Petition — Cowles Broadcasting, Inc. v. Central Florida Enterprises, Inc.

_— af

Tes’ |

me? ¥3 1979

IN THE MICHAEL ROBAK, JR..CLERK

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1978

No. 78 on ] 4 0 #)

COWLES BROADCASTING, INC. and

COWLES COMMUNICATIONS, INC.,

—_

Petitioners,

v.

CENTRAL FLORIDA ENTERPRISES, INC.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

ROBERT A. MARMET

HAROLD K. McComss, JR.

MARMET PROFESSIONAL

CORPORATION

1822 Jefferson Place, N.W.

Washington, D.C. 20036

WILLIAM T. COLEMAN, JR.

DONALD T. BLIss

Davip G. BouTTE

O’MELVENY & MYERS

1800 M Street, N.W.

Washington, D.C. 20036

Attorneys for Petitioners.

Washington, D.C. « THIEL PRESS + (202) 638-4521

INDEX me.

EE 1

SE ea eee re 2

pe EE ae 3

STATUTORY PROVISIONS INVOLVED ............. 3

oe 4

REASONS FOR GRANTING THE WRIT ............. 8

I.

Il.

Ill.

THE COURT OF APPEALS’ OPINION IS

FUNDAMENTALLY INCONSISTENT WITH

THIS COURT’S DECISION IN FCC v. NCCB ....... 8

A. The Court of Appeals Wrongfully Refused

to Recognize the Importance This Court

has Accorded Continuity of Meritorious

Service as a Relevant Factor in the ‘‘Public

a PPTL LEE EEE 9

B. The Limitations Placed by the Court of

Appeals on the Relevancy of Past Perfor-

mance Are Directly Contrary to This

Court’s Determination of Past Perfor-

mance as “The Most Important Factor”’

im Remewal Decisions 2.0 .c ccc ccc ccc cccces 12

C. By Reordering the Balance Between Diversi-

fication of Mass Media Ownership and Meri-

torious Past Performance, The Court of

Appeals Improperly Substituted its Policy

Judgment for That of the Commission ......... 15

BECAUSE THE COURT OF APPEALS MADE

SERIOUS ERRORS OF LAW AND FACT,

ITS DECISION IS CLEARLY WRONG ........... 17

IN [TS ATTEMPT TO OBFUSCATE THE IN-

CONSISTENCIES, THE COURT OF APPEALS’

OPINION LEAVES IN UTTER CONFUSION

- THE MEANING OF THE “PUBLIC INTEREST”

STANDARD, THE COMMISSION’S STATU-

TORY RESPONSIBILITIES, THE OBLIGA-

TIONS AND RENEWAL EXPECTANCIES OF

(11)

Page

ALL INCUMBENT BROADCAST LICENSEES,

AND THE APPROPRIATE COURSE OF ACTION

De PUERUEIEMRUEE NS oh de eee eee ses veeseee 19

oe ts bw 4b 4.ec8 00 b 6a 6.48 8 Oe Ole et 20

SPE pa 6 Wh ek 8 bw be ek Owe we Separate Volume

TABLE OF AUTHORITIES

Cases:

Alianza Federal de Mercedes v. Federal Communications

Commission, 539 F.2d 732 (D.C. Cir. 1976) ......... 12

Ashbacker Radio Corporation v. Federal Communications

Commission, $26 U.S. $27 (1945) 2... cece cv cccess 14

Citizens Communications Center v. FCC, 447 F.2d

1201, clarified, 463 F.2d 822 (D.C. Cir. 1972) ..... 12, 14

Citizens to Preserve Overton Park v. Volpe, 401 U.S.

ee SNS se Bae Bee i a a ek ae ees 16

Federal Communications Commission v. National

Citizens Committee for Broadcasting, 436 U.S.

1 TEED 6 aE CS OTA OR RASA Kade s passim

Federal Communications Commission v. Pottsville

Broadcasting Company, 309 U.S. 134 (1940)......... 16

Federal Communications Commission v. WOKO,

its Ne Ee Es 54s OA pode We wea see eee 16

Fidelity Television, Inc. v. Federal Communications

Commission, 515 F.2d 684 (D.C. Cir.), cert.

mo a a 12

Greater Boston Television Corp. v. Federal Communi-

cations Commission, 444 F.2d 841 (D.C. Cir. 1970),

cert. denied, 403 U.S. 923 (1971) .......0eeeeeces 12

Securities and Exchange Commission v. Chenery

Corporation, S16 US. GO CIG48).. ccc ccc cece. 16

Vermont Yankee Nuclear Power Corporation v.

