SHOULD ECONOMIC CRITERIA BE USED 8‘! THE FCC IN DETERMINING THE NEED FOR NEW AM RADIO STATIONS? Thais $08 the’ Degree of M. A. MICHIGAN sure UNIVERSITY Stuart L Luedfke 19563 \M I, LIBRARY Michigan State University miner am “MIC cum I! USED I! m FCC II “MING m REED '01 NEW All RADIO STATIONS? by Stuart Luedtke ggadcegtig end [ederal galley. -- The beeic pnrpoee end philoeophy of the Federal Communicetione Commieeion 1e to etimnlate broadceetere to greater efforte to meet the program.neede of the areee they eerve. In no doing. they'ney better carry out their prinery obligetion of eerving the ”public intereet, convenience and neceeeity." For thie reaeon. and beceuee Americen radio ie primerily e profitdmeking venture, the Commieeion hee eought to etimwlate eerwice in the public intereet by elloceting additional etetione to meny merketa. the retionele for thie action ie that eech etetion will try to do a better job of eerwing the public then ite competitor in order to attract both lietenere and revenue from edvertieere. Ee [goblem fider §tndz. - The general problem with which thie reeearch ie concerned ia the competitive eituetion faced by Al.redio broadceetere in 1962. One-third of the A! etatione are loeing money end meny othcre are exieting on e merginel economic baeie. It ie the pnrpoee of thie reeearch to make a hietoricel-enelytical etudy of the ICC'e ellocetion policy and practice with regard to the nee of economic criterie in determining the need for new All etetione. the etudy takee into coneideretion the inability of many etatione to render good eervice becanee of an over-competitive eituetion in many merkete. The etudy aleo coeeidere the policy of the Commieeion and the courte in ceeee of econmmic injury to en exieting etetion ee e reeult of the Commiaeion'e ellocetion policy. 2 Stuart Lucdtke figurcee need. -- The important eourcea utilized for thie etudy were journal articlea, government documenta and releases, a number of erticlee fru- induetry publicationa, and several books. A large part of the aource material in thie etudy conaieta of FCC ounce and court opinions. [indiggg. -- Analyaee and documentation of court and connieeion caaee demonetrate that. eince the daye oi the Federal Radio Commieaion in 1930 to the preeent. the Commieeion and the courte have vacilleted between admiaaion end denial of the uee of economic criteria in determining whether new lieeneea eheuld be ieeued. The inplicetiona of the anti-truet lewa. the Iiret Amendment. end the Communicationa Act concerning competition in broadcaating are analyzed, end coneidered to be no barrier to the uee of economic criteria by the Com-iaeion. Finally. recommendetiona are made calling for a clarification of the Commiaaion'e policy on the one of economic criteria. The euggeetion ia made that there are autiicient grounde for a policy which would conaider the need for a new etetion in a given murket, aa well ea the economic potential of that market. A nore vigorone and eqhetic uee of ICC powere ia called for. Congreeeional action in recon-ended if the Commieeion can find no legal beeie for inplementing an allocationa policy that regarde broadcaating ea a quality inatrument for public aervice, ae well an a competitive enterpriee. m 30030110 cumn II “SID I! m ICC II nmmrnc m I!!!) M m A! RADIO 8IATIOIII? 3! Stuart 1.. Leedthe dull“ Submitted to Iiohigen State Univereity in partial inltillneet of the requiraeete fer the degree of mm or Ali's Department of televieien and ladie 1963 WWII?! 1 a grateful to Dr. Ialter I. fiery fer hie generate aid and direction in the planning and execution of thie project. 11 TAIL! O! COHTENTS Page WW I O O O O O O O O O O O O O O O I O O I O O O O 1‘ CIAITII I. II. 111. mm non O O O O O O O O O O O O O O O O I O O O O O 1 lechground and Dineneions of the Proble- the Economic Conditions lacing Itandard Iroadcast Stations in 1962 facing the froblanxof Overpopuletion: The Freeze Industry and Ce-ission positions regarding the need for use of economic criteria in the area of frequency allocation A.CIIOIOLOOIOAL’IIVIIH AID AIAIIBID OP IIDIIAL RADIO COMMISSION, YEDERAL COMMUNICATIONS COMHISSION AND 0003! POLICY AID PIACTICI II DIOIDIBO CAIII IIVOEVIIO TH! IHPACT 0! DEV COMPETITIOI DION EXIITING SIAIDAID W .r‘nm O O O, O O O O O I O O O O O O O O O O 2‘ A review of cases. decisions and court and Commission policies from 1930 to 1962 Analysis of the [00's present position with regard to the use of econonic criteria AIAIYIIS 0! run IlOBLIH: SHOULD ECONOMIC CRIIIIIA II DIED I! III ICC II DIIIIIIIIIG IIID FOI.IIU NI SIIIIORS. COICLDSIOIB Alb PROPOIALI '0! 1031!!! mm“ 0 O O O O O O O O O O O O C O O O I O O O O O O 13 tummary of court and Connisaion practice in considering the tnpact of new competition on existing stations lngineering standards: the need for revision Pest efforts to amend the Communications Act with regard to use of economic criteria in allocating frequencies Analysis of the Commission's vecillation between acceptance and denial of economic considerations Conpetition as a factor in frequency ellocetion 111 caarrra fags Implications of the Anti-trust laws with regard to linitetion of «petition in broadcasting hlications of the first hanhont as a factor militeting against the denial of licenses on economic grounds Authority of the FCC to use econonie criteria and the desirability of doing so Objectives of radio regulation: the use of economic criteria proposed A.now'allocation policy needed Suggestions for further research .mm O O O O O O O O O O O O O O O O O O O O O O O O O 102 mu O O O O O O O O O O O O O O O O O O O O O O O O O O O 1“ iv CRAITII I "mmcmrsanastssenmso rn rm ”anaemic “IOU!” WADDMIOIOOITIIMLII Ithe basic purpose and philosophy of the federal Ce-enieations Co-issions statsnent of progr- policy in July 1960 eas to stimulate broadcasters to greater efforts to neat the progr. needs of the areas they serve and in so doing, to better carry out their primary obligations of serving the public interest. Unfortunately. the competitive situation today in Al radio is each that many stations are unable or unwilling to offer to their listeners the kind of pregran service the rec uould libs. this is because. as Co-issioner rred U. ford said in an address to the lentuehy broadcasters" Association in October of 1961. “Ila are operating in an economy of saturation of radio stations in neny populous areas. If we continue present policies for licensing radio stations .d the odor of radio stations continues to ultiply we will find that in spite of our efforts to create a better climate for inprovod progr-ieg. eeisting engineering. allocation or processing policies may neutralise our actions. this nay cons about by reason of preoccupation by station nan-eat with ocenenic survival and a financial inability to concentrate l on the needs of their service areas instead of their ~tying pocketbooks.” _ _____A.— 1n“ 11. Ford. Ce-iseioner. ace. in on ten WW tut-em. Int-do. 2 All radio stations sea to have developed a finacial paradox. havonuas and profits for the average station hoop going down. ad the value of the station properties hoops mounting. There have been several reasons cited for this paradox: aoven coastition nahos same sagnonta of the industry noro attractive to investors because they are less coastitivo: radio in general still appears to be a good business in- vestment to nay. even if revenue ad profits are done: ad the aggressive operator still sees a chaos to boat the average.z W editor Iol Iaiahoff had this to say about increased AI radio ooaetitien in a editorial in the Oct. 5. 1959 issue or mun: In the past decade, (1969-59) the odor of radio stations insperstionhas risanbydn. thondorreportiegae anal lose by 16!. In the year 1948. 1.826 stations were operating. Of that odor $81 lost nosey. In 195s...3.oss stations operated throughout the year. Of that odor. 1,013 suffered losses. those are the cold neasurenants of a competitive situation that is getting hotter by the ninuto. last is generated by friction. and there is ach friction in radio today. telh to any radio broadcaster fra any cs-nity bigger than a crossroads ad you will hear stories of bitter eeaotition for sudiaea ad business. In its nest extras forms the coastition for audience dogsnerates into wild practises and wilder progr-ing. the objective is to be first in the ratings-u-nevor nind by how small a fraction or by how few listeners it represents. he first in the ratings. the battle cry goes. ad than you will get the business. 2 c. I. tower. Coastition is tougher: traces postwar radio trends. W. 51360-1. Oct. 19, 1959. 