For Assignment of License of Station
File No. BALCT-330
FEDERAL COMMUNICATIONS COMMISSION
12 F.C.C.2d 50; 12 Rad. Reg. 2d (P & F) 561
RELEASE-NUMBER: FCC 68-308
March 20, 1968 Adopted
BY THE COMMISSION: COMMISSIONERS BARTLEY, COX AND JOHNSON DISSENTING AND ISSUING STATEMENTS.
The Commission has before it the above-captioned assignment application under
which S. H. Patterson proposes to assign the license and assets of UHF station
KSAN-TV (channel 32),
2. Metromedia is now the licensee of the following VHF television stations:
Station Location @a r b/ranking
3. On February 9, 1968, the Commission released its report and order "In the Matter of Amendment of Section 73.636(a) of the Commission's Rules Relating to Multiple Ownership of Television Broadcast Stations" n1 (docket No. 16068) in which it stated, in part:
n1 FCC 68-135.
In light of the special problems concerning the top 50 markets set forth in the notice of proposed rulemaking herein, we will expect a compelling public interest showing by those seeking to acquire more than three stations (or more than two VHF stations) in those markets. The compelling showing should be directed to the critical statutory requirement of demonstrating, with full specifics, how the public interest would be served by a grant of the application -- that is, the benefits in detail that are relied upon to overcome the detriment with respect to the policy of diversifying the sources of mass media communications to the public. Since as shown Metromedia already has four VHF television stations in the top 50 markets, the above statement is applicable to the subject application. A review of the applicants' showing in this case indicates that the criterion of overriding public interest has been satisfied.
4. The application shows that KSAN-TV went on
the air in March [*51] of 1954; that it went silent in June of 1958
because of operating losses; and that on February 18, 1966, the "U"
resumed operation as a satellite of station KICU-TV,
5. Applicants claim Metromedia is one of the
most independent of all the Commission's multiple owners. Metromedia noted that except for the
6. In the
7. In addition to the general considerations that negative a finding of failure to comport with the Commission's policy of diversification of mass media, there are affirmative considerations that compel a finding that the public interest would be served by a grant of the subject application.
8. Metromedia, Inc., represented that if the
application is granted, it will undertake immediate steps to improve the
technical facilities and programming of KSAN-TV, with a view to enhancing the
station's competitive position. First,
with regard to the improvement of the technical facilities, there is now
pending at the Commission an application BPCT-4041 to increase the power of
station KSAN-TV from 16.2 to 180 kw. KSAN-TV proposes to originate programs
from the transmitter site as soon as possible.
It further represented that it will [*52] subsequently apply for authority to increase power to 1600 kw ERP
and to operate from a new site at
9. Metromedia thoroughly surveyed the needs and
interests of the
10. The assignee cited a number of illustrative
programs planned for channel 32. Among
the proposed programs are "Panorama," a 2 1/2-hour per day,
Monday-through-Friday discussion and interview program, and "Community
Dialogue, " a weekly 1-hour interview program. This program will bring the views and activities of bay area
community leaders to the audience. Both
of the above programs will be produced from the
11. Basically then, Metromedia proposes two things for KSAN-TV. (1) To improve the facilities of the station, and (2) to ultimately change KSAN-TV from a satellite operation to an originating station. Concerning the changing of satellite stations to originating stations, the Commission has stated:
It has been our hope -- fulfilled in many instances -- that satellite stations would develop with time into more nearly full-scale operation, with local studios and local origination. In the Matter of the Amendment of Commission's Rules Relating to Multiple Ownership of Standard FM and Television Stations. (3 R.R. 2d 1554 at 1563.)
12. Aside from the report and order, it is obvious that changing a UHF station from a satellite station to an originating station is in the public interest. The illustrative programs proposed corroborate the assignee's representations concerning public service programming, and the assignee's representation to increase KSAN-TV power to 180 kw is not something in the distant future, but the proposal is presently on file with the Commission.
