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In Re Application of MINNEAPOLIS STAR & TRIBUNE CO. (TRANSFEROR) AND WKY TELEVISION SYSTEM, INC. (TRANSFEREE) For Voluntary Transfer of Control Wichita-Hutchinson Co., Inc., Licensee of Station KTVH-TV, Hutchinson, Kans.


Docket No. 18631 File No. BTC-5848




19 F.C.C.2d 433 (1969)




August 14, 1969 Adopted









[*433]  1.  This proceeding involves the application for transfer of control of the Wichita-Hutchinson Co., Inc., licensee of station KTVH-TV (channel 12), Hutchinson, Kans., from the Minneapolis Star & Tribune Co. to WKY Television System, Inc.


2.  KTVH-TV serves Wichita-Hutchinson, Kans.  This property is owned by the Wichita-Hutchinson Co. which in turn is owned by the Minneapolis Star & Tribune Co.  The latter is substantially controlled by the John Cowles family.


3.  Cowles interests in broadcasting and CATV reach through the Midwest and Southern United States.  Superimposed on these operations is a corporate structure of newspaper and publishing concerns holding substantial influence over sources of information throughout the Nation.


4.  Behind the corporate identity of the purchaser stands the Oklahoma Publishing Co., substantially owned and completely controlled by the Edward K. Gaylord family.  Gaylord holdings constitute a regional concentration of publishing and broadcasting interests predominantly centered in the Southwestern United States, and extending (perhaps, less significantly for the moment) into the Nation's southern and midwestern regions.




5.  Wichita-Hutchinson, Kans., ranked as the 56th television market in the United States, has a net weekly circulation of 321,900 television  [*434]  homes.  n1 Of the State's 12 operating commercial television stations, three are located in this market.  n2 KTVH-TV, the CBS affiliate, ranks third with a net weekly circulation of 242,000 homes.  n3 Competitively, its position is measured against Wichita stations, KARD-TV (NBC) and KAKE-TV (ABC).  But the former has three satellite television stations bringing two additional Kansas communities and one Kansas-Nebraska market into its audience total.  The latter, KAKE-TV, owns a satellite station extending its market area to one additional Kansas community.  n4 Despite their disparate coverage, however, KTVH-TV enjoys a healthy financial position with a substantial share of the market's television station revenues and of its total income.  In political and media prominence, KTVH-TV is a powerful voice in Kansas.  Based on FCC engineering standards and estimated 1968 population figures, the station's grade B signals serves 760,830 people, or 33.4 percent of the State's total population of 2,272,000.  n5


n1 38 Television Factbook, stations volume, 1968-69, p. 263b.


n2 Ibid.


n3 Ibid., p. 277b.


n4 KARD-TV has satellite stations in Great Bend and Garden City, Kans., and one in Oberlin, Kans.-McCook, Nebr.  KAKE-TV has one satellite station in Garden City, Kans.


6.  The Gaylord application lists 26 radio stations, purportedly assigned to the Wichita-Hutchinson market and presumedly reflecting media competition in the area.  n6


n6 F.C.C. file No. BTC-5848, sec. IV-B, exhibit B.


7.  There are only two separately published dominant newspapers in Wichita-Hutchinson.  Their distribution is as indicated in chart I:


CHART I. -- Newspaper market, Wichita-Hutchinson


Hutchinson News (published by John P. Harris, former minority owner in KTVH-TV):

1968 census estimate    43,600


All day         51,412

Sunday       52,581

Saturday morning 51,204


Wichita Eagle and Beacon (published by the Wichita Eagle & Beacon Publishing Co.):

1968 census estimate    314,043


Eagle (morning)   128,597

Beacon (evening) 67,342

Eagle and Beacon (Sunday)   164,153

Weekly papers:

Hutchinson Record, circulation         850

Wichita Democrat, circulation  1,580


Source: "Ayer Directory of Newspapers and Periodicals," 1968, pp. 408, 420.


8.  The combined daily circulation of the Wichita Eagle and Beacon (jointly published) and the Hutchinson News roughly corresponds to the net weekly circulation of KTVH-TV.  Nevertheless, the figures tend to indicate that the Wichita morning and evening dailies do not penetrate much beyond their immediate market while KTVH-TV encompasses both Wichita and Hutchinson.  Though the above outline of newspaper distribution includes only local dominant publications,  [*435]  Gaylord's newspapers, the Daily Oklahoman and the Oklahoma City Times, are currently sold in the Wichita-Hutchinson market.  They constitute the two largest newspapers in Oklahoma.  In Kansas, their daily circulation is 1,741 and 3,849 on Sunday.  n7 We are told that only two copies are sold daily in Hutchinson and 16 on Sunday.  n8 The balance reportedly is distributed throughout Kansas, although we presume a sizeable portion is sold in Wichita.  (Consequently, Gaylord already has a foothold in this market, serving as an information and media source competitively antagonistic to Cowles.)


n7 Letter to the FCC from Gaylord's attorneys, Mar. 3, 1969.  F.C.C. file No. BTC-5848.


n8 Ibid.  In evaluating competition in the Wichita-Hutchinson market, see, also, U.S. v. Wichita Eagle Publishing Co., Civil No. W-1876 (D., Kansas 1959), Anti-Trust Div. No. 1466, 1959 Trade Cas. 69,400, proscribing the practice of conditioning newspaper advertising upon the agreement of advertisers not to use other media; "tie-in" advertising sales in different editions; and limiting distribution to subscribers of all newspapers owned by a single publisher.  Other anticompetitive practices and media purchases may possibly he traced from this prohibition.


9.  In terms of regional media concentration encouraged by this transfer to Gaylord, it should be noted that there are two counties in Kansas (Summer and Chautauqua) and three in Oklahoma (Grant, Alfalfa, and Woods) in which the television station signals of both WKY-TV and KTVH-TV have varying degrees of penetration.  Within these five counties are located 18,400 television households.  n9 (See app. B.)


n9 "38 Television Factbook," stations volume, 1968-69; pp. 277-b. 565-b.


10.  Based on FCC engineering standards, neither of the grade B contours of these television stations overlap.  (See illustration 1.) But on further review it may appear significant to the issues of concentration that, for advertising and program purposes, the station signals of these two broadcast facilities are in competition.




11.  The proposed transferee, WKY Television System, Inc., is a wholly owned subsidiary of the Oklahoma Publishing Co., a concern controlled by the Edward K. Gaylord family of Oklahoma City, Okla.  The WKY subsidiary is the licensee of five television stations and one standard broadcast station, including WKY-AM-TV (v), Oklahoma City; KTVT-TV (v), Fort Worth-Dallas, Tex.; KHTV-TV (u), Houston, Tex.; WTVT-TV (v), Tampa-St. Petersburg, Fla.; and WVTV-TV (u), Milwaukee, Wis.  (See illustration 1.) Thus, WKY Television System, Inc., is the licensee of television stations in the 51st, 15th, 26th, 31st, and 24th markets, respectively.


12.  The Oklahoma Publishing Co. prints that State's two largest newspapers, the Daily Oklahoman (morning) and the Oklahoma City Times (evening).  The combined daily circulation of these newspapers is 292,672.  n10 The company also publishes a combined Sunday edition, with a circulation of 270,975.  n11 As previously mentioned, the circulation of these newspapers in Kansas is 1,741 daily and 3,849 on Sunday.  n12


n10 "Ayer Director of Newspapers and Periodicals," 1968, p. 888.  The Daily Oklahoman, circulation 176,235; Times, circulation 116,437.


n11 Ibid.


n12 Cf., footnote 7.


13.  Oklahoma Publishing Co. prints a monthly agricultural periodical, The Farmer-Stockman (circulation 426,443), published in three  [*436]  separate editions for Kansas, Oklahoma, and Texas.  n13 In addition, it publishes Rx Golf and Travel, a monthly sports and travel magazine for physicians (circulation 196,070 monthly).  n14 The publishing company also operates a trucking company through its wholly owned subsidiary, the Mistletoe Express Service. 


n13 Ayer, 1968, p. 887.


n14 Ibid., p. 888.