3 the urge to be first was responsible for two situations which have come to national attention recently, (1959). In hos Angolas one station offered listeners 010,000 for finding a certain disc jockey. Another Les Angoles station found bin in buffalo. ‘ In Denver one station has accused another of allowing autty broadcasts to go on the air. true or false-otho accusationo-and the circuastaces giving rise to it-will do nothing to enhance the bags of radio. he have a feeling that aloss the urge to be first is repressed. or at least eenbinod with other urges of none lasting value. it will be the whole of radio that will get the business in the long run-cad not the hind of business that stations ca bill. the ears eoqlaiats one broadcaster nahos against another. the ears reason one broadcaster gives another to ooqlain. the stronger will becons the argaont for artificial linitation of competition. It is a ergment that has often been heard. ad saetinos free unexpected sources. At the Itarz station disc jockey convention in the spring of 1959. Gordon lichendsn. one of the nest successful competitors in radio. publicly spoho out for legislation to permit no more stations in ‘a narhot than the govern-ant decided the economy could support.3 Other operators have expressed the sac thoughts privately. Iaishoff goes on to give his views on the desirability of such legislation: Iowsver undesirable the by-products of free coastition in radio (linited only by the availability of frequencies under proper engineering standards) . they are less un- desirable tha govaraont economic control would be. hot the government restrict the saber of stations by its evaluation of the economic potential of a narhot. ad the gourmet will also restrict the asunt of money ay of these stations ca nabs ad will iaose other conditions for doing business. If there are more radio stations licensed tha the DJ. economy ca support. the rigors of free coastition will eliminate some of then. Unfortunately. this has not been the case. and the coepetitive situation in radio has worsened since 1959. *— 3so: ‘faisheff. W33, an editorial, groadcastigg. Oct. 5. use. p. 126. Iaishoff continues: ‘fhose stations which adapt thanselvos to a condition of intense coastition. which invent new services that nest public needs. will not only survive but flourish. Otreng nanagasnt and sound planing can build a radio systa which will exceed as the nation expands. but there is a disnal future for that type of radio nanagaont which thinks that the terminal point for advance planning is the date of the neat rating report. b It is possible that nany stations would be happy to provide new and ineginative services but cannot afford batter progr-ing boceuso of the increase in All radio stations since the and of World War II. In order to survive. these stations nust provide the cheapest progr—ing possible in an effort to show a profit. American cc—orciel radio is a profit-unhing venture in spite of the fact that it is licensed in "the palic interest. convenience ad necessity." Suprae Court Justice Islix Irafifurter states in the decision ' * of w. 319 I! 190 (1963) that: ”the plight into vdaich radio fell prior to 1927 was attributable to certain basic facts about radio as e noses of caaunicetionuits facilities are limited: they are not available to all who nay wish to use than: the radio spectrum is sinply not large enough to «Mu everybody. here is a fixed natural linitation upon the amber of stations that can operate without interfering with one another. legu- 1ation of radio was therefore as vital to its development as traffic control was to the develop-ant of the automobile.’ ‘m.. p. 126. 5W. 319 OD 190. 213. 2152917 (1963). 5 In enacting the Indie Act of 1921. the first comprehensive echoes of control over radio commicetion. Congress acted upon the knowledge that if the potentialities of radio were not to be wasted. regulation was essential. “but the act docs net‘nerely restrict the Connission to supervision of traffic.~ It puts upon the Omission the burden of deternining the "since of that traffic. the facilities of radio are not large enough to acconnodate all who wish to can then. Methods nust be devised for choosing anong the nany who apply. and since congress itself could not do this. it committed the task to the Connieaion." "lbs Geaission was. however. not left at large in parfsrning this duty. the touchstone provided by Congress was the 'public interest. convenience or nocossity.‘ '...'fho facilities of radio are limited and therefore precious: they cannot be left to wasteful use without dotth to the public intorost...." "Ihe emission's licensing function canct be dis- charged. therefore. merely by finding that there are no technological objections to the granting of a license. If the criterion of 'public intoron' were linitod to such natters. how could the Co-ission asses betwea two applicants for the ease facilities. each of whom is financially and technically qualified to operate a station! lines the very incqtion of federal regulation of radio. csquativo considerations as to the services to be rendered have governed the application of the stadard of 'public interest. convenience or necessity. "' 6 ‘Ibid.. p. 213-217. . s‘ .'I I I I ‘ ’ I . . I . t .- r I .. 'l ‘ ‘l s ,‘ n..-n“'~.~m Mo- 9". a ‘e‘ -0 '. A « r .. s L ., _l .--.4, -. "O one- a. '- a..‘ 0-0.7 a -\ ‘ ,1 u .1 n I ‘ I '4 I . V A ‘ ‘ I i \ r. t “A k V i I‘ . ’ l . . , ‘ u . ‘ O ‘ >I ‘a‘ a s 'l . 1‘ .e I I so. . .. ‘ J .‘ I ~ I I J I J I’ I ,'- I. .‘ ) . .' 3w. " . . ‘ 'v i “0 "‘fi’M ". “be. at In IUD ‘1} I. '1. I I. ‘O 7 ' J i I . .. I 1 . J? _ .. , ,s . . ,o r J .o'O-a. C W“ - 6 Justice Frankfurter's statement. I think. brings into clearer perspective the issues that are involved regarding the duties of the Com-ission where they relate to the issuing of licenses. Clearly there are other than technological factors which oust be considered if the "public interest. convenience and necessity” is to be served. The W case illustrates a Supreme Court consideration of the "composition of the traffic" in radio broadcasting. In this case. Storer stated that it wes being caused injury by the FCC rules: ...8torer is adversely affected and aggrieved by the order of the Commission adopted on November 25. 1953. amending the Multiple Ownership rules. in that: (a) storer is denied the right of a full and fair hearing to determine whotha its owner- ship of an interest in more than seven standard radio and five television broadcast stations. in light of and upon a showing of all material circastances. will thereby serve the public interest. convenience and necessity. (b) The acquisition of Storor's voting stock by the public under circastencss beyond the control of Itorer. may and could be violative of the Multiple Ownership rules. as amended. and result in a forfeiture of licenses now held by Storer. with resultant loss and injury to storer and to all other Storer stockholders.7 The Storer complaint was that the rules were in conflict with the statutory maindatos that applicants should be granted licenses if the public interest would be served. and that applicants must have a hearing before denial of an application. The lultipla Ownership rules provide that licenses for broadcasting stations should not be granted if the applicant directly or indirectly IUnit It a at al v 8tor broadcasti . 331 II 192 at 97 (1953). u I - n ‘ l A. ‘ . , .. ‘ . . , 1 , I . ..) . .1 a ,.- u ' .‘ - ' " N Y "I " ‘ " l ‘ . ' ' " |. " t' .. ' . ‘ ' .' ' ' ' ‘ . . J .4 I I . v . 1 . j ‘. I . ' D ‘ .2 ' ‘ ‘ . “ —‘— > i. o Q‘GO ‘- -— - 0,. . . , a ‘ ' ‘ . ,A A t ‘ . I l ”‘I ,l a ' V l .i ' , . A ' It I .. _ . ‘. ~ . . I, L , . A s ‘ . . -‘ ‘ l ‘ ' an. s u s l I I ‘ I ‘ D ; ' o ‘i l I . ‘ , - ' A . ‘. 7‘ . l L v A - ‘ mu \ I , . r n . . ' v , l .1 i | . s ‘ ) , ‘ - . I .L ~ . .' . l 2 - | . - . ' . . v ‘ 7 l s I . . ’ ‘ ' ¢ . ‘ l . , , . _ - A. , . . 1 f"; . 1., - . J . x. I .. .1}, ‘ ., . ‘ ' 5 . ; .a“.d ‘3 1 ~ .‘1 ’. - - . I . ' " . ..s t , w . ‘ 4 . I J . J ' ‘ - p 1-! —v's \~l I ' t . ' ‘ t .5 _ ( - ‘ . v , , r . , .. ..‘ J. V . f . s .A . .' . 4 .s , . l g Q . , . .. W. . ,‘ . i t v. I . . ‘ . ‘ '4. , I 4 , -. i 4‘ . ' ,i .4 1-. 1 " ' J 'l‘ .' . J ' I . I I ~ , - ‘ k 1 . I . .‘ I ~ ‘J .‘ g 13:: I. 1‘..; ' I . . . . . 4 .' . ‘. .l “L ‘I- I I , .- i H . , -‘ I. . '. H mm.) e- ‘ ‘Ne. ‘ . .. .“ v ~ ',5 , f .t , '- I r e 5 4 v i s A . _- a...-r.. - _,‘, ._ V. . - ..—...-..- —-..o-- 7e .. . - , I. ' . t v V , ,. r . , - . - .. . .- .. .. l . k. ‘ \ 1 I 7 has an interest in other stations beyond the number limited by the rules. the purpose of the limitations is to avoid over-concentrated control of broadcasting facilities. Since Itorer already had five VB! television stations. its application for a sixth was denied without a rehearing. The court ruled that Section 309 (b) of the Comications not hes not withdraw from the Co-ission the rulenaking authority necessary for the orderly conduct of its business.8 As conceded by Ctorer. "Section 309 (b) does not require the Ce-ission to hold a hearing before denying a license to operate a station in wnys contrary to those that the Congress has deternined are in the public ilml‘on’ the Court continued: ...1‘his Ce-ission. unlike other agencies. deals with the public interest. its authority covers new and rapidly developing fields. Congress sought to create regulation for public protection with careful provision to assure fair opportunity for open cowetitien in the use of broadcast facilities. Accordingly. we cannot interpret Cection 309 (b) as barring rules that declare a present intent to linit the fist of stations consistent with e pernissibla concentration of control. It is but a rule that announces the Co-isaim's attitude on public protection against nth concentration. the court therefore nade it clear that the ICC does have rulanshing power to protect the public in the econonic sphere of breadcastiq. as wall as the technical and progra-ing areas. section 3.35 of the Rules covering st-dard (All) broadcast stations provides that no license any be grated to up party who already one. operates or controls nether such station 9;;g4,. p. 202. ’m" p. 202. “my. p. 293. 