# Petition for Writ of Certiorari — Fidelity Television, Inc. v. Federal Communications Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_1508%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1975 - **Citation:** 423 U.S. 926 ## Text ru. & JUL 390 1975 | IN THE snap JRCLER Supreme Court of the Anited ae OCTOBER TERM, 1975 no. Jy -/66 FIDELITY TELEVISION, INC., Petitioner, V. FEDERAL COMMUNICATIONS COMMISSION, 2/ me Respondent., PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT EDWARD P. MORGAN GERALD S. ROURKE 300 Farragut Building 900 Seventeenth Street, N.W. Washington, D.C. 20006 Attomeys for Petitioner Of Counsel: WELCH & MORGAN 300 Farragut Building 900 Seventeenth Street, N.W. Washington, D.C. 20006 EERE TESTED THE CASILLAS PRESS, INC.—1717 K Street. N. W.—Washington, 0. C.-223-1220 (i) INDEX Page OR ae re ee ec ee a ee ee 1 JURISDICTION 2. 6 2 2 we ee ee es 2 QUESTIONS PRESENTED FOR REVIEW ...... . 2 CONSTITUTIONAL PROVISIONS AND STATUTES og | Re te ae ee ae Go ee SA cee Oe CG kk er Sow we eee 6 REASONS FOR GRANTING THE WRIT ....... 12 1. The F.C.C. and the Court of Appeals Have Seriously Undercut the First Amendment As Applied to Broadcasting by thisCourt. . . . . . . L2 II. It Was an Abuse of Discretion for the Commis- sion to Refuse to Assess At Least a Comparative Demerit Against RKO for Engaging in Reciprocal Trade Practices in the Sale of Advertising Time on KHJ-TV and its OtherStations . . . . .... #=&4J7 Ill. Fidelity Was Denied Due Process of Law Where Allegations Were Made Against It in Petitions to Enlarge the Issues, Where the Petitions Were Denied by the Commission With the Result that No Hearing Was Held on the Allegations, and Where the Allegations Were Then Used Against Fidelity in the Commission’s Decision. . . . . . . 21 IV. The Grant of a Comparative Preference to a Renewal Applicant for the Fact That it is Operating on the Frequency, Apart From the Merit of its Past Performance, Violates Sections 301, 304, 307(d). and 309(h) of the Commun- en eee. vs eee ee ee ee (iui Page Loh RN a eee te ewe e APPENDIX A — Opinion of the United States Court of Appeals for the District of Columbia Cwowlt, MesskG6, 1975S... ....... la APPENDIX B — Opinion of the United States Court of Appeals for the District of Columbia Circuit on Petition for Rehearing En Banc, and Statement of Chief Judge Bazelon, June 30,1975. . . . . . . . 34a APPENDIX C — Decision of the Federal Communica- tions Commission, December 6, 1973 . . . 94a APPENDIX D — Initial Decision of F.C.C. Hearing Examiner Thomas H. Donahue, Aug- 8) eta a oe a er TABLE OF AUTHORITIES Cases Cited: Associated Press v. United States, SES ae eee a ne ey ee 12 Citizens Communications Center v. F.C.C., 447 F.2d 1201 (DC Cir.1971) 2. 2. 2 ww 13, 23725 Johnston Broadcasting Co. v. F.C.C., 17S F.2d 351 (DC Cir. 1949) . . ....... 13,15 McClatchy Broadcasting Co. v. F.C.C., poe fee Ce cee eee ee Oe ew ST EGS Red Lion Broadcasting Co. v. F.C.C., eee ke ee ee ee OR (in) Page TV 9, Inc. v. F.C.C., Gee rea ee ee a ek a 13 United States v. General Dynamics Corp., 258 F Supp. 36 (S.DN.Y.1966) . . . 2... 2 es 1 Constitutional and Statutory Provisions: Communications Act of 1934, 47 U.S.C. Section 301 4, 23, 25 Section 304 4,23,25 Section 307(d) 5, da.e0 Section 309(h) tet cy a ete ails ice or eres ear ees ee cd eay ae VI ae ed Ve Ss | SRI SE OE Sit or eh gine a eee ee ey oS 10 Federal Trade Commission Act, 15 U.S.C. #41, ef seq. . Ss Cl ae aR 5 OS. Be eR ew Va er ee az oO no onde BMC ie eer n ag Okn aare: SaeePw ie Se 7 Se ae lr re rene rer at a Se re tie a 7 Ey a Or Ce oe ca re ye el ees Sek ad ac tg 2 U.S.Constitution, amendment] . . . . . . 3,12, 13, 16,17 U.S. Constitution,amendmentV . . . . . 6 we 4 Administrative Reports and Decisions: Amendment of Rules Relating to Multiple Ownership of AM, FM and Television Broadcasting Stations, 5 ge ie ke Ft | ee ieee Se eC Fe Policy Statement on Comparative Broadcast Hearings, 1 F.C.C. 2d 393 (1965) 2 2 | |. 9 BR TS. 22 IN THE Supreme Court of the United States OCTOBER TERM, 1975 No. FIDELITY TELEVISION, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Petitioner, Fidelity Television, Inc., prays that a Writ of Certiorari be issued to review the judgment of the United States Court of Appeals for the District of Columbia Circuit entered in this case on March 6, 1975. OPINIONS BELOW The opinion of the United States Court of Appeals for the District of Columbia Circuit, while not yet of- ficially reported, has been unofficially reported at 32 P& F Radio Reg. 2d 1607 (1975), and is printed in the Appendix 2 at page la.'! The per curiam opinion of the same court on petitions for rehearing, reconsideration or clarification and suggestions for rehearing en banc and the statement of Bazelon, Chief Judge, as to why he voted to grant rehear- ing en banc are not yet officially reported, but are unof- ficially reported at 34 P & F Radio Reg. 2d 419 (1975), and are printed in the Appendix at page 34a. The Deci- sion of the Federal Communications Commission is official- ly reported at 44 F.C.C.2d 123 (1973) and is printed in the Appendix at page 94a. The Initial Decision of the Hear- ing Examiner is not officially reported, but is unofficially reported at 16 P & F Radio Reg.2d 1181 (1969), and is printed in the Appendix at page 121la. JURISDICTION The judgment of the United States Court of Appeals for the District of Columbia Circuit was entered on March 6, 1975. An order denying petitions for rehearing, recon- sideration or clarification was entered on June 30, 1975. An order staying the issuance of the mandate of the Court of Appeals pending the filing of a Petition for Writ of Certiorari was entered on July 21, 1975. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). QUESTIONS PRESENTED FOR REVIEW 1. Does the interpretation of the First Amendment requirement of diversification of the media by the F.C.C. and the Court of Appeals in this case comport with the prior decisions of this Court? 1 References to the Appendix are in¢jcx* This de- cision declined to accept the Hearing Examiner’s recommen- dation and instead granted RKO’s renewal application and denied Fidelity’s application.* The vote in the Commission was 3—2, with the deciding vote being cast by Chairman Burch who concurred in the result of the majority only and not the opinion issued. Accepting for the moment the scope of the hearing held and the propriety of the Commission’s treatment of the stand- ard comparative issues, the ratio decidendi of the Commission was this:> . From our consideration of these [applications] up to this point, we have established that each applicant is basi- cally qualified to be a licensee, that the characteristics of the [applications] differ in certain respects, but that none of those differences provides a basis for making a choice between the two applicants in this proceeding. Nonethe- less a selection must be made, and so we shall look to other aspects of the record affecting the public interest. In this connection, we believe that recognition must be given to the rights and expectancies of an ordinary renew- al applicant... . 3 The history of the extraordinary delay in this case is discussed in Fidelity Television, Inc. v. FCC, 163 U.S.App.D.C. 441, 502 F.2d 443 (1974). 4 RKO General, Inc., 44 F.C.C.2d 123 (1973). 5 Jd, at 136-37 (emphasis added). Cd a 43a {In light of RKO’s substantial investment in the station to make the Channel viable and in light of the renewal ex- pectancies of RKO], we believe that there is a public in- terest, both in the Los Angeles area and the nation at large, in insuring the predictability and stability of broadcast service. If there is no such security for applicants seeking facilities with the intention of providing good service to the public, the overall development and motivation of the industry will suffer.... [We] are persuaded that credit must be given in a comparative renewal proceeding, when the applicants are otherwise equal, for the value to the public in the continuation of existing service. ... [Since] the record is clear that Fidelity has not demonstrated that it will in fact provide a better service than RKO, we are convinced, for the reasons set forth above, that RKO’s re- newal application . . . must be preferred. Initially, it appears that the court misapprehends this rationale for decision. The reader may wish to compare the foregoing quotation with the following representation of it in the court’s opinion:® On the whole it is fair to say that the Commission found that the ultimate effect of its analysis of the record was that Fidelity and RKO were essentially poor contenders—or, at the best, both were minimally acceptable applicants... . [We] cannot say that [the Commission] committed legal error when, in its atti- tude as of the times pertinent in this case, it took the view that ‘minimal service is to be preferred to no ser- vice at all.” Compare Broadcast License Renewal Act, H.Rep.No. 93-961, 93d Cong., 2d Sess. 17 (1974). There is no need here to expand on ‘renewal expec- © Slip pages 31-32, —— US.App.D.C. pages —-, —~—, —~— F.2d pages ——, ——- (emphasis added). RAT Sy eR NER ORD: TENTHS G apes NR RRS PME ME RMI AGE NINE SLITS LIT WEIRD atteias 44a tancies.. We are not faced with a situation where a superior applicant is denied a license because to give it to tim would work a ‘forfeiture’ of his opponent's investment. We merely confirm what we intimated in [Greater Boston Television Corp. v. FCC, 143 US. App.D.C. 383, 444 F.2d 841, 854, 859 (1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971)] that, when faced with a fairly and evenly balanced record, the Commission may, on the basis of the renewal applicant's past performance, award him the license. The court does not inform us from whence comes the quote “minimal service is to be preferred to no service at all.” It surely does not come from the Commission's opinion. The Commission referred to the value of “continunation of ex- isting service” and not to the value of minimal service over no service at all. And indeed it had no other choice since we confront here not a petition to deny—where the value of minimal service over no service at all is certainly relevant —but rather a comparative hearing—where the issue is not the existence of service but rather who shall provide it. Why ihe court finds no need to “expand upon renewal ex- pectancies” is not at all clear to me, since I read the Com- mission as basing its decision squarely on renewal expec- tancies. The court suggests that the Commission’s decision was based on a rule that among equal applicants, the renewal applicant may be preferred on the basis of “past perform- ance.” First, the court’s point about the non-superionity of Fidelity’s application is entirely circular since that issue can only be determined by making a comparative evalua- tion. But the Commission’s decision, as the quoted ex- cerpt shows, did not make a comparative decision since it chose largely on the basis of “renewal expectancies.” In éh 45a other words, Fidelity’s application was not “superior” sim- ply because the Commission never decided whether it was! "As is discussed in more detail in slip pages 9-10, ___ VEO. 000. gs Ss PSG ee infra, use of the renewal expectancies, clearly relied upon by the Commission, completely short-circuits the compara- tive evaluation process. Hence, the Commission did not choose between ‘‘equal” applicants since the very notion of a comparative choice requires that one applicant be “more equal” than others. The question is why is that applicant better. lo that question, the Commission’s only answer is ‘“‘renewal expectancies.” Second, the Commission did not, repeat did not, award renewal to RKO on the basis of RKO’s past performance. The previously quoted excerpt should make that point clear. If further proof is needed, the following additional quote should provide it:’ [We] are persuaded that there are sufficient good points to offset the less favorable aspects of KHJ-— TV’s performance and that, on balance, its record must be deemed to be within the bounds of average performance expected of all licensees, thus warrant- ing neither a preference nor a demerit. Earlier in its opinion, the court expressly affirms this hold- ing.® Indeed, both the Commission and the court had to 7 RKO General, Inc., 44 F.C.C.2d 123, 133 (1973). Presumably, if the Commission had in fact made a comparative decision, RKO’s past record would be entitled to some weight in comparison with Fidelity’s advantages. 8 Slip pages 26-28, —— US.App.D.C. pages —-, ——, —— F.2d pages -—-, ——. At slip page 28, —— US.App.DC. at page —, PREIS O OS i i i a aia RESORT TE! ERE OES 46a labor valiantly, for what purpose I do not know, to over- turn the Examiner's finding that RKO deserves demerit for its past performance.? The Commission’s decision is based purely on renewal expectancies, on the value of ‘“‘continu- ation of existing service.” The issue thus delineated is whether the Commission may use the value of “continuation of existing service”, quite apart of the quality of that existing service, as a factor in comparative renewal hearings. Initial reference to the relevant statutory provisions would indicate that this factor is legally irrelevant."° However, early Commis- sion practice was to grant a basically insuperable advantage to the incumbent on the basis of past performance.'! Thus, __ F.2d at ——, the court makes the rather opaque statement that RKO’s past performance as a licensee in the areas of integration, diver- sification and local ownership as well as past programming performance are to be considered as part of the renewal applicant’s past performance. This statement is confusing. Of course, the renewal applicant’s proposal, as well as a new applicant’s propoaal will be scrutinized and compared on the above-mentioned factors. But such factors have no significance in regard to a renewal expectancy engendered by past performance. And, of course, RKO’s “past performance” on those factors is dreary indeed. 9 see RKO General, Inc., 44 F.C.C.2d 123, 130-33 (1973); Slip pages 26-28, —— US.AppD LC. pages —, ——: —— F.2d pages —. 10 see 47 U.S.C. 8 301; 304; 307(d); 309%(h)(1) (1970), quoted and discussed Citizens Communications Center v. FCC, 145 U.S.App.D.C. 32, 447 F.2d 1201, 1209 n. 23 (1971). i Hyde, FCC Policy and Procedures Relating to Hearings On Broadcast Applications in Which a New Applicant Seeks to Displace A Licensee Seeking Renewal, 1975 Duke LJ. 253, 256-61. See also Citizens Communications Center v. FCC, 145 U.S.App.D.C. 32, 447 F.2d 1201, 1207-08 (1971); Greater Boston Television Corp. v. FCC, 143 US.App.D.C. 383, 444 F.2d 841, 854-858 (1970), cert. denied, 403 US. