Ad Hoc Challenges to Media Cross-Owners After "FCC V. NCCB."

DOCUMENT WOMB BD 168 080 CS f02 -423 AUTHOR' Firestone, Char es H. TITLE Local Media C ncentrition;Ad Hoc Challengesto Media Cross-Owners After "FCCv. NCCB." SUB'DATE Dee 78 NOTE 45p.; Paper presented atThe Federal Trade Commission Media Symposium (Washington,D.C., December 14-15, 1978)

EDRS PRICE MF01 PCO2 Plus Postatle. ..DESCRIPTCRS *Broadcast. In try; Certification; Federal q:Gove-rnment;Afederal Regulatiami;Legal Problems; *Mass Media; Newspapers; *Policy.Fdrmation IDENTIFIERS Department of Justide;Federal ComRunications Commission; Federal TradeCommission; *Ownership )BSTRAeT This paper exploressome of the implications Df cross- cwnership ofnewspapers and other media in the role of the Federal a single market and Communications Commission(FCC) , the Department of Justice, andthe. Federal Trade Commission' enforcing national 13olicrafavoring (FTC in media. It describes a deconcentration of local'mass the.history of FCC regulationof lode; media concentrations,'' looks atthe potential harms andbenefits of newspaper-broadcast mediacross-ownerships,' and distinguish between behavioral proposes, that tae FCC problems and structuralproblems. It further suggests thatthe,Department of Justice shouldbring antitrust action for behavioralmonopolistic ac of concentrated owners and thA, the FTC should look t al media.. concentrations under.Section Five of the Federal e Commissida Act. (TJ) N

r' r, 0 *4********************************A********14************************** * Reptaducions stpplie y EDRS are the' best thatcan be made " * * t from the original document. * ,*************44**************************i4*************************** U.S. DEPARTMENT OFHEALTH. EDUCATION WELFARE NATIONAL INSTITUTE of EDUCATION THIS DOCUMENT.-HAS BEEN REPRO- DUCED EXACTpl'AS, THE PERSON OR RECEIVED FROM ATING IT POINTSORGANIZATION OF ORIGIN- STATED DO VT NECESSARILYVIpWOR OPINIONS REPRE. Beforephe SENT OFFICIAL NATIONALINSTITUTED* EDUCATION POSITION ORPOLICY Federal Trade Commission

Washington, D.C.

MEDIA SYMPOSIUM,

ieceillber 14-15,. 1978 -

LOCAL MEDIA CONCENTRATION: 141

Hod Challenges to Media Cross-Owners

, After-FCC II: NCCE

"PERMISSION TO .REPRODUCETHIS MATERIAL HAS BEENGRANTED BY. Charles. Mb Firestone

TO THE EDUCATIONAL RESOURCES INFORMATION CENTER '(ERIC) USERS OF THE ERICSYSTEM."

Charles M. Yirestone7-DirtctOr Communications Law Progrp.m and Adjunct Professor of aw UCLA,School of Law

December 14,. rt.8\

a LOCAL MEDIA CONCENTRATION:

V . Ad Hoc Challenges to Media Crosse-pwnegs:,

. " After FCC v. NCCB

I. 1 INTRODUCTION

.40 One irony of the CommunicationsAct of 193( is that.a , t law tht-t was enacted inpart to temper media monopolies has-'

I . - instead fostered their_growth. In many citles around.the'

country one interest controls extremely largeshares of the local advertising and outlet for effective miss communication:'

Shares of the marketare4sanctioned in,newspaper-broadcast combinations thatCave been consideredprimarfacie mwpolisti/.c t in other industries; This so despite a national need grouAded

A in First Amendmentas well As antitrust principle'th/at thl. maximum diversity of 'information sources is-essential the . public welfare.

In FCC v. National Citizens Committee. for Broadca tine jr (NCCB), the Supreme Court last summer affirmed the4Tederal

Communications pmmission rules barring future creationor acquisition of colocated newspaper-broadcastco ations in the same market. While the Commissiori'required divestiture where one party controlled the only,dailynewspaper' and only- ' television,', or only radio, ;6.tion, in 16 tiny marketsaround, the couktry; he agency with Supreme Court approval'grandfathered the remaining cross-ownerships.

3 67,

lhesupreme 'Court'lekt:Open,however, the question. ofthe - A .*tandar4 ng, leadingtowards denial of reilewal.or dive

tatursin hoc,challenges tiaindividual concentmt d-media owners.

Myth'esis is that theL FCC, .EheDepartment of Justice and

,the FederalTrade Commisii6n each 11.;.s an important role still to play in enforcing national policy favoring a deconcentratIon ti of local mgss media. In describingthese roles, I first lOok at..

0 theilistory of FCC regulation eflodal me is concentrations, then

take a closer. look ate the potential/ harmsan benefits of

paper-broadcast cress-ownerships. I,I,conclude with a proposal

e. 4 . for disValguishipg 0:t the. FCC betWeen 'behavioral problems, which I . should lead to "sanctions which' 'include denial or °,forteitu4A of

a license, on the one hand, an Structural problems whifi. should

. ) result in divestitures; on theioither.

Similarly, I suggest thathe Department of Justice should bring actions under its arse al of antitrust laws in the federal

coLuxt.for behavioral mondpo iptic activities ofconcentrated OOners. In addition I she suggest that the Federal Trade Commission could look at local media concentrations under its

broad authority under Section 5 of the Federal Trade ComMission 4 Act to prevent "unfair methods of competitioindluditg an'ti- 4 competitive structures `illhis should lead to'a vigorous and

Competitive enforcement'effort to foster vigorous and competitive : mass mediaA This is most important in the mass.me4a industry since, as the Supreme Court has Observed, "Seech'concerning N pnJpiic affairs is more-thanself-expressioni it_is.the esiehce

4 of.self-gOvernment.',2- And "the consumer' s interest in,t rlOe . . . 0 * N't flow ok'commercial information . m4b b&askeen, if n Ft keener 41. by far, than his interest inthe day's most uigent\po Xtical

debate. " '3

Simply because the,FCC's rureq donot, break

,gsFoss-ownerships, then, doe's hotmean'.thatour C ment to diversifEcatidh of information . sources sad be dimin- i'Shedon.case -by-case approach.

)

0 . -A.BRIEF HISTORY OF CHALAENGtS TO LOCAL,CONCENTRATIONS.

OF ilEDIA. CONTROL

A. The Broadcast Licensing:scheme -7' i4 Under t e Communications Act of,1934 .Congress 1

delegated to theederak Communications Commissionthe ,c1667.

to license broadcasters,for , three=year reviewable terms. AY . . , -iNWhen.applicant files fo1,64r renewal, othersan also apply, .to operate On that frequency. InlUch a case, or whenever.

. . there are mutually exclusiveapplications for broadcast

,facilities, the Fcp holdsa comparative7hearing.. t? first determines 4hetberany applicant is disqualified from

operai$inga4station on legal, technical, financialor

chaticterigroun4s: If more tan one i basically qualified

0. 430 . in these categores\the 'Commission determines which is est qualified ,or the ensuipg three year tarm.

In adopt his Act and its predecessor Radio At of 1927,

Congress debate thVIssueof mon000lization'of,the broadcast 5 frequencies. As Mr.Justice'Frankfurter. observed," Cpngress

moved under the spur of a widespread fear 'that, inthe absence

of governrjiental control.the public interest might besubordinated f to monopolistic-domination in the broadcastingfield.. " -6 It therefore provided, in additionto the usupple",and flexible JV 7 public interest'oonvenierice.and'necessity standard,4 the duty

and authority'within'the Commission to (1) establishrules regu

lating ",chain broadca,stineor networkin "to encourage the larger and more effectiveuse of o in the public inter-

a 77 A. r

est," and to distribute lipensesAamong the Statesand commu7 as to provide a fair, efficient:andequitable

bution of radio service' to eachof the sdme.u8

B. Multiple Ownership Rules

In a series of rulemakings beginning in -1940 the

FCC proceeded, to broadcast ownership on both a focal

and.national:level. Thus, the Commission restrictedone licensee to,:Operation of onlyone FM radio,9 one AM10

1 and one commercial teleyision frequencyllper community.

AIS- It limited to, one the number of networks whdchan entity

could operate in .a singie communiti, ordering in the,wake

a break-up of NBC's Red and lu Networks.1ZThese are generally .known under the misnomer of "duopoly" rules.13 In the cases of FM and TV the duopoly standard Was

imposed prio'r to widespread licensing, andno onewag/in violation of he standard at the time ,of promulgation.

