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In Re Application ZENITH RADIO CORP. (ASSIGNOR) and GCC COMMUNICATIONS OF CHICAGO, INC. (ASSIGNEE) Application for voluntary assignment of license for radio Station WEFM-FM, Chicago, Illinois

 

File No. BAPLH-140

 

FEDERAL COMMUNICATIONS COMMISSION

 

38 F.C.C.2d 838

 

RELEASE-NUMBER: FCC 72-1129

 

December 21, 1972, Released

 

 Adopted December 13, 1972

  


JUDGES:

BY THE COMMISSION: COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT.  COMMISSIONER REID CONCURRING IN THE RESULT.  COMMISSIONER WILEY NOT PARTICIPATING.


OPINION:

 [*838]  1.  We have before us the above captioned assignment application, a Petition to Deny timely filed by the Citizens Committee to Save WEFM, and responsive pleadings filed by the assignor, Zenith Radio Corp. [Zenith], assignee, GCC Communications of Chicago, Inc. (GCC-Chicago) and the Citizens Committee.  n1

 

n1 On November 20, 1972, Petitioner filed a document entitled "Complaint" relating to the subject assignment application.  By this document, Petitioner requests that the Commission dedicate WEFM's channel for a "Classical and related cultural music" format station indefinitely.  For a complete discussion of the "Complaint" see paragraph 27 below.

2.  The Citizens Committee is a not-for-profit association comprised of individual listeners of WEFM-FM who are opposing the assignee's programming proposals.  No substantial question has been raised concerning the standing of the Citizens Committee, and we find that Petitioner is a party in interest under Section 309(d)(1) of the Communications Act of 1934, as amended.  Estate of John C. Mullins, 36 FCC 2d 78 (1972).

3.  WEFM-FM operates on 99.5 mhz with effective radiated power of 42kw (horizontal) and 35kw (vertical) with height above average terrain of 590 feet.  n2 The license was issued to Zenith in February, 1940 and from that date through 1965, assignor provided a non-commercial classical music service to the Chicago area as a developmental adjunct to its manufacturing business.  Zenith, since 1966, has operated WEFM on a commercial basis and during its entire period of operation, the programming format has always been classical music.  GCC-Chicago proposes to change this format to one of "contemporary music"  [*839]  appealing to young adults.  This change in format is the chief basis for Petitioner's objection to the application.  Additionally, the Commission has received over 1,000 letters from Chicago area listeners protesting the proposed format change.  Some of these letters are from Chicago area citizens: Felix Ganz, Dean, Chicago Musical College of Roosevelt University, Chicago; Leo E. Heim, President, American Conservatory of Music, Chicago; Enrique Alberto Arias, Dean, Chicago Conservatory College, Chicago; Shirley M. Schaefer, President, Women's Literary Club of Chicago; several area high school orchestras; several area music clubs; and several area religious leaders. 

 

n2 The assignment application includes an outstanding construction permit (BPH-7677) issued on November 30, 1971 for effective radiated power of 6kw with height above average terrain of 1170 feet.

4.  The Chicago metropolitan area is served by two additional classical music stations: WFMT-FM n3 non-commercial 24 hours per day and WNIB-FM n4 a commercial operation.  The assignee believes that WNIB's operation is deficient in certain respects and that many listeners desire improved facilities for WNIB through increased power and stereo operation with vertical and horizontal polarization.  Accordingly, assignee has made the following agreement with WNIB-FM which would be effective when the subject application is granted and consummated:

 

n3 98.7 mhz, 16kw, HAAT 1.170 feet.

n4 97.1 mhz, 3.5kw, HAAT 580 feet.

1.  assignee will relinquish to WNIB the call letters "WEFM-FM" subject to our approval.

2.  assignee will make a gift to WNIB of its stereo classical music library with the understanding that that library will be used in connection with the classical music programming presented by WNIB.  The assignee estimates that the value is $40,000.

3.  assignee will provide legal and engineering assistance which will be required by WNIB to obtain our consent to increase its power.