14.  The Katz Agency, Inc., of New York, is one of the country's largest media sales representative organizations.  Operating through three separate agencies, it serves newspapers, television, and radio stations throughout the United States.  Katz Newspaper Sales, Inc., represents over 46 newspapers, including Gaylord's Oklahoma City Times and the Daily Oklahoman.  n15 Katz Television, Inc., includes within its representation of 59 television stations nationally, service to the advertising revenue needs of Gaylord's five video outlets.  n16 Katz Radio Sales serves WKY-AM, Inc., and 55 other radio stations. 


n15 "1969 Editor and Publisher Yearbook," p. 355, Katz has recently announced that as of Sept. 1, 1969, it will divest its newspaper representation, Katz Newspapers Sales will become a separate division of Cresmer, Woodward, O'Mara & Ormsbee, New York, a major newspaper representative firm.


n16 "Broadcasting," May 19, 1969, p. 68.


15.  In certain competitive areas, the Katz Agency represents both Gaylord and Cowles.  For example, in Florida, the Katz television agency handles national and spot advertising for Gaylord's WTVT-TV (Tampa-St. Petersburg) and also Cowles' WESH-TV (Orlando-Daytona).  The grade B contours of these stations overlap.  n17 A similar condition exists in the Wichita-Hutchinson market where there is the practical overlap of WKY-TV and KTVH-TV signals to which we have already averted, and where there is a presumptive conflict of interest likely to be enlarged by this transfer. 


n17 Cowles' WESH-TV has a net weekly circulation of over 50 percent in Sumter, Lake, Osceola, and Citrus Counties; between 25 and 50 percent in Lafayette County; and between 5 and 24 percent in Polk, Highlands, and Hernando Counties.  Gaylord's WTVT-TV has over 50 percent net weekly circulation in Herando, Polk, and Highlands Counties; between 25 and 50 percent in Lafayette, Osceola, and Sumter Counties; and between 5 and 24 percent in Lake and Citrus Counties.  "38 Television Factbook," stations volume, 1968-69, pp. 154-b, 163-b.


16.  We believe such overlap becomes competitively perilous when viewed in the balance of proprietary interests held by the Katz family in Gaylord's Oklahoma Publishing Co. Eugene Katz, George R. Katz, other family members, and the estate of Sidney L. Katz possess combined shares exceeding 7-percent ownership in the Oklahoma Publishing Co. Eugene Katz is president of the Katz Agency, Inc. George R. Katz, a director in that agency, holds an interlocking relationship as vice president and director of the Oklahoma Publishing Co.  n19


n19 "Poor's Register of Corporations, Directors and Executives," 1969, p. 1282.


17.  These ties are relevant to the proposed transfer.  Katz Television Sales represents KAKE-TV in Wichita.  n20 Since the agency serves all six stations in the Oklahoma Publishing Co.'s system, it seems reasonable to presume it will handle KTVH-TV if the transfer of license is allowed.  Assuming this presumption is correct, the Katz family will represent two television stations in the Wichita-Hutchinson market  [*437]  while holding ownership interests in one.  If Katz bypasses representation of KTVH-TV, the family will still be a part owner in that station while serving its competitor, KAKE-TV in Wichita.  An issue on this duopoly situation is appropriate.  Metromedia, Inc. 16 F.C.C. 2d, 918 (1969).


n20 "Broadcasting Yearbook," 1969, p. A-27.




18.  Gaylord broadcast stations rise in spoon-handle fashion along a northerly tier extending from the Gulf of Mexico through Texas and Oklahoma.  The proposed transfer adds the most immediately adjacent television station to the north in Hutchinson-Wichita, Kans.  (See illustration 1.)


19.  Within these three States reside 15,717,900 people.  In Texas, with a population of 10,945,600, Gaylord television stations, located in the Ft. Worth-Dallas and Houston markets, serve over 4,316,730 people.  This service covers 39.4 percent of Texas population.  (See illustration 2.)


20.  Gaylord's radio outlet, WKY, in Oklahoma City, has a potential for daytime circulation to 1,529,500 people, or 61.2 percent of the State's 2,499,400 population.  (See illustration 3.) The contour of the Oklahoma City television station, WKY-TV, encompasses 1,035,455 people, or 41.4 percent of the total.  (See illustration 4.)


21.  Adding to this total coverage, the 33.4 percent of Kansas population served by KTVH-TV in Wichita-Hutchinson, Gaylord broadcast facilities will have a potential political and media influence reaching to 6,607,060 people -- almost half the combined population of Texas, Oklahoma, and Kansas.  (See illustration 5.)




22.  Cowles family ownership involves numerous media enterprises, held individually and through the Minneapolis Star & Tribune Co. or Cowles Communications, Inc. (CCI).  (See illustration 6.) Common ownership interests also link these two companies; and a structure of interlocking relationships enlarges the potential for control.  The Minneapolis Star & Tribune Co. has joint broadcast interests with Ridder Publications, Inc. Cowles Communications is intimately involved with media operations, especially newspapers, owned by Perry Publications, Inc. Together, these companies hold substantial sway over information sources throughout the United States, including broadcast properties, newspapers, magazines, and book publishing companies.  (See app. A for detailed elaboration.)


23.  The Minneapolis Star & Tribune Co. owns 100 percent of the licensee of KTVH-TV. WCCO AM-FM (cp)-TV is licensed to Mid-west Radio-Television, Inc., which is owned by the Minneapolis Star & Tribune Co. (47 percent) and by Midcontinent Radio-Television, Inc. (53 percent).  Midcontinent, in turn, is equally owned by MTC Properties, Inc., an enterprise with financial interests in the Minneapolis Star & Tribune Co.; and Northwest Publications, Inc., a company controlled by the prominent publishing family of the late Joseph E. Ridder.  The Minneapolis Star & Tribune Co. publishes the only two daily general circulation newspapers -- The Star (evening) and  [*438]  Tribune (morning and Sunday) -- in Minnesota's largest city.  The Star and Tribune are also the first and second largest daily newspapers in the State.  John Cowles, Jr., is editor of both.  The only two newspapers in St. Paul, the Pioner Press (morning), and the Dispatch (evening and Sunday), are published by Northwest. 


Hence, in the twin cities of Minneapolis-St. Paul, there are no daily general circulation newspapers published by anyone other than those connected with WCCO.  The Minneapolis Star & Tribune Co. publishes the Journal (evening and Sunday), the only newspaper in Rapid City, S. Dak.; also the Tribune (morning) and Leader (evening), the only newspapers in Montana's largest city, Great Falls.  It also owns 90 percent of the monthly magazine, Harpers.


24.  Cowles Communications, Inc. is licensee of KRNT AM-FM (cp)-TV in Des Moines, Iowa, the Nation's 78th market.  In addition, it owns the KRNT Theater in Des Moines.  The Des Moines Register & Tribune Co., largely controlled by Gardner Cowles, publishes the Register (morning) and Tribune (evening and Sunday), the only two newspapers in that city.  Cowles Communications, Inc. is the publisher of Look magazine, Venture, Family Circle, and Paperboard Packaging, a trade publication.  In addition, the corporation publishes the San Juan Star (morning), the only English-language newspaper in Puerto Rico, and the Sun (morning) in Suffolk, Long Island, New York.  CCI, through its wholly-owned subsidiary, Cowles Broadcasting Service, Inc., is the licensee of WREC AM-FM-TV in Memphis, Tenn., the Nation's 32d market.  CCI is also one-third owner of Total TV of Memphis, Tenn., which holds the CATV franchise for Memphis and Shelby Counties in Tennessee.  The remaining two-thirds of Total is held by Memphis television stations WHBQ-TV, owned by RKO General, and WMCT-TV, owned by Scripps-Howard.  n21 Cowles Communications, Inc. (CCI) also has a substantial position in TV Communications Corporation (TCC), n22 which is partially owned by the Bulletin Co., publisher of the Philadelphia Bulletin.  The Bulletin holds a majority position in Philadelphia CATV Co.; and Time-Life Broadcasting Co. has a substantial minority interest in that enterprise.  n23


n21 "38 Television Factbook," services volume, 1968-69, p. 576-a (see app. A, par. 3).