13. Our conclusions are therefore: (1) The assignor is not in a position to improve the facilities at KSAN-TV in order to compete with the other television stations in the market; (2) efforts were made by the licensee to sell KSAN-TV to buyers who did not have the broadcast interest mentioned in the then Top Fifty Interim Policy statement; (3) because of the nature of the competition in the San Francisco TV market, and the independent stature of the assignee, a grant here will be consistent with the Commission's policy to promote [*53] diversification of broadcast media; (4) because of the Metromedia proposals both as to improving facilities and proposed programming, better TV service will be rendered to the public by the station following consummation of this transfer; (5) because of all the considerations involved a grant here will affirmatively be in the public interest. Therefore the criterion mentioned, supra, is satisfied in this case.
14. In view of the above, It is ordered, That the above application Is granted.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
DISSENTBY: BARTLEY; COX; JOHNSON
DISSENTING STATEMENT OF COMMISSIONER ROBERT T. BARTLEY
The $1 million consideration
for KSAN-TV is to be divided equally between S. H. Patterson, the licensee of
KSAN-TV, and Sierra Broadcasting Co., licensee of KICU-TV,
An opposition to the assignment has been filed by Mr. Keith Dare, former general manager of KICU-TV, alleging that the agreements were used to (a) prevent forfeiture of the KSAN-TV permit in docket No. 15902, (b) to stave off foreclosure proceedings against KICU-TV, and (c) to assure Metromedia that it could later pick up an operating station. Dare urges that the KSAN-TV license be canceled and channel 32 be made available to other parties.
I would not approve the device here employed whereby half the consideration for assignment of KSAN-TV is paid to the licensee of another station. Also, I believe that Dare's opposition raises serious -- and unsatisfactorily answered -- questions as to whether the satellite operation of KSAN-TV proposed in docket No. 15902 was, in fact, for the purpose of effectuating an assignment of the permit, and whether, therefore, the permit should be canceled and channel 32 be made available to other parties.
The $1 million purchase price is for what appears to be little more than the license of KSAN-TV. The station shows depreciated assets of $55,671. It operated from 1954 to 1958 and was silent from 1958 to 1966, when it resumed broadcasting as a satellite of KICU-TV. KSAN-TV broadcasts only 28 hours a week, carrying KICU-TV's afternoon programming. KSAN-TV has no studios. Metromedia's agreement was for KICU-TV to continue furnishing programs (28 hours per week) to KSAN-TV for 6 months after Metromedia's take-over. Thus, there is no going operation in the usual sense of a television station for Metromedia to take over for its $1 million. In my opinion, the transaction amounts to the sale of a license to Metromedia and should be rejected in favor of opening the channel to applications by other interested parties.
Accordingly, I vote to set these matters for hearing, and, in view of Metromedia's extensive acquisitions and sales of stations, include an issue with respect to its trafficking in broadcast licenses.
[*54] DISSENTING STATEMENT OF COMMISSIONER KENNETH A. COX
I have a great
deal of sympathy for the transferor, but do not believe the proposed transfer
is in the public interest. Like a good
many others who went into UHF broadcasting in the early 1950's, S. H. Patterson
no doubt hoped that his station in
n1 I was out of the city when the memorandum opinion and order in dockets Nos. 15889-15910 was adopted. However, I had participated in the oral argument in those proceedings and in the instructions given to our staff as to preparation of the order.
In the light of all this I think Mr. Patterson is entitled to sell his station -- but I do not think he is entitled to sell it in derogation of the public interest in a diversely owned, locally based television service, or that he is entitled to hold out for a price, far in excess of the value of anything he really owns, which is likely to be paid only by a purchaser who, like Metromedia, poses problems of concentration of control. I therefore dissent.