4.  WEFM-FM is presently in the process of moving its transmitter and antenna to the John Hancock Building (BPH-7677).  Assignee will make a gift to WNIB of a 10kw transmitter with stereo generator and associated equipment.  This gift will enable WNIB to commence early stereo operation and is contingent on WEFM's move to the John Hancock Building. 

5.  Petitioner's main concern with the subject application centers on GCC-Chicago's proposed musical format.  "Petitioners submit that the burden of proof is currently upon Zenith and GCC-Chicago to demonstrate that the public interest no longer requires three full time FM stations to serve these areas and population with a classical music format." (Pet. p. 8) Petitioner maintains that the three existing classical FM stations in Chicago, WEFM, WFMT, and WNIB, have had their licenses renewed due to representations by each station that classical music served the best interests of the public.  In turn, argues petitioner, the Commission's renewal grants confirm the stations' determination that classical music must have three outlets on Chicago FM radio.  Petitioner asserts that assignee is therefore stopped from changing WEFM's classical music format given WEFM's renewal in 1970 which was based on representations that classical music would continue during the station's entire three year license term.  The Citizens Committee contends that GCC-Chicago's community survey and  [*840]  music preference study are irrelevant to "the issue of the legal right of the 7 1/2 million people in the Chicago Metropolitan Area to continue to be entitled to three channels devoted basically to classical and cultural related programming." (Pet. p. 11) Finally, Petitioner claims that they "will in a public hearing demonstrate the public's continued right at this time, if not indefinitely, to the use of WEFM channel for its classical music format." (Pet. p. 9)

6.  Additionally, the Petitioner has raised questions concerning other aspects of the subject assignment.  The financial aspects of the application "present serious questions under SEC 310 b" of the Communicationer points to the fact that: Mr. Alexander Tanger has purchased all of the assignee's common stock (50% of the voting rights) for $500; assignee's parent (General Cinema Corp. hereinafter GCC) will make an unsecured loan of $1.3 million to GCC-Chicago for purposes of acquiring WEFM; $100,000 of expenses will be paid by assignee for improvement of facilities of the subject station; assignee is a company without any assets and created solely for the purpose of acquiring WEFM.

7.  The petitioner questions the "propriety" of a clause in the sales contract for the subject station which gives either party the right to terminate the agreement within six months after the filing of the application or in the event the Commission designates the application for hearing.  Petitioner contends that these provisions raise problems "as to the applicants right to impose upon the valuable time of the members of the Commission and its staff when the entire transaction may be voided by the simple fulfillment of the Commission's responsibility setting this case for a public hearing." (Pet. p. 7)

8.  The Citizens Committee "disputes" assignee's qualifications to become the licensee of WEFM given the following: the unusual relationship between the assignee and its parent regarding financial matters; the failure of GCC to fully inform its shareholders of the basic issue in this case; the loss of $1 million during 1971 on other radio stations owned by GCC and its subsidiaries; and the failure by assignee to demonstrate how it can live up to WEFM's high record of public service in view of the inflated purchase price of $1,000,000.

9.  Zenith has stated in the application that it is selling WEFM rather than continue to subsidize its operation and petitioner is disputing Zenith's claim of financial loss.  Petitioner believes that a licensee is not guaranteed a profit when it is issued a license by the Commission and Zenith's claim of loss here does not "justify approval of the sale with or without a public hearing." (Pet. p. 13)

10.  The assignor's opposition centers basically on the substantial losses incurred with the operation of WEFM as a classical music station: "Zenith can no longer justify the continued subsidization of WEFM." (Opp. p. 12) In support thereof, Zenith submits the following operation losses (excluding capital costs other than annual  [*841]  depreciation and amortization) for the six calendar years during which WEFM has been operating on a commercial basis: n5

 

n5 Opp. p. 3.  Zenith assumes arguendo that if one-half of these losses were offset by the maximum possible tax credit, the cumulative after-tax operating losses just since January 1, 1966 exceeds the $1 million sale price in this transaction.