n22 On Apr. 18, 1968, CCI exchanged all of its voting and nonvoting stock in Universal Cable Vision for 160,000 shares of the capital stock in Television Communications Corp. (see app. A, par. 4).


n23 "38 Television Factbook," services volume, 1968-69, p. 575-a. cowles-perry media interests/


25.  CCI, through its wholly-owned Florida Broadcasting Co., is licensee of WESH-TV, Daytona, Fla.  Until very recently, CCI, through other subsidiaries, and together with Perry Publications, Inc., controlled 17 daily newspapers (11 morning; six evening), almost one-third of Florida's total of 55 daily papers (20 morning; 35 evening).  n24 (See illustration 7.) This concentration of control in such a small region of Florida appears all the more service in view of the fact that Perry Publications, Inc. owns 47.5 percent of the WNDB licensee in Daytona Beach. John H. Perry, Jr. is president and board chairman of Perry Publications, Inc. and is also a director of CCI. 


n24 Ayer, 1968, pp. 198-217.  Perry has recently been disposing of his ownership in these Florida newspapers (see app. A, pars. 5-8).




26.  Ridder Publications, Inc., founded by the late Joseph E. Ridder, holds vast media interests throughout the United States.  The Ridder family controls Ridder Publications, Inc. which, directly or indirectly, owns three television stations, five AM and two FM broadcasting stations, 16 daily newspapers, and two CATV systems.  (See illustration 8.) As previously mentioned, Ridder Publications has proprietary interests with Cowles in the licensee of WCCO (for elaboration see app. A, pars. 9-15).




27.  Cowles broadcasting and publications, based on advertising and distribution circulation figures, reach approximately 19,800,000 people.  In terms of the political and media prominence of Cowles broadcast facilities, the span of coverage over populated areas of the United States is tremendous.  (See illustration 6.)


28.  The WREC AM-FM-TV stations in Memphis, Tenn., cover the four-State area of Tennessee, Arkansas, Mississippi, and Missouri in which 12,833,300 citizens reside.  n25 The service contours of the AM station encompass 2,435,200 people, or 19 percent of the total four-State population.  Within the contour of WREC-FM reside 1,049,100 persons.  This constitutes 8.1 percent of the area's population.  WREC-TV reaches a concentration of 13 percent, or 1,657,800 people in the four States.  Within these average percentages, Cowles signals may range from a State population coverage of less than 1 percent to as high as 32 percent of a State's residents. 


n25 The following figures are derived from FCC engineering standards and estimated 1968 population figures taken from Spot Television Rates and Data, Jan. 15, 1969.


29.  KRNT, located in Des Moines, Iowa, reaches significant percentages of that State's 2,760,700 inhabitants.  Its television contour encompasses 608,800 people, 22 percent of the State's total population.  The FM contour includes 435,950, or 16 percent of the State's population.  KRNT-AM radio serves 27.5 percent or 758,700 people.  But Cowles, influence through AM broadcasting in Iowa is potentially even greater.  The Cowles-Ridder owned WCCO-AM station in Minneapolis-St. Paul, Minn., reaches 331,800 people living inside the northern border of Iowa.  When this figure is added to the population encompassed by the KRNT-AM service contour, Cowles broadcasting spans 1,090,500, or 39.5 percent of Iowa's population.


30.  The Cowles-Ridder stations, WCCO AM-FM (cp)-TV, cover substantial areas of population within the four-State area of Minnesota, Wisconsin, Iowa, and South Dakota.  Within this center live 11,281,400 people.  Inside the AM radio contour are 3,807,300 inhabitants, or 33.7 percent of the area population.  The heaviest concentration, however (2,984,600 or 82.3 percent), resides in Minnesota.  WCCO-TV reaches 55.6 percent of Minnesota's total population.  When the FM station authorization becomes operational it will reach 1,560,300 people in Minnesota, or 43 percent of the State's total population.


 [*440]  31.  If these population figures are collated, Cowles media influence in an eight-State area is extended by broadcasting to approximately 7 million people.  When broadcast circulation figures for advertising purposes are discounted, and population figures based on service contours are substituted, the reach of Cowles broadcasting and publishing extends to about 27 million people, or more than 10 percent of the population within the United States.


32.  Through common business interests and holdings in newspaper and broadcast facilities, Cowles, Perry, and Ridder reach into 17 States -- Arkansas, California, Colorado, Florida, Indiana, Iowa, Kansas, Massachusetts, Missouri, Mississippi, Montana, New York, North Dakota, South Dakota, Tennessee, Wisconsin, and Washington -- some of the most densely populated States in the Nation.  (See illustration 9.)




33.  We have not attempted to penetrate the intricacies of these business combinations.  It seems obvious that we do not, at the present time, have sufficient facts to ascertain their full relevance, or ferret out all the implications of this media concentration.


34.  Some of these relations are remote, as for example, the community of business interests which may tie together Cowles and Time-Life Broadcasting through Television Communications Corp. and the Philadelphia Bulletin Co.


35.  Others are more immediate and financially important, as for example, the common proprietary interests tying Gaylord and the Katz advertising sales agencies, which in turn represent Gaylord and Cowles broadcast facilities within adjacent or proximate markets; and as for example, the CATV alliance of RKO General, Scripps-Howard, and Cowles Communications, Inc. in Memphis, encompassing substantial areas of Tennessee, Mississippi, Arkansas, and Missouri.


36.  The list of these arrangements, whether formed out of common sense or by conscious choice, may constitute the detail and description of media control proscribed as inconsistent with the public interest and our multiple ownership rules.


37.  We have not limited this review by setting a barrier at 1 percent cross-interests which (not being counted under our reporting rules) are sometimes presumed to shelter minority interests from any inquiry into their impact on media concentration of control.  In many cases, the presence of wholly-owned subsidiaries may signal material questions of how small percentage interests are to be defined in terms of Commission reporting requirements vis-a-vis the issues encompassed by economic and media concentration.  Minority interests sifted through the mathematics of attribution rules often can be reduced to an exceedingly insignificant proportion of ownership, which nevertheless, may hide an extremely dramatic influence.


38.  The most obvious answer is that our regulations encourage us to inquire into "actual working control in whatever manner exercised." 47 C.F.R. 73.35, 73.240, 73.636.  We have consistently interpreted this rule as described in our multiple ownership policy statement of 1953.  We there said:


 [*441]  It is our conclusion that the principle of diversification and the realities of the situation require that no distinction be made between a minority non-controlling interest and a full or controlling one.  While the holder of a small interest in many instances may have slight influence on the operation of the station in question, it is also true such a person can exert a considerable influence -- to an extent clearly within the objectives and purview of the described diversification policy.  Several factors should be noted here: (1) there may not be a correlation between the size of the minority holding and the extent of the influence wielded; (2) it is impossible to determine on the face of the application what the influence of the multiple owner will be; indeed it may be difficult or incapable of definite ascertainment even in a subsequent hearing; and (3) in the cases of the holder who has interested himself in numerous stations, there is good probability that because he is so actively engaged in the broadcast field, his influence will tend to be a positive or substantial one.  Amendment of Rules Relating to Multiple Ownership, 18 F.C.C. 288, 292-3 (1953).


39.  The issue of these business combinations and arrangements is material to this case.  Where the number of competitors is small, "the greater is the likelihood that parallel policies of mutual advantage, not competition, will emerge.  That tendency (however) may well be thwarted by the presence of small, but significant competitors." United States v. Aluminum Company of America, 377 U.S. 271, 284 (1963). The problem for us is to find the standard of competition which thwarts "policies of mutual advantage" carried on in disregard of public interest.




