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In broadcasting, one of the greatest public interest con
APPENDIX TO REPORT AND ORDER siderations is the preservation of diversity of programming and service. Thus special caution is warranted. Based on all I. Part 1 of the Commission's Rules and Regulations the facts, we conclude that an ownership interest of 5% by is amended as follows: banks is consistent with the special caution required, will 1. In $ 1.613, paragraph (b)(3) is amended to read as require some divestiture, but significantly less than at a follows: 3% benchmark, provided an appropriate disclaimer is $1.613 Filing of contracts. filed and that the holding remains a passive one. FILING OF TRUST INSTRUMENTS
(b) 14. The first question (Question A) in the notice dealt
(3) Any agreement, document or instrument (i) prowith the need for filing of trust instruments or abstracts viding for the assignment of a license or permit or (ii) thereof. All comments supported the tentative conclusion rights of the licensee's or permittee's stock (common or
affecting, directly or indirectly, the ownership or voting that such instruments generally served no useful purpose preferred, voting or non-voting), such as: (a) agreements and that the Commission could secure the information in for transfer of stock; (6) instruments for the issuance of cases where such information was necessary to the Commission's processes. We agree that the perfunctory filing censee's or permittee's stock by the issuing licensee or
new stock; or (c) agreements for the acquisition of liof such trust agreements and abstracts, in the main, serve no useful purpose because the reporting on FCC Form 323 permittee corporation. Pledges, trust agreements, options (Ownership Report) will indicate the person that has the required to be filed:
Provided, however, "That trust agree
to purchase stock and other executory agreements are power to vote the stock. As we said above and in Docket ments or abstracts thereof are not required to be filed, No. 15627 (the mutual fund proceeding) we shall consider unless requested specifically by the Commission. Should the owner to be the person who controls the power to vote the Commission request an abstract of the trust agreethe stock. Thus, we shall generally dispense with the filing ment in lieu of the trust agreement, the licensee or perof the trust agreements as abstracts thereof, but will mittee will submit the following information concerning retain the power to specifically request them if circum- the trust: (1) name of trust; (%) duration of trust; (3) stances dictate. 15. The information submitted in response to the Notice
number of shares of stock owned; (4) name of beneficial of Inquiry indicated that there are at most 6 cases in
owner of stock; (5) name of record owner of stock; (6) which a bank official was a director of one broadcast
name of the party or parties who have the power to vote company and that same bank had an interest of 1% or or control the vote of the shares; and (%) any conditions more in another broadcast company. The directorship acteristics of the trust.
powers of voting the stock or any unusual charby the bank official in a broadcast company would cause that individual to be subject to the multiple ownership rules if the bank's numerical holdings are the maximum II. Part 73 of the Commission's Rules and Regulations allowable by the rules. Thus, we will attribute stock held is amended as follows: by the bank to the bank official that is a director of the 1. In $ 73.35, notes 6, 7 and 8 are redesignated notes 7, broadcast company but not vice versa.
8 and 9, respectively, and new note 6 is added, the new
note reading as follows: THREE-YEAR GRACE PERIOD
$ 73.35 Multiple Oronership. 16. With respect to violations that exist under the revised benchmark, the data is nearly three years old, so the extent of the violations is not currently known. We
NOTE 6: In applying the provisions of paragraphs (a) recognize that the trust departments which hold stock in
and (b) of this section to the stockholders of a corporation violation of the rules will have to do extensive analysis which has more than 50 voting stockholders, a bank of individual trust accounts to meet legal and fiduciary holding stock through its trust department in trust duties. We therefore will give a three-year period for accounts need be considered only if such bank directly banks to bring themselves in compliance with the revised
or indirectly owns 5 percent or more of the outstanding standard. After that time, any violations will be dealt voting stock: Provided, the bank files a disclaimer of with based on the circumstances present at the time. This intent to control the management or policies of the may include possible cease and desist proceedings, deferral broadcast corporation. Holdings by banks shall be agof pending applications and other such appropriate gregated if the bank has any right to determine how the remedies.
stock will be voted. 17. In view of the foregoing, and pursuant to authority contained in Sections 4(i) and 303(r) of the Communications Act of 1934, as amended, it is ordered, That effective
2. In Section 73.240, notes 6, 7 and 8 are redesignated June 23, 1972, Sections 1.613, 73.35, 73.240 and 73.636
notes 7, 8, and 9, respectively, and new note 6 is added, of the Commission's Rules and Regulations are amended the new note reading as follows: as set forth in the attached Appendix, and the proceeding $73.240 Multiple ownership. is terminated. FEDERAL COMMUNICATIONS COMMISSION
NOTE 6: In applying the provisions of paragraphs (a) BEN F. WAPLE, Secretary.
and (b) of this section to the stockholders of a corporation Attachment: Appendix.
which has more than 50 voting stockholders, a bank holdNote: Rules changes herein will be covered by T.S. ing stock though its trust department in trust accounts I(71)-2 & the 1972 Edition of Volume III.
need be considered only if such bank directly or indirectly : See attached statement of Commissioner Johnson in which
owns 5 percent or more of the outstanding voting stock: Commissioner Bartley joins.