 

1966

$372,019

1967

337,488

1968

277,721

1969

304,192

1970

316,864

1971

349,250

Total

$1,957,534

 

Zenith points out that petitioners have failed to cite specific facts upon which its "dispute" with assignor's losses are based. Moreover, Zenith argues that petitioner has not met the pleading requirements for petitions to deny as set out in Chuck Stone V. FCC, No. 71-1166 (D.C. Cir.) (Order June 30, 1972).  Since petitioner's "dispute" with assignor's past operation is without factual support, Zenith argues that the Citizens Committee's objection must be rejected.  Zenith concludes that its losses are a matter of record with the Commission as set out in its annual Financial Reports (FCC Form 324) and "Accordingly, there is no issue of fact which would justify a hearing." Finally, Zenith cites WCAB, Inc., 27 FCC 2d 743 (1971) and Biola Schools and Colleges, Inc., 29 FCC 2d 787 (1971) as support for its position that a proposed licensee cannot be expected to continue to bear heavy losses for the mere sake of retaining a particular musical format.

11.  Zenith continues by stating that petitioner's remaining objections do not justify a hearing.  Zenith quotes extensively from the Chuck Stone opinion, supra. concerning applicable standards for a petition to deny and concludes: "Measured against the standards of the Court's decision, the Petitioner's other allegations should also be rejected without a hearing." (Opp. p. 9).  Zenith contends that petitioner's allegation that the renewal of WEFM, WFMT, and WNIB's licenses were based on the Commission determination that these three classical music formats must be continued is "fallacious".  Given the dynamic quality of broadcasting which is constantly changing to meet the needs of its listening audiences, Zenith asserts that no format can be permanent.  n6 KNOK Broadcasting Inc., 29 FCC 2d 47 (1971) is cited as support for the fact that a licensee may change its musical format during a license term. 

 

n6 Zenith claims than during the last nine months of 1971, 112 radio stations changed their formats without Commission objection.  Its source was Broadcasting for the period cited.

12.  Zenith finds that with two other operating classical music stations in the Chicago area, the subject application can be distinguished from Citizens Committee to Preserve the Present Programming of WONO (FM) v. FCC, No. 71-1336 (D.C. Cir.) (Order May 13, 1971)  [*842]  ["WONO-FM"] and Citizens Committee to Preserve the Voice of the Arts in Atlanta (WGKA-FM) v. FCC, 436 F 2d 263 (D.C. Cir. 1970) ["WGKA"].  In each of those cases, Zenith points to the fact that no other station in the market carried classical music.  In Keys Corp., 31 FCC 2d 32 (1971), the Commission granted an assignment where the assignee proposed to eliminate the existing format while other stations in the market provided a musical format similar to that of the assignor.

13.  Finally, Zenith contends that the termination clause of its sales contract with the assignee raises no substantial or material question of fact.  Such clauses Zenith believes are routine in assignment applications for without them uncertainty would exist both for the applicants and the public.

14.  The assignee in its Opposition (p. 14) concludes that "The objections of the Citizens Committee lack the requisite specificity, are largely conclusionary in nature, and do not raise any public interest questions." In support of a grant of the subject application, the assignee argues:

Where... an applicant has made a detailed and good faith attempt to ascertain the needs, problems, interests and tastes of the community and, on the basis of such a study, has determined to change the musical format of the station, no grounds exist for designating such an application for hearing.  This is certainly the case where two other stations in the community broadcast with the same musical format and GCC [Chicago] proposes to strengthen the weaker of the two to make it stronger and more viable.  Finally, it certainly is the case where the existing licensee has accumulated a deficit of over two million dollars in an attempt to present its existing classical music format.  (Opp. p. 2)

15.  The assignee points out that the petitioner does not attack the adequacy of the conclusions reached in its survey of community needs, interests, and program preferences.  n7 While petitioner simply labels these surveys as "irrelevant", assignee argues that the Commission does not decide program formats but rather it is the licensee's responsibility to choose a format that will best serve the public interest.  Assignee stresses that it the survey is adequate and conclusions of the licensee based on that survey are reasonable and made in good faith, "the Commission will not substitute its judgment for that of the licensee." (Opp. p. 3) n8

