15

Any particular predicted percentage is self-serving, and a decision to produce in the future so much of this and that regardless of demand and supply, and regardless of quality, is nonsense. The Commission in its Policy Statement of 1965 has rejected this fantastic gamesmanship." It no longer compares programs unless either past performance or proposed programming raises the issue that the performance of one applicant promises to be notably poor or notably good. Instead, the applicant must show that he has made a "survey" of community needs. To satisfy this requirement, an applicant need simply talk to a great many important and representative people and organizations in the community." The Policy Statement, particularly as applied in WHDH, reduces the principal criteria applied in a comparative hearing to two: the so-called integration and diversification standards. Under the integration standard, the FCC favors applicants whose managers own shares in the broadcasting enterprise. It is the FCC's theory that owner-managers are more likely to discharge their "public responsibility" than nonowner-managers. The Commission conceives of the broadcaster as serving primarily the community in which he is licensed to broadcast. If the integration requirement is met, the owner of the enterprise (or some percentage of the owners) will be working and presumably living in the community. The Commission assumes that the owner-manager will be more sensitive to the community's needs than a manager who is reporting to an absentee owner. This theory is at least reasonable, but not, I think, obviously right and surely not demonstrable. A resident manager may indeed feel pressured by an absentee owner to maximize profits by shoddy programming. But a manager whose own investment is at stake may also be motivated to discount community interests, particularly if the investment is a substantial part of the manager's total capital. By the same token a giant corporation, such as NBC, CBS or Westinghouse, which owns a number of stations and (as with Westinghouse) much else besides, is in a financial position to allow its stations much greater room to experiment. Westinghouse, as I understand it, has attempted to institutionalize the freedom of the local manager by giving him the status of a high and autonomous officer in the corporation.

The FCC, as far as I know, has never attempted to determine on the record whether "integrated" stations perform better than "nonintegrated" ones. Indeed, one of the most important cases applying the local service concept suggests that a distant corporation not subject to local pressures may more adequately represent at least minorities if not the dominant forces in a community. This is the Lamar Insurance case,16 in which the FCC found that the owner of a TV station in Jackson, Mississippi, a locally controlled, though not "integrated," corporation had not given adequate representation to the Negro interests of the community, had consistently opposed Negro civil rights, and had suppressed news from the outside world contrary to its point of view.

I realize that it is not easy to gauge the character of a station's performance. But if that is so, it is neither just nor rational to refuse to renew on the basis of a flimsy theory and grant the license instead to an applicant which has simply tailored its application to meet this particular requirement. One has the feeling that the Commission, forced by the requirement that it hold comparative hearings for initial licenses to rationalize its decisions, has been taken in by its rationalizations and elevated them to the status of guiding truths.

The WHDH decision illustrates a further arbitrary aspect of the integration doctrine, although the precise impact of the doctrine on the particular decision is a little obscure. The principle that station managers should be station owners is more restrictive than its primary rationale: that stations should be locally controlled. Thus, WHDH is a wholly owned subsidiary of a local newspaper. It does not satisfy the integration requirement because the corporation, not the managers, owns the station." Yet surely it satisfies the criterion of local connection and awareness.

14 Policy Statement on Comparative Broadcast Hearings, 1 F.C.C. 2d 393, 397-98, 5 P&F RADIO REG. 2D 1901, 11-12 (1965).

15 Id. at 397, 5 P & F RADIO REG. 2D at 1911. See Viking Television, 15 P & F RADIO REG. 2D 954 (1969) for a "comparative efforts issue" where one applicant had made a "significantly greater" number of "programming contacts" than the other and the other had failed to describe the manner in which its survey was organized and executed. See also Warren County Radio, 15 P & F RADIO REG. 2D 1105 (1969).

16 Lamar Life Broadcasting Co., 3 F.C.C. 2d 784, 7 P & F RADIO REG. 2D 445. rev'd sub nom. Office of Communication of the United Church of Christ v. FCC, 359 F.2d 994 (D.C. Cir 1966), on remand, Lamar Life Broadcasting Co., 14 F.C.C. 2d 431, 13 P & F RADIO REG. 2D 769 (1968).

17 See WHDH, Inc., 16 F.C.C. 2d 1, 25, 15 P & F RADIO REG. 2D 411, 436 (1969) (dissenting statement of Commissioner Lee).

