Senator Moss. I don't know that I have any questions. I'm sorry I came a bit late and have just had time to skim your written statement.

I appreciate what you say about the spur that is placed by this threat or application for the license by other competitors. But I also am very concerned about the constant threat that hangs over those who have made a very considerable investment.

I believe, as I think the chairman has indicated, that the real problem is how do you make sure that the FCC does its job effectively in deciding the public interest service of the broadcaster rather than throw it the other way around and just leave it open to elements that really have no capacity to execute a license but would scamper around and try to get the money and to go ahead and do it.

I can see that this is a hard road to block through a very thorny bush. I'm very concerned at the insecurity and uncertainty that does hang over a licensee who doesn't know until his time has expired whether he is going to have to defend it against other applicants or whether because he has performed adequately could expect to continue. Reverened MCLAUGHLIN. In response to that, Mr. Moss, I have argued in my statement that the policing activity of the station must be undertaken by a competitor because the FCC doesn't have the resources, and it is almost inconceivable to me with 7,000 renewals occurring triennually it could ever have the resources, for the type of policing that would be required that it would justify it in withholding a renewal.

You speak about irresponsible elements coming forward, but the proposals that I have seen and the monitoring records that I have seen-I have reference specifically to the petition to deny of the WLBT case these are exhaustive petitions that would not be undertaken for reasons that are irresponsible or frivolous.

In other words, the FCC is entirely at liberty to inspect rigorously and to ascertain and to authenticate and to certify that the records which have been submitted, monitoring records by the petitioner to deny or by the challenger are truly authentic.

So, I don't see, therefore, why the licensee is unduly threatened. I think the licensee is unduly threatened if he feels that the WHDH decision in which the incumbent is not given any presumption in favor would be enforceable on him. I think this is an unfortunate conclusion for him to draw.

The FCC has said, in effect, this not a normative decision for the average licensee's renewal, but the fact remains that he does need some

assurance.

In the closing section of my paper, Mr. Moss, I have submitted an outline of what I think could be done to protect the licensee but at the same time not kill this spur to broadcasting reform that is currently taking place.

Senator Moss. If your applicants have this, as you say, very exhaustive monitoring procedure and very large report and if the FCC has to verify these factors, then, we still are against having a very large personnel, are we not, in the FCC in order to make this determination? Reverened MCLAUGHLIN. Oh, no; we are not. I think we all agree here that the FCC is seriously understaffed. This situation is an abomination. The workload of this group-I have heard working in pairs there is something like eight to 10 people-Mr. Zapple can correct me

on this who have the job in the Broadcast Bureau of inspecting these records at renewal time. How can you possibly do this when you are renewing 7,000 licensees every 3 years?

Senator Moss. We agree on that, they are woefully understaffed. Reverend MCLAUGHLIN. The point I made with Mr. Pastore was that if we had, say, unlimited resources and personnel in the FCC, would we want the Washington staff, some of them bureaucrats, invading or moving into local areas from the outside and becoming enmeshed in the competitive system? Would we not rather let the free function of competition itself in which the Government protects the rights of all, protect that free function process as a neutral principle, would not we rather prefer that than having FCC staffers doing the type of policing that is done by petitioners to deny or by challengers? My concluding point here is, and I know there is another witness waiting, and the meeting is going to be adjourned-it is going to be kind of a bobtailed session from what Senator Pastore told me. My concluding point is a conscientious broadcaster has nothing to fear. Even by the present rule I don't think he has very much to fear.

I don't believe the FCC believes to be normative the WHDH formula, that your programing has to be superior if there is a component of diversification. I don't think they take it that seriously. They have flatly said that this is not to be diagnostic for the average licensee.

But I concede that the broadcaster has a legitimate gripe here, and that is why I formulated the concluding section, an alternative to the Pastore bill.

Senator Moss. Thank you for a very thoughtful presentation, and I shall read it very carefully.

Senator Baker.

Senator BAKER. If I may for just a moment, I have a question that I would like to put for my own clarification.

First, let me say that I commend you on a fine statement and even finer presentation in colloquy with the chairman and Senator Moss. It was most stimulating in helping me put things in perspective, especially the inevitable balancing of equities and properties of the public interest and property interests, which are not as significant, and which, on the other hand, must be taken into account.