40.  The transferor, Minneapolis Star & Tribune Co., in giving its reasons for the transfer states, "* * * that the operation of KTVH in the public interest would benefit from the infusion of substantial additional capital and that the transferee is in a better position to accomplish this at the present time." n26 Transfereehs vice president tells us the corporation "* * * can operate the station in the public interest," because its "* * * experience and record in other markets will be brought to bear in Wichita, and the applicant believes this will result in a benefit to the community." n27


n26 F.C.C file No. BTC-5848, pt. I, sec. I, p. 2.


n27 Id., at pt. III, sec. I, p. 5.


41.  Cowles representatives give us no sufficient reason why the public interest will benefit by the "infusion of substantial additional capital" in KTVH-TV.  Gaylord's WKY Television System explains that there is an interest in the station acquiring color video equipment for local program origination.  n28 But, this explanation for needed capital seems insufficient.  KTVH-TV reports to potential advertisers that it is in full possession of color capacity.  n29 Furthermore, an equipment purchase of this type would seem well within the financial capacity of the Cowles company.  It currently enjoys an excess of $1 million in assets over liabilities.  n30 Consequently, the Commission has no information of decisional relevance disclosing the licensee's need for additional capital, or the benefit expected to result from the contribution.  In addition, the transfer application contains no commitment to invest any sum of new capital. 


n28 File No. BTC-5848, sec. IV-B, exhibit C, par. 2.


n29 Spot TV rates and data, SRDS, Inc., Jan. 15, 1969, pp. 18, 191.


n30 BTC file, op. cit., sec. I, exhibit 3.


 [*442]  42.  Certainly, expanded program investment might be a reason for the contribution of "substantial additional capital." But Gaylord agents conclude that they "* * * should retain the general (program) format of the station's operation * * *." Such program improvements as are suggested appear to have been developed within the station's existing resources of staff personnel and revenues.  n31 Thus, no new capital is indicated or specified in this regard. 


n31 Id., at sec. IV-B, exhibit C, par. 1.


43.  Furthermore, there is serious question whether the Gaylord promise to retain the KTVH-TV program format is credible.  In attempting to assess WKY Television System's past experience and record in other markets, we find on a comparative basis that Gaylord's WKY-TV in Oklahoma City makes a disproportionately smaller programming effort than KTVH-TV makes under Cowles' management.


44.  In terms of gross revenue, KTVH-TV is approximately one-third the size of WKY-TV ($1,599,633 compared to $4,071,510, respectively).  Yet, in program expense, KTVH-TV devotes 33 percent ($525,782) of its revenue to this effort, in comparison to only 26 percent ($1,060,250) for WKY-TV.  Though WKY-TV expends more dollars than KTVH-TV, it represents a smaller devotion of resources to public service.


45.  Nationally, the total broadcast industry currently budgets about 30 percent of its total revenue for "conventional programming." n32 Judged by this standard, WKY-TV program expenses are 4 percent (or $163,000) below the national norm, and 7 percent (or $285,000) below the level assumed by KTVH-TV for its own operation.  In terms of size based on revenue, KTVH-TV may be required to make proportionately greater expenditures.  But in what sense, and under what circumstances, the parties do not bother to explain. 


n32 Subscription Television, 15 F.C.C. 2d 466, 497 (1968).


46.  For reasons not readily apparent, there is considerable disparity between these stations in their percentage of profit compared to gross revenue.  We are not concerned with this difference as a fact in itself, but only because it may bear a substantial relationship to programming potential and achievements.  The pretax earnings of KTVH-TV stand at 15 percent (or $232,341) of gross revenue as compared to 40 percent (or $1,627,088) generated by WKY-TV.  If program effort is stated as a function of profits, KTVH-TV's expenses of $525,782 are twice as great as its net income before tax.  The inverse ratio is true of WKY-TV.  Its program expense only amounts to about 65 percent of its total profit.  Stated as a dollar expense to income ratio, for every $2.25 KTVH-TV spends for programming, it earns $1 profit.  On the other hand, WKY-TV earns $1 profit for every 65 cents of program expense.  This represents a 154-percent return on program investment.


47.  We have not analyzed these percentages in terms of consolidated station revenue and expense of broadcast holdings in the WKY Television System.  Nor have we made a financial comparison of all Cowles broadcast operations.  No doubt adjustments may be required within the structure of Gaylord broadcasting to account for losses in its UHF television operations.  Based on the scant information before us, it is impossible to determine how much Gaylord's programming efforts are  [*443] depleted in VHF television by the exigencies of carrying losses and acquiring programs in the UHF branch of its business.  To some extent, there must be a correlation.


48.  We have made this comparison between KTVH-TV and WKY-TV solely on the basis of their proximity, and the necessity to establish some standard for judging the public interest in programming a transferee may be expected to serve on the basis of its past performance.  Assuming that a complete financial survey of Gaylord broadcast operations does not significantly change the percentage of program expense to revenue and income, as compared to the present and historic levels of such expense maintained in KTVH-TV, it may be extremely difficult to ascertain how this proposed transfer can benefit or serve the public interest in broadcasting.


49.  There is also evidence that this transfer may financially impair KTVH-TV.  Though KTVH-TV (CBS) is third, behind the NBC and ABC affiliates in the Wichita-Hutchinson market, the station enjoys a healthy financial position.  As of November 30, 1968, the licensee, Wichita-Hutchinson Co., had total liabilities of $576,011.  These were more than adequately covered by an excess net worth of $1,297,474.  n33 But the transfer application before us suggests that these assets will be jeopardized by Gaylord's purchase of KTVH-TV. 


n33 BTC file, op. cit., sec. I, exhibit 3.


50.  The purchase price is $4.4 million.  n34 To cover this sum, the First National Bank & Trust Co. of Oklahoma City has agreed to lend, on a noncollateral basis, its legal limit of $3.6 million to Gaylord's WKY Television System, Inc.  n35 The transferee's application gives no information as to the source of payment for the adjusted contract price balance.  Presumably, cash and receivables ($3,833,899) of WKY Television System, Inc., are sufficient (and will be used) for the purpose.  A direct cash, capital investment from this source, perhaps, can be made without serious risk to the corporation's working capital position.  n36


n34 Id., at sec. I, exhibit 2.


n35 BTC file, op. cit., amended by letter of Mr. Charles A. Vose, chairman, First National Bank & Trust Co., dated Feb. 28, 1969.


n36 Id., at sec. III, exhibit 3.


51.  On the other hand, the loan with which Gaylord proposes to burden WKY Television System, Inc., sits oppressively upon the corporation's capital structure.  It is repayable at the rate of $200,000 per month, exclusive of interest which was not specified by the bank letter of commitment.  n37 At this rate, the corporation's annual cash expenditures (in the first year after acquisition), are increased by $2.4 million.  In 1968, total net income from all WKY Television System broadcast holdings was only $1,333,073.  n38 Consequently, the KTVH-TV acquisition, on the financial basis proposed, converts the corporation's profit position into approximately a $1.1 million deficit, assuming a constant revenue level.  KTVH-TV's contribution of income to the system only alleviates the deficit by approximately $232,000, stated at its current income rate.  KTVH-TV's net worth is thus practically liquidated by Gaylor's acquisition. 


n37 Id., Vose letter.


n38 Id., at sec. III, exhibit 3.


 [*444]  52.  The capital structure of WKY Television System, Inc., is also weakened.  At the repayment rate schedule fixed by the Oklahoma City Bank (and apparently accepted by the Gaylords), $2.4 million of the $3.6 million loan must be stated as a current liability (payable within 1 year) on the financial statement of the WKY corporation.  In this position, the relationship of net quick assets to liabilities is degraded from a healthy 3 to 2 ratio to a 1 to 1 deficit ratio.  Not only the capacity of income to generate internal expansion, but the solvency of the corporation itself is brought into question under financial arrangements.  On sound accounting and financial principles, both the loan and the investment may enter the shaky realm of insubstantial deals.