8 vhich servos substantially the sane primary service area. except on a showing 11 that the public interest will be served. his is known as the duopoly rule. there have been exceptions to this rule however. In Lubbock gaunt; 323d- W: s an #93 (191.3). the Omission said that each c... involving nnltiplo ownership nust be decided on its nerits and that Section 3.35 of the lulas is not an absolute bar to a grant in every instance involving overlapping service areas of two stations under to.» control."2 M Oo-issioner Prod Ford recalls that. until 191.0. the ICC fre- gently rejected qplications ulsss there was proof that the station was needed. lose recently the Co-ission and the courts have taken the position that broadcasters are expostod to operate in a free eeonony. without econonic protection from the govern-ant.” low. Ford wonders if the tine has none for the FCC to noose-ins its thinking: ”lee the trensndous increase in ne'etitioa baton. stations really brought the benefits which our agency conteqletod. or has constition become a destructive force decreasing the quality of progr—ing and placing station after station on a narginal econsnie basis! to bad progrs-ing driving out the good because it costs loss to pnedueoflu if we .alyae the fiscal side of station operation since the and of Iorld War 11.. we find these trends in the radio esnpetitive picture: A uWalter I. lnery. broadcastng and Government. Michigan State University Press. 1961. p. 176. u‘hbbock County Broadcagtigg 2,. 4 ll. 1:93 (1948). lJune-so Outback. light lelp Radio lslprove. says Ford. Advertising “In 31: 1+. October 23. 1961. p. 12. “m" p. u. .u‘l 9 1. Indie competition is growing every year. Three station redio nerhets whore ICC figures are available show that a najority of such narkots are in the O2 to 102 profit margin category for the narkets as a whole. All these markets showed a lower profit nergin for stations that were operating in 1945. with the smallest decline occurring in the million and over population markets.“ 2. In 19“, there were 996 stations; in 1960. 3.651 stations 3 in 1962 there are a total of 3.686. with 3,886 authorised to go on the air.“ Including networks and the stations which they own and operate. total broadcast revenues increased little more than 2002qfron 8220,584,000 in 19h6 to 8528.834.000 in 1960. It is bnportent to note that even with this increase of 2,4‘5 stations in 1‘ years, income before state and federal taxes decreased fnon 857,122,000 in 1946. to 851,281,000 in 1960. the change in the source of this revenue to predeninatly local time sales is also significut. In 1946. 212 of local tins sales of broadcast stations wee network. 312.national spot, and 482 local. by 1959. network tins sales decreased to 22. national spot sales renained the one (312). and local than sales increased to 672. Thus. while the average revenue for stations maintained a good earning record, nere than one-third of the standard I. 8. broadcast stations ro- l7 ported an operating loss in 1960. (lee additional financial u“amnesia... p. 80. “Curran statistics, Wint- 62:97 August :0. 1962. "rm Speech. 1. mu ‘Oct. 19. 1961. a“ 1. a. Appendix). the following table shows the fluctuations in the revenues and 10 profits of the broadcasting industry as a whole and 111 radio in particular since 1911. Calendar total inhstry total radio All-HI! Indie profits e adi befo tans , + or o 2+ or . 1111 1116.1 .11. 1216.1 .11. +11.1 110.1 .11. +11.1 1111 1100.0 .11. 1100.0 .11. +6.1 111.1 .11. -1.1 1111 1111.6 .11. 1111.6 .11. +1.1 111.1 .11. +1.1 1111 1161.1 .11. 1161.1 .11. +11.1 111.1 .11. 4.1 1111 1101.1 .11. 1106.1 .11. +11.1 111.1 .11. -10.1 1111 1111.1 .11. 1111.1 .11. +1.1 111.6 .11. -11.1 1110 1110.1 .11. 1111.1 .11. +1.: 161.: .11. +10.o 1111 1616.1 .11. 1110.1 .11. +1.1 111.1 .11. -16.0 1111 1111.1 .11. 1161.1 .11. +6.0 160.1 .11. +1.1 1111 1101.0 .11. 1111.1 .11. +1.6 111.0 .11. -1.1 1111 11.011.1 .11. 1111.1 .11. -1.1 111.1 .11. «21.0 1111 11.111.1 .11. 1111.1 .11. +0.1 111.0 .11. +10.0 1116 11.111.1 .11. 1110.1 .11. +6.0 111.1 .11. +1.0 1111 11.111.1 .11. 1111.1 .11. +0.0 111.0 .11. +10.0 1111 11.111.1 .11. 1111.1 .11. +1.0 111.1 .11. -11.0 1111 11.111.1 .11. 1110.0 .11. +1.1 111.1 .11. +11.1 1111 11,166.: .11. 1111.1 .11. +6.1 111.1 .11. +1.1n ”broadcast lnhstry linucial beta“) . ldcrs 11 through 27, fiscal 11 Contrasting preceding revenue and profit figures with the total cs-srcial AI radio stations in operation or authorised for a countable year in the following table. it bocsnos apparent that revenues have not kept up with the increasing odor of All radio stations in operation. MCI“. AI ”10 IMIGC IIICI 1945 W 1111 111 - 111 1116 161 .. 1111 1111 1291 .. 1111 1111 1611 .. 1011 1111 1163 1006 1111 1110 1111 1111 1301 1111 1111 1211 2111 1111 2111 1111 1110 1113 ' 1111 1111 1111 1111 1161 1111 1611 1111 1111 1112 2110 1116 2111 1116 3020 1111 3011 1011 1111 1111 1111 1211 1111 1111 3121 3111 1100 1160 1111 3113 1111 1161 1111 3101 3111 "W 1.... 27. men 1111. .. s1. 19 12 In granting applications. particularly for nighttine operation. the “onion hes hoen inclined to anthorino stations offering little or no interference to onisting stations. oven though the proposed etetion is snhject to interference well over the recs—ended values of the allocation otaderds. The view is taken that when an applicant knows the restrictions that will he placed on his operation. end can install a 1t1tion without naterinlly increasing interference to other stntions. that service ehonld he per-ittod if the applicant feels that it is econenically feasible.20 I'hio stotenent of Co-iosion policy appeared in the 1011'- annual report for 1941 and helps to eccsnnt for the greatly increased naher of Al license grate since the end of world liar II. In the 21 nenths between the close of World Var II and Jannary l, 1!“. the Mission enthorinod 1.0“ new All stations. At the close of fiscal l0“. 1 totoi of “l epplications for now or changed Al stations was pending; 1.01 (or 55.5!) were awaiting hearing. it the sae tine. the Codooion noted that fron an engineering viewpoint. desirnhle All facilities were heeening oearoor. with nnlinited tine facilities practically non-intent: ad daytine only facilities were entrenely hard to find in the are hnevily popnlatod areas of the «entry.21 In spite of the increasing scarcity of All frecpencieo. ad the greatly increasing caetition. the rec centinnnd to grant licaeee et a in- creasing rnto while issning contradictory stataents. 0n the one had ithasaedthefaetthsttheairwesrepidlyhecaingcrowdedtothelinit w— 20W. Nun-bar 13. men 1917. p. 11. n W nub-r 11. um: ms. 1. so. 1 . I a D J I! " V 1‘ 1’ 1 ~‘ 9 X I t K < I " '- u u 1 - a. - n p} 5 . T 1* .. .1 fi- -' “a” 13 of capacity. and at the cone tine cited the increasing nnnhor of appli- cations acted npon and granted. the Connission notod in its report for the Fiscal year 1955 that ”the year 1954‘nerhed the firct tine in 16 years that the radio indestry failed to establish a new alltine high for total revenues which declined to $449.5 nillion. or 5.41 below 1953."22 At the sac tine the nataring television industry set a new record for total revenne, surpassing radio‘s record high of $475.3 nillion which was reached in 1933.1: by 1956 it was apparent that television was taking large portions of advertising revenne that had previously belonged to rndio. while the nenhor of‘NI stations continued to increase. If these events seaned to indicate that a new’policy for.hfliradio allocations wee needed. none was taken, or even.nentioned in the 1955 Annual Report of the ICC. ' however it 1111 the Co-issicn report not“ that "Nth. 111 had 11. generelly speaking. as crowded that only local daytine stations. for the nest part. are new able to 'shechorn in." 2‘ Succeeding years did not lead to a decline in AK allocations or even a relstive slowing in processing. lo agency questioned the value of additionnl stations in the light of the crowded spectrum. the enincns financial data‘ind the continning declinc in the overall quality of radio prograning on a national basis. ”W. Mo: 21. used 1915. ,. no. 231219,. p. 110. “W. MIMI? 31. Hull 195‘. to 32. .- a.’ .—. 14 On a geographical basis. conpotition is unevenly distributed. the largest increase in the amber of stations has been in the South Central and southeast sections of the 0.3.. particularly in the asll | ‘25 Figures fren M's official record on station incone conpera the growing nabera of outlets in a nunber of nnrheto. levenno x... 1mm. 11.... 1...- 1t1t1-m: 1110 10 11,111,161 1111.110 (before tones) 1160 11 11,111,111 1111.111 11m: 1110 1 11,111,111 1111.111 ‘ 1111 11 11,111,111 1101.111 11111111 1110 11 11,111,111 1111.110 1110 11 11,110,111 1111.111 Dallas: 1110 1 11,111,111 1111.101 1110 11 11,111,111 1111.101 fort m: 1110 1 11,111,111 1111.111 1110 1 11,111,111 1 11,111 1.1-1. 111.: 1110 1 11,111,111 1 11,101 1110 1 11,111,111 1111.111 mum. s. 0.1. 1110 1 11,111,111 1111.111 1110 1 11,111,110 1101.111 1.1m. 11.1, Art: 1110 1 1 101,111 1101.011 1160 1 11,011,111 1111.161 1:. 11.1.: 11.51 11 11,111,111 11,111,111 ' 1110 11 11,011,111 1 111,111 11 2“. ”AT—£301 '1 ”1 “11m «.1111 fer 111 radio‘l. W, 11:1». 