Appendix — WHDH, Inc. v. Federal Communications Commission

gerst. TPP) Om E a4 Ae

—m F,

IN THE

Supreme Court of the United States

Ocroser Term, 1970

No i 5 2 2

WHDBH, Inc., Petitioner,

v.

FEepERAL ComMMUNICATIONS CoMMISSION,

Greater Boston TELEVISION CoRPORATION,

Cuar.es River Crvit Terevision, Inc., and

Boston Broapcasters, Ivo.

——————

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the

District of Columbia Circuit

APPENDICES TO THE PETITION FOR

WRIT OF CERTIORARI

Wuuimm J. Dempsey,

938 Bowen Building,

Washington, D. C. 20005,

Counsel for the Petitioner.

Wuuiiam C. Koptovirz,

J. Ricnarp Cage,

Joun J. DeMPsEY,

938 Bowen Building,

Washington, D. C. 20005,

FrRepericK Bernays WIENER,

1750 Pennsylvania Avenue, N. W.,

Washington, D. C. 20006,

Of Counsel.

Press or Brron S. ADAMS PRINTING, Inc., WASHINGTON, D. C.

Re RIE MINDER FANN EG HE SY aL RRO OT ot

eT

Bo

ERRATA

The following footnotes were inadvertently omitied

in the Appendices :

Appendix D(3)—Footnote 4, page 314a, which reads

38 FCC 25 (1965).

Appendix D(4)—Footnote 5, page 327a, which reads

29 FCC 204, 212.

Appendix D(4)—Footnote 6, page 328a, which reads

22 FCC 767, 880.

Appendix D(4)—Footnote 7, page 329a, which reads

29 FCC 204, 212.

Appendix D(4)—Footnote 8, page 329a, which reads

22 FCC 767, 880, 881.

APPENDICES TO PETITION FOR CERTIORARI

Page

Appendix A—Opinion below ..................005- la

Appendix B—Judgments below .................... 44a

Be WS OE BUTIORING ook os vc ccc sae ccxas 44a

2. Order Denying Rehearing ................... 44a

Appendix C—Opinion of April 16, 1964 .......... 4.

Appendix D—Pertinent FCC Decisions ............. 52a

1. FCC Decision adopted January 22, 1969, re-

leased January 23, 1969 (16 FCC 2d 1) .... 52a

2. Initial Decision of Hearing Examiner, adopted

August 10, 1966, released August 15, 1966

Kk @ a tg & . SaaS appear arene Bernt 80a

3. FCC Memorandum Opinion and Order adopted

May 19, 1969, released May 20, 1969 (17 FCC

2d 856) RP PT EEE YT OE ee ee CET REET TC 3064

FCC Decision adopted September 25, 1962, . re-

leased September 26, 1962 (33 FOC 449) ..326a

FCC Decision adopted March 13, 1963, released

March 15, 1963 (34 FCC 537) ............ 345a

a

on

Appendix E—FCC Policy Statement on Comparative

Broadeast Hearings, July 28, 1965 (1 FCC 2d

Te er eee ee ter Cer Pirie ee ores The 350a

Appendix F—FCC Policy Statement on Comparative

Hearings Involving Regular Renewal Applicants,

January 14, 1970 (22 FCC 2d 424) .............. 373a

Appendix G—Statutes involved ................... 383a

la

APPENDIX A

Opinion Below*

Ruited States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 17,785

Greater Boston Tetevision CorporaTION, APPELLANT

v.

FEperaL Communications CoMMISSION, APPELLEE

WHDH, Inc., A Massacuusetts CorporaTION, INTERVENOR

No. 17,788

WHODBH, Inc., apretnant

v.

FrperaL Communications CoMMISSION, APPELLEE

GreaTER Boston TELEvision CorPoraTIon,

A Massacuusetts Corporation,

INTERVENOR

No. 23,154

Cuartes River Civic Trtevision, INc., APPELLANT

v.

FrperaL Communications CoMMISSION, APPELLEE

* As amended sua sponte by Judge Levanthal on December 31,

1970, and as further amended in the order denying rehearing

entered on February 16, 1971.

BLL PS RR RT, Ee Opp ETP Re

2a

WHDHM, Inc.,

Boston Broavcasters Inc.,

INTERVENORS

No. 23,159

WHODH, Inxc., aPppeLLant

v.

FEDERAL CoMMUNICATIONS Calan, APPELLEE

Boston Broapcasters, INC., INTERVENOR

No. 23,172

GreaTteR Boston TV Co., Inc., APPELLANT

v.

FrepEran CoMMUNICATIONS COMMISSION, APPELLEE

WHODH, Inc.,

Boston Broapcasters Inc.,

INTERVENORS

Appeals from the Federal Communications

Commission

Decided November 13, 1970

3a

Mr. J. Joseph Maloney, Jr. for appellant in Nos. 17,785

and 23,172 and intervenors in No. 17,788.

Mr. William J. Dempsey, with whom Messrs. William C.

Koplovitz, J. Richard Carr and John J. Dempsey were on

the brief, for appellant in Nos. 17,788 and 23,159 and inter-

venor, WHDH, in Nos. 17,785, 23,154 and 23,172. Mr.

Harry J. Ockershausen was also on the brief for appellant

in No. 17,788.

Mr. Harry M. Plotkin, with whom Messrs. Thomas

Schattenfield and William L. Fishman were on the brief,

for appellant in No. 23,154.

Mr. Henry Geller, General Counsel, Federal Communi-

cations Commission, with whom Messrs. John H. Conlin,

Associate General Counsel, Edward J. Kuhlmann and

Mrs. Lenore G. Ehrig, Counsel, Federal Communications

Commission, were on the brief, for appellee.

Mr. Benito Gaguine, with whom Mr. Donald E. Ward

was on the brief, for intervenor, Boston Broadcasters Inc.,

in Nos. 23,154, 23,159 and 23,172.

Messrs. Vincent B. Welch and Gerald S. Rourke filed a

brief on behaif of Hampton Roads Television Corporation

and Community Broadcasting of Boston, Inc., as amici

curiae.

Before Tamm, LevenrHaL and MacKinnon, Circuit

Judges.

LEVENTHAL, Circuit Judge: This appeal marks the cul-

mination of a sixteen year struggle to determine the li-

censee to operate a television station on Channel 5 in Bos-

ton. Rivals for ihe license have been before this court on

three previous occasions.

The Federal Communications Commission previously

made a limited award to WHDH, Inc., and that company

has been operating the station, WHDH, under temporary

aA SE Ge cde wal PS

5

3

3

.

2

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authorization. In the decision now under appeal, the Com-

mission, after an extensive comparative hearing, approved

the application of Boston Broadcasters, Inc. (BBI), and

denied the mutually exclusive applications of WHDH, Inc.,

Charles River Civic Television, Inc. and Greater Boston

Television Corp. (II). 16 F.C.C. 2d 1, (January 22, 1969).

This result was adhered to on reconsideration by the Com-

mission, although the petition for rehearing filed by WHDH

was granted in part. 17 F.C.C. 2d 856 (May 19, 1969). We

affirm the decision of the Commission.

I. COMMISSION PROCEEDINGS

A. Historical Background

The initial proceeding to select a licensee to operate on

Channel 5 in Boston began in 1954 with consideration of

four mutually exclusive applications. Three years later,

the Commission announced the granting of the application

of WIIDH, Inc., a wholly owued subsidiary of the corpor-

ate publisher of the Boston Herald-Traveler newspaper.

22 F.C.C. 767. The station began broadcasting in the same

year. While the decision was on appeal in this court, it

came to the court’s attention that the Commission’s award

might be subject to an infirmity by virtue of improper ex

parte contacts with the Chairman of the Commission. Re-

taining jurisdiction, we remanded to the Commission for

an evidentiary hearing. Massachusetts Bay Telecasters,

Inc. v. FCC, 104 U.S.App.D.C. 226, 261 F.2d 55 (1958), cert.

dented, 366 U.S. 918 (1961).

At the supplemental hearing before a Special Hearing

Examiner, Honorable Horace Stern, formerly Justice of

the Pennsylvania Supreme Court, it developed, inter alia,

that during the pendency of the initial license proceedings,

Mr. Robert Choate of WHDH, Inc., had arranged two

luncheons with Mr. George C. McConnatfghey, then Chair-

man of the FCC. The first of these, in the winter of 1954-

ef

5a

53, was used by Mr. Choate for the simple purpose of

“sizing up” the new chairman. The second, however, in

the spring of 1956 (after the initial hearing examiner’s

decision favoring another applicant, but before oral argu-

ment on exceptions to that decision), was arranged to

allow Mr. Choate to discuss certain legislative matters, un-

specified in advance, with Mr. McConnaughey. The matters

in question proved to be the Harris-Beamer bills, which

would have limited the Commission in its policy of encour-

aging the diversification of ownership of mass media of

communication, and which had been opposed in Mr. Me-

Connaughey’s testimony before Congress. At the second

luncheon Mr. Choate attempted to hand Mr. McConnau-

ghey a draft amendment to the pending bills, which he

hoped would moderate the Chairman’s opposition. The

Chairman, however, rebuffed Mr. Choate’s attempt at dis-

cussion, and later called public attention to the matter in

testimony before the House » Committee on Legislative

Oversight.

The Special Hearing Examiner concluded that WHDH’s

construction permit should be allowed to stand, that

Choate could not fairly be condemned as having made an

improper attempt to influence the Commission as to this

particular adjudication, that there was no reason for the

Chairman or any other member of the Commission to dis-

qualify himself from participation, and that the award

made to WHDHE was neither void nor voidable. The Com-

mission felt otherwise. It discerned a meaningful and

improper, albeit subtle, attempt to influence the Commis-

sion, and condemned it as an effort that “does violence to

the integrity of the Commission’s processes.” See note 36,

infra. It filed its report with this court—which had re-

tained jurisdiction over the original appeal, and ordered

the status quo maintained. The Commission's findings and

report concluded that while the original grant to WHDH

was not void ab initio, it was voidable and action should

ci Eat

be

6a

be taken to set it aside, that the conduct of WHDH while

not disqualifying had been such as to reflect adversely

upon it in the comparison of applicants. The course which

the Commission concluded represented the best exercise of

its discretion consisted of setting aside the permit ; granting

at the same time a special temporary authorization for

WHODH to continue broadcasting on Channel 5; and re-

opening the entire proceeding for a comparative proceed-

ing between WHDH and the other applicants then before it.

29 F.C.C. 204 (1960). We approved the plan and remanded

accordingly. Massachusetts bay Telecasters, Inc. v. FEC,

111 U.S.App.D.C. 144, 295 F.2d 131, cert. denied, 366 U.S.

918 (1961).

In October i96i, the Commission held new hearings,

this time among three of the four original applicants. On

September 25, 1962, it again awarded a construction permit

to WHDH. 33 F.C.C. 449. It ascribed a demerit to WHDH

because of Choate’s improper approaches to the Commis-

sion Chairman. In the same order it made a grant to

WHDH of an operating license for only four months—stat-

ing that it was exercising its discretion to grant a license for

such a short term, as contrasted with the 3-year = ail

missible and normally provided, because it belicved this in

the public interest due to “the inroads made by WHDH.

upon the rules governing fair and orderly adjudication.” 33

F.C.C. at 454. In 1963, after WHDH filed for its-renewal, —

the FCC took the unusual step of assuring that comparative

consideration would be given to competing applications filed

within a specified 60-day “safe” period. By order of October

24, 1963, it designated for comparative hearing the WHDH

renewal and the mutually exclusive applications filed dur-

ing that period by BBI (intervenor before this cour -)

and Charles River and Greaier Boston TV Corp. (II), ap-

pellants, for determination, on a comparative basis, which

of the proposed operators would best serve the public in-

terest in the light of significant differences among appli-

7a

eants as to (a) background and experience bearing on

ability to operate the TV station; and (b) proposals for

management and operation of the proposed TV station;

and (¢) proposed programming. 1 R.R. 2d 468, 472.

Meanwhile, the grant of the 4-month license had been

appealed to this court, both by WITDH (which protested

the conclusion of impropriety on the part of Choate and

the short term of the license) and by Greater Boston

TV Corp. (I). On December 21, 1963, while this appeal

was pending, Mr. Choate died. We remanded again to

determine what effect his death would have on the awards.

Being aware of the impending comparative hearings on the

renewal of WIIDH’s temporary license, we authorized the

Commission to combine the renewal proceedings with the

proceedings, on remand, for reconsideration of the award.

of the construction permit and/the 4-month operating

license, both to be conducted on a/comparative basis assess-

ing the public interest in the light of the absence of Mr.

Choate. Greater Boston Television Corp. v. FCC, 118 U.S.

App.D.C. 162, 334 F.2d 552 (1964).

B. The Current Comparative Proceeding

The consolidated comparative proceeding authorized by

this court began in May 1964, and there was full presenta-

tion by WHDH and the other_three-applieants.

1. Hearing Examiner’s Decision

On August 10, 1966, Hearing Examiner Herbert Sharf-

man issued an exhaustive Initial Decision, in favor of

granting the renewal by WHDH. He concluded that the

taint of Mr. Choate’s activities had passed with his death,

since none of the associates who might have been able to

stop him were even aware, so far as the record shows, of

the intention of the “imperious” Mr. Choate, and that an

extension of disability on the part of WHDH would not be

deterrent or prophylactic but only vengeful.

a

CLF OT OL I TLE RTF

ry

- t ROP EP PA INHIN TT BEM

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In the bulk of his conclusions, related to a comparison

of the applicants, the Ilearing Examiner took account of

the evidence pertaining to the various criteria laid down

in the Policy Statement on Comparative Broadcast Hear-

ings, 1 F.C.C.2d 393 (July 28, 1965):—past perform-

ance; diversity of ownership; integration of ownership

and management; and program proposals. In determining

the weight he felt appropriate under the circumstances of

the case, the Examiner placed primary emphasis on the

actual operating record of WHDH under the temporary

authorizations of the preceding nine years. .

The Examiner conceded that the position of WHDH

was weak in regard to the integration criterion (nartici-

pation in station management by owners), and that both

BBI and Charles River were proposed by a distinguished

and indeed “star-studded” group of civically active resi-

dents, offering strong claims on the score of area famil-

iarity. The Examiner acknowledged that both BBI and

Charles River proposed a diversity of excellent programs,

though he offset this by noting that in the case of program

proposals a new applicant enjoys a “literary advantage”

over an existing operator. He further noted that the ab-

breviated nature of the WiiDH tenure conferred by the

Commission made it clear that WHDH was not entitled

to a competitive advantage merely because it is a renew-

ing station. Yet the Examiner concluded that it would be

a sterile exercise to decide this case on the basis of the

traditional methods of comparison of new applicants. In

his view the dominant factor on balance was that the

proven past record of good performance is a more reliable

index of future operations in the public interest than mere

promises of new applicants, which have no means of vali-

dation except as the criteria may be helpful in predicting

ability to comply with proposals. The WHDH operating

record was considered favorable on the whole, notwith-

standing its unwillingness to grasp the nettle of some local

9a

problems. As to diversification, the Examiner concluded

that while the concentration of ownership of a Boston

newspaper and other broadcast facilities would probably

have ruled out the WHDH application if this were an all-

initial license case, in this case the preference for WHDH

on past record was not materially affected.’ This, the

Examiner felt, was in accordance with the Commission’s

long-standing policy in renewal proceedings, as established

in Hearst Radto, Inc. (WBAL), 16 F.C.C. 141 ( 1951).

2. Commission’s Decision of January 22, 1969

On January 22, 1969, the Commission reversed the Hear-

ing Examiner’s decision, and entered an order denying the

application of WHDH and granting that of BBI. 16 F.C.C.

2d 1. Its Decision reviewed the comparative merits of the

applications.

Past Performance of WHDH: The Commission’s Deci-

sion. stated that the principles of the 1965 Policy Statement

would be applied to the proceeding. Specifically it invoked

the provision of its 1965 Policy Statement that an appli-

cant’s past record was to be given an affirmative prefer-

ence only if it were outside the bounds of average perform-

ance. It read the Examiner’s findings of fact as showing

that the record of WHDH-TV was “favorable” on the

whole—except for its failure to editorialize—but con-

cluded that it was only within the bounds of average per-

formance, and “does not demonstrate unusual attention to

the public’s needs or interests.” 16 F.C.C. 2d at 10.

Diversification of Media of Mass Communications:

WHDH’s ownership by the Herald-Traveler resulted in an

adverse factor on the diversification criterion. The Com-

1The fourth ay ‘icant, Greater Boston Television Corp.

(II), was disqualified for failing to surmount two preliminary

(non-comparative) questions: it had not made an independ-

ent evaluation of the community’s program needs, nor had

it been able to secure its proposed antenna site.

10a

mission stated that the desirability of maximizing the

diffusion of control of the media of mass communications

in Boston was highlighted by the incident wherein the

Herald-Traveler prematurely published a preliminary

draft of the report of the Massachusetts Crime Commis-

sion without also simultaneously publicizing the report over

the broadcast station. It was brought out at the hearing

that such a news broadcast would have impaired the

story’s “scoop” value for the Herald-Traveler.