In cases o AM and. networking, the Commission allOwld

licensers six onths to:comply by divestiture X14

Th reason ng for duopoly prohibitions is twofold.15

The underlyng interest in first amendment analysisis that the public's right eb receive informationnecessittes

the ,,widest posaible dissemination of41 formaon from

diverse And antagonistic sources 16 N telonal antitrust .vW 6

policy,.in addition, faVors a competitive situation--here

for he advertising dollar--especially in a;\industry

;ILAe marketmltet entry'is limited:17 . nitts in both the

economic-martcetplace'and'the marketplace of ideas, national polidy-favors04etitive local media, :so that the flow of advertising; and Ott* information essential to self- r goveirimentand the-search for-truth,.i§ Unimpeded. In7lhisC\f connection, the Commission has,been upheld in acting to

prevent the poisibility for monopolizatibn or abuse rather than to await the feared result.18

Basicall the same7dtionaleshave beenAuted for

nationwide limifs,.on'broadp/asting stations,19 for rules restricting.(1) the networks from spot sales representation,

for aTfiliates,20 (2) ,television statio from owning local

cable franchises ,21 (3) networks from owning cable systems,22

(4) telephone companies. from owning cable television

systems,23 and (5) in connection withother factors related to .the adoption of the'Prime Time Access Rules 24 networks

from owning syndication companies.25

Interestingly, in each of these cases the Commission

required divestiture within a certain time limit for com-

- .pliance h the new standards.40 On the other hand, divestiture was not required where the Commission tightAted

its *tandards'for measuring duopolies in 1964,27 nor in( the multiple ownership rulemakings from 1970 on.28

4 C. Ad HocsConsiderati of Diversification.°

Media-Cross-Ownership.

While the FCC /was considering itadhairt

casting and first multiple ownership (duopoly) rules

also looked at the iesUe.of newspaper owrwrship Olf iad o.

stations.29 It opted, however, lorad hoc.consideration

of the problem, rather than rul s, statingits intention

. . / or generally not to (permit concen ration of control the ,

hands o'f the feu( to the excluiion of theman who may,

equally well qUalified to render such publfc'serviceas

required of 1,enses)"30

Generalfy,however, the Commissi has granted applications, fOr media cross-owners where (1) they wereArithfn

the spe ific multiple- ownership rules, (2) whereno like- lihood of abuses could\be shown, (3) wherea monoOly situ tion would not ensue, and (4) where other non-media

appiicantawere not al applying for the same frequency at

the- same time. 'Mils, in the cases* where aofrequencywas

/available and only one appliant applied forauthorization to operate, on it, theTC-cimassion usually made the grant to

'qualified applicants Who nevertheless owned loCalor nearby daily newspapers.31 Simiaar134 assignments and transfrs of broadcht stations to existing local newspapers have

mostly been appraved, as have renewaii.32 But. with a

1 few notable exceptions33 newspapir owneiship ,becamea

. . crutial negative factor under ,the diversification-criteriori

k. in contested comparative licensing proceedings%34 '7

In eomparative4proceedings- priorto 1965 new4peper

xelate4in opposie ways. On the one handy't newspaper often demons sated °cal- ownership,. comma tY involvement, service and familiAa 'It showed 'journal-

is ticOPeriende,and usually !guaranteed: finarteial

quallfication.35 Oh.;the- Qther ate. ellttbined ownership:

would lessen thediversity of ihformationsources in the 0ebramunity const"tutiotalfaetor a least since Justice 7-. 141-ack's famous adage,in Wobiated Press v. United ''Stards.,-1,,,4

that ,thtfirst amendment. "restsonthe,fa`ssumptiob'that the widest 'possible dissemination ofinformation fromilvere

and antagonistic dources is essentialto the welfare of :tcie

. . ."37

_By 1965 the Commission's domparati licensing proee

long in need ,of direction andconsistenc f finally': receive

liNne. In its Policy Statementon Comnar Broadcast

, ; . Hearings38 theCommissibnstated as it's two basic "licenT

ing criteria the Thes.,p practitcae service to ttte public" -, r r \_,,,- . . , 1 and "diversification" of themedia foi mass communication.

Although these criteria hardly resolvedthe dilemma of the 'countervailing characteristics inherentin media applicants

for new licenses, nevertheless, by the time of thePolicy Statement, a 1 cal daily newspaOr hadalready been effed-

karred.rom obtaining anew co-Located broadcast

license in4t compaTative proceeding.39The spectrum began

- 10 f

/ , //7;'

6 get 'sattirated,,television had becme a dominant medium of r communicit ion and diversification4n4d. been steadily on ascendat 444' . The Policy Stateient, raised Afar thornier problem t context for which IE was notilr tglnally . , intended- .that of license ren'ewals', both with and= without, challenge

-ftoli,coMpetirig applicants; In VHDitInc,a:: comparative t)rbadcast: applicationproceeding. ivolving. a-renewal applit an inCuMbent'holding: only a fourmghtb

the:C"ommiss'ioncompgred'the app icants accordingto the 1965

: Policy Statement. While the Po it7-Statement .Statedon its-

.:fate that it was not intended for- the comparativerenewal situation4. its application to this case wag premised (on

reconsideration) on the fact that the 'applican6 hadmot held a.regular three-Year license.43

The incumbent, which was cross-owned byu theBoston Herald Traveler, lost its licence then .not because .of specific

abuse, .bU ecause the public interes(te would be better

. served by diversified ownership of the major media, outlets.

in Boston. 44

ff.

ov* In .lidwestl-Radio-Tel.evi-sion" and.ChronicleBroadcasting 6. 'CompaiLy theLcommiSsioncraeighaPad hearings-,,on the renewal

'%.--eaPPlicatiOns of'newspapef,6rOss-04ned television..stations in 10.

Ni:nneapol,is- St...Paul. and; San'FraticiaCo'In. bothcases - specific programMingor, antit,rust abuses were alleged;47 but in both cases issues,were designated not only on-th§alleged.

- .. ... abuses: but alsoon .'W ther th 4.....-*--7eappl,i-Ca0t-posseaaed-411- . undue concentrationof co'atroLover.Ji-teal: media'ofmass. communicatio6.0'

In ariother.significant developmenxthe Commission

designated for hearing FrolltierBroadcastirig's application

for a televisiom,stationin.Cheyenne, Wyoming., where it

controlled the onlynewspaperonly televisidn,--Only cable

system and two of only threeadro stations.49 The case

was resolvedwhen thecompany-voluntarlly,divested the TV station--orie of'the remediescontemp

With Justice pepaitment and citizengroup 'pressure,

the Commission finally decided. tolook again at the concen-

tration issue in a broad rulempkingrather than:bY adhoc

decdsiOnmaking. ..When it resolvedapelridingrUleMaking:in: % 1970 to bring-local televISion-rad40 ownershipwithin its

dOpoly rules0.e.,,one broadcast-atationfto a marIce

d the agency concurrently isued,a.fUrtherNotice ofPropO$e& Rulemakin7aJ,- to take into. .account newspaper-broadcast

cross-oWilership an ,thesluetion of diyestiture: . . Docket 18110 an Interim Folic on\Media (--- Combinations

In the Further tice in DOcket 1`8110 the CoMmis proposed to require div titure of all existing TV-radio

and all co-,locatednewspaper- broadcast combinations,as well ap bar future such combinations. 'It.hat now become clear"

the Commission stated, "that,themost significant aspect of the- (.concentration] problem is thecommon control of television station d newspapers of general circulation. . . The

public loo primarily to these two sources forits news and info ion on publicaff.-2irs." 53

airman Dean B rch, ina concurring opinion, ampli- fied the issue:

Clearly, the media cross-ownershipmatter warrant- , ,ing the most attention isthat of VHF-TV and the daily newspaper. There are only a-few daily newspapers in . . each large city and their numbersare declining. There are only a few powerful VHF stationsin thesecities, sand their numbers cannot-beincreased. Equally important, the evidence shows that thevery large majority of people get their news information fromthese two limitedsources. Here then is -the guts of thematter. 54

Meanwhile the agencywas becoming more and more con.erned about a piecemeal restructuring of the inaustry.55WHDH,56

Chronicle,57 Midest58and Frontier59 made theissue more acute by the month. 4113'y March,1970, ad hoc adjUdications 12

we hreptening the established broadcast interests not

4ith a restructuring of the industry, bat with forfei

of multi-million dollar licensesas well.

jased in part on r les which generally bar undue concent4- 60 tions of local control f mass media, challengers had brought

ad hoc .cases before tAie Commission, usually seekingto alleviate an unique or peculiarly egregious local situation.61 'The

Commission set a couple for hearing, stddt.essing the.specific

abuses as well as more general issues of concentration. In

Chronicle, for example, the parties gathered evidencenot 4.111Y on the charges that the parent company used KRON-TV's news and

-6ublic affairsto gain competitive advantage in'its quest for

CATV franchises in outlying communities: They also gathered

evidence on Chronicle's dominanceover the means of obtaining

information in the San Francisco Bay Area. The hearing examiner ,found, for instance, that 10% (or 400,000) of Bay Area resIdents

receive theirnews exclusively frail Chronicle outlets.62

But where cross-ownership was alleged to be per ,)-se contrary to,the public interest, as in the D.C. Federation of