1pm 1, 1111. p. 27. .0 15 In 1950, 1.976 radio stations reported total revenue of $340,891,476 iron which they earned $55,113,872 in incona before taxes. In l960. 3,300 All stations took in $560,315,368 but the income stood still. totaling $55,200,977. Other examples of the thinning co-sunity revenue dollars are these: In l0“. sin Denver All stations shared $565,000 incone; 1. 1110 11 11111011 «and 1111.100, 1... than one-third of 1111 m." In lhoenin. where the population doubled in the last decade, the live stations operating in 1960 shared 0204.000 in inconez nine stations 16.: 111,000 1. 1111; .11 11 stations showed . 1... at 161,111 1. 1110.” ' to flat extent the 700 should take into account the ability of a enmity to support any additional broadcast stations has been one of the not persistent and difficult questions in the entire tiold of broadcast regulation. 11 the IA! convention at Chicago during the first nest of April. 1962, the issue cone to a head when 100 Chairnan Newton linow proposed putting a ireese on All allocations. no suggested a “shirtslooves uorking conference” to discuss the present art of radio broadcasting. ”We are so busy grinding out grants of new licenses that we need to step back and take a look at why we're doing it,” Minow said. “An intensive search for answers is long overdue and a search for policies that confor- to the answers is inporatiwe."29 Chair-an liinow i-ediataly received wholehearted endorse-ant iron the nejority of the us ne‘er delegates in the audience. the 1111 accepted zylbt‘og ’o 17o ”ELI-1 p. 27. ”m1” p. 11. 16 the proposal and indicated it would be pleased to participate in a conference with the FCC to find solutions to broadcasting's problems.30 Chairnen‘flinew also said that he felt that engineering standards nust be tightened and the Connission's processing priorities sharply revised. He felt the ICC should encourage existing stations to nerge and should also delete stations to pcnnit operation based on sounder engineering standards, if these proposals are "guided by the principles of no significant loss of service and on avoidance of nonopoly or undue concentration of control.”31 these are just a few of the neny questions which the industry- rec conference would try to answer. At the sons conference, KAI head Governor Leroy Collins said that “The eesnnnics of good broadcasting are such that a station or a network sinply cannot adequately detennine con-unity needs, plan for the neeting of these needs, finance the progranning required. erperinent with new forests and develop new talent without an adequate revenue base.”” It takes nonay. the governor continued, for broadcasters to do well the things that are expected of then: It is futile to think that this kind of financial base can be onesuraged by the continued proliferation of an un- duly large nunber of individual, conpeting broadcasting units. the theory of’nultiplieity as an incentive to better prograuning and a safeguard against nediocrity is a fine theory, but in actual practice there is a.point of dininishing returns. llo one wants nonopoly, but the 391215., p. 27. ”fig. , p. 11. ”1211., p. 11. .- e 1 0-0 _' . J . .' (. ( 1 o '11-'“‘ ’ .*-.-- I'- .Au—Q 17 alternative is not the extreme in the other direction-- anarchy through overpopulation of broadcast facilities. for when this happens, each eoonsnie unit is forced to cut back on costs. including important services in the very areas where public need requires streutheuiug. :i.13:‘2§".i.§§:..“i§‘3.133351“ ”“ "" "“" Chair-an Iinsw warned, however. that the ’00 should not got too deep into the nuber of stations a «unity can afford or it will be entering the utility type of regulation. lath 200 and us officials ' stressed that no one is advocating that the goverusnt return to oesnsnie stability considerations in asking new grants. la the late 1930's the cs-ission had a question in its application forn relating to the need of a cs-unity for the requested radio service. In a hearing, an applicant often was required to prove this need. this question was deleted frou the application fore and as a hearing issue in the early 1940's.“ Iecause no advance shill or knowledge is undetery, and because progr-ing sources are cheaper, there any be a large n-her of -11.: 1111101. which a. not 11.111111, .1... the public interest. the con-11111- will often encourage nergers because stations have individual attributes hich couple-ant each other (i.e., desirable fregency, well known calls, no interference, unlinited hours, unegiag ability. sales ability and Nigeria! ability. cupl-entgry “nub” lbs 200 will nahe it increasingly difficult for a station with enrunprofiteble record to be sold if future success depends on sudiue prenotions and gin-nicks. It is likely that the Ce-ission will require __L _.A._ ”1.1.1.1.. r. 21. "11.11.. 1. 11. 11 1111.. 1- 1’- 18 the station in financial straits to continue operating or turn in its license. la the case of the latter, the frequency involved would not be granted to a new station.36 chair- liiuw said that. ”Though so nany stations are in the red. radio sons to have so nortality rate. Radio stations do not fade any, they just nultiply. the result has been a string of 100's to several past owners, none and nore raucous ce-srcials, and a licenses so busy trying to pay his debts that he cannot serve the public."37 linen ashed. 'Is this the business of the Ce-issienf If there are any jungle narhots overpopuleted by quick-buck operators where you have to son. at the listener to survive. is the Ce-ission responsible!” In proposing a study of radio. Ir. liasw said he favors the present free enterprise systen, with all its short tern drawbacks.” Isl 'l'aishoff. editor of W, voiced his objections to the establiabnt of ecsnsnic criteria in on April 9. l962 editorial: 'fhe naehinery was started last week for gover-snt action to rates censtition in radio. It is a bind of action that a good nany broadcasters eagerly sash, and we only he their eagerness will not lead to an odors-ant of procedures that could ease nore troubles than they cure. It is no secret that seas influential radio broadcasters believe that the '00 ought to establish ecsnsnic criteria to be applied with engineering standards in the consideration of radio station grate. lone even think a esubination of ecsnsaic and engineering judgnents ought to be invoked to elininate sens stations that are on the air. We suggest. as we have been suggesting for years, that a request for econenic protection is also a request for _____._+ A__ 3 up ’e ”e 3’At Chicage1 a linew of any needs, W, April 9, 1962, p. 51. 3.121.1- , p. 51. 0 7 ' 1 . . .1-..- t '1 l ,. 1 .,. l can“ 'u-r I I O I I O ‘ 1 O I s I f f . . 2 A --—- '4". " .1 _—.— a—n.‘ . 7 e 1 . v . 1 J 1 :' ( . 1") . ‘ '1 7- 1 d ' l ' . A g) . ..’ e :9. .. .1 ‘ I, I 7 I 1 . ,1' 1' ' ' 1 1 1 ' ‘ V 1 . . .-—..--n-—— v—d .e...--.- - 19 200 regulation of the business practices of the lieensees to which it has accorded eesnsnie protection. Historically the governsnt has d-onded the right to supervise the rates and practices of businesses that it shelters fron free narhets. We do notashinh that broadcasters can reverse that history. 'l‘aisheff. in his editorial, advocated the, adoption and observance of realistic engineering standards for radio. rather than eesnsnie criteria. Ia does adnit that there are too easy radio stations, but says that nany stations have been squsesod in at the cost of signal interference. Reception in easy of the densely populated areas of the country is degraded.“0 If broadcasters confine their case to technology when they begin the rec conferences on radio population that will now be held. they will be on sound ground. Ithe ninute they begin talking about econenic nethods of reducing constition they night as well also to“ about the profit ceilings they are willing to accept. According to W lagosiae, agency enscutives in a position to help shape the econsnie future of radio overwhelningly believe that reducing coapetition in radio would be beneficial. Just how beneficial is another question. they thinh radio would easrge with a better insge. 1.11.. pron—1.. .1 11.1.11, 1.11.. 11111.... but they are 11111.1 about the extent of these inprev-snts. lany nhotically would prefer that they not occur at all, rather than have then result free direct gover-snt intervention. 3’Profits and protection, W April 9. 1962. p. 122. “paid” p. 122. “m" p. 122. “1.1.11 1.11. 11.11 «.1111 1.1.1. W. 11.11 11, 1111. 20 One nsdia director felt that s cutback in radio stations. especially in large narhets. uould bring to surviving stations larger national ad budgets. even though the total radio budget night not increase. lhrough a.lossoning of competition for the audience. he predicted. radio budgets night increase as e station's total audience boo-e a nore attractive ’.'¢h....43 dnothor agency nan :11: that 1: would u 1.111.111 11 «.11.