The Commission further referred to the contention of

WHODH that since it had never editorialized there existed

a factor that minimized the charge of concentration of

control. The Commission disagreed, stating that licensees

have an obligation to devote reasonable broadcast time

to controversial programs, and the failure to editorialize,

if anything, demonstrated the wisdom of the Commission's

policy for diversification of control of media of mass

communications. On the factor of diversification, it con-

cluded by awarding a substantial preference to both BBI

and Charles River as against WHDH, and giving BBI

a slight edge over Charles River (which also operates an

FM radio station in Waltham, Massachusetts devoted to

. .

serious music).

Integration of Ownership with Management: The Com-

mission affirmed the Examiner’s conclusion that the

applications of both Charles River and BBI reflect an

integration—which in FCC parlance means integration

of ownership with management—of substantially greater

degree than WHDH, whose integration is small. It

restated its view that the public interest is furthered

through participation in operation by proprietors, as in-

creasing the likelihood of greater sensitivity to an area’s

changing needs and programming to serve these needs.

As between Charles River and BBI, the Commission

found that BBI rated a significant preference pn integra-

ponies

iY

}

lla

tion (six of BBI’s stockholders propose to serve as full-

time management, two of whom have had significant

television experience, as opposed to only one Charles

River participating owner, whose experience was limited

to radio).

Proposed Program Service: The Commission agreed

that both BBI and Charles River proposed generally well-

balanced program schedules, and concluded that neither

proposal demonstrated such a substantial difference as

to constitute a “superior devotion to public service.” 16

F.C.C. 2d at 15. |

The Commission assigned a slight demerit to BBI be-

cause of its insufficiently supported proposal for local

live programs, for which it projected an extraordinary

percentage of 36.3% of 160.5 hours of weekly program-

ming. It adopted the findings of the Hearing Examiner

that this was only a “brave generality” which generated

the suspicion that it was flashed for its supposed value

in a comparison.

The Commission issessed a slight demerit against

Charles River in view of the fact that all its stock is

owned by Charies River Civic Touudation, a charitubie

foundation complying with Section 503(c)(3) of the In-

ternal Revenue Code. “Although Charles River proposes

to editorialize, it is manifest that there are limitations on

the amount of time that could be devoted to controversial

questions which may be legislatively related, and that such

limitations are not found in ordinary television station

operations.” 16 F.C.C. 2d at 17.?

The slight demerits assessed against BBI and Charles

2 The Commission was aware that applicant would be fully

taxable, but took into account that the Internal Revenue

Service might take the position that the parent’s exemption

would be lost if «ppliesnt Cid wot comply v.it) Che Code pro-

visions for tax-exempt organizations.

RATE A MEARE NE TNR IR

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12a

River on proposed program service were deemed to offset

each other.

Other Factors: The Commission assessed a demerit

against WHDH because of a failure to obtain the approval

of the Commission on the transfer of de facto control when

Choate was selected as president following the death of his

predecessor, and when his death was followed by the acces-

sion of Akerson.* However, since there was no attempt at

misrepresentation or concealment it was concluded that the

circumstances did not reflect so adversely on character

qualifications as to warrant the absolute disqualification

of WHDH.

The Commission’s Vote: The Commission voted to grant

the application of BBT. Its Decision was written by Com-

missioner Bartley, who was joined by Commissioner Wads-

worth. Three commissioners did not participate in the deci-

sion (Hyde, Cox and Rex Lee). Commissioner Johnson

concurred, with a statement indicating his strong opposi-

tion to the application of WIIDH, and noting that this was

supported not only by diversity of media, but also by the

“healthy” result of having at least one network-affiliated

VHF television station that is independently and locally

owned. “I feel no passion,” he remarked, about the

choice between BBi and Charies River, and stated that

3The Commission approved the Hearing Examiner’s con-

clusion that this was a transfer of control under § 310 of the

Communication Act in view of the “peculiar but not unique

situation of the Herald-Traveler in which management (the

president) is in actual control.” 16 F.C.C. 2d at 17. However,

in view of the lack of Commission precedent the Examiner

deemed it unfair to hold WHDH accountable for failure to

realize the “transfusion of ichor” required FCC approval. The

Commission disagreed, its conclusion (as refined on reconsider-

ation) being that there was a duty to obtain the approval of the

FCC. The Commission also added that licensees had been

instructed to proceed in any case of uncertainty by bringing

the facts to the Commission’s attention, for a determination

whether Commission approval is required.

13a

while normally he would not participate in a case that

essentially involved a reconsideration of matters that arose

before he became a a member of the FCC—‘‘In this in-

stance, however, my participation is necessary to constitute

a working majority for decision. Accordingly, I concur in

today’s decision.’”? 16 F.C.C. 2d at 27. Commissioner

Robert Lee dissented, voting to grant the application of

WHDH, and abstaining from any choice as between BBI

and Charles River.

3. The Commission’s Action on Reconsideration

Reaction to the Commission’s decision was swift. One

distinguished commentator characterized it as a “spas-

modic lurch toward ‘the left’.”* The television industry

began organizing its forces to seek legislative reversal of

what seemed to be a Commission policy, reversing Hearst,

that placed all license holders on equal footing with new

applicants every time their three-year licenses came up

for renewal. On May 19, 1969, the Commission adopted

a separate Memorandum Opinion and Order on the peti-

tions of all parties for a rehearing. 17 F.C.C.2d 856.

While the Commission granted in part the petition for

reconsideration by WHDH essentially its second opinion

restated and reinforced the views stated in the Decision.

It ‘may be useful to mention the explication put forward,

as it happens in response to exceptions by the favored

applicant (BBI), which urged that the FCC state ex-

plicitly that its decision did not reaffirm the earlier grant

to WHDH. BBI sought clarification of the status of

WHDH as an applicant for initial license, rather than

for renewal of license. Instead the FCC recited that

WHDH’s application was treated as one for the renewal

of its license, and explicitly adopted the Examiner’s

conclusion that modification of the FCC’s 1962 decision

(granting a 4-month license) would not serve the public

4 Jaffe, WITDH: The FCC and Broadcasting License R--

newals, 83 HARV. L. REV. 1693, 1700 (1969).

l4a

interest, that no change in that ruling was required as a

result of Choate’s death, and that reevaluation of the

original record would be contrary to the public interest

best served by terminating this lengthened proceeding.

The Commission added a closing paragraph to clarify

that this was not an ordinary renewal case since “unique

events and procedures . . . place WHDH in a substan-

tially different posture from the conventional applicant

for renewal of broadcast license.” The FCC noted that

WHDH’s operation, although conducted some 12 years,

has been for the most part under temporary authoriza-

tions. It did not receive a license to operate a TV station

until September 1962, and then for only 4 months, because

of the Commission’s concern with the “inroads made by

WHODH upon the rules governing fair and orderly adjudi-

cation.” And in the renewal proceeding the FCC ex-

pressly ordered that new applications could be filed for

a specified 2-month period, which was done and a proceed-

ing held thereon. ,

4, Subsequent Developments

While the Cammission’s decision was on appeal to this

court, the legislative pressure continued to build. A bill,

introduced by Senator Pastore, Chairman of t:ie Comimu-

nications Subcommittee of the Senate Commerce Commit-

tee, proposed to require a two hearing procedure, wherein

the issue of renewal would be determined prior to and to

the exclusion of the evaluation of new applications.5 On

January 15, 1970, the Commission issued a new Policy

Statement, which, while retaining the single hearing

approach, provided that the renewal issue would be

determined first, in a proceeding in which new applicants

5S. 2004, 91st Cong., Ist Sess. (1969) was sponsored by 22

Senators and 18 Representatives.

lda

would be able to appear to the extent of calling attention

to the license holder’s failings. 22 F.C.C. 2d 424. Only upon

a refusal to renew would full comparative hearings be held.

The Policy Statement set forth that a licensee with a

record of “solid, substantial service” to the community,

without serious deficiencies, would be entitled to renewal

notwithstanding promise of superior performance by a

new applicant. This was said to provide predictability

and stability of broadcast operations, yet to retain the

competitive spur since broadcasters will wish to ensure

that their service is so “substantial” as to avoid the

need for comparative proceedings.

The Commission expressly stated that its policy state-

ment “is inapplicable, however, to those unusual cases,

generally involving court remands, in which the renewal

applicant, for sui generis reasons, is to be treated as a

new applicant.” 22 F.C.C. 2d at 430. In such case the license

holder cannot obviate the comparative analysis called for by

the established Policy Statement, 1 F.C.C. 2d 393 (1965).

Wl. THE ISSUES ON APPEAL,

A. General Conformance of Agency Disposition

to Salient Principles of Rule of Law

We have presented at some length and detail the Com-

mission’s proceedings and disposition because we have

given particular consideration to the Commission’s pro-

cedures, findings and reasons, in this case, in order to

assure ourselves that the decision on appeal satisfies the

basie requirements of the Rule of Law, as established

by Administrative Law doctrine. That is always the

court’s task, but it is one discharged with vigilance in

a case like this, where the administrative process was

at one time blemished by ex parte contacts with agency

l6a

heads.® Our alertness was also prompted in this case by

the circumstance first that the agency rejected the result

reached by its Hearing Examiner, and, further, that it

was manifestly in a state of flux and evolution of its

approach to the kind of issue presented by this proceeding.

Approaching this case as we have with full awareness of

and responsiveness to the court’s ‘‘supervisory’’ function

in review of agency decisions,’ it may be appropriate to

take note of the salient aspects of that review. It begins

at the threshold, with enforcement of the requirement

of reasonable procedure, with fair notice and opportunity

to the parties to present their case.* It continues into

examination of the evidence and agency’s findings of facts.

for the court must be satisfied that the agency’s eviden-

tiary fact findings are supported by substantial evidence,®

and provide rational support for the agency’s inferences

of ultimate fact.’ Full allowance must be given not only

for the opportunity of the agency, or at least its exami-

ners, to observe the demeanor of the witnesses, but also

for the reality that agency matters typically involve a

kind of expertise—sometimes technical in a scientific

sense, sometimes more a matter of specialization in kinds

of regulatory programs. Expert discretion is secured,

6 Jacksonville Broadcasting Corp. v. FCC, 121 U.S.App.

D.C. 69, 348 F.2d 75, cert. denied, 382 U.S. 893 (1965).

7 L. JAFFE, JUDICIAL CONTROL OF ADMINISTRATIVE ACTION

589 (1965).

8 Goldberg v. Kelly, 397 U.S. 254 (1970); Greene v. Mc-

Elroy, 360 U.S. 474 (1959) ; Radio Athens, Inc. v. FCC, 130

U.S.App.D.C. 333, 401 F.2d 398 (1968).

® Consolidated Edison Co. v. NLRB, 305 U.S. 197 (1938).

10 City of Chicago v. FPC, 128 U.S.App.D.C. 107, 115, 385

F.2d 629, 637 (1967), cert. denied, 390 U.S. 945 (1968).

17a

not crippled, by the requirements for substantial evi-

dence, findings and reasoned analysis. Expertise is

strengthened in its proper role as the servant of govern-

ment when it is denied the opportunity to “become a

monster which rules with no practical limits on its dis-

cretion.” Burlington Truck Lines v. United States, 371

U.S. 156, 167 (1962). A court does not depart from its

proper function when it undertakes a study of the record,

hopefully perceptive, even as to the evidence on technical

and specialized matters, for this enables the court to

penetrate to the underlying decisions of the agency, to

satisfy itself that the agency has exercised a reasoned

discretion, with reasons that do not deviate from or

ignore the ascertainable legislative intent.1 “The defer-

ence owed to an expert tribunal cannot be allowed to slip

into a judicial inertia.” Volkswagenwerk v. FMC, 390 U.S.

261, 272 (1968).

Assuming consistency with law and the legislative man-

date, the agency has latitude not merely to find facts and

make judgments, but also to select the policies deemed

in the public interest. The function of the court is to

assure that the agency has given reasoned consideration

to all the material facts and issues.’ This calls for

insistence that the agency articulate with reasonable

clarity its reasons for decision, and identify the signifi-

cance of the crucial facts, a course that tends to assure

that the agency’s policies effectuate general standards,

Los Angeles v. FMC, 128 U.S.App.D.C. 156, 159, 385

F.2d 678, 681 (1967).

12Permian Basin Area Rate Cases, 390 U.S. 747, 792

(1968); City of Pittsburgh v. FPC, 99 U.S.App.D.C. 113,

237 F.2d 741 (1956); Scenic Hudson Preservation Confer-

ence v. FPC, 354 F.2d 608 (2d Cir. 1965), cert. denied, 384

U.S. 941 (1966).

ETT

TKS a 7

we se Ra ites. SURE

18a

applied without unreasonable discrimination.* As for

the particular subject of comparative hearings, the find-

. ings must cover all the substantial differences between the

applicants and the ultimate conclusion must be based on

a composite consideration of the findings as to each

applicant."

Its supervisory function calls on the court to intervene

not merely in case of procedural inadequacies, or by-

passing of the mandate in the legislative charter, but

more broadly if the court becomes aware, especially from

a combination of danger signals, that the agency has not

really taken a “hard look” at the salient problems,?® and

has not genuinely engaged in reasoned decision-making.

If the agency has not shirked this fundamental task,

however, the court exercises restraint and affirms the

agency’s action even though the court would on its own

account have made different findings or adopted different

standards. Nor will the court upset a decision because

of errors that are not material, there being room for the

doctrine of harmless error.’® If satisfied that the agency

has taken a hard look at the issues with the use of

13 WAIT Radio v. FCC, 1385 U.S.App.D.C. 317, 320, 418

F.2d 1153, 1156 (1969) ; City of Chicago v. FPC, 128 U.S.App.

D.C. 107, 385 F.2d 629 (1967), cert. denied, 390 U.S. 945

(1968).

14 Johnston Broadcasting Co. v. FCC, 85 U.S.App.D.C. 40,

46, 175 F.2d 351, 357 (1949).

16 WAIT Radio v. FCC, 185 U.S.App.D.C. 317, 418 F.2d

1153 (1969) ; Pikes Peak Broadcasting Co. v. FCC, —— U.S.

App.D.C. ——, 422 F.2d 671, cert. denied, 395 U.S. 979

(1969).

16 Braniff Airways v. CAB, 126 U.S.App.D.C. 399, 411-14,

879 F.2d 453, 465-68 (1967). The doctrine must be used

gingerly, if at all, when basic procedural rights are at stake.

Yiu Fong Cheung v. INS, 185 U.S.App.D.C. 244, 248, 418 F.2d

460, 464 (1969).

19a

reasons and standards, the court will uphold its findings,

though of less than ideal clarity, if the agency’s path

may reasonably be discerned,’ though of course the

court must not be left to guess as to the agency’s findings

or reasons.’®

The pfocess thus combines judicial supervision with a

salutary principle of judicial restraint,® an awareness

that agencies and courts together constitute a “partner-

ship” in furtherance of the public interest,?° and are

“collaborative instrumentalities of justice.”*1 The court

is in a real sense part of the total administrative process,

and not a hostile stranger to the office of first instance.

This collaborative spirit does not undercut, it rather

underlines the court’s rigorous insistence on the need for

conjunction of articulated standards and reflective find-

ings, in furtherance of even-handed application of law,

rather than impermissible whim, improper influence, or

misplaced zeal.2? Reasoned decision promotes results in

17 Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 595

(1945); WAIT Radio v. FCC, 185 U.S.App.D.C. 317, 320,

418 F.2d 1153, 1156 (1969); Pikes Peak Broadcasting Co.

— Ann ANN TA OA £7

Ve FCC, U.S. pp.v.c > Tee Lees 671, cere. adeiied,

395 U.S. 979 (1969).

18 Radio Station KFH Co. v. FCC, 101 U.S.App.D.C. 164,

247 F.2d 570 (1957).

19 Braniff Airways v. CAB, 126 U.S.App.D.C. 399, 379 F.2d

453 (1967) ; WAIT Radio v. FCC, 135 U.S.App.D.C. 317, 320,

418 F.2d 1158, 1156 (1969).

20 Niagara Mohawk Power Corp. v. FPC, 126 U.S.App.D.C.

376, 383 n.24, 379 F.2d 153, 160 n.24 (1967).

“1 United States v. Morgan, 3138 U.S. 409, 422 (1941).

22 City of Chicago v. FPC, 128 U.S.App.D.C. 107, 116, 122,

385 F.2d 629, 688, 644 (1967); Am-Chi Restaurant, Inc. v.

Simonson, 130 U.S.App.D.C. 37, 38, 396 F.2d 686, 687 (1968) ;

Proctor v. Hackers’ Board, ——-A.2d —— (D.C. Ct. App., July

28, 1970). |

saa a

ny kins ey actee Mada Ack ecaek de hai UY BR bl I aie aL

3

7

F

a

4

3

20a

the publie interest by requiring the agency to focus on

the values served by its decision,’ and hence releasing

the clutch of unconscious preference and irrelevant preju-

dice. It furthers the broad public interest of enabling the

public to repose confidence in the process as well as the

judgments of its decision-makers,

There was once a day when a court upheld the “sen-

sible judgments” of a board, say of tax assessors, on the

ground that they “express an intuition of experience

which outruns analysis.” ** There may still exist narrow

areas where this approach persists, partly for histori¢

reasons.

Generally, however, the applicable doctrine that has

evolved with the enormous growth and significance of

administrative determination in the past forty or fifty

years has insisted on reasoned decision-making. The re-

quirement of reasoned decision-making is under great

tension when a certificating agency is required to choose

between two or more applicants endowed with virtually

equivalent qualifications. But at least so long as the gov-

ernment uses the forms of adjudication, and does not turn,

e.g. to bidding, or even chance, as the most feasible guar-

antor of neutral and acceptable selection,”> reasoned

decisioi-iiahkiny remains a 1eyquireient of oir law.