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971); WOKO, Inc. v. FCC, 80 U.S.App.D.C. 333, 153 F.2d 623, 629-30, rev'd on other 47a administrative practice, confirmed by the courts, was that some consideration must be given to incumbency or renew- al expectancies. The question became not whether renewal expectancies were to be recognized but what was the prop- er consideration of renewal expectancies. This court provided the framework for analysis of that issue in Citizens Communications Center v. FCC, 145 U.S. App.D.C. 32, 447 F.2d 1201 (1971). There we considered a Commission policy of refusing to assess the comparative qualifications of competing applicants in renewal hearings until after the Commission had determined whether the incumbent licensee had performed “substantial service.” If the licensee had performed such service, then renewal was granted without consideration of comparative factors. If the licensee did not so rerform, a full comparative hear- ing was held.!2_ We rejected this policy as inconsistent with the statutory and caselaw requirement for a full com- parative hearing on the qualification sof competing appli- cations. This holding was not purely formal: the nght to a full comparative hearing involved not only the right to grounds, 329 U.S. 223, 67 S.Ct. 213, 91 L.Ed. 204 (1946). Com- pare these statements with FCC v. Sanders Bros. Radio Station, 309 US. 470, 475, 60 S.Ct. 693, 84 L.Ed. 869 (1940); Crowder v. FCC, 130 U.S.App.D.C. 198, 399 F.2d 569, 571, cert. denied, 393 US. 962, 89 S.Ct. 400, 21 L.Ed.2d 375 (1968); Transcontinental Televi- sion Corp. v. FCC, 113 U.S.App.D.C. 384, 308 F.2d 339, 341-42 (1962); American Broadcasting Co. v. FCC, 89 U.S.App.D.C. 298, 191 F.2d 492, 496-97 (1951), quoting Ashbacker Radio Corp. v. FCC, 326 US. 327, 331-32, 66 S.Ct. 148, 90 L-Ed. 108 (1945); FCC v FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 137-38, 60 S.Ct. 437 437, 84 L.Ed. 656 (1940); L. B. Wilson, Inc. v. FCC, 83 U.S.App. D.C. 176, 170 F.2d 793, 798 & n.5 (1549). 12 Policy Statement Concerning Comparative Hearings Involving Regular Renewal Applicants, 22 F.C.C.2d 424, recon. denied, 24 F.C.C.2d 383 (1970). RE eae oD ees Ee ce 48a present a competing applications but also the duty of the Commission to make a decision on the basis of a compara- tive examination of the competing applications. '3 The CCC case thus establishes that the Commission may not use renewal expectancies of incumbent licensees to short- circuit the comparative hearing process. In particularly famous dicta, the CCC court defined the proper consideration of renewal expectancies: We do not dispute, of course, that incumbent li- censees should be judged primarily on their records of past performance. Insubstantial past performance should preclude renewal of a license... . At the same time, superior performance should be a plus of major significance in renewal proceedings. The court recognizes that the public itself will suffer if incumbent licensees cannot reasonably expect renewal when they have rendered superior service. The statement reflected administrative practice (or, at least, stated administrative practice) and was quickly adopted by the Commission after the CCC decision. This form of “renewal expectancy” fitted easily into the doctrinal frame- 13 Citizens Communications Center v. FCC, 145 U.S.App.D.C. 32, 447 F.2d 1201, 1212 (1971), citing Johnston Broadcasting Co. v. FCC, 85 US.App.D.C. 40, 175 F.2d 351, 356-57 (1949). 14 447 F.2d at 1213 & n.35. 15 See Formulation of Policies Relating to the Broadcast Renewal Applicant, 31 F.C.C.2d 443, 444 & n.1 (1971), mandamus denied, Citizens Communications Center v. FCC, 149 U.S.App.D.C. 419, 463 F.2d 822 (1972) referencing Formulation of Policies Relating to the Broadcast Renewal Applicant, 27 F.C.C.24 580, 582 (1971) and Policy Statement Involving Regular Renewal Applicants, 22 F.C.C.2d 424, 425 & n.1 (1976). See also A. H. Belo Broadcasting Corp., 40 49a work established in CCC. A licensee’s past performance was clearly indicative of potential as a licensee and thus must be given comparative weight against a challenger’s ad- vantages in proposed programming, ascertainment efforts, diversification or whatever. The proper weight to be giv- en to past performance is, of course, a matter for the Com- mission’s judgment. It is obvious, and the Commission does not seriously deny it, that RKO is entitled to no renewal expectancy under the reasoning of CCC ostensibly adopted by the Commission. RKO barely avoided a finding of insubstan- tial service and received only a lukewarm finding of “‘aver- age” performance which deserved neither merit nor de- merit."© RKO would not be entitled to a finding of “sub- stantial” service under the Commission’s post-CCC suggest- ed guidelines.'7 And, as established above, the Commis- F.C.C.2d 1131 (1973), on further proceedings, 47 F.C.C.2d 540 (1974); Moline Television Corp., 31 F.C.C.2d 263 (1971). This kind of renewal expectancy is supported by the various state- ments of this court on the issue. See, e. g., Greater Boston Televi- sion Corp. v. FCC, 143 U.S.App.D.C. 383, 444 F.2d 841, 854, 859 (1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971); Office of Communications of United Church of Christ v. FCC, 123 US.App.D.C. 328, 359 F.2d 994, 1007 (1966). 16 See slip-page 6 & nn. 7-9, US App.D.C. page F.2d page Ss & nn. 7-9, supra. 17 Compare Formulation of Policies Relating to the Broadcast Re- newal Applicant, 27 F.C.C.2d 580, 582 (1971) with RKO General, Inc., 44 F.C.C.2d 149, 161, 173-77 (1969) (Hearing Exam.) (discusses in detail RKO’s programming in the various categories of programming identified in Network Programming Inquiry, 25 Fed.Reg. 7291 (1960)). The court, slip page 26 n.36, __ US.App.D.C. page, _—si*F 2d page ____n. 36, makes the assertion that the hearing Examiner “expressed the belief’ that RKO would have met standards of “sub- 50a sion did not find that RKO was entitled to renewal on the basis of past performance. Indeed, the renewal expec- tancy granted to RKO had nothing to do with RKO’s own performance as a licensee, but rather was premised upon a general policy of ensuring the “continuation of existing service” unless a challenger proved that it would “‘in fact” provide better service than the existing licensee. We thus have seen that the renewal expectancy awarded to RKO is quite distinct from that approved in CCC and accepted by the Commission. It remains to be seen wheth- er that renewal expectancy is inconsistent with the hold- ing and reasoning of CCC and the Federal Communications Act. B. The Renewal Expectancy Granted to RKO Shortcir- cuits the Comparative Hearing Procedure. The first thing one notices about the renewal expectancy granted to RKO and considered in this comparative hear- ing is that it has nothing whatsoever to do with RKO’s comparative merit as a licensee. Rather it is a general policy, existing wholly apart from RKO, which mandates that renewal will be granted unless a challenger proves that it will “in fact’? provide better service that the existing licensee. Initially, we may strike the “unless” clause off the last sentence. The comparative factors in general are designed to determine which competing applicant will pro- stantial service” if they had existed. However, reference to the Ex- aminers opinion, 44 F.C.C.2d at 228, reveals that this was no more than an expression of confidence that RKO would have upgraded its station to meet the established standards, if such standards had existed, and is not any suggestion, much iess a holding, that RKO en- gaged in substantial service within the intendment of the 1971 pro- posed guidelines. S5la vide the “best practicable service.”"8 And indeed. the Commission has affirmed that the factor of diversification of ownership of communications facilaities is a factor above and beyond the “best practicable service” determination.’ Thus, the comparative hearing process is designed to deter- mine whether the challenger will, under the only predictors the Commission recognizes, “in fact” provide better service. The issue is whether the grant of a renewal expectancy such as was given to RKO itself prevents that determina- tion. 1 think it does. The whole of the Commission’s effort in its opinion prior to the passage quoted in Part A above is to estab- lish that neither applicant has a significant advantage over tne uther. Making the heroic assumption that the Com- mission succeeded in this effort, it still must, under CCC, make a comparative choice; it must make a selection. The mandate of the Act is that the Commission must choose and it has on previous occasions managed to choose on the basis of fairly equal records.2” But it is precisely at 18 See Policy Statement on Comparative Broadcast Hearings, 1 F.C.C. 2d 393, 394, 395-98 (1965). 19 See Terre Haute Broadcasting Corp., 25 F.C.C.2d 348, 353-55 (1970). 20 See, e. g., Star Television, Inc. v. FCC, 135 U.S.App.DC. 71, 416 F.2d 1086, cert. denied, 396 US. 888, 90 S.Ct. 171, 24 L.Ed. 2d 163 (1969) aff'g Flower City Television Corp., 9 F.C.C.2d 249, recon. denied, 10 F.C.C.2d 718 (1967); Community Broadcasting Corp. v. FCC, 124 U.S.App.D.C. 230, 363 F.2d 717 (1966); Ten- nessee Television, Inc. v. FCC, 1u4 US.App.D.C. 316, 262 F.2d 28 (1958); Pinellas Broadcasting Co. v. FCC, 97 U.S.App.D.C. 236, 230 F.2d 204, cert. denied, 350 U.S. 1007, 76 S.Ct. 650, 100 L.Ed. 869 (1956); W. S. Butterfield Theatres, Inc. v. FCC, 99 U.S.App.D.C. 71, 237 F.2d 552 (1956). 52a this point that the Commission pulls up short and refuses to make a comparative choice, holding that when in doubt it must renew. As I have stated, the renewal expectancy granted to RKO has nothing to do with its comparative qualifications and thus use of that factor may not be jus- tified as simply one more element in the comparative bal- ance. So, the use of the renewal expectancy prevents the challenger from making its case that it will in fact be a bet- ter licensee by forestalling the comparative decision which will establish the challenger’s contention. This Catch-22 reasoning completely shortcircuits the comparative decision process since it avoid the “overall relative determination upon an evaluation of all factors’?! which is the sine qua non of comparative licensing. It is no answer to this analysis to assert that the Com- mission simply imposed a “burden of proof” on the chal- lenger to prove that it is better qualified under the com- parative criteria. First, the Commission has not hereto- fore ever informed challengers that they have a special burden of proof which exists wholly apart from the com- parative criteria and, as far as one can tell from the lan- guage of the reports, has never expressly applied such a “burden of proof.”” The Commission advances no reasons in its opinion for departing from its pnor practice and none are apparent. Thus, the matter should at least be remand- ed for that purpose.22. Second, it is clear that the Commis- sion did not truly use the renewal expectancy as a “‘bur- den of proof.”” Nowhere does the Commission make a comparative judgment between the two applicants, even with a burden of proof on Fidelity. Its whole discussion goes only to prove that RKO is qualified to be a licensee 21 Johnston Broadcasting Co. v. FCC, 85 U.S. App.D.C. 40, 175 F.2d 351, 357 (1949). RL EOE AS RO LIME ELEN I OE TOST BI IETS SOE TIPU Oc mt Ree -* 53a and is entitled to a renewal expectancy. Indeed, the Com- mission expressly refuses to make a comparative judgment, saying by fiat that none of the differences in the applica- tions provide the basis for making a choice.23 The Com- mission nowhere provides any reasoned comparison of these differences; it treats the advantages and disadvantages of the two applicants but makes no comparison. To be sure, the Commission asserts that none of the parties are enti- tled to a preference or a demerit, as if those two concepts were all or nothing issues. Put it never holds that in com- parison to each other, Fidelity or RKO should have some advantage or disadvantage because of, respectively, diversi- fication or past performance. And, as will be developed in Parts C and D below, there are very significant differ- ences between the applicants which even under the Com- mission’s reasoning could provide the basis for a compara- tive choice. 22 See Garrett v. FCC, 167 US.AppD.C. __, 513 F.2d 1056 (1975); Columbia Broadcasting System, Inc. v. FCC, 147 U.S.App. D.C. 175, 454 F.2d 1018, 1026 (1971); see also Local 814, Team- sters v. NLRB, 167 US.App.DC. __, 512 F.2d 564, 571-72 & n.15 (1975) (Bazelon, C. J. concurring in part, dissenting in part) and authorities cited. 23 RKO General, Inc., 44 F.C.C.2d 123, 137 (1973): 24 This point might, at first glance, appear too attenuated. If the reader has this reaction, | would suggest a comparison between the cases cited in note 20 supra and the discussion in Parts C and D infra in regard to their treatment of relative “preferences” and “de- merits.” Reference may also be made to Mid-Florida Television Corp.. 33 F.C.C.2d 1, 9-10, 21, reviews denied, 37 F.C.C.2d 559 (1972), rev'd on other grounds, TV 9, Inc. v. FCC, 161 US.App.D.C. 349, 495 F.2d 929 (1973), cert. denied, 419 U.S. 986, 95 S.Ct. 245, 42 L.Ed.2d 194 (1974). 54a But more important than these two points, I would hold that the renewal expectancy granted to RKO violates the express provisions of the Federal Communications Act re- lating to renewal expectancies. 47 U.S.C. §301 (1970) states that “no such license shall be construed to create any right, beyond the terms, conditions, and periods of the license.” Other statutory provisions, buttressed by case law, provide reinforcement for this command. The very concept of a three year license demands that the holder be subject to competition at the license’s term. To grant an advantage in the comparative hearing process to the incumbent licensee for reasons wholly unrelated to its performance, past and future, nullifies the competition that the three year licensing scheme was designed to pre- serve. A renewal expectancy based on past performance could in fact encourage competition by providing a safe haven for the diligent licensee. A renewal expectancy not based on past performance will have an opposite result since any competitive spur provided by the three year li- cense will be substantially eliminated. And, of course, there is no precedent in the Commission or in the courts for a renewal expectancy not based on past performance. I need hardly point out that CCC specifically and express- ly relied on this competitive spur argument to strike down the Commission’s previous renewal policy. There are substantial antitrust and First Amendment considerations which support my position. As CCC ex- pressly recognizes, perhaps the most significant comparative qualification which is ignored by a policy that entrenches the inct:mbent licensee is diversification of ownership.2’ 25 See authorities cited notes 10-11 supra. 26 447 F.2d at 1214. 