I concur in what Commissioner Bartley has said. I agree that there are questions about the details of this transaction which need to be examined in a hearing. I also agree that, in view of the very limited operation of KSAN-TV and its very minimal physical assets, this is essentially a transfer of a bare construction permit for a price which I think violates established Commission policy. I also concur in Commissioner Johnson's views.
But there are other aspects of the matter I would like to consider. The majority recognizes that this application falls within the language of the report and order issued February 9, 1968, in docket No. 16068, in which they rejected the proposal to tighten our multiple ownership rules as to television stations in the top 50 markets. They therefore concede that the applicants here must make "a compelling public interest showing," with "full specifics" as to how the public interest would be served, or more specifically, "the benefits in detail that are relied upon to overcome the detriment with respect to the policy of diversifying the sources of mass media communications to the public." In other words, in that report and order the majority conceded that allowing one entity to own more than three stations in the top 50 markets (not more than two of which can be VHF) is prima facie contrary to the public interest in diversity of control of the broadcast media. They therefore recognize -- both in docket No. 16068 and here -- that applicants proposing ownership in excess of that level [*55] must show countervailing benefits which overcome this detriment to the public interest. I dissented in docket No. 16068 -- in part because I did not believe the majority would really hold applicants effectively to that test. I think this is a case in point, and that it indicates the course the majority are likely to follow in most other cases of this kind.
Let us consider
the grounds upon which the majority find that "the criterion of overriding
public interest has been satisfied." First, they recite the facts as to
Mr. Patterson's operation of KSAN-TV: (a) That the station operated for 4
years, before going dark because of operating losses; (b) that on February 18,
1966, it resumed operation as a satellite of KICU-TV in
The only one of these matters which is reasonably relevant to the issue here is the one involving efforts to sell the station in conformity with our interim policy -- and that seems of very doubtful factual accuracy. Presumably this claim -- advanced in an amendment filed September 8, 1967 -- is made because in a number of earlier actions waiving our interim policy, the majority gave some weight to claims that the transferor had tried to effect a sale which would not violate that policy. Of course, the necessary implication is that Mr. Patterson, realizing that our policy would apply to a sale of SAN-TV, conscientiously tried to sell to others whose acquisition of the station would not call for a hearing, and that it was only when such efforts failed that he agreed to sell to Metromedia, even though it already owned more than the permitted number of stations in the top 50 markets. I don't believe this claim fits the facts.
The chronology in this matter was as follows:
June 17, 1965 The Commission granted Mr. Patterson's application for additional time within which to complete construction.
Oct. 12, 1965 Mr. Patterson gave Metromedia an option to buy the station.
Feb. 16, 1966 The station went back on the air as a satellite of KICU-TV.
July 1, 1966 Metromedia began paying Mr. Patterson $10,000 per month over and above the contract price of $1 million. (These payments presumably now total $210,000.)
June 28, 1967 Metromedia exercised its option.
Aug. 1, 1967 The parties filed the pending transfer application.
[*56] It thus appears that Mr. Patterson says that efforts to sell the station to others were made in the period between October 1964 and October 1965. Since the negotiations with Metromedia and the preparation of the necessary agreements must have required considerable time, it seems likely that the negotiations with potential purchasers claimed not to have had interest in conflict with our interim policy must have taken place in late 1964 or the first half of 1965.
The amendment in
question indicates negotiations with only two other possible purchasers, D. H.
Overmyer and King Broadcasting Co. In
the summer of 1965, both of these already owned (or were in the process of
acquiring) stations in the top 50 markets.
