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In Re Application of THE NATIONAL BROADCASTING CO.,ASSIGNOR and OHIO COMMUNICATIONS, INC., ASSIGNEE For Assignment of License of Stations WKYC-AM and FM, Cleveland, Ohio


BAL-7553 and BALH-1656




37 F.C.C.2d 657




OCTOBER 5, 1972



 [*657]  MR. KENNETH A. BICHL, c/o American Federation of Television and Radio Artists, 1276 West 3rd Street, Cleveland, Ohio

DEAR MR. BICHL: This is with reference to your letters of June 5, 1972 and August 1, 1972 objecting to the assignment of the licenses of Stations WKYC-AM&FM, Cleveland, Ohio from The National Broadcasting Company (NBC) to Ohio Communications, Inc. (Ohio) (BAL-7553; BALH-1656).

In your June 5, 1972 letter, the following points in support of the objection were made:

1.  Ohio proposes a decrease in news programming from 12% to 8%; a decrease in public affairs programming from 8.7% to 4.0%; and a decrease in "all other" programming from 3.9% to 3.5%.

2.  Ohio proposes to broadcast 25% less local news than NBC is currently broadcasting.

3.  Ohio cannot render the same outstanding news service to the public that NBC has been rendering in view of its proposed reduction in news staff.  You contend the public is entitled to this outstanding news service from the area's most powerful radio station (50 kw Clear Channel).

4.  The financing arrangement proposed by Ohio, whereby 50% of the station's net revenue would be paid to lending banks gives these lending banks an illegal degree of control over the licensee.

5.  The principals of Ohio are also the principals in firms which own the professional athletic teams in Cleveland.  The assignment application indicates that Ohio hopes to broadcast the games of these teams and make reference to this association in station identification announcements, i.e., voice of the [team].  You contend this reduces the station to a "federally licensed promotional tool of the owners".

In your letter of August 1, 1972, you reiterated the above points and made the following additional points:

1.  Ohio intends to broadcast portions of its public affairs programming on Sunday.  You contend that public affairs programming should be broadcast at some other time.

 [*658]  2.  You note that in an amendment by Ohio concerning additional financing, the bank must approve the person to be chief executive of Ohio if it is to be anyone other than the present person -- Mr. Nick Mileti.

3.  The separation of WKYC-AM&FM from WKYC-TV does not, as assignee claims, advance important Commission policies.

The Commission has reviewed the WKYC-AM&FM assignment applications, amendments thereto and responses by the applicants to your objections and finds that the proposed assignment is in the public interest.  While it is true, that there will be a reduction in overall news broadcasting from 12% to 8%, we do not believe that this raises a substantial question of fact which would require a hearing.  This is particularly so in this case, where the present licensee (NBC) is able to maintain a large combined staff for AM/FM/TV and other network purposes, while on the other hand the assignee is proposing an independent AM/FM operation.  Regarding "Public Affairs" and "All Other" non-entertainment programming, we find that the assignee's proposal is substantially the same as that actually broadcast by NBC.  (On an adjusted bases, NBC broadcasts 4.5% Public Affairs and 3.9% "All Others" while the assignee proposes 4.0% and 3.5% respectively.) The fact that WKYC is a 50 kw Clear Channel station does not affect these considerations.  As for Ohio's proposal to broadcast public affairs programs on Sundays, such decisions are left to the discretion of the licensee and not altered by the Commission unless a substantial showing has been made that broadcasting these programs on Sunday is contrary to the public interest.  Bare allegations, such as yours, are insufficient and do not constitute the substantial showing necessary to require a hearing on this matter.

The financial arrangement, which no longer provides for bank approval of the chief executive, provides for a fixed repayment schedule by Ohio of a specific sum however, if station net earnings should reach a specified minimum, then 50% of the net earnings would be paid to the bank and applied against the fixed amount due the bank.  The Commission finds no reason to conclude that this arrangement creates the risk of potential influence or control by the bank over Ohio.  With regard to the ownership of Cleveland athletic teams by Ohio principals, Ohio states that all Cleveland stations will be given a full and fair opportunity to obtain the broadcast rights of such teams, and to the extent Ohio obtains these rights, their promotion of the sporting events will be substantially the same as might be expected of any station under similar circumstances.

Finally, it is clear that the separation of WKYC-AM&FM from WKYC-TV advances the Commission's multiple ownership policies in view of the fact that the Commission's rules were recently amended to prohibit the future formation of such ownership combinations.  First Report and Order in Docket 18110, 22 FCC 2d 306 (1970). The Commission, having found that Ohio Communications, Inc. is fully qualified and that a grant of the application would serve the public interest, convenience and necessity, has, this 5th day of October, granted the assignment of the licenses of Stations WKYC-AM&FM to Ohio Communications, Inc.

 [*659]  Commissioners Robert E. Lee and Reid absent; Commissioner Johnson dissenting and issuing a statement; Commissioners H. Rex Lee and Wiley concurring.