Judicial vigilance to enforce the Rule of Law in the

administrative process is particularly called upon where,

as here, the area under consideration is one wherein the

Commission’s policies are in flux. An agency’s view of

23 Joseph v. FCC, 131 U.S.App.D.C. 207, 211, 404 F.2d

207, 211 (1968).

24 Chicago B. & Q. Ry. v. Babcock, 204 U.S. 585, 598 (1907).

25 Some instances of a principled use of luck, with ground

rules known in advance, are cited in Star Television, Inc. v.

-FCC, 185 U.S.App.D.C. 71, 80 n.18, 416 F.2d 1086, 1095 n.18

(dissenting opinion), cert. denied, 396 U.S. 888 (1969).

2la

what is in the public interest may change,** either with or

without a change in circumstances. But an agency changing

its course must supply a reasoned analysis indicating that

prior policies and standards are being deliberately changed,

not casually ignored,”’ and if an agency glosses over or

swerves from prior precedents without discussion it may

cross the line from the tolerably terse to the intolerably

mute.”

The net result of our study and reflection in this case is

our conclusion that the record findings and opinions before

us, while not without problems, reveal in essence that the

Commission has been diligent to take a hard look at tine

problem areas, and to set forth with clarity grounds of

reasoned decision which we think permissible.

It merits interjection that the shape of the agency’s

disposition was aided in no small measure by the Initial

Decision of the Hearing Examiner, and the Examiner’s

careful and indeed exhaustive review of ‘he evidence and

issues, and comparisons of the applicants in regard to each

of the pertinent criteria. It does not decry the significance

and value of the Examiner’s efforts that the Commission

aisagréed with his decision and with several! of his con-

clusions; indeed, it attests to his care that his decision

was useful although the conclusion was reversed.

The Examiner’s decision is part of the record, and the

°6 City of Chicago v. FPC, 128 U.S.App.D.C. 107, 115, 385

F.2d 629, 637 (1967), cert. denied, 390 U.S. 945 (1968);

Pinellas Broadcasting Co. v. FCC, 97 U.S.App.D.C. 236, 238,

230 F.2d 204, 206, cert. denied, 350 U.S. 1007 (1956).

“7 New Castle County Airport Comm’n. v. CAB, 125 U.S.

App.D.C. 268, 270, 371 F.2d 733, 735 (1966), cert. denied,

387 U.S. 930 (1967)

*8 Marine Space Enclosures, Inc. v. FMC, —— U.S.App.D.C.

, 420 F.2d 577, 585 (1969) ; VVATT Rodio v. FCC, 125 US.

App. D.C. 317, 321, 418 F.2d 1153, 1157 (1969).

22a

record must be considered as a whole in order to see

whether the result is supported by substantial evidence.”

The agency’s departures from the Examiner’s findings are

vulnerable if they fail to reflect attentive consideration to

the Examiner’s decision.*® Yet in the last analysis it is the

agency’s function, not the Examiner’s, to make the findings

of fact and select the ultimate decision, and where there is

substantial evidence supporting each/ result it is the

agency’s choice that governs.*? Here, the Commission ac-

cepted the Examiner’s findings and conclusions to a sub-

stantial degree; and when it did not, the Commission made

clear not only its awareness of what the Examiner had

concluded, but also its reasons for taking a different

course.

The court’s conclusion as to the general scope and char-

acter of the agency’s findings and reasoned decision pro-

vides prologue and perspective for the discussion of the

particular contentions raised by appellants.

a

is. Issues Posed by Appellant WHDH, Inc.

1. Contention that WHDH Was Entitled to Same Consid-

eration As Renewal Licensee

WHDH’s central contention rests on its 4-month operat-

ing license, duly granted b,” the Commission * in 1962, and

29 Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951).

30 American Fed. of Television & Radio Artists v. NLRB,

129 U.S.App.D.C. 399, 405, 395 F.2d 622, 628 (1968); Retail

Store Employees Union v. NLRB, 123 U.S.App.D.C. 360, 360

F.2d 494 (1965).

31 Oil, Chemical & Atomic Workers v. NLRB, 124 U.S.App.

D.C. 118, 116, 362 F.2d 943, 946 (1966) ; Lorain Journal Co. v.

FCC, 122 U.S.App.D.C. 127, 131, 351 F.2d 824, 828 (1965),

cert. denied, 383 U.S. 967 (1966).

82 The Examiner put it that WHDH recognized that “it

23a

the Commission’s determination, in the decision before us

on this appeal, to adhere to the grant of the original

application of WHDH to that extent.

WHODH makes no serious contention that it could pro-

test the grant to intervenor BBI if the Commission pro-

ceeded validly in comparing these applications by the cri-

teria used by the Commission for appraisal of new appli-

cants for facilities. On that basis it is undeniable that a

strong preference would be available to BBI in view of the

‘‘integration’’ and ‘‘diversity’’ criteria. WHDH objects

that such preferences were set forth by the 1965 Policy

Statement governing comparative hearings involving new

applications for new facilities, and are not properly avail-

able in a renewal proceeding. It was by application of the

criteria generally used for renewal proceedings that the

Examiner entered a decision in favor of WHDH. The

failure of the Commission to apply renewal criteria is the

core of the WHDH appeal.

The application of the criteria in the 1965 Policy State-

ment is said to impose an unlawful forfeiture on WHDII

amounting to a denial of due process, and to constitute

au uuproper refusal io honor ihe esiabvlished policy of

promoting broadcast license stability.

There is no doubt that the Commission applied to this

proceeding, although it is a renewal proceeding, the same

criteria that it normally applies for hearing new appli-

eants for facilities. The effect of that determination was

to give WHDH no predicate for renewal on the basis of a

sound or “favorable” record in its license operation, and

to hold that only an exceptional record would warrant

special consideration (since all applicants would be pre-

sumed to offer a normal range of operation).

?

would be unlikely to prevail under the conventional criteria.”

16 F.C.C, 2d at 229, para 721.

5B ge PRN IT NRL BEE TEEN NEE LED RS ERE IPD

yan coat cd Aho geoelandys oe Le ee ae a ee ee

pctees

PT eee ee ee

MERELY

SAU hasnt Py eRe ees Tn ae

24a

If the case were before us solely on the Decision adopted

by the Commission on January 22, 1969—susceptible of the

construction that the 1965 Policy Statement was applicable

to all renewal proceedings- -we would be presented with a

different question. While the “forfeiture” terminology

invoked by WIIDII may be more of a conclusion than a

reason, and while this statute does not reflect the same

concern for “security of certificate” that appears in other

laws, cf. CAB v. Delta Air Lines, Inc., 367 U.S. 316, 322 n.6,

324-25 (1961), there would be a question whether the Com-

mission had unlawfully interfered with legitimate renewal

expectancies implicit in the structure of the Act. In addition,

a question would arise whether administrative discretion

to deny renewal expectancies, which must exist under any

standard, must not be reasonably confined by ground rules

and standards—a contention that may have increased sig-

nificance if First Amendment problems are presented on

renewal application by 4 newspaper affiliate, including the

possibility that TV proceedings may come to involve over-

view of newspaper operations. Those problems are magni-

fied if a licensee on the one hand may avoid comparison only

by maintaining extraordinary. performance, and on the

other hand court disaster. in the event of comparison, by

virtue of the diversity policy, whether expressed in a formal

demerit or some inchoate burden.

Fortunately, the present posture of this case permits us

to refer to these problems as matters that are not involved

in our decision. The Commission’s opinion of May 19,

1969, entered on reconsideration, expressly puts this case

in a special and unique category because of the past his-

tory of WHDH.**

83 The Commission said (par. 40) :

In closing, we think it should be made clear that our

decision herein differs in significant respects from the

ordinary situation of new applicants contesting with an

25a

This interpretation of its action is underscored by the

1970 Policy Statement on Comparative Hearings Involving

Renewal Applicants.** This Statement in essence carries

forward the general policy on renewals expressed in

Hearst Radio, Inc. (WBAL), 15 F.C.C. 1149 (1951), on

which WHDH places substantial reliance. The Commis-

sion’s 1970 statement puts its policy thus (see 22 F.C.C. 2d

at 425):

[I]f the applicant for renewal of license shows in

a hearing with a competing applicant that its pro-

gram service during the preceding license term has

been substantially attuned to meeting the needs and

interests of its area, and that the operation of the

station has not otherwise heen characterized by ser-

ious deficiencies, he will be preferred over the new-

comer and his application for renewal will be granted.

applicant for renewal of license, whose authority to

‘operate has run one or more regular license periods of

3 years. Thus, although WHDH has operated station

WHDH-TV for nearly 12 years, that operation has been

conducted for the most part under various temporary

authorizations while its right to operate for a regular

3-year period has been under challenge. Not until late

Sepiember i962 did WHDH receive a iicense to operate

its television station, and even then its license was

issued for a period of 4 months only because of the

Commission’s concern with the “* * * inroads made by

WHDH upon the rules governing fair and orderly ad-

judication * * * .” Again, unlike the usual situation

when an applicant files for renewal of license, after

WHDH filed its renewal application we issued an order

directing that new applications for channel 5 would be

accepted within a specified 2-month period. Such appli-

cations were filed, accepted, and entered into the pro-

ceeding herein. Those unique events and procedures, we

believe, place WHDH in a substantially different pos-

ture from the conventional applicant for renewal of

broadcast license.

34 22 }.C.C, 2d 424 (1970).

26a

llis operation is not based merely upon promises to

serve solidly the public interest. He has done so.

Since the basic purpose of the act—substantial serv-

ice to the public—is being met, it follows that the con-

siderations of predictability and stability, which also

contribute vitally to that basic purpose, call for

renewal.

The permissibility of the general policy continued by this

Statement is not in issue since that is not challenged, if any-

thing it is relied on, by WHDH. Assuming its validity, the

Commission’s failure to apply the policy to WHDH is not

error.

The Commission’s 1970 Policy Statement carries a pro-

viso, set forth in the footnote,® indicating that it is inapplic-

able to “those unusual cases, generally involving court

remands, in which the renewal applicant, for sui generis

reasons, is to be treated as a new applicant.” In such cases

the applicant’s record will be examined, but subject to the

comparative analysis called for by the 1965 Policy State-

ment.

We think the distinction drawn by the Commission, in

both this case and the 1970 statement, providing for spe-

cial consideration of certain renewal applicants, as in

remand cases, as if they were new applicants, to be rea-

sonable both generally and in its application to the case

before us.

85 “The policy statement is inapplicable, however, to those

unusual cases, generally involving court remands, in which

the renewal applicant. »r sui generis reasons, is to be treated

as a new applicant. I. such cases, while the past record, fav-

orable or unfavorable, is of course pertinent and should be

examined, the WBAL policy, as here amplified, is inapplic-

able; a good record without serious deficiencies will not be

controlling in such cases so as to obviate the comparative

analysis called for in the ‘Policy Statement on Comparative

Broadcast Hearings,’ 1 F.C.C. 2d 393 (1965).” 22 F.C.C. 2d at

430.

27a

We have re-examined the Commission docket which was

before us in 1963, when we remanded for further pro-

ceedings. The Commission’s action was based on its critical

decision of July 14, 1960, where it reviewed the record and

concluded that Robert Choate, who was the principal officer

of WHDH, had “demonstrated an attempted pattern of

influence.” *¢

86 See 29 F.C.C. 204, at 211-212:

5. However, we do conclude that Choate demonstrated

an attempted pattern of inffuence. He indicates that his

reason for the initial meeting with McConnaughey was

to “size up” the new Chairman but, accepting that as

true as far as it goes, it does not appear to be a full

disclosure of his motives. While the Herald-Traveler

had a legitimate interest in the views of the new Chair-

man of the agency regulating its radio station and the

television station it soon hoped to have, in the normal

course of events its contacts with the Commission would ’

be conducted through its professional representatives %

and its appraisal of the individual Commissioners would ;

be formulated from the opinions of these gentlemen.

The record contains no persuasive explanation of why

Choate felt it necessary to seek a personal relationship

with McConnaughey, and we conclude that his reason

was to afford the Chairman an opportunity to “size him

up”; that is, to demonstrate by his demeanor and pres-

ence that he was a responsible man representing re-

sponsible interests who merited favorable consideration

of their application to conduct an operation in the public

interest.

6. This view of Choate’s motive in arranging the first

luncheon is buttressed by the fact of the second luncheon

and its admitted purpose of providing an opportunity to

present McConnaughey with a brief on the Dempsey

amendment. While WHDH undoubtedly had a right to

express its views to the Commission on communications :

legislation concerning it, its attempted method of pres- d

entation must be judged in the light of the circumstances

then prevailing. It could not have escaped Choate’s

attention that the subject of the legisiation was an

28a

Thus the Cominission superseded the September 23, 1959

decision of Special Hearing Examiner Stern, 18 R.R.

1101, who had concluded that the activities of Choate

were not such as to render the construction permit to

WHODI either void or voidable. Justice Stern reasoned

that Choate was visiting Chairman McConnaughey not in

his adjudicative role but as one who had been a hostile

important issue in the pending adjudicatory praceed-

ing, nor could he have believed that McConnaughey

might read such a brief without perceiving the perti-

nence of its arguments to the disposition of the Boston

case. If he felt it necessary to present such a brief to the

Commission at that time, he must be presumed to have

been aware of the relevance of the brief to the pending

case, and, if he wished to escape the stigma of ex parte

representation, the presentation should have been in such

form as would afford his opponents an opportunity to

make such reply as they might deem appropriate. Fur-

ther, there is no persuasive explanation of why Choate,

who is not shown to be a specialist in communications

law, should consider himself, rather than the draftsman

of the proposed legislation or some other experienced

counsel, to be the proper person to present a brief on so

technical and complex a subject. That McConnaughey

did not accept and, therefore, could not have been influ-

enced by the brief is irrelevant to the fact that Choate

attempted, in effect to influence the outcome of the case

by presenting argument on a portion thereof to a mem-

ber of the Commission ex parte.

7. The very attempt to establish such a pattern of in-

fluence does violence to the integrity of the Commission’s

processes. Such an attack on the integrity of the proc-

esses of any adjudicatory body brings into play its in-

herent right to protect such processes, and one of the

remedial measures available is its discretion in the void-

ing of any previous action that may have been tainted

by such attempt. The facts revealed on this record

persuade us that the Commission’s processes can best be

protected in this instance by exercising our discretion to

void the grant to WHDH.

29a

witness before a legislative committee, and “did not make

any culpable attempt to influence his vote in the Channel 5

proceedings.” Nor was such effort made on any of the

occasions when Choate had casual social contacts, as at

lunches and receptions, with the Commissioners. Justice

Stern interpolated that social relations with public officials

are not taboo, for they are not required to live in ivory

towers, so long as no “marked attention or unusual hos-

pitality” is involved. And Justice Stern reiterated in

strongest terms that there was no attempt on.the part of

Choate to present the merits of the [erald’s application

or its organization, nothing that could justifiably be re-

garded as impairing the propriety of the award made.

The Commission took a different view. The matter is

important enough that we have set out its findings (see

note 36), to let them speak for themselves. The essence of

the matter is that the Commission discerned that although

Choate did not in terms refer to his application, his pur-

pose was not to size up the Chairman as much as to let

the Chairman size him up—“to demonstrate by his de-

meanor and presence that he was a responsible man

representing responsible interests who merited favorable

consideration of their application.”

The fabric of Administrative Law, stiffened with Jus-

tice Stern’s own eloquence in another proceeding, estab-

lishes the discretion available on principles of fairplay to

take appropriate action when parties seek to influence the

results of a proceeding by factors not a part of the hearing

record. WKAT, Inc. v. FCC, 111 U.S.App.D.C. 253, 260,

296 F.2d 375, 382, cert. denied, 368 U.S. 841 (1961). Although |

in the present case, unlike others, this Examiner perceived

no misconduct, that issue, and the assessment of the serious-

ness of the misconduct, involves the judgment and discre-

tion of the Commission. The Commission—wise in the ways

of the administrative world—must he given reasonable lati-

tude in its efforts to keep its processes free of taint. The

ce

CEG” ANG NERO TE oe

SR SFG CE

nN

ut. SR

30a

Comission was within the range of its discretion when it

found misconduct, for the fact that Choate’s effort was low

key did not render it less significant, or less likely to be

suecessful. The Commission was within the range of sound

discretion when it decided to take remedial measures be-

cause the “attempt to establish such a pattern of influence

does violence to the integrity of the Commission’s proc-

esses.” 29 F.C.C. at 212.

There is no chart that can forecast the flow and pace of

sound administrative discretion, and hence there is always

some possibility of surprise. The same might be said of

stiffenings and relaxations of sentencing policy that pulse

through the courts, often long after the crimes. Discretion

is particularly broad when an agency is concerned with

fashioning remedies and_ setting enforcement policy.

Consolo v. FMC, 383 U.S. 607 (1966) ; WOKO, Ine. v. FCC,

71 U.S.App.D.C. 228, 109 F.2d 665 (1939). The burden

of establishing a claim of Ulegality is a heavy one, and

WIHIDIL cannot successfully contend that the judicial

conscience must be shocked by what the Commission has

done.