Citizens Msociations' letter complaint agaiOst th ashingtwi

Post's ownershio'of WTOP-TV, the Commission declinedaction

14 A

stat it that that issue would. portend °Lan overallrestruc- . urri of the industry. 'This, .it held, snautd beaccomplished in 4ulemaking.63 t. The ruLemaking, ,then, came in the 1970Further N in Do ket 18110. The Coimmission proposeda newspar' 0 duopoly rule with dive titure. This would remedy boL,

. / COmmission's stated.concerns'abOut impleffientingeffectivecdiver-

sifilpation over local media control andthe unstated objective

4°, of assuring worried media coniglomeratesthat, at the leastv,

they would not forfeit the value of their licenses,'as WHDH had.,

Any-overall restructuring- of the industrykip have t to await the five years that Docket 18110 draggedon. The court of appeals, faced with attackson the Commission's policy of

deferring ad hoc challengesto therulemaking, waited patiently\-1 for four years.' Buta majority of the court finally told th'e--

Commistion to act on the rulemaking within 40 days'orhave the individual cases judged on their merits.64

Rather than restructuring,hoever,the SecoalELEILL

and Order in Docket18110 grandfathqred existing cross-owners

in place, with minor exceptions.65 Resttucturing would hive

to await voluntary sales by wadia owners wneLeopond LIOW

prosoeutive duopoly rule wokild bell acquisitionot nawspape. broadcast OL TV -radio CroSli-vwLAer5hips.66 14

This result would not serve the needs ofcross-owners, howe'Ver, who stiliffe red losintheirp licenses in a compara- 0 tiverenewal context.' And the Commission movedto protect

those grandfathered,by the rule. A rule the began as a: \tsw sword to force divestitureended up as a shiel r'n 46t-ing

cross - owners 67 Couched the context 0- 141..4i.at renewals, ehe Commission declared that "absentashowing of

economic monopolization thatmight warrant actions under the

Sherman Act, it "would not be'our view thatsuch (concentra-

, 46. Lion of control] arguments would raisevalid issues necessita-

ting the dedignation of renewal applicationsfor hearing. 68

The Commission took note ofnone of the allegations

raised in the petitions to deny which had beendeferred to the rulemaking. Now the rulemaking wouldbeused in effect to immunize existing licensees from ad hocchallenge. Any overall restructuring-of the 'industry wouldbe done through rulemaking., anayhat was essentiallyno restructuring.

This conclusion was st'r'ongly reinforcedinAseries, of subsequent FQC actions:

(1) It rescinded- a rule requiring television station diveitieUre of cabletelevision systems in their service area.69 'Although thisrule was in existence during the pendhncyof Docket 18110, assuring that TV-cableL:ross- ownerships would not be a problem for healcummunitieo in the future, the Commlion based ItssuLtplent_ Ce

t the Lule un iLS ut "cgLe61y11" // as, ,_ i (no competin incomingsignalp'to-a newspaper-

.., / ...... televisonor newspaper- adi? absoVtel'monopoly) from ir 4',N Dodleet 18110. . . . , , .. ,, . 4 , \. k (2).-The FCCLieririnated.proce4dinv peddingon. newspape

410 cable televisiob cro s-ownerships70;and-on conglomerate

t ownerghi, -of brnadc st properties.71

(3) In denyi reconsideration ,f- Docket 1811, che

agency declared.rh t where new egregi us monopolies were created from removal of signals which p esently served

to grandfather co binations, no divestiture wr2uld be 'required.72

(4) In a. se Aes of individual Cases, ,the Commission I dismisSip pending petitions to deny .individual license

'renewals of cross-owners, basing th cisions an the pet tioners' failure to meet the abuse or Sherman Act standard.73

, (5) In one case where aHheaying was designated on

alleged abuses,74 and a'strong S erman- Act'showing made,

the Commission declined to designatej.a general issueon a undue concentration of control, stating:. 6 The Commission has neither the expertisenot

the statutory authority Co enfurce the ailti- teusL laws In iLs Lc6ulaCiOn ut thebLUtJ

ist. Indu6btry LtintOkc.cii,dnt OtLilc

ShcLulatiACt.cf.,.1 .., 1,,1 Sedtkil.c6 pLupeLl; ,1th ut.h: tcJ-Ldi atscu-leo ct

wIlh Ltic cApcilise "v ,;L

lheb-waLLei6.75' 16

.. '''''N . . ,' "NN, of Docket 18110 the D.C.Cirouit reversed i 76 with a engeancs. The Commission's prosIpettivestandard than c;ost-ownershipswere contrary to the public intere0,

could- t be.squareddn the courC.s mindwith anIrdar that

allowerexisting ones to remain. As theCommition'seated,:'-'

- A "[lit is unrealisticto expect true diversity froma commonly

, owned station- newspaper comknation. T.he di ergenCy thei

viewpoints cannot be expeciedito the same-'as.i'f theywere

7 7 antagonistically rub. ".( The court determined thata - presumption for divestiture existed: The Copision accordingly misappltedthe/burdenof proof in the proceeding

by placing it on those favoringdivestiturei- to show specific

abuse from continued existen combinations, rather than on the crostowners,to show howYtontihliation would

aft4tmativeli servethe public interest lfghtof the Commission't.\generally'contl,gryfindings'in the prospeNtive aspect of't e'Pr ceeding.78

Having'%reversed.theentire rUlemaking;the court's

only attention to the Commi\ssion'sad hoc standard was in a single footnote Noting that the Second Report "solidifies

the position of 'existing combinationsby making petitions . to deny more difficult," the court ofappeals.ridiculed

the agency's orderonthisscore. "Without reasoned is cushion," the court noted Lhatthe FCC had -abandon'd iLa fotmer policy of allowingeLiLioneLh Lo .LictlyLhc UppoL

LUnity CO 'ClealunSLEdie indU Joe Ot 6cveCd1 w.yz Ll'aL. 17

coss-ownerchipAlarmp the public interest." Finally,i the

P qubted tromtlsCommission's WGALTV decision where the CC declined as inappropriate to duplicate the functions

f Other agencies i applying antitrust lawS.80

The Sppremo Courr reversed, recogn:- . L ':he fl°

. tishe a "legitimate renewal ppany g81 .Th. Basically anotherdilapter.--sfa boOk on deferrakto adminis- . - # traXive.agencies-r6\inforcedby the -recent Vermont Yankee.Nuod 82', 83 leer Power case, and continued irn:the Pacifica case, the unanimous re7rsa184 found the FCC's concern for local

, ownership, economic 4sruption to the industry'and continuity

of ownership to legitimately outweigh the agency's fut re.

promotion of ownership diversification.85 TheCO4t's

message to the courts of appeals was an unmistakable "Keep

Out." Yet Mr. Justice Marshall's opinion,.continuing'the footnoteidiscourse, seems to have also differed with the o ad hoc approach of the Second Pleport. Distinguishing between

LTh the comparative and non-comparative renewal situations, the

Court first pointed out'that diversification would temdin d

relevant Comparative consideration in the former.80 IL tLe.,

cited the FCC's sidied sCdndard fot d Leciewdl

Lion for hedrin6 dbbesitd compeLio6 dpplscduc, ' suffiLienc Showing spcLifi, abuses Lya t..1WlooLkl t'Wht,

or ut cooLlomic alonop,,I sc.It1,u utLlic buLLll,cil wold vs laco

the Sheraidu ALL

113 Er

.- ,. Sig ficAtly; however, [ the opinion st1-11: proceededfurther:

,:c1c-21 not m4x.p clear te extejit to--whic nearings will.be'availableon petitions to deny renewal-that do notallegespecific abuses or economic monopolization. -CoUnsel for- the Co 4.4. sion informs us; however,that the Order intended to "limit [ ] such aRallengers only to the extent that [theCommission] will,not permit them to re-argue innadjudicatory setting the question already decided inthis rulemaking, i.e;J\ in what circumstances isthe continued existence of-.co-located,newspaper-broadcast combinations per se undetirable.88

This.point was Chen emphasizedelsewhere in the opinion

where the Cqurt observed thateconomic monopolization and specific abuses werenot thesole grounds for renewal challenge.89

Thus the Court has leftopen the question'of what standard should or must be appliedfor ad hoc media challenges.'

