WOHO) formats, see There's Still Magic in the Middle of the Radio Road, Broadcasting, June 12, 1972 at 37.  Progressive rock of course, is altogether different.

9.  Petitioner charges that a hearing on the application is required by Section 1.597 of the Commission's Rules (the "three-year rule") which requires a hearing on an assignment application where the station has been operated by the assignor for less than three years unless the applicant qualifies for a waiver or exception of the rule.  The assignment application contained a request for waiver of Section 1.597 of the Commission's Rules since the assignor had been granted initial operating authority for the station on November 22, 1968 and had filed the assignment application on August 12, 1971, less than three years later.  The assignor had been granted a construction permit on November 24, 1967, built the station and actually had operated it for more than three years by the time the instant assignment application was granted.  The application was granted without a hearing based on the assignor's representations that its principals had virtually no experience in broadcasting prior to their involvement with WGLN (FM), that it had spent $84,004 for initial construction of the station, and that the station had experienced operating losses.  While it had a cash profit of $2,036 in 1969, it had a cash loss exclusive of depreciation and amortization of $27,072 in 1970 and of $21,901 during the first six months of 1971.  The purchase price of $125,000 was payable $100,000 in cash and $25,000 by assumption of liabilities.  Thus, the assignor did not even recoup the amount of its construction expenses and operating losses when it sold the station.  Since under these facts, there is no suggestion of trafficking in broadcast licenses, a hearing on the application under the three-year rule was not necessary.  The purpose of the "three year rule" is to prevent trafficking in licenses.  Trafficking has been defined as "an intent to profit from the sale of broadcast properties, rather than their operation... and the requisite intent must ordinarily be determined from a consideration of all relevant circumstances, past and present." Romac Baton Rouge Corp., 9 RR 2d 1030, 1033 (1967). It is clear from the discussion above that there was no trafficking and that a hearing on the assignment application was not required.

10.  Finally, Petitioner charges that Midwestern's proposed duplication of WOHO's programming 11 hours a day will result in a misallocation of radio service in violation of Section 307(b) of the Communications Act.  Assignee's proposal is to duplicate "not more than 11 hours per day" (out of a 24 hour broadcast day).  Thus, rather than a definite amount of duplication per day, assignee's statement shows the maximum it will duplicate.  (Presumably, this will allow the assignee greater flexibility to duplicate WOHO programs which from time to time it deems desirable to carry on WGLN.) Since WGLN has returned to the air on May 4, 1972 it has been duplicating only two hours per pay on week-day evenings.  This is the WOHO program "Rap" which is described in the application as a telephone talk show from 11 p.m. to 1 a.m. which covers topics of concern to the whole metropolitan area.  In these circumstances there is no substantial question as to "misallocation" or radio service in violation of Section 307(b) of the Act.

11.  The Petitioner has raised no matters which would require a reversal of the Broadcast Bureau's previous determination that a grant of the WGLN (FM) assignment application would serve the public interest.  Accordingly, IT IS ORDERED that the grant of the WGLN (FM) assignment application is hereby affirmed and that the "Petition for Reconsideration" filed by the Citizens Committee to Keep Progressive Rock is hereby DENIED.

 

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.


DISSENTBY: JOHNSON

 

DISSENT:

DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

On February 22, 1972, the Commission staff, by delegated authority, granted the application for assignment of the license of WGLN (FM) (now WXEZ), Sylvania, Ohio, from Twin States Broadcasting, Inc. to The Midwestern States Broadcasting Company.  At the time of the filing of the application on August 9, 1971, the station followed a "Golden Oldies" format, which was in substance one of top-40 records from prior years.  On August 31, 1971, prior to the assignment, the station changed its format to one of progressive rock.  In the application, Midwestern proposed a "middle of the road music" programming format.

Petitioners here seek to have the Commission reconsider its decision approving the assignment, in light of the format change from progressive rock to middle of the road.  n1 The Commission has declined to do so, and I dissent. 

n1 Petitioners raise subsidiary issues as well, including questioning whether or not the assignee misrepresented its intentions as to the format change to its employees, whether assignor's polices of AM duplication are in the public interest, and whether the Commission's waiver of its three year rule is appropriate.  I concur with the majority's disposition of these issues as set forth in its opinion.

Before the Commission can grant an application for an assignment of a license, it has to find that the public interest, convenience and necessity will be served by such a grant.  47 USC   310(b).  Without such a finding, based on underlying factual considerations, the application cannot be granted.

In Citizens Committee v. FCC, 436 F.2d 263 (D.C. Cir. 1970), the Court of Appeals reviewed a Commission grant of an application for a transfer of WGKA-AM-FM, Atlanta, Georgia.  In the Citizens case, the Commission had granted the transfer application without a hearing on the question of the public interest impact of a proposed change of format from classical music to a "blending of popular favorites, Broadway hits, musical standards, and light classical music." Strauss Broadcasting, the transferee, had completed a survey of Atlanta, and had concluded that only 16% of the population preferred a classical format to the blended format they proposed.  Given these figures, the Commission held that the format, and thus the transfer, were in the public interest -- particularly in view of the apparent serious financial problems suffered by the transferor.

The Court of Appeals reversed.  In substance, it held that the Commission could not make the factual determinations necessary from the record as developed without a hearing.

This case raises questions identical to those in Citizens.  The Commission is charged by statute with making a public interest finding based on factual considerations.  In the case of an assignment of a license, this includes an affirmative finding that any programming changes made by the assignee will be in the public interest.

We require assignees to inform the Commission of programming plans (per cent news, public affairs, and other non-entertainment programs), programs designed to meet the needs and interests of the community based on the transferee's ascertainment of these needs and interests, and his commercial policy (number of commercial minutes per hour).  Analysis of these changes can be accomplished without an evidentiary hearing, since the only criteria -- assuming that there are any criteria -- is Commission policy in these areas.

Format changes are quite another thing.  A station's format describes what the licensee will be broadcasting for the most substantial portion of each broadcast day.  It is through its format that, in a very real sense, it "serves" its community.

Normally, when a station proposes to change a format, it is a matter between it and its community.  If no one objects, the Commission assumes -- and properly so -- that the new format is acceptable.  But when the format change occurs during a licensee assignment proceeding, and is thus exposed to the public in a more direct fashion, the Commission ought to be particularly sensitive to complaints surrounding that proposed change, for it is an indication that people in the community feel that such a change will be a disservice to their interests.

This was the thrust of the Citizens case.  The Court of Appeals told the Commission that in the face of objections to a music format change, the Commission had to hold an evidentiary hearing in order to determine whether the public would be served by such a change.  And that is precisely what we have failed to do in this case.  We have before us a petition seeking the denial of the application for assignment, alleging that the proposed format change is not in the public interest.  That cannot be resolved without a factual hearing.  Our refusal to hold one is in clear and direct violation of the law as interpreted by the Court of Appeals.  n2

n2 The majority attempts to distinguish this case from Citizens by pointing out that the current format was not adopted until after Midwestern contracted to buy the station, or even until after the application for approval of the purchase was filed.  While this may be a distinction between this case and Citizens, it is a distinction without a difference.  The relevant question is still whether, given what we know about the current operation of the station and the proposed future operation, the assignment is in the public interest.

I would designate the application for assignment for hearing so as to comply with the Communications Act of 1934.  Because the majority has refused to do so, I dissent.


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