The diversification criterion has more to commend it. In preferring applicants with no other interests in communications media, the Commission rightly looks to each medium as a potential source of ideas and cultural activity. Its most important application should be to cases like WHDH, where a broadcasting applicant is controlled by a local newspaper. The principle is particularly appropriate where the newspaper is the only one in the area or the most significant one. Nevertheless, requiring forfeiture of all existing broadcasting investments by publishers of newspapers and magazines is a very drastic solution to the problem of concentrated mass media ownership, particularly if any less drastic one is available (as there is). The solution is particularly harsh in the WHDH case. The paper in question, the Herald-Traveler, does not dominate the Boston newspaper market by any standard. Furthermore, it is one of the ironies of the case that, for reasons almost impossible to discover (lending considerable weight to the suggestion of political favoritism), the WHDH license was awarded initially despite the applicants' ownership of the Herald at that time. The irony is further compounded by the fact that the Herald appears to have been losing money for many years and if deprived of the TV license may be unable to survive.

18

Does the WHDH decision mean that all licenses owned by publishers of newspapers or magazines are to be forfeited? It appears so, for there is nothing in the majority opinion to suggest any necessary distinction between WHDH and any other case, at least any other case of ownership by a local newspaper.19 If in a comparative hearing a new applicant demonstrates itself to be more "integrated" and "diversified" than a renewal applicant, it will prove itself superior in the two most important respects. On what basis, then, can an established licensee be preferred to the new applicant? The renewal applicant may show, perhaps that its programming has been not merely adequate but phenomenal. The Commission, however, as I have noted, is disinclined to compare past with proposed performances. In any case, officials rating of performances is a highly questionable undertaking.

20

The concurring opinion of Commissioner Nicholas Johnson raises further questions about this already questionable decision. He says (with astounding nonchalance):

21

"I take no present position on the merits of continued newspaper ownership of broadcasting properties in markets where there is [sic] competing media. But I do think it is healthy to have at least one station among these politically powerful 33 network-affiliated properties in the major markets that is truly locally owned, and managed independently of the other major local mass media. It is a step, however small, back toward the Commission's often professed but seldom evidenced belief in the benefits of local ownership and media diversity. It is, at the very least, an interesting experiment which will be watched carefully by many."

One wonders at the power here asserted by a government agency to pick out "at least one" victim for an "interesting experiment." Need there be no standards for making such a selection? And what, we may ask, are the criteria for judging this experiment: whether the newspaper now collapses? I find this blithe and ingenuous attitude toward interests of considerable substance disturbing.22 It is not in my opinion sufficient to insist on the statutory provision limiting the license term to three years or to speak of a "privilege" to use "the public's air waves." We used to contrast the "law-in-action" with the "law-inthe-books." The proposition was that there is much more to justice and to the law as an institution than the bare formulations of case and statute. This idea has been used in the past to "liberalize" and "reform” the law, to bring it into accord with "reality." But the principle is no less applicable to the protection of "vested" interests if fairness requires that they be protected. A pound of flesh is a pound of flesh, whether it be Shylock's or Antonio's. Surely the considerations bearing

18 See WHDH, Inc., 22 F.C.C. 767, 13 P & F RADIO REG. 507 (1957).

19 I assume WHDH will be applied to future renewal cases and will not be treated as merely an initial licensing proceeding. See p. 1694 supra.

20 See WHDH, Inc., 16 F.C.C. 2d 1, 10, 15 P & F RADIO REG. 2D 411, 424 (1969). 21 Id. at 28, 15 P & F RADIO REG. 2D at 439.

22 Commissioner Johnson manifests something of the same disposition in his apparent willingness to forfeit the licenses of broadcasters who have insufficiently implemented the policy of the FCC requiring time for anti-cigarette statements. See, e.g., National Broadcasting Co., 15 P & F RADIO REG. 2D 1048, at 1050 (1969) (dissenting opinion). When it is realized that probably the entire broadcasting industry has so offended, this would mean revoking all existing broadcasting licenses.

on the proper effect of a statute include reasonable expectations built up over the years by official action.