The limits were simply thatforfeiture or divestiture of

combinations per se could'not birelitigated in the renewal

context, but neither could petitionersbe foreclosed from

raising anything beyond specificprograming abuses or Shermau Act violations. What then should the standard qr be, and where should thee cases be ticard? It appears that I uupn

Court's opinion in FCCv. NCC hds raisdJ ELUL,: qu,:stious this patti,lulac seire than ithas Lesolve3 6

.A $ER LOOK AT CROSS-OWNERSHIP 4 4 . r '.

t.- 41deLly.Lag bases for crossOWner7

ship rules: fte dual grounds, of antitrust policyin favor of

decongentration, especially whereentry 'into the market is. limited, and first amendittent,valVes ih diversityofinformation' sources. How important,are these -firc-tdrsi

The Co mission found them very important, in?adoptingpros- pective rules, but emphatically less importantthan assuring

that existing cross-owners could retain theircurrent, some- . times concentrated positions. The question is, what should iipe if done, if anything about existing concentrations. ofd.OSiolover localmass media of'communications? 4

Our first point of depakture f.Otanalysis is thefactual evidence of benefits or detridents from local newspaper-broad-.

a. cast cross - owners rips, and other forms Oflocal concentration.

In a lengthy review of'the evidence befaie 'the FCC .inDocket 18110, Judge Bazelon described the .25 major studies submitted

(1) the effect of common ownershipon station performance, (2) the effect on competition,(3). multiplicity and diversity of the media and (4) the economic consequences of divestiture?u

He then methodically undercut each one, ayreeing with the Commission that theitudies were laryely inconclusive.91

The' Supreme Court's assessment differed noton the themselves, but on the conclusions the Commision could draw from thin. IL held, contramy to LlIc Ck.,prtcdt App,:c11, LhAi mit

,45 ility and continuity of mdr1Luti,w5sQrvic:c pL,Jvl,4=,1 20

w_ wspape: orsas a group dc. lost. TL,

'-tr=ed to FLA_ Li_nding'S that econoMic, dislocations from high

interest rateSmghti prevent new owners from obtaining and air-

inch quality programs, and that local ownership wouldprobably decrease.934i. I,could take issue with-the evidentia4 question' t of vlhether adequate evidence supports the idea that grancrfathering

., 1 .. will generally yield better service to the public. In fact, 94 Professor.Stephen Barnett has argued, NCCB has.,argued,95 , 96 Profetsors William Gortley and Robert Prisuta97 have since shown the opposite to be true -- that tangible harm is likely -11 from local cross- ownerships.

Dr. Gormley has found; for example, that cros4-ownership

increases news story overlap by ],6.7 %, thatmore than twice as

many, cross=otwned TV stations never editorialize as nonL-affiliated

statioril and that 9.3% of newspape -owned television stations

receive/carbons of the newspaper's stories on an exclusive basis, compared to 1.1% of comparable non-affiliated stations.98

Dr. Prisuta has recently, found that cross-owned stations

are no more likely than.pon,-affiliated stations to present

publiC'serVice pro9f4mming, and that competitivemarkets are

likely to lead to significantly more public service proyrammiL,J

by stioils 111 tha market thap in noLlcompetitlye maLkets.99

FurtileL'aloke, 114ve sell example z L;Lu vW1IcLbillp

siLudtions preter.znc,,s Jr the .080. 100 c.411ed TV sLat..XOLI 111 t.,...,gram listings, ay-1l 101 :Jul1L1a1 Lu pLulc:L.0 tJ LusILlesz A:.it_cl.c.sLs 1., ,,lto.;.L wcUla ,:kAlc.1:1,Lizc- IL, LI, QL,I.A *, r 21 , V Att 103 104 crosssujosiizations, lack of editoria izing, 1 and anti- , competitive abuses in a newspaper's refusals deal 41thctis-

105 4 tomers of,a rival radio station. While all of these allegations did not lead ultimatelyto license denials, in.each

case the al egations were sufficiently demonstratedto make out 106 at' -least a prima faCiecase before the FCC.

These tangible harms, then, from actual caieg before the

FCC and studies; demonstrate at thevery least the potential fOr anticompetitivk abuse,for which the consumer ultimately

pays, Or the potential for .a limitttion or abridgement ofthe public's first amendment interest in the freeflow of information

from antagonistic and d'ersesources.

While these grounds Vwere used to bar future cross-ownerships and'break.up egsegioUSmonopolies, the continuation ofmeritor-. ious service and economicdislocation rationale provided the

Commission with the impetusto grandfather all others. The Supreme Court's affirmance ofthe rules may have been illacon-

sidered. But that is water over the dam. It most unlikely that the question'Olerssrules will be revisited by the FCC in the foreseeable future.

Yet, in affirminy the yrandtaLher Lt,c ,"LL has ap=,;iZically left "opp,..flantaut Lticaa ,t_htiL1Liatluna Loikhalk 1u7 Lamcdla In Icldtvldualtut:ad hu..)Lenewai 1.1.u.:aadIAAy

Liuw 1., 141A.AL Aczwadlaa 4La .,va11a1)1,; tL..0 ,1 ,

=LLtALI1,2/ == L LtAl, L1,L

..,AL Ly LLQ L JL ,%.4:,L -tiA,1 t.at 1 A =11 4. -

IV. AD HOC CHALLENGES TO CROSS -O BEFORE THE FEDERALCOMMUNICATZOgS COMMISSION

There are two basic and effective remedies attendant to

license challenges at the FCC: forfeiture or divestiture of

the license., And of course there is'a' world of difference between

them -- often tend of millions of/dollars per television lidense.

In divestiture the owner is compensated, for the license, despite

the legal lipservice to public ownership of the airwaves. In forfeiturewhether by license denial or victoriogs competitive challenge, all is lost by the vanquished licensee save the resale value of plant, equipment and inventory.,

The FCC paid such little' attention td the issue of ad hoc challenges in the Second Report that it didnot even distinguish between forfeiture and divestiture remedies in thiscontext.1-08 NOr did the courtson review.

Yet FCC case law certainly does so, particularly in the area of undue concentration of control. In Elyria-Lor'ain 109 Broadcasting t (WEOL), for example, the Commission designated the 1964 renewal applications for hearing of Elyria, Ohio's AM and FM radio stations, where it appeaed that theiL common ownership with a local newspaper might coasLitute concentration of control conttaL-1, to puL11L;

Setting the renewal hcariny, 11.,Wcvql., the L;kJi.iti1 m6lut1 110 allowed rot the po6b1L111ty ,t .11k/bL1 t.nk 1t4 111 LLe of dIvezLituLc In the da,lynaL1on oLiet uu4C, ,nc,:ncIation pe.

2,3

, . of. the Cheyenne, Wvomipg me is market. z---1 p I submit that where there are behavioralabuses, monogg,- a e \ \ lizations diP:ianticompetii,tive act,,ons by the licensee the . mv' N.....;.0 Commission should employ its gamut of'sanctionsup to and inclu-- d ' ,ding denial of iicenie.sThis would inclUde both comparativeand

noncomparative renewals., ,q. \de Wheke, hbwever,/the problem is basically a-atructural one

that is, where the degree of concektration of localmedia control )., has reacheda.serious point whiCh'ia inimical to the public . A

interesLi, then andorily then should the Commiss'i'on employthe. *1 divestiture remedy. This again should apply'to both comparatie and .noncomparative` proceedings, althoughunder existing law it is questionable whether thatcan be done with comparative

renewyls. It 173, however, Albert Kramer suggesteda legis-

lative amendment to the Senate-which,in effect,, would provide

for the winning challenger's buy-out of theloser at a fair market, depreciated value.112 In this way, the Commission's stringent standards for ad

nbc challenge to noncomparative renewals can be viewedas

disqualifying factors which, if established, wouldwarrant 'forfeiture. Yet the Supreme Court's allowdhce for additio,-11

challenges alp., be met by is strinyent criteria for 11,,

L=wc.ly, prior Lu

1d110.

A ic_,Lee k.)f-k.;un,enLr4ALlui; oLmikLIca,i E,41.

beLv.s., law i,daL 1 L l lo o t-1.1,tio li3 =Lc114,1o4,1- SJ, Lhz.. o rt-

24 4 of relitigating Docket 181J0 on 'a _case-by-ease. basis sincea!.° .\ newspaper-broadcast crosth-owneship would not be per se Pro- -.

hibited. Rather, the Commission would set degree of Concen- ation,' say 60%, 1 'hich would raise a prima facieAte of undue concentration. At that point', a heiring could be ,ogered* which

would delve in the'folldwing'areap -- quoting from Elyria-, t * To, - .

Lorain: .