The Commission stayed within the range of sound dis-

cretion when it adopted, as successive remedial measures,

voiding the original grant to WHDH (though not void ab

initio) ; remanding for a comparative reevaluation of the

original applicants; confining the grant given to WHDH

as the better of the original applicants to a mere 4-month

operating license; providing for a reopening period of two

months, in order to permit a comparative evaluation with

new applicants proposing to serve the public interest.

While the precise nature of the forthcoming comparative

evaluation was not spelled out in detail, WHDH certainly .

‘has no basis for suggesting it had an assurance of being

treated by the same criteria as those generally accorded to

renewal applicants.

dla

If anything turned on this we would have to recognize

that WHDH was not expressly informed in advance that

the comparison between WHDH and its rivals was to be

conducted by reference to the criteria normally used for a

new application devoid of any elements of renewal. But

this did not affect the range of proof which any party

might tender or contest. Although the 1965 Policy State-

ment did not purport to deal with the problems raised by

renewal applications the Commission concluded in the

same year that the policy statement properly governed the

nature and scope of evidence contemplated for renewal

proceedings. Seven (7) League Productions, Inc. (WII1),

1 F.C.C. 2d 1597, 1598 (1965). Each applicant was aware

that its task was to make the best case possible on the

basis of program offering, integration, diversification,

past performance and any other matters the parties asked

the Commission to consider as pertaining to licensee fit-

ness. As the Hearing Examiner noted, all the applicants

were given the fullest opportunity to display their ad-

vantages. It is-ecrtainly not uncommon for a contender to

be called on to put forward all the factors he deems favor-

able though he cannot be confident what absolute or rela-

tive weichts will he aceorded by those charged with

appraisal and judgment.

There being no impediment in the content or shape of

the record due to lack of fair notice, certainly we cannot

say the Commission was unreasonable when in the last

analysis it used the tainted overtures of WHDH as a

reason for fresh consideration of all applicants, without

any special advantage to WIHDH by virtue of its opera-

tion under lawful but temporary authority. This is what

the law seeks to ensure whenever selection of a contender

must be made after a hearing, although one of the appli-

ecants has been given temporary authority, either without

a hearing at all because of emergency," or after a proceed-

37 Algonquin Gas Transmission Co. v. FPC, 201 F.2d 334,

SSK MRE TE

ep aa a ge are

32a

ing subject to a defect. Braniff Airways v. CAB, 126 U.S.

App.D.C. 399, 379 F.2d 453 (1967).

The complaint of WHDH must be appraised in the light

of the courses available to the Commission for coping

with the problem presented by the activities of Mr. Choate.

At one extreme, the Commission was being asked (by

Greater Boston) to take it into account to such extent as

would in effect impose an absolute disqualification; this it

did not do.

WUDHU in effect suggests the other extreme—a _ brush-

ing aside of the entire matter on the ground that the

offending officer is no longer involved, and the corporation

has not profited by his delict. The Examiner used this

conception on the ground that no reason for deterrence

could apply to the unimplicated officers presently manag-

ing the station. But the policy of deterrence may have a

broader significance. It may take into account that an

officer might well be willing to try his hand at an im-

propriety if all that is involved is a calculated risk as to

his own position (which would be enormously enhanced

if he is successful), whereas he would possibly be deterred

if he realized that his mal-adventure, if discovered, would

be costly to the friends and associates who had invested in

the enterprise.

In between these extremes are possibilities like a com-

parative hearing with a demerit assigned to WHDH; that

was done by the Commission in its Decision of September

25, 1962, which, however, left the Commission with the

conviction that while it would still make a grant to

WHDH, a customary 3-year grant was not in the public

interest.

The Commission’s action in exposing WHDH to another

public hearing with new applicants, a hearing scheduled

838 (1st Cir. 1953) ; Pennsylvania Gas and Water Co. v. FPC,

— U.S. App. D.C. : F.2d —— (No. 23,051, March

19, 1970).

= —

i,

soon after the date of its order, is a disadvantage from the

viewpoint of WIIDI, but we cannot say it was contrary

to the public interest. After this court's remand, to take

account of Choate’s death, the Commission set a course

that retained its order for a hearing with new applicants,

but avoided a specifie demerit for WITDIL in that com-

parative consideration. This was preferable to an ap-

proach wherein a demerit would be inserted into the com-

parison with new applicants, preferable both for WIIDIL

and, it would seem, for the public interest.* | WITDH

insists, however, on an approach which would give it all

the rights and expectancies of an ordinary renewal appli-

cant. In the ordinary case 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 secu-

rity. This position does not fairly characterize the situation

of a licensee which, by virtue of its officer’s impropriety,

has been given only temporary operating authority of one

kind or another (including the 4-month license). This was

the conclusion of both the Hearing Examiner and the Com-

mission (as refined on reconsideration), and we think it

within the range of reasonable discretion.

ei ash Be oo: + ae ed

The determination that in certain cases a renewal appli-

cation must be conducte1 on the basis of a new compara-

tive consideration is not necessarily a “punishment” for

wrongdoing. The same result may follow even where the

88 When an applicant is required to bear a demerit as-

signed for non-comparative reasons, the public may wind up

being denied the services of a superior broadcaster. Where

that demerit is not necessary for deterrent reasons, it would

seem counterproductive. As to the final comparative hearing

the blend of deterrence and public interest in selecting the

broadcaster was accomplished by requiring WHDH to face a

de novo comparative hearing, but without a continuing

demerit.

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ineptitude and errors of the Commission may be more to

blame than the licensee for the state of affairs precipita-

ting that result.6* The central consideration is that there

is a special class of cases where this method of reaching

the optimum decision in the public interest may be fairly

invoked without undercutting whatever expectancies may

attach in general to licensees seeking renewal.

The Commission's action in pitting WITDH against its

rivals for fresh comparative consideration is not nega-

tived by its insistence on its 1962 issuance, preserved in its

1969 decisions, of a license. Presumably, the use of a 4-

month license rather than some other kind of temporary

operating authority reflected practical, procedural eonsid-

erations. Compare WK AT, Inc. v. FCC, 111 U.S.App.D.C.

253, 261, 296 F.2d 375, 383, cert. denied, 368 U.S. 841 (1961).

The Commission may have thought the 4month license

would be preferable as serving to finalize the proceeding, so

far as the then-operative rival was concerned, though this

was later undercut by this court’s remand. The 4-month

license did not operate to make WHDH a conventional

applicant for renewal, and that is the core of its position in

this court.

The Commission did not try, as WHDH suggests, to

erase the operating record and experience of WHDII and

its principals. In effect what it did was to hold WIHIDH

to a higher comparative standard than that required of

renewal applicants generally in order to be able to invoke

a past record as a reason for rejecting the promise of

better public service by new applicants. The Hearing

39 Cf. Office of Communications of The United Church of

Christ v. FCC, —— U.S. App. D.C. , 425 F.2d 543 (1969),

especially at 551, for statement of Judges McGowan and

Tamm, who along with Judge Burger, were on original panel,

accompanying their vote to deny FCC petition for rehearing

en bane. ws

Soa

Examiner considered that a good record of past perform-

ance was a more reliable indicator of public service than

glowing promise. The Examiner was not as impressed as

the Commission by the reliability of its criteria as indi-

cators validating the likelihood of performance. Also, he

does not seem to have taken into account the problem that

his approach provided in effect a “huilt-in-lead” from

actual operation, although he disclaimed any right of

WIIDIL to a privileged position as an applicant for re-

newal. The Commission, on the other hand, was more

concerned with keeping the parties as close as possible to

a new application situation, without undue advantage

acquired from the physical fact of operation under a

temporary authorization.

We think the course adopted by the Commission cannot

be considered as arbitrary or unreasonable, or as in

violation of legislative mandate. The remedies fashioned

through the exercise of its discretion are not without an

element of noveity. “In the evolution of the law of reme-

dies some things are bound to happen for the ‘first time.’ ”

International Bhd. of Operative Potters v. NLRB, 116

U.S.App.D.C. 35, 39, 320 F.2d 757, 761 (1963). Hand

crafted orders and procedures are particularly appropriate

for unique fact situations. On the unique facts presented,

WHDH was neither a new applicant nor a renewal appli-

cant as those terms are generally construed. Since these

orthodox classifications, and the rules generally pertaining

to each, were not meaningfully available to the Commis-

sion on these facts, that body soundly formulated an inter-

mediate position for the instant case. There was no error.

2. Other Issues

The other issues raised by WHDH do not require re-

versal. It was rated inferior to its rivals on the diversifi-

cation and integration criteria.

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36a

a. Diversification of Controls of Media of Mass Communi-

cations

The Commission assigns a preference to Diversification

of Control of the Media of Mass Communications. Plainly

the Commission does not exceed its powers in seeking to

avoid ratlier than foster a concentration of control of the

sources of news and opinions."?

The need for diversity, and the danger of concentration,

is not as great in Boston as in smaller markets. .That

consideration apparently contributed to the Commission’s

original 1957 decision, and again its 1962 decision, follow-

ing a comparative hearing, to prefer WHDH to its then

rival. That the diversity criterion was prominent in the

1969 rejection of WILDH does not necessarily indicate that

the Commission’s standards changed. It is merely another

aspect of the situation that after 1963 WHDH was con-

fronted with more effective competitors then previously.

It is ironical rather than unjust that the efforts of WHDH

establishing the availability of profits may have stimulated

the new applications.

We take note, as WHDH requests, of the Red Lion

decision, Which approves tie FCC's policy of requiring

licensees, under the “fairness” doctrine, to provide a voice

to more than one side of important controversial issues.

Red Lion Broadcasting Co. v. FCC, 395 U.S. 367

(1969). We do not agree that Red Lion has, as WHDH

put it, “pulled the rug from under the pretentious Policy

Statement justification of its ‘diversity’ criterion.” The

point is more soundly put by saying that the importance of

avoiding concentration of control in communication is

49 McClatchy Broadcasting Co. v. FCC, 99 U.S.App.D.¢C.

195, 239 F.2d 15 (1956), cert. denied, 353 U.S. 918 (1957) ;

Scripps-Howard Radio, Inc. v. FCC, 89 U.S.App.D.C. 13, 189

F.2d 677, cert. denied, 342 U.S. 830 (1951).

37a

such an important objective that the Commission must be

‘) accorded discretion in choice of measures for its fulfill-

ment. Philadelphia TV Broadcasting Co. v. FCC, 123 US.

App.D.C. 298, 359 F.2d 282 (1966).

The Commission need not be confined to the technique

of exercising regulatory surveillance to assure that licen-

sees will discharge duties imposed on them, perhaps

grudgingly and perhaps to the minimum required. It may

also seek in the public interest to certify as licensees those

who would speak out with fresh voice, would most natur-

ally initiate, encourage and expand diversity of approach

and viewpoint.

Further, as the Commission pointed out, its concept of

the public interest contemplated initiating of editorials

by licensees. This embraces selection of topics for prob-

ing, and emphasis given to topics, as well as fairness in

presentation of views on each topic. There is a public

interest in diversity in policy areas lit by the lantern of

editorial probes, and for that matter by reportorial assign-

ments and coverage.

WHDIH complained it was wrongfully penalized for

failure to editorialize. And it can readily be discerned that

aggressive editorializing by WHDH would have provided

its rivals with ammunition. This does not undermine the

Commission’s opinion; it rather underlines the inherent

difficulty confronting the affiliate of a newspaper, at least

one seeking a new license.

Some aspects of the Commission’s discussion are more

bothersome. Thus the Commission discussed an instance

in which WHDH delayed relay of a story published in the

Herald-Traveler as a “scoop”— a preliminary account of a

report of the Massachusetts Crime Commission. The

Examiner disclaimed “competence to assess any blame

because the Herald-Traveler chose to disclose the draft, a

printed document, in its natural medium, print, rather than

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58a

perhaps weaken its effect by publicizing it orally.” 16 F.C.C.

2d at 92. This observation is not without merit, and we do

not sce why the Commission should have pursued this in-

stance if its purpose was only, as it said, to highlight the

importance of the diversification criterion. We do not pur-

sue the point further for even assuming error its impact in

overall context was mininal rather than substantial.

b. T'ransfer of De Facto Control

The Commission imposed a comparative demerit against

WIIDII for failure to report changes of de facto control

of the licensee with the change of presidency. The Com-

mission, like the Examiner, found that in this particular

situation this amounted to a transfer of actual control and

management of corporate affairs. The Examiner reached

the same conclusion, but thought it warranted no consider-

ation because of lack of precedent explicity requiring the

report.

The problem is not without difficulty. On the one hand

there is need to report transfers of actual control and the

Commission has a discretion as to appropriate remedies.

Lorain Journal Co. v. FCC, 122 U.S.App.D.C. 127, 132,

351 F.2d 824, 829 (1965), cert. denied, 383 U.S. 967 (1966).

As there noted, the Commission has warned that in case of

doubt licensees may seek appropriate advice of the Com-

mission. And here the Commission did not assert a dis-

qualification, in view of the fact that there was no misrepre-

sentation or concealment by WHDI, but only assigned a

demerit. Yet a demerit that loses a license is bitter tea. And

the use of a sweeping rather than a more refined adminis-

trative remedy may, at least in some instances, represent

an improvident use of administrative discretion, in the

absence of stated justification. Burlington Truck Lines v.

United States, 371 U.S. 156, 178-74 (1962).

The difficulty of the issue is sharpened by prickly

39a

questions of notice and reasonableness of remedy, notwith-

standing the wide discretion reserved to the Commission.

Ifowever, there is doctrine supporting the Commission’s

action, at least prima facie. Taking into account the status

of WIIDIH as in effect an applicant for a new license, and

having in mind the essentially cumulative nature of this

demerit, we think the interest of justice would not he

served by refinement of the issues in the ease at bar.

C. Issues Raised by Charles River

1. The Voting Question

Charles River presents a subtle, technical contention

which is deftly stated but proves on analysis to reduce it-

self to this, that on the selection of BBI over Charles

River a quorum was lacking since there were four absten-

tions (three Commissioners abstaining completely, and

Commissioner Robert Lee who voted for WIIDH, ahstain-

ing from a choice as between the two new applicants), and

that Commissioner Johnson recorded no great enthusiasm

for BBI over Charles River.

The short answer is that four out of seven Commis-

siuuers constitutes a quorum; that the Commission inay

act, assuming a quorum of four or more, by the vote of a

majority of those present;*! and that in this docket out of

the four Commissioners casting votes three Commissioners

cast their vote in favor of an award to BBI.

Even assuming that Commissioner Johnson voted

for BBI solely in order to avoid an impasse and

to provide an effective order, that is a_ perfectly

sound reason for his vote, and one that involves neither

stultification nor irrationality. Government often in-

volves the choice of the feasible, and the selection of the

*! WIBC, Inc. v. FCC, 104 U.S.App.D.C. 126, 259 F.2d

941, cert. denied, 358 U.S. 920 (1958).

Se ey ee an er

40a

least undesirable alternative. It is accepted judicial prac-

tice for a judge to cast a vote, at least assuming no viola-

tion of conscience is- involved, in order to avoid an

impasse and secure a legally effective mandate for the

court.** We also note that when this point was raised in

the application of Charles River for reconsideration, Com-

missioner Jolinson expressed no reservation in voting to

deny that application and uphold the grant to BBI.

2. Comparative Consideration

In terms of comparative consideration the choice

between Charles River and BBI is closer than the issue

whether to retain WHDIH. In the last analysis, the Com-

mission's order turns on the eriterion of integration, of

full-time participation in station operation by owners.

Charles River’s appeal is based on the fact that BBI’s is

only a paper claim.

The Commission’s conclusion is not necessarily under-

cut, as Charles River contends, by the “slight demerit”

that the Commission assigned to BBI for insufficient m=

substantiation of its program proposal. The Commission

was weili within iis discretion in treating Uus as a Veilial

sin and not a character defect that in effect vitiated the

application. The effect of this “slight demerit” on BBI’s

program proposal was offset by a “slight demerit” as-

signed to Charles River.** And so the two applicants were

42 See, e.g., Justice Rutledge in Screws v. United States, 325

U.S. 91 (1945); Judge Wright in Women Strike for Peace

v. Hickel, —— U.S. App. D.C. , 420 F.2d 597 (1969).

43 This was assigned on the ground that the ownership of

Charles River by a charitable foundation implies limits on

the amount of time which could be devoted to questions which

may be related to legislation. Charles River says that its

disability is unlike BBI’s default since “it is a relatively

minor disentitlement, in view of the vast number of topics

4la

at a standoff under the criterion of proposed program

service, as in essence resting on proposals no more than

average in nature. That is, the Commission found no sub-

appropriate for editorializing.” This court’s affirmance is

not to be taken as affirming the Commission’s reasoning in

assigning a slight demerit to Charles River, in the absence

of guidance from the Internal Revenue Service, or consid-

eration of to what extent, e.g., a fair and Vigilant “guest

page” editorial policy of contrasting viewpoints might be

acceptable to both the Service and the Commission.

Since this is an area that turns in substantial measure on

guidelines and regulations of the Internal Revenue Service,

the Commission would have had standing to seek authorita-

tive guidance, on the record, from the Service. The fact that

the Commission is an “independent” agency in its decision-

making does not mean that it may not properly be advised of

pertinent policies under formation in the Executive Depart-

ment.