Provided, the bank files a disclaimer of intent to control
the management or policies of the broadcast corporation. control, influence, collusive or parallel behavior where a Holdings by banks shall be aggregated if the bank has any number of institutions own a company, and the impact of right to determine how the stock will be voted.
institutional ownership on managerial decisions to expend
resources to serve the public. The majority is content to 3. In 8 73.636, notes 6, 7 and 8 are redesignated notes
rely on the assurances of non-interference offered by those 7, 8, and 9, respectively, and new note 6 is added, the new
seeking the benefits of the rule change. note reading as follows:
One looks in vain for any suggestion that the views of
the Antitrust Division of the Department of Justice were $ 73.636 Multiple ownership.
requested, despite the fact that the Division has pending
a suit against a bank's trust holdings of the stock of firms Note
NOTE 6: In applying the provisions of paragraphs which compete with each other. See Business Week, (a)(1) and (a)(2) of this section to the stockholders of a
April 4, 1970, at 24. corporation which has more than 50 voting stockholders, & One looks in vain for any discussion of the issues that bank holding stock through its trust department in trust have been raised in this proceeding by Chairman Patman accounts need be considered only if such bank directly or of the House Banking Committee, or any reference to the indirectly owns 5 percent or more of the outstanding work published by that committee. In fact, the delay in voting stock: Provided, the bank files a disclaimer of intent concluding this proceeding is principally attributable to to control the management or policies of the broadcast the concerns that Chairman Patman has expressed, and corporation. Holdings by banks shall be aggregated if the the majority has apparently been waiting in hope that bank has any right to determine how the stock will be his interest would flag. Perhaps the majority now believes voted.
ONE, THREE, FIVE PERCENT RULES
One looks in vain for any discussion of why a one Dissenting Opinion of Commissioners Johnson and
percent rule is applied to individuals, a three percent Bartley
rule to mutual funds and a five percent rule for banks. BANKS IN BROADCASTING
The single unifying thread seems to have been to set the
standards in a way that would not require much divesti(In the Matter of Amendment of Sections 79.35
ture. In fact, the Commission does not know if the three Broadcast Stations)
percent rule on mutual funds has been complied with.
Apparently one licensee, Corinthian, would have settled Dissenting Opinion of Commissioner Nicholas Johnson for three percent here. in which Commissioner Robert T. Bartley joins.
While many statutes are discussed, one looks in vain Monopoly, banking power, and corporate abuses in- for a discussion of a statute of great significance to bank volve issues and arguments that have raged for at least ownership questions-the Bank Holding Company Act the last 100 years in this country. There is little likelihood Amendments of 1970. 12 U.S.C. $8 1841-1850. While that I can add very much new to that dialogue.
this statute sets out a five percent standard for ownership Some-a majority of those who hold power in this coun- attribution, it does so in the form of presumptions with try--believe that criticism of corporate power is, at best, opportunity for further inquiry. exaggerated; that corporations have contributed far
One looks in vain for any discussion of problems more than they have detracted; that, indeed, they possess presented by differing geographical or market situations. a certain special wisdom that should be heeded rather Surely substantial bank ownership, even of less than five than frustrated.
percent, of several close competitors in a state or region Others-generally a minority--believe that corporate should be viewed differently from bank holdings of five control tends to produce an overemphasis upon economic, percent in widely-scattered licensees. And there is no rather than human, values; that it reduces individuality; distinction for bank ownership of network stock, despite that it makes for the relative irresponsibility of anonym- the existence of a highly concentrated market where ity; and that it makes possible the abuse of power by competitors meet each other in a variety of contexts. those heading such institutions.