27 id. at 1213 1.36. Te EPCOT A ET 4 55a The diversification guides, the most important single fac- tor in the comparative hearing, constitute the prime legal rule for dealing with the extremely concentrated VHF tele- vision market.2? The guides thus serve both antitrust con- 28 Terre Haute Broadcasting Co., 25 F.C.C.2d 348, 353-55 (1970); Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393, 394 (1965). See WHDH, Inc., 16 F.C.C.2d 1, 12-13, on recon., 17 F.C.C.2d 856 (1969), aff'd, Greater Boston Television Corp. v. FCC, 143 U.S.App.D.C. 383, 444 F.2d 841, 859-60 (1970), cert. denied, 403 US. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971); Lorain Com- munity Broadcasting Co., 13 F.C.C.2d 106, 114, recon. denied, 14 F.C.C.2d 604, rehearing denied, 15 F.C.C.2d 388 (1968), review de- nied, 18 F.C.C.2d 686 (1969), aff'd, Allied Broadcasting, Inc. v. FCC, 140 U.S.App.D.C. 264, 435 F.2d 68, 69 (1970); Ultravision Broad- casting Corp., 11 F.C.C.2d 394, 410-11 (1968), aff'd, WEBR, Inc. v. FCC, 136 U.S.App.D.C. 316, 420 F.2d 158 (1969). See generally TV 9, Inc. v. FCC, 161 U.S.App.D.C. 349, 495 F.2d 929, 938 (1973), cert. denied, 419 U.S. 986, 95 S.Ct. 245, 42 L.Ed.2d 194 (1974). 29 See Hale v. FCC, 138 US.App.D.C. 125, 425 F.2d 556, 562 & n.2 (1970) (Tamm, J. concurring); Bennett, Media Concentration and the FCC: Focusing with a Section Seven Lens, 66 Nw.U.L.Rev. 15 159, 181-86 (1971). See also R. Noll, M. Peck & J. McGowan, Economic Aspects of Television Regulation 15-16, 104-06 (1973); House Comm. on Interstate and Foreign Commerce, Report on Net- work Broadcasting, H.R.Rep. No. 1297, 85th Cong., 2d Sess. 559-75 (1958); Barnett, Cable Television and Media Concentration, Part 1, 22 Stan.L. Rev. 221 (1970). Failure to grant significant weight to a diversification advantage in a comparative renewal hearing would tend to entrench this present pattern of concentration of control by eliminating the prospect of potential competition on the edge of the market. Elimination of this “edge effect” has been one factor that has weighed heavily in more recent anti-trust case law. See United States v. Marine Bancorporation, Inc., 418 U.S. 602, 623-41, 94 S. Ct. 2856, 41 L.Ed.2d 978 (1974); United States v. Falstaff Brewing Corp., 410 U.S. 526, 532-37, 93 S.Ct. 1096, 35 L.Ed.2d 475 (1973) and sources cited. If one inspects the Los Angeles viewing and ad- EG LES NG, FOIL IE Oe my A aes od ts oP EVIE LSE TR PEG OP 56a cerns, in regard to the market for television advertising, * and First Amendment concerns by increasing the number of diverse speakers. The diversification guides serve First Amendment concerns in another manner as well. The passle of program~regulation policies presently en- forced by the FCC would viol%e the First Amendment in any context other than telecommuntatjons. The jus- tification for providing a different First Amendntatysegime to the telecommunications field is the alleged “scarcity = of broadcast speakers, a scarcity which if the truth were known is a product of the extremely concentrated VHF television market.3! Failure to effectively deal with the concentrated VHF television market will only increase the pressure for more program control. We thus erode our vertising market for VHF and daily newspapers (on this definition of the relevant market, see Multiple Ownership of Standard, FM and Broadcast Television stations, 50 F.C.C.2d 1046, 1056, 1077, 1083 (1975)), one finds seven VHF television stations and two daily news- papers, a total of nine competitors. Elimination of the threat of potential competition from a merket structured in this manner would surely fall within the rule of the cases cited previously on “edge effect”, although the elimination of potential competition does not occur in a merger context. 30 See Citizens Comm. to Save WEFM y. FCC, 166 U.S.App.D.C. ___, 906 F.2d 252, 270-72 (1974) (Bazelon, C. J., concurring in the result); TV 9, Inc. v. FCC, 161 US .App.D.C. 349, 495 F.2d 929, 937-38 (1973), cert. denied, 419 U.S. 986, 95 S.Ct. 245, 42 L.Ed.2d 194 (1974); Multiple Ownership of Standard, FM and Television Broadcast Stations, 50 F.C.C.2d 1046, 1048 (1975) and id. at 1116, 1119 (Robinson, Comm’r, concurring in part, dissenting in part), citing Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945). 31 See Bazelon, FCC Regulation of the Telecommunications Press, 1975 Duke LJ. 213, for a complete discussion of this powtt 57a First Amendment freedoms in two days by a refusal to enforce the diversification guides. I conclude from the foregoing discussion that the court's decision in the present case is inconsistent with CCC both because it shortcircuits the comparative process and because it eliminates the competitive spur upon which CCC relied in significant part in its holding. Moreover, I think the renew- al expectancy granted to RKO violates the Federal Commun- ications Act independently of CCC. A review of the Com- mission’s treatment of the diversification guides in the pres- ent case provides additional evidence that the Commission both shortcircuited the comparative hearing process and vio- lated the Federal Communications Act with its renewal ex- pectancy for RKO. C. The FCC Failed to Follow Its Own Precedent In Its Ruling on Fidelity’s Diversification Advantage The FCC has traditionally granted a significant compara- tive advantage to an applicant which possesses no other media interests over an applicant which does possess other media in- terests. In its 1965 Policy State on Comparative Broadcast Hearings, the Commission had this to say about the diversi- fication guides: *? We believe there are two primary objectives toward which the process of comparison should be directed. They are, first, the best practicable service to the pub- lic, and, second, a maximum diffusion of control of the media of mass communications. ... Since inde- pendence and individuality of approach are elements of rendering good program service, the primary goals 32 Policy Statement on Comparative Broadcast Hearings, 1 F.C.C. 2d 393, 394-95 (1965). DEOL TE ABE ORE NRRL SS RTOS IIS, SRY PAE PALER RS MOVE a 2 Ae * a i a ia I 58a of good service and diversification of control are also fully compatible. As in the past, we will consider both common con- trol and less than controlling interests in other broad- cast stations and ether media of mass communications. The less the degree of interest in other stations or me- dia, the less will be the significance of the factor. Other interests in the principal community proposed to be served will normally be of most significance, followed by other interests in the remainder of the proposed service area and finally, generally in the United States. However, control of large interests elsewhere in the same state or region may well be more significant than control of a small medium of expression . . . in the same community. The number of other mass communica- tions outlets of the same type in the community pro- posed to be served will also affect to some extent the importance of this factor in the general comparative scale. The diversification issue is a standard comparative issue and was duly considered by the Hearing Examiner and the Com- mission, The following facts were developed. RKO was the licen- see of standard, FM and broadcast television licenses in New York City (# 1 viewing market in the country); Los Angeles (# 2 viewing market); Boston (# 5 viewing mar- ket): Windsor, Ontario (serving # 6 Detroit market) and Memphis (# 45 viewing market). RKO was the licensee of standard and FM stations in Washington-Bethesda (# 9 viewing market) and San Francisco (# 10 viewing market). RKO has controlling interests in a massive number of CATV franchises serving almost 100 cities and towns. 59a Several towns are within the Grade B contour of Channel 9. RKO has other media interests, including microwave communications facilities, a chain of movie theaters, pro- gramming and advertising services and a small interest in a newspaper in Schenectady, New York. Fidelity has no other media interests. A 3% stockholder of Fidelity has a 10% interest in a CATV franchise 50 miles from Los Angeles. That is the extent of Fidelity’s media interests.*? From these facts, the FCC reached the miraculous con- clusion that neither applicant was entitled to a diversifica- tion “preference.” Before indicating the absurdity of this conclusion, it is necessary to point out that this finding of no “preference” does not mean that if a comparative eval- uation were made, Fidelity would have no advantage on di- versification. If the FCC had in facts made a comparative determination, a diversification advantage of some kind would clearly be required. The Commission avoids this, by avoiding a comparative decision, as was noted in Part B above. As will be seen, all the Commission’s arguments against Fidelity’s “preference” or diversification advantage serve only to reduce its significance, not eliminate it en- tirely. The vestige is eliminated not by arguments directed to diversification policies but by avoidance of a compara- tive decision. Taking a deep breath, I note the following arguments for reducing Fidelity’s diversification advantage. First, the Com- 33 The FCC assets that another stockholder of Fidelity of an un- stated interest has a 26% interest in a corporation publishing “news- papers” in the Los Angeles suburbs. RKO General, Inc., 44 F.C.C. 2d 123, 133 (1973). The court properly holds that the Commission committed error in considering this “fact” since Fidelity was denied a hearing on its assertion that these “newspapers” were simple ad- vertising “throwaways.” Slip page 30, __— U.S.App.D.C. page __, > | Lee TS 60a mission points out that there are 15 television stations, 126 radio stations and numerous newspapers within Channel 9’s signal contour. Second, the Commission finds that RKO has never sought to influence the operation of KHJ-TV to promote a uniform expression of views. Third, the Com- mission will not attempt to restructure the broadcast in- dustry in comparative hearings.** These reasons are com- pletely and utterly inconsistent with every reported com- parative decision my office has been able to locate. Per- haps it is the unmitigated audacity of the Commission that stuns the court into accepting its sweeping repeal of the diversification guides. Whatever the reason, it is be- yond cavil that the Commission’s reasoning will simply not bear analysis unless one makes the assumption that it has sub silentio repealed the guides. First, as the 1965 Policy Statement clearly provides and as has been followed in every case decided since it promul- gation,*S the existence of other media of the same type in 34 RKO General, Inc., 44 F.C.C.2d 123, 133-34 (1973). 35 See Terre Haute Broadcasting Corp., 25 F.C.C.2d 348, 349, 350-51 (1970); WHDH, Inc., 16 F.C.C.2d 1, 12-13, recon. denied, 17 F.C.C.2d 856 (1969),: aff'd, Greater Boston Television Corp. v. FCC, 143 US.App.D.C. 383, 444 F.2d 841, 859-60 (1970), cert, denied, 403 U.S. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971); Ultravision Broadcasting Corp., 11 F.C.C.2d 394, 410-11 & n. 29 (1968), aff'd, WEBR, Inc. v. FCC, 136 U.S.App.D.C. 316, 420 F.2d 158 (1969). While ultimately not award- ing the license to the applicant with the diversification advantage, the Commission affirmed the proposition that other media outlets only discount the diversification preference and do not at all eliminate it in Mid-Florida Television Corp., 33 F.C.C.2d 1, 9-10, recon. denied, 37 F.C.C.2d 559 (1972), rev'd on this ground in part for failure to give complete consideration to diversification, TV 9, Inc. v. FCC, 161 U.S.App.D.C. 349, 495 F.2d 929 (1973), cert. denied, 419 U.S. 6la the community may be weighed fo some extent. However, the existence of other outlets neither cancels a diversifica- tion advantage, nor indeed renders it insubstantial. This principle has been applied in cities such as Boston, Terre Haute, and Buffalo.” And no other conclusion would be plausible considering the express provision in the Policy Statement?” and recent cases that the diversification guides are directed to concentration of control in the na- tion and several regions, not only within a viewing mar- ket. In fact, this policy is implicit in the group owner 968, 95 S.Ct. 245, 42 L.Ed.2d 194 (1974), citing Flower City Tel- evision Corp., 9 F.C.C.2d 249, 254, recon. denied, 10 F.C.C.2d 718 (1967), aff'd, Star Television, Inc. v. FCC, 135 U.S.App.D.C. 71, 416 F.2d 1086, cert. denied, 396 U.S. 888, 90 S.Ct. 171, 24 L.Ed. 2d 163 (1969). See also Brandywine-Main Line Radio, Inc. v. F.C.C., 153 U.S.App.D.C. 305, 473 F.2d 16, 28 (1972), cert. denied, 412 U.S. 922, 93 S.Ct. 2731, 37 L.Ed.2d 149 (1973) (only inquiry un- der Fairness Doctrine is balance within a licensee’s own program- ming and not in the viewing market as a whole). 36 See cases cited note 35 supra. 37 Policy Statement on Comparative Broadcast Hearings, | F.C.C, 2d 393, 394-95 (1965). 38 Binly T. Pirtle, 43 F.C.C.2d 670, 671 (1973), citing Snake River Valley Television, Inc., 26 F.C.C.2d 380 (1970). See Alvin L. Korngold, 45 F.C.C.2d 1, 4-5 (1974); The News-Sun Broadcast- ing Co., 24 F.C.C.2d 770, 775-76 (1970); East St. Louis Broadcast- ing Co., 19 F.C.C.2d 289, 292-93 (1969). See also McKenney v. FCC, 116 U.S.App.D.C. 412, 324 F.2d 444 (1963); McClatchy Broadcasting Co. v. FCC, 99 U.S.App.D.C. 195, 239 F.2d 15 (1956), cert. denied, 353 US. 918, 77 S.Ct. 662, 1 L.Ed.2d 665 (1957) (in these cases the court affirmed Commission actions awarding a comparative demerit against an applicant with media ties outside of the service area.) See generally Clarksburg Publishing Co. v. FCC, 96 U.S.App.D.C. 211, 225 F.2d 511, 518 (1955). 62a ship and chain broadcasting rules.% Even if all this were wrong, we would still want to consider how many of those other outlets in Los Angeles are truly independent. We know that at least two are owned by RKO itself and three VHF television licensees are owned by the three major net- works as flagship stations, as well as an unknown number of radio stations. Second, none, repeat none,” of the cases considering the diversification guides consider the fact that the owner 39 See Multiple Ownership of Standard, FM and Television Broad- cast Stations, 50 F.C.C.2d 1046, 1049 (1975); Multiple Ownership of Standard, FM and Television Broadcast Stations, 22 F.C.C.2d 306 (1970), on recon., 28 F.C.C.2d 662 (1971); Multiple Owner- ship of Standard, FM and Television Broadcast Stations, 18 F.C.C. 288 (1953); mod. Storer Broadcasting Co. v. United States, 95 U.S.App.D.C. 97, 220 F.2d 204 (1955), reinstated, 351 U.S. 192, 76 S.Ct. 763, 100 L.Ed. 1081, affirmed on remand, 99 U.S.App. D.C. 369, 240 F.2d 55 (1956). See also National Broadcasting Co. v. United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344 (1943); lacopi v. FCC, 451 F.2d 1142 (9th Cir. 1971); Mount Mansfield Television, Inc. v. FCC, 442 F.2d 470 (2d Cir. 1971). Even when one considers intra-viewing market concentration, Fidelity would under established precedent be entitled to a sub- stantial diversification demerit. Fidelity, as stated in the text, owns an AM and an FM station in Los Angeles as well as certain cable franchises within Channel 9°s Grade B contour. See, e.g., Industrial Business Corp. 47 F.C.C.2d 891, 892, 897 (1974); Lorain Commun- ity Broadcasting Co., 13 F.C.C.2d 106, 114, recon. denied, 14 F.C.C. 2d 604, rehearing denied, 15 F.C.C.2d 388 (1968), review denied, 18 F.C.C.2d 686 (1969), affd, Allied Broadcasting, Inc. v. FCC, 140 U.S.App.D.C. 264, 435 F.2d 68, 69 (1970). See also Scripps-How- ard Radio, Inc. v. FCC, 89 U.S.App.D.C. 13, 189 F.2d 677, cert. denied, 342 U.S. 830, 72 S.Ct. 55, 96 L.Ed. 628 (1951). 