 

n7 As part of assignee's survey of community needs and interests, a separate survey was conducted by Creative Research Associates, Inc. of Chicago to determine the general public's view of desired radio programming and of desired types of music.  A total of 511 persons were interviewed throughout WEFM's coverage area by telephone.  Respondents were asked what kind of radio programs they most liked to hear; the results were:

 

Percent

Music only

31

News

21

Soothing music

12

Panel/talk shows

11

Rock music

8

"Educational"

5

"All Kinds"

5

Classical music

4

Stories, dramas, etc

3

Semi-Classical

3

Totals more than 100% due to multiple mentions.

They were then asked specifically what kind of music they would like to hear:

 

Percent

Popular

32

Semi-classical

20

Rock and roll

18

Classical

18

Jazz

11

Old-time/Big band

10

Country and Western

8

Religious

7

n8 Twin States Broadcasting, Inc., 24 RR 2d 766 (1972) is cited in support.

 [*843]  16.  Assignee strongly maintains that it had an open mind with regard to a musical format when the sales contract was signed with Zenith.  The Citizens Committee has alleged no facts which would support its allegation that assignee signed the contract with the intention of eliminating WEFM's classical music.  In fact, assignee points out that it operates a full time classical music station in Atlanta, Georgia (WGKA-AM) and that it could have easily done the same in Chicago.  However, after completing its community survey, assignee determined that it would program a musical format for young adults.  This being the case, the assignee decided that classical music would not be consistent with the desire to reach this particular audience.

17.  Assignee terms petitioner's argument that Chicago has a right to three classical music stations as conclusionary.  It contends that the agreement between WNIB-FM and the assignee to improve the former's facilities, "will certainly affirmatively aid classical music and not weaken it by making possible two healthy viable classical music stations." (Opp. p. 6) Assignee argues that two classical music stations give ample service to the classical music audience and that its agreement with WNIB should be welcomed by any friend of classical music.  In this regard assignee finds petitioner's objection to the WNIB agreement "startling." n9

 

n9 Petitioner questioned assignee's authority to make gifts of property to WNIB due to shareholder interests of the assignee's parent that may be affected.  Assignee points out that any objection these shareholders may have can only be resolved through shareholder suits and the petitioner's objection has failed to raise any allegation as to how these proposals will affect the public interest.  Assignee points out further that the qualifications of its parent are a matter of record with the Commission.  The operating losses experienced by GCC's other broadcast stations "do not come in light of anything alleged in the Petition to Deny, and the ability of General Cinema to sustain additional losses if necessary by entry into the Chicago market has not been questioned." (Opp. p. 9, fn *).  GCC's balance sheet submitted with the application lists current assets of $26.6 million which includes cash of $8.178 million; additionally current assets exceed current liabilities by over $3 million.

18.  Assignee finally turns to cases that support its position.  In WGKA supra., the issue found by the Court was the profitability or lack thereof of the assignor's operation which, the assignee argues, is not present here.  Given the fact that Zenith has lost money with WEFM, assignee cites WCAB, Inc., supra. as support for the proposition that an unprofitable format may be changed.  Assignee argues that the case cannot be distinguished from the present assignment application.  The assignee strongly maintains that the Citizens Committee has failed to meet its burden of alleging specific facts which would indicate that a grant of the application would be prima facie inconsistent with the public interest.  (Chuck Stone, Supra.)

19.  The Petitioner in its reply maintains that substantial and material questions of fact continue to exist in the application and that the applicants have failed to demonstrate that their application should be granted with or without a public hearing.  Initially, Petitioner claims that:

GCC's community study is largely irrelevant for it is not an adequate study of the enormous area served by WEFM, or related to its concrete 'needs, problems, interests and tastes',...  as affected by WEFM's long record, nor can its conclusions  [*844]  be reasonable as vital underlying facts are absent from its study." (Reply p. 3)

Essentially, the Citizens Committee contends that GCC-Chicago "was under a duty to question [community leaders] on the specific and highly relevant point" concerning its proposal to abandon classical music.  (Reply p. 11) n10

 

n10 Two members of the Citizens Committee were interviewed as community leaders by the assignee, and they have expressed their opposition to GCC-Chicago's proposed program format.