Nor does there appear to be any recognition that specific
factual situations may require special Commission inquiry SURPRISING CONCLUSION
on its own motion-in fact it is not clear that the ComToday the Commission reaches the rather surprising the holdings are less than five percent.
mission will know about bank ownership situations where conclusion that bank ownership of broadcast licenses in conflict with FCC multiple ownership rules is less impor
It may be that there are no potential problems with tant than individual ownership also in conflict. I dissent. treating banks more favorably than mutual funds or
Present Commission rules set certain ownership stand- individuals. But there has been no demonstration on this ards for the holding of broadcast stations. For widely held record to justify a change in rules to satisfy banks and entities, ownership attribution is made when a person
bank-held broadcasters-a change adopted only to avoid holds one percent, or a mutual fund owns three percent.
divestiture. Now for banks it will be five percent. Because I believe those seeking relaxation of the Commission rules have [Before the Federal Communications Commission, Washtotally failed to show how the public interest will be ington, D.C., FCC 72–525, 79407, File No. BTC-6682] improved, I cannot support the change the majority adopts.
(In the Matter of Cris-Craft Industries, Inc. (Transferor) and One looks in vain in the majority document for any Metromedia, Inc. (Transferee) For Transfer of control discussion of the important issues concerning institutional of WTCN Television, Inc., Licensee of Station WTCNownership of the stock of other companies--questions of TV, Minneapolis, Minn.)
third VHF-TV is operated by a subsidiary of Twentieth
Century Fox Film Corporation. Metromedia would be an Adopted: June 14, 1972; Released: June 21, 1972.
independent operator and has no other broadcast stations By the Commission: Commissioner Bartley dissenting; serving the Minneapolis-St. Paul market. Metromedia Commissioner Johnson dissenting and issuing a statement also supplies data to indicate that a grant of the applicaa ;
a Commissioner H. Rex Lee absent; Commissioner Wiley
tion would not result in any undue concentration of connot participating.
trol of mass media from a national standpoint. This data 1. The Commission has before it the above-captioned served by the other Metromedia stations, indicating that
sets out the competitive broadcast media in markets application for transfer of control of WTCN Television, competition is often from other group owners and licensees Inc. licensee of Station WTCN-TV (Channel 11), Minne- with print media interests in the particular markets they apolis, Minnesota from Cris-Craft Industries, Inc. to
serve. Since Metromedia only operates in major metroMetromedia, Inc. 2. Metromedia is presently the licensee of the following politan areas, it is in competition with a plethora of other
broadcast and print services. VHF television stations:
INTENTION TO OFFER IMPROVED SERVICES
5. Metromedia's "compelling public interest showing" KTTV-TÝ, Channel 11, Los Angeles, Calif
2 is based primarily on its intention to offer an improved WTTG-TV, Channel 5, Washington, D.C.
program service to the Minneapolis area. The most KMBC-TV, Channel 9, Kansas City, Mo.
22 significant new program to be instituted will be a daily
local program similar to WTTG's (Washington, D.C. 3. On February 9, 1968, the Commission released its
Channel 5) “Panorama." This is an hour and a half live report and order “In the Matter of Amendment of Sec
program devoted to news, interviews and discussions tion 73.636(a) of the Commission's Rules Relating to Multiple Ownership of Television Broadcasting Stations”,
relating to matters of local and regional concern. Also to
be established is a "Consumer Help Center". The center FCC 68–135, 12 RR 2d 1501, in which it stated in part:
will most likely be staffed by students of the local law In the light of the special problem concerning the top
school who will take calls from members of the public who 50 markets set forth in the notice of proposed rulemaking "we will expect a compelling public interest showing by private sector. The center serves to educate the public in
are having problems with government red tape or in the " those seeking to acquire more than three stations (or
consumer matters. Other new programs which cater to the more than two VHF stations) in those markets. The com- public interest are: pelling showing should be directed to the critical statutory
1. “Achievements”—a series of spot announcements requirement of demonstrating with full specifics, how the
which recite the contributions of both Blacks and Indians public interest would be served by a grant of the applica
to American culture. tion—that is, the benefits in detail that are relied upon to 2. "Focus"-members of various community organizaovercome the detriment with respect to the policy of
tions are invited to appear and make an informative statediversifying the sources of mass media communications ment about the function of their organization. to the public. Since, as shown, Metromedia already has four VHF
3. “Operation Grandparents" — During movie programs television stations in the top 50 markets, and Minneapolis,
teen-agers are asked to give whatever number of hours to which WTCN-TV is licensed, is the 16th ARB ranked
they can each week to help a senior citizen in their local market, the above statement is applicable to the subject
community. The station coordinates the contacts beapplication. Applicant's showing in this case indicates that
tween the teen-ager and the senior citizen. the criterion of overriding public interest has been satisfied. 4. "Operation Adoption”-Once a week for fifteen
minutes social workers will be interviewed on the “PanoNO UNDUE CONCENTRATION OF CONTROL
rama” program about children they are holding for