Appearing eager to effectuate the policies underlying our multiple ownership rules, the Commission today approves the National Broadcasting Company's assignment of stations WKYC-AM and FM to Ohio Communications, Inc.  While I certainly approve of our one-to-a-market rule, and would normally endorse any voluntary action by the networks to rid themselves of offending broadcast interest, I believe that, by giving today's assignment its blessing, the majority has helped a bad situation deteriorate.

Ohio Communications, Inc., is a brand new corporation -- designed for the sole purpose of operating stations WKYC-AM and FM.  The President, who is also the corporation's major stockholder, has substantial financial interests in several of Ohio's professional sports teams.  For this reason, and also because the assignee proposes to broadcast less news, public affairs, and other non-entertainment programming than did NBC, the Cleveland Local of the American Federation of Television and Radio Artists (AFTRA) opposes this assignment.

The majority has no problems with the assignee's intention to broadcast less news, public affairs, and non-entertainment programming.  Indeed, the majority has the gall to assert that the assignee's proposals are "fully consistent with Commission policies" -- policies which are not here, and have never been, enunciated.

Entering this void which the majority has stubbornly refused to fill, former Commissioner Kenneth Cox and I proposed, in 1968, a subsistence level of news, public affairs, and non-entertainment programming below which no station's audience should have to suffer.  See Oklahoma Renewal Study, 14 FCC 2d 1 (1968). That minimum standard -- and, indeed, it is a very minimum standard -- would have provided that licensees must broadcast at least 5% news, 1% public affairs, and 5% other non-entertainment programming.  The majority rejected our suggestion in 1968 and, with a consistency which is seldom seen around here, has rejected it again today.  For, not only has Ohio Communications reduced to a ridiculously meager level the amount of news and public affairs it intends to broadcast, but it also proposes to allocate only 3.5% of its stations' time to other non-entertainment programming.  Without even a moment's hesitation, the majority stamps this arrangement with approval.

Nor is the majority troubled by the assignee's proposal to broadcast most of what paltry public affairs it does contemplate on Sundays -- when it will do the least damage to the assignee's commercial interests and when it will, no doubt, attract the smallest audience.  In classic fashion, the majority begs the crucial "public interest" question by  [*660]  satisfying itself that programming "decisions are left to the discretion of the licensee and not altered by the Commission unless not in the public interest."

But perhaps more baffling is the majority's haughty indifference to the danger 1) that the assignee's programming decisions may well be subject to outside influence, and 2) that the assignee's sports interests might carry anti-competitive implications.

First, the assignee's loan agreements provide for certain fixed payments to reduce the borrowings; those agreements also provide that if assignee's net earnings exceed a certain amount, then 50% of said earnings will be paid to the banks to satisfy the loans.  The obvious danger in such an arrangement is the possibility that the banks, desirous of having their loans repaid expeditiously from net earnings, might encourage the assignee to devote its broadcast time to what the banks believe are the most lucrative forms of programming.  There is also the substantial risk that the content of whatever meager news and public affairs programs are presented may be influenced by the financial interests of the banks.

In The Yankee Network, Inc., 13 FCC 2d 1014 (1949), the Commission refused to tolerate such a risk of outside programming influence, stating that an assignee's freedom to operate its station in the public interest "carries with it the duty of independent decision." Id. at 1020.  The majority, however, maintains that under the instant assignee's financial agreement, the banks will not exercise influence over programming because said banks would lose interest if the loans were repaid in advance of the fixed payment schedule.  That, of course, is a highly dubious assumption in that a more rapid repayment of the loans (at a fixed rate of interest), in the context of an economy with rising interest rates, could well prove more advantageous to the banks.

Second, the assignee's principal stockholder and president also controls the local professional sports teams and plans to air their games over his stations.  Though the majority at least recognizes the possibility that such an arrangement could have anti-competitive effects, the majority is, nevertheless, content with the fact that "assignee has indicated that steps will be taken to prevent such an occurrence." Nowhere, however, are these "steps" outlined.

The Justice Department has recently sued the networks, arguing that their ownership of the production centers from which they purchase programming violates the antitrust laws.  Just as the networks' ownership patterns may foreclose other broadcasters from obtaining programs from such production centers, so the assignee's ownership of the local sports teams might foreclose other broadcasters from having a fair opportunity to air those teams' games.

In the face of such blatant antitrust ramifications, the majority should surely demand more from the assignee than its vague assurances that it will not engage in anti-competitive conduct.

The assignment of stations WKYC-AM and FM to Ohio Communications is thus rampant with problems, problems which may well return to haunt this Commission if, indeed, this Commission is truly concerned about the public interest.  It simply makes no sense to sanction  [*661]  this transfer on the sole ground that NBC is doing some good by divesting itself of some of its broadcast interests.  For that good has been more than offset by the problems inherent in Ohio Communication's insidious financial arrangements and programming proposals.  Any one of these defects should give the Commission pause.  That even this combination of defects fails to move the Commission, however, is perhaps a classic illustration of the anything-for-business stance that has come to characterize this "regulatory" agency.

I think NBC should be encouraged to find another buyer, one that would better serve the Cleveland public.  I dissent.

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