-- wore elininatod in sons narhets. but use doubtful that such a nove would lead to incrosoed spending in radio. la advanced the theory that earn andwnoro radio stations are destined to becene local advertising carriers (”Just like the local novspnpu"). largely because of television's continued groutb and 'fl's increasing inroads on the advertiser’s dollar.M the vice president in charge of nedia for a top agency endorsed the sqgestion of reducing stations because “too neny of th- operate as if they uere a hardware store.” A .eller n-ber would eliniuete ”fierce coupetitionP and persuade sons stations to inprovo the quality of their progress. It use his experience. he said. that stations which uors established as ”going businesses” before the advent of television have neintainod acceptable stndards and are obtaining the large portion of national business. Is thought the radio narhet of the future. ideally speaking. should be one with radio stations appealing to both amnsss audience .d to specialised audiences.“ "29.11.. h 3‘- “m” p. 34. ‘SM0 1 '0 35° 7 d ,, | ' I‘ ) l ' . ‘1 a. ” ' ' . _, v. , ' l .1 ' ' 1 4 I, - ’ o ' L \ J V t‘ 4 .r- ‘ ~ J 1 . 1 ‘ _, 1 A . r A. I I b} If k a r " I d l‘ i. } J u - “ C , . , .‘. e ‘ t A In I " ‘ ‘ , . . ; 1'? ' ' - n ‘ “" ' 7- .l“ .- .- . . .o o ' " -_-u- . o " .vn' "“ 21 a official at another agency took the position that ”cutting down ee-otitiou does not necessarily ushe a better entertai-ent India. Constitien betueen stations increases incentive to create better progrns. It also gives tinebuyers a rider rage of choice. hoes censtition nay also sues advertising rates to go up. 1 think the best way the no can handle the eitnation is to be careful as to who it licenses. rather than to trin dove stations indiscrininately."‘ Thane co-ents indicate a varying degree of f-iliarity with the overpopulation problu. but generally the agency nan wore in favor of sons sort of readjust-at of the allocation policies of the rec. lith the at fresco erdorin effect as of lay 11. 1’62. dharles I. loser. ahinistrative vice president of Corinthian broadcasting Corp.. raised a saber of questions regarding the issue of eesnsnie criteria .d tham’s “birth control proposal." in a speech to the Kentucky broad- casters 11111111111. 1- mm. .- lay 11. 191:. hr. rower ashod. ’ I'fiat is neent by 'eeoesnie protection' in broadcasting! Ihy is eesnsnie protection being advocated soul that are the iqlications of the proposal! lhst sort of forula for ecsnonic protection is lihely to be developed! [ill the proposal. if adopted. no. nsre control over progr-ingl Iill it naan nero supervision ever station finances. and will broadcasters oqport the proposal 1““ Ir. tenor asserted that nany of those who advocate the policy ”are not prinarily concerned with saving your dollar but are concerned with that they m as lack of the content and quality of the service.” “an. . p. 36. ”ten questions regarding the rat's proposal. Irgadcgstigg. Ilsy 21. 1962. p. 69. 22 he said that if ”econonic protection is given.” broadcasters are ”adnitting that a cenpetitive profit systcn does not provide a satisfactory service.... Icenonic protection will. in all likelihood. nean substantially noro control over progr—ing and a nuch closer supervision over the finucial natters of broadcasting. Its chief impact will be in the snaller narhsts." Dir. tenor said.M d loch at the Ce-ission's policies and practices partially ansnsrs sons of the questions lir. loner has stated concerning the ”birth control” proposals being nade. the rat has built up over the years a fairly wall-articulated policy regarding coupetition in the broadcasting field .d the use of ecsnsnic criteria to deternino shiasion of an applicant to a given narhet. historically. the Cc-isaieu has conceived of the broadcasting inhotry so a ceepetitive industry and has played - i-ortant role is naintaining ad fostering cenpetiticn. ‘l'he Co-issien pernits one than one station to operate in a given cunity or area and to naainise the total nuber of stations; insures that there is no overlappiu of anarchip interests .sng licensees of stations in the one broadcast service. i.e.. All or 2'. serving substantially the one area: to linit total a—ber of stations liensed to a single individual or group: provides roughly equal service areas so that constitive superiority will rest on progr-ing rather than technical coverage; encourage diversification of ownership in ones nsdia: assures freedon of the licensee frcn undue restraints by networks es m- 0 ’0 “0 23 and advertisers; and strengthens conpetition anong the networks.‘9 the Ge-ission does not concern itself with rate patterns. rate level or rate practices of stations. the benefits which the Cc-isaien enpocts to flow fron cespetitien relate both to the business practices and to the progra-ing of stations. h the business side. cenpetition is pron-ed to provide a greater usuranee that advertisers. large and .all. will receive fair and equitable troatnent in obtaining access to radio facilities and that udue con- centration of econanic~ power will be avoided.so 0n the pregr-ing side. the censtitien of stations vying for audience is arpactad to encourage progr-ing attractive to the public and reflecting co-nity tastes and needs. further. by liniting ultiplo station eunership.‘ and by discouraging cross ch-nal ownership of co-uni- catious nadia. the rec cache to nasinias diversity of progr- sources and ideas. to foster the free flow of sun. and to encourage the airing of diverse vieue. attitudes ad opinions in the public interest. in short. the Ce-issien hopes that licensees easrcising their responsibility within a censtitive fr-ouorh will obviate the need for regulatory «11'1” by an. Oe—iseien in the day-to-day operations of 1 stations.5 the OI-ission's concern se-s designed to serve one or both of the following purposes: Mll. I. Goldie. lconeuic and regulatory problens in the broadcast field. W ”1221+. 195‘. p. 227. ”m" p. m. $1Mo g 's we 2b 1. Increasing the degree of diversification of econenic We 2. freneting a richer. nere varied progran fare. ‘lhe first. is hardly sufficient to stand alone. bhila undue concentration nay be undesirable. considerations of efficiency. and coaster satisfactious are critical in deciding whether a given degree of concentration is en- cessivu.52 the critical dincnsion‘ of cometition in broadcasting is its effect upon the pregr- fare. The public interest in broadcasting is largely progran-oriented. This poses a difficult set of problens in regulation because the progran is the by-product of stations' co-orcial operation.33 The Cc-ission has consistently refused to exercise direct o'er- vision of prograns. lt hes. however. recognised that progress are in- fluenced in at least three ways. they are: l. The variety of progran choice is linited in any area by the m-ber of outlets. The Co-ission. through its licensing policy. has atteqted to naninise the amber of outlets possible (subject to certain linitationa). These policies have been successful up to a point. than the law of dininishing returns sets in. The pro“. is. where is that point and how do we serve the public best in terns of stations authorised. 2. Ithe variety of prograns presented will be affected by the fresden of individual stations to select prograne under their nandste of public service reaper- 3. no free choice of staunch-ong progr-s. is linited bythe supplyofprogr . _.' ”Peter 0. Steiner. Discussion: Goldin's Paper on Iconenic and hegulatory Problene in the broadcast field. W. 301 "a 233.2“. t’“. 'o 23‘s ”gm. . p. 131. “M. . p. 233. 25 In detornining if a station's entry into an area should be per- nitted. the ec-ission has excluded econsnic factors relating to financial loss. even when ahission of a new station into the area could result in bankruptcy of prior licensees and possible cessation of service. Inch a policy is the antithesis of these which rule industries such as utilities. lt powerfully rebuts any claim that broadcasting is sinilarly regulated. with primary jurisdiction for enforcing the antitrust laws vested in the rec.” a review of the Co-isaion's practice in considering the inset of new constitien on existing stations shows that it has varied widely over the years. It can best be understood by analysing various cases and decisions that the courts and the Co-issien have node as to whether or not econenic criteria should be considered in the allocation of AI radio stations. Inch an analysis follows in Chapter 11. 55Victor 2. Hansen. Broadcasting and the Antiotrust.-;laws. MW... 22:57». when. 1957. a. $73. mu A MIMIC“. anus AID MALI!!! 0! man. RADIO MSSION. uncut WW!” “1881”. AID couar POLICY AID namcsncasss morvrscmmacrorm manner I”! uremic W w more luring the past thirty years official positions on refusal of broadcasting licenses been“ of new cenpetitien have been diverse. they vary fro- ths decision that the Federal Ce-unications Co-ission has no authority to consider any such factor. through an internediate position that the “anion nay weigh such an issue but should decline a b so as a policy nutter. to the other artrene. enunciated in m“ W: :51 121 no. n.c. Circuit (1958). that the Monies oust in certain instances consider the issue because of its inset ”so the phlic. rather than its effect upon the eaistiu station. Wt because it affects the future of a vital industry. the question also eonlifies tho probl- of the degree of csnpetitien which should be pernitted is regulated industries. the issue of refusal of entry on ossnnic grounds is significant for all regulated industries when chained in the light of anti-trust policies. and in the case of broadcasting raises a further consideration of possible goveruental infringcnent of freedon of the press.