Indeed we see no reason why the Commission and Treasury

could not have organized a conference on areas of mutual

concern, to see whether the legislative intention underlying

the Revenue Act could not be achieved by guidelines or

regulations that did not unwittingly or unnecessarily result

in an impairment of public interest under the Communications

Act, which could include reasonable balance in service of the

public.

A Task Force of the first Hoover Commission recommended

that the chairmen of the independent commissions be desig-

nated by the President from among the members, rather than

determined by the members themselves, and assigned as an

important consideration that this would facilitate legitimate

channels of communication concerning interrelated policies

without undercutting independence of action. Task Force

Report on Regulatory Commissions [Appendix N], Prepared

for The Commission on Organization of the Executive Branch

of the Government, at 31-32 (1949).

This recommendation (though not endorsed by the Hoover

Commission) was followed in reorganization proposals that

subsequently were proposed by the President, and became

effective in the absence of legislative disapproval. The Presi-

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42a

stantial differences, going beyond ordinary differences in

jndgment, which would establish a superior devotion to

publhi¢ service.

That in effect meant that the principal difference be-

tween Charles River and BBI was a difference in regard to

the factor—referred to in the Policy Statement as a factor

of “substantial importanee”—of integration, of “partici-

pation in station management by owners.” To some extent

this difference in presentation may reflect a difference in

the style of the applicant. Charles River in effect says

that the claims of BBI were-so extreme as to be untrust-

worthy. While the Hearing Examiner took note of the

“exuberance” of BBI, he also pointed out that there was

nothing wrong with an applicant’s objective in fashioning

its proposal so as to “impress the Commission” unless

there was no sincere belief that the project could be ac-

complished. And he noted that both applicants suffered

from the “endemic” taint of comparative applicants—ex-

aggerated advancement of claims. The shortfall of Charles

River on the integration showing he attributed to its being

“excessively cautious.” Charles River says it is merely

being realistic, proposing a “meaningful” rather than spur-

ious integration.

The Commission considered that the ultimate facts fav-

ored BBI on the integration factor. The Hearing Exam-

iner’s report concluded that Charles River was entitled to

dent now designates the Chairman for a majority of the inde-

pendent regulatory commissions.

Taking into account our “collaborative” or “partnership”

kind of supervision of the agencies, we do not pursue the

subject further at this time. It appears clear from the Com-

mission’s decision that any reconsideration or refinement of

program proposals would be of minor consequence compared

to the strong preference awarded BBI on the integration

criterion.

43a

little or no credit on the score of integration, 16 F.C.C. 2d

at 208, para. 791, that perhaps out of “reticence” it had not

made as “meaningful” a presentation as it had undoubtedly

hoped even in staking out a modest eredit for integration,

16 P.C.C, 2d at 252, para. 796. As to BBI, while he expressed

doubts concerning its presentation, he expressly declined to

discard its proposal, 16 F.C.C, 2d at 245, pura. 759. There

was no finding either of lack of bona fides or lack of

practical possibility of fulfillment. Tt was the Commission's

function to determine whether BB's proposals merited

belief in terms of practicability and likelihood of fulfillment.

The Commission indicated its reasoning with reasonable

clarity. It relied on the participation of the six BBI stock-

holders, and indicated what function each would perform.

The findings are supported by substantial evidence in the

record. “[T]t 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, 229 (1946); WEBR, Inc. y. FCC,

136 U.S.App.D.C. 316, 420 F.2d 158 (1969). We see no

reason to disturb its judgment.

A ffirmed.**

** Greater Boston (II), successor in interest to Greater Ros-

ton(I) (one of the competing applicants at the time of the dis-

closure of Mr. Choate’s activities) has no serious basis to

challenge the conclusion that BBI would better serve the

public interest. The Hearing Examiner endorsed the rebut-

tal in BBI’s brief of the Greater Boston (II) application. One

sentence sums it up: “Their interest in television may have

been long but so far as this record reflects, it has never been

deep.” 16 F.C.C. 2d at 258.

We see no ground for holding that this appellant had a .

right to confine the Commission to consideration on the basis

of the original record and to resist a fresh, comparative

hearing.

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44a

APPENDIX B

1 JUDGMENTS BELOW

1, Judgment of Affirmance

The District of Columbia Circuit no longer enters formal

3 judgments, but instead simply causes a docket entry to be

: made, and marks the line of its opinion that gives the

date thereof, in this instance November 13, 1970, with a

stamp reading *‘Judgment entered this date.”’’

:

j

{

|

: : 2. Order Denying Rehearing

(Filed Feb. 16, 1971)

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1970

Nos. 17,785, 23,154, 23,172, 17,788, 23,159

GREATER Boston TELEVISION CorPoraTIoN, Appellant,

v.

FeperaL CoMMUNICATIONS Commission, Appellee,

WHODH, Inc., a Massachusetts Corp., Intervenor.

WHODH, Inc., Appellant

v.

FEDERAL CoMMUNICATIONS Commission, Appellee.

GREATER Boston TELEVISION CorPoRATION, a Massachusetts

Corporation, /ntervenor

Cuar.es River Civic TELEvision, Inc., Appellant

v.

FEepERAL ComMuNIcatTions Commission, Appellee

45a

WHDH, Inc., Intervenor

Boston Broapcasrers Inc., Intervenor

WHDH, Inxc., Appellant

v.

FEepERAL ComMUNICATIONS Commission, Appellee

Boston Broapcasters, Inc., Intervenor

GREATER Boston TV Co., Inc., Appellant

V.

FEDERAL CoMMUNICATIONS ComMISSION

WHDH, Inc., Intervenor

Boston Broapcasters Inc., Intervenor

Before: Tamm, Levenrnar and MacKinnon,

Circuit Judges.

ORDER

On consideration of petitions for rehearing filed by

WHOBH, Ine. and by Greater Boston Television Corp., and

after continuation of the careful study of the briefs and

record that the oral argument showed was needful in view

of the importance and complexity of the cases, the court

is of the view that although modifications of relatively

minor statements in the opinion are appropriate, no modi-

fication is warranted either of the result or the views set

forth in the opinion on the issues before the court.

Accordingly, it is

OrvERED by the Court that the opinion rendered

November 13, 1970 is modified as follows:

ES EE RIED PESTON

EOL EEN TNE NITY: A

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46a

(1) Page 6, line 9: Change ‘‘any other applicant, old

or new”’ to ‘‘the other applicants then before it.’’

(2) Page 12, line ee ‘‘report to the’’ to ‘‘obtain

the approval of the.’

(3) Page 12, footnote 3, line 10: en ‘report to

the’’ to ‘ightain the approval of the.’’

(4) Page 12, footnote 3, line 13: Change ‘‘attention.’’

to ‘‘attention, for a determination whether Commission

approval is required.’’

(5) Page 32, line 7: Change ‘‘to’’ to ‘‘to take it into

account to such extent as would in effect.’’ It is

FurtHer Orverep by the Court that the petitions for

rehearing, and the motion of WHDH, Ince., to hold its

petition for rehearing in abeyance are denied.

Per Curiam

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47a

APPENDIX C

Opinion of April 16, 1964

UNITED STATES COURT OF APPEALS

DISTRICT OF COLUMBIA CIRCUIT.

Nos. 17785, 17788.

GREATER Boston TELEVISION CORPORATION, Appellant,

v.

FEDERAL CoMMUNICATIONS Commission, Appellee,

WHODH, Inc., a Massachusetts Corporation, Intervenor.

WHODH, Inc., Appellant,

v.

FEDERAL CoMMUNICATIONS Commission, Appellee,

GREATER Boston TELEVISION Corporation, a Massachusetts

Corporation, Intervenor.

Argued Nov. 26, 1963.

Decided April 16, 1964.

Proceeding upon application for television station con-

struction permit. The Federal Communications Commis-

sion issued a_ construction permit and a four-month

operating permit. On appeal, the Court of Appeals held

that proceeding in which construction permit and four-

month operating permit were awarded corporation should

be remanded to Federal Communications Commission to

permit commission to consider whether and to what extent

death of corporation’s president would affect awards,

where awards had been made upon a close margin in a

closely contested comparative consideration, and president

had been an important factor in the determination, and

that commission could, upon reconsideration of awards,

combine construction permit proceeding with proceeding

Be Gih iin cy ne REG RGAE A SAR Wat ni SAL aoe a OS

NEST aerate

48a

for renewal of station’s license or conduct the proceedings

simultaneously.

Remanded for proceedings consistent with opinion.

Before Prettyman, Senior Circuit Judge, and BurcEr

and Wricut, Cireuit Judges.

Per CurIAM:

In April, 1957, the Federal Communications Commission,

after a long comparative hearing, awarded to WHDH, Inc.,

a construction permit for a television station on Channel 5

in Boston. Its findings were elaborate and detailed. They

showed, inter alia, that one important factor for favoring

WHODH on broadcast experience and for rating it favor-

ably on civie participation and integration of ownership

with management was the abilities and activities of its

president, Mr. Choate. The award was appealed (Nos.

13896 and 13899). While the appeals were pending,

suggestions were newly made that ex parte contacts with

the Commission had been sought by some of the parties

in the course of the Commission proceedings. After briefs

and argument the court announced ' that it found no error

in the award but that the newly suggested ex parte contacts

must be explored, and it remanded the case for that limited

purpose, retaining jurisdiction.

After some complicated procedural steps,” including an

1 Massachusetts Bay Telecasters v. Federal Communications

Comm’n, 104 U.S. App.D.C. 226, 261 F.2d (1958).

2 See Massachusetts Bay Telecasters, Inc. v. Federal Communica-

tions Comm’n, 111 U.S.App.D.C. 144, 295 F.2d 131, cert. denied,

WHODH, Ine. v. F.C.C., 366 U.S. 918, 81 S.Ct. 1094, 6 L.Ed.2d

241 (1961).

49a

intensive hearing before the Honorable Horace Stern as

Special Hearing Examiner, the Comission set aside the

award to WHDH, reconsidered and reevaluated the

applicants in light of the new factors, and again awarded

the construction permit to WHDH. In the course of this

reexamination the Commission, contrary to its Special

Hearing Examiner, found that Choate had made improper,

but ineffectual, approaches to the Commission Chairman

and ascribed a demerit to WHDH on that account. At the

same time, and in the same order, the Commission also

awarded WHDH a four-month operating license for the

station.* This was in September, 1962. The appeals now

pending before us are from that decision. Thus there are

now before the court for review (1) the 1957 award of the

construction permit to WHDH and (2) the 1962 award of

the four-month operating license to WHDH.

[1] The court is now advised that Mr. Choate died on

December 21, 1963, after these appeals had been argued.

We conclude that under such circumstances the proceedings

should be remanded to afford the Commission opportunity

to consider whether and to what extent these changed

conditions affect the awards to WHDH.‘ This is indicated

’ WHDH had been on the air from the station since November,

1957, operating on an informal, or permissive, temporary authority

issued after the Commission granted it a construction permit on

the basis of the initial comparative hearing. In view of this fact

and “‘the inroads made by WHDH upon the rules governing fair

and orderly adjudication,’’ the Commission was in 1962 reluctant

to grant WHDH a full three-year term to its formal license; rather

the Commission wanted to bring the operation of the station before

it for early reappraisal. Therefore it set the term of the license

at four months. The four months expired. WHDH applied for

renewal. Other applicants applied. A comparative hearing upon

the renewal application and its competitors has been set and is

under way before the Commission.

*See, e.g., Fleming v. Federal Communications Comm’n, 96

U.S.App.D.C, 223, 225 F.2d 523 (1955).

50a

in a case where, as here, awards appear to have been made

upon a close margin in a closely contested comparative

consideration and because the Commission’s findings

reflect that the late Mr. Choate was an important factor

favorable to WHDH and also was the cause of the demerit

against that applicant. Obviously the resultant net assay

is initially for the Commission. The case will therefore

be remanded for such reconsideration.

The original awards of the construction permit and of

the four-month license are before the court in the pending

appeals, but when the remand presently ordered is

effectuated those awards will again be before the Com-

mission for reconsideration. The court does not prescribe

the course or form of the proceeding on reconsideration,

nor does it intimate any suggestion as to its result, e. g.,

whether these initial awards be given one or the other of

the present parties or whether no such awards be now given.

The proceeding for renewal of WHDH’s license ® is also

before the Commission;*® that subject is not now and has

never been before this court. Clearly whatever changes

may be wrought in the affairs and prospects of WHDH

by the death of Mr. Choate may be pertinent both to the

reconsideration of the initial awards and to the renewal

proceedings. The public interest determinations, as they

rest on the relevant preferences and demerits of WHDH,

now must be considered in terms of the absence of Mr.

Choate.

[2] Under such circumstances, if the Commission deems

it to be in the public interest for the sake of efficiency,

5 Of course the renewal proceedings assume an initial license to

WHODH. If on reconsideration upon this remand the Commission

decides not to award the initial license to WHDH, the renewal

proceedinzs lose their appropriateness.

® See note 3, supra.

5la

economy and expedition to combine some or all of the

features of these two proceedings into one proceeding, or

to conduct the two simultaneously, the Commission is

hereby authorized to consider such procedure as within

the authority of this remand.?' The court will retain juris-

diction of the cases.

Remanded for further proceedings consistent with this

opinion.

* Without in any way intimating a directive to the Commission

as to the formal procedural steps it may take in the several pro-

ceedings which will be before it after this remand, we point out

that it appears to us that difficulties may be encountered in any

formal consolidation of the remanded proceedings and the renewal

proceedings; ¢.g., the parties are different. But it also appears to

us that, since the evidence as to the merits and demerits of WHODH,

absent Mr. Choate, on all the various features of the operation

material to the award may be long and involved, and since that

evidence might well be material to both proceedings (remanded

and renewal), the Commission could appropriately adopt a pro-

cedure which would permit the taking of this evidence only once.

The same might apply to any other evidence, and any argument,

common to both proceedings.

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52a

APPENDIX D |

PERTINENT FCC DECISIONS 1

1. FCC Decision Adopted January 22, 1969, Released

January 23, 1969 (16 FCC 2d 1)

BEFORE THE

FEDERAL COMMUNICATIONS COMMISSION

Wasuineton, D.C. 20554

FCC 69-82

In the Matter of

WHODH, Inc., Boston, Mass. Docket No. 8739

File No. BPCT-248

Greater Boston Tetevision Corp., Boston,| Docket No. 11070

Mass. File No. BPCT-1657

For Construction Permits for New Tele-

vision Stations (Channel 5)

In re Applications of

WHDH, Inc. (WHDH-TV), Boston, Mass. ) Docket No. 15204

For Renewal of License File No. BRCT-530

Cuartes River Crvic Te.evision, Inc., Bos- | Docket No. 15205

TON, Mass. File No. BPCT-3164

Boston Broapcasters, Inc., Boston, Mass.| Docket No. 15206

File No. BPCT-3170

Greater Boston TV Co., Inc., Boston, Mass. | Docket No. 15207

For Construction Permits for New VHF | File No. BPCT-3171

Television Broadcast Stations

4

APPEARANCES

William J. Dempsey, William C.K ptt Harry J. Ockershausen,

and J. Richard Carr (Dempsey & Koplovitz) for WHDH, Inc.;

J. Joseph Maloney, Jr. and Joseph F. Tubridy for Greater Boston

Television Corp. and Greater Boston TV Co., inc.; Harry M. Plotkin,

Thomas Schattenfield, and George H. Shapiro So ox, Kintner,

Plotkin & Kahn) for Charles River Civic Television, Inc.; Benito

Gaguine, Jack P. Blume, and Donald FE. Ward ys Shuebruk, Blume

& ine) for Boston Broadcasters, Inc.; and John F. Reilly, Wil-

liam G. Secrest, Thomas B. Fitzpatrick, and Morton I. Be Id. for

the Chief, Broadcast Bureau, Federal Communications Commission.

Paul Dobin (Cohn & Marks) represented witnesses Ruan and Rosen-

eld; and Arthur J. Rosett (Patterson, Belknap & Webb) represented

w7inesses Miller and Brumley.)

DEcIsIOoN

(Adopted January 22, 1969)

CoMMISSIONER BarTLEY FOR THE ComMMISsSION: CHAIRMAN HybDE

ABSTAINING FROM VOTING AND ISSUING A STATEMENT ; COMMISSIONER

Rosert E. Lee DISSENTING AND ISSUING A STATEMENT; CoMMIS-

STONER Cox NOT PARTICIPATING ; COMMISSIONER JOHNSON CONCUR-

RING AND ISSUING A STATEMENT ; COMMISSIONER H. Rex LEE ABSENT.

I. Introduction

1. The history of this proceeding may be found in the initial decision

of Hearing Examiner Herbert Sharfman (FCC 66D-47, released

53a

August 15, 1966), and will not, — set forth here. However,

it will be helpful to an understanding of the manner in which this pro-

Cg ee ees ee ee ee

are mentioned briefly. In September of 1962, the Commission released

a decision * in which it affirmed its earlier decision of 1957 (22 FCC

767, 13 R.R. 507) ,? reinstated the grant of the application of WHDH,

Inc. (WHDH) for authority to construct and operate a new television

broadcast station on channel 5, Boston, Mass., and denied the compet-

ing applications of Greater Boston Television Corp. and Massachusetts

Bay fruteenabare, Inc. In addition, the Commission granted the appli-

cations (BLCT-761 and BLCT-762) of WHDH for licenses to cover

construction permit, and issued such licenses for a period of 4 months

only. Both WHDH and Greater Boston appealed that decision.

