procedural regularity to insure stability and continuity in broadcasting is needed not only by commercial broadcasters, but by noncommercial broadcasters as well, so that all broadcasters will be encouraged and enabled to devote their best efforts to serving the public.

KCET, like many other noncommercial or "public" television stations, is supported in large part by the community it serves. The raising of funds is a continuing and significant aspect of the station's activities. In a sense, all such community supported stations have "gone public" and must rely on the long-term support of the public. This public support and confidence in the future of a noncommercial station's operations is needed not to enable the station to raise money in an offering of shares in the market place, but to enable it continually to raise money to meet its day-to-day operating expenses and to acquire necessary and very expensive capital equipment.

We believe that the ability of a noncommercial station to generate the kind of community support that is necessary to operate a first-rate public television station, considering the high costs of television broadcasting and facilities, could be seriously adversely affected by any uncentainty with respect to whether the station was going to continue to hold a broadcasting license. This would be particularly true with respect to efforts directed toward acquiring funds for large capital assets, such as studio facilities and technical equipment.

Moreover, noncommercial broadcasters are, in general, not in a position to bear the cost of defending a license in a comparative license renewal proceeding, since noncommercial stations attempt to devote substantially all of their resources toward maintaining and operating the best possible broadcast facility. Of course, no noncommercial broadcaster would maintain that a licensee should have a permanent right to a license, without regard to its performance in the public interest. Nor do we understand any commercial broadcaster to make such a contention. What all broadcasters seek is simply a procedural reform that will bring the Commission's practices into conformity with the reasonable and orderly Stewardship of an important resource.

Thus, if a fully qualified broadcast licensee performs in the public interest, and in conformity with its representations and with the Commission's regulations and policies, its license should be renewed without considering competing applications for the same facility. Such competing applications are necessarily based on promises that are designed to impress the Commission favorably in comparison to the past performance of the existing licensee, but are not necessarily tempered by practical experience.

Perhaps no one is as aware as a noncommercial broadcaster of the practical difficulties of operating and programming a broadcast station, particularly in the early stages of a station's development. The unfairness of permitting a competing applicant to contest a license renewal application of a noncommercial broadcast station, based on promises of performance that could not realistically take into account all these difficulties is particularly apparent.

The restoration of stability and continuity in the renewal of broadcasting licenses that is sought by S. 2004 would have still a further beneficial effect on noncommercial broadcasters. Although much of a community supported station's resources are obtained from individuals and other small contributors, heavy reliance is necessarily placed upon more substantial gifts and grants. KCET has benefited substantially upon such gifts and grants given by both the government and private businesses.

A most important source of KCET's support from private business has been that provided by commercial broadcasters in our community. This help has been provided to Community Television in many forms. When Community Television began, five of the commercial stations in Los Angeles donated a total of $950,000 to Community Television. This, together with an HEW grant of $468,790 provided under Public Law 87-447, enabled KCET to acquire the facilities needed to begin providing television service to the Los Angeles metropolitan area.

Since that time, KCET has received other benefits from the Los Angeles commercial broadcasters. For example, the KCET transmitter site on Mt. Wilson is leased by KCET from a commercial broadcaster at less than one-tenth of the market value for such space. Until very recently, KCET had no equipment for originating color programming. However, another Los Angeles commercial broadcaster made its color equipment available for lease at a preferred rate whenever it was needed by KCET for special programs. Donations of equipment valued at more than $100,000 from still another Los Angeles commercial broadcaster over the past four years have been mad, and other items of equipment have been donated by other commercial broadcasters.

KCET hopes that the valuable contribution to its efforts in public broadcasting that have been made by commercial broadcasters will continue. However, potential expenses-not to speak of the grave uncertainty as to outcome-that are faced by broadcasters as a result of recently adopted FCC license renewal policies could well and understandably result in a reassessment by commercial broadcasters of their ability to continue to contribute to the support of public broadcasting in the cities they serve. This, we submit, is a significant and further reason why the public interest would be served by enacting the legislation now under consideration, and we urge the passage of S. 2004 in the interest of enabling noncommercial as well as commercial broadcasting better to serve the public.

Once again, thank you for the opportunity to submit this Statement and for your consideration of these matters, which concern the future of our noncommercial public broadcasting efforts.

HON. JOHN O. PASTORE,

U.S. Senate,

Washington, D.C.

NATIONAL RELIGIOUS BROADCASTERS,

Madison, N.J., August 4, 1969.

MY DEAR HONORABLE SIR: This is to indicate my support of Bill S. 2004. I believe we should combat the growing trend in the broadcasting industry where existing licenses are becoming the object of attack from new applicants. I believe the legislation is acutely needed in view of recent trends and developments. We do not like to see radical elements taking over in our American society by making promises resulting in the loss of licenses.