53.  The proposal liquidates over $1 million of net worth in the Wichita-Hutchinson Co., and tends to dissipate slightly over $2 million in liquid assets of the WKY Television System.  The public benefit is difficult to see.  The WKY System is already burdened with losses in its UHF television operations.  Consequently, the financial arrangements designed for the KTVH-TV purchase enlarge rather than lighten the magnitude of that concern.


54.  With these considerations, it is difficult to determine how Gaylord's ownership of KTVH-TV will result in a benefit to the Wichita-Hutchinson community.  WKY Television System says the public interest benefit results from its past experience and record in other markets.  Nothing, however, is related concerning this feature.


55.  We find with respect to certain trust indentures affecting the Oklahoma Publishing Co., WKY Television System, Inc., apparently has been in default of compliance with section 1.613 of Commission rules for a number of years.  We shall, of course, designate a hearing issue to determine the circumstances surrounding this apparent omission.  Our concern in this regard was prompted by the disclosure that Commission records until recently could not identify the beneficiaries in whose favor substantially all assets of the Oklahoma Publishing Co., and WKY Television System are administered.


56.  More significantly, however, is a sense of the magnitude of these trust arrangements.  We wish to assess the impact of the trust arrangements affecting Cowles as well as Gaylord's media interests.  It is apparent that they may not serve public interests in broadcasting, that they may tend to depress the initiation and maintenance of sound communications policies promoting program diversity.  It seems equally clear that where our policy of integration -- combining ownership and management -- is socially essential to broadcast station operations, a trust instrument bifurcates ownership, and is in derogation of the integration standard.  The interests of ownership then become matters solely of commercial benefit, rather than owner-management involvement in community affairs.  A serious question arises whether these arrangements place public interests in broadcasting in thrall to the private concerns of beneficiaries, centered on swelling investment income and capital growth.


57.  Companion to this danger may be the tendency of trust arrangements to encourage the siphoning of income from broadcast programming.  Where, for tax reasons, it becomes beneficially attractive and  [*445]  profitable to divert income from corporate endeavors to trust estates, management decisions, except where charitably motivated, are not likely to elect increased programming.  The inducement for preferring program expense over the enhancement of trust estates will not be readily apparent where business income available to principal owners can be divided and distributed at reduced income tax rates among family and business relations.  Without the availability of these devices, such income, for countervailing tax reasons, might be frozen into business enterprise objectives more highly conducive to programming efforts.  There is a level at which consideration of one's personal income tax bracket will discourage receipt of more earnings, whether classified as dividends or otherwise.  At whatever point that level is reached in a taxpayer's judgment, business revenue surplus will tend to be directed toward deductible and depreciable expenditures.  This decision will follow from the necessity to produce capital growth out of an expanding business net worth -- that is, the decision logically results, unless surplus can be converted to earnings properly excluded from the principal owner's personal income where taxes are regarded as prohibitive.  The trust device, under certain circumstances, permits this alternative means of capital and income accretion.  At the point where sound judgment would normally required the devotion of more income to business purposes, the trust provides a way out.  It potentially eliminates the either/or alternative of more tax or business effort, and recaptures the possibility of enlarging personal estates with investments disassociated from occupational endeavor.  Both our integration standards and public interests in program diversity are then defeated.


58.  We seek to determine the significance of these trusts in terms of broadcasting policies established by Congress and this Commission.  We emphasize that our inquiry is limited to those situations in which trust arrangements appear to dominate the corporate or capital structure of broadcast enterprises.  In another context, we have noted the dangers inherent in any ability to siphon programming from our free television system, and the potential of certain types of competition to work in derogation of an "improved and more varied fare of programming." n39 We would be less than realistic if we neglected to recognize the competitive tug of trust devices on broadcast income which might otherwise be channeled in service to the sources of program diversity. 


n39 Subscription Television, 15 F.C.C. 2d 466, 495 (1968).


59.  It appears that the facts before us raise significant questions whether a grant of the transfer application will serve the public interest.  The questions are sufficiently substantial to justify setting the application for evidentiary hearing.


60.  Accordingly, It is ordered, That, pursuant to section 309(e) of the Communications Act, the above-captioned transfer application Is designated for hearing, at a time and place to be specified in a subsequent order, on the following issues:


(a) To determine whether a grant of the application would result in an undue concentration of control of the media of mass communication regionally or in the Wichita-Hutchinson area.


 [*446]  (b) To determine the nature of the licensee's need for additional capital; whether licensee's present owners can supply that need; how such requirement necessitates approval of the proposed transfer, and the extent to which the transferee's plan fulfills that need.


(c) To determine which of the applicants can be expected better to serve the community and programming needs of the Wichita-Hutchinson area on the basis of a comparison of their (i) past broadcast record; n40 (ii) contributions to program diversity; (iii) fairness in media presentations of controversial issues of public importance; and (iv) programming dollar expenditures as a percentage of gross revenue and net income.  n41


n40 Transferor's record at KTVH-TV, transferee's record in the operation of its VHF television stations.


n41 See above, also relating same to any national norms which may be adduced, the reasons for differences shall also be adduced, if possible.


(d) To determine the extent to which sales representative proprietary interests in the Oklahoma Publishing Co. have or may result in violation of the Commission's multiple ownership rules and policies.


(e) To determine what effect the transferee's financing plan will have upon the assets of the licensee, the assets of the transferee and upon the ability of the transferee to carry out its programming proposals.


(f) To determine the uses, purposes, and effect of corporate and family trusts and estates containing securities in which the Gaylord and Cowles families have legal or beneficial interests in corporations holding FCC licenses, or the capital stock of licensee corporations; their tax, income, and capital effects; the historic correlation, if any, between expense to income ratios applicable to programming before, during and after the execution of such trust arrangements; and the impact of such arrangements on Commission integration standards.


(g) To determine whether and if so, why WKY failed to file trust instruments or their abstracts involving ownership interests in the Oklahoma Publishing Co., as required by section 1.612 (47 CFR 1.613).


(h) To determine, in the light of the evidence adduced pursuant to the foregoing issues, whether grant of the above-captioned application would be in the public interest.


61.  It is further ordered, That the Wichita-Hutchinson Co., the Minneapolis Star & Tribune Co., WKY Television System, Inc., the Oklahoma Publishing Co., and the Katz Agency, Inc., are made parties to the hearing.


62.  It is further ordered, That to avail themselves of the opportunity to be heard, the above-specified parties, pursuant to section 1.221 of the Commission's rules and regulations, in person or by attorney, shall within 20 days of the mailing of this Order, file with the Commission, in triplicate, a written appearance stating an intent to appear on the date fixed for the hearing and present evidence on the issues specified in this Order.


63.  It is further ordered, That the transfer applicants herein shall, pursuant to section 311(a)(2) of the Communications Act and section 1.594 of the Commission's rules and regulations, give notice of the  [*447]  hearing within the time and in the manner prescribed in such rule, and shall advise the Commission thereof as required by section 1.594 of the Commission's rules and regulations.







Today the Commission majority initiates an important inquiry into the proposed transfer of KTVH-TV, Hutchinson, Kans., from corporate interests of the John Cowles family to corporate interests of the Edward K. Gaylored family.  The proposed acquisition of KTVH-TV by the Gaylord interests would, if approved, create a three-State radio, television and newsprint network comprised of four television stations, an AM station and two large metropolitan newspapers which would span a distance of some 750 miles (about one-half the northsouth distance across mid-America) and reach a population of some 6,607,060 people -- more than 3 percent of the Nation's total population.


I fully join in and support the Commission majority's opinion in this proceeding.  However, in light of the dissenting opinion of Chairman Rosel H. Hyde, in which Commissioner Robert E. Lee joins, I would like to add a few remarks of my own stating what, in my view, the majority's opinion does and does not do.


 [*463]  Chairman Hyde raises a number of points in his dissenting opinion which merit a response.