Nor has the Commission's policy of promoting broadcasting license stability been mere inadvertence. It has resulted from a considered judgment, participated in by Congress, the Commission, and the courts. One of the new substantive amendments to the statute was the provision that a petition to approve a sale or assignment of a license should not be put into comparative hearing. This concensus may, if you will, reflect the power of the industry itself but it has also involved a judgment that a secure and stable investment will promote the objectives sought in regulating the broadcasting industry. It is not necessary to the argument that this system is the only workable one. The British have a different system, resting in part in a stabilized public investment and in part also on terminable contracts. But the American system has been based on very different premises. To cause heavy forfeitures in a reversal of these premises by administrative fiat is appropriate only if there is a great evil and there is no other way of remedying it. Yet the Commission itself has recognized one alternative: it has twice renewed a license on condition that the licensee transfer the license to an approved person.23 There is no direct authority in the Communications Act for such action. Arguably it is contrary to the statutory scheme, which seems to bar licensing an applicant who is not qualified. Nevertheless, the Commission has done it as an exercise of equity, and if there is any question about it, Congress could confirm the power of the Commission.

In the absence of such legislative initiative, the Commission will continue to be left to its own devices in attempting to protect the public interest. Indeed, WHDH re-emphasizes what has been clear now for years: that the FCC is the victim of congressional failure to provide guidance. However, that failure may in turn evidence a lack of public consensus for change. In fact, it may be nearer the truth (however distasteful to the critics that truth may be) that there is no substantial public dissatisfaction with either the industry or the Commission. And even if the critics are correct in believing that there is significant dissatisfaction, no one has been able to advance an acceptable alternative.

Assuming, whatever the climate of opinion, that change is desirable, in my opinion such a desperate and spasmodic lurch toward "the left" as the decision in WHDH is neither just nor constructive. The objection to such moves proceeds from what I believe to be a basic proposition: namely, we cannot look to regulation to make basic improvements in broadcasting. A great deal can be said (pro and con) about this proposition, but in the end the argument in favor of it can be very simply stated: we have no acceptable method of formulating official standards for judging performances, and therefore no way of measuring the effects, good or bad, of the principles applied. There is no elite (as there may be in Britain) whose judgments are accepted, or acquiesced in, by the community at large. It is my conclusion therefore, that the creation of additional types and methods of broadcasting is our best hope for more representative programming— publicly supported broadcasting, community antenna (CATV), and perhaps subscription TV.

I do not, however, go so far as to say that there is no role at all for regulation relevant to program content. The most effective single reform could be regulation of the amount and method of advertising, such as limiting advertising time per hour or the number of program breaks. This might not be an easy reform to accomplish, but it involves the kind of regulation which can be given an understandable and administrable form. Some time ago the Commission undertook rulemaking that looked toward the imposition of a limitation-a very generous limitation on advertising. But even this minimal reform failed to gain sufficient Commission votes.24

The Commission might also consider requiring in a gross, overall manner that broadcasters provide certain categories of desirable programs-news, public discussion, and the like. Regulation of this sort might take the form of prescribed percentage minima. That method, however, has an obvious possible defect: a single good one-hour program is better than three poor ones. The example demonstrates the difficulty of even modest regulation. Apparently the FCC has, over

Melody Music, Inc. (WGMA), 2 F.C.C. 2d 958, 6 P & F Radio Reg. 2d 973 (1966); National Broadcasting Co., 37 F.C.C. 427, 2 P & F Radio Reg. 2d 921 (1964). Similarly, where a court finds that an attacked concentration_ offends antitrust laws, it orders divestiture, not forfeiture, of the offending property. For a similar solution by the FCC, see National Broadcasting Co.. 37 F.C.C. 427, 2 P & F Radio Reg. 2d 921 (1964). *Advertising on Standard, FM, and Television Broadcast Stations, 36 F.C.C. 45 (1964).

26

the objection of Commissioners Cox and Johnson, given up any regulation of program category minima.25 In 1961 the Commision in KORD, Inc. did grant a one-year renewal (rather than the usual three-year renewal) because the station had not lived up to its program proposals and was consequently deficient certain desirable program categories. However, as the number of stations has multiplied specialization has taken place, particularly in radio broadcasting in metropolitan areas. Thus, it may no longer make sense to impose the same requirements on all broadcasters, at least in metropolitan areas. In areas with relatively few broadcast services, enforcement of percentage minima for programming in public service categories might still be useful. The problem, then, is one of applying a general standard with sufficient flexibility to allow judgments geared to the situation in each community.

The upshot of such an approach, however, might be that broadcasters in nonmetropolitan areas would be subjected to the more onerous and costly obligations. The cry would go up that the FCC had saddled the "little fellow"-arguably less able to bear added costs-with responsibilities from which his city cousin was free. Of course, one of the supposed virtues of administrative agencies is just this capacity to particularize, but one cannot be blind to the hazards, political and otherwise, of such a policy. Yet the wisdom of the Commission's preference for locally based broadcasting, as expressed for example in the "integration" principle, is at least brought into question in cases where the local broadcaster does not provide a minimum of locally significant service.