4 11 actices of the stations and newspapers , with particularegard to any,jdint.rates. or discounts; the..presenAnd proposed staffp of the stations and' newspapers, with particular regard.toany empidyees, officers,eior directors' of the stations who are emikloirees, officers, or directors of the newspapers; the extent to which the stations andnewspaper ell, on the same sources for -for-broadcast o publication; the national, state, and lotl'al politic -al dis ri'cts served by the stations and newspapers; the market reas served respectively.by'th* stations.and.newspapers the,other broadcast and media services available to areas in question, With particularegard to (a) th amount of coverage these other services devote to local affairs' of the communities primarily served by the applicant's stations and newspapersand (b)' the extentto which these other serVices qompete with the applicant's stations and newspapers for ddvertising. revenues; and suah 'other facts as will tend to demonstrate that the oper4tion of WEOLAM & FM by Lorain Counpy Printing will or will not result in concentration ofcitrolover local media contrary to the public interest. 114 Furthermore, es Professor Robert Bennett and Glen 115, on have ably argued, the FCC should apply Clayton Act

6eocion 7 analysis LO 1ts licehslny ac:Lions While Gllt LAci,

Ot05-ovirlerliip ruico ruLuLc noquIbILloiio y,C

itiedia, the ClayLon Hit applies LA) all cluoc 1950 whIL:I.

401,,1 Colicac all erCCa.:1- Jr 611LotautIcal1,,, 1c651 eo1y o

Ths ,;..1,1!1 11,L cAA,;,

hcal:t1145 LOWC,Fdo.12vc.:41Lk4'e

4LI/LocaCil /...,t11,1 Lc Lo l 1 , 25, 40

grandfathered stations as waiver requests by members of the 4. public from enforcement of the grandfathering rule. If the underlying goals, policies and reasons for the rules would be

better served in a paitiaular situation by nonapplication of the

rule,.then grandfathering should be "waived," and divestiture

.ordered over a reasonable period of .time.116,

For example, if a non-local owner with an average or

poor broadcastrecord held a significant. share Of.the local

media market, and. divestiture could be accomplished without

.severe economic'hardship, then the grounds for grandfathering

continuation of meritorious service and av).ociance. of disruption

bp the industry -- would not pertain inapplicfation. to that

,licensee. In that case, the rule in Locket 18110 shOuld not

'protect that licensee from divebtiture. Perhaps a showing

should also have to be made that the best practicable service

to the public in 'that market,is more likely from another

'licensee than the existing one, although that showing should

not actually have to produce the other licensee. 1. the beaUty of the ad hoc4;proach is that it does allow

the excellent newspaper-broadcast combinations to remain where

they are, serving the public. Yet it does not give the absentee I owned, mediocre licenseea base on balls on the basis of some- _ one else's batting average.

Another advantage is that it facilitates scrutiny of all aspects of concentration at one time. Thus, without violating

.the lettef of the present cross-ownership rules, a licenseecan own the only newspapers, only VHF television station, only two radio r

26 stations, only cablesystem, only movie theatres, only sound-.

trucks, only printingpress, only laillboards, only banks and

-virtually anythingelse, butstill be grandfathered if there is

. but One incoming UHF:televisionsignal of primary strength in

the market. Indeed ,even'if that VHF station later went out

of buSiness, the Commissioft'sreconsideration order would not require. divestiture.4 111 . Assuming'no abuses d an inability to show intent to maintain or 1 8 use monopoly polder; the Commission would do nothing under existing law.

While this is certainlyan extreme hypotketiCal situation,"

the point its made. In an ad hoc degree-of-concentration pproach, the Commission would, be able to lookat TV-radio-newspaper-cable- / 119 MDS- and-other local combinations even though they didnot violate the narrow focus of each duopoly rule.

J The play.of.non-media .aspects on concentration is particu-

larly interesting. While the FCC has terminated and hidden'its- , 120 Conglomerate Inquiry Task Force Report, its preliminary study

indicated a basis for believing -that conglomerates.soMetimesUse

their media properties for theirown business purposes.121 The

Task Force found.questionable in -house dealingsby two of six

- 122 licensees studied in a pilot study, and the factp hat the

Commission' Still keeps the finalReport secret sixyears after

it was written, raises 'serious questions about just what is in it. The crucial point here is that.ad hoc scrutiny of local O concentratioii of control should be' pursued and .encouraged by

the FCC, not effectively precluded. In the past, conglomerate

ownership haS caused the Commissiongrave concern, as. in 1948 27

when the CommiSsion even preferred a localnewspaper owner Ter a competing, non-media applicant associated with the local induS-: 123 trial company that dominated the city.

The next question which arises is how to view a cable system

commonly owned by a concentrated local media entitya Does it expand the opportunity foralternative distributionofviews, news and advertising, or does.it further concentrate control of

the media in that entity's favor?. More brc441Y, what is the effett today of netechnologies-which proMiSe to proVide

localities with a plethora of new, .voices, .data services, and

channels of communication? Should a TV station still be barred from owning, say; a multipoint distributioh system (MDS)?

Certainly, as lon4.aS an entity has an interestk in the

audience tuning into cOe Channel, whether it is itsown television skation, or to a lesser degree; 'a financial-interest in

a pay cable channel, the operator has a built-in conflict of

interest fiom seeing tha the number of local media outlet are

C maximized. It is important, then, either to separate the pro- . graMming function from the home distribution function,or to, maintain a clear feasibility for new entry by others into the

local home delivery systems market.

This means that -governmental entities shoiild not allow c 4 existing media companies the opportunity to obtain dominant positions in new markets for local Communications if there

is limited eptry into that market and an opportunity to preclude

further expansion of services at:a later time.

29 28

Thus broadcasters should not be cableoperators, o even 'common carriers in the same localities. I am not sure that it

makes sense, howeVer, ta,precludecommon carriers from cable

television, particularly if they operatethe cable system as a common carrier6

IAmist admit that inclusion ofcable in a local newspaper.

ncentration MakeS it difficult to define theper- , centage of media con raltionheld by that entity in the

market, For, it annot realistically be measured by control

over advertising, nor strictly by control'over channels. Per

haps a measurement of acc ,sto audiences wouldbe the best, approach.

°Finally, theke is something basically unfairabout a concentrated owner's getting paideven- by its competitors'

audiences, as TV-owned cable systems do. This *could be con-

sidered at unfair Method of competiton bythe FT9 ulY4e

Section 5 of the'Tederal'Iradt"'CP.mila-04.4.QA.

. which I now turn. 14. v f/

...;c 4 : gi0

it:07,*

V. OTHER FORUMS-FOR DIVERSIFICATION

OF MEDIA OWNERSHIP '

As the FCC stated in the TAIQAL Television case, it "has

40, . neither the expertise-nor the statutory authOrityto enforce

30 / :A

29 the antitrust laws... [E]nforcement of the Sherman, Act and

.similar statutes rests properlywith other federal agencies.

entrusted with the expertise andjukisdiction over these matters." 'W 124

t The Suprenie Court has held thatFCC consideration and approval of an'action suchas a transfer of broadcast ownership

does not preclude the Depaitment ofJustice from bringing an anti-

trust action in the courts for the same activitY. 125 Presumably, this concurr jurisdidtion woul4 apply as well to the Federal'

Trade Commis 1 s enforcement of Section 5 the FTC Act, or of Section. 7,of the. Clayton Act.

I am, of course, baffled-as to why the FCC wouldestab-

lish a standard for its ad hoc considerationof Concentration

cases such as "economic monopolization under the ShvmanAct" when it has neither the expertisenor authority to enforce it.

But having.ceded away this function, I believe itis incimbent

upon the 'agencies with both the expertise and authorityto

enforce the antitrust laws to doso vigorously.in the area of media conglomeration. fi The Justice Department brought individual cases before

the FCC.prioi p0 the Second Report,126but the'"maddogs"°ofthe

.Antitrust Division, as the then cross-owned WashingtonPost referred to them,127seem to havebeen muzzled in recent years. Certainly the Department should continue to bring the

egregious cases of monopolization before the FCC.Moreover,-it JF cdUld also begin to piirsue these cases in local federal courts

where'discoyery is.more obtainable, the judiciary ismore inde- pendent, and the process more decentralized.

0 1 A- 4c1 128 Judge Warren Ferguson's FArliily Viewing Hour decision has

demonstrated that local judges can be .as or better equipped,to .") handle media cases than the FCC itself. ,In the areas of anti-.

trust and'the first amendment -- the twOjpases for media diver-.

sification -- the judiciary is more expert than the FCC. Fin-

ally, the FCC' track record for backlog in recent years sug7 gests that even ka.crowded court calendar, the tiple.it takes

to get to trial\could conceivably be less,in the federal courts.

But mote to the essence of this conference, the FTC has

a potential role in the regulation in local media concentration. For example, .in 1969, the Trade Commissilfinvestigated certain

.allegations of monopolist/ic news practices on the part of the

Washington Post and wvlpradio:,/2g Indeed the closing of

that investigation =was cited by the station as a defense against

a general charge that/ the company had an undue concentration of

Control of the D.C. media.130And The Commission has beeniolved

in oiler cases involving advekiising rate practices and alleged

unfair methods 'of competition Significantly,'theagency'S expertise is doubly applicable.