King Broadcasting has operated VHF stations in
It appears that
Mr. Patterson must be in error with respect to the timing of the negotiations
with Overmyer, because they must have taken place some time before November 10,
1964, when Overmyer filed an application to acquire another
Similarly, it seems unlikely that the negotiations with King Broadcasting represented a conscious effort to find a buyer in compliance with our interim policy. Prior to June 21, 1965, our policy did not apply to the acquisition of UHF facilities in the major markets, so that sale to King, or anyone else, during that period would not have raised any problem. It is true that after that date KSAN-TV could have been sold to King, but not to Metromedia, in compliance with our revised interim policy, but it seems likely, from the overall chronology, that the King negotiations took place earlier. In other words, as suggested above, I think that the claim of efforts to sell to someone whose holdings would not conflict with our interim policy was probably advanced -- because the majority had given credit for such attempts at compliance in approving earlier transfers. I don't think any real effort was made to find a buyer in compliance with the policy, and the majority's unquestioning acceptance of the statement that such a buyer could not be found seems downright credulous. If the price quoted had been reasonable, there is no reason to believe that others would not have been interested -- including some who would not have run afoul of our interim policy. I think the transferor's real efforts were addressed toward finding a buyer who would pay at least $1 million for the station.
The majority next
notes applicants' claim that Metromedia is one of the most independent of the
country's multiple owners, with three of its four television stations operating
as independents facing substantial competition. They point out that KSAN-TV
competes with five local commercial stations, four VHF and one UHF, n2 with the former owned by the San Francisco
Chronicle, Westinghouse Broadcasting Co., American Broadcasting Co., and Cox
An additional UHF station will soon for on the air in
n3 But we pursue a directly contrary policy in the initial licensing context, giving a strong preference to the applicant who has the least in the way of interests in the mass media. "Policy Statement on Comparative Broadcast Hearing," 1 FCC 2d 393 (1965). However, ias is evidenced by the action here -- and in the whole string of transfers of licenses or permits in the top 50 markets approved by the majority in the last 2 1/2 years -- the Commission can be relied on to correct this momentary deviation through the transfer process.
In addition, the majority say "there are affirmative considerations that compel a finding that the public interest would be served by a grant of the subject application." Of course, they said in docket No. 16068 that such "a compelling public interest showing" must be made. So let us consider what they find "compelling" enough to meet this hopeful new standard which they announced just last months.
might have been expected, they do not require very much. They simply say that
Metromedia promises "to improve the technical facilities and programming
of KSAN-TV, with a view to enhancing the station's competitive position."
It proposes to increase power, in two stages, to move to a new transmitter
site, to increase hours of operation, to present certain indicated programming,
n4 and thus ultimately to change
KSAN-TV from a satellite operation to an originating station. I agree that this will all be in the public
interest, since it represents a much more useful service to the
I would like to have examined its programming proposals in detail, but have not
found time to do so. However, neither
our staff's summary nor the majority 's comments suggest anything
extraordinary. Metromedia identifies
seven or more problem areas with which it proposes to deal through news and a
weekly half-hour series entitled "Community Dialogue." It further
proposes a Monday-through-Friday program (2 to 2 1/2 hours in length) similar
to one it has presented on its station in
It seems clear that if the assignor is not fully competitive in the market, if he says he first tried to sell to buyers without significant media interests (even though this seems improbable on the face of things), if the other stations in the market are controlled by strong multiple owners, and if the transferee proposes to improve the station's facilities and programming, n5 the majority will be glad to ratify the [*59] transaction. In fact -- and in all seriousness -- I think that any licensee or permittee of a television station in a major market who finds a better-financed buyer who meets our minimal legal qualifications can expect majority approval of his sale. I think this means that we can expect to hear more talk of promoting diversification and of special affirmative showings, but that we will see a continuing trend toward more and more concentration of control over our vital broadcast media. I do not think this will promote the true interests of the American public, but it will be very profitable for the beneficiaries of this benevolent attitude toward those moving to acquire greater and greater holdings in television and radio.
n5 This is a paraphrase of the considerations recited in par. 13 of the
[Voluntary assignment of license of Station KSAN-TV, San Francisco, from S. H. Patterson to Metromedia, Inc.]
