Broadcasting Telecasting (Oct - Dec 1952)

JOHN C. MULLINS (I), managing director, KPHO-AM-TV Phoenix, shows Walter Fulkerson, manager, Phoenix' Sky Harbor Airport, the new weather board which KPHO presented to the airport. The lighted board, located in the airport lobby, indicates latest weather reports in major cities across the nation. Mr. Mullins is resigning from the stations Jan. 1 to devote time to outside interests [B«T, Nov. 3]. ABC-UPT Text (Continued from page 23) tions in this proceeding, exclusive of the transfer or assignment applications involved in or resulting from the proposed ABC-UPT merger, which will be considered later. One of the principal matters with which we are now concerned is the transfer of stock interests from Paramount Pictures Inc. to UPT and Paramount Pictures Corporation in companies holding broadcast authorizations, transfers which took place before we had an opportunity to pass upon the applications relating thereto. More specifically, we shall consider the facts and circumstances surrounding the transfers of stock interests from Paramount Pictures Inc. to UPT and Paramount Pictures Corporation to consider whether they indicate violations of the Communications Act or the Commission's Rules, and whether they adversely affect the qualifications of Paramount Pictures Corporation and UPT to be licensees, or, more precisely, to have controlling stock interests in companies holding broadcast authorizations from the Commission. The applicants contend, among other things, that these transfers, occurring principally on December 30, 1949, were involuntary in that they were pursuant to the judgment of the United States District Court for the Southern District of New York, entered on March 3, 1949, and also that their applications for consent to these transfers were filed as soon as possible in view of the fact that the two new companies were not incorporated until November 15, 1949. 17. In view of the Supreme Court decision (U. S. v. Paramount Pictures Inc., et al, 334 U. S. 131) looking toward a divorcement of theatre facilities from production and distrbution (even though the matter was remanded for decision to the District Court) and in view of the adamant position of the Department of Justice in requiring such divorcement and the success it had in arranging for such divorcement of the RKO facilities late in 1948, it would appear that Paramount's entering into the consent judgment of March 3, 1949, had very little of the aspect of a voluntary action. The handwriting on the wall was legible for anyone to read. The feeling of the Paramount officials and counsel that the contemplated divorcement and transfer of assets was involuntary, received some support on October 3, 1949, when the Apellate Division of the Supreme Court of New York in the case of Kokol v. Paramount Pictures Inc., 275 App. Div. 1021, held that the distribution of assets to the two new companies was not a voluntary transfer insofar as the right of an objecting stockholder to have his stock appraised was concerned. We do not regard this decision by the New York State Court with respect to a different problem to be binding upon this Commission in applying the Communications Act or the Commission's Rules with respect to transfers of control over broadcast stations. To do so would be "lumpccncept thinking" indeed. Nevertheless, this decision8 is entitled to some weight in considering the nature of the transfer of assets which occurred, and it does support, on and after October 3, 1949, the claim of the Paramount people that they truly regarded the transfers of assets, including broadcast interests, as being pursuant to the consent judgment and therefore involuntary. 18. The consent judgment, together with the letter incorporated therewith, requires the transfer of certain broadcast interests, directly or indirectly. It does this expressly with respect to television station WBKB in Chicago and, reasonably construed in the light of the circumstances and testimony, it does it also with respect to the other broadcast interests which were transferred prior to the close of 1949. We entertain little doubt that if the transfer of the broadcast interests had been more completely described both in the proposed consent judgment and incorporated document and in the oral argument before the Court, and if the Court had been apprised of the Commission's jurisdiction with respect to such transfers, the Court would have recognized the Commission's jurisdiction and acted accordingly. We do not care to speculate whether the Court would have waited until the present date. In this connection, we think it appropriate to announce at this time that hereafter if this or any similar situation should ever arise again, we would expect members of the Federal Communications Commission Bar, as officers of the Commission in a manner of speaking, under circumstances similar to those which prevailed in the Paramount case, to advise the Court of the Commisson's jurisdiction. We do not consider the consent judg sApproved without opinion by the Court of Appeals, 300 N. Y. 685. ment to have deprived the Commission of its jurisdiction to review the pending transfer applications and we are exercising that jurisdiction now. 19. While Section 310(b) of the Communications Act of 1934 requires the prior approval of the Commission for a transfer of control, whether voluntary or involuntary, the Commission as a matter of practice has recognized, in its Rules and in its actions, that in certain types of cases such as death or legal disability, prior approval is impossible or impracticable. Section 310(b) must be viewed in terms of the facts of life, both personal and corporate. In these cases, the Commission has permitted applications to be filed even subsequently to the occurrence of legal disability and, where the circumstances warranted, approved Such applications. Under certain circumstances, the Commission has recognized a transfer to a trustee in bankruptcy or a receiver as an involuntary transfer even where the bankruptcy was voluntary and the appointment of the receiver was due to legal action voluntarily initiated. It would appear that the term "legal disability" could also apply to a situation where, as here, a judgment not only required the transfer of assets to two corporations required to be established but contemplated as well the dissolution of the existing corporation. However, we hesitate, pending some elaboration on the meaning Hennock Talk OPPORTUNITIES for women in educational radio and TV were discussed by FCC Comr. Frieda B. Hennock last Thursday at a dinner meeting of the District of Columbia chapter of American Women in Radio and Television. Question and answer period included discussion of current status of educational applications and Commission policy. Meeting, one of monthly series, was presided over by President Nancy Osgood, NBC, and Program Chairman Helen Coar of the Congressional Recording Facility. of "legal disability," in rule-making or other proceedings of a more general nature, to make a pronouncement not necessary, as we shall see, to the decision of the case and relating to a fact-situation unprecedented in our history and unlikely to occur again. Meanwhile, we shall not expect of the parties a clairvoyance which we do not ourselves possess. 20. The applicants filed formal applications for consent to the transfers prior to the actual consummation of the transfers, and within a reasonable time after the formation of the new companies named as transferees. In this respect, the situation differs from the so-called "unauthorized transfer" I cases, in which the parties effectu: ated transfers without notice or application to the Commission and concealed the transfers. In this case, some notice was given directly to the full Commission as early as January 17, 1949, during an oral argument9 in a rule-making proceeding, that some transfers of Paramount television interests might become necessary as a result of litigation in the United States District Court for the Southern District of New York. However, this offhand notice does not comply with our Rules (Sections 1.342 and 1.343) requiring the filing within 30 days of execution, of contracts or documents relating to or affecting ownership, management or control of a licensee or permittee, or rights or interests therein, as well as the filing of interim ownership reports containing information as to any transac j tions affecting ownership or voting rights within 30 days of their occurrence. Until they filed the applications referred to above, the applicants had not provided the Commission with the consent judgment, the plan of reorganization, the proxy statement to stockholders or any of the other documents relating to the proposed transfer of assets. Paramount Pictures Inc. and UPT also failed to file a copy of the May 30, 1949, contract whereby E. V. Richards agreed to sell to Paramount Pictures Inc. or UPT his 50% interest in Paramount-Richards Theatres Inc. In addition, we note that a technical transfer occurred in the month of May, 1950, when 51% of the common stock and voting power of UPT passed from the trustee to persons theretofore holding only certificates of interest in UPT. This was unreported to the Commission; however, the plans for placing 'the stock of UPT in the hands of the trustee and thereafter for exchanging stock for certifi !'See Paragraph 34 of the Findings. (Continued on page UU) UPT Dividend BOARD of directors of United Paramount Theatres declared a dividend of 25 cents per share on outstanding common stock, payable Dec. 19 to holders of record on Nov. 28. Page 42 • November 17, 1952 BROADCASTING • Telecasting