Broadcasting Telecasting (Oct-Dec 1954)

ONCE AROUND THE PARK THIS ONE always wows 'em at bar association dinners. Seems a gal asked a large, plush, Wall Street law firm to represent her in a breach of promise suit against the scion of one of the oldest families. She claimed she was violated one festive night in a hansom cab while being driven through Central Park with her, at that time, beau. The senior member of the law firm instructed a junior to check the law library for cases which might be used in this suit. Weeks later the law clerk reported chagrined back to his chief. There had never been any case in the history of American juris prudence which involved rape in a hack. Although this article on the FCC's principle of diversification looks like a legal brief with its extensive quotations from FCC tv decisions, there is method in the writer's format. This is that each quotation, albeit seemingly similar to others, is based on a separate set of facts and contains nuances that are not the same in any other case. Like the legal profession's "Rape in a Hack" story, there are no two cases exactly alike. In order, therefore, to give the flavor of each decision, it was thought best to reprint the Commission's exact words. Where the decision repeats something already set down, it has been paraphrased. waukee and through a related company, WCAE Pittsburgh. Although not directly at stake, WBAL-TV's license was also in jeopardy if Hearst was found disqualified to own a radio station. The license of WBAL was renewed. In the final decision, the Commission discussed the diversity principle in these words: The weight to be given to the principle of desirability of diversification of control of media of mass communications will, in those instances involving licensees of existing facilities, vary with the facts in each individual case. We believe that normally diversification is not a controlling element where a person has been licensed by the Commission for more than one station and operates these stations in the public interest; where the licenses held are not in violation of our rules; and where the record does not clearly establish from facts pertinent to the individual case, that the control of other radio facilities would make a renewal of the license not in the public interest. In the instant case our rules governing multiple ownership are not being violated and we do not believe the last made point has been established by the record. The stations owned or controlled by Hearst interests serve three widely separated communities (WISN Milwaukee, WCAE Pittsburgh, and WBAL Baltimore). Each of these communities has several stations assigned to it. The dangers which might arise from concentration of control in a single community, or in contiguous areas, with limited choice of radio services, are not here present. Accordingly, the fact that greater diversification might result from a preference of the application of Public Service Radio Corp. is not considered to be a determining factor in this case. Similarly, the fact that Hearst interests control one of the two daily newspapers in Baltimore [Baltimore News-Post] and a number of newspapers and perodicals in other cities and that stockholders in the Public Radio Service Corp. have no proprietary interests in Baltimore area newspapers is not considered determinative under the circumstances in this case. Newspaper ownership does not automatically disqualify an applicant. It is a factor which is considered, but only in relation with the other aspects of comparative determination and as it bears upon the final decision of whether a grant to the applicant in question is in the public interest. The record does not show that the common control of WBAL and the Baltimore newspaper has been employed adversely to the interests of the listening public, and an inference can reasonably be drawn that these conditions which have previously obtained will continue. But, the then FCC Chairman Wayne Coy had other ideas. To him the diversity dogma was practically over-riding. This is what he said: The Commission is committed to the principle that unless there are over-riding considerations, preference should be given to a non-newspaper, non-multiple owner applicant as against an applicant which publishes a newspaper or has other broadcast stations in order to encourage the greater diversification of control of the media of mass information. This principle, unlike that of integration and local ownership, is not grounded on the fact that there is any basis for assuming that one applicant is more likely to carry out its program proposals than the other, but is a reflection of the Congressional policy expressed in the Communications Act and that the public interest is best served by having as wide an ownershp as possible of the media of mass communications. I recognize that where there are over-riding considerations the Commission has preferred a newspaper applicant to a non-newspaper applicant on the basis of qualifications, or a multipleowner applicant to an applicant with no other broadcast interests on the basis of a demonstrated record of superior program service. None of these elements are present in this case. . . . In the first post-freeze final decision, the Denver ch. 7 case, the issue of an existing broadcaster vs. a newcomer was paramount. The Commission decided in favor of Aladdin Radio & Television (KLZ Denver) and against non-broadcaster Denver Television Co. on the ground that KLZ was so superior in other respects that it outweighed this advantage for Denver Television Co. The Commission said, in this respect: It is contended that because of Aladdin's present radio operations and the radio interests of its officers and directors, it would be more in the public interest to approve the application of Denver Television which does not have such interests, for there would result a diversification in the ownership of the media of mass communication. The Commission has in the past held that diversification of control of media is desirable and that, in the absence of countervailing considerations, a grant to an applicant who has fewer broadcast interests better serves the public interest since it results in greater diversification of radio and tv ownership. Thus a grant to Denver Television would bring a qualified newcomer into the field as opposed to Aladdin which presently operates an am station in Denver, and whose stockholders hold substantial interests in a number of other stations in the country. In the absence of other comparative considerations, a grant to Denver Television would be