# Central Florida Enterprises, Inc. v. Federal Communications Commission, Cowles Broadcasting, Inc., Intervenor > Court of Appeals for the D.C. Circuit · May 17, 1979 · 598 F.2d 37 URL: https://www.frixlaw.com/law-library/cases/9465768 ## Case - **Full name:** CENTRAL FLORIDA ENTERPRISES, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee. Cowles Broadcasting, Inc., Intervenor - **Court:** Court of Appeals for the D.C. Circuit - **Decided:** May 17, 1979 - **Citations:** 598 F.2d 37; 194 U.S. App. D.C. 118 - **Precedential status:** Published - **Opinion:** On rehearing - **Judges:** Robinson, Wilkey, Flannery - **Cited by:** 38 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9465768 ## How later opinions describe it (automated extraction) - holding that Commission policy forbids “functional” inquiry into efficacy of substitutes for integration ## Opinion text On Petition for Rehearing PER CURIAM. The FCC and intervenors in this matter seek a rehearing, complaining inter alia that our opinion disregards the “legitimate renewal expectancies implicit in the structure of the [Communications] Act.” 1 In light of the ambiguity of the phrase “renewal expectancies” and the frequency with which they are asserted to insulate an incumbent from license challenge, we think some clarification is called for, both generally and insofar as such an expectation may have been undercut in this case. The content of the comparative proceeding at issue was governed by the Commission’s 1965 Policy Statement; 2 however, the weight to be given findings under the various criteria was, as in all renewal proceedings, dependent upon the particular facts of the case. 3 The Commission renewed the incumbent’s license after a hearing. It summarized as follows its rationale for doing so: Our conclusions in this regard do not mean — or suggest — that a challenger is denied an opportunity to show that a grant of his application will better serve the public interest. They do mean that a challenger is in a less favorable position, however, because he asks the Commission to speculate whether his untested proposal is likely to be superior to that of an incumbent. The Commission — and the Court — have consistently recognized that a record of past programming performance is the very best indication of future performance. It is for this reason that we make clear that a substantial performance — i. e. sound, favorable — is entitled to legitimate renewal expectancies. Under the circumstances here, this consideration is decisive. Central’s preference under the diversification criterion is of little decisional significance and Central is entitled to no preference under the integration criterion. These factors, even considering Cowles’ slight demerit for the *59 studio move and Central’s merit for the • Black ownership it proposes definitely do not outweigh the substantial service Cowles rendered to the public during the last license period. 4 We set aside the renewal. Our principal reason for doing so was that the Commission’s manner of “balancing” its findings was wholly unintelligible, 5 based, it was said, on “administrative' ‘feel.’ ” 6 Admittedly, licensing in the public interest entails a good many discretionary choices, but even if some of them rest inescapably on agency intuition (not a comfortable idea), 7 we may at least insist that they do not contradict whatever rules for choosing do exist. ' We think it plain that the Commission violated the rules. In our opinion we observed: the Commission purported to be conducting a full hearing whose content is governed by the 1965 Policy Statement. It found favorably to Central on each of diversification, integration, and minority participation, and adversely to Cowles on the studio move question. Then simply on the basis of a wholly noncomparative assessment of Cowles’ past performance as “substantial,” the Commission confirmed Cowles’ “renewal expectancy.” 8 The dispositive question is, of course, the relevance of the incumbent’s past performance. We thought it relevant “only insofar as it predicts whether future performance will be better or worse than that of competing applicants.” 9 From much of the Commission’s language (apart from its holding), it appeared to agree. 10 We understand, of course, that it does not. 11 If we were correct, the Commission’s decision cannot stand, for as we noted: Of course the incumbent’s past performance is some evidence, and perhaps the best evidence, of what its future performance would be. But findings on integration and minority participation are evidence as well, and are both the only evidence comparing the applicants and also the only evidence whatsoever pertaining to the challenger. The Commission nowhere articulated how Cowles’ unexceptional, if solid, past performance supported a finding that its future service would be better than Central’s. In fact, as we have noted, Central prevailed on each of the questions supposedly predicting which applicant would better perform —the same criteria the Commission uses for this purpose in non-renewal comparative hearings. It is plain then that this record will *60 not support a finding that Cowles would give the best practical service. 