20.  Petitioner is still concerned by the GCC-Chicago/WNIB agreement and doubts the "propriety" of assignee's attempt to tie its relations with WNIB to the instant application.  Petitioner claims that WNIB's coverage area is so inferior to that of WEFM making the agreement contrary to the public interest: "It is doubtful whether more than 10 to 20% of the WEFM audience find WNIB of any value to them." (Reply p. 10) In any event, petitioner argues that a material and substantial question of fact arises out of the extent of Wnib/'s service to WEFM's audience.

21.  To support their argument that GCC-Chicago cannot change WEFM's existing musical format, the Committee states that "In two recent cases the Court of Appeals (D of C) has held program format changes, when opposed by substantial segments in the stations audience, raise 'public interest' questions requiring an evidentiary hearing." (Reply p. 7) n11 Petitioner also points to the Primer on Ascertainment of Community Problems, 27 FCC 2d 650, 679 & 680 (1971) where the Commission declared that special attention should be given to the WGKA decision when program formats are changed in connection with an assignment of the station's license.  Petitioner also challenges the applicants' reliance on the Chuck Stone, supra. decision, since that case has nothing to do with the abandonment of classical music.  Petitioner asserts that the assignee has failed to cite any Commission or Court decision resembling the "immense public interest issues presented here which serves as authority for the abandonment of the classical music format by GCC without a public hearing." (Reply p. 13). 

 

n11 WONO-FM, supra and WGKA, supra.

22.  Petitioner adheres to its original position that Zenith's losses have not been correctly presented.  "We submit that the reliance upon Zenith's losses as a factor in approving this instant transaction without a public hearing would deny Petitioners their rights of due process." (Reply p. 14).  The Citizens Committee maintains that Zenith's apparent losses must be questioned due to Zenith's continued use of WEFM to advertise its products.

23.  Finally, Petitioner claims that the applicants have "violated WEFM listeners rights of due process by their grossly inadequate notice" concerning the proposed format change of the station (Reply p. 2).  While Petitioner does not question assignor's notice as given and required under Section 1.580 of our Rules, it does argue that assignor was under a higher burden of giving notice which would include notice of assignee's programming plans.  The Committee argues that the  [*845]  primary issue in the application centers on GCC-Chicago's programming proposals and Zenith's notice omitted any reference to this fact and further that "[adequate] notice of all material facts is, of course, all the more essential, where, as here, a hearing is discretionary." (Reply p. 5).  ( Mullane V. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) is cited in support).

24.  The issue here simply put is whether the assignee without a hearing can change the musical format of WEFM from classical music to a "contemporary music" format where there are two other classical music stations serving Chicago and the station has been suffering continuous operating losses.  n12 As we recently stated in Twin States Broadcasting, Inc., et. al. with respect to the necessity of a hearing on the assignee's decision to change the WGLN format from "Progressive Rock" to "MOR" format:

 

n12 (Footnote from page 8).  The WEFM operating losses incurred over the past 6 years total $1,957,534.  Petitioner in an attempt to create a factual issue here has suggested that we need to know the extent to which these losses were offset by other business activities or tax credits.  We are of the view that no substantial question exists regarding the WEFM operational losses.  However, since the existence of such losses is not of critical significance to our decision here, petitioner's speculations regarding the tax write offs, etc. would not raise "substantial and material" questions of fact which would require a hearing on this application.

 

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.