When WHDH filed its application for renewal of license, new and

competing applications for the channel 5 facility were filed by Charles

River Civic Television, Inc. (Charles River), Boston Broadcasters,

Inc. (BBI), and Greater Boston TV Co., Inc. (Greater Boston 4

By memorandum opinion and order released October 29, 1963 (1 R.R.

od 468), the Commission designated the new nape her

with the WHDH renewal application, for hearing on standard com-

parative issues.

2. After the appeals from the September 1962 decision had been

argued but before the court had announced its decision, Mr. Choate of

H died. Consequently, the U.S. Court of Appeals for the District

of Columbia Circuit, on April 16, 1964, remanded the i

afford the Commission the opportunity to consider whether and to

what extent the ch conditions ari from Choate’s death affect

the awards to H.* The Court indicated that, Choate’s death

might also be pertinent to the proceeding already designated for hear-

ing on comparative issues, that the evidence as to the merits and de-

merits of H, absent Choate, might be material to both

p i and that the Commission could appropriately adopt a

rocedure which would permit the taking of this evidence only once.

ereupon, the Commission by memorandum opinion and order (FCC

64404) released May 8, 1964, reopened the record in dockets Nos. 8739

and 11070 (concerning the WHDH and Greater Boston I initial appli-

cations), and remanded the proceeding for hearing and initial decision

on the following issues:

(1) To determine the changes made by WHDH, Inc. as a result of the death

of Robert B. Choate ; and

* Apeaain encie as tenia the Commissi 1957 and 1962 decisions to the Uni

8 were en e Com: on’s a ons

States Court of Ap 8 for the District of Columbia Circuit. Those appeals are neler

Tis of ae dar at dates oe eee pence ip ny ERE

8 0 e e 0! ation for

Boston ITI heid 73.68 percent of the stock of Greater Boston Television Corp., yn wl

Boston I. Although the Commission was aware that the composition of Greater Boston I

and Greater Boston II was substantially the same, and normally Greater Boston II would be

dismissed for this reason, the Commission determined that it would be inequitable to re-

quire dismissal of that application since the extended term of WHDH's tion under

application ——. deprived Greater Boston II of the opportunity to a competing

ordinary %

Greater Boston Television Corp. v. Federal Communica 4 :

552, 2 R.R. 2d 2040. The court relat ned jurisdiction of the ae ee eee

\

54a

(2) To determine, in light of the evidence adduced pursuraot to the above issue

and the absence of Mr. Choate, whether the Commission’s decision of September

25, 1962, in dockets Nos. 8739 and 11070 should be modified, and, if so, in what

respects such decision should be modified.®

The Commission contemplaied that the hearing examiner would deter-

mine the above issues first in his initial decision, and then treat the

issues in dockets Nos, 15204-15207 in the same document. The Commis-

sion also consolidated the reopened proceedings in dockets Nos. 8739

and 11070 with tho proceedings in dockets Nos, 15204-15207 for the lim-

ited ae of taking evidence as to the effect of Choate’s death on the

WwW rt me in these proceedings. It was further provided

that all applicants in dockets Nos. 15204-15207 would be permitted to

address themselves to the question of the e.tent to which the operati

record and experience of WHDH on channel 5 should be fo

and the weight to be accorded, in the event that its application in

docket No. 15204 is determined to be one for renewal of Scans or is

treated as one for initial license.

3. The issues in this proceeding, either as included by the Com-

mission or as added by the Review Board, are as follows:

To determine the changes made by WHDH, Inc. as a result of the death of

Robert B. Choate.

To determine, in light of the evidence adduced pursuant to the above issue and

the absence of Mr. Choate, whether the Commission's decision of September 25,

1962 in docket Nos. 8739 and 11070 should be modified, and if so, in what respec’:

such decisiox should be modified.

To determine what efforts have been made by Greater Boston TV Co., Inc. to

ascertain the programing needs and interests of the area its application pro-

poom to serve and the manner in which it proposes to meet such needs and

terests.

To determine whether Greater Boston TV Co., Inc. has reasonable assurance

of being able to secure its proposed antenna site.

To determine, with respect to the stockholders, directors, and officers of

WHDH, Inc.’s parent corporation, the Boston Herald-Traveler Corp., the infor-

mation required by section II of FCC form 301, and, in light of the evidence

adduced, to determine whether WHDH, Inc. is legally qualified.

To determine whether a grant of the application of WHDH, Inc. would be

consistent with the provisions of section 73.636 of the Commission’s rules.

To determine whether a grant of the application of WHDH, Inc. would be

consistent with the provisions of section 310(a)(5) of the Communications Act

of 1934, as amended.

To determine whether the control of WHDH, Inc. and the Boston Herald-

Traveler Corp. has been transferred without Commission authorization in

violation of section 310(b) of the Communications Act.

To determine, in view of the facts developed under the foregoing issue,

{transfer] whether WHDH, Inc. possesses the requisite character qualifications

to be a Commission licensee.

To determine on a comparative basis which of the operations proposed in the

above-captioned applications would best serve the public interest, convenience

and necessity in light of the significant differences among the applicants as to:

(a) The background and experience of each, bearing on its ability tc

own and operate the proposed television broadcast station.

(b) The proposals of each with respect to the management and operation

of the proposed television broadcast stations.

5 The ro aeeteen | ssibilities were contemplated by the Commission: whether the grant

to WHDH shoul reaffirmed, whether a grant should be made to Greater Boston Tele-

vision Corp. (Greater Boston I), or whether there should be no grant in dockets Nos. 8739

ané@ 11070 in the circumstances.

55a

oan — programing services proposed in each of the above-captioned

applications.

To determine, in light of the evidence adduced pursuant to the foregoing issue,

which of the applications should be granted.

4. Hearing Examiner Herbert Sharfman concluded, with respect

to the issues added because of Choate’s death, that no material cha

have been made by WHDH as a result of Choate’s death, and that

reevaluation of the original record made by WHDH and Greater

Boston would advance neither the interests of either applicant nor

the pile che mg. tp interest in the ending of this —— proceeding.

Accordingly, he concluded that modification of the Commission’s de-

cision of September 25, 1962, would not serve the public interest. Ex-

aminer Sharfman held further that the questions of comparative

demerit, if any, to be assessed against WHDH because of Choate’s

ex parte contacts, and the effect of Choate’s death, can be argued

effectively and with greater overall expedition in the renewal proceed-

ing. After having resolved favorably the noncomparative issues re-

lating to WHDH, and unfavorably such issues relating to Greater

Boston IT, the examiner ultimately preferred WHDH’s application on

a comparative basis. Accordingly, he recommended that the application

of DH, Inc. for renewal of license be granted, and that the

competing applications be denied.

5. Oral a: ent on the exceptions to the initial decision was held

before the Commission, en banc, on September 5 and 6, 1967. Each

party was afforded the opportunity to address itself to the question of

the applicability in this proceeding of the Commission’s Policy State-

ment on Comparative Broadcast Hearings, 1 FOC 2d 393, 5 R.R. 2d

1901 (1965). The Commission’s rulings on the exceptions to the initial

decision are set forth in the appendix to this decision. We have reviewed

the examiner’s findings of fact in _ of the exceptions, and we are of

the view that they are substantially accurate and complete. Accord-

ingly, they are adopted with the modifications noted herein and in the

appendix. However, we view those findings as warranting substantially

different conclusions and a different ultimate result. For the reasons

set forth below, our judgment is that grant of the application of Boston

Broadcasters, Inc. would best serve the public interest, convenience and

necessity. >

II. Petition for Leave To Amend and Request for Amendment

Pursuant to Section 1.65 of the Commission's Rules ®

6. Petition for leave to amend. On September 29, 1967, Charles River

Civic Television, Inc. (Charles River) requested permission to amend

its application to reflect the death, on September 6, 1967, of Mr. Ernest

Henderson, a director of Charles River and the holder of 2,000 shares

of Charles River’s class A, nonvoting common stock. Mr. Henderson

®Two petitions of BBI may be disposed of at this point: (a) on Feb. 6, 1967, BBI re-

quested a 1-day extension of time within which to file its reply to exceptions. The pan

is un . and it will be granted. and (b) on Nov. 6, 1966. BBI requested waiver of sec.

1.227(c) of the rules to permit the filing of briefs exceeding 50 in length. The request

Mee 4 dismissed as moot inasmuch as no one of the parties filed brief< approaching this

mitation.

56a

was also a trustee of the Charles River Civic Foundation. Charles

River asserts that the requested amendment will not require a re-

opening of the record herein and will not result in a comparative

vantage to Charles River. On October 10, 1967, the chief, Broadcast

Buftau, filed comments re. ing the petition. The a

petition will be granted and the amendment will be accepted for filing.

7. Request for amendment pursuant to section 1.65 of the Commis-

sion’s rules. On August 18, 1967, BBI filed a petition requesting that

the Commission require WHDH to amend its applicstion, pursuant to

section 1.65 of the rules, to bring it up to date with — to alleged

personnel, programing, and ownership changes which, BBI alleges, are

of decisional significance. As to personnel, BBI asserts that substantial

changes have occurred in the staff personnel assigned to the television

operation exclusively and in the executive personnel of the television

station. Based upon schedules for a 2-week period in the TV magazine

section of the n Sunday Herald, BBI states that programing

changes of such itude as to require an amendment have occurred

in the operation of WHDH-TV. Moreover, BBI contends that one

Joseph Linsey has been characterized by Mr. Akerson as a “major

stockholder” in Herald-Traveler,’ and that WHDH should file an

amendment to reflect this ownership change.

8. WHDH and the Broadcast Bureau op BBI’s request. In

substance, WHDH denies the allegations fas «go BBI, stating that

the majority of the television station’s employees are still employed b

the station, and some changes have occurred as a result of norma

turnover in station operation. In particular, WHDH asserts that it

is not true that Mr. McGrath, the executive pc sewn and a direc-

tor of WHDH, Inc., and who is also the general manager of the tele-

vision station, no lo is connected with the station. With regard

to programing, WHDH asserts that no cha of any substantial

character have occurred in its caf poe ; cerning ownership

c WHDH states that Mr. Linsey does not own directly or

indirectly a reportable interest in Herald-Traveler stock, and that

“there is no rule, regulation or policy of the Commission which would

make his ownership of less than 1 percent of the stock of decisional

significance in the instant proceeding.” :

9.Wea with WHDH and the Broadcast Bureau that the showing

submi by BBI does not warrant our entering an order that the

WHDH ey eer be updated — to section 1.65 of the rules.

We believe that if there were real substance to BBI’s allegations, BBI

would have asked that the record herein be reopened and that the

proceeding be remanded for further hearing under an issue to deter-

mine whether WHDH, Inc., had failed to comply with the provisions

of section 1.65 of the Commission’s rules. To support that request,

BBI necessarily would have been required to submit a far more sub-

stantial showing. See section 1.229 of the rules. Additionally, in light

of the action which we take herein with respect to the WHDH appli-

‘BBI refers to an article in the Wall Street Journal of July 25, 1967, wherein Akerson

is alleged to have made this statement.

57a

cation, no useful purpose would be served by granting the relief re-

quested, even if Aten otherwise appropriate to do 20 BBI's request

will, therefore, be denied.

Special Issues Relating to WHDH

10. No extended discussion is necessary with res to the non-

comparative issues which were eddvened, to WHDH. Those issues

inquired into: the legal qualifications of WHDH; whether a grant of

the WHDH pe prime cen would be consistent with the provisions of

section 73.636 of the Commission’s rules (concerning multiple owner-

| ship) ; whether a grant of the WHDH application would be . onsistent

with the provisions of section 310(a) (5) of the Communications Act

— requirements) ; and whether control of WHDH, Inc. and

Boston Herald-Traveler Corp. has been transferred without Com-

mission authorization in violation of section 310(b) of the Communi-

cations Act. Except for the _— of the latter issue which relates to

de facto control, we with the conclusions which the examiner

reached on these issues. question of de facto control will be treated

marr g vae | in connection with the standard comparative issue.

11. recent issuance of a report and order in docket No. 15627 ®

provides added support for the examiner’s conclusion that WHDH

1s not disqualified under section 73.636 of the rules relating to multiple

ownership. This question arose principally because Lill Co., which

a a reportable interest in Herald-Traveler stock, is th» -ecord

holder for Television-Electronics Fund, Inc., of a reportable interest

in five other Commission licensees, four of whom are multiple owners

of VHF-TV stations with a combined total of 20 TV stations. In

addition to those reasons asserted by the examiner, we conclude that

the report and order in docket No. 15627 is also dispositive of the

multiple ownership issue inasmuch as the Commission’s multiple

ownership rules have been amended to increase from 1 percent to 3

percent percentage of stock which investment entities may own

in specified broadcast licensees.

8 Issues Relating to Greater Boston II

12. Two di pits noncomparative issues were directed to

Greater Boston II which the examiner determined adversely to that

applicant. Those issues related to: (a) the efforts made by Greater

n IT to ascertain the programing needs and interests of the area

its application proposes to serve and the manner in which it pro

to meet such needs and interests; and (d) the question whether Greater

Boston IT has reasonable assurance of being able to secure its pro-

In the Matter of Amendment of Sections 73.35, 73.240 and 73.6386 of the Commission’s

13 OC 20 86 welbanad ex tt t908, iz 4 iseappies

4 re) une 17, ;

® As of Jul 20, 1965, Lill & wee 4 held 7600 shares of Heraid-Traveler stock, of which

——, pry h Fund, La the Ire y Sag Fy —— fer that Fund, Lill i

mpany also 3 the following stock : shares (2. -American Broad-

casting Cos., Inc. ; 35,000 shares’ (2.57 percent) of Capitol Citles Broadcasting Corp. i 2.42

reent of Storer Broadcasting Co. ; .000 shares Ca pereeet) of Seripps-Howard

roadcasting Co. ; and 95,000 shares (1.02 percent) of Zenith Radio rp.

58a

posed antenna site. We with the examiner’s adverse resolution

of these issues — ecision paragraphs 712-717). Accordingly,

Greater Boston II is disqualified and is not entitled to comparative

consideration with the other applicants. We also agree with the exam-

iner’s conclusion at paragrap 793 of his initial decision that. even

if comparative consideration were given to Greater Boston IT's appli-

cation, the showings thereunder are unimpressive.

Ill. The Status of WHDH Under the Standard Comparative Issue

13. Two questions are presented in connection with WHDH’s status

under the standard comparative issue: (a) are Mr. Choate’s ex parte

contacts, in light of his death, still to be treated as a factor in the com-

parative evaluation; and (6) is the Commission’s policy statement on

comparative broadcast hearings fully applicable to this proceeding?

14. The Examiner concluded that use of Mr. Choate’s death his

ex parte contacts are no longer a factor in the comparative evaluation.

In reaching this conclusion, the examiner disc the contentions of

Charles River and BBI to the effect that Choate’s death did not ter-

minate the consequences of his ex parte contacts because WHDH

“ratified” his actions by reelecting him to office while WHDH was

under a cloud, and because individual directors of WHDH in testi-

mony herein did not voice disapproval of his conduct. The examiner

also considered and rejected Charles River’s contention that because

Choate’s conduct, the effect of which is impossible to assess, was calcu-

lated to influence the Commission during the course of the first com-

parative proceeding which resulted in a grant to WHDH, his conduct

must be held to pervade the oe itself and cannot be purged by either

the subsequent conduct of H or by Choate’s death. The excep-

tions of Charles River, BBI, and Greater Boston, in essence, reiter-

ate Mage! 5c which were before the examiner. In view of our denial

of the DH application on other grounds, it is unnecessary to

determine whether the examiner reac a proper result on this

question.

15. In responding at oral argument to the question of the applica-

bility herein of the Commission’s policy statement on comparative

broadcast hearings, supra, each of the parties, with the exception of

Greater Boston and H, stated that the policy statement is appli-

cable. Greater Boston stated no position, oe to “counsel

who are much more experienced in this area.” HH, however, points

out that the policy statement was adopted in 1965 after the record

herein was closed. WHDH asserts that if the statement is to apply to

this proceeding, the record would have to be reopened and the case re-

tried on that basis. When we adopted the policy statement on July 28,

1965, we stated that it did not attempt to deal with the somewhat differ-

ent problems raised where an applicant is contesting with a licensee

seeking renewal of license. However, in Seven (7) League Productions,

Ine., 1 FOC 2d 1597, released December 13, 1965, we stated that the

policy statement should govern the introduction of evidence in pro-

a where a renewal application is contested. At the same time, we

made it clear that the parties would be free to urge any arguments they

59a

might deem — concerning the relative weight to be accorded

ring

the evidence on the various com ive factors. This

ceeding was terminated before an initial decision was released. We

took a similar position in a ing renewal-new applicant Pp

(RKO General, Inc. (KHJ- » FCC 66-508, released June

1966),?° and we stated that “Twle have not, however, reached any

determinations as to see to be accorded various factors of difference

between the renewal applicant and the ranpeting applicant, preferring

instead to do so later upon the full, factual record that is

developed by competent evidence under the designated issues.” Again,

we stated that parties in a contested renewal proceeding are free to

No element of surprise affecting the fairness of the hearing exists

inasmuch as we did not adopt new criteria in the policy statement

which would call for the introduction of new evidence; rather, we

restricted the scope somewhat of ——- factors and explaincd their

importance more clearly. Thus, we sha’ apply the principles of the

policy statement to this p ing, and as we proceed with the com-

parative discussion we shall determine the weight to be accorded the

various factors of difference between the renewal applicant, WHDH,

and the competing applicants.

