Variety (Jul 1939)

so VAUmTY RADIO Wednes^day, July 5, 1939 ♦ ♦ THIS WEEK XN WASHINGTON ♦ ♦ Bewildering Lack of Consistency Noted in Arde Bulova FCC Case Washington, July 4. Bewilderment in radio ranks as a result of the apparent FCC about-face on station sales and leases and on news- paper ownership. Another set of! decisions last week heightened confusion and left industry watchers gasping over the logic behind, the latest rulings. .While pleased at the presumable evidence the Commish is taking a broader view, attorneys and others were unable to follow the reasoning on which the FCC granted Arde Bulova's request for permission to take over WPG, Atlantic City, the sudden cancellation of a hearing—expected to be an important policy-maker—oh proposed merger of WSAN and WCBA, AUentowo, Pa., and the transfer of KEHE, Los^ An- geles, to Earle C'Anthony, owner of two Los Angeles out- lets. The principle established in the MTPG and KEHE sales cases was particularly confusing. Although observers long , have been accustomed to inconsistency on the part of the regulators, it was next to impossible to understand, why the FCC, in view of its recent attempts to broaden jurisdiction over financial affairs of licensees, split hairs over the appli- cations for its consent to purchases. In apparent complete contradiction of its previous concepts, the Commish seems now to be following the theory that swapping of equipment is a matter of no concern. Trend of the two puzzling opinions .is to establish a view that there is no relation between ap- paratus and a frequency. If the view Is sustained in subsequent decisions, members of the industry will be free from official scrutiny over the fairness of prices paid for transmitters. For more than two years the Commish has taken the stand—although there are several notable exceptions, chiefly where politics was in- volved—that it can pass judgm^t on the reasonableness of amounts paid for stations and ttiat such action is necessary to prevent 'trafficking' in licenses. Now the FCC seems to be following the old caveat emptor' (let the buyer beware) philosophy. As long as the purchaser still has sufficient cash to keep operating, the Commish apparently cares nothing about how much is paid to acquire a transmitter. In the Bulova case, the Commish ruled the New York watch manufacturer, who also has a finger in'a haU-dozen local plants strung along the Eastern seaboard, was seeking nothing but the right to operate a plant in the metropolitan areai Since he already owns the stations which would be submerged In WPG, the regulators held they are not con- cerned about the transaction with the City of Atlantic City, aside, from its relation to Bulova's ability to render satisfac- tory service. The KEHE decision, handed down a week before, followed the same lines but presented another novel slant While the FCC allowed Anthony to buy the Hearst outlet and approved his plan to substitute it for KECA, it in effect ruled there was no frequency transfer in this case. Inasmuch as An- thony frankly admitted he wanted KEHE solely for the right to operate on 780 kc, this conclusion was amazing. More consternation over the demand that Anthony surrender the ticket to KECA, which now operates on 1430 and which he planned to sell to Worcester Broadcasting Co. with view to-its removal to San Diego. The back-tracking on new^aper ownership—particularly Important in view of repeated reports administration wants the press Invasion stopped—was significant but still did not indicate a complete change of policy. In the past yeajr, the Commish has been noticeably cool, it not outrightly hostile, to publishers. Now for it to suddenly call off the AllehV>wn hearing, which was fought bitterly several months ago by Commissioner T. A. M. Craven, and simultaneously to ap- prove the combination of the two stations under a corpora- tion dominated by a newspat>er owner, is more than incon- sistent The surprise was amplified by the decision approv- ing the sale of WFAS, White Plains, to the Macy inter«fsts. Anticipate That FCC WiH Adopt Rule Against Multiple Ownership in One Area Curb on multiple ownership of radio stations, at least in the same community or service area, appears a likely out-' growth of the FCC chain-monopoly inquiry. Tentative formula for checking concentration in the industry being dis- cussed by regulators who have dusted off policy suggested periodically during past four years. ... Sentiment is developing in favor of a rule-of-thumb saying no licensee can own two or more transmitters serving the same population. Ban probably would be carried farther, with provision that no single Individual or corperatlon can operate—either via lease or management agreement—several outlets in a single area.. The question of adopting some such restrictions has been up before but the Commidi always has sidestepped or de- nied applications on other grounds than that public Interest would