 

There has been no showing here that the format of "contemporary music", chosen by the assignee in the exercise of its discretion, is not reasonably attuned to the tastes and needs of the Chicago listening public.  Elementary understanding of the nature of the radio broadcast industry, especially in larger markets, shows that the choice of the musical format is primarily a business judgment by the applicant as to how he can operate the station with sufficient revenues to ensure its viability and meet his public interest obligations.  While we may view it as commendable for assignor here to have operated WEFM as a classical music outlet with substantial and continuous losses, we cannot reasonably in the circumstances here, question the assignee's judgment as to the musical format which will enable it to best assure the station's viability.  Although the Court of Appeals ordered a hearing in WGKA, that case involved the proposed termination of the only classical music format in Atlanta whereas here, there are two other classical music stations in Chicago.  Morevover, there were questions of fact which the Court viewed as substantial and material which required resolution.  We are of the view that extension of that holding beyond the limited confines of the facts and circumstances therein would be most  [*846]  unwise.  As we have stated before, the use of a particular format is not a static thing.  Indeed, "[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." * To hamper the licensee's discretion in this area with the ominous threat of a hearing in a case like this would only serve to discourage licensees from choosing or experimenting with a format such as classical music, progressive rock, or other specialized formats.  Accordingly, we find no basis to questions the applicants discretion in the choice of format and we conclude that Petitioner has presented no material and substantial questions of fact which require a hearing on this application.  In short, the existence of other classical music programming in Chicago coupled with the established long continuing losses experienced by the present licensee, affirmatively establish that the substantial and material questions which the Court, in WGKA, supra, found to be unresolved do not exist here.

 

* WCAB, Inc. supra, at p. 746.

25.  Petitioner has also alleged in its Reply that the notice given by Zenith to announce the sale of WEFM, while conforming to the guidelines of Section 1.580 of our Rules, has, however, failed to provide WEFM's audience with proper notice and thereby lacked due process.  The Citizens Committee argues that the notice read over the air should have included reference to assignee's proposal to eliminate WEFM's musical format.  No such notice is required by our Rules.  Our publication Rules (Section 1.580) simply requires the publication of a statement which identifies the parties to the application and the "Purpose for which the application was filed (i.e., construction permit, modification, transfer or assignment of control, renewal, etc.)" and states where the application is available for public inspection.  The rule does not require the publication of a complete summary of the approximately 35 page application and related documents.  We believe that such a simple announcement will alert interested parties to pursue their interests further.  Petitioner cites Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306 (1950) as support for their argument that Zenith's notice did not afford WEFM's listeners due process.  We find that the language of that decision, viz. "... within the limits of practicality notice must be such as is reasonably calculated to reach interested parties" ( Id. at p. 318) has been misapplied by petitioner.  We find that the notice as given by Zenith comes within the reasonable limits of practicality as required by the Court in Mullane.  The notice advised the public of the pending sale of the station and indicated that the application itself would be on file at the station for public inspection by any person desiring further information on the terms of the sale.  We find no substantial or material questions of fact concerning Zenith's public announcement of the subject assignment.

26.  Concerning petitioner's other allegations as noted above, we find that the applicant has adequately responded to these charges.  We find that petitioner's contentions concerning the corporate structure of assignee and its financial arrangements with its parent corporation,  [*847]  raise no substantial and material questions of fact or public interest considerations which would require a hearing.  The corporate structure and financial arrangements of the assignee are similar to that utilized by GCC in its recent acquisitions.  Petitioner points out that some of the community leaders contacted by the assignee are opposed to the elimination of classical music on WEFM.  The assignee responds by stating that its community leader survey is not required to ascertain programming and musical preferences but rather such a survey is designed to seek our problems and issues of the community.  We find assignee's response to be persuasive and hold that the programming preferences of some leaders, while contrary to assignee's plans, do not in any way impair the validity of the assignee's community leader survey.  In any event, in view of our above conclusions regarding the format change, these allegations raise no substantial or material questions.  With regard to the questioned termination clause in the parties sales contract, we fail to find and petitioner has failed to point to any substantial or material questions of fact that would affect the public interest.  While GCC and its subsidiaries have experienced some cash flow losses in operating other broadcast facilities, we are of the view that its financial position is such that the operation of WEFM will not be affected.  Finally, GCC's agreement with WNIB-FM to improve its operation would appear to benefit the public interest and the classical music listeners in the Chicago area.

