been written, mainly by economists, advocating this approach. Whether or not this should be done seems clearly to be a matter of fundamental policy and this procedure could not be followed under the statutes as they are now written. It would require a substantial revision of the Communications Act to establish such a procedure.

If broadcasting licenses were auctioned to the highest bidder then it would appear that there probably would be a property, or quasi-property, right in these licenses. Such a procedure probably would involve many of the vices that are erroneously attributed to the public interest procedure established by S. 2004. Some of the difficulties with such a proçedure are fairly obvious. The wealthiest would get the most and best licenses. Minority groups and the economically underprivileged would be greatly disadvantaged. The principles established in the recent opinion of the Supreme Court in Red Lion Broadcasting v. FCC, 395 US 367, would be undercut and probably substantially altered. In any event, such a procedure is a radically different one than any now permitted by the Communications Act or proposed, so far as I am aware, by any substantial group concerned with broadcasting. Such a procedure is directly contrary to the kind of procedure provided by S. 2004, which is based specifically and directly on a public interest standard applied to the past performance of a broadcast licensee. 4. Q. If the problem is the lack of criteria shouldn't the committee work on criteria rather than on changing the procedure depriving newcomers of the opportunity to broadcast?

A. If the Communications Subcommittee is capable of devising specific criteria for deciding broadcast license renewal cases or comparative application cases it would certainly be desirable for it to do so. However, the comparative hearing cases have been the focus of criticism of the FCC for decades. The lack of intelligible criteria in comparative cases has been condemned by lawyers, licensees, scholars and Commissioners, including those Commissioners now opposing S. 2004. Despite this during the 35 years since passage of the Communications Act no one has been able to formulate specific and intelligible criteria for decision of comparative hearing cases. Surely it is necessary that there be a more rational and orderly procedure for determining license renewal proceedings if the public is to be served by a broadcasting industry, and there is little prospect that acceptable criteria will be formulated or promulgated in the foreseeable future. The procedure established by S. 2004 does not deprive newcomers of the opportunity to secure broadcasting licenses but does establish an orderly and rational procedure for determining what frequency assignments are and should be available to newcomers. They are a very large number of both television and radio channels that are available and have not been assigned. These are the ones that are thought to be less desirable because they are in the FM or UHF band. Nevertheless they are available for those who desire to be heard through the broadcasting media and are able and willing to provide the necessary capital and effort to establish stations. The only opportunity that would be denied anyone under S. 2004 is the opportunity to come in and take an assignment away from a licensee who has been operating in the public interest as determined by the FCC. No reason is apparent why this kind of opportunity should be provided, particularly under the unpredictable and gambling procedure established by the WHDH decision.

5. Q. Isn't it just as much an inhibition on freedom of speech to give one guy the television license and exclude, all the others? What about the First Amendment rights of the man who wants to broadcast?

A. Whether awarding a television license to one person and denying it to others who may seek it is or is not an inhibition on freedom of speech is really a philosophical question. Basically, this has nothing to do with S. 2004. Whether or not S. 2004 is enacted only one licensee can broadcast at any one time on one broadcasting channel in a given geographical location. The fact that this does necessarily and inescapably involve a limitation on the opportunity for expression by others over the broadcasting media is the problem dealt with by the Supreme Court in the Red Lion Broadcasting case, 395 US 367. Undoubtedly in the large metropolitan areas there are many who would like to be heard on the broadcast media (not merely on television). Running a license lottery or playing a game of renewal roulette in order to award a single license according to gambler's chances does not give any more people the right to be heard through the broadcasting media or solve any of the problems of the First Amendment rights of those who desire so to speak.