“ s‘lichard A. Givens. Refusal of India and Television licenses on Icon-ic Grounds. W. Vol. ‘6. 1960. p. 1391. «a or» 'o I .J :1 s. d - I\ ‘11 1 I 1. I I. r d . I. b. 1 . ll . . I! l 1‘ a ..| . o I A I l e u I _ I»! 0| I y. I I . 27 One of the earliest cases which dealt with the question of eesnsnie 131"! W W “ '1‘ ‘31. 90 “M“ (1933). in boos-bur of 1933. ii! had clainsd that an increase of facilities grated to "III in thin. broadcasting with station on in linsoln. lebroshs.'oonld subject HG! to scone-is injury. In the ensuing court case which use the result of an appeal by HGI. the court ruled that.UGh's protest was ”too vague. problcnaticsl and conjectural to furnish present substantial objection” 1.1 11.. up.“ was 11.-um.” One of the first cases to ccoe before the newly created federal . Mentions Co-ission in 193$ was that of W g§._g1. Ihis~case areas over an application filed by the bed ooh Indie corporation. carter Lake Iowa. and the 2.1... lchool of Chiropractic. bovenport. Iowa. for consent to assigooent of the station license of station not. Carter lahc. Iowa. to the 2.1-..- bchool of Chiropractic which then filed an application for a construction peeoit for the renewal of station KICK to Davenport. Iowa. however the tech Island broadcasting Co.. which was the licensee of station flab! in loch Island. 111. protected (1) that additional facilities were unnecessary in the tech Island and Davenport area. (2) that additional facilities. if authorised. would subject station Hub! to econooic injury by curtailing the advertising business of that station. and (3) that as a result of such alleged pecuniary lose the protestant would be unable to ”continue the high standard of service heretofore rendered.” ”W n m 01m“ 0°“- “’3”- “W. .1. .1.. 1 no 111 at 111. (1914). 28 do a result a hearing was ordered and the Ceaission granted the construction pernit for reneval of the station to Davenport upon the dasnstration. in”; 9.3.1.11 that there was need for the additional service. and that potential advertising business could naintain an additional station. Possibilities of fioacial injury resulting to an existing station were considered by the ecaission. the burden of proof. ruled the ce-ission. is on the protestant to sustain allegations contained in a pretest filed against the granting of a application by the Ccaission.” In oahing its decision the cc-issien considered population. coverage area. profit ad loss statenents of the euisting stations and the need for local service as well as prevailing business conditions and the advertising potential of the area involved. however. the Coaission found that the protestant had not sustained its protest and that the application for a G! would serve the public interest. convenience and necessity. It should be clear frco'the deliberations in this case that the newly-fernsd cc-ission did consider need for a station in a given area and probable econeoic injury to an existing station. In 1936 the case of W reaffirood the policy established in the bad duh decision. In this case. a construction peroit was grated for a new local broadcasting station to operate deytine only'in latsenville. califernia. which. according to the testinony of the applicant Atkinson. was one of the best advertising fields for a city of its also (8.3“). btation non - hontarey. also served the area and offered depositions to showthst thelontereybayareaof which Ustsenville isapartwooldnot be able to support co-srcially two radio stations.60 ”m” p. 11:. “W. 3 [CC 137 at 11.0. (1936). 29 As in the bed Och case. the Ceaission allowed such evidence to be caissible but ruled it was not sufficient to justify a decision that the anterey bay area would not be able ceaercially to support two stations. It would appear. tha. that the Cs-issien's policy was to consider the need for a new station in a given area aswell as the effect it auld have open an enistisg station. with the burden of proof placed upon the protestat. 1. W. 1911. on. case of W. M o“ W "I” “f.“ W Court of Appeals. District of Cslunbia. Croat Hooters had filed with the [CC on application to erect two stations in Utah. one at began and one at Provo. Jach Powers and Associates had requested authority to erect a station at belt lahe City. Inter-notch broadcasting. the appellat. was the licensee of an existing station in belt laho City and it sought to intervao ad prevent a grat of the Powers aplication for a station in that city.‘1 Crest Ileatero's aplicatioos were denied on the grounds of finacial inability to construct and operate two stations. Crest Iestern contended that these fiodias were wholly contrary to the evidence.“ bearings before the Court disclosed that Crest hectare was in fast a subsidiary of Interesuotnin .am oasd antrsllisg interest which had not been paid for by Interneuntsin. in effect an ”eaty corperauen possecsod of no character save its charter.” re. Court denied W um 11. .. 2“. (1932). “M" P- 1“. 30 the appeals of Great Western.“ On appeal. the Appellate Court held that Inter-ountain had failed to allege any sort of injury that night result free the allocation of radio facilities to Powers and usociatos. Interoeuntain's appeal one based upon the theory that felt Lab City had all the radio service it needed. the court stated: ”In any case where it is shown that the effect of grating s new license will be to defeat the ability of the holder of an older license to carry on in the public interest. the application should be denied unless there are conpelling reasons of a public nature for granting it. And it is obviouely a stronger case where neither license will be able to render adequate service. This. we thinh. is the clear intent of faction 4.02 (b) (2) of the statute. aich provides for an appeal by an aggrieved person whose interests are adversely affected by a decision of the Co-iseiou grating or refusing an application.““ file Court stated that where a urpsretieo operating a broadcasting station intervenes ad opposes the grat of a license for a new station ad apesls free the grant of the license. but. in its reasons for appeal. escorts. in substance. nerely that the city has all the broadcasting it needs ad does not allege any financial or eesnsnie injury to the station through the grat of a new license. it does not show any right to appeal.” Shortly .1..: the Great Western dacision 11.. Court 1.11:1 a. case i .1 W" 1.. noon-u rum-nu. c.. hedappliedtothobCCforacsoatroationpernitferanoustatieoin ”gm" 1!. 111. “lb;‘ag 's I“. u-»\ 31 It. basis. the bulitnor Publishing Ccaay appealed as a party aggrieved. on the ground that granting a license to etar-‘rines would throw that station into coastitien with no. the appellat's station. It also stated that the ICC should have found that broadcasting facilities in the It. Louis area were sufficient.“ bolitaer felt that its aplicatioo for increased facilities should have taha preference over the aplicatien for a new station. he Court stated that: "the ground of this contention is that a broadcasting licensee is a palic utility. and free this ground rulitser argues that a new utility cqht not to be allowed to ater the field atil a old establiaed utility 1. given an. opportunity r. antend 11. service!" Ihe Court ends it clear. however. that radio is not a public utility. Congress does not fir ad regulate rates or establish rules requiriu it to serve slihe the entire public in the use of its facilities. nor has Congress assaod the right to linit the profits. choose advertisers. progras. etc. Generally. the only requirenent for the renewal of a license is that the station has not failed to faction and will not foil 1. 1...:1.. in as. public 1.1.1...." therefore the Court stated that: “We hold that the NC. as a atter of positive duty. is not required to give the owner of an existing station priority to enlarge or antend its facilities alone of the prinecy of its grat. Instead the tent should be the character ad quality of its service. rothisusnapaddtharcqnirenentuhichwestatodinm __._a E w —r v I p ” m 2" Ct 2”. (DJ. €183.12. 1’37). . “ 7m. ’o 23‘s “1111.. .1 151. a..- an- a... 32 W. eel-17. that when the effect of tutti-1 an application for a new lieasc will be to destroy the ability of the holder of the old license to carry on in the .011. interest the appli- cation should be denied." the Court. however. did not. find this situation to be prevailing in 11.1. 1... and 11...1...111." " Later. in 1937. the case of rechard. btebbins and Packard can before the Ccaission'. this company. doing business as Valley broadcasting ‘Co.. beans California. sought a construction pernit to erect a new 250-wstt daytine only station in fences. ”there is no broadcast station in bases.“ stated the Ccaissicn. ”but prinary service 1. available to that city and vicinity froo stations II. In. and lid of bee Angoles and a saber of other stations located ' there. and in addition to these stations. secondary service would be available free distant clear chanel stations at night."10 l‘helCCwentontosaythatx “Iraasadyefallthscvideoce adduced... we are of the opinion ad as find that the Valley broadcasting Co. is legally. financially ad technically qualified to construct ad operate the proposed new station at 2onsns...." “He are not satisfied. hoover. that the aplicants have shown there is a aisting need for the additional service contalated in this application. braver the record affiroetively shows that objectionable interference will be cased should this aplieaticn be grated."n ”m. p. 113. "W 4» m a. u m- (”’7’- 71 1 Mn Po 1"- 33 "It is not in the true interest of the public that the service of existing stations should be curtailed to echo way for a on station without caaelling reason. be such ceaclling reasons 'are shown on this record."n A The Ccaissiou. therefore. tooh into ..’