adoption in an effort to find homes for them. 4. At the outset, Metromedia makes it clear that a grant of the application will not result in any undue concentration of control of mass media in the Minneapolis area. The application contains a breakdown of all the
Metromedia also plans to improve news reporting to print and broadcast media located within or penetrating
the area by increasing the staff and purchasing more news the WTCN-TV, Grade B contour. This breakdown shows related equipment and services. Further, Metromedia that there are 6 television stations, 28 radio stations and
notes that WTCN will have available the services of the 24 CATV systems located within the Grade B coverage specialists they have in various areas of news analysis and area. As for print media, there are sixteen daily news
direct information from the other stations they operate. papers, six Sunday papers, one hundred and sixty-eight Metromedia points out that it is a successful operator of weeklies and fourteen shoppers. More specifically, the independent television stations in large market and offers three other commercial VHF-TV stations licensed to and
its viewers a real choice in programming. operating in Minneapolis-St. Paul are affiliated with the 6. In 1968, the Commission waived its "Top-50” policy national networks. Of these three, two other local media and permitted Metromedia to acquire a fifth television interests, Channel 4 (WCCO-TV), operated by Midwest station in the top fifty marketsa losing UHF-TV Radio-Television, Inc., also operates WCCO-AM&FM (KSAN-TV) in San Francisco. Metromedia, Inc. 12 and has ownership interests in local daily newspapers.
RR2d 561 (1968). That decision was based on the folChannel 5 (KSTP-TV) operated by Hubbard Broadcasting, lowing considerations: Inc. also operates KSTP-AM&FM. These two licensees 1. Station was a losing UHF operation and assignor are also owners of other stations around the country. The lacked funds to make needed improvements;
IMPROVED NEWS REPORTING
2. Efforts were made to sell to a buyer with interests the hearing requirements of the Commission's Three consistent with the top fifty policy;
Year Rule will be waived. 3. Because of the nature of the competition in the San 10. Accordingly, based upon our determination that Francisco Television market (Multiple owners affiliated the transferee is fully qualified and that the public interest, with the national networks), and the independent stature convenience and necessity would be served thereby, IT IS of the Metromedia, a grant would be consistent with ORDERED, that the above captioned application IS Commission policy to promote diversification of broad- GRANTED. cast media; and 4. Proposed programming and technical improvements
FEDERAL COMMUNICATIONS COMMISSION, would render a better service to the public.
Ben F. WaPle, Secretary. This station was purchased for $1,000,000; however, Metromedia could not make it a financial success and Dissenting Opinion of Commissioner Nicholas Johnson donated it to the Bay Area Educational Television Association in September, 1970.
[In re Application of Metromedia, Inc.) WTCN-TV PROFITABLE 7. Here WTCN-TV is a profitable VHF rather than a
Today the Commission rushes through the approval of 8 losing UHF station. However, in its 1968 grant of the significant station acquisition by one of the largest KSAN-TV, San Francisco assignment, the Commission television group owners in the nation, in order to satisfy did allow Metromedia to become a holder of five top-fifty complaints by private parties that feel the Commission stations. Admittedly, the station it now seeks to acquire the majority completes the emasculation of the so-called
has waited too long to act on the application. In so doing, is of a different nature than the one it recently gave up. Nevertheless, the market it is here seeking to enter is
“top-50 policy,” and confesses its inability to accumulate considerably' smaller than San Francisco --Minneapolis financial institutions.
the relevant data and enforce its own ownership rules for St. Paul is ranked 16th ARB with an SMSA population of 1,813,647, whereas San Francisco is the 5th ranked ARB The evidence of the rush can be seen in the fact that the market with an SMSA population of 3,109,519). Thus, the staff has had to hurry its presentation to the Commission change in Metromedia's past status from a holder of four and also that important information on the holdings by a VHF's and a UHF in the "Top-Fifty markets” to a holder certain institution of Metromedia's stock was filed only of five VHF's in such markets is somewhat offset by the on Monday, and corrected on Tuesday. fact that Minneapolis-St. Paul is a much smaller market. Metromedia, Inc., the owner of four VHF television Accordingly, this grant will not substantially increase stations in the top 25 markets and a host of other media Metromedia's potential share of the national television properties here acquires its fifth VHF television station, audience beyond what it was with KSAN-TV as its fifth located in the 16th market. It is also the applicant to Top-Fifty station. On the question of the impact of this acquire a UHF in the 15th largest market. Thus under acquisition on the Minneapolis-St. Paul market, we are of Commission policy now nominally in force, Metromedia the view that Metromedia's stature as a highly successful must make a compelling affirmative showing as to why operator of quality independent television stations in this additional aggregation of media power will be in the competition with network affiliates, will serve to promote public inte est. According to 1969–70 data, Metromedia diversification of media in Minneapolis-St. Paul and will
, with this acquisition and the other application pendrender, as discussed above, an improved programming ing, increase its net weekly circulation by almost 10%, service to the public.