I am intrigued by the general proposition that the element of traditional competitive necessity is the best monitor and the best policeman available in this situation, as I happen to believe in most situations, and as by status we have constituted the Federal Communications Commission the arbiter of the public interest.

Therefore, competitiveness is by a determination of the FCC. This brings me to the final question, of whether or not the laws that exist or the amendment that is proposed by the chairman or the very pertinent detailed suggestion that you have made this morning creates more effective and more useful competition and thus creates a climate favorable to a greater public interest.

With that rather long preamble, I want to ask you this specific question.

Is it not possible, and I do not advocate a position here, that under the chairman's amendment, especially on page 2, that the full element of competition, even by the intervention of third parties who might never be applicants for station licenses, is protected, in fact encouraged,

in lines 2 through 4 where it says, "If the Commission determines after a hearing that a grant of the application of a renewal applicant would not be in the public interest"? This clearly implies that at the time of renewal the applicant for renewal will make his presentation and that the public in terms of private citizen groups presumably who might later become applicants if the license is not renewed, could all be heard without the necessity of employing engineers, market analysts, and the other specific routine paraphernalia that go into the preparation of a competitive application.

I'm not implying an answer or a position or a prejudice on my part. I would frankly like to hear your reaction to that suggestion.

Reverend MCLAUGHLIN. My reaction to that, to file a petition to deny is a very simple proceeding. If I recall correctly, the original WBLT petition to deny was a page and a half. Then it evolved into something bigger.

In the WTOP case here in Washington, it is my understanding that this was essentially a very stark. bare petition. It was nonenforced. So, if you want to mount an effective petition to deny, this requires a degree of elaboration, a degree of monitoring, a degree of research, that must be very comprehensive.

Earl Moore, appearing here at the first session of hearings, said that in public service announcements which number into the thousands under the WLBT station, they had to find out what the organization was that was receiving the sustaining time from the public service announcement to determin whether that organzation was integrated or segregated and so forth. He said this took thousands of hours, you

see.

So, to mount an effective petition to deny requires this comprehensiveness and this detail. If you do not have this comprehensiveness and detail, if you do not have an effective petition to deny, the broadcasters won't take it seriously.

Senator BAKER. May I interrupt you that that point to define my suggestion a little more.

Senator PASTORE. Will the Senator yield for just a moment?
Senator BAKER. Yes.

Senator PASTORE. Will you forgive me if I leave you? We have a bill pending on the flood, an amendment which has to do with determination after 40 years for foundations, and I am very much interested and I would like to say a word on it. If you forgive me.

Reverend MCLAUGHLIN. Certainly, Senator.

Senator BAKER. If I may continue for just a moment, the thought occurs to me that while it is very true that in order to mount an effective challenge, you must have substantial resources and accountants and expertise but that nothing in this provision in the Pastore amendment precludes someone who has substantial resources and expertise from appearing at a hearing and contesting for the denial of renewal, and that the most we would do if we adopted the Pastore amendment would be to intrude one further step in the process. Thus, a perspective competitive applicant might have to negotiate before he could receive that station license; that is, he would have to appear at that hearing to try to demonstrate that the applicant's renewal application should not be granted.

In addition to that there would be the incidental advantage of permitting those who don't have substantial resources and expertise to appear for whatever they may contribute to the record and thus add presumably to the total reservoir of public knowledge and public good.

Reverend MCLAUGHLIN. Let me back up a little bit, Mr. Baker. Are we clear on the distinction between petitions to deny and challenges? A petition to deny is not an expressed wish to take the license away from the incumbent; the challenger wants the license. We are clear on that, are we not?

Senator BAKER. We are clear, and I'm sure we are clear on the fact that I am referring to page 2, lines 2 and 3 of the Pastore amendment. Reverend MCLAUGHLIN. The Pastore bill would not affect petitions to deny. You could even have a highly public-spirited citizen who is willing to invest fifty, a hundred, or a hundred-fifty thousand dollars to mount an effective petition to deny. How many of those people are there? The only one I know is United Church of Christ, Dr. Everett Parker. I don't know where he got his money from. But I admire him for doing this.