This is not to say that review of renewal is unnecessary but simply that the burden of proof lies on those who challenge.

My observation has been that present broadcasting stations by and large are doing an excellent job in serving the public.

Your bill will succeed in strengthening freedom rather than to deny it. It promises to correct abuses at renewal time—a development which in recent years has been on the increase.

Sincerely yours,

Dr. BEN ARMSTRONG.

CHAPEL HILL, N.C., August 4, 1969.

Hon. JOHN O. PASTORE,
U.S. Senate,

Washington, D.C.

DEAR SENATOR PASTORE: I am writing to you in regard to your bill (S. 2004) which seeks to amend the Communications Act of 1934 with regard to consideration of applications for renewal of broadcast licenses.

As I understand the present philosophy of the Act, the burden of proof of operations in the public interest, convenience, and necessity lies with the licensee. Every three years, the broadcaster comes back to the FCC to present his record of operation and, in effect, to petition for the privilege of operating during another license period. Section 301 of the Act reads, in part: "It is the purpose of this Act . . . to maintain the control of the United States over all the channels of interstate and foreign radio transmission; and to provide for the use of such channels, but not the ownership thereof, by persons for limited periods of time, under licenses granted by Federal authority, and no such license shall be construed to create any right, beyond the terms, conditions, and periods of the license." [Italics supplied.] It seems to me that, legally, the broadcaster is out of business at the end of his license period. He comes anew to the FCC seeking a new period of privilege; and he, like any other applicant, presents his qualification for consideration-side by side with any others who wish to apply.

As I read your bill, it seems to me that the broadcaster is being given a right that goes beyond the period, terms, and conditions of the license because---or so it appears to me the broadcaster is being given prior consideration rather than equal consideration. It seems to me that the amendment comes rather near to giving the broadcaster a special status, nearly a right to broadcast instead of granting him the privilege. If this is so, it seems to me that the proposed amendment changes the basic philosophy under which broadcasting has operated since the Radio Act of 1927. I will agree that our practice has not always carried out the concept, but I think the concept is nevertheless there and still sound.

As I noted at the outset, I have stated my understanding of the intentions of the effect of your proposed amendment and of my understanding of the intentions of the Communications Act. If I am in error, or have misread the significance of your proposed amendment, I hope that you will enlighten me. I am not in favor of creating for the broadcaster a special or preferred status.

Sincerely yours,

WESLEY H. WALLACE.

UNIVERSITY OF MARYLAND,

RADIO-TELEVISION DIVISION,

DEPARTMENT OF SPEECH AND DRAMATIC ART,

College Park, August 12, 1969.

Hon. JOHN PASTORE,
U.S. Senate,

Washington, D.C.

DEAR SIR: This letter is in support of a bill which you have introduced, S. 2004, to amend the Communications Act of 1934.

In my role as broadcast educator for some twenty years, I am in a position to be familiar with the present practices of the Federal Communications Commission as outlined in the Communications Act of 1934 as well as to understand the implications of the bill which you have introduced.

While I do understand your concern about the economic implications of the present practice, this argument persuades me very little. What is more important, in my opinion, is the waste of time, money, and energy of the present licensee and his staff at or about the time of renewal, which energies could be better put to use in the development of more effective programming and public service. Once the Commission has granted a license on the basis of proposed programming policies and practice, it seems that it would be far better for the licensee to expend his energies in meeting those commitments than in worrying about who is interested in his property.

This argument, of course, does not ignore the fact that there is a need for better programming, particularly public service. I see in the bill that you have introduced, a distinct possibility that the Commission would be in a position to further encourage all licensees in this direction.

Sincerely,

THOMAS J. AYLWARD, Director.

Senator PASTORE. Our first witness today is Mr. Earle K. Moore, who is the general counsel of the National Citizens Committee for Broadcasting.

STATEMENT OF EARLE K. MOORE, GENERAL COUNSEL, NATIONAL
CITIZENS COMMITTEE FOR BROADCASTING; ACCOMPANIED BY
BEN KUBASIK, DIRECTOR, NATIONAL CITIZENS COMMITTEE
Senator PASTORE. Do you prefer to read your statement, sir, or do
you think it would be better to summarize it?

Mr. MOORE. I would rather read it, if I may, Senator.
Senator PASTORE. All right.

All I want you to realize is that here I am, I am by myself, and
I am a fast reader. So the faster you read it, the better I like it.
Mr. MOORE. I will go as fast as I can, sir.

Senator PASTORE. All right.

Mr. MOORE. Mr. Chairman, I appear for the National Citizens Committee for Broadcasting which is a nonprofit educational corporation supported by contributions. We seek to represent the public interest in broadcasting matters primarily by studies of current problems and participation in legal proceedings before the Federal Communications Commission.