Chairman Hyde first states (par. 2) that the proposed transfer would not violate the numerical maximums contained in the Commission's multiple ownership rules.  Of course, this fails to address the real point.  Rule 47 C.F.R. section 73.636(2) bars transfers which "would result in a concentration of control inconsistent with public interest, convenience, or necessity." The rule instructs the Commission to make such a determination by examining "the facts of each case with particular reference to * * * the size, extent and location of area served, the number of people served, and the extent of other competitive service to the areas in question." It is precisely these and other factors which will be examined in the forthcoming hearing.


Chairman Hyde does not see (par. 4) how the proposed transfer can raise any question as to "undue concentration of control" in the relevant market.  A cursory look at figure 1, attached to the majority opinion, and a reading of paragraphs 18-21 in the majority opinion, should easily dispel any doubts in this area.


The chairman finds "appalling" (par. 4) the majority's inquiry into, and comparison of, the resources dedicated to programming by the owners of KTVH-TV and WKY-TV.  The chairman apparently feels this would establish "programming norms" which will drag the Commission into a "quagmire of number games." The point, however, is that we do not know what conclusions we will reach through this comparative analysis, and it is for this very reason that a hearing is necessary.  As the majority states in paragraph 46, "[for] reasons not readily apparent" KTVH-TV spends $2.25 on programming for every dollar it earns, yet WKY-TV spends $0.65 on programming for every dollar it earns.  There may well be some perfectly valid reason for this apparent discrepancy -- yet it is not immediately apparent from the materials now available to the Commission.  For this reason, and because we are charged with determining whether this transfer will promote the "public interest," we have given the parties the opportunity to explore this in a hearing.  Finally, the Commission clearly does have the authority to insure an adequate dedication of resources to programming in the public interest.  This matter is no longer in doubt.  See Red Lion Broadcasting Co., Inc. v. FC.C., 37 U.S.L.W. 4509, 4517 (U.S., June 9, 1969).


Chairman Hyde concedes that there may have been a "violation" of section 1.613 of this Commission's trust disclosure rules (par. 4), yet apparently feels it unnecessary to investigate this matter further in hearing.  The chairman also objects to the majority's inquiry into possible rule violations by the Katz Agency's relationship to the parties involved, and suggests that this Commission can easily gloss over such violations by politely asking the parties not to do it again.  I cannot agree.  We cannot determine the seriousness of these possible rule violations without further inquiry at hearing.  If, for example, the violations were intentional, then we would be shirking our duties toward the public if we were to postpone any inquiries to a later date.


 [*464]  The chairman finds "absolutely no basis" for doubt as to whether Gaylord will retain the present KTVH-TV program format (par. 3).  This objection is amply answered by paragraphs 43-47 in the majority's opinion, and needs no further comment.


The chairman views (footnote 1) the statistics on the transferor as "immaterial" to the considerations before us.  An examination of issues (b), (c), (e), and (f) should readily demonstrate the necessity for such comparative data.


Chairman Hyde suggests (footnote 1) that the transfer should be granted under the majority's "novel test of weighing 'media influence,'" for the transferor's influence will be diminished.  Nowhere, however, has the majority indicated that it has any intention of weighing or comparing the relative concentrations of control presently held by Cowles and Gaylord, and approving the transfer if that concentration will thereby be decreased.  As issue (a) clearly states, the hearing will determine whether the transfer would result in an undue (not a lesser) concentration of control in the relevant areas.


Finally, the chairman intimates (pars. 2-3) that the majority has prejudged the merits of this case by reaching conclusions before the hearing process has been completed.  Obviously this is not the case -- as an examination of the hearing issues and a re-reading of the majority opinion will reveal.  For example, the majority does not contend that the financial arrangements here involved will "enter the shaky realm of insubstantial deals" (majority opinion, par. 52; compare dissenting opinion, par. 2), but that it "may" be subject to doubt.  I simply fail to see how this may be characterized as a "premature finding" or a "gratuitous characterization." It is not necessary for me to discuss the issue of whether a strong dissent to the mere holding of a hearing, an attempt to get fuller information, presupposes a decision by the dissenter "reached after and not before the hearing process is completed."


I believe the majority opinion is a significant step toward the closer scrutiny of transfer applications by this Commission, and believe that we will thereby eventually evolve more meaningful standards by which to judge such applications in the public interest.





%i dissent to the order setting this transfer case for hearing.  This case involves a transfer of control of the license of station KTVH, Hutchinson, Kans., to WKY Television System, Inc. KTVH-TV serves Wichita-Hutchinson, Kans.


First and foremost, it should be made clear that the subject application would not, if granted, represent a numerical concentration of control in contravention of our multiple ownership rules.  The transferee would be acquiring its fourth VHF and its sixth television station.


A little background on the Wichita-Hutchinson market will help to place this matter in proper perspective.  Hutchinson is served by a daily newspaper.  Wichita is served by both a morning and an evening paper.  The parent company of the transferee owns the Daily Oklahoma which has a very small circulation in Kansas.  In Hutchinson, its daily circulation is two and on Sunday it is 16.  The Witchita circulation is 300 daily and 410 on Sunday.


The transferee's closest station, WKY, is in Oklahoma City, which is about 153 miles from Wichita.  In Wichita-Hutchinson, there are two VHF stations in addition to the subject station and about 25 AM and FM services reach the market.  I do not see how the majority is justified in concluding from this factual recitation that this transfer raises any questions as to undue concentration of control of media in the "relevant" market.


Yet, a reading of this order which Commissioner H. Rex Lee has charitably characterized as "disjointed," indicates that the majority has concluded that Gaylord (the transferee) and Cowles (the transferor) are no in a position to unduly influence the American people.  For example, they have already concluded that the transferee has "potential political and media influences reaching 6,617,000 people," and the transferor's media influence extends to "27 million people, more than 10 percent of the population within the United States." n1


n1 The alleged statistics as they apply to the transferor are immaterial for our consideration of whether the public interest is served by a grant under 310(b) of the act.  The crucial issues in any such case relate to the transferee.  Assuming the majority's premise, the transfer should be granted because the Cowles "media influence" will be diminished to the extent it is no longer a broadcaster in this market.  Under the majority's novel test of weighing "media influence" Cowles will no longer influence 760,830 Kansans.


Of course, these impressive eye-catching figures ignore the fact that these same millions of Americans have access to multiple sources of news and information; and these outlets provide the American people with a degree of diversity that assures exposure of varying viewpoints.  To say nothing of our fairness doctrine which requires individual stations to provide diversity on controversial matters of public importance.


The order is replete with premature findings, including a gratuitous characterization of the transferee's loan as perhaps entering "the shaky realm of insubstantial deals."


It has always been my understanding of administrative processes that the decision is reached after and not before the hearing process is completed.


 [*461]  Perhaps the most appalling aspect of the majority's approach is the obvious intent to develop a yardstick for measuring performance in terms of dollars spent.  The Commission rightfully cannot impose standards for program quality.  However, there is a veiled threat by the majority to circumvent this prohibition in a very mischievous manner by an unrealistic test of equating dollar expenditures with program quality.  To begin with quality cannot be measured in terms of quantity or dollars.  If that is to be the test of service, stations can easily meet it by pouring large sums into meaningless program projects while ignoring any attempt to achieve true community service.  Such an approach will logically lead the Commission into a quagmire of number games where applicants and the public interest will be measured on a dollar standard.  I find it hard to believe that the majority fully realize the serious implications of involving the Commission not only in a program-dollar comparison of the parties here, but also in seeking the establishment of national norms on programming dollar expenditures as a percentage of gross revenue.  I view this as a very serious and subtle intrusion by the Commission into programming matters.  We do not have authority to establish programming norms under any banner.