27.  As noted in footnote #1 above, Petitioner has filed, on November 20, 1972, a document entitled "Complaint" which essentially requests the Commission to enter the following order or orders:

"1.  Set this Complaint for a public hearing.

2.  Consolidate, for purposes of hearing only, this Complaint with the public hearing if and when ordered in File BAPLH-140.

3.  Require Zenith to make available to the Citizens Committee to Save WEFM, Inc. Station WEFM for reasonable periods from time to time to discuss the issues in this proceeding without payment of any fees or charges by the Citizens Committee to Save WEFM, Inc.

4.  Enter an order upon the completion of the hearing herein, directing that Channel 99.5 shall be set aside indefinitely for a classical music format as long as its listening audience remains interested in such classical music programming, and a qualified person, firm or corporation is willing to continue such classical music format."

 

The assignor and assignee have not commented on the merits of the "Complaint" arguing that it "... presents no new material not previously raised in the Petition to Deny and not extensively briefed in response to that document." The applicants contend that the "Complaint" should therefore be dismissed.

28.  Although the "Complaint" is not specifically labeled as a supplemental pleading directed against the instant WEFM assignment application, it is directed against the parties to that application and the relief requested in the "Complaint" would preclude a grant of that application in its present form.  Accordingly, it is in the nature of a supplemental pleading which is governed by Section 1.45 of our Rules, Subsection (c) of that Section provides that "... additional pleadings [in excess of Opposition and Reply Pleadings] may be filed only is specifically requested or authorized by the Commission." Here the  [*848]  Commission has not requested or authorized the filing of this additional pleading and thus, our rules of procedure and fairness to the parties require the dismissal of this "Complaint" pleading in-so-far as it pertains to the application before us.  We have, nevertheless, considered the merits of the "Complaint" and we conclude that the public interest would not be served by a grant of the relief requested therein.  As we have set out above in our treatment of the matters raised in the Petition to Deny, the choice of a particular musical format is primarily a business judgment which a licensee or applicant must make in determining whether he can successfully operate the station and render service to his community of license.  The question of whether some other "qualified person, firm or corporation is willing to continue such a classical music format" can be of no consequence to the Commission in considering and acting upon this application.  Section 310(b) of the Communications Act of 1934, as amended, states that in acting on an assignment or transfer of control application,

"... the Commission may not consider whether the public interest, convenience and necessity might be served by the transfer, assignment, or disposal of the permit or license to a person other than the proposed transferee or assignee."

 

Thus, under the Act, we must consider only the application before us and the proposals made therein by the proposed assignee.  In the circumstances before us we have concluded that the assignee's decision to change the WEFM musical format does not require an evidentiary hearing on the subject application.  In view of this conclusion and our determinations that the applicant is fully qualified and that the public interest would be served by a grant of the application, a hearing on Petitioner's "Complaint" is clearly not warranted.  Accordingly, on the merits, the relief requested in the "Complaint" must be denied.

29.  In conclusion, we find that the Petitioner in its pleadings has failed to raise substantial or material questions of fact that would show that a grant of this application would not be in the public interest.  ACCORDINGLY, IT IS ORDERED, That the Petition to Deny filed by the Citizens Committee to Save WEFM, IS DENIED, that, Petitioner's "Complaint" IS DISMISSED and that, the application for the assignment of the license for radio Station WEFM-FM, Chicago, Illinois, from Zenith Radio Corporation to GCC Communications of Chicago, Inc. IS GRANTED.

 

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.


DISSENTBY: JOHNSON

 

DISSENT:

DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

Before the Federal Communications Commission can grant an application for the assignment of a license, it must find that the public interest, convenience and necessity will be served by the grant.  47 USC   301(b).  Today, absent the requisite information upon which to base such a finding, the majority approves the assignment of WEFM-FM Chicago, from Zenith Radio Corporation to GCC Communications of Chicago, Inc.