Natural Resources Defense Council, Inc., 435

I NN Se a a 16

(itt)

Page

Statutes:

Communications Act of 1934, 48 Stat. 1064, as

amended, 47 U.S.C. §151 (1976) et seq.:

oe aS a eer ot oe re ae ae ae a 11

PO eee, Cee ee eee ee $, 4, 11

EE EE (0d. is -wiahs bbe a Cae oa Nae ee Ke eee 3,4

SUNEEEE ce KARR KA RO ee eee wes 6

Communications Act of 1934, 48 Stat. 1084

(current version at 47 U.S.C. §307(d) (1976)) ....... 11

Rules:

ee ee bk coy re ee ar Sey a eee Sra ae 18

ge MB Se 2 gs a cere more a er eer 18

eee Re es a oe ere 17, 18

Other Authonities:

H.R. Rep. No. 1750, 82d Cong., 2d Sess. 8 (1952) ...... 11

Policy Statement on Comparative Broadcast Hearings,

Beer 8 8) | ere ere a are 13, 16, 17

S. Rep. No. 44, 82d Cong., Ist Sess. 7 (1951) ....... 11, 12

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1978

No.

COWLES BROADCASTING, ING. and

COWLES COMMUNICATIONS, INC.,

Petitioners,

v.

CENTRAL FLORIDA ENTERPRISES, INC.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioners, Cowles Broadcasting, Inc. and Cowles

Communications, Inc., respectfully: pray that a writ of

certiorari issue to review the final judgment of the United

States Court of Appeals for the District of Columbia Cir-

cuit entered on January 12, 1979.

OPINIONS BELOW

The original opinion of the court of appeals, remand-

ing the Federal Communication Commission’s (hereafter

“Commission’’) renewal of a television broadcast license

to Petitioners, was rendered on September 25, 1978. The

court of appeals amended this opinion by an order filed

January 12, 1979. On the same date it issued a separate

l

2

order denying petitions for rehearing en banc filed by

Petitioners and the Commission. It also issued a separate

opinion per curiam. None of these actions has yet been

reported officially.!

The Initial Decision of the Administrative Law Judge

(“ALJ”), FCC 73D-62 (1973), is neither officially nor

unofficially reported. App. at 54a. The Decision of the

Commission is reported at 60 F.C.C.2d 372, 37 Rad.

Reg. 2d 1487 (1976). App. at 139a. Its Memorandum

Opinion and Orde denying reconsideration and clari-

fying the Decision is reported at 62 F.C.C.2d 953, 39

Rad. Reg. 2d 541 (1977). App. at 289a. Its Memorandum

Opinion and Order further denying reconsideration, FCC

77-446 (1977), is not officially reported but is found at

40 Rad. Reg. 2d 1627 (1977). App. at 302a.

JURISDICTION

The judgment of the United States Court of Appeals

for the District of Columbia Circuit was entered on Sep-

tember 25, 1978, and amended on January 12, 1979.

Petitions for rehearing en banc were denied on January

12, 1979, and an opinion per curiam issued. The juris-

diction of this Court is invoked under 28 U.S.C. §1254

(1).

IT simplify the array of opinions, the court of appeals’

September 25, 1978 opinion as modified by its January 12, 1979

Order shall be cited hereafter as ‘“‘Opinion’”’. The unamended opin-

ion shall be cited hereafter as “Original Opinion’”’. The order mod-

ifying the Original Opinion shall be cited hereafter as ‘“‘Amend-

ment.” The separate January 12, 1979 per curiam opinion shall be

cited hereafter as “‘Per Curiam’’. The Original Opinion is unoffic-

ially reported by Pike and Fischer Radio Regulation at 44 Rad.-

Reg. 2d 345 and by the Bureau of National Affairs Media Law

Reporter at 4 Med. L. Rptr. 1503. App. at la. The Amendment,

Per Curiam opinion and Order denying rehearing are reported at

44 Rad. Reg. 2d 1567. App. at 39a, 44a, and 53a.

3

QUESTIONS PRESENTED

Whether the decision of the court of appeals reject-

ing the Commission’s balancing of ‘‘public interest”

benefits in a broadcast license renewal proceeding:

1. Conflicts with the most recent decision of this

Court, holding that in a license renewal proceeding (a)

the preservation of continuity of meritorious service is

an integral part of the statutory “public interest” stan-

dard, (b) the past performance of the incumbent is the

most important factor in deciding whether to grant li-

cense renewal, and (c) in the weighing of policies under

the “public interest” standard—a task delegated to the

Commission—the continuity of meritorious service out-

weighs diversification of mass media ownership;

2. Wrongfully concludes that the Commission did not

explain adequately its decision and is wrongfully pre-

mised on a misreading of the Communications Act of

1934, as amended, the Commission’s regulations and

policies, and the record; and

3. Leaves in a state of complete confusion the sta-

tutory “public interest” standard and the renewal ex-

pectancies of incumbent licensees.