here approves the purchase of the license for
The company also
owns six AM and six FM radio stations, all of which are also in the top 25
markets. Related interests other than
stations include Foster & Kleiser (outdoor advertising), Metro Transit
Advertising, the Ice Capades, Wolper Productions, Dickie Raymond, Inc., Metro
TV Sales (station sales representative), and Playbill Magazine. It is headquartered in
I believe very strongly that, before we decide that adding to a broadcasting empire of this magnitude serves the public interest and therefore merits our approval, we are obligated to hold a hearing. I say this despite my appreciation of the admirable vigor of Metromedia's performance in the markets where its stations furnish effective independent challenge to network affiliates. A majority of my colleagues have chosen to grant this application for transfer without a hearing. Therefore, I must dissent.
Until 3 weeks ago, this case would have been governed by the Commission's interim policy pertaining to concentration of control over broadcast licenses in the major markets. This policy, announced June 21, 1965, stated that, "absent a compelling affirmative showing to the contrary," an application for a new station or for a transfer which would give the applicant more than three television stations in the top 50 markets (or more than two VHF stations) would be designated for a hearing. Public Notice: Interim Policy Concerning Acquisition of Television Broadcast Stations, 5 P. & F. R.R. 2d 271 (1965). This interim policy was designed to prevent further concentration until the Commission decided whether to adopt a rule, proposed the same day, permanently proscribing future increases in major market concentration beyond the three-station limit. In the matter of: Amendment of Section 73.636(a) of the Commission's Rules Relating to Multiple Ownership of Television Broadcast Stations, 5 P. & F. R.R. 2d [*60] 1609 (1965). On February 7, 1968, with Commissioners Bartley, Cox, and myself dissenting, the Commission decided not to adopt the proposed rule, to abandon the interim policy, and to terminate the proceeding altogether. We retained, however, at least in theory, the requirement that a "compelling affirmative showing" be made before more than three television stations could be acquired in the top 50 markets (FCC 68-138, report and order adopted Feb. 7, 1968).
Unfortunately, the Commission never took this requirement seriously even before it formally abandoned the interim policy. As I observed in dissenting to our action of February 7, the majority discovered in the applicant's pleadings a showing "compelling" enough to justify waiving the requirement in literally every one of the 10 cases where the question was raised. The majority’s summary approval of the instant transfer demonstrates, to no one's great surprise, that it is going to continue to feel "compelled" to ignore its supposed commitment to blocking increased concentration in the major markets. Henceforth, as predicted in my dissenting opinion on February 7,
The Commission's policy with regard to multiple ownership will be what is now in its rules, and no ad hoc determinations will tighten those standards. Seven AM's, seven FM's and seven TV stations, of which five can be VHF's – so long as no signals overlap -- can be acquired by any multiple owner regardless of how many millions of Americans he influences.
It is curious to me why the majority has felt it necessary to retain its lip-service commitment to the three-station limit, when its actual policy is and always has been quite clearly otherwise.
The present acquisition by Metromedia, in addition to revealing the persistence of the majority's relaxed attitude toward concentration, also illumines, I believe, the dangers inherent in this attitude.
Metromedia is now
an enterprise which controls important gateways to the minds of millions of the
most strategically located members of the Nation's body politic. Specifically, Metromedia can reach, by means
of its TV, AM, and FM stations in the first, second, and seventh largest
markets (New York, Los Angeles, and San Francisco-Oakland), a total of more
than 20 million individual citizens -- decisive majorities of the population in
each of the Nation's two largest States.
With two broadcasting outlets in each city, Metromedia reaches
That, it need hardly be added, amounts to considerable power -- private power which counts for a great deal in all arenas where public decisions of national consequence are made.
Unlike other accumulations of private power with public implications, however, Metromedia's acquisitions have all been conferred by a public agency, an agency which has today in a too casual manner sanctioned a substantial addition to the company's holdings.