I have with me Mr. Ben Kubasik, who is the director of the National Citizens Committee and who knows more about some of these broadcasting matters than I do.

We appreciate this opportunity to appear before the committee because the important issues presented by S. 2004 have not been adequately covered by the news media. I think this may be the first coherent statement in opposition to the proposal that the opposition has had an opportunity to make.

We think the silence about this proposal may be related to the fact that many of the Nation's newspapers and magazines are owned by the same communications conglomerates which control the most profitable television and radio stations in the principal markets and which have large and rapidly expanding CATV holdings.

In our judgment, these major market conglomerates are the only broadcast licensees who would be protected by S. 2004. The licensees of the small, less profitable, locally owned stations are not threatened and have not been threatened by any so-called jump applications before the Federal Communications Commission.

Even before the Radio Act in 1927, it was understood that broadcast channels in important markets are scarce, and that a license for one of these channels confers monopolistic powers which can be misused by rendering inadequate public service, and by charging excessive rates to advertisers. These charges must inevitably be passed on to consumers in the service area.

It was recognized that the Government had an obligation to assure that the best possible use was made of the channels. As far back as 1924, the then Secretary of Commerce Herbert Hoover, stated that:

For the first time in history we have available to us the ability to communicate simultaneously with millions of our fellow men, to furnish entertainment, instruction, widening of vision of national problems and national events. An obligation rests upon us to see that it is devoted to real service and to develop material that is transmitted into that which is really worthwhile.

Accordingly, section 301 of the Communications Act of 1934 asserted the purpose of Congress.

To maintain the control of the United States over all the channels of interstate and foreign radio transmission; and to provide for the use of such channels, but not the ownership thereof, by persons for limited periods of time, under licenses granted by Federal authority, and no such license shall be construed to create any right, beyond the terms, conditions and periods of the license. The Supreme Court has described the act as a "supple instrument" to allay fears that "in the absence of governmental control the public interest might be subordinated to monopolistic domination in the broadcast field."

The monopolistic advantages which broadcast licenses confer have made the communications industry unusually profitable. The net income of the broadcast industry as a whole increased in every year from 1959 to 1966 by percentages ranging from 8.1 to 33.3 percent. When television developed, the radio broadcasters were well placed to take advantage of the new opportunities. The radio networks took the best channels for themselves and favored other multiple owners in grant. ing affiliation. The most valuable television channels in the principal markets were obtained by the large communications conglomerates operating out of major communications centers. Local interests and

owner-managers obtained only the marginal stations in the smaller markets.

The profitability of the television industry has been enormous. In 1966, the television industry earned about $493 million on depreciated investment in tangible broadcast properties of $550 million. I understand that television was slightly less profitable in 1967 but profits rose again in 1968.

In other words, the average television station recovers its full investment twice over and earns a reasonable return in addition in one 3year renewal term. It is true that there are many small FM stations, daytime radio stations, and UHF stations, particularly those without network affiliations, which are marginally profitable. However, there is little likelihood that anyone will incur the substantial expense of competing for these unprofitable channels and S. 2004 has little to do with them.

Senator PASTORE. I want to say I agree with about everything you have said. The mere fact that you allow entrepreneurs to come in, why will that ameliorate this situation. If this is a problem of whether or not the FCC should control the profit with relation to investment, you get a new group that comes in over the old group, and they will do the same thing.

I realize what you say, it depends on whether you get this license, this is a very profitable venture. As a matter of fact, though, it came up yesterday that their profits have jumped up again. There is no question about that.

I think by and large the whole broadcasting industry should take it upon themselves on their own, to take a good hard look at the charges they are making. We are getting all kinds of demands. As a matter of fact, a request has been made to me by the Citizens for Better Congress that a certain amount of free time be given to candidates at election time, because of the expense of television. That is, free time, or reduced charges.

Now, these are entirely different problems. I think it would be most unfair for us to get the two mixed up, because you are placing me in the position that while I agree that there should be a certain equity and justice with reference to this sword of Damocles, I quite go along with you on these other grievances.

But I don't see how you are going to cure it that way. That is the problem. The mere fact that you begin to create a state of fear if you keep these broadcasters in a state of fear, because somebody else might apply for that license, who might claim to better serve the public interest and reduce the rates. I think the contrary is going to be true. Because the new applicant would try to take out of that investment everything he possibly could because he would be afraid he was going to lose it in 3 years.

Of course, we have never charged a broadcaster a substantial license fee. Back in my State, if you get a liquor license, you have to pay a fee. You pay a fee to get that license. Because you are one of the many who is chosen to be given that franchise.

The same thing applies to broadcasting. I am not suggesting that we do that, but there are some people-well, they have a fear that the fee now charged doesn't amount to anything when you compare the fee with the profits that are involved. It is ridiculous in proportion.