In re
HARVEY RADIO LABORATORIES, INC. (ASSIGNOR), AND WKBG, INC.
(ASSIGNEE) For Assignment of Construction
Permit for TV Station, Channel 56,
Cambridge, Mass., and for
Licenses of WXHR (AM) and WXHR-FM, Boston, Mass.
BAL-5831
BALH-910 BAPCT-388
APPLICATION
6
F.C.C.2d 898, 8 Rad. Reg. 2d (P & F) 660
October
20, 1966
On October 20, 1966, the Commission en banc, by Commissioners
Hyde (Chairman), Bartley, Lee, Cox, Loevinger, Wadsworth, and Johnson, granted
assignment of licenses of AM-FM stations and construction permit for TV station
to WKBG, Inc.; consideration $1,750,000 and agreement not to compete in radio
or TV broadcasting within 25 miles of Boston State House for 10 years. WKBG,
Inc., is 50 percent owned by Globe Newspaper Co., which has no other broadcast
interests, and 50 percent by Kaiser Broadcasting Corp., which controls four UHF
TV stations and one FM station. WXHR-TV is now off the air.Chairman Hyde issued
a concurring statement, Commissioner Loevinger issued a concurring statement in
which Commissioner Lee joined, Commissioner Wadsworth issued a concurring
statement, and Commissioners Bartley, Cox, and Johnson
issued dissenting statements.
CONCURRING STATEMENT OF CHAIRMAN HYDE
I am satisfied that the applicant has made a compelling showing
justifying a grant of the application without hearing under our interim policy.
I do not construe this action as a reproach to that policy nor as being
determinative of any issues pending in the 'top fifty' proceeding. However, in
applying the interim policy I do not believe that the hard realities and substantial
hazards which have attended major market UHF efforts may be overlooked.
Successful operation of an independent UHF-TV station in a major market already
served by four VHF-TV stations is indeed enhanced when the applicant possesses
the requisite background and financial resources, as in the case at present. At
the present state of UHF television development, it is my opinion that the
proposed assignment presents the opportunity to make the station reasonably
competitive and, therefore, able to provide a significant service to the
public.
A grant of the assignment will transfer the station to an
experienced television broadcaster (all of whose television interests are in
UHF) who has joined forces with a local group with deep community roots. Together
they present a substantial plan for restoring the UHF station to the air and
diversifying further the program choices available to the Boston metropolitan
area in a manner responsive to ascertained community needs. This is the second
case in recent months in which the Commission has found it appropriate to
permit acquisition of a Boston UHF station by a group with ownership in other
large markets. Cf. New Boston Television, Inc., 7 Pike & Fischer R.R. 2d
857 (1966). In both cases I believe that we are making possible a substantial
contribution to the establishment of UHF on a viable and competitive basis. For
the foregoing reasons I concur in the Commission's order.
CONCURRING STATEMENT OF COMMISSIONER LOEVINGER, JOINED IN BY
COMMISSIONER LEE
The policy which the Commission should -- and does -- try to
follow is that diversity of program sources in broadcasting should be
encouraged and that the Commission should, within its jurisdiction, forbid
transactions which tend to lessen competition unduly or to create monopolistic
control in any market or economic area. Establishment of a numerical limit on
the number of broadcasting licenses that may be controlled by a single
enterprise undoubtedly serves this policy but is necessarily arbitrary, as any
quantitative limit is arbitrary. The advantages of effectiveness and
specificity justify such an arbitrary limitation so long as the limit -- even
though arbitrary in its numerical nature -- is within the range of
reasonableness. Further, the differentiation between large and small markets
for the purposes of such a limitation is more reasonable than the establishment
of a single numerical limitation applicable to all markets. Consequently, the
attempt to formulate a policy or rule applicable to the 'top fifty' markets is
an improvement on the multiple ownership rules that make no differentiation
among markets.
Similarly, however, it seems to me that a rule or policy on this
subject should differentiate between kinds of stations -- particularly between
VHF and UHF television stations. Realistically, VHF stations are more
profitable and prosperous at the present time than UHF stations. Realistically,
also, there is need for enterprises that are relatively strong financially to
help develop UHF, and there is no evidence of any present tendency toward undue
concentration of control of UHF stations. Consequently, I am satisfied that
there is no danger to the public interest in maintenance of a healthy
competition within the field of broadcasting by allowing a single enterprise to
have as many as five UHF stations in the 'top fifty' markets. Accordingly, I
concur in the Commission order.