not be promoted by multiple control. About two years ago, at the height of agitation over alleged monopoly, Commissioner Nonnan S. Case sought to put over this vl«w. but with a few exceptions the principle never received seri- ous attention. More recently, Chairman Frank R. McNinch espoused the doctrine- which was applied—with much tub- thumping—in a New Orleans situation and then more or less forgotten. Plan not ready for formal discussion but data being com- piled in checking the financial and corporate reports of the various licensees and testimony taken during the long in- vestigation. Attorneys are tracing the so-called lines of own- ership portrayed in special studies offered by the Account- ing Department as showing 'community of interest' The re- ports were attacked at the hearing, chiefly by CBS, but nevertheless are receiving serious consideration. Equipment Manufacturers Foresee Boom As Consequence of Engineering Rules Boom days ahead for radio engineers and equipment people as a result of final FCC action on long-agitated changes in allocation principles, operating rules, and technical standards. Present members of the industry and prospective recruits expected to write checks for several hundred thousands of dollars, with outlay for new and improved plants possibly running into seven figures. Biggest lift the manufacturing and construction end of the business has seen in nearly 10 years. Approval of the new creed last week, after deUberatlon dating back to the tall of 1936, opiens the way for action on many pending applications and wiU 'allow hosts of other ticket-holders and potential operators to seek better assign- ments or to enter the field. Lawyers look to get a good slice of the melon, for many hearings will be inevitable since the FCC intends to ogle each request carefully and contests are certain. The rules will break a log-jam which has had the effect of preventing much expansion in. the Industry. Estimated that around 500 applications are on file, having been docketed in the last 18 months in anticipation of the changes now going Into effect August 1. .A good many can be acted upon with- out further consideration, although the bulk have been pigeon-holed since receipt because of the need to decide which way the Commish was going. Immediate effect on the industry unquestionably will be a hypo for reglonals' and locals. During the past year or more, knowing that more wattage was probable, the Commish has been grinding out permita tor reglonals to jump their day- time power from 1 to 5 kw. In a good many instances these transmitters wUl receive speedy consent to operate after dark with the top strength. The outlay for directional antennas will run, engineers guess, from $10,000 to $50,000, with additional land and build- ings required in a good many cases. While some present radiators may be adopted with relative ease, it is more likely that entire- new installations will resuU, with material ex- penditures for towers, apparatus and structures. Washington Declares Owners of Two 50.000-Watters Missed Opportunitr Owners of two 50 kw transmitters have only themselves to blame for FCC's failure to list their channels in the Class I —available for only one station after sunset—category as set forth in the new rules. Sentiment was substantial in favor of llsUng 680 and 710 ribbons in the select group. But WOR, Newark^ previously had voiced no objection to letting KIRO, Seattle, use 710 on a 'specialai^orlzation basis' and KPO, San Francisco, had allowed WPTF, Raleigh, to increase time on 680 (In return for an unexercised option to buy the plant). Another angle in the 710 decision was the interest of Senator Homer T. Bone of Washington, whose wrath the regulators did not. want to invite by taking action wblch might upset KIRO. Industry Protest on International Rules Now Scheduled for July 14 Concerted assault upon the restrictive features of the new rules governing International stations is planned by the licensees of the DX plants at the hearing scheduled now for July 14. Two-day postponement voted by the FCC on ita own motion last week, with the NAB receiving another slap when the regulators snooted its petition for a continuance. Broadening of the scope of the hearing—now confined to Rule 42.03, dealing with 'culture' and 'goodwill' programs— was sought in the appearances filed by the ticket-holders. Besides protesting against this requirement the operators want to voice views about several other clauses which they feel are contrary to the spirit of the statute and which will make operations unnecessarily difficult While principal dissatisfaction was caused by 42.03, the members of the industry affected by the new principles are Irked by the rule which prohibits simultaneous airing of the same program by more than one DX station except when two plants of a single licensee are firing at two different audiences and the policy against short-waving of programs