indicated. As has heretofore been shown, however, Aladdin has demonstrated its superiority in all other material respects where there is a difference between the applicants. This superiority clearly outweighs the comparative advantage enjoyed by Denver Television because of its lack of other radio and tv interests. So far, so good. Although the FCC talked about the diversification issue, it did not penalize a tv applicant for being newspaper connected or for including broadcast properties among its holdings. But, beginning late in 1953 and throughout this year, wherever the issue has come up, it has become a heavily weighted factor. The tide seemed to be turning toward a harsher attitude on this point. It is ironic, but since the advent of a Republican administration, the FCC seems to have gone farther and farther along the path of acknowledged New Deal-inspired diversification righteousness. In the one exception to this seemingly closedmindedness on newspaper ownership, the Commission decided in favor of the Tampa Tribune (WFLA) for Tampa-St. Petersburg ch. 8, and denied the St. Petersburg Times (WTSP) and non-newspaper, non-broadcaster Tampa Bay Area Telecasting Corp. In this case, the Commission held that neither the Tribune nor the Times intended to employ joint rates in the sale of tv time and that a grant to either would not lessen competition. This is how the Commission majority said it: The Commission, in the past, has held that diversification of control of the media of mass communication is desirable and that in the absence of countervailing considerations, the grant to an applicant who has fewer broadcast interests or is not affiliated with other radio or newspaper interests better serves the public interest. This factor, important as it may be, is only one of the numerous comparative factors we have weighed in reaching our decision. The weight to be accorded this factor is dependent upon the circumstances of each case. This record shows that neither Pinellas [Times] nor Tribune proposes or intends to employ joint rates in the sale of tv time; that there is no indication that the operation of a tv station by either Tribune or Pinellas would lesson effective competition; that there are competing radio stations and newspapers now operating in Tampa and St. Petersburg as well as a variety of media in the proposed area to be served; and that both have demonstrated their capacities to function in the public interest. Under these circumstances, we conclude that even though Tampa Bay warrants a preference over Tribune and Pinellas in this area of comparison, it is not determinative of this proceeding. . . . But Comr. Frieda B. Hennock thought otherwise. She said: Among the three applicants for this channel, two are owners of local newspapers and radio stations. The third owns no mass media in the area. I dissent from the majority's grant here to the Tribune Co., which publishes the Tampa Tribune and is also the licensee of radio stations WFLA and WFLA-FM in Tampa, on the same ground on which I have consistently based my dissents in other cases where a choice was available between owners of local newspapers and other qualified applicants. One of the most important responsibilities of the Commission is to license use of spectrum space in a manner consistent with the greatest possible diversification of control over mass media. This basic criterion is especially important in a case like the present one where the newspaper interest to which the grant is being made does not reflect appreciable integration of ownership and management where so few of its owners and board members are residents. . . . In this case, the Commission agreed with the hearing examiner who had also favored granting the Tribune. In the other six cases the Commission turned thumbs down on newspapers. In the Fort Wayne ch. 33 case, the Commission picked WKJG Fort Wayne and turned down the News-Sentinel's WGL. It particularly did not like the forced combination rate for national and classified advertising which the News-Sentinel and the Journal Gazette practiced as part of their joint mechanical, advertising and business departments. This was also the view of the examiner. The very same combination practices, involving the same newspapers, impelled the Commission in the Fort Wayne ch. 69 case. Here the FCC picked WANE Fort Wayne (identified in ownership with WISH-AM-TV Indianapolis and WHBU Anderson, Ind.) over Anthony Wayne Broadcasting Co., whose principals are Paul V. McNutt and James R. Fleming. Messrs. McNutt and Fleming are major stockholders in the Journal Gazette. In this the Commission reversed the examiner. Fort Wayne Ch. 69 This matter of forced combination rates has tended to become more and more important to the Commission in recent hearing cases. This is what the FCC said in the Fort Wayne ch. 69 case: By forming a combination which has resulted in the imposition of forced combination rates upon advertisers in their newspapers, News Publishing and Journal Gazette have used their dominant positions as publishers of Fort Wayne's only major newspapers in a manner inconsistent with the public interest as we conceive it. We are of the view, moreover, that these advertising practices seriously reflect upon the comparative qualifications of Anthony Wayne to be a licensee of this commission. It is true that Messrs. McNutt and Fleming cannot dictate the advertising practices of the agency corporation. Being able to control the Journal Gazette Co., however, they are able to control that company's attitude with respect to these advertising practices. Because of their announced intention not to take steps to bring about the abandonment of these practices unless a court of last resort declares them to be illegal, responsibility for the practices must be imputed to them. Accordingly, a substantial preference is due Radio Wayne whose representation that it will not employ combination rates if its tv application is granted is supported by the history of its past operation of its four standard broadcast stations [same interests had owned WHOT South Bend, Ind.]. . . . In another section of its Fort Wayne ch. 69 decision, the FCC said: We are reluctant, however, to subject a broadcast facility to possible misuse by entrusting it to an applicant whose principals have not seen fit to object to practices so obviously contrary to the public interest. The use of dominant position to deprive advertisers of a choice of advertising media does not recommend this applicant to us. We do not care to assume the risks Page 88 • November 1, 1954 Broadcasting • Telecasting