STATUTORY PROVISIONS INVOLVED

The Communications Act of 1934, as amended, 47

U.S.C. §151 et seq., and, particularly, Sections 307(d)?

and 309(a)° are pertinent in this proceeding.

2 Section 307(d) provides that broadcast licenses can be

granted for a three year term and renewed for additional three year

terms upon a finding that the “public interest, convenience and

necessity would be served thereby.”” App. at 312a.

3 Section 309(a) provides that applications, such as renewal

applications, may be granted upon a determination that “‘the pub-

lic interest, convenience, and necessity will be served.”’ App. at

313a.

4

STATEMENT OF THE CASE

A broadcast station must renew its license every three

years. On October 31, 1969, Cowles Broadcasting, Inc.

(“CBI”)*, one of the Petitioners, applied for renewal of

its license to operate WESH-TV, Channel 2, Daytona

Beach-Orlando, Florida. Central Florida Enterprises,

Inc. (‘Central’), Respondent, tendered a competing

application for a construction permit to establish a new

commercial television broadcast station on WESH-TV’s

Channel 2. Unlike CBI, Central’s application did not

provide for auxiliary studios in the Orlando area. Be-

cause the applications were mutually exclusive, a com-

parative renewal hearing was required to determine which

applicant would best serve the “public interest, conven-

ience, and necessity.”” 47 U.S.C. §§307(d), 309(a).

The court of appeals characterized this proceeding as

a “typical comparative renewal case.”” App. at 2a.

At the hearing, the “standard comparative issue’’—as

it is applicable to comparative license renewal proceed-

ings—was addressed to determine which of the applicants

would provide the “best practicable service” and which

would provide the broadest diversification of mass media

ownership. CBI’s past broadcast record was examined

thoroughly. Numerous local residents and community

leaders expressed particular satisfaction with CBI’s per-

formance, and the record does not contain a single com-

plaint about the station’s service. App. at 136a, 231a.

The challenger, Central, elected not to introduce evidence

concerning its proposed programming. Numerous other

subsidiary issues were raised, two of which are relevant

*Cowles Florida Broadcasting, Inc. filed the renewal appli-

cation at issue. During this proceeding it amended its Articles of

Incorporation to change its name to Cowles Broadcasting, Inc.

5

here: (1) the use of dual studios under the Commission’s

rules and (2) the relevancy, if any, of certain mail fraud

allegations made against other completely separate

subsidiaries of CBI’s parent corporation, Cowles Com-

munications, Inc. (“CCI”).°

On December 7, 1973, the ALJ granted CBI’s re-

newal application and denied Central’s competing appli-

cation. The ALJ concluded that CBI merited a “‘dis-

tinct preference” under the “best practicable service”

criterion based primarily on its past performance, which

outweighed Central’s advantage because of diversifi-

cation of mass media ownership.°®

On July 30, 1976, the Commission affirmed the

ALJ’s decision, but noted that the ALJ’s findings did

not adequately reflect the “outstanding” quality of

CBI’s past performance and community involvement.

App. at 228a. Following its own careful examination

of the record, the Commission concluded that CBI’s

past performance deserved a rating of “superior”, en-

titling it to a “plus of major significance.” The Com-

mission affirmed the ALJ’s conclusion that CBI’s pref-

5 See App. at 57a for the full text of the issues.

§ Central had no other media interests, and CCI, at that time,

was the licensee of a television station and two radio stations in

Des Moines, lowa. The radio stations were subsequently divest-

ed. CCI was the parent of the licensee of two radio stations in Mem-

phis, Tennessee, which were also subsequently divested, and it

owned stock in The New York Times Company. The ALJ (and

later the Commission) found CCI’s broadcasting interests of “‘little

decisional significance” because they were remote from the Day-

tona Beach area and were not even dominant in their own com-

munities, and because CBI had substantial management autonomy.

The ownership of The New York Times Company stock was

deemed insignificant because CCI did not have a controlling inter-

est.

.

6

erence for best practicable service outweighed Cen-

tral’s preference under diversification. It also agreed

with the ALJ that neither the “main studio” nor the

“mail fraud” issues constituted grounds for denying

the license renewal to CBI.’

On January 4, 1977, in its supplementary opinion, the

Commission clarified its finding that CBI’s past per-

formance was “superior’’, explaining that the level of

service provided by WESH-TV was “sound, favorable, and

substantially above a level of mediocre service which

might just minimally warrant renewal.” App. at 294a

(emphasis added). The Commission expressly avoided

the word “superior” out of concern that such a “com-

parative” term would entitle only a small percentage

of television licensees to renewal, thereby denying the

legitimate renewal expectancies of the vast majority of

meritorious broadcasters. App. at 295a.°

Central appealed the Commission’s decision to the Unit-

ed States Court of Appeals for the District of Columbia

Circuit pursuant to section 402(b)(1) of the Communi-

cations Act, 47 U.S.C. §402(b)(1). The court of appeals

vacated the Commission’s orders on September 25, 1978,

and remanded the case, concluding that the Commission

erred in according more weight to the finding that CBI

would provide the best practicable service based upon its

substantial past performance than to the finding that

7 These issues are discussed infra at pp. 17-19.

8 Citizens Communications Center, National Citizens Com-

mittee for Broadcasting and the National Black Media Coalition

(amici before the court of appeals) then petitioned for recon-

sideration. The Commission held that they lacked standing, but

considered the merits of the petition nonetheless and denied it

on June 30, 1977.