40 The court makeés’a rather extraordinary cit to McClatchy Broadcasting Co., 19 F.C.C. 343 280-281 (1954), aff'd McClatchy Broadcasting Co. v. FCC, 99 U.S.App.D.C. 195, 239 F.2d 15 (1956), OO —— 63a has not imposed uniform expression of views in ruling on the application of the guides. To do so would run count- er to the oft stated maxim of antitrust law that one does not distinguish between “good” monopolists and “bad” cert. denied, 353 U.S. 918, 77 S.Ct. 662, 1 L.Ed.2d 665 (1957) in which the Hearing Examiner relied on the so-called “autonomy” argument to reduce a diversification preference (although not to eliminate it). But the Commission refused to accept that reason- ing, reversed the Hearing Examiner's recommendation and awarded to the applicant with the diversification advantage. This court affirmdd. Of course, the court is correct that the Commission “considered” whether the licensee had met the goals of diversifi- cation by autonomous operation, slip page 30, = U.S.App.D.C. page _, __—*F.2d page ___, but fails to inform the reader that the Commission rejected the argument. In the cases cited in notes 28, 35, 38-39 supra, there is no evidence of Commission considera- tion of autonomu in ruling on the weight of a diversification pref- erence. The reasoning of those cases implicitly rejects such a con- tention. As the amicus Citizens Communications Center argues, the autonomy rationale would seemingly nullify the multiple or group ownership provision, as well as the duopoly rules, since the licensee could argue that it has met the “goals” of the rules by “autono- mous” operation. And, as may be evident, the Commission in its decision did not rely on “autonomous” operation so much as the fact that there was no evidence that the control of ownership was exercised to promote a uniform expression of views. Turning to the Commission’s true rationale, it is clear that ad hoc inquiry into whether diversification demerits translate into a failure of diversity would require a prescience of what is “uniform” expression of views, a skill the Commission is not required to achieve and which has shown no success in achieving. Cf Multiple Ownership of Stan- dard, FM and Television Broadcast Stations, 50 F.C.C.2d 1046, 1119- 21 (1975) (Robinson, Comm’r, concurring). The Commission has followed this approach to a very limited and unsuccessful extent in petitions to deny in cross-ownership situations. E.g. Columbus Broad- casting Coalition v. FCC, 164 U.S.App.D.C. ___, 505 F.2d 320, 324 325 (1974); Stone v. FCC, 151 U.S.App.D.C. 145, 466 F.2d 316, 331 (1972); Hale v. FCC, 138 U.S.App.D.C. 125, 425 F.2d 556, 560 64a monopolists in application of antitrust policy.*! More- over, the Commission does not inform us how one defines uniform expression of views as opposed to local expression of views. To make the distinction raises very serious First Amendment questions indeed. Third, the Commission’s reference to restructuring of the broadcast industry is en- tirely gratuitous and conclusory since the diversification guides by their nature will cause restructuring if applied. The reference is thus no more than a bad humored attack on the existence of the guides. The court affirms this bizarre, vertiginous reasoning by simply incanting it out loud and citing in support two of the leading cases upholding a strict application of the diver- sification guides. The court does not cite and shows no (1970). The Commission promoted this approach only as a tempo- rary measure while it examined proposed rules and this court express- ly affirmed it on that basis. The adoption of the rules on cross- ownership represent a rejectior of the ad hoc approach and the ex- pression of a general sentiment that the dangers to diversity because of the power gained through concentration is sufficient to prohibit the concentration. Multiple Ownership of Standard, FM and Tele- vision Broadcast Stations, 50 F.C.C.2d 1046, 1054(1975). These rules represent the limit of cross or common ownership as a dis- qualification factor; they are to be extended in comparative hear- ings through the diversification guides. Jd. at 1055, 1087-88 (since cross-ownership rules are prospective, in large part, major considera- tion of diversification in comparative hearings will occur in renewal proceedings). 41 see United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 213-14, 221-22, 60 S.Ct. 811, 84 L.Ed. 1129 (1940); citing United States v. Trenton Potteries Co., 273 U.S. 392, 397-98, 47 S.Ct. 377, 71 L.Ed. 700 (1927). The policies stated in these two cases, that there is no feasible or efficient manner of administration of monop- oly power to ensure against abuses, are applicable to the Commis- sion’s logic. 65a awareness of the multitude of Commission cases which are inconsistent with this reasoning, even though we have only recently reaffirmed the proposition that the Commission must follow its own precedent or explain why it has not.” One possible distinction of these precedents, not mentioned by the court, is that they all involve non-renewal compara- tive hearings. However, this distinction goes to the weight of a diversification preference in comparison with the past broadcast record of the renewal applicant and does not at all purport, in any case except this one, to affect the as- certainment of a diversification advantage in the first place. The Commission’s treatment of the diversification guides in this case truly illumines its intent in erecting the renewal expectancy mentioned in Parts A and B. Without any supporting reasoning to speak of, the Commission nullifies the diversification guides in comparative renewal hearings and the court, laboring valiantly, sweeps up behind it. And for what purpose we are never told. Perhaps what underlies this extraordinary holding is the instinctive feeling that despite its substantial diversification advantage, Fidelity is not really that good an applicant. This feeling is apparently based on sever comments of the Hearing Examiner to the effect that Fidelity’s lack of ex- perience renders it suspect as a licensee43 But it should be absolutely clear that no new voice will ever have exper- ience; this is inherent in being new. And if it is an im- portant communications policy to increase the number of diverse voices, speakers, in the telecommunications sys- tem, a goal frequently avowed, then we are just going to 42 See sources cited note 22 supra. 43 See RKO General, Inc., 44 F.C.C.2d 123, 226-27 (1969) (Hear- Exam.). See slip pages 31-34, _ U.S.App.D.C. pages - i, F.2d pages -_, infra and sources cited. 66a risk the mistakes of inexperience against the mistakes of a lack of diverse speakers. In any event, the issue cannot be dispositive on this appeal since the Commission did not expressly make it a ground for decision. D. Other Comparative Factors Misapplied By the Com- mission The Commission’s mutilation of the diversification guides is, unfortunately, only indicative of its treatment of the other comparative factors. Again, as with the diversifica- tion guides, the manner in which the Commission removes Fidelity’s advantages or RKO’s disadvantages does not fully eliminate the existence of advantages and disadvantages. Rather, as I have said, that is performed by a failure to make a comparative decision. The Commission takes its hatchet to the “integration of ownership into management” factor and here we get the stench of procedural bias. Fidelity, the Commission admits, has an obvious advantage in this factor. The Commission adduced these reasons for giving Fidelity no “preference” on the factor. First, the Commission notes that the man- agers of KHJ, while not owners, do have autonomous con- trol of the station. This argument, of course, nullifies the factor and has never been considered bo my knowledge in comparative evaluation of the “integration” factor.45 Even 44 see SEC v. Chenery Corp., 318 U.S. 80, 92, 63 S.Ct. 454, 87 L.Ed. 626 (1943); cf. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 419, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); Burling- ton Truck Lines, Inc. v. United States, 371 U.S. 156, 168-69, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962). rs ns nee 45 See, e.g., Terre Haute Broadcasting Corp., 25 F.C.C.2d 348 (1970); The News-Sun Broadcsting Co., 24 F.C.C.2d 770, 777-78 (1970); WHDH, Inc., 16 F.C.C.2d 1, 13-14, on recon., 17 F.C.C.2d 856 67a so, this argument says nothing about Fidelity’s advantage, both through integration and through local ownership and does not even purport to weigh Fidelity’s advantage against RKO’s. The Commission’s second argument is characterized in Fidelity’s brief as a “‘monstrous abuse of Fidelity’s right to due process.” 4 This is, if anything, an understatement. The Commission discounts the viability of Fidelity’s inte- gration proposal because of the unverified allegations in a Broadcast Bureau and RKO petitions to enlarge issues which were denied by the Commission.*’ Accepting these allegations, although Fidelity never had a chance to dispute them, the Commission states that they demonstrate an “‘un- willingness or inability to carry out its responsibilities as an applicant” and hence call into question Fidelity’s inte- gration proposal. The allegations are that Fidelity was re- miss in not informing the Commission that its stock sub- scription agreements were signed by agents of the owners, (1969), aff'd, Greater Boston Television Corp. v. FCC, 143 U.S.App. D.C. 383, 444 F.2d 841, 862-63 (1970); cert. denied, 403 U.S. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971); Ultravision Broadcast- ing Corp., 11 F.C.C.2d 394, 408-09 (1968), aff'd WEBR, Inc. v. FCC, 136 U.S.App.D.C. 316, 420 F.2d 158 (1969); Flower City Television Corp., 9 F.C.C.2d 249, recon. denied, 10 F.C.C.2d 718 (1967) aff'd, Star Television, Inc. v. FCC, 135 U.S.App.D.C. 71, 416 F.2d 1086, cert. denied, 396 U.S. 888, 90 S.Ct. 171, 24 L. Ed.2d 163 (1969). The Commission’s argument nullifies the factor because, of course, there will always be integration of management employees into management; this is a truism. The factor seeks to integrate owners into management. Policy Statement on Compara- tive Broadcast Hearings, | F.C.C.2d 393, 395-96 (1965). 46 Brief for Fidelity Television, Inc., at 123. 47 RKO General, Inc., 22 F.C.C.2d 737 (1970). See RKO Gen- eral, Inc., 44 F.C.C.2d 123, 135 (1973). 68a failing to secure prompt ratification of documents so signed and in failing to report for 17 months significant changes in the corporate structure of the company. How does the Commission leap from these allegations to the conclusion that Fidelity will not implement its integration proposal? There is no answer to this question in the Commission’s opinion. It hardly requires extended reflection to conclude that the allegations go to character but since no character issue was added to the hearing, consideration on that basis would be inappropriate. There is absolutely no demon- strated relation between the allegations and a possible in- ability to implement the integration proposal. The Com- mission was arbitrary in the extreme in suggesting (but never overtly stating) that there was. And, of course, even if the relation existed, it would not elimirate Fidelity’s 48 See Policy Statement on Comparative Broadcast Hearings, | F.C.C.2d 393, 399 (1965). Fidelity’s explanation of these events is recited in the Commis- sion’s opinion denying the requested character issue, RKO General Inc., 22 F.C.C.2d 737 (1970). It appears that one member of Fi- delity’s board of directors did not authorize a signature on a stock subscription but did in fact believe himself committed to a $5,000 investment in the company. The individual did in fact function as a member of the board according to the Commission, although it never held a hearing on any of these issues. The other issues relat- ing to changes in Fidelity’s corporate structure were reported late but well before the Commission’s decision. The facts as to the changes may be gleaned only from the pleadings of the parties, which differ substantially. The Commission never resolved the con- flicts in the pleading or even commented on them until its appar- ent acceptance of RKO’s version in RKO General, Inc., 44 F.C. 2d 123, 135 (1973). The additional reference in the Commission’s opinion to the late reporting of an alleged “newspaper” interest is completely inappropriate and was so recognized by the court. Slip page 30 n. 42, ___— U.S.App.D.C. page __, ___ F.2d page __ n. 42; note 33 supra. 69a advantage in any comparative evaluation but would only affect its weight. The court wisely ignores this second half of the Com- mission’s butchering of the integration factor. Instead the court returns to the rationale of the Hearing Examiner who held that Fidelity’s integration proposal could not be im- plemented because the management-owners had no broad- cast experience. Apparently, neither the court nor the Hearing Examiner consulted the 1965 Policy Statement which advises us this way on that issue:*? Previous broadcast experience, while not so signi- ficant as local residence, also has some value when put to use through integration of ownership and man- agement. .. . Since emphasis upon this element could discourage qualified newcomers to broadcast- ing and since experience generally confers only an initial advantage (Lack of experience, unlike a high concentration of control, is remedial . . .), it will be deemed of minor significance. This, of course, does not dispose of contentions that an integration proposal can not be implemented but it does call into doubt al! the confident assertions by the Hear- ing Examiner that Fidelity’s plan is.a “foolish piece of business.”"5° And it must be remembered that Fidelity’s proposal was only that a Mr. Simon, a 20% stockholder, would be President and General Manager, and that a 2% stockholder would be director of public service program- ming. The rest of the staff would be professional broad- 49 Policy Statement on Comparative Broadcast Hearings, 1 F.C.C. 2d 393, 396 & n. 8 (1965), citing Sunbeam Television Corp. v. FCC, 100 US.App.D.C. 82, 243 F.2d 26, 29 & n. 6 (1957). 