designed primarily tor domestic consumption. Both of these requirements will greatly Increase the expense of the opera- tions, without providing any comparable benefits, the licensees feel. Limitations on the type of sponsorship al- lowed are a minor irritation as well as the arbitrary require- ment that all DX planta must have 50 kw by next July. Religious Station (EFUO, St. Louis) Was Properly Treated by FCC. Court Decides Denial of more time tor KFUO, St Louis, was proper and sotmd, the District of Columbia Court of Appeals held Mon- day (26) In decision ratifying the issuance of renewal tickets to time-sharers on the 550 kc ribbon. Fight has been going on tor several years and, in another form, la raging at the moment Agreement that KFUO failed to present any reason for up- setting the FCC decision was voiced by Associate Justice Heory W. Edgerton in affirming the Commish action. He pointed out that KFUO, a religious outlet, disputed none of the regulators' findings except the carry-all .conclusion that public interest would not be served by allowing more time. There was ao basis for-contending that the application should be granted, he said, aiid the Commission's decision was sup- ported by 'substantial evidence.' Judges cannot substitute their judgment tor that of the FCC as to the relative im- portance of different types, of programs and public need for service from particular pldnts, he said. Station Won Court Victory, FCC Then Ordered Rehearing, New Respondents Still another spanking tor the FCC is the result of ita per- sistent attempta to pay off victors In court proceedings against FCC by holding 'rehearlngs' at which latfr^mers, not.orig- inally Involved, are allowed to produce evidence. The Dis- trict of Columbia Coiut of Appeals last week handed down one more in the long chain of rulings that the FCC cannot ring in slow starters when reopening records where the de- cision wasxipset by the judiciary. Latest reprimand was a *per curiam' decision granting pe- tition of the Hannibal (Mo.) Courier Post tor a writ of man- damus forcing the Commish to reconsider its application tor papers covering a new station on the basis of the origioal record. While the judges did not block another hearing, they said It is obviously improper to take up simultaneously other applications not filed until some time after the rag's plea was docketed. Rehearing on 'Corporate Structure' Angle in WTIC, Hartford Situation Possible back-tracking on another controversial policy mat- ter was foreshadowed last week when the FCC ordered argu- ment next Thursday (13) on petition tor rehearing of the Travelers Instuance Co. plan to transfer its five outlets to a new subsidiary. The rehearing plea was filed several months ago after the Commish, in an opinion which stirred up much legal debate, held public interest would be violated by the bookkeeping transaction which related principally to WTIC, Hartford. Regulators looked askance at details of the accounting pro- cedure which some felt would amount to Infiatlng the value of the Y^IC plant and putting a price on the operating fran- chise. The unfavorable action blocked the Insurance company s plan to simplify the corporate structure, under which owner- ship of WTIC would be shifted to Travelers Broadcasting Co. At present there Is an Intricate relationship affecting owner- ship and operation of the 50 kw transmitter, into which the parent concern has pumped large sums of money to counter- act operating losses. The ruling aroused attorneys, who felt the FCC went tar out of ita way to condenm the Travelers' business methods and who feared the precedent would have adverse reaction on the industry generally. Trying to Speed Up Administration, FCC Slipshod in Publicizing 'Reasons' In attempting to speed up administrative processes and save both mon^ and labor, the FCC is inviting another spanking from the courta. Recently the regulators have been slip-shod about obeying the order, embodied in several Dis- trict of Columbia Court of Appeals opinions, to make public their reasons for granting or denying applications before they issue the orders winding up cases. Glaring example of dis- regard for the judges was last week's action on petition of Earl C. Anthony for permit to buy KEHE, Los Angeles, from Hearst Radio, and to seU KECA, Los Angeles, to Worcester Broadcasting. Corp. Four days after the decision, approving the pleas, was relessed, the regulators made wibllc their •proposed decision and order.' Previous week » 'proposed decision' and a 'final order* In the case of WTHT (Hartford, Conn,), came out simultaneously. RADIO'S FIRST LADY Vaughn De Leath *ASCAP For the Lydia Pinkham Company WOR and Mutual System Mon.-Wed.-Fri.—1:45 P.M. By transcription—^WMCA Mon.-Thurs.-Sat.—7:30 P.M. "Still unsurpassed in her field" Rocky Clarke — Bridgeport ^'Post 99 25 WEST 51st ST. NEW YORK CITY * Member of the American Society, of Composert, Authors and Publiihera