Broadcasting (Jan - Mar 1949)

MULTIPLE OWNERSHIP FCC May Adopt Rules Despite Objections By RUFUS CRATER FCC APPEARED disposed to adopt its proposed new multiple-ownership rules — but perhaps with modifications — despite virtually unanimous opposition directed against them in oral argument last week. Industry's objections, heard by the Commission in a three-hour en banc session Monday, ranged from sug * ■ gestions for changes to unqualified denial of FCC's right to issue such rules in any form. Observers felt FCC might revise sojne of the terms of the proposed regulations but would not abandon them. The proposed rules [Broadcasting, Aug. 23, 1948] would impose a seven-station ceiling on multiple ownership in AM, continue the present six and five-station limits in FM and TV, respectively, and also, for each class, establish ceilings on the number of stations in which a stockholder might have minority interests. The Proposal's Formula The number of allowable controlling interests would be determined, under the proposal, by the number of minority interests, and vice versa. In AM, the range would extend from no minority holdings if seven stations are controlled to 14 minorities if no station is controlled; in FM, from six controlled stations with no minority interests to 12 minorities with no controlled station; in TV, from five controlled and no minorities to 10 minorities and none controlled. Principals in the attacks on the proposed rule were Duke M. Patrick, Washington attorney representing the Paramount Pictures' television interests; Joseph H. Ream, executive vice president of CBS; Paul A. O'Bryan, attorney for the Fort Industry Co. stations; Thomas N. Dowd, counsel for WIND Chicago; James A. McKenna Jr., representing four stations and applicants, and Gustav B. Margraf, vice president and general counsel for NBC. FCC Chairman Wayne Coy presided. Other Commissioners present were Paul A. Walker, Rosel H. Hyde, Robert F. Jones, and Frieda B. Hennock. Participating as Commission counsel were Benedict P. Cottone, general counsel; Harry' M. Plotkin, assistant general counsel, and Paul Dobin, attorney. 'Lacks Authority' Opening the arguments, Mr. Patrick told the Commission not only that it lacked authority to issue such rules but, aside from that, their issuance would be of questionable wisdom in television's present formative state. "It is difficult at any time to say that the ownership and operation of a given number of television stations, or parts of such stations, will constitute a monopoly irrespective of questions of coverage and location," he declared. "We submit that it is impossible at this time." Referring to Paramount's ownership of 29% of Allen B. DuMont Labs, which FCC has held tentatively to amount to control, Mr. Patrick said its television applications have "received the quiet treatment" from the Commission ever since the Paramount-DuMont question was raised in early 1947. In that time, he said, FCC has granted no Paramount television application, though grants have been issued meanwhile to other applicants in cities where Paramount is applying. Paramount's station ownership situation may be decidedly changed as result of developments in the government's anti-trust suit against the major motion picture producers, he reported. If Paramount disposes of its theatre companies (through which most of its television stations and applications are held), he explained, Paramount's television properties might be vested in a single company. Paramount Television Productions. This company now has one station and one application. The theatre companies then "would stand entirely on their own feet and would be entitled, even under the Commission's proposal, to five stations," Mr. Patrick pointed out. Delay to 1953 Under FCC's proposal, eifectiveness of the rules insofar as "existing situations" are concerned would be delayed to Jan. 1, 1953, "to permit the orderly disposition of interests." Mr. Patrick said this provision should be construed "in such manner that [the rule] will constitute no bar to the prosecution and grant of any applications filed by the Paramount group prior to Jan. 1, 1953." FCC often makes grants with a condition that the grantee rid himself of certain other inter ests within a specific period of time, he pointed out. On behalf of CBS, which owns 7 AM stations and 45% of another, Mr. Ream asked that the AM ceiling be raised from seven to eight, and that the FM limit be increased to the same number. Ownership of more than eight might be allowed Mr. Ream under his plan upon a clear showing that it would be in the public interest. He urged that no definite limitation be placed on TV ownership now, in view of the channel shortage and general uncertainty as to the number of stations in the future. Mr. Ream centered his argument on networks' need for owned stations to help support other broadcasting operations. The financial stability of any broadcasting organization depends upon the profitability of the owned stations, he declared, asserting that any rule restricting station ownership will threaten the stability of networks. Because of the high operational expenses, he emphasized, television stations in particular will depend largely upon networks for programming, thereby making strong networks more than ever essential. CBS Revenues in 1947 Mr. Ream said that the 1947 revenues of all CBS operations (except recording company) totaled $49,113,515, while profit before federal taxes amounted to $7,177,179. The margin of profit, he said, was 29.8% for CBS-owned stations and 7.1% for the network operation. Under questioning from the bench, he said he didn't see how competition would be restrained "if Mr. X, who happens to own a certain number of stations, comes in and competes with the stations already in a city." To further ques Zitfimerman Heads New Group ARK. ASSOCIATION FORMATION of the Arkansas Broadcasters Assn. has been announced by its new president, G. E. Zimmerman, KARK Little Rock. A certificate of incorporation has been issued to ABA. Other officers are Sam W. Anderson, KFFA Helena, vice president, and Al Godwin, KFPW Fort Smith, secretary-treasurer. Named as directors are Bob Choate, KWFC Hot Springs; Leon Sipes, KELD El Dorado; John J. Wolever, KTHS Hot Springs; David Crockett, KAMD Camden; Harold Sudbury, KLCN Blytheville, and Ted Rand, KDRS Paragould. Formation of the association is designed to promote cooperation among its members; to promote and develop the art of broadcast ing; to encourage practices for the best interests of the industry, and to act as a regional contact with NAB. Membership is limited to representatives of "licensed standard broadcast stations" in the state and is subject to approval of the board of directors. The board is composed of three officers and six other persons selected from the membership. Term of office is one year. Mr. O'Bryan tions he said if the multiple-ownership ceiling were going to be fixed on competitive basis, then allowances should be made for differences in power. Speaking for the Fort Industry Co., Mr. O'Bryan attacked the "illogicalness" and "impracticability" of FCC's proposed rule. The FM and TV limits, he contended, should be the same as the AM limit. He noted that Fort Industry owns seven AM stations, for example. WMMN Fairmont, W. Va., is the only one of the seven without an FM affiliate. Under FCC's six-station FM limit, he pointed out, WMMN is prohibited from offering on PM the service it has been providing by AM for some 20 years — and consequently, he predicted, WMMN ultimately may be forced to discontinue service altogether. If this happened, he pointed out, "concentration of control" in Fairmont would be greater, not less. Mr. Dowd, representing WIND, called attention to the "injustice" suffered at FCC's hands because H. Leslie Atlass, 19.2% owner, is also CBS vice president in charge of WBBM Chicago. Under FCC's proposal, a person could not be an officer or stockholder of two stations of the same class in the same community. Wants Immediate Actions Contrary to general Commission procedure, Mr. Dowd declared, action on wind's television application was held up until others were filed, necessitating a hearing. He urged FCC to make grants conditioned on compliance with the rule by its effective date, and not to withhold action on applications until compliance had been achieved. Mr. McKenna told the Commission its proposed rules would be unwise even if it had authority to issue them — and he felt the authority clearly was ^^^^ lacking. In a proJpljM^k vocative discussion of FCC ju1 risdiction and power, he raised no question of FCC's right to deny an application, after a hearing, on grounds that a grant would produce undue concentration of control. But, he argued, FCC lacks authority to set an arbitrary limit and refuse to consider applications which would exceed that limit. Further, he said, the need for multiple ownership rules is far less (Continued on page 60) Mr. McKenna Page 30 • January 24, 1949 BROADCASTING • Telecasting