7

Central was entitled to a “‘preference”’ because of diversi-

fication of mass media ownership.

Both the Petitioners before this Court and the Com-

mission sought rehearing en banc, on the grounds that:

(1) the appellate court’s decision was inconsistent with

the decision of this Court in Federal Communications

Commission v. National Citizens Committee for Broad-

casting, 436 U.S. 778 (1978) (“FCC v. NCCB”), and

with appellate court precedent on licensing criteria appli-

cable in a license renewal proceeding; (2) the court of

appeals, contrary to the intent of Congress, exceeded

its scope of review in substituting its policy judgment

for the mandated discretionary judgment of the Com-

mission; and (3) the decision to remand to the Com-

mission on certain special issues was premised on a mis-

reading of the record.

The court of appeals denied these petitions on Jan-

uary 12, 1979, in a separate opinion per curiam. The

appellate court also amended its September 25 Opinion

sua sponte to acknowledge this Court’s holding in FCC

v. NCCB by including a quote from that opinion and by

deleting certain incorrect »olicy directions and statutory

interpretations. App. at 39a, Amendment. As the fol-

lowing discussion will demonstrate, however, the ap-

pellate court’s decision is still in conflict with FCC v.

NCCB.

8

REASONS FOR GRANTING THE WRIT

THE COURT OF APPEALS’ OPINION IS FUNDAMEN-

TALLY INCONSISTENT WITH THIS COURT’S DECISION

IN FCC v. NCCB.

This Court has recognized—and recently reaffirmed—

that a licensee who has given meritorious service has

a “legitimate renewal expectanc[y]” that is “im-

plicit in the structure of the Act” and should not be

destroyed absent good cause.

FCC v. NCCB, 436 U.S. at 805 (emphasis added). This

policy is based on this Court’s recognition that, in reli-

ance on their legitimate renewal expectancy, incumbent

broadcast licensees, including Petitioners, will invest in

the technology that brings quality service, experiment

with innovative programming, and provide local and

informational programs.

The appellate court’s belated discovery of this Court’s

decision—completely ignored in the Original Opinion

although brought to its attention—does not change the

fundamental inconsistency of its Opinion—even as

modified—with this Court’s recognition that “existing

licensees [are evaluated] on a somewhat different basis

from new applicants,” Jd. at 810-11.

Even as modified, the court of appeals’ opinion con-

flicts with FCC v. NCCB in three fundamental ways:

°The Amendment correctly deleted the erroneous statement

in the Original Opinion that a distinction between initial and

renewal proceedings would not be “lawful without an amendment

to the hearing provisions of the Communications Act” (App. at

21a, 43a), but ignored the substantial legislative history in sup-

port of the distinction which was cited by this Court in FCC v.

NCCB, 436 U.S. at 811 n.31.

9

(1) it denigrates the public interest benefit in “a policy

of avoiding undue disruption of existing service” (7d. at

782); (2) it undermines the significance of “past per-

formance of the incumbent as the most important fac-

tor in deciding whether to grant license renewal and

thereby to allow the existing owner to continue in oper-

ation”’ (id. at 806); and (3) it supplants the Commission’s

policy discretion by requiring that greater weight be

accorded the factor of diversification (id. at 810). Fur-

thermore, the Opinion directly contradicts the legislative

history of the Communications Act, prior decisional law,

and longstanding administrative practice—all of which

were cited with approval by this Court.

A.The Court of Appeals Wrongfully Refused to

Recognize the Importance This Court has Accord-

ed Continuity of Meritorious Service as a Rele-

vant Factor in the “Public Interest” Determina-

tion.

This Court has explained that continuity of meritor-

ious service furthers the “‘public interest” both by “bring-

ing proven broadcast service to the public” and by

“rewarding—and avoiding losses to—licensees who have

invested the money and effort necessary to produce qual-

ity performance.” Jd. at 805. Initially, the appellate court

erroneously characterized the Commission’s consider-

ation of continuity of service as an “embarrassingly

clear’? presumption of renewal. App. at 23a, Original

Opinion. Only after Petitioners and the Commission

pointed out the blatant inconsistency with FCC v.