 [*849]  For 30 years, WEFM-FM provided its listeners in the Chicago area with a classical music format.  The assignee, arguing that Zenith has experienced financial losses in recent years, proposes to change that format to one of "contemporary music." As the result of this proposed change -- a proposal which was never communicated by the station to the public -- the Citizens Committee to Save WEFM has filed a petition to deny this assignment.  In addition, over 1000 Chicago residents have written to this Commission protesting the pending format change.

In response to this display of community concern, the majority holds (1) that WEFM-FM had no obligation to advise its listeners of its proposed format change, and (2) that no hearing is necessary in order to determine whether the assignment and its accompanying format change will serve the public interest.

In Citizens Committee v FCC, 436 F. 2d 263 (D.C. Cir. 1970), the Court of Appeals reversed a Commission grant of an application for a transfer of WGKY-AM-FM, Atlanta, Georgia.  In that case the Commission had granted the transfer application without a hearing on the question of the public interest impact of the proposed change of format from classical music to a "blending of popular favorites, broad-way hits, musical standards, and light classical music." The Court of Appeals held, in substance, that the Commission could not make the necessary factual determinations from the record as developed without a hearing.

The majority, as it has in the past, see In Re Application of Keys Corporation, 31 F.C.C. 2d 32 (1971), attempts to distinguish the Citizens case on the ground that the principles there enunciated do not apply where the format being extinguished is not the only format of that sort available to the community.  Thus, the majority holds that it may determine, absent a hearing, that because there are currently three classical music stations available to listeners in the Chicago area, a change in the format of one of those stations will serve the public interest.  Such an approach represents a gross misreading of Citizens.

First, in Citizens the assignee alleged that a second classical music station was available to Atlanta's listeners.  The FCC majority agreed that that second station's signal reached a large portion of Atlanta's listenership, but the Court of Appeals held that such a determination could not be made absent a hearing.  Likewise, in the instant case, it is alleged that one of the two classical music stations (WNIB-FM) which will remain after the demise of WEFM does not satisfactorily reach a substantial number of Chicago's population.  The assignee concedes this point but proposes to aid that station after consummation of the instant assignment.  Whether or not the assignee's proposals will indeed, improve WNIB's signal, and the extent of the resulting improvement are questions of fact which cannot be answered absent a hearing.

Further, as in Citizens, the question whether the assignor, Zenith, has lost money on WEFM solely as the result of its classical music format is a question which cannot be answered without further investigation.  The petitioners contend that Zenith's claims are questionable  [*850]  because Zenith has continued to use WEFM to advertise its own products.  The majority, preferring expedience to truth, simply rejects that contention.

After refusing to investigate in order to determine the requisite facts, the majority concludes that "There has been no showing here that the format of 'contemporary music' chosen by the assignee in the exercise of its discretion, is not reasonably attuned to the tastes and needs of the Chicago listening public." Given Citizens, that is truly a bizarre statement.  First, it places on the public the burden of proving that the assignee's format change is not in the public interest, even though, at a later point in its opinion, the majority holds that the station has no obligation to inform the public of the impending change.  Even Joseph Heller, author of Catch-22, would marvel at such reasoning.

Second, whether or not the proposed contemporary music format is reasonably attuned to the tastes and needs of the Chicago public is not, under Citizens, the relevant inquiry.  Indeed, in Citizens the Court was presented with evidence which allegedly established that only 16% of the Atlanta community favored classical music over the new format proposed by WGKY.  That evidence itself raised factual questions warranting a hearing, but the Court's primary point was that the mere fact that a format appeals to a majority in the community does not insulate the format change from further scrutiny.  Rather, Citizens demands that when a station's proposed format change will decrease the diversity of broadcast formats within a given community, the Federal Communications Commission must determine whether that resulting decline can possibly service the public interest.  As the Citizens Court explained, we cannot make that determination simply by stating that a majority of the community would probably prefer the new format to the old.

Yet, that is precisely what the majority does today.

I dissent.


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