CONCURRING STATEMENT OF COMMISSIONER WADSWORTH
I agree with the result reached in this case, which is to grant
Commission consent to the assignment of licenses of stations WXHR and WXHR-FM,
and the construction permit for WXHR-TV to WKBG, Inc. However, since I
dissented to the original adoption of the Commission's so-called 'interim
policy' relating to assignments of television authorizations in the 'top fifty'
markets, I would not have applied that requirement of any special showing or
justification in this case. Therefore, I would not have to reach the question
of the adequacy of the showing advanced by the proposed assignee.
DISSENTING STATEMENT OF COMMISSIONER BARTLEY
I dissent because in my opinion the information submitted in
support of a grant without hearing is inadequate to meet the compelling showing
requirement of our interim policy on acquisition of TV stations in the 'top
fifty' markets.
DISSENTING STATEMENT OF COMMISSIONER COX
I must dissent, as I did to the authorization of the transfer of
another UHF station in Boston a short time ago. New Boston Television, Inc., 7
R.R. 2d 857 (1966). The majority continues to flout our interim policy limiting
acquisition of television stations in the 'top fifty' markets, while indicating
that it still favors the objectives of that policy.
Chairman Hyde is satisfied that applicant has made a compelling
showing justifying a grant here, but he does not in any way indicate what that
showing consists of. His further comments are simply general observations about
the financial hazards of major market UHF operations. There is no showing that
the added service of this station is critically needed in Boston, which now has
three commercial VHF, one commercial UHF, and one educational VHF stations in
operation. The station here involved has been off the air for many years, and
while I suppose it is always in the public interest to provide an added
broadcast service if this can be accomplished in accordance with our policies,
if that is all the Chairman has in mind, then, obviously, every transfer would
be granted without regard to the issue of concentration.
The Chairman further notes that the transfer here is to an
experienced television broadcaster. But here, as in so many cases, we can
substitute the words 'multiple owner.' It is possible to find people
experienced in broadcasting in capacities other than ownership, but such people
can never successfully bid for stations offered for sale if the Commission is
willing to give the inside track to multiple owners who already have a
substantial advantage in terms of their ability to raise funds with which to
bid up the price. The Chairman also refers to the fact that Kaiser 'has joined
forces with a local group with deep community roots.' Nothing is said, however,
to indicate that this local group consists of the owners of one of the two
principal newspapers in Boston, thus posing another form of the media
concentration problem. While Chairman Hyde says that this action should not be
regarded as determining any of the issues pending in our 'top fifty' market
proceeding, it seems to me that each additional waiver grant on a slender
showing, or no showing at all, seriously undercuts the consideration the
Commission is supposed to be giving to the matter now out for rulemaking.
Commissioner Loevinger regards the protection of diversity of
program sources as desirable, and agrees that the use of a numerical limitation
undoubtedly serves this Commission policy. He recognizes, as we all must, that
the use of such a limit is necessarily arbitrary, but points to the advantages
of effectiveness and specificity which can be obtained in this way, saying only
that the number selected must be in the range of reasonableness. Further, he
agrees that some differentiation must be made between large and small markets
for the purpose of such limits and concedes that our attempt to formulate a
policy applicable to the 'top fifty' markets is an improvement over the
multiple-ownership rules now in effect, which take no cognizance of market
size.
However, Commissioner Loevinger says that our policy should differentiate
between VHF and UHF television stations, on the ground that the former are more
profitable. He, therefore, suggests that we need relatively stronger
enterprises to help develop UHF, although the Commission, with Commissioner
Loevinger concurring, specifically stated that it had decided to use the 50
market concept, among other reasons, because of 'the availability of ample
economic support for individual, local ownership of both VHF and UHF stations
in these markets.' I know of no evidence to rebut this judgment; all we have
had are indications that multiple owners are paying higher prices for permits
of off-the-air stations, or for the acquisition of faltering operating
stations, than others can afford. While the obtaining of the highest possible
price is undoubtedly in the private interest of the sellers concerned, it is
the essence of our entire proposal in this area that the public interest is not
served in this process if it results in the aggregation of more and more
stations in the major markets into fewer and fewer hands.