and increase the potential homes it can reach by 12%. It 8. In view of the foregoing we conclude that Metro- will be able to reach more than 27% of the television media has made a satisfactory compelling affirmative homes in the nation. showing that the public interest would be served by its acquisition of WTCN-TV.
WEAK GROUNDS APPLICATION GOVERNED BY THREE-YEAR RULE
Although the majority has always been able in the
past to find the "compelling showing" that the public 9. In addition to the above matters, the application is interest would be served in a “top-50" market situation, governed by the Commission's Three Year Rule (Section never have the grounds for accepting such a showing been 1.597 of the Rules). On February 12, 1969, WTCN-TV so weak. Normally there have been situations where there received a construction permit for a major change in were UHF stations losing money and efforts had been technical facilities. This construction permit authorized made to find other buyers unsuccessfully, or there were principally a change in antenna location and antenna significant benefits of local or regional deconcentration of height. Since the instant application was filed on Septem- a present ownership structure. In addition, there were ber 28, 1971, less than three years after issuance of the often important commitments to minority groups in terms construction permit, the three year rule applies. Applicant of expanded programming, etc. And in the most recent states that program test authority for the permit was
case, the Time-Life--McGraw-Hill applications, commuexpected to be granted prior to the filing of the present nity groups by agreement were able to enforce a more transfer application. However, on September 28, 1971, vigorous view of the “top-50” policy than the majority the new tower for the antenna collapsed during the final viewed necessary. Here there are no community groups stages of construction. This event has made
it impossible spurring the Commission and the parties, and there is no for program test authority to be issued in time to remove enforcement. the permit from the technical requirements of the three- The "compelling affirmative showing" made by Metroyear rule. There is no evidence of trafficking in broadcast media is mainly a proposal to use programming in Minnelicenses or construction permits and, in view of the above, apolis which it has found successful in other communities. There is no benefit of deconcentration-one multiple owner Commission approval of the application in question. This sells to another, and the first promises to use the proceeds inquiry is not always made. to get another, bigger station. This is a very profitable The problem is illustrated by the holdings of the two station-Dot a UHF on the brink of bankruptcy. And part institutions ordered to divest in this case. Keystone Funds of the "compelling affirmative showing" is a promise by has 5.45% of Metromedia, 3.6% of ABC, 6.38% of Downe Metromedia to program less hours, less other nonenter- Communications and 8.7% of LIN Broadcasting. College tainment programming, and less news than the present Retirement Equities Fund, technically an individual owner licensee actually presented in its last license renewal subject to the one percent limitation but now treated as a composite week—Metromedia does propose 15 minutes mutual fund by the Commission, has 4.65% of Metromore news per week than the present licensee proposed media, 3.5% of ABC, 3.28% of Cox Broadcasting, 3.2% at last renewal. This is the sum of the majority's compel- of Fuqua Industries, 2.04% of McGraw-Hill, 3.09% of ling showing
Rollins and 1.03% of Travelers Insurance. For both these
holders, recent Commission action on other transfer appliTWO HOLDERS VIOLATING OWNERSJIIP RULES
cations for other companies (Downe Communications and
McGraw-Hill) failed to reveal the rule violations. And A second major problem with the application is that at these rule violations take place two years after the time least two of the major holders of Metromedia stock are in
the Commission gave for divestiture in the rulemaking patent violation of the Commission's multiple ownership that allowed mutual funds to hold as much as 3% of a rules, as the majority recognizes by sending letters to the broadcast licensee's stock. Somewhere in the foggy past owners ordering them to divest. The problem is that the there was an effort underway to revise the Commission's Commission's ownership reports, for a variety of reasons, ownership reporting form. Perhaps that effort needs to be are not providing the relevant information, on institutional revived. holdings of broadcast stock. The Commission is often
I would set this application for hearing to determine reduced to asking transferee applicants to ascertain from whether it complies with the Commission's "top-50" the institutional holders of their stock whether the institu- policy, and whether the public interest generally would be tion is in violation of Commission rules, as a condition to served by granting it.
29-553 O. 74.26