The majority has charged that with respect "to certain trust indentures affecting the Oklahoma Publishing Co., WKY Television System, Inc., apparently has been in default of compliance with section 1.613 of the rules for a number of years." Section 1.613 of the rules provides in part that "* * * trust agreements * * * are required to be filed [with the Commission] provided, however, that trust agreements are not required to be filed unless requested specifically by the Commission; in lieu of the trust agreement, the licensee * * * may submit the following information concerning the trust: (1) Name of the trust; (2) Duration of the trust; (3) Number of shares of stock owned * * *"


On April 21, 1969, copies of Gaylord trust agreements were filed with the Commission -- not however at the Commission's request.  The cover letter for the filing of these agreements recites in part: "These trusts are shown as certificate holders in the voting trust holding 11,275 shares of stock of the Oklahoma Publishing Co.  (See 323 dated Feb. 27, 1968, for the Oklahoma Publishing Co.)"


The February 27, 1968, ownership information on file with the Commission indicates: (1) That there is a Gaylord, Inex K.; Gaylord, Edward L. voting trust -- of Oklahoma City, Okla.; (2) That the trustees are citizens of the United States; (3) That there are 11,275 shares of stock in the trust and that the stock is common stock of no par value.


Thus the existence of the trust referred to by the majority was a matter of Commission knowledge.  It is true that all of the information required by section 1.613 of the rules for the trust was not provided and that therefore there may have been a technical violation of the rule, but if so, it was not a conspiracy of silence to conceal some nefarious trust scheme.  In fact, on the basis of the type of violation that may be involved here, the Commission has often refused to impose even a small forfeiture.


[*462]  Having introduced the subject of the Gaylord's trust, the majority goes on to state:


More significantly, however, is a sense of the magnitude of the trust arrangements.  We wish to assess the impact of the trust arrangements affecting Cowles' as well as Gaylord's media interests * * *.  A serious question arises whether these arrangements place public interests in broadcasting in thrall to the private concerns of beneficiaries, centered on swelling investment income and capital growth.


I do not believe that an assignment hearing is the proper place to explore complicated policy questions, of the appropriativeness of trust ownership.  Further, it is blatantly unfair and prejudicial to the applicants to suddenly unfurl the overall appropriativeness of trust arrangements in a hearing case.


If such an inquiry is warranted, the proper machinery to test the question is the Commission's rulemaking processes.

The Katz Agency relationship to both parties has also cast a major roadblock to the transfer.  The majority implies some rule or policy violation because the Katz Agency represents both Gaylord and Cowles in some overlapping markets.  The issue I suggest is enlarged out of proportion to its importance.  Any potential conflict evolving from the Katz's relationship to these licensees can easily be rectified by appropriate conditions in a grant.


Not being able to find fault with the programming percentages of the transferee or its efforts to determine community needs and interests, the majority instead resorts to questioning the integrity of the transferee's representations, stating in one instance "there is serious question whether the Gaylord promise to retain the KTVH-TV program format is credible." There is absolutely no basis for such an allegation.  This order is perhaps without parallel in Commission proceedings.  It explores issues unrelated and irrelevant to transfer proceedings.  It is conclusive as to the very issues it purports to explore and it represents an abuse of the hearing process to raise and decide broad policy matters.

For these reasons we dissent to the order.





1.  The purpose of this appendix is to provide further elaboration of the Cowles, Perry, and Ridder media interests.  The magnitude of these combinations imposes on us the duty of inquiry respecting public interest standards which now exist or may emerge from the character and practices of these enterprises.


2.  Gardner Cowles is chairman of the board and editorial chairman of Cowles Communications, Inc. (CCI).  n1 He is the only person of record who owns more than 10 percent of the outstanding voting stock of that corporation.  The Gardner Cowles family owns an indeterminate percentage of CCI stock through various businesses and trusts.  Gardner Cowles is also president and publisher of the Des Moines Register & Tribune Co., which owns 9.9 percent of CCI stock.  John Cowles, Sr., is president and John Cowles, Jr., is vice president of the Minneapolis Star & Tribune Co.  That company lists as holders of 10 percent or more of its voting stock, John Cowles and John Cowles, Jr., the Des Monies Register & Tribune Co., the Minnesota Tribune Co., and the trustees of Cowles family trusts.  n2


n1 The following is a list of CCI's subsidiaries as of Dec. 31, 1967.  Cambridge Book Co., Inc.; Civic Reading Club, Inc.; Cowles Broadcasting Service, Inc.; Civl Service Publishing Corp.; College Publishing Corp.; Cowles Fla. Bcg., Inc.; Cowles National Organization Service. Ltd.; Cowles Magazines, S.A.R.L.; Dental Survey Publications, Inc; Educational Book Club. Inc.; Educational Book Club, Ltd.; The Family Circle, Inc.; Family Circle Overseas Corp.; Famil Circle Stores, Inc.; Family Circle Verlagsgesellschaft mbH; Gainesville Sun Publishing Co.; Hacienda San Miguel Corp.; Home Reader Service, Inc.; Cowles Home Reader Service, Ltd.; Home Reference Library, Inc.; Lakeland Ledger Publishing Corp.; Lancet Publications, Inc.; Modern Medicine Publications, Inc.; Professional Publications. Inc.; Modern Medicine of Australia Pty., Ltd; Modern Medicine of New Zealand, Ltd.; Modern Medicine (Properties) Pty., Ltd.; Magazines For Industry, Inc.; Books For Industry, Inc.; The Glass Publishing Co.; The ICF Publishing Co., Inc.; MMI Publications, Inc.; Mutual Readers League, Inc.; National Organization Service, Inc.; Southwestern Book Club, Inc.; Star Publishing Corp.; Starpress, Inc.; SUFSUN Co., Inc.; TRAVELVENTURES, Inc.; Universal Cable Vision, Inc.; Visual Panographics, Inc. Form 10-K, Dec. 31, 1967, Security Exchange Commission file No. 0-450.  Note: On Apr. 26, 1968, CCI, through a wholly owned subsidiary Magazines For Industry, Inc., acquired for stock substantially all of the assets of Bettendorf Publications, Inc.


n2 Public notice announcing the proposed transfer of KTVH-TV, broadcast over KTVH-TV, Jan. 29, 1969.


3.  The three competing television stations in Memphis, Tenn. (Cowles' WESH-TV; RKO General's WHBQ-TV; and Scripps-Howard's WMCT-TV), won the Total TV of Memphis, Inc., a cable system which serves their market area.  RKO General, in turn, controls Vumore Co. which has extensive CATV holdings in Arizona, Colorado, Kansas, Missouri, Texas, and Oklahoma.  Scripps-Howard owns 49 percent of Telerama, Inc., the CATV system situated in Cleveland, Ohio, suburbs.  n3


n3 "38 Television Factbook," services volume, 1968-69, pp. 574-a, 577-a.


4.  TV Communications Corp., in which CCI owns 160,000 shares, operates CATV systems in Fayetteville, Ark.; Athol, Dalton, Lenox, and Pittsfield, Mass.; Little Falls, Minn.; Claremont, N.H.; Olean, N.Y.; Coos Bay and Myrtle Point, Oreg.; Bradford, Clearfield, Pottsville, and Warren, Pa.; Bellows Falls, Vt.; Harrisonburg, Va.; and a franchise in Lee, Mass.  n4


n4 Ibid., p. 575-a.




5.  John H. Perry, Jr., board chairman and president of Perry Publications, Inc., and a director of CCI, is also one of three trustees under a trust indenture in which he is named life income beneficiary and retains testamentary power of appointment over one-half the corpus of the estate.  As of February 1, 1968, this trust reportedly owned 228,500 shares of the common capital stock of Cowles Communications, Inc.  n5


n5 "Cowles Communications, Inc., Annual Report," 1967.


6.  Of the 35 evening and 20 morning dailies in Florida, CCI publishes two evening newspapers: The Gainesville Sun, and the Lakeland Ledger.  Perry Publications, Inc., prints nine evening dailies: The West Palm Beach Times, the De Land Sun News, the Leesburg Commercial, the Melbourne Times, the Palatka News, the Panama City Herald, the Ocala Star-Banner, the Fort Pierce News Tribune (controlled by Indiana Rivers Newspapers, Inc., a company in which CCI has financial interest), and the Pensacola News.  Perry also publishes six daily morning newspapers: The Marianna Jackson County Floridan, the West Palm Beach Post, the Palm Beach News, the Panama City News, the Fort Walton Beach Daily Playground, and the Pensacola Journal.  n6


n6 "Ayer," 1968, pp. 198-217.