When one moves
from the national scene to the particular metropolitan area affected by this
decision, the potential dangers of acquisitions like the present one appear
even more clearly. The
What sort of
change will UHF television make in the structure of the television industry in
This then, is the
monument the FCC has built and left in
Was it necessary
or wise for the FCC to so structure the media in
To express concern over concentration of control over the mass media is not to prescribe a wooden rule to govern every case. Nor should objection to the power of an organization be understood to impugn the motives or present practices of its officers and owners. On the contrary, the record of Metromedia as a Commission licensee is in the first rank, both as a promoter of competition and of public service.
But it is not
merely abuses of power which the FCC is bound to rectify. We must be equally concerned with the
potential for abuse in the structure of the mass communication system we are
building. We cannot content ourselves
with the notion that we will be able to deal adequately with abuses when and if
they occur. For, after all, abuses in
the management of the media are not easily, nor, one suspects, frequently
discovered. Indeed, even if it were
feasible, it would be neither wise nor possibly even constitutional for this or
any other Government agency to police too vigilantly the news policies of the
Commission's broadcast licensees. As
the Department of Justice stated to the court of appeals, when reviewing the
FCC's approval of last year's abortive ABC-ITT merger, a "continual
process of demanding explanations as to why particular news items or programs
were or were not shown would come dangerously close to the kind of program
censorship which is barred by the first amendment and section 326 of the
Communications Act." Brief for the
Moreover, to the extent that abuses are discovered, they are not easily countered. Certainly it is improbable that multiple licenses, once conferred on an organization, would be taken away simply because the organization falls into new and apparently less trustworthy hands. Experience has taught that, once institutional arrangements are fixed in place, the Government's formal power to protect the public interest becomes essentially negligible in fact. Government cannot be relied upon to make significant rearrangements, or to affect to a significant extent the internal direction of the institution's polices.
Finally, and most important, a representative government simply cannot abide unnecessary private accumulations of power over the press, quite apart from the degree to which it can effectively control abuses. When the power to inform the people is held by a relative few, the tendency is irresistible for Government to begin to regard those few, rather than the electorate, as its constituency. Indeed, in particularly acute situations, a public official is effectively compelled to defer to the masters of the media. Democracy cannot safely run any unnecessary risk of such subversion of its basic processes.
Whether the putative benefits cited by the majority will in fact materialize, or whether they outweigh the risks of increased concentration attendant upon this latest acquisition, cannot be determined on the record before the FCC at this stage. Only the data and analysis [*63] obtainable through a hearing would justify the decision which the Commission has seen fit to render on the basis of the pleadings alone.
The fact is that the majority is uninterested in undertaking such an investigation, because it has made in this, as in so many other cases, an a priori judgment that concentration is a policy consideration of insignificant weight. The Commission's opinion states that Metromedia was the only purchaser turned up by the assignors, the only hope therefore of activating an otherwise moribund UHF station. This claim may seem a bit suspect, in view of the size of the San Francisco market, the growing number of UHF receivers, and, indeed, the $1 million consideration paid by Metromedia for what Commissioner Bartley points out is little more than a bare license. And, in fact, it is known to the Commission and its staff that at least one other offer for the station was made, but that the assignors considered it ($250,000) "inadequate." Commissioner Cox's thorough analysis seems considerably more creditable.
Moreover, the Commission's treatment of this case effectively removes any incentive a prospective assignor of a license might have to look first for a buyer without substantial additional media interests. Our rhetorical commitment to encourage diversification through the administration of transfer policy is believed by the majority's eagerness to accept the assignor's representation that "no * * * buyer could be found * * * whose broadcast interests were not in conflict with the Commission's Top Fifty Interim Policy. * * *" That commitment is also called into question by the Commission's brush-off of a complaint described in Commissioner Bartley's dissenting opinion.
The complaint before
us alleges that the present transaction is the culmination of a scheme to
prevent the license for channel 32 in
With respect for my colleagues, but regret at their indifference to the dangers of concentration, I dissent.