50 RKO General, Inc., 44 F.C.C.2d 149, 227 (1969) (Hearing Exam.). 70a casters, In any event, the court has no suthonty to at- firm the Commission on a ground it itself did not offer. The atlirmance is clearly wrong on this point! We next come to the Commission's treatment of the character issue set down against RKO because of its ad- mitted reciprocal dealings, a violation of Section 5 of the Federal Trade Commission Act and Sections | or 2 of the Sherman Act? 1 simply do not have the space, time or energy to describe the procedural minefield the Com- mission laid for Fidelity on this point and the numerous backings and fillings, shifting of ground, in the years the Commission sought to avo? consideration of this obvious comparative and non-cenparative issue. Suffice it to lst the admitted facts after the dust had settled. The Com- mission found that on the basis of an extremely myopic view of the evidence RKO’s reciprocal dealing violations were limited to mutual patronage situations, Tt then com cluded that such reciprocal dealings were not at that tine clearly illegal under the antitrust laws and thus the Com- mission would not charge RKO with “knowing and will- ful misconduct. Furthermore, since many corponitions have engaged in such violations, since RKO is presently under an injunction in regard to such practices and since RKO has an “unblemished” record as a broadcaster for 28 years, the Commission will not assess a comparative dement™ The court in affirming takes a slightly differ SU See sources cited note 44 saw. S215 USC. @ 1, 2 48 (1970); see discussion in note SO dyra S3 RKO General, Inc, 44 F.C.C.2d 123, 130 (1973). 54.42 The Commission’s reference to RKO's “unblemished” ree ord is somewhat baffling since it had just finished concluding that 2 s 3 & Ef $ x & 4 3 ey ~ 4 a 3 _ Pla ent tack, The court independently concludes, without the aid of either the Hearing Examiner or the Commission, that “most” of the reciprocal dealings were ineffective and those that were effective “have little to do with RKO.SS The court recognizes that reciprocal dealing was declared illegal in 1965 at a minimum and probably much earlier, thus implicitly discounting the Commission's logic $* On the basis of this analysis, the remark that “KHJ was only a small part of what went on” and the clearly incorrect assertion that “aititrust considerations are only one segment of the Commission’s concern with the character”, the court holds the FCC did not act arbi- trarily 5” The court is clearly mistaken in its assertions about the nature of the reciprocal dealings. Both the Commission and the Hearing Examiner found completed acts of at least mutual patronage involving KHJ that resulted in significant advertising revenues to the station These acts clearly RKO had engaged in illegal acts, had only an average past record (at best) and was the member of a sizeable communications con glomerate, What does the Convnission think is a “Memished” reo. SS Stip page 22, US.App.D.C. page, F.2d page SO 7g, slip pages 21, 23, U.S.App.D.C. pages . F.2d pages, S7 Jd. dip pages 23-24, US.App. D.C. pages F.ld pages. S8 in particular, the record establishes that General Tire, RKO's parent company, engaged in successful mutual patronage reciprocity with Pepsi-Cola, Olin Mathieson, Alooa, American Airlines and Herte that resulted in significant (respectively, $36,800, $12,350, $8,009. $9,650 to $14,500, $15.210 to $90,025) increases in KH) advertis. 72a violate Section 5 of the Federal Trade Commission Act and at least after 1965, violate the Sherman Act? The ing revenues. See RKO General, Inc., 44 F.C.C.2d 149, 202-204, 210-11, 212-15 (1969), summarized, 44 F.C.C.2d 123, 143 (1973) (Lee, Comm’r, dissenting). The Commission itself stated: ‘Thus, | the question here is not whether reciprocal dealing was practiced . with respect to KHJ-TV, but whether this conduct should reflect adversely upon the operation of the station.” Jd, at 129. 59 See FTC v. Consolidated Foods Corp., 380 U.S. 592, 594-95, 85 S.Ct. 1220, 14 L.Ed.2d 95 (1965); Allis-Chalmers Mfg. Co. v. White Consol. Industries, Inc., 414 F.2d 506, §18-19 (3d Cir. 1969); Cali- fornia Packing Corp., 25 F.T.C. 379 (1937). In Consolidated Foods, the Supreme Court found a merger violated Section 7 of the Clayton Act because of the possiblity of reciprocal dealing. If the possibility of reciprocal dealing is sufficient to set aside a merger, it must cer- tainly follow that actual engagement in reciprocal dealing would vio- late some provisions of wie anti-trust laws. Lower courts since Con- solidated Foods have concluded that Sections 1 and 2 of the Sherman Act are offended by reciprocal dealing. See W.L. Gore & Assoc. v. Carlisle Corp., 381 F.Supp. 680, 703 (D.Del. 1974); United States v. General Dynamics Corp., 258 F.Supp. 36, 57-59 (S.D.N.Y. 1966). This seems a fairly uncontroversial extension of the cases outlawing tying arrangements (reciprocity being simply a form of tying). See Fortner v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969); Northern Pacific R.R. v. United States, 356 US. 1, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958); International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947). Indeed, the Surpeme Court in Consolidated Foods, in declaring reci- procity an unlawful consequence of a merger, specifically relied on the reasoning of the tie-in cases. 380 U.S. at 594, 85 S.Ct. 1220. And even if it does not violate the Sherman Act, reciprocity clearly violates Section 5 of the Federal Trade Commission Act. Since mis- take of law is not a defense to civil or criminal charges, see United States v. Barker, = U.S. App.D.C. __, 514 F.2d 208 (1975) (Bazelon, C.J., concurring), in most circumstances, it requires some fairly extraordinary leaps of faith to excuse RKO’s clear violations of .he antitrust laws. And it must be remembered that we are dis- cussing not disqualification, where “knowing” misconduct is partic- 73a Commission is expressly commanded to enforce the anti- trust laws against licensees. Even beyond this, use of ularly relevant (although mistakes of law are not generally part of the “knowing” requirement), but only comparative evaluation. The Commission’s off-the-cuff assertion in RKO General, Inc., 44 F.C.C.2d 123, 130 n. 21 (1973) that an insufficient amount of commerce was affected to bring to bear the sanction of the anti- trust laws is clearly erroneous for two reasons. First, the commerce requirement is a jurisdictional requirement for federal courts tied to policies of federalism and says nothing about the validity of the trade practices involved. Thus, since the FCC has established juris- diction over individual licensees, the jurisdictional requirement is not relevant and hence the Commission must look only to the sub- stantive validity of the trade practices involved. Second, the FCC gives no reasoned basis for its conclusion, cites no evidence and in no way correlates the evidence with established guidelines in the area. See Greater Boston Television Corp. v. FCC, 143 U.S.App. D.C. 383, 444 F.2d 841, 850-52 (1970), cert. denied, 403 US. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971). The one ambiguity in this record relating to RKO’s violation of the anti-trust laws concerns the degree of market power necessary to make reciprocity illegal. There is some confusion in the cases, particularly when one refers to the tie-in cases, on whether some kind of market leverage must be shown to sake reciprocity illegal. Cf Turner, Conglomerate Mergers and § 7 of the Clayton Act, 78 Harv. L.Rev. 1313, 1386-93 (1965). This issue, while serious from my examination of the facts in this case, was not considered by the Commission. Since the case should be remanded under my view I think the Commission should explore the matter further with the aid of the Justice Department. 60 See National Broadcasting Co. v. United States, 319 U.S. 190, 222-24, 63 S.Ct. 997, 87 L.Ed. 1344 (1943); Philco Corp. v. FCC, 110 U.S.App.D.C. 387, 293 F.2d 864 (1961); Allentown Broadcast- ing Corp. f. FCC, 94 U.S.App.D.C. 353, 222 F.2d 781, 787, rev'd on other grounds, 349 U.S. 358, 75 S.Ct. 855, 99 L.Ed. 1147 (1955); Mansfield Journal Co. v. FCC, 86 U.S.App.D.C. 102, 180 F.2d 28 (1950). 74a reciprocal dealing to obtain advertising reduces the incen- tive to meet the needs of the public since advertising is garnered by economic power and not successful competi- tion.©! When one considers the fact that RKO was found to have engaged in overcommercialization, the serious- ness of the reciprocal dealings in terms of the policies of the Federal Communications Act is manifest. And if one refers back to the strained arguments of the court and Commission on the diversification point, it is clear enough that economic concentration in both media and non-media areas should count very heavily against RKO if not pro- 61 soe RKO General, Inc., 44 F.C.C.2d 123, 143-44 (1973) (Lee, Comm’r, dissenting), citing FCC v. Pottsville Broadcasting Co., 309 US. 134, 60 S.Ct. 437, 84 L.Ed. 656 (1940). 62 see RKO General, Inc., 44 F.C.C.2d 149, 172-73, 220 (1969) (Hearing Exam.). These statements of fact are not varied by the Com- mission’s decision which only notes that RKO did not violate the NAB Code on advertising time. RKO General, Inc., 44 F.C.C.2d 123, 133 (1973). This statement is not supported by any reasons or evidence, both of which are necessary in light of the fact that RKO does not subscribe to the NAB Code and Fidelity’s Exhibits 50-51, summarized in its brief at 88-89, purport to offer proof that RKO consistently vio- lated the NAB Code provisions. RKO and the Commission respond in their briefs by essentially arguing that there are no standards by which to judge whether a licensee has engaged in overcommercielization. They are correct that the Commission has relied on a case-by-case in- quiry , Commercial Practices of Broadcast Licensees, 36 F.C.C. 45 (1964), but this does not mean there are no standards at all. RKO seems to challenge the accuracy of Fidelity’s information on commercialization in excess of the NAB Code (although the relevance of the Code is not explained); the Commission should forthrighly reconcile the disputes in the evidence and not rely on a mere conclusory statement, particular- ly in light of the fact that RKO does seem to admit to some commercial- ization in excess of the Code. See Brief for Intervenor RKO General, Inc. at 45. 75a vide a basis for disqualification. The Commission’s failure to even weigh the issue at all in the comparative process is only one more indication that the Commission did not in fact engage in a comparative decision. And what are we to make of the court’s statement that KHJ was only a small part of RKO’s antitrust violations? This argument seems to support a conclusion opposite from that drawn by the court. The holding on this issue is truly extraordinary. In terms of procedural unfairness to Fidelity, the preced- ing instances are unfortunately not exclusive. In its treat- ment of the programming issues suggested by Fidelity, the Commission continued to avoid a comparative evaluation through controversial procedural decisions. II. The Commission Improperly Denied A Hearing on Fidelity’s Specialized Programming Issue A. Fidelity’s Petition to Enlarge Issues to Consider Programming A major factor motivating Fidelity’s application for Chan- nel 9 was its belief that communities in Orange County and southern Los Angeles do not receive sufficient atten- tion from television stations in Los Angeles proper. The owners of Fidelity believed Channel 9 could be programmed in such a manner as to meet what they perceived to be the unfulfilled communications needs «f t+ “Southland.” Since programming iss" ve considered in a com- parative hearing ur _wy are specifically set down by the Commission,™ ridelity filed on June 27, 1966, a peti- tion to enlarge the issues at the comparative hearing. The petition requested in the alternative that the Commission set down a § 307(b) issue in regard to the need of the 63 Policy Statement on Comparative Broadcast Hearings, | F.C.C. 2d 393, 397-98 (1965). 76a Southland for an allocated television station or an issue as to Fidelity’s “service philosophy”, its desire to pay special attention to the needs of the Southland. Fidelity also requested a general programming issue on the basis of its allegations that it would devote substantially more time to news and local affairs than had RKO. This peti- tion was accompanied by an extensive ascertainment sur- vey of 1,200 community leaders and involving over 6,000 telephone calls and meetings with public officials and com- munity organizations. ; The Commission rejected the petition. Its finding on the § 307(b) issue is acceptable. 1 would also affirm its holding denying a general programming issue since Fidelity’s petition alleged no facts in regard to the need for greater local or news programming in general. The Commission has since 1965 become increasingly strict about the relation of the ascertainment survey to general differences in per- centage of news and local affairs programming because of its concern that applicants were engaging in “‘promise”’ battles to obtain a license. As I will discuss in Part B below, there are First Amendment considerations which support this approach. But I perceive no basis at all for the Commission’s re- fusal to accord Fidelity a hearing on its “service philo- sophy” issue. Fidelity’s “service philosophy” is merely a form of specialized programming designed to meet the al- leged needs of an underserved portion of a particular serv- ice area. The Commission has granted a significant com- parative preference on the basis of “service philosophy” in 3 Central Coast Television, 35 F.C.C. 859 (1963), clearly the ; 64 1g See Moline Television Corp., 31 F.C.C.2d 263, 272-73 (1971). 77a model for Fidelity’s petition, and has granted comparative preferences on the basis of specialized programming in other cases. This court in Citizens Committee to Save WEFM v. FCC, 166 U.S. App.D.C. ———, 506 F.2d 252 (1974) (en banc) reversed a Commission order denying a hearing into a speciaiized programming issue in a license assignment context and strongly indicated that the Commis- sion couJd not ignore its responsibility to ensure a diversity of formats in a service area. The Commission’s Review Board denied Fidelity’s pro- posed “service philosophy” issue for these reasons. First, Fidelity has neither alleged nor shown that the Southland is more underserved than other parts of the service area. Second, Fidelity has not made “factual allegations” that it will not ignore the remainder of the service area. Third, there is no indication that the community leaders surveyed have sought and refused television time. Fourth, Fidelity has nct shown a need for the programs directed to the Southland.” The first three reasons are utterly devoid of rational con- tent. What possible relevance is there in the fact that other areas of Los Angeles may be as underserved as the South- land? Such an argument defeats every specialized program- 65 See Citizens Comm. to Save WEFM v. FCC, 166 U.S.App.D.C. —__» ___, 506 F.2d 252, 280 & n. 63 (1974) (Bazelon, C. J., con- curring in the result) and authorities cited; authorities cited note 72 infra. 