7.  The Cowles station in Daytona, Fla., WESH-TV, has over 50 percent net weekly circulation in Alachua County where CCI publishes the Gainesville Sun, and between 5 and 24 percent net weekly circulation in Polk County, where CCI also publishes the Lakeland Ledger.  n7 The grade B signal of WESH-TV covers five cities (De Land, Ocala, Leesburg, Melbourne, and Palatka) whose only newspaper is published by Perry. 


n7 "38 Television Factbook," stations volume, 1968-69, p. 154-b.


8.  The complexities of Cowles and Perry involvement have recently been compounded by the sale of many of Perry's newspapers to other large multimedia companies including CCI, Cox Industries, Inc., and Gannett Newspapers.  A New York Times article reports the following:


"The sale of 16 daily and 10 weekly newspapers owned or partly owned in Florida by John H. Perry and Associates is expected to be completed this week for a price estimated at $70-million.  The ownership of several of the dailies was transferred last week.


"The 16 daily newspapers have a combined circulation of about 265,000.  All of the dailies are being sold to out-of-state interests.  Thirty-six of Florida's 50 daily newspapers are now controlled or owned out of state.  These 36 dailies have a total circulation of 1,529,351.  The 14 owned by Floridians have a circulation of 409,598.  "The Perry chain was developed over several decades by John H. Perry and was inherited by John H. Perry Jr. of Palm Beach.


"The younger Mr. Perry is interested in developing techniques for living under water and has a program of research toward this under way in the Gulf Stream of the Atlantic Ocean now.




"Executives of the Perry company declined to release the sales price of the 16 dailies and the 10 weeklies.  The rumored price has been $70-million.

"'That is in the ball park,' said William Atterbury, treasurer of the chain.


"Gannett Newspapers, which has headquarters in Rochester, bought two of the Perry dailies -- The Pensacola Journal, with a 1968 circulation of 60,718, and The Pensacola News, with a circulation of 27,853.


"Gannett owns three other Florida dailies, Today, which was started in Brevard County near the Cape Kennedy Space Center in March 1966, and which had a circulation last year of 45,215; The Cocoa Tribune, with a circulation of 3,238, and the Titusville Star Advocate, 6,684.


"The James M. Cox newspapers of Dayton, Ohio, bought the three Perry newspapers at West Palm Beach -- The Post, with a circulation of 51,809; The Times, with 23,207 circulation; and The Palm Beach News, a daily during the winter and a weekly in the summer.


"The Cox papers also bought Palm Beach Life, a magazine, and a 47.5-percent interest in The Daytona Beach Journal and The Daytona Beach News, which have a combined circulation of 64,727.  The remaining 52.5 percent of the Daytona Beach papers will stay in the family of Herbert M. Davidson of Daytona Beach.

"The Cox Newspapers also own The Miami News.


"Freedom Newspapers of Santa An, Calif., bought five papers in the Perry chain -- The Fort Pierce News Tribune, with a circulation of 9,399; The Fort Walton Beach Playground Daily News, with a circulation of 10,761; The Panama City News, 10,067 circulation; The Panama City Herald, 13,593, and The Marianna Jackson County Floridan, 5,421.


"These are the first Florida papers to be bought by Freedom Newspapers, which is operated by R. C. Hoiles * * *


"Cowles Communications, Inc., of New York City bought the Ocala Star-Banner, with a circulation of 14,065 from the Perry chain.  Cowles Communications had previously bought The Gainesville Sun and The Lakeland Ledger from other Florida residents.


"Indian River Newspapers, Inc., also associated with the Cowles Publishing Company bought The Leesburg Commercial, with a circulation of 4,940, and The Palatka Daily News, 5,639 circulation.


"The Lake City Reporter, with a circulation of 1,977, was bought by two newspaper brokers, Taylor Communications, Inc. of Fort Worth, and the Bill Matthew Company of Clearwater, Fla.


"The Taylor and Matthew combine also bought the 10 Perry weeklies at Avon Park, Belle Glade, DeBary, Eustis, Fernandina Beach, Kissimmee, New Smyrna Beach, Quincy, Sebring, and Tavares, and took options until Jan. 1, 1970, on the two remaining Perry dailies, the Melbourne Times, circulation 10,238, and the De land Sun News, circulation 6,930.


"Several of the newspapers purchased also publish on Sunday." n8


n8 New York Times, July 11, 1969, p. 36, col. 2.




9.  Ridder Publications, Inc., through Northwest Publications, Inc., has common ownership interests with the Minneapolis Star & Tribune Co. in the licensee of WCCO-AM-FM-TV.  Besides the two newspapers that Northwest publishes in St. Paul, it also publishes the Duluth News-Tribune (morning), and the Herald (evening and Sunday).


10.  Northwest is also the licensee of WDSM-AM-TV in Duluth, Superior, the Nation's 115th television market.  In Minnesota's neighboring State of South Dakota, Northwest owns 80 percent of the Aberdeen News Co., publisher of the Aberdeen American News (evening and Sunday), and is also licensee of KSDN in that city.  WDSM contours overlap WCCO-AM-TV to the south and southwest, while KSDN overlaps WCCO-AM to the east.  n9 (See illustration 8.) It is thus possible to receive Ridder AM broadcast signals all the way from approximately Ely, Minn., in the north, to Storm Lake, Iowa, in the south; from Ironwood, Mich., in the east, to Pierre, S. Dak., in the west.  These AM signals encompass significant portions of six Midwestern States: Minnesota, Wiconsin, Michigan, Iowa, North Dakota, and South Dakota. 


n9 Commission records contain no information indicating that these broadcast facilities predate adoption of FCC duopoly rules.


11.  The Cowles-Ridder corporation, Midwest Radio-Television, Inc., is the sole owner of a CATV system, Rice Lake TV, located in Rice Lake, Wis.  This cable system carries all the Minneapolis-St. Paul television station signals, including WCCO-TV.  Rice Lake is located in Barron County, Wis., where WDSM-TV has a 5-24-percent net weekly circulation.  n10


n10 "38 Television Factbook," stations volume, 1968-69, p. 546-a.


12.  In addition to this highly concentrated midwestern regional broadcast market, Northwest Publications is also the licensee of KSSS in Colorado Springs, Colo., and owns in excess of 1 percent of the common capital stock in WHDH-AM-FM-TV, licensed to the Boston Herald Traveler Corp. in Boston, Mass.


13.  Ridder Publications prints the only two newspapers in San Jose, Calif., the Mercury (morning) and News (evening) (joint edition on Sunday).  With Standard Radio & Television Co., the licensee of KNTV also in San Jose, Northwest owns 50 percent of the CATV system, San Jose Cable TV Service.  This system operates in San Jose and its adjacent community of Campbell, Calif.


14.  Besides the newspapers already described, the Ridder family, through various subsidiaries, publishes or has interests in five newspapers in California, and one newspaper in each of the following States: New York, North Dakota, Indiana, and Washington.  n11 Ridder recently announced an agreement in principle to purchase the Boulder Daily Camera (evening).  n12 This newspaper is distributed within the service contour of Ridder's radio KSSS in Colorado Springs, Colo. 


n11 California newspapers: Long Beach Independent (morning) and Press Telegram (evening) (joint edition on Sunday); the Pasadena Independent (morning) and Star-News (evening) (joint edition on Sunday); the Garden Grove Orange County News (evening); New York Journal of Commerce (morning); Grand Forks Herald (morning); Gary Post-Tribune (evening); and the Seattle Times (evening).


n12 Editor and Publisher, Apr. 19, 1969, p. 112.


15.  The Ridder newspapers reach 1,143,747 people daily and have a Sunday circulation of 1,128,647.  n13


n13 Ayer, 1968.






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