..11.r.11.a the adequacy .1 «.11.». service. regardless .1 the 16.11.1111” .1 . tree-acy- ‘fhe Ccaissicn's policy was not to curtail the operations of cuistiog «.11.... even mu. .. 1. :11. case. the city 111 not has . 1.1.1 radio station and the aplicant was otherwise qualified to receive a lieasc. the boaaont broadcasting Association. in a hearing before the rec in 1930. wated to construct a new station at bcaaont. Iroses. binary service was already being rendered that city by 0-. a unlinited tins 11m... Inthehearingitwescentendodthatmwasbeing operated at a loss with 45! of the station tins ceaercial. and 552 sustaining. ad that therefore no new station should be allowed in the city.73 in. Csaission. in its decision. stated that it felt a public need .11..“ 1.: the proposed new um... 11mm 11. «11.21.. station (III) was operating at a loss. it was shown that no serious effort had been nods to sell advertising ad that the station was not efficiently waged.“ ”11.11.. 1. 222- I’MLMW. 5 no 119 .. 13’. (1930). 76 Meg Po 1‘2. .n“. b“ h.- 34 the Coaission stated thstl...”an existing station cannot be heard to csnplain that it is losing noney unless it appears that said 79 beaaent's application use existing station is efficiently oanagod." therefore approved and the Coaission had established that it would consider the efficiency of the nsnagcnent of a station protesting on econonic grounds. 0o llay 11. 1938. the case of the ball liver herald laws Publishing Ccaany cae before the ICC. Pall liver had applied for a construction pernit to install a new unlinited tine All station in fall liver. lsssachusotts. Station UbAh located in tall hiver had protested a grat of the application. btstions “All. 11.111 and um located in brovidence. bhode Island rendered service to 2111 River and territory adjacent ““9“.“ The hearing exainer had race-ended denial of the application. btation van was shoa to be rendering an ”acceptable" and ”sufficient” service in fall liver. (the neaing of these terns was never defined by the Coaission). I“! was established in 1921 but it had node an operating profit for only a short while iaediatsly before the hearing of this case. ‘fhe Coaission felt. therefore. that there was nothing in the testinooy before it to encourage the belief that two local broadcast stations in [all liver would find ”sufficient" financial support to sustain thasslves. nor that the existing station could survive the expected rivalry of the Pall liver Icrsld bows Publishing Co. lines the perforance of the existing station was ”acceptable and sufficient.” the application for a pernit to construct anther station was denied." ”M. . p. 142 7W. 5 rec 371 at m. (1938)- 71 m” p. 311. s o 35 In its greads for decision. the Ccaission. on the record of the case. dead that: ' ‘1. the ball hives. lessaohusetts area has adequate broadcast service. . 2. the applieat has not shown a public need for the radio broadcast service he proposes. 3. the record does not show that sufficient ceaereial saport could be reasonably expected to enable the existing station to continue its operations ad at the sac ties to sustain the applicat in its proposed operations. d. the grating of the application would not serve 7. the public interest. convenience and necessity.“ Ibo Caissien in this decision considered clansnts of showing by the aplioont as to the need for a new broadcast service. this case is a sale of the consideration the Ceaissicn gave to the existing broadcast service. its facilities. progras. ad eesnsnie survival of existing stations. A ceaclling need would have to be shown in order to obtain a construction pernit in cases such as the one above. lines the record indicated that the ceaity could not support two local stations. ad that the existing station could not survive the rivalry of a new station. the aplication was denied. It apoars that the broad concept of “need“ has been variously interpreted by the Ccaission. It has been viewed in a odor of contents: e.g.. the question of assigning a broadcast service to one of two or are eo—itias; deteroinisg whether or not to grat a application despite interference: deter-icing whether to revoho a license or deny renewal ——-—~ 7. Meg 'o ”is V I . ‘ ‘ v . . . , . u , . A h , _' 1 . , - ' . . '4 < . . 4 _ , . 1 a . . . ‘ e: I I 1 - . . ' ~ . J . s ' 1, . , .o r C . . r ‘ C , . . . I I , . . 1 . A s -~. 1 . l ,1 . ‘ V - . ~ -g‘ _ - - - -' 36 because of sons ioproper conduct of the licensee: deternining whether or not to condone departures free the dtanderds of Coed lsgineering Practice. load for a local broadcast service any also override other considerations aich night nilitete against a grat. e.g.. newspaper onerahip. In 1939 the Ceaission heard the Curtis broadcasting Cs. case. Curtis had aplied for a construction pernit h establish a new station in hicaond. Indiana. Prinary service was already being radercd hichnond by local station our. the station was a loo-watt full tins operation. 'lhoCs-issioo foadthat thecitywos alreadybeingprovidedwitha adequate service to serve public interest. convenience ad necessity.” ‘fhs aplicant. stated the Ccaissien. would offer approninately the can type of service now being broadcast by stations in the area. In eontading that the existing station did not provide adequate service. the Curtis to. did not aply for the facilities of that station. stated the Ceaission. the application would have to be considered as a aplication for additional facilities.” rt. cos-1m.- stated that: 'Purthernsrc. there 1. not «111.1.» «losses to indicate that there are adequate sources of ceasrcial saport available in “chad. lodiac to insure the successful operation of two broadcast stations... lhcrefore the grating of the application will not serve the public interest. convenience and necessity}.1 the Csaiseieo. in the Curtis case. continued its policy of con- sidering the eceoaic success of a proposed operation. the effect it wr— ”W. i m 7- (1939» ”m" p. 1. “m. . p. 10. -- .1.. q a :h‘, -a.cnn o ~‘ .-~ '- ‘e-‘u’ 37 would have upon service in a glveo.ceeeunity. and oeupetitive effects upen.an caisting station. I A.landnsrh case which tested the policy of the [CC on the question of eesnsnie criteria for entrance into e.givon area¢or1oarhet.wos the W. decided in 11.0. In this case. the telegraph- berald newspaper. located in bubuque. love. wanted to set up a radio station in that city. and applied to the ICC for a csostructisn.pernit. lenders brothers. owners of radio stationflblbb in best bubuque. Illinois. applied to the Coonission to have their station relocated in bubuqus end stipulated that there was not enough talent and revenue. to support an additional station in the area. they contended it would not serve the public interest. convenience and necessity. es the present station was rendering adequate sorvieototheoaity. Elbbaswsdthat ithsdoperatodatalessio the ease area that the herald-telegraph|prepoeod to sorve.’2 both aplicatioos wot. grated by the rec. but the and... brothers appealed. on grounds of econsnic injury as a person aggrieved. the s.c. Circuit Court of Appeals held that onshof:the issues that the ICC should have considered was the possible eesnsnie injury to lader's station that night occur with the establish-ant of a additional station. ad that the ICC had erred in failing tstenhe findings in.thst issue. the.Appellate Coortdecidod that. inthsabssocoofsoehfiadisgs. theCaissiso'ssetien in granting the telegraphdlarald pernit oust be set aside as “arbitrary and eaprieious.'.’ io 8 309 U ‘79. (l9d0 . ”my, . p. 111. 38 the m contended that under the Comications Act. scone-in injury to a coastitor is not ground for refusing a broadcast license ad that lenders was not a person aggrieved nor were its interests adversely affected by the Ceaission's action within the neaing of faction 4.02 (h) of m m. which athorisoa appeals frou the Ce-isaions orders.“ The ma. leptons court grated a petition for llrit of Certiorari on Docs-bar ll. 193’. ad held that the ”resulting econ-1c injury to a rival station is not. in and of itself. ad apart fren considerations of public interest. maniacs and necessity. an elaont the ICC nust weigh. ad as to uhich it ast naho findings. in passing on a application for s broadcasting license.”” the Court continued: ...fection 307 (a) of the Ceaunicatias Act directs that ”the Ceaission. if public interest. convenience or necessity will he served thereby. adjact to tho linitatiens of this Act. shall grant to any applicat. therefore. a station license provided for by this Act.” This nandato is given ncaning and contour by the provisions of the statute and the subject nutter with which it deals. (Inc v lclson lothers. Ce.. 2” II 266. 