The FTC's -dual arms of enforcement parallel the dual.goals of

diversification 41111, MIR competition serves the antitrust objectives,

1Pr and'consumer protection should promote the public's first amend-

ment interest in diversity of information sources.- The agency's

o expertise'in advertising familiarieS it not only withthe

business of broaddastiilig,but with its customers as well:,For

the true consumers of broadcastinCs. product are the advertisers.

who buy public audierices from. the StatioiiS%

32 3,1.

The FTC's familiarity with marketstructures, unfair

Practices and othercompetitiOh issues shouldenable it to

. . view. the role of a broaddast'stationin a local conglomerate, .,

. . . a. or certain competitive pradtices with greater clarity than the ., FCC.

More'to the general-issue of local media concentration,

hOweyer, would'be theability of the to order divestiture

of certain media properti a finding of unfair methods of competition under Section 5 of the FTC Act..

Ins-FTC 1. SperryandHutchinson Co.. 1 the Suprethe Court

held that a finding-of "unfair methods of competition"'orunfair acts o.practices under Section 5 Of,the Act need'not encompass

c% acts which. otherwise violate the IOtter orspirit of theAnti- trUet laws. '"[U]npir competitivepractices[thecourt held]

were notlimited to those likely to haVe anti-competitivecon- peqUences after the manner of the antiust laws."132 And the

1938 Wheeler-Lea amendmeht to the Act"dharged theFTC with 4 protecting consumers as well ascompdtitOrs."133

The Court cited with approval the Commission's description

of factors it considers in determining whether-a practice is

-.1kfairdespite its not being anticompetitive or deceptive. These include, inter alia,

(1) whether the practice, without necessarily having been previously ocnsidered unlawful, offends public policy as it has been. established blvstatutes; the common law, or otherwise

. -(2) whether it is_ immoral, unethical; oppressiveor unscrupulouS;

(3) whether it causes substantial injury to consumers ... 134 33 32.

And in L.G. Balfour Company v. FTC135 the Seventh Circuit

affirmed the Commission's order requiring divestitureby Balfour

of a stibsidiary which had theappearance ofu.a competitor in the 'fraternity jewelry market, found to be in vi4ation of Section

5 of the. Act.

Obviously there are. difficulties with applying Section 5

to media concentration cases. But the combindtion of a high degree of concentration, a general public, politr for diversi-

ficaltion'.and a particularly "oppressive"-ciossownership could ,- '", .perhaps come within guidelines for 'unfairness" set fOrth

above. It would be hig ly.beneficial.tocconSumersJas Wellas competitors to diversify the sources.:for local-information.

'It may take;additionalacts, howeverneither violative in

and of themselVes othe antitrust Lpis'-zior specific abuses by , FCC standards, to find unfair. methods of competition. I have suggested one inherent in TV-cable cross=ownership -- the-

, , payment of money to the concentrated owner in order to watch a

competitor's'channel. Certainly if the cpmmon owner is involved, as some are, in having a covenant4assed in a subdivision that

no outside anteArils be bLilowed, the practice should be con-

sidered unfair. Joint advertising policies could fit within

the definition.' Or acquiring a cable franchisebut not fully

building it may qualify.

1 can'tertainly do no more than to suggest that the flexi-

bility of both Section 5 as a statute and the t'TC as'an adminis-

trative, agency go far to recommend a close look by the agency local, media concentration.

34 33 Ihconclusion, I.ehNiision a vigorous effOtt of vigilance -

. in the coming years by Congress,the FCC, the FTC, the Justice

Department ,competitors, customers,and members of the public

on the activities of local mediaconglomerates. With that many

watchdogs,let's hope.that these'entities,so, important to Our self- governance,' will act responsibly,that they will provide

the p lic with an unimpeded, :lean'andclear flow of infor-

mation on all topics of public importaxice,that they will insure

access to r resentativebviews. and voices in their-communities,'

- and that t y will make fools of.their critics by m'aking the

job' of tic unnecessary. *

*The author.wishes to acknowledge, with appreciation, elehelp

of Ms. Irslie Rosen, a UCLA law student, and Ms. DorisDavis,

, administrative assistant, in the'preparation of thispaper.

35 FOOTNOTES

U.S. , 98 S.Ct: 2096 (1978) (hereafter, "NCCB"). .GarrisonV. Louisiana, 379 U-.S.64,,74-75 (1964). Vi glnia State. Boardof Pharmacy Consumer Council, v. VirginiaCitizens 425 U.S. 748,763 (1976). 48 Sta. 1064, 47 U.S.C.SS151 et 47 U.S.C.SS307(d), 309 seq, (1970). See FCC, 326 U.S, (1970). Ashbacker RadiE-Co. 327 (1945);Citizens V. v. FCC; 447. P.2d CommunicationsCenter 1201 (D.C.Cir.1971). 44 Stat.1162, as amended, 48Stat. 884. Senator Howellat. 6/ Cong.Rec. See remaksof 47 U.S.C.§313 (1970).. 12503 (19267See also

Apparently in1934 Congress be interested did notexpect in radioownership. newspapers to Dill, fatherof the 1934' As SenatorClarence Adt laterstated, If I haddreamed that newspapers wouldtcquir4-radio and televisionstations, .I prohibition would havewritten .a -into' theact.- Certainly whichoccupy monopoly newspapers notbe permitted pqsitions ina city should also toownradio and stations. television 2 This countrycannot afford oly overpublic opinion to. have .mbno- have monopbly any more.thanit can afford in industry.. ' Notee The Power'of the, FCC toRegulate Newspaper Cioss-Ownership;The,Need for Broadcast 75 ,Mis..h,IRe.m. Congressional 1708, 1719,'n. 54, citing Clarification, "Cross-Media'Ownership and Note, Antitrust- Analysis and the AntitrustLaws - A Critical A SuggestedSolution, 47 nj, 97 (1967). N.C L.Rev,-794, 810, 6 FCC. v. Pottsville Btoadcasting Co.,309 U.S. 134,137(1940) 7 Id., 309U.S. at' 11118; A7 U.S.C.SS307-09 (1970).

8 47, U.S.C. SS301(i),303(g) and 307(i)(1970).

c 9 , Duop9ly Rules, 5Fed.Reg. 2382, /. 2384 (1940). 10 Duopoly Rules, 8 Fed.Reg. 16065(1943). 2 Duopoly Rules, '6 FedNIeg.2284-85(1941).

36 0 0 12 Report ion 'Chain Broad astingDkt. 5060,' May 1941, aff'd, Nat'l Broadasting Corp.v.. nited Stat'es, 319.U.S. 190.

. I 13 literally, dudpoly would°:allowtwo entities to control the . market. here the Cdpmission uses the word to preventover- .:1aP of signals in the, same service in the/Same market.

14' See FCC'Ann. Report,. 1945 at p. 12. At least 24 combinions HEff'to divest,

15 E.g., pcc v. Nat'l Citizens Committee for Broadcasting

98, S.Ct. 2096, 2104 (1978) (hereafter, NCCB), citinMultiple Ownership of Standard, FM and Television

roa cast Stations,s4 F:C.C. 1476-77 (1964). See also Multiple Ownership of Standard, FM and TV Broadcast Stations, 22 F.0".C.2d 306,310-14 (1970)(First Report and, Order,

. Docket 18110), modified on other grounds, 28 F.C.C.2d '662 (1971). T 16 See, e.g.', Associated Press v. United States326 U.S. 1, 27T-(1945)(The first amendment "rest on on the Assumption that the widest possible dissemination ofinformation from diverie and antagonistic-sources is essential to the welfare of the public...)

17 N\CCB, "supra n. 1, 98 S.Ct. at 2112. 18 Mul ple Ownership of Staidardi FM and Television Broadcast.

st tions, 45 F.C.C. 1476,1'1482 (1964), citing FCC v. RCA . C...municationst 346 U.S. 8.6,996-97 A1953)("The effects of c.upetition or it's absence.:_are matters not readily susceptible of quantitative ascertainment.") See also ° Arkansas Oklahoma.Broadcasting Co., 3 R.R. 479 (1946).

.19 Multiple Ownership Rules, 18 Fed.Reg. 7796 (1953), aff'd United States v. Storer Broadcasting Co., 351 U.S. 13171956).

20 Metropolitan'Television. Corp. v. FCC, 289.F.2d 874 (D.C. Cir. 1961).

-21 CATV, Second Report and Order, 23 F.C.C:2d 816 (1970); .47 C.F.R. 76.501 (1975).. But see Cable Television Systems, Second Rep rt and Order, 55 F.C.C.2d 540 (1975), appeal pending s nom. National Citizens Committee for Broadcasting FCC, C. Cir.No. 75-1933 (Sept. 22, 1975), motion for :remand pending.(amendment of TV-,cable cross-ownership standard's to conform to standards eStablished in-Docket 18110, newspaper-TV-radio.) See generally, Dillon, The FCC's Rescission of the 1970 Television-Cable Cross-Ownership Rule, 26 Am.U.L.Rev. 688 (1977).