I mean by that allusion to money, that I could not conceive of other religious groups being able to spend that amount of money. I honor him for this, that he has resources that must be prodigious, but who other than a person of this caliber and of this public-mindedness would want to come forward without the economic incentive?

So what we are reduced to is no effective petitions to deny. Therefore, the matter moves into the area of challenge where there is an economic conception.

Senator BAKER. I'm sorry to interrupt, but the buzzers we just heard were three buzzers for a live quorum, and Senator Moss and I will have to go to the floor now.

I am afraid either I don't fully understand your position or you you don't fully understand my suggestion. What I am saying is that under the language at page 2, lines 2 and 3 of the Pastore amendment which provides that "If the Commission determines after a hearing that a grant of the application of a renewal applicant would not be in the public interest," that the language in fact permits any potential petitioner for denial or renewal, any potential or future applicant for that station permit or license, to intervene at that point, and, therefore, nothing in this provision acts in derogation of the full opportunity for anyone who wants to file a competitive application to do so.

Reverend MCLAUGHLIN. That is correct, after the renewal is granted. But the point here is the FCC could never satisfy itself in the real order that there were grounds for refusing to renew without the testimony of the competitor at the initiation stages of the hearing.

Senator BAKER. And that is why I made the point a moment ago. Isn't the fair intent of the Pastore amendment simply to require a potential applicant in the future to intervene at this point at the hearing and to try to demonstrate that a licensee should not be renewed so that later in a second step he can then file an application?

It has made it more difficult, but it has not precluded anyone from engaging in a full range and array of competition, including a full showing of a superior plan for programing at this stage and later another one?

Reverened MCLAUGHLIN. The problem is in the opening language of the Pastore bill he says the decision has been reached to renew or not to renew rests on the record and the representations of the licensee. Senator BAKER. Which possibly ought to be changed. I think that is inconsistent with page 2.

Reverend MCLAUGHLIN. I believe that is the key problem.

Senator BAKER. Would you believe if that preliminary language were brought more nearly in accord with the language of page 2, which I have just dealt with, that we might have a situation where you would create a presumption in favor of the broadcaster but you would not preclude a showing of an opportunity to render superior service and the full range of competition in a hearing which might or might not lead to revocation of a station license under the Pastore amendment? Reverend MCLAUGHLIN, I think I would concur with that, but in the event I have not fully understood this, because I know we are rushing here, I would rather conclude by saying that my considered view is that the four-step process that I have made in my own statement is my own considered opinion as to the best considered procedure to be followed.

1

Senator Moss (presiding). Thank you very much. We do have a live quorum on the floor, and we will have to go and respond to that. I suppose, though, it is going to be possible to return. We have one more witness we want to hear, and he is present and ready to go. His statement has been brought up to the desk.

So, we will be in recess now for 15 minutes to enable me then to find out who is going to be able to sit here and take the testimony. We want to hear it.

Thank you very much, we appreciate your testimony.

(Recess.)

Senator Moss. I guess I had better formally open the hearing to make the announcement that at the request of the next witness and in order to fit in with the time we have on the floor, the hearing will stand in recess until 12 noon, at which time the chairman will be here to conduct the hearing, and Mr. Banzhaf will then be on as a witness. So the hearing is in recess until 12 noon.

(Recess.)

Senator PASTORE (presiding). Mr. Banzhaf..

STATEMENT OF JOHN F. BANZHAF, III, OF LASH, WASHINGTON, D.C.

Mr. BANZHAF. Thank you, Mr. Chairman. Thank you particularly for coming back and continuing these hearings so that I could be heard.

Senator PASTORE. I understand that you insisted I be here.

Mr. BANZHAF. I did not insist. I suggested it very strongly because I intend to raise some questions to which you may want to reply and I think you might want to have your position on the record on these

matters.

Senator PASTORE. Oh, I have been talking on the record for the last 3 or 4 weeks. My position is well known.

I have read your statement. I followed it very attentively, and I am very pleased now to hear you make it.

Mr. BANZHAF. Thank you.