The First Amendment rights of those who desire to be heard on the broadcast media have been dealt with over a period of years by the FCC and have re

cently been enunciated in positive terms by the Supreme Court in the Red Lion Broadcasting case, supra. This provides, in substance that the licensee, whoever he may be, must act as a fiduciary for the public and permit all sides of controversial issues to be heard. This is consistent with the public interest standard of S. 2004. It is inconsistent with the procedure established under the WHDH rule, which makes license renewal dependent upon the whim of the FCC, and therefore abridges the First Amendment rights of everyone, including the one who temporarily holds the license by virtue of FCC favor.

6. Q. The First Amendment was drafted to protect against state granted communications monopolies. The British Crown imposed censorship by granting a publishing monopoly to selected private printers. How does that differ from granting a state monopoly to selected private broadcaster?

A. If this question implies that there is at present a state monopoly granted to selected private broadcasters I believe that it is in error. By virtue of the physical characteristics of broadcasting no more than one station can broadcast on a specified frequency channel at the same time and at the same geographical location or within a certain range of that location. In order to permit broadcasting to be conducted it is necessary for the government to assign frequencies and other technical parameter of broadcasting stations. However, this is not a monopoly in any substantial sense, any more than permitting the private ownership and occupancy of a specified plot of land involves monopoly. The government permits private ownership of particular plots of land and permits the owners to exclude others from privately owned land. However, there is no monopoly unless the government by grant, or otherwise, puts so much land into the hands of one or a few owners that the rest of the population is denied the opportunity to find any place to live or rest.

In the field of broadcasting the FCC has effectively prevented any such monopoly. No single licensee can hold more than 7 licenses in any service, and no more than 5 VHF licenses, and there are literally thousands of different broadcast licensees throughout the United States. Furthermore, no single licensee can have more than one license in the same service with overlapping contours of reception area. Consequently, every sizable community in the United States has numerous competitive broadcasting sources and the large metropolitan areas have literally hundreds of competitive broadcasting sources. A sketch of the scope of diversity of broadcast news sources is given in a report of mine which appears in the Hearing Record at p. 185 et seq. Insofar as the question of monopoly and diversity in broadcasting sources is concerned, the effect of the WHDH rule will be to increase monopolistic concentration whereas the effect of S. 2004 will be to increase diversity, as is demonstrated in detail in points 7 and 8 of my Supplementary Statement. To summarize the points made there, the problem of concentration and diversity is essentially a problem of national news and programming sources. The instability created by the WHDH rule will inevitably require individual licensees to rely more and more on the existing national news and programming sources, principally the networks. The public interest standard established by S. 2004 will permit the establishment of stable and strong individual licensees who will be able to develop additional separate and independent news and programming sources. As indicated in my Supplementary Statement, S. 2004 will thus tend to increase diversity in broadcasting news and programming sources while the WHDH rule will tend to decrease it. In any event, the significant aspect of the problem posed by the foregoing question is that the British Crown imposed censorship by granting a public monopoly to selected private printers and that the First Amendment was drafted to prevent such censorship. The First Amendment was directed against the censorship, not against the monopoly as such. The censorship resulted from the fact that the monopoly was granted to those regarded as friends of the Crown and denied to those regarded as unfriendly and that it was revocable at the whim of the Crown. The procedure established by the FCC under the WHDH rule will not only permit but inevitably result in the granting of licenses to those regarded as congenial to the views of the FCC and the denial of licenses to those regarded as uncongenial, and renewal will depend on the whim of the Commission. As the question suggests, this is precisely the kind of situation that the First Amendment was intended to prevent. On the other hand, S. 2004 will establish a public interest standard, subject to evidentiary hearings based upon past record of performance and subject to judicial review. Thus the WHDH rule of the FCC essentially tends toward, if it does not wholly establish, de facto censorship through the control of broadcasting licenses by the FCC, while the public interest standard established

by S. 2004 tends to prevent this and, therefore, will give practical effect to the First Amendment guarantees of free speech and free press in the field of broadcasting. Since I assume these questions were asked for the record, I am taking the liberty of sending a copy of this letter to Senator Pastore.

Respectfully yours,

Senator PASTORE. Thank you very much.