IV. Evaluation of Comparative Criteria

17. Our basic disagreement with the examiner’s conclusions lies

in the preferred status which he gave to WHDH “not because it

is an applicant for renewal but because it has an operating record

and its very existence as a functioning, manned station to advance

against its opponents, whose promises, after all, are as yet just so

much talk.” ‘Thus, the examiner decided that the traditi mode

of comparing mutually exclusive applicants, “in the mechanical or

point-by-point manner especially advocated by BBI”, would have been

a sterile exercise. In his ju ent, the cardinal probative attribute—

ek or bad—of was its o ing record. The examiner’s

thi ng is highlighted by the ollowing quotation from his

conclusions :

identification with the community through newspaper and station

the annnarded as @ near-substitute for local ownership because it has enabled

Facbplicant to acquire a knowledge of the community, could it claw a fecthnr

Facing the cleverly designed organizations and preparatory campaigns of lorem.

programi

proceeding unless first specifical put in issue by the hearing order or on subsequent

largement of the issu reshold factual showing that distinctive difference

deficiency exints and is we ry exploring. . ™ “9

60a

owned, civically active opponents, each integrated to a different degree but more

than it is, and proposing managerial direction by fairly experienced persons,

WHDH's proguosis would be poor unless it could rely for a clincher on its

operating record unabated by any substantial “character” or other defects.

With regard to WHDH’s past broadcast record, Examiner Sharfman

concluded ultimately that as a whole such record is favorable. The

po ning J of H’s claims to renewal against those of its com-

rs

and Wabash Valley Broadcasting C ion (WIHI-TV), 35 FOC

——— Vv)

Pr ing of * * * [the new applicant] excellent though the pro-

pees soar a? The Commission ales gave serious coniabdaeation to the

herein, the policy statement is applicable to this proceeding. This

being so, a atone approach from that former] employed is required

- 4 at record ron

to a new applicant with some past roadcast experience, or to a renew

licant. That factor is of su i

ining

w of several applicants offers the best practicable service to the

public, which is one of the two ry objectives toward which the

comparative process is directed: As the policy statement indicates,

a past record within the bounds of average performance will be dis-

par pirige sear tnpincen eae is expected ; and emphasis

be given to records which, because they are either quite good or

very poor, give some indication of unusual performance in the future.

Thus, while a renewal applicant must literally run on his record and

such record is the best indication of its future performance,” that

record is meaningful in the com: ive context only if it exceeds the

bounds of average performance. We believe that this approach is sound,

1 Office of Communication o Be Canes Car’ & Ott *, Stes o

Commission, 123 U.S. App. D.C. 328, 359 F. 24 994, 7 R.R. 24 2001 (1966).

6la

for otherwise new aloes, emer A with a poet applicant

record as an o ing station. More importan: the public interest

is better served when the foundations for deteriviodan the best prac-

ticable service, as between a renewal and new applicant, are more

nearly equal at their outset.

A. Past Broadcast Record

20. As the policy statement states, past records are considered

to determine whether the record shows: (i) unusual attention to the

public’s needs and interests, such as ial sensitivity to an area’s

changing needs through flexibility of local programs desi to

meet those needs, or (ii) either a failure to meet the ic’s needs

and interests or a significant failure to carry out tions made

to the Commission. In the latter connection, the Comminion stated

that the fact that such reprecentaions have been carried out does

lead to an affirmative pre erence for the applicant, since the Commis-

Sion expects, as 8 matter of course, that a licensee will carry out

representations made to the Commission. ee re

1. idering the record of WHDH-TV in this light, it is

clear from the examiner’s findi of fact that the only valid conclu-

lessened to some Ne Be by on to

for the discussion of certain controversial problems of local interest,

and by its failure to editorialize.

, 22. Charles River and BBI assert in their exceptions that WHDH

from the original rogram p 1, and changes were made in these to

reflect the network operation. Haworar we agree with the examiner’s

disposition of this matter. As he stated, when WHDH received its

— award it did not receive a preference for either its program

policies or its proposed program service. At the time of the original

grant in 1957, the Commission knew of WHDH’s possible network

ration, and when WHDH filed its application for license in late

1 7, it advised the Commission that it was going to be a network

examiner held, the mere fact of d parture from the poricnine of its

non-network schedule proposals, ay, es as it was

ities of network operation, cannot be held against H. Indeed, this

62a

record does not present a clear opportunity to compare WHDH’s

promises with its performance inasmuch as the record does not con-

tain a program aig based upon network affiliation, which can be

compared with the renewal showings.

23. In view of the foregoing, the past broadcast record of WHDH

will not enter into the comparative evaluation.

24. The past broadcast record compiled by Mr. Jones of Charles

River is available for consideration inasmuch as he has an ownership

interest in Charles River and is the majority stockholder (as well as

the president, treasurer, general manager and a director) of Charles

River Broadcasting Co. which is the licensee of stations WCRB-AM

and FM in Waltham, Mass. Although that licensee wholly owns the

stock of another corporation which is the licensee of an FM station

(WCRQ-FM) in Providence, R.I., no findings were made with regard

to the record of the latter station, and no exceptions were takén to

this omission.

25. Based upon his extensive findings in this connection, the exam-

iner concluded that “WCRB is preeminently a ‘good music’ station—

and its record in its: cialty is excellent—with considerable news and

some other non-musical programs. It is and thinks of itself as a re-

ional station, but pays some attention to Waltham, its location.” While

VCRB’s record in its specialty may be excellent, this characteriza-

tion is not the same as saying that on an overall evaluation of its record

such record is unusually good because it shows particular attention to

the public’s needs and interests, such as special sensitivity to an area’s

changing needs through flexibility of local programs designed to meet

those needs. This latter consideration is the one which, under the policy

statement, takes a past record out of the bounds of average perform-

ance. Viewed in this light, we think that it is as reasonable to conclude

from the examiner’s findings that WCRB’s past record is only within

the bounds of average performance. While WCRB as a regional sta-

tion has an obligation to meet the needs generally of its entire service

area, it should at the same time endeavor to meet the needs of the com-

munity of its location. This obligation may increase when, as here, the

stations are the only ones assigned to the »ommunity. The examiner’s

findings regarding the past record of WCRB warrant. the conclusion

that WCRB’s past reccrd does not demonstrate unusual attention to

the publie’s needs and interests, particularly those of the city of

Waltham. Thus, although a listener survey was conducted, in peeing

with WCRB’s view that its service area is larger than just Waltham,

that survey was not classified to segregate the responses of Waltham

residents. Nor was any particular class of Waltham residents contacted

in a formal survey which was conducted, except for some Waltham

ministers regarding religious programs. In addition, the findings show

that little time is devoted to discussion and talks programing, and that

no time is devoted to agricultural programing. Moreover, in its pub-

licity WCRB identifies itself with Boston and only incidentally with

Waltham. The foregoing findings buttress our conclusion that WCRB’s

past record is within the range of average performance only.

26. In view of the foregoing, the past broadcast record of Mr. Jones

will not enter into the comparitive evaluation.

lle ete ees

_ ae mere SE SEO

63a

B. Diversification of the Media of Mase Commumications

27. As noted in the policy statement, diversification is a factor of

first significance since it constitutes a primary objective in the Com-

mission’s licensing scheme. The benefits derived from diversification

have been set forth in many cases decided by the courts and by the

mmission, and they need not be recited in detail here.?? When com-

pared with Charles River and BBI, WHDH manifestly ranks a poor

third because of its ownership of a powerful standard broadcast sta-

tion, an FM station, and a newspaper in t’:> city of Boston itself. While

it is true that the existence of numerous other media in Boston in which

WHDH has no ownership interest may not be ignored and does some-

what diminish the weight.to be accorded the preferences to Charles

River and BBI on local diversification, nonetheless those preferences

are quite significant here. A grant to either Charles River or BI would

clearly result in a maximum diffusion of control of the media of mass

communications as compared with a grant of the renewal applicatior

of WHDH. A new voice would be brought to the Boston community

as compared with continuing the service of WHDH-TV. We believe

that the widest possible dissemination of information from diverse and

antagonistic sources is in the public interest, and this principle will be

significantly advanced by a grant of either the Charles River or the

BBI application.

28 T e desirability of maximizing the diffusion of control of the

media of mass communications in Boston is highlighted by the Herald-

Traveler’s premature publication in its newspaper of a preliminary

draft of a report of the Massachusetts Crime Commission without also

simultaneously publicizing the report over its broadcast stations.

Although the Herald-Traveler received the ey draft 4 or 5

days before it was published, personnel of Herald-Traveler’s broad-

cast stations first heard of the impending publication of the draft re-

port in the newspaper about midnight of the night before the draft

was published. At the 1954 hearing, the testimony was that news would

not be withheld from the public just because the Herald-Traveler pub-

lishes a newspaper. At the hearing in 1965, Mr. Akerson agreed that

had any part of the story about the draft report appeared on the

Herald-Traveler’s stations, prior to newspaper publication, such news

broadcast would have adversely affected the “scoop” value of the story.

In this instance, the joint ownership of newspaper and broadcast

interests inured to the dlasdvgatams of the broadcast stations and their

listeners,

29. Although conceding that it has never editorialized, WHDH con-

tends that this is a factor which minimizes any question of concentra-

tion of control flowing from the common ownershi of newspaper and

broadcast interests. We disagree with this contention. Licensees have

an obligation to devote « reasonable amount of their broadcast time to

the presentation of programs on controversial issues of public im-

1 Recognizing that radio and television broadcast stations play an important role in

providing news and opinion, it is important in a free society to prevent a concentration of

control of the sources of news and opinion. See United States v. Storer Broadcasting Co., 351

U.S. 192 ; Scripps-Howard Radio, Inc. v. Federal Communicati one 4 8. App

C sion, 89 U.S. .

Dc ia, 180 . 2d 677, cert. den. 342 U.S. 830. See also, Associated Press v. United States,

64a

portance to their communities. /ditorializing by Broadcast Licensees,

138 FCC 1246 Bote If anything, the failure to editorialize demon-

strates the wisdom of the Commission’s policy in favor of a maximum

diffusion of contro] of the media of mass communications.

30. The foregoing incidents reduce the favorable consideration

which might otherwise accrue to WHDH because of the number of

competing media in Brston. In addition, not to be overlooked on the

question of diversification is the controlling interest which WHDH has

in Entron, Inc., a manufacturer of CATV components, and which has

interests in several CATV systems which are at some distance from

Boston. In sum, the preference which both Charles River and BBI

merit over WHDH on the factor of diversification of the media of

mass communications is substantial.

31. As between Charles River and BBI, BBI merits a slight: pref-

erence on the diversification factor, for, as the examiner concluded,

BBI is virtually free of any media alliance and Charles River's media

connection is “trivial by comparison locally and only tenuously sug-

gested nationally.” (See /nitial Decision, paragraph 796.)

C. Integration of Ownership With Management

32. In securing the best practicable service, full-time pretietpation

in station operation by owners is a factor of substantia! importance

because it is inherently desirable that legal] respnsibility and day-to-

day performance be closely associated. Moreover, there is a likelihood

of greater sensitivity to an area’s changing needs, and of programing

designed to serve these needs, to the extent that the station’s proprictors

actively participate in the day-to-day operation of the station. In this

area of comparison, we agree with the examiner’s conclusion that both

Charles River and BBI are integrated toa substantially greater degree

than is WHDH, whose integration is small.

33. As between Charles River and BBI, BBI merits a significant

preference. In assessing the important differences bet ween applicants

on the integration factor, those attributes of participating owners, such

as their experience and local residence, are considered in the weighin

process, This is so since the value of integration of ownership wit!

pone gg is increased if the participating owners are local residents

and if they have experience in the field. Apart from the actual de

of integration of ownership with management, it. is ¢ ficult to draw

any meani ] distinctions between Charles River and BBI inasmuch

as they demonstrate essentially equal local residence. It is also

true that no pease differences exist between these two applicants

in the matter of experience for, as the examiner noted, both have asso-

ciated with them persons having broadcast or television operating and

production experience.

34. The critically important consideration here is the degree to which

those individuals having ownership interests in Charles River and

BBI would play a distinguishable part in the management af.the day-

to-day operation of the proposed station. In this connection, we are

primarily interested in full-time participation in station operation by

the owners, and to the extent that the time spent is less than full time,

the credit given will drop sharply. Little credit is to be given to the

participation of any person who will not devote to the station substan-

tia] amounts of time on a daily basis.

65a

35. ee, all of Charles River’s stock will be held ultimately by

the Charles River Civic Foundation, we agree with the examiner's

conclusion that Charles River’s claimed integration may be considered

here. Respecting full-time rabore ican. only Mr. Jones, who now

holds 4.9 percent of Charles River’s nonvoting stock and is that appli-

cant’s president in’ addition to being a director, will so participate.**

Mr. Jones would be the general manager of the proposed television

station. Although he has broadcast experience, that experience is « *

diminished importance here since it was acquired in the operation of

an AM and FM station, which stations employed a specialized format.

The full-time participation of BBI’s stockholders would be as follows:

Mr. David, executive vice-president and a 6.31 percent stockholder,

as administrative officer and general counsel; Mr. Burdick, a 5.91

percent stockholder after grant of the application, as general man-

ager; Mr. Pickard, a 2.36 percent stockho ta after grant, as director

of news and public affairs; Mrs. West, a 1.53 percent stockholder, as

executive assistant to the general yews ook, Mr. Steele, a 0.86 percent

stockholder, as associate director of public affairs; and Mr. Hoffman,

a 3.06 percent stockholder, in charge of product and credit clearance.

Thus, quantitatively, BBI is in a superior position to Charles River

on the integration factor. Qualitatively, BBI ‘s also in a better posi-

tion than Charles River inasmuch as certain of the full-time

participating owners of BBI would bring extensive television operat-

ing experience to the proposed station. Thus, Mr. Burdick has had wide

experience in the alminletretion and operation of noncommercial

television stations in Philadelphia, Pa., as well as with the educational

television station of the University of North Carolina. While this

experience was not acquired in commercial television operation, it is

nonetheless meaningful experience. in addition, Mr. Burdick has

had several years of experience as program director of a California

standard broadcast station. As was the case with Mr. Jones, this ex-

perience, however, is of less importance here. Mr. Pickard has exten-

Sive experience in the field of television station news operations and

public affairs programing. Also of significance is the regulatory ex-

perience which was acquired by Mr. David with the Federal -

munications Commission. Although such experience is not to be equated

with operating experience, it does provide assurance of isowldes of

the framework of the Communications Act and the Commission’s rules

and its policies. Grand Broadcasting Co., 36 FCC 925 (1964).

36. While both Charles River and BBI have proposed other stock-

holders for participation in station operation, little credit can be given

to that participation here since those individuals will not devote sub-

stantial amounts of time to the station on a daily basis. Although both

Charles River and BBI have stockholders who are long-time local resi-

dents, the credit to be given in each case is slight since full-time par-

ticipation in station affairs is not demonst:

18 We agree with the examiner’s conclusion that Mr. Saudek cannot count as a cipal

for —— purposes, since he has no ownership interest even in the Charles River

applican

66a

D. Proposed Program Service

37. The hearing herein was conducted under procedures which per-

mitted extensive showings with respect to A gaye program service

as well as the means which were employed in formulating the pro-

eres to meet the area’s needs and interests. As the examiner’s initial

eci

decision demonstrates, Charles River and BBI in wide-rang-

ing efforts to support the programing service which each proposes.'*

ile we di with exaiminer’s adverse characterization of

the efforts which Charles River and BBI made in this area of com-

parison, we are constrained to observe that the extensive showings

made by these two applicants offer increased support for the views

which we enunciated in our policy statement on comparative broad-

cast hearings. Thus, the policy statement asserts that because of our

rience with the similarity of program plans, no comparative. issue

will ordinarily be designated on program plans and | pmery os or on staff-

ing plans or other program planning elements, and evidence on these

matters will not be taken under the standard issues. While, as the

examiner stated, BBI employed more elaborate methods of ascer-

taining the area’s needs than did Charles River, in neither case do the

methods employed seem to have had an appreciable effect Be gee the

program proposals. We believe in the final analysis that appli-

cants made no more than acceptable efforis to ascertain local needs

and interests through local contacts and surveys. No preference, there-

eri is due either of the applicants with respect to preparation and

planning.

38. With rd to the respective program proposals themselv

decisional dasifieason is accorded only to material and mibotantial

differences between the applicants’ proposed program plans. Sub-

stantial differences are considered to the extent that they go beyond

ordinary differences in judgment and show a superior devotion to

public service. Although an unusual attention to local community mat-

ters for which there is a demonstrated need may be urged, there is no

assumption that an unusually high percentage of time to be devoted

to local or other particular types of programs is necessarily to be

referred. Minor differences in the proportions of time allocated to

ifferent types of programs are not considered. This is so because pre-

cisely formulated program plans may have to be changed not only in

details but in su ce to take account of new conditions at the time

a successful applicant commences operation. Against this rec sa

it is clear, as the examiner’s findings show, Charles River an

BBI propose generally well-balanced program schedules, and that

neither applicant’s proposal demonstrates any substantial differences

extending beyond ordinary differences in judgment which show a

superior devotion to public service. This conclusion is not inconsistent

with the examiner’s characterization of both program proposals as

supplying the community, in their local offerings, a diversity of ex-

cellent programs inasmuch as that characterization is not synonymous

with programing which shows a superior devotion to public service.