NCCB in requests for rehearing en banc, did the appel-

late court begrudgingly concede:

This, we admit, appears at least a plausible con-

struction of the “public interest”. App. at 49a,

Per Curiam.

10

In finding a congressional policy clearly recognized by

this Court to be “plausible”, the court of appeals has

both glossed over the obvious conflict between its Orig-

inal Opinion and FCC v. NCCB'°® and sidestepped the

basic issue of the significance of past performance as a

noncomparative criterion, irrespective of its predictive

value. In complete disregard of this Court’s unambiguous

language,'! the appeals court left as “open and difficult

questions”’ whether “a ‘substantial’ past record would be

a factor weighed in the incumbent’s favor . . . [in order]

to promote security directly and to induce investment.”

App. at 41a, Amendment (emphasis added).

10-The Amendment now incorporates a quoted passage from

FCC v. NCCB in an apparent attempt to remedy this glaring defect

(App. at 42a, Amendment), but this reference merely highlights

the contradiction as the quoted passage stands isolated, unex-

plained, and in conflict with the rest of the appellate court’s deci-

sion. Moreover, although intimating that this Court’s construction

of “public interest’’ may be “plausible”, the appeals court clearly

reserves its judgment by claiming that the Commission did not

adequately explain its rationale nor would it be permitted to pre-

sent such a rationale for the first time to the appellate court. App.

at 50a, Per Curiam. In fact, as this Court has recognized, “[T] he

Commission has consistently acted on the theory that preserving

continuity of meritorious service furthers the public interest.”

FCC v. NCCB, 436 U.S. at 805. Furthermore, in its decision and

again on reconsideration, the Commission articulated this ration-

ale by emphasizing ‘“‘renewal expectancies” and stressing that the

license renewal process should not be used to restructure the

broadcast industry. App. at 237a, 295a. The Commission also

took notice of the ALJ’s reliance on the importance of industry

stability. App. at 133a, 210a.

lluwe agree with the Court of Appeals that ‘[p] rivate losses

are a relevant concern under the Communications Act only when

shown to have an adverse effect on the provision of broadcasting

service to the public.’ [Citations omitted.] Private losses that

result in discouragement of investment in quality service have such

an effect.”” FCC v. NCCB, 436 U.S. at 805-06 n.24 (emphasis

added).

11

A policy which fails to take into full account the

actual performance of the licensee and the need to

preserve continuity of service is clearly not in the public

interest. Investment in quality programming and the

freedom to innovate and to take the risks inherent in

informational (news and public affairs) and local pro-

gramming depend on the licensee’s stability and the

avoidance of unnecessary disruption. The Communica-

tions Act does not require that these “public interest”

objectives be ignored,'* and Congress clearly did not in-

tend such a result.!® Prior appellate court decisions

12-The appellate court’s recitation of statutory provisions that

support its bias against an incumbent’s expectancy of renewal (e.g.,

47 U.S.C. §301 “no .. . license shall be construed to create any

right beyond the terms, conditions, and periods of the license”’

App. at 4, Original Opinion n.4) is directly contradicted by this

Court in FCC v. NCCB: “The fact that a licensee does not have any

legal or proprietary right to a renewal does not mean, however,

that the Commission cannot take into account the incumbent’s

past performance in deciding whether renewal would serve the pub-

lic interest.” Id. at 806 n.25 (emphasis added).

13 Congress expressly amended the Communications Act in

1952 to enable the Commission to apply a different “public

interest” standard to renewal applicants. Prior to 1952, §307(d)

provided that decisions on renewal applications “shall be limited

to anc governed by the same considerations and practice which

affect the granting of original applications.”” See Communications

Act of 1934, 47 U.S.C. §307(d), 48 Stat. 1084. In 1952 the sec-

tion was amended to provide simply that renewal “‘may be granted

. . . if the Commission finds that public interest, convenience, and

necessity would be served thereby.’’ Communications Act Amend-

ments of 1952, 66 Stat. 714 §5. The House Report explained

that the previous language “‘is neither realistic nor does it reflect

the way in which the Commission actually has handled renewal

cases,”’ H.R. Rap. No. 1750, 82d Cong., 2d Sess. 8 (1952), and the

Senate Report specifically stated that the Commission has the

“right and duty to consider, in the case of a station which has been

operating and is applying for a renewal, the overall performance of

[footnote continued]

12

consistently have recognized this distinction between

initial and renewal proceedings.'*

B. The Limitations Placed by the Court of Appeals

on the Relevancy of Past Performance Are Directly

Contrary to This Court’s Determination of Past

Performance as “The Most Important Factor”’ in

Renewal Decisions.