LEE LOEVINGER.

Mr. Frank B. Estes, president of the New Hampshire Association of Broadcasters, Inc.

STATEMENT OF FRANK B. ESTES, CONCORD, N.H.

Mr. ESTES. Mr. Chairman, I am now the immediate past president rather than the president.

Senator PASTORE. You are welcome in any capacity.

Mr. ESTES. First of all, to let the people know who I am, I am Frank B. Estes. I own 100 percent of the Capitol Broadcasting Corp., the licensee of WKXL in Concord, N.H. I also own 79 percent of the Coastal Broadcasting Co., Inc., who is the licensee of WKXR, in Exeter, N.H.

I am also the immediate past president of the "New Hampshire Association of Broadcasters," as well as "Director of District I for the CBS Radio Affiliates," and a member of the "Small Market Committee" of NAB.

Concord, N.H., has a population of 30,000 people so I speak for, and as, a small market broadcaster. I am in my 22d year of experience in the broadcast field. I started in as a salesman and worked my way up until I was manager of the station I was employed at and eventually became vice president of the corporation. After 11 years of experience, holding a good job with security, I decided to pursue the American spirit of free enterprise and buy my own station. I purchased the stock of the Capitol Broadcasting Corp., Inc., licensee of WKXL in Concord, N.H.

WKXL had been on the air since June 1946, but through the years, the physical condition of the station deteriorated substantially, and the station became less and less of an asset to the community, or as a medium for serving the public.

It was really run down, but I felt that I could build it into a good station serving the area as it should and realize a financial gain for myself if successful. I raised as much money as I could but had to go to a bank for a loan to finance the major share.

Based upon the declining earning record of the station during its first 11 years, I am sure that the Concord National Bank, which was the institution that financed my purchasing of the corporation, would never have entered into a financial arrangement for the repayment of the money needed to purchase the corporation if the loan had to be paid off in a 3-year period.

The physical condition and acceptance of the station in the market was so bad that if I had not expected that I would have been given the opportunity to operate longer than a 3-year period, I never would have purchased the station. Too much work had to be done in building up the integrity, sales and image of the station, and this could not be done within a 3-year period.

I am pleased to read into the testimony three letters * * the Concord National Bank:

one from

DEAR FRANK: As a result of our recent discussion, I have reviewed the information in our files relative to the financial condition of Capitol Broadcasting Corporation, Inc., as conditions existed in 1957. Although it is a hypothetical question, inasmuch as we did not finance the purchase of the Corporation over a three-year period, I do not believe we could have granted you the loan which assisted you in purchasing WKXL, had we expected you had to repay the loan in its entirey within 36 months. Based upon the poor financial condition of the Corporation and the poor earnings history the station had experienced in its previous eleven-year history, I doubt that we would have made the loan.

It gives me a great deal of pleasure to realize, however, that in our making the loan, it was a wise decision, and that you have been able to upgrade the station, both in its financial standing and stability and in its service to the Greater Concord Area. We are also proud of the active interest and participation you have taken in the Greater Concord Area, with the result that WKXL has been built into a respected and reliable source of information.

Signed Francis N. Southworth, President, Concord National Bank, Concord. This letter from Concord National Bank indicates the verification of the probability, of inability to borrow money based upon the poor record of the Corporation and the condition in which the Capitol Broadcasting Corp. was in 1957 when I purchased it.

I am also pleased to read into my remarks letters from the Concord Regional Development Corp. and the city planning board of the city of Concord:

DEAR FRANK: As a result of our recent discussion relative to your appearing before the Senate Commerce Committee as a witness to Bill S-2004, I thought you might be interested in my thoughts relative to the fine job you are doing at WKXL in serving the Greater Concord Area.

Having lived in the City of Concord for the past 40 years and been involved in various capacities of community service, I am familiar first hand with the history of WKXL.

