You take the history of comparative applications that have been filed under this law since this law came into being. Who filed them? It is the wealthy fighting the wealthy. That is all it amounts to. And they are not speaking for the black community. They are not speaking for the minority community. They are only speaking for their own pocketbooks, and you substitute one entrepreneur for another entrepreneur. That is the point I am trying to get at, because I believe in the little people of America.

One thing about this bill, it is the most maligned bill I have ever heard discussed because people won't read it very carefully. They won't listen to what is being said here. I have people coming in here saying the airwaves belong to the public. That is true. I have never denied that. As a matter of fact, I have insisted upon that.

When I point to the individual who said that, I say name me one station that is owned by the public, and they can't answer that question. The license is owned by some very affluent person, and only another affluent person can come in.

So we have to wait for a comparative hearing whereby one individual or one entrepreneur comes in to fight another combine. I don't like that. I want the mass of the people to come in at the time of the renewal application and to say we don't believe this. The licensee hasn't lived up to his responsibility, and then let that FCC stand up and assume its responsibility and say this application should not be renewed. That is what I am for. But they haven't had the guts to do it. They come in here and they say, well, it has never been done. Whose fault is it? Is it my fault?

I have talked myself dry in trying to tell them what their responsibility is. But I say to you, sir, with the background and the history of your organization, don't let's drift into a Government that the only way that you can enforce the rights of the people is through threat. Mr. PEMBERTON. Mr. Chairman, I think your question gives me the opportunity to explain the basic purpose of our opposition to this bill. We are in total sympathy with the objectives you have stated. We think your bill will defeat those objectives.

Senator PASTORE. Well, I don't think so.

Mr. PEMBERTON. May Í have an opportunity to explain why I think it will?

Senator PASTORE. Of course.

Mr. PEMBERTON. It would not if broadcasting were regulated by a common carrier type system, I agree that is true, but I suggest that the system of regulating that has been adopted in the 1934 act for broadcasting is first superior to a common carrier type regulation. In fact, I think it would be very undesirable from the point of view of protection of freedom of speech and the competition of ideas for men's minds in this great democracy if the kind of intricate, detailed regulation that is the case of railroads and other public utilities were imposed upon broadcasting.

Senator PASTORE. That is another subject.

Mr. PEMBERTON. What is left, Mr. Chairman, what is left in the FCC if it may not regulate broadcasting as a common carrier is regulated? I submit that all the act has given the FCC is a tool for achieving the purposes of protection of the public interest and control of the United States, the public over the airwaves, is competition. It does not

regulate rights. Competition regulates rates. But because it is a natural monopoly, rates become quite high in the populated centers of the country. The demand for these channels is very high. The demand by advertisers for time on the airwaves is very high. In those channels broadcasting has become an enormously profitable industry.

We speak of stability. There is probably no more financially stable industry than broadcasting because of the profitability.

Now, how does the public interest in the best utilization of those limited channels get protected by the FCC?

The only tool it has is to choose between competing applicants for the same channel.

Senator PASTORE. Why do you say that? The tool that they have is to deny a renewal.

Mr. PEMBERTON. Exactly.

Senator PASTORE. I don't eliminate that in this bill.

Mr. PEMBERTON. At present they have that tool. But what wellfinanced broadcaster

Senator PASTORE. At present they have that tool but they don't exercise it because they wait for comparative applications, and that is where the mistake is made. They wait for a contest between giants and they eliminate the intercession of the public to come in and complain. That is the point.

Mr. PEMBERTON. To say that the FCC has failed to discharge its responsibility is to understate what Judge Burger said of the FCC in the WLBT case, and I couldn't agree with him more.

Senator PASTORE. I agree with him 100 percent, and they should have had the guts to deny it.

Mr. PEMBERTON. And finally it took Judge Burger to deny that license. But let's observe the fact that it took an enormous effort on the part of a civic group to accomplish what was accomplished in that case. Before the Pastore bill was adopted and after it is adopted, that same effort will be available to any group who can do it, but to say that it does not take substantial sums of money, that it does not take some accumulation of what we call affluence to challenge licenses this way is to ignore realities.

Senator PASTORE. I disagree with you.

Mr. PEMBERTON. The Survey of Broadcast Journalism just published by the Du Pont Foundation and Columbia University School of Journalism observed that it would probably take a quarter of a million dollars in the ordinary case to make one of these challenges.

Senator PASTORE. And what little American citizen has a quarter of a million dollars to get this thing started?

Mr. PEMBERTON. Mr. Chairman, what I have said to you is the method of controlling that you have advocated is going to cost a public citizen group a quarter of a million dollars. I suggest that there is one other way to get that quarter of a million dollars together besides calling upon a group of not very affluent citizens to make public spirited contributions out of their pocket, and that is to encourage as many as aspire to take their chance at getting a license to use the airwaves.