It is unfortunate that the majority of the Commission has not seen its way clear even to respond on the merits to the arguments of Commissioners Cox and Johnson in favor of limited programming regulation. There are, as I have indicated, reasonable arguments for their position. This failure to rationalize both exemplifies and partially accounts for the indeterminate, ambivalent character of our broadcasting regulatory policy. And it may be that until there emerges something approaching a popular consensus for change, we are condemned to shuttle back and forth within its labyrinthine maze.

Senator PASTORE. All right, you may proceed, Mr. Fogarty.

STATEMENT OF FRANK P. FOGARTY, VICE PRESIDENT, MEREDITH CORP., GENERAL MANAGER, BROADCASTING DIVISION

Mr. FOGARTY. Thank you, Mr. Chairman and gentleman of the committee; my name is Frank P. Fogarty. I live in Omaha, Nebr. I am vice president of Meredith Corp. and general manager of Meredith's broadcasting division.

We operate five television, four AM radio, and two FM radio stations.

I wish to make a brief statement in support of S. 2004, a bill to establish orderly procedures for the consideration of applications for renewal of broadcast licenses. This bill was introduced by Senator Pastore, and I am proud to say that both of the Senators from my home State, Nebraska, are cosponsors.

I have with me our Washington counsel, Mr. Michael Bader.

I am very appreciative, Senator Pastore, for your courtesy in letting Senator Hruska introduce me here this morning.

Broadcasting is a service to the public, but it is also a business, and it cannot serve the public adequately unless it is a sound, stable, and profitable business.

There is no stability in a business unless it can plan for the future. We have FM radio today largely because successful AM radio broadcasters were willing and able to risk some of their profits for develop

See Renewal of Standard Broadcast and Television Licenses [Broadcasting in America and the FCC's License Renewal Process: An Oklahoma Case Study], 14 F.C.C. 2d 1 (1968) (dissenting statement of Commissioners Cox and Johnson).

26 31 F.C.C. 85, 21 P & F Radio Reg. 781 (1961).

ment of the new FM service, which in the early days looked like a long shot, and even today is generally unprofitable.

When television began to look like a practical possibility, a handful of AM radio licensees ventured into television, with the full realization that the return, if any, was far down the road, but with the hope that they would still be in business when and if TV should become profitable. In turn, color television loomed on the horizon, and the black and white telecasters invested hundreds of millions of dollars in color, knowing full well that they had no hope of a return on their investment within a normal 3-year license period.

Many broadcasters are today assuming risks to develop UHF television from its current sorry financial state. All broadcasters are weighing the impact of such vital technological developments as the use of satellites in program transmission.

Today, however, the spirit of enterprise in broadcasting faces a threat in the form of the so-called strike application, which Senator Pastore has explained. It is perfectly understandable that at periodic intervals we broadcasters should render an account of our stewardship, especially in terms of promise versus performance.

And I assure you, Senator Pastore, that the burden of proof you mentioned will be faced up to by the broadcasters.

Now, however, we face the prospect of one or more competing applicants at renewal time. These applicants may be devoid of broadcasting background. They may have no investment to protect, no employees to worry about, no responsibility of any kind.

They can promote anything. They are in a position to point up the real or imagined deficiencies of the current licensee's record, whereas the licensee can attack only their promises. They need not, in fact cannot, give any assurance of quality because they have no track record. Even if the licensee has performed outstandingly, he runs the risk of losing his license because his record may not match the glib promises of his adversary.

Let us see how this threat will affect the planning and performance of broadcasters.

Meredith Corp. broadcasting stations serve five widely scattered markets, none of which are in the top 20. It has been and continues to be our policy to make major investments to improve both our coverage and the quality of our service.

Take Omaha, for example. There are three commercial VHF stations in the city. In early 1961 the three stations developed a plan to build higher towers on a common site. This was designed to bring our signals into some homes not then served and to improve the quality of reception in others, a very important point in the oncoming age of color.

The project was completed in late 1966. Thus, there was a period of nearly 6 years of planning, processing through Federal, State, and local governmental agencies, and construction. Our station, WOWTV alone spent $725,000 on its share of the project. It would have been madness to commit this sum of money in a business with a 3-year life expectancy.

In Kansas City, we replaced a short tower with what was for a long time the tallest self-supporting television tower in the world. At