By limiting the relevance of the incumbent’s past

performance to mere evidence of the credibility of the

licensee’s renewal proposals and by establishing a restric-

tive test of “‘superior’”’ performance, the court of appeals

has undermined the statutory “‘public interest” standard

as defined by this Court in FCC v. NCCB, 436 U.S. at

806, 810. This Court clearly stated:

[T]he Commission has long considered the past

performance of the incumbent as the most impor-

tant factor in deciding whether to grant license re-

newal and thereby to allow the existing owner to

continue in operation.

that station against the broad standard of public interest, conven-

ience, and necessity.” S. Rep. No. 44, 82d Cong., Ist Sess. 7

(1951) (emphasis added). See FCC v. NCCB, 436 U.S. at 811 n.31.

The court of appeals distorts this legislative history. See App. at

$a, Original Opinion, n.4.

\4Greater Boston Television Corp. v. FCC, 444 F.2d 841, 854

(D.C. Cir. 1970), cert. denied, 403 U.S. 923 (1971) (“legitimate

renewal expectancies [are] implicit in the structure of the Act’’);

Citizens Communications Center v. FCC, 447 F.2d 1201, 1213,

clarified, 463 F.2d 822 (D.C. Cir. 1972) (“incumbent licensees

should be judged primarily on their record of past performance”’);

Fidelity Television, Inc. v. FCC, 515 F.2d 684, 702 (D.C. Cir.),

cert. denied, 423 U.S. 926 (1975) (‘when faced with a fairly and

evenly balanced record, the Commission may, on the basis of

the renewal applicant’s past performance, award him the license.’’);

Alianza Federal de Mercedes v. FCC, 539 F.2d 732, 736 & n.9

(D.C, Cir. 1976).

13

436 U.S. 806 (emphasis added). Yet the court of ap-

peals berated the Commission for judging “incumbents

largely on the basis of their broadcast record, to which

there will be nothing comparable on the side of a challen-

ger in any case”’ (App. at 31a, Original Opinion (footnote

omitted)) and for the ‘wholly noncomparative assess-

ment of Cowles’ past performance.” App. at 20a, Orig-

inal Opinion (emphasis added).

The appellate court’s reliance on the comparative

criteria of the Policy Statement on Comparative Broad-

cast Hearings, 1 F.C.C.2d 393 (1965) (hereafter “1965

Policy Statement’’) to guide the balancing and outcome

of the renewal proceeding is misplaced and contrary to

the critical distinction between initial and renewal li-

censing implicit in the structure of the Communications

Act. App. at 20a-23a, 28a, 34a, 40a, Opinion.'® Accord-

ing “equal footing” in a renewal proceeding to the criter-

ia in the 1965 Policy Statement—which were adopted to

govern initial licensing proceedings—is also directly con-

trary to the holding in FCC v. NCCB. The 1965 Policy

Statement is necessarily concerned with structure and

proposals, not with performance and continuity, and if

applicable, would not protect the renewal expectancies

of broadcasters who have rendered meritorious service.

Challengers can, and will, easily structure themselves to

appear superior to the renewal applicant on these initial

licensing criteria, especially in organizational matters and

15 Footnote 1 to the. 1965 Policy Statement provides:

This statement of policy does not attempt to deal with

the somewhat different problems raised where an appli-

cant is contesting with a licensee seeking renewal! of

license.

1 F.C.C.2d at 393.

14

promises of performance. The renewal applicant lacks

such structural flexibility. Its full hearing rights, guaran-

teed by this Court,!® can only be preserved by due con-

sideration and emphasis on its past broadcast record.

The court of appeals attempted to limit further the

Commission’s consideration of past performance by pro-

viding that only “superior”? performance is “highly

relevant to the comparison, and might be expected to

prevail absent some clear and strong showing by the

challenger under the comparative factor.’’ App. at 37a

(emphasis added). First, the Commission and not the

courts is charged with the responsibility for estab-

lishing renewal standards.'’ More importantly, as the

Commission’s supplementary decision sought to ex-

plain, rigid adherence to a notion of “superior” per-

formance would mean that only a small percentage of

all broadcasters would be entitled to renewal despite

clearly demonstrated “meritorious” programming. The

“superior” test is inherently contrary to the principle

that broadcasters have legitimate renewal expectancies

16 See generally Ashbacker Radio Corp. v. FCC, 326 U.S. 327

(1945).

17 In Citizens Communications Center v. FCC, 463 F.2d 822

(D.C. Cir. 1972), the court of appeals noted that “‘superior”’ per-

formance would be entitled to a “‘plus of major significance.’’ The

court of appeals now attempts to transform and elevate this dictum

to a threshold of relevance which would require that the Commis-

sion demonstrate “superior” performance in order to justify the

renewal on the basis of the incumbent’s record. The illustrative cri-

teria set forth in Citizens Communications Center, id. at 823, ap-

parently now have become legal prerequisites, requiring conform-

ance by incumbent licensees. App. at 36, Original Opinion, n.93.

15

under the Communications Act, and works to defeat

the public interest in continuity and stability. FCC v.