66 See 506 F.2d at 258-62, 265-66 & n. 31 and authorities cited. See also Local 880, Retail Store Employees, v. FCC, 141 U.S.App. D.C. 94, 436 F.2d 248 (1970). 67 See RKO General, Inc., 5 F.C.C.2d 517, 519-20 (1966). special relief denied, 8 F.C.C.2d 880, clarif. denied, 10 F.C.C.2d 115 (1967). 78a ming issue. The argument is implicityly rejected by WEFM. A similar point may be made about the third reason. Does the Commission seriously expect proponents of specialized programming to prove that their listeners have unsuccessfully sought other broadcasters to carry the specialized program- ming? And how can the Commission hold Fidelity to the actions of community leaders when those leaders expressly state that there are local needs not being served by present communications outlets? But the second “treason” deserves more scrutiny. Fidelity expressly states in its petition that if the § 307(b) issue is denied, it will serve the entire service area with particular attention to the needs of the Southland.& The Commis- sion says this assertion is not backed by “factual allega- tions.” What factual allegations does the Commission want? Even if some answer to this riddle would appear, and none does, at the very least the Commission should have requested further data (what data would be relevant, | do not know) or provided Fidelity with an opporiunity to amend their petition after being informed of what facts the Commission thought were relevant. It must be remembered that Fidel- ity’s petition seeks to merely obtain a hearing and that it offers proposed programming with the express allegation that the proposed programming will serve the entire service area. What more could the Commission want before order- ing a hearing? The court attempts to affirm this second reason by alter- ing the Commission’s rationale. Where the Commission’s 68 Petition to Enlarge Issues of Fidelity Television, Inc. at 11, Joint App. at 205, citing Petersburg Television Corp., 19 F.C.C. 451 (1954), aff'd Southside Virginia Telecasting Corp. v. FCC, 97 U.S.App.D.C. 130, 228 F.2d 644, cert. denied, 350 U.S. 1001, 76 S.Ct. 546, 100 L.Ed. 865 (1956). 79a had complained of a lack of factual allegations to support the contention thit the entire service area would be covered, the court states that the Commission’s decision is controlled by Petersburg Television Corp., 19 F.C.C. 451, 464-65 (1954). The Court, noting a fact not mentioned by the Commission, states that Fidelity’s list of interviewees contained only three interviews in Los Angeles proper? thus Fidelity “could. . . be found to have ignored the actual city of license in its planning” as was found in Petersburg. It is certainly true that the Commission does cite Petersburg for its holding— that a comparative demerit is awarded against an applicant who ignores a portion of its service area in formulating proposed programming—but it is equally clear that the Com- mission did not and could not have relied on that case to support its holding sub judice for the simple reason that the decision in Petersbury came after a complete hearing into the programming issue. The Commission in Petersburg found on the basis of one applicant’s ascertainment survey, testimony and other evidence that the applicant ignored a portion of the service area in formulating its proposed pro- gramming. In this case, Fidelity’s ascertainment survey was never introduced into evidence because no hearing was ever held. Fidelity was given no opportunity to contradict the court’s factual finding about its intentions. Indeed, the court’s citation of evidence ignores the fact that Fidelity also placed many thousands of telephone calls and sent many letters other than the interviews cited in its petition. ©9 This was mentioned by the Hearing Examiner. See RKO Gen- eral, Inc., 44 F.C.C.2d 149, 194, 224 (1969) (Hearing Exam.). See also id. at 195-199 (testimony supporting the specialized program- ming issue summarized). This fact is particularly crucial since Fidel- ity’s petition was drawn with explicit reference to the Petersburg de- cision and sought to avoid the conciusion that it, Fidelity, like the unsuccessful applicant in Petersburg, meant to ignore part of the service area. See note 68 supra. 80a We do not know to whom those queries were directed be- cause no hearing was ever held. The Commission, of course, avoided this issue by not, repeat not, referring to any inade- quacies in Fidelity’s ascertainment survey and instead simply stating that Fidelity had not made any factual allegations that it would in fact service the entire area. And, as I have argued, that holding may not be sustained. The court’s finding of fact, couched in terms of what “could have been found’’, is clearly erroneous. I conclude that these first three reasons are largely make weight. The fourth reason is the more serious since it in- corporates the Commission’s policy of correlating ascertain- ment efforts with proposed programming in order to put down a programming issue. Apparently, the FCC’s position was that the data stated in Fidelity’s petition did not sup- The court mistakenly informs us, slip page 16 n. 14, __ US. App.D.C. page __, __, F.2d page____n. 14, that the Hearing Examiner would have found against Fidelity on the service philosophy issue. This statement is remarkable ior several reasons, the first of which being that the Hearing Examiner could not find against Fidel- ity on an issue which had never been heard and upon which no record had been developed. A second problem with the court's as- sertion is that it misstates the Hearing Examiner's remark, which was that Fidelity’s proposal might result in a further contribution to Los Angeles proper becoming “the hole in the doughnut of the surround- 4 ing communities.” RKO General, Inc., 44 F.C.C.2d 149, 226 (1969) 3 (Hearing Exam.). This remark is not a holding against Fidelity (and if it were, it might well be subject to challenge since no evidence is adduced in support of it and, of course, no hearing was held on the 2 issue), but rather is one argument that counts against the specialized a programming issue if in fact the specialized issue were to be used in the comparative hearing. It is noteworthy that this argument of the Hearing Examiner is directly inconsistent with the argument by the Commission that there is no evidence of any special local needs of the Southland to justify even hearing a specialized programming is- sue. RKO General, Inc., 5 F.C.C.2d 517, 519-20 (1966). 8la port its specialized programming proposals since the ascertain- ment survey did identify any community problems or needs to which the programming would relate. The most cursory reading of Fidelity’s petition indicates that it has offered substantial proof that little if any television programming in Los Angeles is directed to the local interests of the Southland. I do not understand the Commission to dispute this. Rather, the argument is that the ascertainment survey has no evidence on what those local interests are and why they require a telecommunications outlet. This requirement as noted previously, originated in Commission attempts to control “‘promise’’ battles among applicants in regard to percentages of local affairs and news programming. Its rationale is seemingly not applicable in a “service philosophy specialized programming issue since the Commission would surely presume that a local community has some telecom- munications needs.” The whole allocations policy of the FCC, based on the perhaps mythical concept of “local serv- ice”, is premised on that view. The only issue then is whether the area to which the “service philosophy” is ” Win fact, the Commission later assigned a UHF channel to Anaheim expressly to meet the local needs of the Southland. Table of Assignments, 8 F.C.C.2d 736 (1967). The Brief for the Federal Communications Comm'n at 19 & n.8 states that Fidelity should not be permitted to have a service philosophy issue until it had pe- titioned for rulemaking to modify the table of assignments. But any failure in that regard was surely cured by the Commission’s own actions in granting an assignment to Anaheim. Moreover, the Commission in ruling on Fidelity’s petition did not state that Fidelity had chosen the wrong procedure to obtain a service philosophy issue and that it should have sought rulemaking. Rather, the petition was dismissed because Fidelity had not alleged sufficient facts that there was separate local needs of the Southland distinct from the remainder of the Los Angeles service area. RKO General, Inc., 5 F.C.C.2d 517, 519-20 (1966). 82a directed is in fact a distinct local community. After WZ/M at least, | think the evidence in the ascertainment survey on the local interests of the Southland is sufficient to raise a substantial issue of fact on that question.”' A review of Commission precedent in general on specialized programming hearings supports this conclusion,” The court does not consider this issue of the relation of Fidelity’s ascertainment survey to its specialized programming proposal, apparently content to rest its affirmance on the deficiencies it “finds” in Fidelity’s survey even though that survey was not introduced in evidence and no hearing was held on it. The court docs attempt to affirm a related Commission decision to deny Fidelity an opportunity to amend its petition after the Commission reformulated its pleading standards for proposed programming issues in Chapman Radio & Television Co., 7 F.C.C.2d 213 (1967). The court advises us that since it has “found’’ Fidelity’s 71 see the evidence adduced and apparently accepted by the Hear- ing Examiner, summarized RKO General, Inc., 44 F.C.C.2d 149, 194- 99 (1969). 72 Compare the analysis of Jimmie H. Howell, 46 F.C.C.2d .1150. 1153-54 (1973): Jay Sadow, 26 F.C.C.2d 940, 957-61 (1970); Harvit Broadcasting Corp., 18 F.C.C.2d 508 (1969); Jaco, Inc., 18 F.C.C.2d 219 (1969); Christian Broadcasting Ass'n, 16 F.C.C.2d 594 (1969): Salter Broadcasting Co., 8 F.C.C.2d 1036 (1967); Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393, 397 n.9 (1965); cf, La Fiesta Broadcasting Co., 6 F.C.C.2d 65, 67-74 (1966) with the following gneral service cases, Community Broadcasters, Inc., 33 F.C.C.2d 714, 719, 720 (1972); WSOQ, Inc., 20 F.C.C.2d 874, 875- 76 (1969); City of Camden, 18 F.C.C,2d 412 (1969); Regal Broad- casting Corp., 14 F.C.C.2d 845, 847 (1968), See also Citizens Comm, to Save WEFM v. FCC, 166 U.S.App.D.C, ___, 506 F.2d 252, 280 & n.63 (1974) (Bazelon, C. J., concurring in the result) and authorities cited, 83a ascertainment survey inadequate, Fidelity could gain nothing from revising its petition in light of Chapman since its original survey was thus inadequate.” The Commission did not take this approach, of course, because the ascertain- ment survey was not in the record, Rather it refused to permit Fidelity to revise its petition because it interpreted Fidelity’s petition for reconsideration as declaiming any desire to amend the Original petition and as nothing more than a restatement of its substantive argument that an is- sue should have been set down.”4 This conclusion, how- ever, is no less extraordinary than the court’s since why else would Fidelity seek relief after Chapman if it did not at least think it could amend its petition to conform with Chapman and since Fidelity could not have complied with Chapman as that decision was not issued until after Fidel- ity’s original petition was denied. So, the Commission changes the law on allegations of ascertainment and denies Fidelity a chance to comply because it assumes that Fidelity is not really able to comply. This reasoning does little to command our respect. I conclude that at the very least Fidelity should have been given an opportunity to revise its petition in light of Chapman. 73 Slip page 18 n. 16, _—-U.S.App.D.C. ig | ae page ____ n. 16. The court may at this point be only referring to the general programming issue proposed by Fidelity. 74 RKO General, Inc., 8 F.C.C.2d 880 (1967), clarif. denied, 10 F.C.C.2d 115, 117 (1967). It was in this last decision by the Re- view Board denying clarification of the Commission’s action that the inadequacy of Fidelity’s ascertainment issue was first raised, In men- tioning this alleged inadequacy (after all the ascertainment survey was never in the record), the Review Board refers to previous “findings” of inadequacy. The Review Board provides no citation to such pre- vious decision on the specialized programming issue. See RKO Gener- al, Inc., 5 F.C.C.2d $17, 519-20 (1966). 84a B. First Amendment Implications of Consideration of Program Content Consideration of Fidelity’s proposed specialized program- ming issue and also of RKO's past performance in program: ming Channel 9 in making a comparative decision raises significant First Amendment problems. 1 have discussed those problems at length previously’> and intend here to only outline the tentative conclusions | have reached, The FCC may in a comparative hearing consider whether a particular programming proposal will need an unfulfilled community need and hence increase the overall diversity of programming in the viewing market. 1 take this to be a rather limited examination of program content and one which is consistent with Fidelity’s specialized programming proposal. As I indicated previously, | am not comforta- ble with this conclusion but perceive no other possible — considering the present system of broadcast regula- tion.’6 Far more difficult problems are encountered when one turns to the Commission’s scrutiny of RKO’s past program- ming. In this case, RKO was awarded neither a prefer- ence, or renewal expectancy nor a demerit because of its past programming. Fidelity vigorously challenges this con- clusion, arguing that the evidence indicates that RKO should have been given a substantial demerit for past pro- gramming. This evidence tends to prove that RKO pro- grammed very little news or local affairs, engaged in ex- cessive commercialization and largely utilized old movies 75 soe Citizens Comm. to Save WEFM v, FCC, 166 U.S.App.D.C. —_, $06 F.2d 252, 268 (1974) (Bazelon, C. J., concurring in the result), 76 12 at 281-83. See generally Bazelon, supra note 31. — eit abbihe 85a dealing with crime and violence.” 1 have no difficulty with a consideration of excessive commercialization in the decision whether to grant a renewal expectancy or a de- merit.”