37 ,$

:23. Gen. Tel..Co, of the Southwest V. United.States,449.F.2d (5th Cir. 1971). However, the FCC' has redently'taken .steps to reduce this prohibition 'inrural areas.

24 47 C.t.R. 573.658(k) (1977), upheld in Nat'l Asen of Inde- ", pencleneTelevision Producers and Distributorsv. FCC, 516 F.2d 526 (2d Cir. 1975).' J 25. 47. C.F.R. 573.658(j)(1977). See Iacopi v. FCC, 451, F.2d 1142, 1147 (9th,Cir: 1971).

26 In the case of the-multiple'- ownership rulessetting national limits on-stations, suFaqn. 19, onlytwo licensees violated the new rules. 'Divestitureswere considered,bn an ad hoc basis, and both were given,threeyears to divest their excess stations. H. Howard, Multiple Broadcast Ownershipl- Regulatory History, 21Z Fed.Com.B.J. 1, 15 (1974). 71 Congress has provided favprable tax-treatment for licensees forced to divest beCause of the adoption ofnew ownership policiee. 26 U.S.C. 51071 (1970).

27 Multiple Ownership, supra n. 18

28' That the Further. Notice of 'proposed RulemakinTin Docket 18110, 22 F.C.=2d'339 (1970 )., Issued concurrentlywith the FieSt'Report And Order, eupraG n: IS, lcbkedto whether or not divestiture should be required for compliance with the general one-to-,a-market standard established ,for brOad7

. cast'-ownership in the First Report. When the Commission declined to require divestiture in its Second Report, 50F.C.C. 2d 104.6, reconsideration, 53 F.C.C.2d 589 (1975), rev'd sub nom. Nat'l Citizens Committee for Broadcastingv. FCC,. 55-5F.2d 938(D.C.Cir.-1977), rev'd NCCB,supra n. 1, 98 SXt.' 266 (1978), itthen:resEralaUriestitureorders in the local .cable television proceeding See n. 21, supra.

29 Newspaper Ownership of Radio Stations, Noticeof Proposed Rulemaking, 6 Fed:Reg. 1580,3302(1940). 'The record in this el.procee4ing consisted of over 3500pages and 400 exhibits of oral andw311 . itten testimony from ,leading experts inthe field. 4 , ' 4 ,I See Note,' The Power of theFCC to Regulate Newspaper-Broad- cast Cross-Ownership: The Needfor Congressional Clarifi- cation,.75 Mich.L.Rev. .1708,1723, n:'7 (1977), and sources cited therein.

33 30 Newspaper Ownership of RadioStations, 9 Fed.Req./02-03' , (1944). *.e

31 Eg.,. Vi-State Broadc4!ting Co. v. FCC, 96 F.2d 564 (D.C. Cir. 138) But see Mansrleld ,Journal Co. v. F.CC.,180

F.2d 2 (D.c7157f950). , ,

. 32 According to the author's review. of 14 transfers of broadcast s'tations to local newspapers prior to 19654 13 or almost 93% were approved without .hearing:"-- E.g., Grants Br adcasting Co., 2 R.R.2d 657 11964); Pacific Radio Corp., 5 .C.C. 427 (1938). ,Compare Stephen R.. Rintoul, 11 F.C.C.. 10 (1945)(granted without hearing), with Miami Broadcasting Co., 1' R.R.2d 43 (1961)(desigAation'f3T-Hearinq where result would be coiamon ownership of only newspaper and only, radio stationincity.) Since 195, transfers have also beenapproved, although less frequently.'See, e.g., Josephv. FCC, 404 F..2d 2)04(D.C. Cir. 1968); Washington Star Communications,54 F.C.C.2d 669(1975) (hearing designated), F,C.C.2d , (1976) (waiver of new .cross-ownership rules # for three year period)..

In nonComparative renewals, challenges .didnot arise prior 4o 1965. Since/that time, renewals have normallybeen .e

granted, without'hearing., E:a:, . Stone v. FCC,'466 F.2d 316 330 (D.C.Cir.'1972); Hale,v. FCC, 425 F.2d 556 (D.C.Cd.r. 1970) (question of undue concentration deferredto rulemaking in Docket 18110). BUt see Frontier Broadcasting Co., 21 F.C.C2d 570.(1970), digErFga.for'voluntarydivestiture, 35' F.C.C.2d 875 .(197,2.),;Midwe-stoRadid-Television, Inc., 16 F.C.C.2d N943, 18 F.C.C.2d .1101 (1969),renewal granted, 24 F.C.C.2d 6'25(19,70); Chronicle Broadcasting Co., 16F.C.C.2d 882 (19691, renewal granted,.40F.C.C.2d 775 (1973); Elyria- Lorain Broadcasting Co., 6 R.R.2a 191'(1265).*1

In comparative renewal cases, the vnewal applicant has

always prevailed except in WHDH, infra n. , an'unique case. 33 E.9., WIBC, Inc., 31 r.c.c. 835 (1961); Midland Broadcasting Co., 12 F.C.C. 611 (1948).

34 E.g.,. McClatchy Broadcasting Co. FCC, 239 F.2d 15 (D.C. ,Cir. 1956), cert. denied, 353 U.S. 918 (1957); Loyola Uni- versity, 12.'R.R. 1017 (1956). Ftom the author',s review of the cases where one of the applicants was a localnewspaper owner, approXiMately 75% of the grants went to non -newspaper applicants prior to 1965.-,-

35 E.a., Capitol Broadcasting, Co. , 11 F.C.C. 859 (1947),; Orlando Ddtly Newspapers, 11:FC.C. 760 (1946). See generalli?, Mills Moynahan, Perlini, McClure, The Constitutal Considerations of Multiple Media OwneFship,Regulation by the rederal,Commu- nications Commission, 24 Am.UL.Rev. 1217, 1224 (1975)- , 36 . 320 U:S. 1 (1945)..

37- Id.. at 20

38. 1 F.C.C.2d 393 (1965).

39 See supra, nn.'30-34. Gee also H. Howard,.supra n. 26, at. 21.

% 40 See generally, H. Howard, supra n. 26.

41 WHDH-,,fnc., 16 .F.C.C.2d 1 (1969) , affld sub nom. Greatei Boston Television Corp. v. FCC, 444 F.2d $41 (D.C.Cir.), < cert. denied 403 U.S. 923 (19,71).,' 1 42 Policy Statement, supra n. 38, 1.F.C.C.2d at 393,.n. 1. 43 WHDH, supra n. 41;16 F.C.C.41 at

A4 However, the fact that'the dtation never. editorialized, in part because it wanted to protect against the-allegation of using all of the-co-owned media tab ddvance a particular pointy was used against the station.

45 Supra, n.

46 Supra ,n. 32. 44.

47' Chrohicle Broadcastihg Co., supra n., 32, 16 F.C.C42d, 'at'883; Midwedt Radio-Television, supra n. 22, 16 F.C.C.2d

at 943, 945 (H. Rex Lee, concurring .

48 Id: E:g., "Whethe'r Chronicle Publishing Co., the parent 3Fthelicensee,has'an undue concentration of control of the media of mass communications in the. San, Francisco Bay arta."

49 Frontier Broadcasting Co., 21' 57,0 (1970).

50 Frontier Broadcasting Co. 35q.c.c.2a 875 (1972).. , 51 Multiple Ownership, First Report and Order, Docket 18110,

22 F.C.C.2d 306 (1970).

.4 52 7-Multiple Ownership, Further Notice of PrOposed Rulemaking, 22 F.C.C.2d 33t (1970).

53 I. at 344.

54 I'd. at 350 (Burch, Chairman, concurring).,

33 See Federation of Cittzicns Assins. (D:C.), 21 F.C.C.2d 1214

4or(1969) 56 Supra, n..41

57 Supra, n. 32

58 Supra, n. 32

59 Supra, n. 32

60 . 47 C.F.R. SS 73.35,,73.240, 73.636 (1977) These rules, in setting national limits on the number of stations one entity can hold in each broadcasting service nationwide provide,in part,that, ndstation license shall be graAted if it would "result in a concentration of control...

[AM, FM or TV broadcasting] in a manner inconsistent with ' the public interest convenience and necessity." Id. at 73.35(b), 73.240(a)(2), 73.636(a).42)..

61 .E.g., Columbus Broadcasting Coalition v. FCC, 505 F.2d 320 D.C.Cir. 1974); Hale v. FCC, supra, n, 32.