NCCB, 436 U.S. at 805.

C. By Reordering the Balance Between Diversifica-

tion of Mass Media Ownership and Meritorious

Past Performance, The Court of Appeals Improp-

erly Substituted its Policy Judgment for That of

the Commission.

The court of appeals’ holding that “it was unreason-

able then to accord the diversification finding ‘little deci-

sional significance,’ ” (App. at 30a, Original Opinion) was

not in keeping with this Court’s conclusion that ‘‘diversi-

fication of ownership [is] a factor of less significance”

than past performance. FCC v. NCCB, 436 U.S. at 810.

Moreover, by rejecting the weight the Commission gave

to diversification of ownership, the appellate court has

usurped the weighing task that Congress has delegated

to the Commission. Jd. The weight the Commission

accorded diversification was fully consistent with this

Court’s most recent articulation of this issue:

Even where an incumbent is challenged by a com-

peting applicant who offers greater potential in

terms of diversification, the Commission’s general

practice has been to go with the “proven product”

and grant renewal if the incumbent has rendered

meritorious service. !8

18 436 U.S. at 806. In an attempt to avoid this obvious incon-

sistency, the court of appeals said in its Amendment that it ob-

jected only to the ‘manner in which the Commission analyzed the

concededly relevant factor, not intending to prescribe the weight

which the Commission generally should accord media concentra-

tion in the context of comparative renewal hearings.”’ App. at 43a

(emphasis added). Nonetheless, the court of appeals concluded

that the Commission’s reconstruction of the diversification criteria

[footnote continued]

16

By rebalancing the scales and assigning a higher value

to the media diversification factor, the appellate court

has intruded impermissibly into the administrative

decision-making process. Such intrusion is improper in

any circumstance,.but it is especially so here whece the

appellate court has ‘directed a result which is squarely

at odds with the established law. Its attempt to sub-

stitute its policy judgment for that of the Commission

conflicts in principle with this Court’s clear command

that the courts adopt a deferential standard of judicial

review. Vermont Yankee Nuclear Power Corp. v. Na-

tural Resources Defense Council, Inc., 435 U.S. 519

(1978); SEC v. Chenery Corp., 318 U.S. 80 (1943);

F.C.C. v. Pottsville Broadcasting Co., 309 U.S. 134

(1940). “The court is not empowered to substitute its

judgment for that of the agency.” Citizens to Preserve

Overton Park v. Volpe, 401 U.S. 402, 416 (1971). Fur-

thermore, “‘it is the Commission, not the courts, which

must be satisfied that the public interest will be served.”

FCC v. WOKO, Inc., 329 U.S. 223, 225 (1946).

“belittl[ed] ” Central’s advantage (App. at 26a, Original Opinion),

that the Commission ‘“‘seriously undercut the utility of the diversi-

fication criteria” (App. at 28a, Original Opinion (emphasis added)),

and that the 1965 Policy Statement established that “related media

interests anywhere in the nation are quite material” (id. (emphasis

added)). Each of these objections goes to the weight accorded di-

versification and is inconsistent with this Court’s holding that

“diversification of ownership [is] a factor of less significance when

deciding whether to allow an existing licensee to continue in oper-

ation than when evaluating applicants seeking initial licensing.”

FCC v. NCCB, 436 U.S. at 810.

17

BECAUSE THE COURT OF APPEALS MADE SERIOUS

ERRORS OF LAW AND FACT, ITS DECISION IS CLEAR-

LY WRONG.

The appellate court’s decision is plainly wrong on

several counts: It wrongly contended that the Com-

mission did not adequately explain its findings and ra-

tionale; it misconstrued the statute, legislative intent

and the Commission’s regulations; and it misread the

record.

(1) Shifting the emphasis to sidestep the obvious

conflict of its Original Opinion with FCC v. NCCB,

the court of appeals redirected its attack on the Com-

mission’s ‘wholly unintelligible’? balancing of its findings

and “administrative feel.”” In fact, the ALJ and the

Commission explained fully the findings and how they

were reconciled and weighed and then, on reconsidera-

tion, the Commission explained further its rationale.

The appellate court may disagree with the Commission’s

rationale, but it cannot pretend that it was not set

forth expressly by the Commission. App. at 207a-238a;

294a-299a; 307a-309a.

(2) The appellate court ignored the statutory dis-

tinction between initial and comparative hearings, mis-

interpreted the 1952 amendment and its legislative his-

tory (supra note 13), and repeatedly misapplied the Com-

mission’s 1965 Policy Statement.