Commissioner Loevinger says that there is no evidence of any
present tendency toward undue concentration of control of UHF stations. If he
thinks the present limitation of five VHF stations is reasonable -- and apparently
he does -- then I think he should find some reason for concern in the list of
permits held by the Overmyer Broadcasting Co. and the apparent plans of Kaiser
to acquire five or more UHF stations in major markets. There is substantial
evidence that it may be too late to deal effectively with concentration of VHF
ownership in the major cities, unless we can require splitting up of holdings
in connection with future transfers. Clearly, one of the main objectives of our
proposed rule, and the interim policy which supports it, is to prevent the
development of the same degree of concentration in UHF as presently exists in
VHF. If we are right in our hope that whatever their difficulties in the near
future, UHF stations in the major markets will eventually be successful, then
Commissioner Loevinger's willingness to accept the proposition that everyone
should be allowed to own five stations in the 'top fifty' markets means that he
is willing to accept the same order of concentration in this newly developing
segment of broadcasting as now exists in VHF television. I suppose one could
even argue that his suggested limit of five UHF stations is discriminatory,
because the existing rule would permit one entity to own five VHF's plus two
UHF's in the top markets. No one in fact does so, at the present time, and the
proposed tightening of the rules would prevent this from coming about. However,
if we continue to disregard the proposed rule, and eventually abandon it, then
it would seem to me that we would have a double standard permitting more
extensive holdings for those multiple owners already entrenched in major-market
VHF.
I concur in Commissioner Johnson's statement that we should hold
the line until we have made up our mind as to proper direction to be taken, as
a matter of policy, with respect to multiple ownership in the major markets.
That was the whole purpose of the interim policy. We adopted that policy
because of a conviction that the handling of transfers on an individual basis
under the existing numerical limit was aggravating the concentration problem.
We recognized, quite properly, that it might be shown in a special case that
there was a compelling reason for a grant despite the interim policy. I simply
cannot begin to find that kind of a showing here. In particular, the majority
cannot find here, as it did in Channel 2 Corp., 6 R.R. 2d 855, that the
transferor had made substantial but unsuccessful efforts to sell the station to
a nonmultiple owner, or to a multiple owner whose interests would not conflict
with the proposed rule. It seems clear here that the transferor initially
attempted to effectuate a merger transaction, and when his efforts were
unsuccessful, did not attempt an outright sale of the stations to anyone other
than Kaiser. So even this ground for earlier action, which I find generally
unpersuasive, is not available to the majority here.
I think it all boils down to the fact that the transferor wants
to get the most money possible out of its rather tenuous hold on a UHF channel
in Boston, and quite logically decided it could do better in this regard if it
sold to a well-financed multiple owner. Kaiser simply wants to get as many UHF
stations as it can in the top markets before the Commission adopts an effective
limit, if it ever does so. Being an experienced and hard-headed business
corporation, it obviously expects these stations to become profitable, and
while they may never equal VHF stations in profitability, I think they will
eventually become very substantial and influential mass media, held in a
concentrated form which the Commission will be unable to reduce if it is ever
permitted to come about. Additionally, Kaiser wants this transfer approved as
quickly as possible to improve its competitive posture in relation to Storer
Broadcasting Co., which the majority just recently permitted to buy the other
commercial UHF station in Boston.
Where is the public interest in all of this? In the short run,
the people of Boston will have the benefit of an added program service. In the
long run, however, they will have lost the opportunity to have that service
provided by local citizens without other media interests, and the people of all
our other major markets will have similarly lost the protection against
concentration of control sought in our proposed rule. The majority, in effect,
says it does not see how it can deny Kaiser since it granted Storer. I think
the answer is that it should not have granted Storer in reliance on its earlier
grant of Channel 2 in Denver. I simply cannot agree that two wrongs make a
right, or that the continued dilution of the objective of our multiple
ownership rules is anything other than a serious below to the public interest.
DISSENTING STATEMENT OF COMMISSIONER JOHNSON
I dissent.
This is a classic instance of the kind of issue that ought not be
decided on a case-by-case basis.
Indeed, in this instance, the Commission is already on record
with its realization of this truth. That, presumably, is why development of the
'top fifty' policy was undertaken.
Now that policy is under review. We have benefit of probing
congressional hearings.The Commission has before it a thorough and thoughtful
analysis by United Research, Inc. Other comments are worth consideration. There
is much validity in the arguments of Commissioner Loevinger, concurring in this
case. The Commission's original thinking in proposing the policy is worthy of
great respect.
I take no position on the substance of our present proposed
policy. I will when it has been given the thorough review and analysis it
deserves. I certainly have serious questions about both the underlying
conception of the problem and the precise formula offered as a solution.
Nevertheless, until the matter is finally resolved, I believe the
most rational and administratively workable course for the Commission is to
hold to its proposed policy as now drafted. Such a holding action seems to me a
more just and responsible course. It would also provide more guidance for those
in the industry who must be somewhat unsettled at best by the quantity of
conflicting opinions produced by us today on this issue.