62 Chronicle BrOadcistng, supra n. 35, 40 F.C.C.2d at 782.

63 lipra,.,n.55. y.:9 0

. 64 . ColumbliS Broadcasting Coalition v. FCC, supra n.61, 505,

. - F.2d at330: ,

0 -65 Tffe CommisO.on required divestiture within five years by , most newspaper-bro combinations where1one owner controlled the onlyaily newspaper and only TV or only radio 'station' in the same city. For a fuller description' and o the wording see Multiple Ownership, Second Report and Order, suera n. -37F.C:C.2d at 1081-84( 1099-1107 (text of rules).

A4few of the grandfathered'cross-owners swapped stations pending or after the Second Report. See, e.g., "WMAL-TV Fetches $100 Million, Trading 1ecord,7'Nroadcasting Magazine, 'April 4, 1977 at p. 28.

66 See, Washington Star COmmunibations suprIL. n. But see Field Communications Corp., F.C.C.2d , 40 R.R.2d 1635 11977).jacquisition of mijUrity control of UHF chain b rity stock'Owner which also owns local newspape in sam- towns as some of the TV stations trans- ferred.

67 - "Housecleaning and Jawboning in Phase One of the Wiley Commission," Broadcasting, March 17, 1975, pp. 21-22.

68 Second deport, supra n. , 50 F.C.C.2d at 1088. IF ,69 CATy, supra n. 21; Dillon, supra n. 21.

41. 3

1 70 Cable Antenna,Television.Syst , First Report, supra n. 28.

71 Conglomerate Corporate Licensees, 4 Fed.Reg. 2.658 (1975). This is particularly interestifig\imv w of ea'rlief prece- dentin a comparative hearing wheie the Commi's'sion preferred a local newspaper applicant over its r val fora new station in part because most of, the direCtors the rival were closely associated. witki.'the.dominant,no -media company in the t9wn. Midland Broadcasting Cob, 12 .C.C, ell (1948).

72.. Multiple Ownership,'Reconsideration, aodket 1811053 Z.C.Ci2d 589', 590-91 (1975), aff'd, NCCB,supra,n. 1, 98 S.Ct. 2086. . 73 E.g.', Syracuse Coalition v. FCC, D.C.Cir. No. 75-1308 slip'op. Oct 20, 1978); Stauffer Publications, 37 R.R.2d 660

(1976). p 74 'WGRATelevisionr*Inc., 62 F.C.C:2d527 (1976)(hearing designated on facts and circumstances surrounding the cross- owned newspapers' carriage of only its own station's

. daily listings and favoritism in the selection of cover stories and pictures for paper's weekly TV.schedule boOklet and use of -a reverse slug in identifying the station in the newspaper.)

75. Id.; 62_F.C.C.2d at 528-29.

76 Nat'l Cit. Committee for Broadcasting v. tCC, supra n. 555 F.2d 938 (D.C.Cir: 1977), rev'd,NCCB, supra n. 1.

77 Id. at 962, citing Second Report, supra n. 28, 50 F.C.C.2d at 1079-80.

78 NCCB v. FCC, supra n. 76, 555 F.2d at 962-67.

79. Id. at 966, n. 108.

Id.

NCCB, supra n. 1; 98 5:Ct. at 2117.

.82 National Resources Defense Councilv. Vermont Yankee Nuclear Power Corp., U.S. 98 S.Ct. 1197 (1978).

83 FCC v. Pacifica Foundation, U.S. , 98 S.Ct. 3096 (1978) .

84 NCCB, supra n. 1. Mr., Justice Brennan did not participate in the decision.. 4 -14 85' Id 98 C.Ct at 2117722.'

86 Id. at 2108-09, n.

87 Id. at 2109, n. 12:

88 Id. 0 A. 89 Id. 98 S.Ct. at 2110 n. 13 ("Since we do,not read the-Order as foreclosing the possibilityof a-hearikg.upon'a claim.Of specific abuses, and since the Commission itselfis apparently of the view that the only issue foreclosed if-1petitions to deny is the question of whether newspaper' broadcastowner- .ship is per se undesirable, seen.12,supra, we cannot say that the Order itself unreasonably limits the ava4abiity of petition's to deny renewal.") and at 2119 (".exisettlgcorn binations will be subject to challenge. by'oOmpeting appli-,-

' cants in renewal proceedings, to the same extentas they were prior to the instant rulemaking proceedings" and "even in the absence of a competing applicant, license renewal may be denied if, inter alia,a challenger can show that a common owner has engaged in specific economic

or programming abuSes.0 See nn. 12 and 13, supra." ) The . latter quote supports the thesis.in the text by the inclusion of the words "inter alia" which demonstrates that the Court had in mind some unspecified grounds for denial for cross-ownership beyond the abuse and monopolization standard set forth in the Secopd Report. 4 90 NCCB v. FCC, supra n. 76, 555 F.2d at 956-61

91 Id.

92 NCCB/ s4.ran. 1 , 98 SdCt. at 2117.

93 Id.

94 Barnett, "Cross Ownership of Mass Media in the SaMe City," Study submitted in 'Docket 18110, cited at NCCBv. FCC, supra n. 76 , 555 F.2d at 959, n.'71.

95 NCCB, supra n. 1 , Brief for RespondentNCCB at n. 32.

96 W.F. Gormley, Jr., The Effects of'Newspaper-Television Crois-Owne'rship on News Homogeneity (U. No.'Car.Press, Chapel Hill,,1976).

97 R. Prisuta, "The Impact of Media Concentrat n and Economic Factors on Broadcast Public Interest Progr ing, J. of Broadcasting (1977).

98 Gormley, supra n. 96, at pp. 112, 210-12.

99 Prisutav supra n. 97 at

100 WGAL-Television,supra n.

101 Western Connecticut Broadcasting 4/ F.C.C.2d 4i4, 433-35 (1974)

Chronicle BrtJaUiasc_hg, ILL.s= h. f, 103 Midwest:Radio-Teicvisih, inc ". 4 104 WHDH, Inc., supra n. 105Mansfield JaurnalICC.-v. FCC, Supra n.

106The'FCC's standard for designation of an applicaction for hearing is a stringent one under 47 U.S.C. §309 (1970). See Bilingual Bicultural Coalition on Mass Media v. FCC, 177.F.2d 656, 659 (D.C.Cir. 1974); Hale v. FCC,. 425 F.d 556, 566 (D.C.Cir. 1970).

107 NCCB, supra n. 1, 98 S.Ct. at2119.1 108,-SeconeRepoA, suprs.A. 28, 50 F'.C.C.2d at 108,0, n. 29 and 1088,-1130. J 109 6 R.R.2d 191 (1965).

110. Id. at 197-98.

111 Supra, n. 32.

112 Testimony of Albert H. amer in Hearings Before the Sub- committee on Communicatis, Senate Commerce Committee, 93d Cong., 2d ,pess., Serial 93-93. /

1'13 Cf:, e.g., United States v..E.I. pluPont de Nemours & Co., 77r U.S. 377 (1956) (intent to maintain or use monopoly power inferred); United States v. Aluminum Co: of America, 148 F.2d 416, 427 (2d Cir. 1945)(proof of monopoly power switched burden to aluminuM producer to prove it had not abused its power).

114 R. Bennett, Media Concentration and the FCC: Focusing With a Section Seven Lens, 66 Nw.U.L.Rev. 159 (1971).

115 Cf. Second Report, supra n. 28 at 1125-26-

116 an United States v. Storer Boradcasting F.Q., 351 U.S. 192 (1956) the Supreme Court affirmed FCC Multiple ownership rules in4part because applicants wereplprotected by a waiver procedure. See also WAIT Radio FCC,'418 F.2d 1153, 1157 (D.C.-di:FMTT)("the agency's discretion to proceed in difficult areas through general rulesis intimately linked to the existence of a safety valve procedure for consideration of exemption based on special circumstances ...") 117- Multi le Ownership, Reconsideration, supra n. 72, 53 F.C. .2d at 590-91.

118 119 Multi-point distribution systems, licensedas common carriers

120 upra n. . The Commission has heavily censored the document upon release required under the Freedom of informatidn,Act.

121 Green, "Conglomerate. Broadcasters Are Faulted in FCC Pilot Study, Wider Inquiry Slated," Wall Street Journal, Auglist 11, 1970. ."

'122 Id.

123 Midland Broadcasting Co., 12 FCC. 611 (1948).

124 WGAL-Television, Inc., 62 F.C,.C.2d 527, 531.

125. United.StAtes v. Radio Corp.of America (1959). 126 E.g., ,Stauffer Publications Co..,supra n. .

. . 127 McBee,

128 Writers Guild of America- West v. FCC, 423 F.Supp, 1064 (C.D.Cal 1976), appeal. pending 9th Cir.No.77-1058. 129 Fed'n of Citizens Ass'ns'(D.C.) , 21 F.C.C.2d 12 (1969).

130 Id. * 131 405 U.S. 233 (1972).

132 Id. at 244.

133 .Id. 4

134 Id. at 244-45, n. 5.

135 442 F.2d 1 (7th Cit. 1971).