12 However, there is the possibility that an incumbent’s meritorious record had literally untold significance. If it were given enough weight (entirely apart from predicting the future), as, for example, to assure industry stability, the incumbent could conceivably prevail even were the challenger otherwise thought the better applicant. There are probably many policies, more or less inferable from the “public interest”, which might be balanced together with the predicted quality of programming. 13 We understand the Commission, in pressing renewal expectancies, to be concerned with the disincentive effects of uncertainty. It argues in its petition for rehearing: Moreover, under the panel’s ruling, substantially-performing incumbents are deprived of the “renewal expectancies” which this Court in Greater Boston viewed as “ordinary”, “legitimate”, and “implicit in the structure of the Act.” As the Court there explained, “such expectancies are provided in order to promote security of tenure and to induce efforts and investments, furthering the public interest, that may not be devoted by a licensee without reasonable security.” Pursuant to these expectancies a “substantial” or “meritorious” past record is a relevant factor to be weighed in the incumbent’s favor. In this sense, a “meritorious” past record deserves appropriate weight in the overall “public interest” determination, irrespective of the predictive value of past performance and, contrary to the panel’s view (194 U.S. App.D.C. at -, 598 F.2d at 57), irrespective of any finding concerning the cerning the challenger’s likely future per- This, we admit, appears at least a plausible construction of the “public interest.” The trouble is, apart from several unenlightening recitals that there are expectations implicit in the Act, there were few intimations that this was the Commission’s inchoate rationale. 15 Of course, even had we guessed, we could not have sustained the Commission by further speculating about the weight constructively given the incumbent’s past performance. 16 Nor may we review a rationale presented for the first time in this court. 17 The place for a new rationale in this case, if one is to be logically developed, is on remand. Moreover, if through rule-making or adjudication the Commission decides to accord weight to such non-comparative values as industry stability, it will have to do so in a manner that is susceptible of judicial review. 18 This would seem to require that the *61 Commission describe with at least rough clarity how it takes into account past performance, and how that factor is balanced alongside its findings under the comparative criteria. Although mathematical precision is, of course, impossible, something more than the Commission’s customary recitals, “completely opaque to judicial review,” must be provided. The choice of procedures through which an intelligible analysis could be composed is, as we have said, for the Commission. Since the FCC petition for rehearing displayed a certain agitated concern that our decision in this case would destroy legitimate renewal expectancies of licensees, with baleful commercial consequences and harm to the general public, we thought it relevant to inquire of the Commission as to just how strong those renewal expectancies have been in the past, based on the action actually taken by the Commission and reviewing court. The history of comparative renewal proceedings since 1 January 1961 (the date from which the data was requested) discloses that incumbents rarely have lost, and then only because they were disqualified on some noncomparative ground. From 1961 to 1978 the Commission has conducted seventeen comparative television license renewal proceedings, seven of which are still pending. 19 In only two cases did the incumbent lose its license, 20 and in neither of those cases were the comparative criteria the grounds of decision. In one case the incumbent was disqualified because of its fraudulent conduct, 21 and in the other the incumbent failed to pursue its renewal application, so the challenger won by default. 22 The story is not much different in radio licensing. No license has been denied on a comparative basis. 23 Plainly, incumbents can “expect” in a statistical sense that their license will be renewed. We doubt that any realistic appraisal of the remand in this single case, calling upon the Commission to perform its duty in accord with its own expressed standards, could reasonably create the nervous apprehension among licensees claimed by the Commission. The only legitimate fear *62 which should move licensees is the fear of their own substandard performance, and that would be all to the public good. . FCC Petition for Rehearing at 9 (citing Greater Boston, 143 U.S.App.D.C. at 396, 444 F.2d at 854). . 1965 Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393 (1965). . See Central Florida Enterprises, Inc., 194 U.S.App.D.C. at , 598 F.2d 37 at 42 (1978); Seven (7) League Productions, Inc., 1 F.C.C.2d 1597 , 1598 (1965); see also Belo Broadcasting Corp., 47 F.C.C.2d 540 , 543-44 (1974). . 62 F.C.C.2d at 958 (emphasis original). . 194 U.S.App.D.C. at —, 598 F.2d at 50. . 