Senator PASTORE. That has never happened.

Mr. PEMBERTON. That happened for the first time last January, and that is what has got us all so excited. I suggest since the FCC

for the first time exercised the courage that the act calls for and refused to renew one license when a better applicant appeared, if we chop it down, we will gut the whole effectiveness of the system. What licensee in a profitable market today could not so effectively finance its programing, could not so effectively hire lawyers necessary to defend its license, that it could not meet the minimum standards that the FCC has required unless those minima became much higher than they are, and even if they became much higher than they are, we are going to see an increasing concentration of control of broadcasting by the media giants, we are going to freeze out every new applicant for a chance to broadcast in the major markets.

It is true that the blacks, the independents, can compete as they did 20 years ago for the new licenses, but the new channels are available only in sparsely populated areas. They are all taken by those who got there first in the major population centers. The effect of this bill will be to freeze the status quo in those centers. The one way that the Reverend Mr. Licorish's new entrepreneurs, whether they be blacks, Spanish Americans, whether they be any other source of broadcasting enterprise, can get into the major markets is to buy one of the major entrepreneurs.

This bill will effectively destroy the capacity that the act contemplated in 1934 of an individual or a group who says we can do it better and who can demonstrate to the convincement of the FCC that they can do it better to get into a channel that is already occupied by somebody pursuing it profitably enough, to be able to meet minimum criteria, whatever those minimums are.

Senator PASTORE. All right, sir.
Mr. PEMBERTON. I am grateful.

Senator PASTORE. Thank you very, very much, sir. I merely want to leave with this note. I have agreed with your organization 90 percent on the things you have done, but on the concerning this bill and your arguments made today-even though I respect your point of view-I respectfully disagree with it.

Mr. PEMBERTON. We agree with your statement of the objectives of the bill; we are convinced it will destroy those objectives.

Senator PASTORE. If it ever tends that way, I will be the first one to change it.

Mr. PEMBERTON. I think we would count on that, Senator. (The prepared statement follows:)

STATEMENT OF JOHN DE J. PAMBERTON

My name is John de J. Pamberton. I am Executive Director of the American Civil Liberties Union. I appear here today on behalf of the Union, the nation's leading non-partisan civil liberties organization. 1970 will mark the 50th anniversary of the ACLU and during the course of its history it has been deeply involved in matters affecting the communications industry.

The American Civil Liberties Union is opposed to S. 2004 because the adoption of this bill will give away a vital natural resource owned by the American people the broadcasting airwaves-to corporations who will be relieved of nearly all obligation to give the public anything in return, The bill's single purpose and seemingly innocent provision-which directs the Federal Communications Commission not to consider any competing application when an existing broadcaster's license is up for renewal-would destroy the present basis on which use of the airwaves is regulated and the public protected.

The airwaves are an enormously important resource for they have become the principal means of mass communication in our society. Their use is regulated

so that they may constantly be employed in a manner that best serves the public good. An essential feature of that public good is that they should provide their audience with a diversity of information and ideas-from which right answers and better ideas can be chosen. In today's period of unprecedented complexity the American people depend more than ever on an improved and more diverse offering of such information and ideas in order that problems may be dealt with in a democratic manner. There could be no worse time in which to do injury to the Federal Communications Act's regulatory system.

Broadcasting, like public transportation and public utilities, is a natural monopoly only one broadcaster can occupy one frequency in one geographic area at one time. Nature permits only a limited number of channels on the air waves and the FCC was created to regulate private access to those channels. Especially in the major population centers of the United States all or most available broadcasting channels are already licensed. Potential broadcasters with different programs to offer for a different public cannot get on the air. Variety suffers because of the limited number of broadcasting outlets and profitssoar.

Under the Communications Act applicants compete for licenses to broadcast and competition determines rates and profits. This system of regulation is unique among those governing natural monopoly services. The others, such as those regulating railroads, telephone and telegraph, gas and electricity, do so on a "common carrier" basis. That is, the rates charged and the kind of service that must be provided are rigidly controlled by the regulatory body, and the regulated facilities must be made available to all who seek to use them on a first-come, first-served basis. The Communications Act expressly prohibits "common carrier" treatment of broadcasting and the FCC cannot regulate rates nor prescribe or censor the content of broadcasting.

The present bill, S. 2004, will change the present system, fundamentally, by eliminating competition among applicants for licenses at the time when existing licenses are due to expire. (Every broadcasting license is limited to a maximum period of three years.) The only competition left will then be among applicants for unused channels and these are open almost entirely in sparsely populated areas. Without competition the Commission will be nearly powerless to influence the use of the public's airwaves in a manner better suited to meet the public's needs and that is the same as to say that the public will be powerless in this matter, for the Commission is the only agency through which the public has a voice in the use of this natural resource.