® As for the remainder of RKO’s past program- ming, I am constrained to hold that the Commission may award a preference or demerit on the basis of a significant amount of actual journalism by the licensee without re- gard to the content of that journalism. 1 think this hold- ing may be premised on those decisions erecting a Fair- ness obligation to report on controversial issues of public importance.”? 1 am not presently informed, however, of 77 See RKO General, Inc., 44 F.C.C.2d 149, 161-88 (1969) (Hear- ing Exam.) which collects most of the evidence Fidelity thinks is re- levant to a determination on RKO’s past performance. On the com. mercialization issue, see note 62 supra. 78 See Citizens Comm. to Save WEFM v. FCC, 166 U.S.App.D.C. ____, 506 F.2d 252, 277 & n.40 (1974) (Bazelon, C. J., concurring in the result); Bazelon, supra note 31, at 229-34. It is not clear what the Commission found on commercialization but it does appear that the Commission did not award a comparative demerit or in any manner weigh overcommercialization against RKO. 79 See Public Communications, Inc., 32 P & F Radio Reg.2d 319 (1974); Editorializing by Broadcast Licensees, 13 F.C.C. 1246, 1249-51 (1949). Cf. Greater Boston Television Corp. v. FCC, 143 U.S.App. D.C. 383, 444 F.2d 841, 860 (1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2229, 29 L.Ed. 2d 701 (1971) (on the “editorializing” part of the journalistic function). Of course, in enforcing such a standard of significant amounts of journalism the Commission should require strict requirements of plead- ing to ensure that percentage differences in programming among ap- plicants truly relate to community needs. These pleadings require- ments will protect applicants from the chilling effect of amorphous and unsubstantiated challenges and the costs incident to defense thereof, See National Broadcasting Co. v. FCC, _ — -U.S.App.D.C. oi se (1975) (Bazelon, C. J., dissenting from the 86a any justification for review of the content of entertain- ment programming. Absent further explanation from the Commission, I would not think it proper to award a pre- ference or a demerit on that basis. Since the Commis- sion’s decision is unclear on this point, I would remand for further consideration.© On the remand, the Commis- sion could, of course, consider the extent to which RKO’s entertainment programming meets unfulfilled community needs and hence contributes to overall diversity in making a comparative evaluation. Any renewal expectancies would of necessity be generated by this process of comparison. | realize this is an imperfect appruach to the problem of permissible renewal expectancies; perhaps much more inclu- sive consideration of program content is required in order to securely grant a significant renewal expectancy. I simply do not know of any other approach. The Com- mission presently has the matter under advisement in a rulemaking proceeding.*! Perhaps it will provide us with order vacating the previous order granting rehearing en banc) at 600- 01. The Commission at present recognizes such pleading require- ments. See Chapman Radio & Television Co., 7 F.C.C.2d 213 (1967); slip page 22 & n.64, US.AppD.c. ___, __ F.2d ____ & n.64 supra. 80 see Citizens Comm. to Keep Progressive Rock v. FCC, 156 US. App.D.C. 16, 478 F.2d 926, 929 (1973); Network Programming In- quiry, 20 P & F Radio Reg. 1901, 1907 (1960). The Hearing Exam- iner clearly weighed the alleged lack of “quality” in RKO’s program- ming, RKO General, Inc., 44 F.C.C.2d 149, 162-69, 177-88 (1969), but but the Commission stated that it would not consider “quality” even though it also concluded that RKO’s past performance was merely “average” (a conclusion which seems to indicate some quality judg- ment), 44 F.C.C.2d at 132-33. 81 Formulation of Policies Relating to the Broadcast Renewal Ap- plicant, 27 F.C.C.2d S8C (1971), amended, 31 F.C.C.2d 443 (1971), mandamus denied, Citizens Communications Center v. FCC, 149 US. App.D.C. 419, 463 F.2d 822 (1972). ’ oa 3 is 87a some guidancesin this difficult area. For the time being, I think this case should be remanded on the programming issue. Ill. Conclusion Former Commissioner Johnson, dissenting, stated that the “decision, granting RKO’s renewal application for KHJ-TV in Los Angeles, may very well be the worst deci- sion of this Commission during my term of seven years and five months.”8? Despite the intense competition for this honor, I am constrained to agree. The decision is so bad not because the Commission’s substantive holding is wrong—although I have little doubt that it is—but because the fiercely technical and mechanical treatment of Fidelity’s meritorious claims and the pervasive result-oriented reason- ing completely strip off any veneer of rationality attaching to the comparative licensing decision. There is only one operative part of the Commission’s decision. I quote it in full: “IT IS ORDERED: (d) That the application of RKO General Inc. for renewal of license . . . IS DEEMED TO BE GRANTED .. .”83 The rest of the opinion is superfluous. It is wholly appropriate that the deciding vote was cast by Chairman Burch who simply concurred ~ in the result. It would be easy to be alarmist about wus decision, but I suppose that would be unwarranted. The same ability to bulldoze through administrative precedent that marks this case for unwanted distinction will be, I am sure, turned against the case itself. Perhaps it is this 82 RKO General, Inc., 44 F.C.C.2d 123, 140 (1973) (Johnson, Comm’r, dissenting). 83 Id. at 138. But the Commission even vacillated on this issue, later arguing that its decision was not a final order. Fidelity Televi- sion, Inc. v. FCC, 163 U.S.App.D.C. 441, 502 F.2d 443 (1974). 88a capacity for forgetfulness that enables the Commission to motor right along while I remain baffled and amazed at the turn of events in these comparative cases. I suppose I am naive to expect anything different. But I remain curious as to why the court labors so valiantly to affirm this “foolish piece of business.” The irrationality of the comparative hearing process has certainly been publicized enough by quite moderate observers. Perhaps the court is of the opinion that this is not the “right case” to correct the irrationality of the comparative hearing process. The court’s “clarification” of its original opinion suggests as much by repeated references to what it obviously has concluded are Fidelity’s weaknesses as a licensee. The central weaknesses that the court perceives are that doubts have been raised as to Fidelity’s candor and that its “service philosophy” is really an “‘artificial con- struct.” I never would have believed the court would be so unfair to a litigant before it. Both of these points were nol in issue before the FCC since the Commission expressly re- fused to put down an issue as to each. With absolutely no record on the candor of Fidelity or the bona fides of its specialized programming proposal, the court leaps to extra- ordinary conclusions. The “service philosophy” issue was patterned directly on a prior Commission decision. We may disagree on whether it fits the pattern, although there never was a hearing to find out, but to name it an “artificial construct” requires more righteousness and certitude than | can summon. The candor issue pertains to Fidelity’s alleged failure to inform the Commission that some of its stock 84 see Geller, A Modest Proposal for Modest Reform of the Fed- eral Communications Commission, 63 Geo.L.J. 706, 715-18 (1975) and leading authorities cited which include Professor Jaffe, Judge Friendly. Professor Jones and a member of the panel that decided this case. 89a subscription agreements were signed by agents of the sub- scriber; and Fidelity’s alleged failure to inform the Commis- sion of certain changes made in its corporate structure. We have nothing, absolutely nothing, in this record to indicate that either existed or that they were more than technical or clerical errors. The fact that the Commission refused to set down an issue on the point certainly tells us some- thing about the substantiality of the court’s new found candor issue. The court also points to the Hearing Examiner’s colorful language describing Fidelity’s lack of experience in broad- casting. No financial issue was put down against Fidelity. As I indicated previously, if lack of experience is a dis- qualification—and the Commission certainly did not, repeat did not, suggest that it was even a demerit—we might as well do away with the diversification guides. Let the net- works own all the licenses; they have proven experience. The Hearing Examiner’s penchant for hyperbole on the integration factor obscures the modesty of Fidelity’s pro- posal and the express statement in the 1965 Policy State- ment that past experience is not all that significant in weighing the integration factor. And, of course, the Com- mission took a completely different tack than did the Hear- ing Examiner in arguing that the integration proposal of Fidelity could not be implemented. The Hearing Exam- iner’s rhetoric has absolutely no decisional significance, And all the court’s enthusiasm for the Hearing Examiner obscures the fact that the Examiner recommended that the license be granted to Fidelity. The court’s characterization of Fidelity as a “nothing” applicant constitutes apparently a flailing effort to avoid what is clearly a dangerous precedent in comparative hear- ings. The ironic truth is that the court need not clutch at 90a such straws since we can be sure the Commission will manage to erect some ethereal distinction of this case that will pre- vent it from becoming a precedent in non-renewal com- parative cases. But the court’s characterization of Fidelity as a “nothing” applicant raises the question in my mind as to what the court would desire from a “something” ap- plicant. Here Fidelity has an important diversification ad- vantage which it seeks to translate into a specialized program- ming proposal; it seeks to modestly integrate ownership into management and is locally owned. It appears to me that this is exactly the kind of application whch we should find to be “something” indeed, a truly new voice in the highly concentrated telecommunications industry. Apparently the court requires experience in order for the applicant to be “something” but as I have said again and again in this state- ment and elsewhere, primary emphasis on past experience will forestall new entrants into the broadcasting field. And as we have said before, prior broadcast experience unlike concentration of control is remedial. Perhaps the im- portance of Fidelity’s application would be more apparent to the court if Fidelity had included members of minority groups among its stockholders.26 The court seems antag- onistic to Fidelity because its proposals promise much, as if the very making of a promise is suspect, a mere ploy to swipe an incumbent's license. But Fidelity has no alter- native but to promise since it is a newcomer. Once more the court seems to place an excessive premium on past broadcast experience. 85 sunbeam Television Corp. v. FCC, 100 US.App.D.C. 82, 243 F.2d 26, 29 n. 6 (1957). 86 Compare Garrett v. FCC, 167 U.S.App.D.C. __, 513 F.2d 1056 (1975); TV 9, Inc. v. FCC, 161 U.S.App.D.C. 349, 495 F.2d 929 (1973), cert. denied, 419 US. 986, 95 S.Ct. 245, 42 L-Ed.2d 194 (1974). 9la Perhaps what makes the court’s opinion so difficult for me is the realization that this debate between diversification and past experience is a repetition of a battle I thought had been fought and won long ago. In 1958, seventeen years past, I criticized the Commission thus:®’ I think that by . . . attributing to these by- products of concentration [e. g. past experience] a greater degree of importance than it attributes to the traditional, and antipodal, preference for decentralization of ownership of the mass media of communication, the Commission has effective- ly nullified the diversification and anti-monopoly policy long since recognized as ‘one of the basic underlying considerations in the enactment of the Communications Act.’ There may be cases in which the Commission can properly find that experience resulting from an applicant’s ownership of communications facilities offsets a competing applicant's freedom from ownership of other communication interests. But ‘Commission expertise alone cannot support so pivotal (a divergence)’ from basic communica- tions philosophy. A convincing explanation is required. 87 Tennessee Television, Inc. v. FCC, 104 U.S.App.D.C. 316, 262 F.2d 28, 32-33 (1958) (Bazelon, J., dissenting). See also Pinellas Broadcasting Co. v. FCC, 97 US App.D.C. 236, 230 F.2d 204, cert. denied, 350 U.S. 1007, 76 S.Ct. 650, 100 L.Ed. 869 (1956). The arguments in my dissents in these two cases were seemingly adopted by the Commission in its Policy Statement on Comparative Broad- cast Hearings, 5 F.C.C.2d 393, 394-95 (1965); see Terre Haute Broad- casting Corp., 25 F.C.C.2d 348, 353-55 ( 1970); sources cited notes 35, 38 supra. 92a 1 do not think either the court or the Commission offers such an explanation. Rather we are regaled with all the advantages of experience and all the advantages of diversi- fication are quietly but securely swept under the rug. As with the last battle, this repetition of it will be won or lost by future appointments to the Federal Communica- tions Commission and whether those appointments arrive, like those in the early 1960's, with a desire to reduce the concentration of control of the telecommunications industry. But what do we say to the owners of Fidelity in the meantime? This question is not merely personal. Reliance on judi- cial techniques of reasoned judgment lends to the compara- tive decision process an expectation of rationality and pre- dictability. Perhaps naively, the owners of Fidelity relied on that expectation and spent a good deal of money in the process of that reliance. Fidelity, too, is entitled to its “challenge expectancies” of a fair and rational comparative process. I simply cannot believe that serious students of communications policy would conclude that expectation has been fulfilled in this case. This injustice leads me to further question whether we ought not give up the pretense that the comparative evaluation is a rational process but is instead a “legislative” type deci- sion which may be made on the basis of any reasons or no reasons, perceived dimly or not at all by the decision-maker*8 88 Pinellas Broadcasting Co. v. FCC, 97 U.S.App.D.C. 236, 230 F.2d 204, 206, cert. denied, 350 US. 1007, 76 S.Ct. 650, 100 L.Ed. 869 (1956) (Prettyman, J.): The decisive factors in comparable [sic] selections may well vary ... And it is also true that the Commission's view of what is best in the public interest may change from time to 4 A ree 93a If we fail to take this approach and yet continue to affirm cases such as the one sub judice, we will only be leaning to- gether the shards of a rotten building through the legitima- tion of appellate review. If we adopt an approach more compatible with the Commission’s present posture and give up the illusion of serious appellate review, we will at least be aware of the choices we face in this difficult area of policy, implicating both the values of protection of small business and free enterprise in a competitive system.29 And we will thereby displace any expectations of rationality possibly held by challengers and renewal applicants alike. Any other approach may give us the illusion that all is well, that the choices may be handled within the present ration- al structure, when in fact we know, from this case at least, that no such rational structure exists. time. Commissions themselves change, underlying philosophies differ, and experience often dictates changes. ... All such mat- ters are for the Congress and the executive and their agencies. They are political, in the high sense of that abused term. They are anot for the judiciary. 