%4 As the examiner stated, “Even WHDH, an ting station, paid dererence to the

importance of a formalized ascertainment of public tastes by offering evidence about its

program committee * * *.”

67a

39. One aspect of BBI’s oi ge proposal in particular merits dis-

cussion. BBI proposes to devote 36.3 percent * of its 160.5 hours of

weekly programing to local live programs. In contrast, WHDH’s 1962

renewal application composite week showing for local live p -

ing is 22 percen and Charies a roposal beta En a =

percent of its w rograming to ive programs. Holdi at

the crucia) peters Fa is whether BBI established its abili rhe

duce its “extraordinary percentage” of local live programs, the exam-

iner stated that BBI can only invoke brave generalities in sup of

its claimed ability. In addition, he stated that BBI’s pro; so far

exceeds that shown in WHDH’s renewal application, is so much in

excess of any network station and is in the vicinity of the highest per-

centage for independent stations, that suspicion arises that BBI’s per-

centage figure “was flashed for its my value in a comparison.”

In sum, the examiner held that BBI’s local live program Pp was

insufficiently supported. Although BBI’s exceptions challenge the

examiner’s conclusion as contrary to his findings of fact, we are not

persuaded that this is so. When an applicant pro such a sub-

stantial amount of local live programing as has BBI, that applicant

— the risk . ati a o— attach to its sho : if it offers no

substantiation for that aspect of its program proposal. It is no answer

to state that the _——s Shank een Heston is the fifth largest.

market in the United States and has well-known cultural, educational,

civic and religious institutions which ensure virtually an inexhaustible

supply of participants and subject matter for local programing. Nor

is it any answer to state that the feasibility of the proposal is demon-

strated by substantial surveys indicating the need therefor and

the willing cooperation of civic, educational, religious, and charitable

oom because, as noted, those surveys had no appreciable effect upon

the program proposals. In light of the foregoing discussion, we hold

that BBI should receive a slight demerit because of its insufficiently

supported local live pro roposal. E

40. We do not believe that BBI is entitled to a —— for its

roposed 24-hour By seasreg for 5 days a week, i through

Natuedne because adequate hours of operation are proposed by Charles

River and WHDH.

41, There is one feature of Charles River’s programing proposal

which warrants the assessment of a slight ee that el

cant. Cl. ‘les River Civic Foundation will ulti y own all of the

stock of the Charles River applicant. To retain the foundation’s tax

exemption as a charitable —h no substantial of its

activities may, pursuant to the ] Revenue Code, include carry-

ing on pro da or otherwise attempting to influence legislation.

In addition, the code permits tax exemption only if the organi:

“does not participate in or intervene in (including the or

distributing of statements) — a on f of any

candidate for public office.” The indenture of trust the

foundation contains language of similar import. Thus, the

% While BBI posed that 45.8 percent, or over 72 hours, of it« weekly programing

would be local live 9 percent of that total would consist of taped repeats.

68a

applicant Charles River itself would pay taxes, it appears ee as

found by the examiner * par. 236), because of the ownership of all

of its stock by the foundation, the Internal Revenue Service may take

the position that the applicant would be bound by the provisions of

the code relating to exempt organizations. —— arles River

proposes to editorialize, it is manifest that there are limitations on the

amount of time that could be devoted to controversial questions which

may be legislatively related, and that such limitations are not found

in ordinary television station operations. To this extent, then, the

pro operation of Charles River suffers in comparison with that

of BBI. The result is that a slight demerit is assessed against Charles

~- b ae slight d hich have been assessed

42. In weighi e slight demerits whi ve against

BBI and Chacies ivan. we conclude that they are offsetting in nature,

and that neither applicant is entitled to a preference over the other in

the matter of ae program service. In the overs]! weighing

process, we conclude that no one of the applicants merits a preference

roposed program service. Th H’s

over the others epee - p

rogram service would be a continuation of service which has been

etermined to be one within the bounds of average a only,

and in essence the proposals of Charles River and BBI are no more

than average in nature inasmuch as there are present in neither pro-

1 substantial differences, going beyond ordinary differences in

judgment, which show a superior devotion to public service.

E. Other Factors

43. A question to be resolved is whether an unauthorized transfer

of de facto control occurred upon the election of a new president (Aker-

son) of Herald-Traveler. Based upon his extensive Sedinne of fact, the

examiner concluded that “[bJecause of the peculiar but not unique

situation of the Herald-Traveler in which management (the president)

is in actual control, the election of a new president in fact created a

new locus of control.” In this regard, the examiner stated that the

presidential dominance exercised by Winslow was continued by Choate

and Akerson. The examiner held it is unfair to hold H ac-

countable for failing to realize that the “transfusion of ichor” from

Winslow to Choate and from Choate to Akerson demanded prior Com-

mission approval inasmuch as there is no Commission precedent re-

— prior approval should be obtained before a given in-

ividual is appointed or elected to be an officer of a licensee corporation.

We di with the examiner’s emgser ne Fp tga ae Ce

for the reasons which are given hereafter, we hold that an unautho:

transfer of de facto control has occurred.

44. The following facts are illustrative of the actual control centered

in Akerson (also and Winslow, earlier). The Herald-Traveler

Board of Directors is not a center of de facto or actual control; that

boned hes saver iran Deetee et ee ee ee

or the election of directors; the vg auuiae discuss ber grat policies,

ractices, or ing; except for itting capital outlays over

$700,000 ' to Terié. Teivlar Board for its sdeldenebdath, Choate

was, and Akerson is, empowered to take any action thought necessary

69a

for the operation of the television station; when Choate was ill, Aker-

son performed his duties without further direction from the board; and

when the board passed its resolution after Choate’s death that there

had not been, and would not be, any change in station policies, at least

five members of the board did not know what ogee they were leav-

ing unchanged. inst this background, and in light of the Com-

mission’s desire to be put on notice regarding the acquisition of an

de facto control, it is clear that a transfer of control application x fea.

have been filed by WHDH.

45. Although it may be generally true that in the ordinary situation

a routine change in officers should be reported to the Commission within

30 days after the event, the fact of the change of the locus of actual

control demonstrated here places the matter in an entirely different

posture. Section 310(b) of the Communications Act of 1934, as

amended, provides in su ce that no station license shall be trans-

ferred, assigned, or disposed of in any manner, voluntarily or in-

voluntarily, directly or indirectly, or by transfer of control of any

——— holding such li to any —— except upon application

to the Commission and upon finding by the Commission that the public

interest, convenience, and necessity will be served thereby. ion

1.541 of the Commission’s rules, which was promulgated pursuant to

section 310(b) of the act, provides, in inent part, that within 30

days after the occurrence of a death or egal disability of one who is

directly or it uirectly in control of a — which is a licensee, an

appiication on FCC Form 316 is to be filed requesting consent for in-

voluntary transfer of control of that corporation to another person

or entity. Thus, WHDH had an obligation to file such an application

not because the licensee corporation a change in officers but be-

cause the change in question involved a transfer of actual control, and

of “the power to dominate the management of the corporate affairs” of

the licensee corporation. Cf. Western Gateway B asting Corpora-

tion, 6 R.R. 1325 (1951). That the nature of the control exercised by

Akerson (and, preceding him, by Winslow and Choate), constitutes

“control” for the urposes of section 310 of the act is beyond question ;

as early as the Powel Crosley, Jr. case ** the Commission expressed

its view that nothing in section 310(b) of the act restricts “control” to

a majority of the stock or to any definite percentage of stock. The

Commission there stated :

We believe that a realistic definition of this term [control] includes any act

which vests in a new entity or individual the right to determine the manner or

means of operating the licensee and determining the policy that the licensee will

pursue.

This policy has been followed in a number of decisions since the Crosley

case.?*

46. In our judgment, therefore, WHDH was obligated to file an ap-

plication for consent to involuntary transfer of control when Winslow

and Choate died, and when Choate, in the first instance, and then

#3 R.R. 6 (1945).

27 See, be CD peremonnt Merger Case, 8 R.R. 541, Town and Country Radio, Inc., 15

R.R. 1085 (1960), and WWIZ, Inc., 2 R.R. 24 169, aff'd sub nom. The

Company v. Federal Communication Commission, 851 F 2d 824, cert. denied, 883 U.S. 967.

70a

Akerson succeeded to the office of president. However, because WHDH

has never attempted to misrepresent to, or conceal from, the Com-

mission the facts bearing on ownership and control, the circumstances

presented here do not reflect so adversely on the character qualifications

of the licensee as to warrant its absolute disqualification. The facts of

the unauthorized transfers of control do, however, enter into the com-

parative evaluation, and in this regard WHDH receives a demerit.

V. Summation

47. Greater Boston II is disqualified and is not entitled to com-

parative consideration with the other applicants because of its failure

to meet the two disqualifying issues which were directed against it.

Even if comparative consideration were given to its application, its

showings thereunder, as the examiner concluded, are unimpressive.

48. h Charles River and BBI must be preferred to H under

the diversification and integration criteria. In addition, a demerit

attaches tothe WHDH applicant because of the unauthorized transfers

of control which have occurred.

49. As between Charles River and BBI, BBI is entitled to a slight

preference on the diversification factor, and to a significant preference

on the in tion factor. As noted earlier herein, H’s past broad-

cast record and the past broadcast record of Jones of Charles River

do not enter into the comparative evaluation for the reasons given in

the discussion of such records. We also concluded that no one of the

applicants merits a prefere:.ce over the others regarding the proposed

program service. she eens ae

50. Because of its superiority under the diversification and integra-

tion criteria, we conclude that the public interest, convenience, and

necessity will be best served by a _— of the application of Boston

Broadcasters, Inc., and by denial of the renewal application of

WHDH, Inc. and denial of the a of Charles River Civic

Television, Inc. and Greater Boston TV Co., Inc.

51. Accordingly, /t is ordered, That the ay Lapeer y request of Boston

Broadcasters, Yen. filed February 6, 1967, for a 1-day extension of

time within which to file its reply to exceptions /s granted.

52. It is further ordered, t the request of Boston Broadcasters,

Inc., filed November 6, 1966, for waiver of section 1.277(c) of the rules

to permit the filing of briefs exceeding 50 pages in length /s dismissed

as moot.

53. It is further ordered, That the petition of Charles River Civic

Television, Inc. for leave to amend its application, filed September 29,

1967, /s granted, and the amendment /s accepted.

54. It is further ordered, That the request for amendment pursuant

to section 1.65 of the rules, filed by Boston Broadcasters, Inc. on August

18, 1967, Is denied.

55. It is further ordered, That the application of Boston Broad-

casters, Inc. for a construction permit for a new television broadcast

station to operate on channel 5 1n Boston, Mass., /s granted; that the

a yaya of WHDH, Inc. for renewal of license of station WHDH-

Is denied ; and that the applications of Charles River Civic Tele-

7la

vision, Inc. and Greater Boston TV Co., Inc. for construction permits

for a new television broadcast station to operate on channel 5 in Beaten,

Mass., Are denied. |

56. lt is further ordered, That no date will be specified at this time

for termination of the operation of station WHDH-TV inasmuch as

portions of these consolidated proceedings, as noted hereinabove, are

et to be determined by the United States Court of Appeals for the

istrict of Columbia Circuit, and as to which the Court retained juris-

diction when it remanded the proceeding for further proceedings con-

sistent with its opinion.

57. It is further ordered, That the General Counsel of the Federal

Communications Commission /s directed to report these roceedings

and this decision forthwith to the United States Court of ppeals for

the District of Columbia Circuit.

FeperaL ComMUNICATIONS CoMMISSION,

Ben F. Wapte, Secretary.

APPENDIX

RULINGS ON EXCEPTIONS OF CHARLES RIVER Crvic TELEVISION, INc.

Exception No. Ruling

8, 4, 5, 7, 8, lla, 12, 138, 14, Denied. The examiner’s findings adequately and

ey 4 18, 20, 21, 22, 23, correctly reflect the record.

6, 11b 4 Denied. The examiner's ruling and the Review

Board order comphained of are correct.

9, 10, 16, 19, 30, 31, 32, 33, Denied as immaterial in light of our decision herein.

50, 51, 52, 55, 61, 66,

69, 72, 88, 89, 90, 91, 92,

95, 96, 97, 98, 110, 116,

119.

40 : — in substance in par. 28 of the decision

44 ____ Denied. The examiner’s reasoning is correct.

59 ___ Granted. The findings at par. 260 of the initial

decision are corrected to show that Weitzel was

born in 1923.

60 = Granted. The findings at par. 264 of the initial deci-

sion are corrected to show that Judge Brooks

v'as appointed a Special Justice in 1928.

63 Granted, and the finding is corrected accordingly

65 Denied. The findings complained ot are relevant

and adequately reflect the record.

73, 104 Denied. The record supports the substance of the

examiner’s findings.

86, 87_ Denied. The examiner’s technique of setting forth

contentions in his findings is not fatal

inasmuch @.. the contentions are resolved.

Ezception No.

120, 121, 122

123, 131, 146, 150, 155.-----

124, 125, 126, 127-...-----.

128

129

130, 133, 147, 166, 170, 171,

172.

132

134

135, 136, 137, 138, 139, 140,

141, 148, 152, 161, 164, 173,

174.

142, 144, 5 abe 158, 159,

162, 163, 1

143

149

151

153

154, 156, 160

167

168

169

175

72a

Ruling

Denied. See pars. 10 and 11 of the decision herein.

Denied. The record supports the conclusion of the

examiner.

Denied. See par. 10 of the decision herein.

Granted. See pars. 43—46 of the decision herein.

Granted to the extent indicated in pars. 43-46 of

the decision herein.

Granted in substance as reflected in the modifica-

tion of the examiner's conclusions.

Denied. The conclusion of the examiner complained

of does not carry the implication suggested.

Granted, and the examiner’s characterization com-

— of in par. 732 of the initial decision is

Denied as immaterial.

Denied. The conclusions reached by the examiner

are proper.

Denied in substance. See par. 22 of the decision

herein.

Granted to the extent indicated in par. 39 of the

decision herein.

Denied. The record does not support the requested

conclusion.

Granted, and the examiner’s characterization com-

plained of in par. 766 of the initial decision is

‘Denied. The requested additional conclusions would

add nothing of substance to the decision herein.

Granted to the extent indicated in the whole of the

decision herein ; otherwise denied in light of the

decision herein.

Granted only to the extent indicated in par. 39

of the decision herein; otherwise denied in light

of the decision herein. .

Denied. The examiner’s conclusions are correct and

adequately reflect the facts of record. See the

ruling on Exception No. 163 of Boston Broad-

casters, Inc., deleting certain characterizations

made by the examiner in par. 791 of the initial

decision.

Granted to the extent that WHDH’s apylication is

mows ng ; otherwise denied in light of the decision

Exceptions 1, 2 and 53 require no rulings. Par. 1 of the exceptions is a preliminary

ftatement. Pars. 2 and 53 of the exceptions specifically state that no exceptions

are taken to certain paragraphs of the initial decision.

Rvuuiines ON Exceptions or Boston Broapcasters, INC.

1, 4, 5, 7, 8, 9, 10, 11, 13,

15, 16, 18, 19, 21, 22,

25, 26, 27, 28, 30, 31,

36, 37, 41, 45, 46, 47,

49, 50, 51, 52, 53, 56,

64, 65, 66, 67, 71, 72,

74, 75, 77, 78, 79, 80,

83, 84, 86, 87, 88, 89.

2, 3, 12, 17, 20, 24, 29, 32,

38, 43, 44, 54, 55, 57,

61, 62, 63, 68, 69, 70,

$28 RASSSRS

Denied as immaterial.

Denied. The examiner’s findings adequately and

correctly reflect the record.

——-

98, 102, 108, 104, 129,

130, 181, 132, 188, 135,

136, 144, 146, 152, 156,

157, 158, 164, 165,

167, 170, 171.

100, 101 105, 106, 107, 108,

109, 110, 111, 112, 118,

114, 115, 116, 118, 119, 120,

122, 123, 125, 126, 127, 184,

141, 143, 145, 147, 149, 154,

155, 162, 168, 169.

124, 148, 150, 151

117

121

128

187, 139

138

ee eee ee eww ew oem meee

142

153

159

160 —

73a

Ruling

Denied. A portion of the requested findings is made

at par. 119 of the initial decision. The remainder

se eng Tequested findings are immaterial.

Granted. examiner’s finding is accordingly

corrected.

Granted to the extent indicated in par. 28 of the

decision herein ; otherwise denied as immaterial.

Denied. The findings complained of are relevant

and material.

Denied. The examiner’s reasoning is correct.

gs in substance in par. 25 of the decision

re

Granted. The finding complained of is modified to

show that the petition to reopen the record, filed

by Greater Boston Television Corp., to show that

Michael Henry is no longer connected with that

applicant was denied by the Commission.

Denied. The examiner’s conclusion is correct. See

par. 11 of the decision herein.

Denied. See par. 10 of the decision herein.

Granted. See pars. 43-46 of the decision her

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