Let me try to make this truth clearer with a few specifics.

I

First, the Commission has almost no staff or money with which to monitor the performance of the nation's more than 7,000 broadcast licensees. Groups of private citizens may, of course, do this and the law permits them to compel an FCC hearing on license renewal if they have established probable cause to believe that the licensee has not used his channel in the public interest.1 But it is terribly expensive and time-consuming to do this and only the most egregious disregard of responsibility on the part of a broadcaster is likely to motivate the private contribution of such time and money.

Under present law there is one other potential source of private energy and money to insure that the law works, that the broadcaster will be held accountable for his performance at renewal time. That source is the competing applicant, the person or group which believes it can demonstrate that entrusting the channel to him for the next three years will better serve the public's needs. For that person the prospect of winning a license may justify the enormous expenditure required to contest it. Eliminate him, as the present bill will do, and you have eliminated virtually the only means available to make the Communications Act work.

In actual fact, the Commission has not always given the potential broadcaster that much incentive. Under its earlier practice, it favored the existing licensee at renewal time because he had a record of broadcasting performance. Until 1969 no renewal in recent times was even denied in favor of a competing appli

1 Office of Communication of the United Church of Christ v. FCC, 359 F. 2d 994 (App. D.C. 1966).

cant. But the Commission's decision in WHDH, Inc.' last January undertook to change that practice. In the WHDH decision the Commission said:

...

a past record within the bounds of average performance will be disregarded, since average performance is expected; and emphasis will be given to records which, because they are either quite good or very poor, give some indication of unusual performance in the future . . . the public interest is better served when the foundations for determining the best practicable service, as between a renewal and new applicant, are more nearly equal at their outset.

...

Only with this announcement that the Commission intended to make competition an effective tool of regulatory policy have serious competing applications for major channels begun to appear. And because these competing applications have begun to appear, the performance of existing licensees has begun to approach their potential. Thus, a veteran observer, Les Brown, was able to write in Variety magazine on August 20, 1969

The recent wave of license strikes . . . has without question raised the level of program aspiration in most major markets, and particularly in those where the jump applications were filed. There is on the whole discernibly more local involvement, more community affairs and educational programming, more news and discussion and more showcasing of minority talent since the license strikes than there were before.

Why... have the NBC-owned stations suddenly gone in for editorializing...? Why, too, did WCBS-TV New York suddenly add the editorial to its 11 p.m. newscast after years of relegating it to the earlier hours... ? And why did WABC-TV choose just this time to expand its news by an extra half hour, and WCBS-TV to enlarge its 1 a.m. news?

Aside from these traces of deeper local involvement-for to editorialize regularly and effectively requires immersion in the multifarious problems of the community-there is the case of New York's WPIX-TV, which has beefed up on all public affairs and educational fronts from the day its license came under challenge by a group calling itself Forum Communications.

66

As the New York Times editorialized on February 9, 1969, “. . . putting the networks and the stations on their best behavior is the first order of business for franchised government airwaves.”

Fears have been expressed that the WHDH policy will jeopardize the investments necessary for high quality broadcasting—or that licensees will not "do [their] best work when [they're] scared to death." But the facts do not bear out these fears. The WHDH doctrine will have no effect on competition for less profitable channels in minor markets; there is no economic incentive to compete for them. Only the powerful channels in densely populated centers will attract applicants desiring to share in the profitability of those markets. The present licensees of these channels are the most powerful investors in broadcasting: the networks, the chains, the conglomerates. They are well able to protect their investments. And their fear of competition is expressed in performance, not paralysis.

Broadcasting has become enormously profitable in the 1960s. Speaking of 1966 and 1968 figures which appeared in the Annual Reports of the FCC, Earl K. Moore, Esq. told this Committee in August that:

the average television station recovers its full investment twice over and earns a reasonable return in addition in one three-year renewal term. (Emphasis supplied.)

Since the filing of competing applications will happen only to the most profitable broadcasters, neither fairness nor the public interest provides cause for concern at the application of the WHDH doctrine.

II

Second, the WHDH decision, despite its language which I have quoted above, did not actually deny a renewal on the basis of the incumbent's programming performance. In fact the Commission has not yet rendered such a decision at any time in recent history. After stating the basis on which it would judge competing program proposals in the future, the Commission finally decided that WHDH-TV and its competitors were equally entitled to the license insofar as programming was concerned. The principal ground on which WHDH's license was awarded 2 Matter of WHDH, Inc., 16 FCC 2d 1 (1969).