We are pleased with the results you have achieved since owning the station, because you have taken an active interest in the community. I feel, as a direct result, you have improved the overall service to the Greater Concord Area. The many innovations you have introduced in your 12 years of ownership have proven to be very worthwhile. We enjoy and appreciate your station in Concord.

Through the years, you have continuously improved your physical plant and upgraded your personnel. You continue to find new ways to bring more exposure to the Greater Concord Area through telephone call-in shows, in-depth interviews, as well as your present attempt to provide an FM facility for Concord, even through a channel is not assigned to the State Capital.

I feel sure that if you had not had the expectation of a licenser beyond the initial three-year period, you would not have considered purchasing WKXL; and therefore, Concord would not have enjoyed the good service you have provided it. We undoubtedly would have continued to receive the less professional service that we experienced prior to your ownership. If you desire, please feel free to use this letter as part of your testimony before the Committee.

ALBERT S. BAKER,

Executive Director, Concord Regional Development Corporation.

DEAR FRANK: In light of your forthcoming appearance as a witness before the Commerce Committee of the United States Senate in connection with S-2004, I thought it might be pertinent to summarize my observations following our recent discussion on the merits of this legislation.

Having held the position of Planning Director of Concord for more than three decades, I am familiar with the history of WKXL.

As the result of your active interest and participation in the community, you have made WKXL a most effective medium to keep people informed.

Your broadcasting of City Council monthly meetings in their entirety is a good example. I know from first hand experience of the broad public reaction and

response that these programs generate having received many comments to statements made before the council in my capacity as a city official. Through the years, you have improved your facilities and upgraded your personnel. Recalling your early years of station operation, and comparing them with the current high quality of service and general public acceptance, I am led to the conclusion that Concord would not be enjoying the excellent job you and WKXL are doing in serving the area if your license had been limited to a three-year period. GUSTAF H. LEHTINEN,

Planning Director of City Planning Board, Concord.

I think both these latter letters speak for themselves in indicating the success we have achieved in gaining acceptance in the State capital of New Hampshire through serving the public interests.

I feel sure that if I had not expected the opportunity to exist to operate the station for a period longer than 3 years, the city of Concord might conceivably have continued to receive the poor service that it was experiencing prior to my purchasing the station.

After organizing WKXL into a well-respected station serving the greater Concord area, we built a new station in 1966 in Exeter, N.H., located in the county of Rockingham, the fastest growing county in the State of New Hampshire, and the second fastest growing county in the United States, second only to Los Angeles County in California, according to the statistics of the New Hampshire Planning and Development Commission. We recognized the need of a broadcast service to serve this community of 8,000 and this fast-growing area.

We know from firsthand experience that we had to operate this station for 34 months in the red before we were able to financially turn the corner on a per month basis. With this information at hand and having just experienced the 34th month in March of 1969, we realize the necessity of a broadcaster in building a new station, having the opportunity to continue in business for a period longer than 3 years. If we had not expected to be given the opportunity to continue in business for a period of longer than 3 years, I am sure the Exeter Banking Co., which provided the money and made it possible for us to build this new station, would not have cooperated with us.

If we did not have the cooperation of such a financial institution, we would not have been in a position to build the new station, and therefore, Rockingham County would have been deprived of its first and only daily means of communication emanating from the center of the county and truly serving this fast-growing area, the entire Rockingham County region.

With these two firsthand experiences dealing specifically with the financial end of building and operating radio stations, I heartily endorse bill S. 2004 and ask your adoption of it in order that the listening public will be in a position of continuing to receive improved and professional broadcasting service from people who are interested in serving the area licensed, for the long term.

I am going to be brief and will try not to duplicate testimony that has been presented before.

My testimony will deal with the difficulty of buying or building a radio station and financially accomplishing it in a 3-year period as well as truly serving the public and the community which isn't accomplished overnight or with promises.

My experience tells me you can't really serve a market in 3 years, because it takes 2 years to know the market.

33-229-70-pt. 2- -8