89 Compare Carroll Broadcasting Co. v. FCC. 103 U.S.App.D.C. 346, 258 F.2d 440 (1958) with slip pages 11-17, __ US.App.D.C. pages -__. Ss F.ldpages ss - _—sy supra. APPENDIX C 94a F.C.C. 73-1263 BEFORE THE FEDERAL COMMUNICATIONS COMMISSION Wasiixoron, D.C. 20554 In Re Applications of ; RKO Gexenan, Inc. (KHJ-TV), Los An- | Docket No. 16679 Geurs, Cai. Vile No. BRCT-58 Vor Renewal) of Broadeast License > Froaary Trenevistox, Ixe., Nouwarx, Caurr. | Docket No, 16680 For Construction Permit for New Tele- | Vile No. BPCT-3655 vision Broadcast Station AVPEALANCES Harold David Cohen, William S. Green, and SF. Laurent Scharff, on behalf of RKO General, Inc.: diware 2. Moraan, Robert N. Green, and Walter 11, Sireeney. on ehalf of biselity ‘Pelevision, Ine. ; Anthony J. Sobczak, John F. heilly, and Lhomas i. Fitzpatrick, on behalf of the Chief, Broadcast Bureau, Federal Communications Conmiission; and Aveith J. Clearwuicrs wand Pelcr Cy Carsicrsen on hehait of the Department of Justice, emrcus curiae. Decision (Adopted November 80, 1973; Released December 6, 1975) By Cosetssionrn Rorert E. Len von rime Coxoission 2? Caras ax Burecit CONCUMUNG EN TILE RESULT; COMMISSIONL:RS JOUNSON AND II. Rex Lrg pissenTING AND ISSUING STATEMENTS 3 COMMISSIONERS Winey anp Hooks NOT PARTICIPATING. BACKGROUND 1. On August 51, 1965, RKO filed an application for renewal of license covering is station KT.)-LV on Channel 9 in Los Angeles. On October 23. 1965. Fidelity filed an application for a constraction permit for a new television station to operate on Channel 9 in Nor- walk. California. On June 8, 1966. the Commission issued au order (FCC 66-503) finding both the NIKO and Fidelity upplications quali- fied for grant and also finding then: mutually exclusive, Tearing: was directcd on these issues : 1. To deteisnine which of the proposals would letter serve the public imterest. ICommivsioner Reld. wee did net hear oral argument, has read the transcript of the oral argemeut and ts partich:.ting in this Decision pursuant tu Section 1.277 (f) of the ules, 44 1.C.C. 2d . 2 AR heni a Bis dt Wars 95a Federal Communications Commission Reports 2. To determine, in light of the evidence adduced pursuant to the foregoing issue, which of the applications should be granted. The order carried the following footnote to the designation clause : “2 The Commission in its Policy Statement on Comparative Broadcast Hearings, (FCC 65-689, released July 28, 1965, 30 F.K. 9660, 5 RR 2d 1901), indicated that 1: did pot therein attempt to deal with *. . . the somewhat different problems raised where an applicant is contesting with a licensee seeking renewal of license.’ That remaius our posi- tion. However, we have also, subsequently indicated (Seven (7) League Productions, Inc., et al., 1 FCC 2d 1597-9) that the Po icy Statement will govern the introduction of evidence where a renewal application is being contested. For example, as in regular com- parative hearings, evidence relating to programming proposals and tu character will not be entertained in the contested renewal proceeding unless first specifically put in issue hy the Hearing Order or on subsequent enlargement of issues upon a threshold factnue!} showing that a distinctive difference or deficiency exists and is worth exploring. We have not, however, reached auy determinations ax to weight to be accorded various factors of dif- ference between the renewal applicant and the competing applicant, preferriug instead to do so later upon the full, factual hearing record that is developed by competent evidence under the designated issues, According[ly], parties in a contested renewal proceeding are free to urge any arguments they may deem applicable concerning the relative weight to be afforded the evidence bearing on the various comparative factors developed at hearing.” 2. The history of this proceeding until September 9, 1968, is set forth in paragraphs 3-19 of the Initial Decision (FCC 69D. re- leased August 13, 1969) of Hearing Examiner Thomas H. Donahue, which paragraphs we adopt and incorporate by reference as fully as if set forth at length herein. Of particular note is the attempt of Fidelity to include, in the issues and the record. material pertaining to a civil anti-trust suit * against General Tire and Rubber C ompany (the corporate parent of RKO General. Inc.). filed March 2, 1967, which dealt generally with the matter of reciprocal dealing allegedly engaged in by General Tire and its subsidiaries, Fidelity. on March 8, 1967, petitioned to enlarge the issues to explore the subject matter of the civil suit. While denying the specific request to enlarge the issues, on June 9, 1967, 8 FCC 2d 632, the Review Board prcscce, the order of designation to include a provision that the outcome of the com- parative proceeding in Los Angeles (KHJ-TYV) would be “without prejudice to whatever action, if any,” the Commission might deem ee . as a result of the Ohio civil action and held that the rele- vant facts and circumstances could be adduced by Fidelity under the standard comparative issue. The Hearing Examiner reopened the roceeding on March 11, 1968, to receive evidence on reciprocal deal- ing which had been developing in the civil antitrust action, “with the caveat that such evidence must be patent! ¥ germane to RKO’s steward- ship of KHJ-TV * * *.” The Commission later sustained the Board's refusal to add a specific evidentiary issue, FCC 68-892. 14 RR 2d 90, stating that the Examiner's action had afforded Fidelity essentially the relief it sought. However, on its own motion, the Commission added a potential disqualification issue, to wit: To determine, in light of the evidence adduced with res to the preceding issues, whether RKO General. Inc. should be disqualified or, if not, whether a comparative demerit should be assessed against it in this proceeding. 3. On August 13, 1969, the Initial , was released in this proceeding. The Hearing Examiner recommended granting Fidelity ? Now known as Administrative Law Judges. Mr. Donahue retired before the change of nomenclature, and he wil) he referred to as Hearing Examiner. *U°8. vv. The General Tire and Rubber Company, et al., Civil Action No. C-67-155. U.S. D.C.. Northern District of Ohio, Eastern Division (erroneously cited in the Initial Decision as 6—-67-155). 44 F.C.C. 24 RNO General, Tue. ct al. 96a and denying RKO.' Exceptions and a brief were filed by Fidelity on December 12. 1969, Exceptions and a request to file a brief in excess of the page length permitted by Commission rules and the brief were filed and lodged ® respectively by RKO on December 12, 1969, Reply briefs were filed June 5, 1970, by both Pidelity and RRO. and an erratum was filed by RKO on Jane 23, 1970. The Department of Justice lodged a brief. amicus enriae, on June 10, 1970, pertinent to the qualitieations of RKO only insofar as they might be affected by the “reciprocal dealings” matter, together with a corrected page sub- mitted Jane 11.1270: a reply brief was fled by RKO on July 20.1970; and aimemorandii in response was filed by the Department of Justice on Avigeust 10, 1970." 4. Meanwhile, on December 5.1969. the Commission designated the renewal application of RKO General, Ine. for Channel 7, Boston, Massachusetts (WNAC-TY ), for hearing with (wo competing appli cations. The issues included, (ater alia: 8. ‘To determine with respect to the application of W380 General, Tne, whether in view of the evidence concerning allered anticompetitive practices by NNO Geners}, ine. or its parent corporation, General Tire and Rebber Co. RING Gen- ere. Tne. shonld ho disquatified te remain a licensee ef the Commission er if pet so disqualified, whether a comparative demerit’ should be assessed againse jt in this [ Boston} proceeding, The order provided that official notice might be taken of the record im the Los Angeles WILI-TY proceeding and that only new or additional evidence not adduced in this proceeding might be adduced in the Boston proceeding. [t also incliaded provisions that, in the event of a grant fer WNAC-TY, the grant would he subject to whatever action the Commission deemed appropriate as a result of the pending civil antitrust suit and the developments and findings in the proceeding before the Commission involving the renewal of KTET-'PV's license. ‘the antitrust action in the United States District Court: was, however, terminated on Octeber 22. 1970. by a consent judgment. Consequently. the Commission does not have the benefit of any findings therefrom, and the reservation by the Commission of the right to predicate action in the RKO renewal proceedings on the outcome of the civil suit has become a nudity. Thereafter, on September 10. 1977, Fidelity petitioned the Commission to take official notice of the con- sent judginent. The Commission did so” noting that, while (his matter had previeusly been subject to any action the Commission might deem appropriate as a result of a final adjudication in the civil suit, this wovise no longer obtained and that the resolution of this case woul: # based on the record developed in the proceedings before the Conunission. @Bxcget as modified herein and by the rulings on exemptions which are attached as an appeneia, the findiess ef Geet set forth by the Paaminer fino his Tnttia! Decision are ndey ted. Sowever, sinee we do met agree with his ub imate determination, the conclusiots set forth Dereir will be substituted for these of the Evciminer, “Phe beiet of excess poate length was accepted for tiling by the Commission's Memoran- fur Cpiet on and Order, SP UCC 2a Toca Ts Pe beief, amicus eoeies, abd the pleadings responsive thereto were also accepted for disc. thie. tte Dee Da SH OD), PPC TT 870) released September 20, inj. 44 ICCC, 2d 97a Federal Communications Commission Reports 6. During the same period, the Broadcast Bureau also sought to reopen the KHJ-TV record for the introduction of additional evi- dence. It alleged that there was then available considerably more evidence bearing on the anticompetitive activities of General Tire, RKO General, Inc., and their subsidiaries and affiliates than was avail- able when the anticompetitive phase of the Los Angeles hearing was in progress. While the Broadcast Bureau indicated a preference for reopening the Los Angeles record with an issue identical to that in the Boston proceeding, it suggested, as a possible alternative, that the out- come of the Los Angeles proceeding could be made dependent upon the final result of the anticompetitive issue in the Boston proceeding in a manner similar to that in which the ultimate result of the civil antitrust suit might have been used. The Broadcast Bureau’s petition further refuevet to another petition pending before the Review Board to add issues in the Boston proceeding to determine whether certain officers. employees and former employees of General Tire and RKO had mis- represented or concealed facts, or been Jacking in candor in their testi- mony concerning reciprocal trade practices when testifying in the Los Angeles procendine and, if so, whether RKO should be disqualified as a licensee in Boston or assessed a comparative demerit. The Bureau requested that the Commission either direct the Review Board to add such issues to the Los Angeles proceeding or add them itself. 7 In the interval after the Bureau’s filin , the Review Board acted upon the pleadings before it and added the following issues to the Boston proceeding: ° (a) To determine whether in sworn testimony given in the course of the KHJ-TV proceeding, Docket Nos. 16679-16680. officers, employees, and/or former em dloyees of General Tire and Rubber Company, or of RKO Guan, Inc., misrepresented facts. concealed facts, or were lacking in candor with regard to the existence, nature, and extent of reciprocal trade practices engaged in by General Tire and Rubber Company and RKO General. Inc. ; anc (b) To determine in light of the evidence adduced pursuant to the aforementioned issue whether RKO General, Inc. should be disqualified as licensee of WNAC-TV or, alternatively, assessed a comparative demerit. After consideration of all of the circumstances. the Commission con- cluded *° that no useful purpose would be served by reopening the record in this proceeding. Rather, the Commission modified the second issue added by the Board, supra, in the Boston proceeding to determine whether RKO should be disqualified as a licensee, made Fidelity a party to the Boston proceeding insofar as the issues therein pertained to RKO’s licensee qualification, and stated that, in the event RKO was found on a comparative basis to be the preferable applicant herein, the issuance of a final decision would be deturced until the conclusion of the Boston proceeding when such action as then appeared appropriate would be taken. Oral argument was scheduled and held edocs the Commission, en banc, on October 12, 1971. * 30 FCC 2d 138 (1971). © 31 FCC 2d 70 (1971), paras. 8 and 17. 44 F.C.C, 2d RKO General, Ince., et al. 98a 8. On June 11, 1973, the United States Court of Appeals for the District of Columbia Circuit issued an Order ™ reciting that Fidelity Television, Inc. had petitioned the court for a writ of mandamus to compel the Commission to issue a decision in this proceeding. ‘The Court, while declining to issue such a writ, stated that the Comnis- sion’s decision appeared to have been unreasonably delayed, that the Commission would likely act in accordance with the views expressed without issuance of a writ, and that a report of the Commission’s ac- tion should be filed with the Court within thirty days. On July 2, 1973, the Commission held a special mecting and determined that a decision herein would be prepa [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_1508%3A1. Public record. Not legal advice.