60 F.C.C.2d at 422. . As Judge Leventhal said, dissenting to an affirmance of an FCC comparative hearing award in Star Television, Inc. v. FCC, 135 U.S. App.D.C. 71, 79, 80, 416 F.2d 1086 , 1089, 1094-95, c ert. denied, 396 U.S. 888 , 90 S.Ct. 171 , 24 L.Ed.2d 163 (1969): I frankly put to myself this question, Should the courts continue to adhere to the approach of requiring the agency to develop a meaningful statement of reasons for a function like this, of choosing the best qualified among several competing applicants? Maybe an agency cannot meaningfully say more than why it screens out those applicants who fall by the wayside due to ‘demerits’ in some prominent category, or who are plainly second best for some reason. Maybe all it can do as to the other applicants is say: These applicants are all reasonably qualified; we have no meaningful way of choosing on principle between them; all we can really do is speculate who will do the best job in the public interest; and our best possible hunch is X. I believe Justice Frankfurter has applied to the concept of administrative expertise the phrase of Justice Holmes concerning intuition that outruns analysis. The possibility that an agency may come to the point of resting on intuition is all the greater when it is recalled that there are no doctrines of burden of proof such as are available for decision of court cases when the proof stands in equipoise. . 194 U.S.App.D.C. at -, 598 F.2d at 49. . 194 U.S.App.D.C. at -, 598 F.2d at 55. . See, e. g., 62 F.C.C.2d at 958 (“[A] challenger is in a less favorable position, however, because he asks the Commission to speculate whether his untested proposal is likely to be superior to that of an incumbent.”) (emphasis original). . See FCC Petition for Rehearing at 7. . 194 U.S.App.D.C. at , , 598 F.2d at 55 (emphasis original). . Diffusion of media ownership is in some sense such a policy. . See, e. g., 60 F.C.C.2d at 422; 62 F.C.C.2d at 958. The FCC also suggests in its Petition for Rehearing, at 6, that our opinion precludes it from taking account of the natural “credibility” of even an “average incumbent’s” proposals derived from the “common sense logic that substantial past performance is the most dependable indicator of substantial future performance.” This is incorrect. We said “we do not see how performance that is merely average, whether ‘solid’ or not, can warrant renewal or, in fact, be of especial relevance without some finding that the challenger’s performance would likely be no more satisfactory.” 194 U.S.App.D.C. at , 598 F.2d at 57. We plainly contemplated that the Commission would consider the likelihood of applicants effecting their proposals, as would be only sensible. . Thus, conclusory references to the need for industry stability are hardly a substitute for the statutorily mandated and particularized balancing. . See SEC v. Chenery Corp., 318 U.S. 80 , 87 89, 63 S.Ct. 454 , 87 L.Ed. 626 (1943), United States Lines, Inc. v. Federal Maritime Commission, 189 U.S.App.D.C. 361 at 376 & n.43, 584 F.2d 519 at 534 & n.43 (1978). . We recall that the Commission’s license to define the public interest, although broad, is not unbounded. See NAACP v. FPC, 425 U.S. 662, 669 , 96 S.Ct. 1806, 1811 , 48 L.Ed.2d 284 (1976) (“the use of the words ‘public interest’ in a regulatory statute is not a broad license to promote the general public welfare,” instead these words “take meaning from the purposes *61 of the regulatory legislation”). Apart from the obvious limitations imposed by its subject matter jurisdiction, see National Organization for Women v. FCC, 181 U.S.App.D.C. 65 , 80, 555 F.2d 1002 , 1017 (1977), there may be subtler constraints “implicit in the structure of the Act.” The Communications Act is very clear that “no . license shall be construed to create any right, beyond the terms, conditions, and periods of the license.” 47 U.S.C. § 301 (1976). The Act’s disfavor of vested license rights reflects the need, which has long informed the public interest standard as well, for “diverse and antagonistic sources of information.” Citizens Communications Center v. FCC, 145 U.S.App.D.C. 32 , 44 n.36, 447 F.2d 1201 , 1213 n.36 (1971). The point at which a renewal expectation would become an impermissible vested property right is a worrisome question about which we intimate no view. . Letter of Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission, to George A. Fisher, Clerk, United States Court of Appeals, District of Columbia Circuit, 11 December 1978. . This does not include the much-publicized case of WHDH-TV, Boston, Massachusetts, which was treated as though it were a comparative proceeding between “new” applicants. See Greater Boston Television Corp. v. FCC, 143 U.S.App.D.C. 383 , 444 F.2d 841 (1970), cert. denied, 403 U.S. 923 , 91 S.Ct. 2229 , 29 L. Ed.2d 701 (1971). . Western Communications, Inc. (KORK-TV), Las Vegas, Nevada, 59 F.C.C.2d 1441 (1976), reconsideration denied, 61 F.C.C.2d 974 , aff’d in part and rev’d and remanded in part sub nom., Las Vegas Broadcasting Co. v. FCC, Nos. 76-2104 and 76-2124 (D.C.Cir., 26 October 1978) 191 U.S.App.D.C. 71 , 589 F.2d 594 (affirming the denial of renewal but reversing the disqualification of the challenger). . Gerico Investment Co., 31 F.C.C. 625 (1961). . From 1961 to 1978 there were thirty-one comparative radio renewal proceedings, twelve of which are still pending. No incumbent radio licensee has been displaced on the basis of the comparative criteria Three licensees were disqualified for misconduct, five other renewal applications were dismissed, and the challengers’ applications granted. See letters of Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission, to George A. Fisher, Clerk, United States Court of Appeals, District of Columbia Circuit, 11 and 13 December 1978. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9465768. Public record. Not legal advice.