It further misread the Commission’s rule on tele-

vision “main studios,” 47 CFR §73.613(a).!9 The court

of appeals found a “plain violation” of the rule—a

conclusion which far exceeded that drawn by the Com-

19 Section 73.613 provides, in part: “‘Main studio location. --

(a) The main studio of a television broadcast station shall be lo-

cated in the principal community to be served... .”

l

18

mission—and directed the Commission to reconsider

this matter.2? In so doing, the appellate court mis-

takenly confused the clear and specific main studio

rules for radio stations, 47 CFR §§73.30, 73.210,7!

with the ambiguous and undefined main studio rule for

television stations, 47 CFR §73.613(a). The court of

appeals also contradicted its own statement that “‘the

choice of remedies and sanctions for violations of Com-

mission rules ‘is a matter wherein the Commission has

broad discretion.’ ” App. at 24a, Original Opinion. In its

detailed review of the issue, the Commission considered

the ambiguity of the television main studio uring

the license period; the lack of interpretive precedent; the

absence of requirements for maintaining records of pro-

gram origination; the lack of any complaints about the

station’s operation; and the meritorious service to the

city of license, Daytona Beach.

(3) Furthermore, the court of appeals misread the

record concerning Central’s allegations about “‘common

officers’’ and the curtailment of the inquiry in the so-

called mail fraud issue, erroneously concluding that the

Commission failed to fully address these points. In fact,

however, as Petitioners pointed out in their Petition for

Rehearing, the Commission thoroughly addressed this

issue and resolved it in favor of Petitioners. While Cen-

20 When CBI acquired WESH-TV in 1966 the station already

had its main studio in Holly Hill, just outside Daytona Beach, and

an auxiliary studio in Winter Park, just outside Orlando. Neither

studio was closed by CBI, nor was there a physical ‘‘move”’ of

either studio. Rather, the issue concerned the use of each studio.

The Commission did not accord significance to this issue.

21 These rules provide that the main studios for AM and FM

stations should be located in the city of license and that a majority

of a radio station’s programs, or two-thirds of its non-network pro-

grams, must originate from the main studio.

19

tral failed to perfect the issue of common officers,

raising it for the first time on appeal, Petitioners none-

theless pointed out that the ALJ had in fact reviewed

the evidence and made findings on this point. They also

pointed out the confused state of Central’s pleadings, its

failure to articulate any harm and its failure to seek

administrative and judicial review of the ALJ’s decisions.

IN ITS ATTEMPT TO OBFUSCATE THE INCONSISTEN-

CIES, THE COURT OF APPEALS’ OPINION LEAVES IN

UTTER CONFUSION THE MEANING OF THE “PUBLIC

INTEREST” STANDARD, THE COMMISSION’S STATU-

TORY RESPONSIBILITIES, THE OBLIGATIONS AND RE-

NEWAL EXPECTANCIES OF ALL INCUMBENT BROAD-

CAST LICENSEES, AND THE APPROPRIATE COURSE

OF ACTION FOR PETITIONERS.

The court of appeals has characterized this proceeding

as ‘‘a typical comparative renewal case”’ and has boldly

asserted that “‘the state of administrative practice in Com-

mission comparative renewal proceedings is unsatisfac-

tory.” App. at 2a-3a, Original Opinion. With its Original

Opinion and its ambiguous, confusing and internally

contradictory Amendment, the court of appeals has

created a state of utter confusion. Incumbents do not

know whether they have legitimate renewal expectancies

and, if so, what such expectancies encompass. They do

not know how the past broadcast record and diversi-

fication of ownership will be weighed or whether avoid-

ance of disruption and continuity of service are relevant

factors. This climate of confusion is hardly conducive

to inyestment in meritorious service.

In the semantical wake of the court of appeal’s

decision, with the simultaneous use of the words “meri-

torious’”’ and “‘superior’? and the constantly changing

20

characterization of the WESH-TV broadcast record,

Petitioners do not know what evidence should be ad-

duced on remand or by what standards CBI’s renewal

application will be judged.

CONCLUSION

Thus, after nine years of administrative and judicial

process, including three decisions of the Commission

awarding a license renewal to CBI, Petitioners are now

faced with the prospect of further hearings without any

clear ground rules. This situation is unsettling, not only

to Petitioners, but also to every broadcaster which must

file for renewal of its license. For the reasons set forth

above, it is respectfully submitted that this petition for

a writ of certiorari should be granted for the purpose of

clarifying the law and providing guidance to licensees.

Respectfully submitted,

ROBERT A. MARMET

HAROLD K. McComss, Jr.

MARMET PROFESSIONAL

CORPORATION

1822 Jefferson Place, N.W.

Washington, D.C. 20036

(202) 331-7300

WILLIAM T. COLEMAN, JR.

DONALD T. BLISS

Davip G. BOuTTE

O’MELVENY & MYERS

1800 M Street, N.W.

Washington, D.C. 20036

(202) 457-5300

Counsel for Petitioners,

March 13, 1979 Cowles Broadcasting, Inc.

and

Cowles Communications, Inc.