285). the Act contains no express oe-and that in passing upon an application the ICC nest cogzider the effect of ceastitien with a existing station. the “prone Court stated that: sash utm‘ltmu. u Mam ” “1m and telegraph... the Act recognises that broadcasters are not can» carriers and are not to be dealt with as such. (‘7 NC loct. 153 (10). thus the Act recognises that the field of broadsasting is one of free ceastitien.” “Mop ’o ‘72. ”pm" p. m. “3m“ p. 4.73. Mo. 'o ‘1‘o . r . I D. ( L : .-. . a . . ' l r p L . ' ... .r A. . A . n C Q . A C o a . cu . es 5 A .| A . . a _ g t r A s K K! 0‘ V I . l ' I 3. Is . 39 l'ho Court oontinuod: ...‘lho Act does not assay to regulate the business of the licenses. 'l'hs Ce-ission is given no supervisory control of the progras. of business nanagaont or of policy. la short. the broadcast field is open to anyone. provided there be an available frequency over which he can broadcast without interference to others.... flainly it is not the purpose of the Act to protect a licensee against oenpotition but to protect the public. Congress intended to leave coastition in the business of broadcasting where it found it. to pernit a licensee who was not interfering electrically with other broadcasters to survive or anon-b according to his aility to naho his progran attractive to the p0b1£Co the Court concluded that : oooM‘ “M t. “ m.t‘.‘ .tut.‘ ‘. ”t . separate and indepadent ole-ant to be tahon into consideration by the Co-ission in dear-lung anther it shall grant or withhold a license. the Inprene Court therefore reversed the judgnent of the Court of Appeals and sustained the Coaission. leverthsless. the empress Court soaingly left the door open for consideration of eesnsnie factors in one situation: ...'lhis is not to say that the question of ooqetitien between a proposed station and one operating under a existing license is to be entirely disregarded by the Ce-ission. and. indeed. the Ceaission's practice shows that it does not disregard that question. It nay have a vital and inportant bearing upon the hbility of the applicant to adequately serve his public; it nay indicate that both stations -- the existing and the proposed -- will go under. with the result that a portion of the listening public will be left without adequate service; it nay indicate that by a division of the field. both ations will be eeaellod to radar inadequate service. LL‘_ A A A‘— ”livid" p. 475. ”m" p. on. ,olbi‘op ’o ‘I‘o .~.a . .' ‘ .\ p . . b ’. - -g , . l f . ~, J A - . I § De 0 s ' " a ' C . A " .y“ l I ’ ‘o‘. o . . , .. . » ‘. ‘ 1 n. f : - A K I . I . P 1 . a . ‘. _._. . I‘ 'Y . A ‘ A a ' Y I. ‘ -‘ - " e a" v on e s . o - . 9 O :1 . Q n r o 40 The Court continued: ...‘lhose nattors. however. are distinct iron the consideration that. if a license is granted. con- potition between the licensee and any other existing station nay cause econonic loss to the letter. If such eesnsnie loss were a valid reason for refusing a lieasc. this would nna that the Ceaission's function is to grant a nonopoly in the field of broadcasting. a result which the Act itself or- prossly negatives (Section 311). which Congress would not have cents-plated without grating the Ce-ission powers of control over the rates. progran ”d other activities of the business of broadcasting. In a eaeequont ease. decided in 1939. the question arose as to anther a court could hear a appeal involving sconenic injury in the light of the previous lenders decision. In W. the D.C. Court of Appeals. in discussing the case. stated that: ...!ho Coaission atteats to support its position (to grat a new license to a station which would be in coastition with taken) by arguing that “one of th chief concoas of Congress. as evidenced by the reports ad debates. was to guard against nonopolies ad to preserve oeaotition." It is difficult to adorstsnd how this result could be achieved by deliberately or carelessly licensing so nay new ca- poting stations as to destroy already existing ones. ad possibly the newly created ones as well. Chile it is true that it was the intention of Congress to preserve ceastition in broadcasting. and um. it is trwo that such intention was written into Section 31A of the Act. it certainly does not follow therafren that Congress intended the ICC to grant or deny an aplicatien in ay case. other than in the public in- teroot. Just as a nonspoly - whieh nay result fren the action of the ICC in licensing too few stations 0- nny ho detrinental to the public interest. so nay destructive conpetition. effected by the grating of too nay licasos. the test is not whether there is a nonopoly. on the one had. or an overabundance of con- pstitia. on the other. but whether the grating or denying ’1Mop ’o ‘7‘o .l. .-. C 41 of the appligation will best serve the interest of the public. the Court continued: ...'i’ha rapidly increasing amber of stations and the resulting cenpotition for advertising as wall as progra "talent" has just as dagerous possibilities as electrical interference. the public interest requires not nerely that a naxinun quantity of ninimn quality service shall be given. If coastition is pernitted to develop to that extent. than ”the larger and are effective use 3f radio in the public interest” canot be achieved.’ the Court further stated that: 'fhe nethod of uncontrolled ccnpotition argued for by tho Ceaission in the present case is in fact one way of creating nonopolies. If it were allowed to go on unrestrained. according to its theory of non-roviowablo arbitrary power. none but a financial nonopoly could safely exist and operate in the radio broadcasting field. the Omission justifies its action in the present case. ad justifies its contention in theory. by assaing that if a chain. operating several broadcasting stations. or a company which owns both newspapers ad broadcasting stations. is able to carry one of then finacially. even though the latter station is not able to support itself. then the latter canot protest uainat destructive conpetition. the result of this policy night well be to destroy or frighten fron the radio broadcasting industry any independent station attenpting to operate on its own resources; and to leave in the field only nonopolies which were sufficiently supported finacially to withstad the destructive canpetition which night result fren arbitrary careless action upon the part of the Ceaissien in the gratin of new station licenses. It was un- doubtedly with just such considerations of possible arbitrary adninistrative action in nind that Congress provided for judicial review under the Coaunications Act on behalf of any pence aggrieved or whose interests are adversely affected. (1’3!) . ”mg" p. m. "1151.. p. 121.. O 4.2 Our jurisdiction on appeal under the Cennnnicatiene Act depends upon whether reasons of appeal are assigned. which. if well founded. would show that the appellant is a person aggrieved or whose interests are adversely affected by the decision of tho Coaission fren vdnich the appeal is taken. If. however. upon an enainatia of the record we find that the appellant is not a person aggrieved.or adversely affected by the order of the Conniggion. it than beconos our aty to diaiss the appeal. is have held that the reasons assigned in tho sanders hroaers case were sufficient to furnish proper grounds of contest on appeal upon the issue of ”eesnsnie injury to the existing station through the establishent of a additional station.” In that case the reasons given showed (1) that the appellat was a licensee under the Act: (2) that it was engaged in the operatia of a broadcasting station: (3) that the Ccaissien had grated an application for a conpeting station license; (A) that the operation of the proposed station would necessarily result in such severe loss of operating revenue as to impair the service rendered by appellant: ad (5) destroy its ability to render prepor service in the public interest. 9each a showing is sufficient to present the issue on appeal. On the basis of these criteria. the Court found that Yahoo had sufficient gounds for appeal under Section 402 (b) (1) ad (2). Al- though the Court admitted the appeal. it upheld the FCC's decision to grant a construction pernit to the Northern Corporation. stating: ...‘l’ho protestats havofailod to establish facts to show that operation by the applicant (Northern Corporatia) as proposed. would adversely affect their ocononic interests. 'fhara is nothing in the record indicating that the entry of the applicant into the regional field would so affect the oconaic welfare of the protestats. or ay of tha. as to have any ultinate effect whatogror on the public interest. convenience and noosesity. .’ .. p. 21A. ”1311.. p. m. 11:16.. Po 215. b3 'l'ho Court continued: ...'l'ho reason given docs m the issue of ocenonic injury. and is sufficient for contest on appeal. but does not show any injury in fact. therefore the Ca-ission's decision to grat a construction pernit to the Northern Corporation is n35 arbitrary and capricious ad should be uphel . In 1939-. subsequent to the tenders ease. the I.C. Circuit Court also held. in Riggs“ groadcfltigg v m. that: ...!ho owner of a enisting station nay well contend in any case that a new station nay reduce the present incono of his station. but it requires noro to justify the Coaission's refusing to grant the new license. A nere showing that the incono of a existing station nay be reduced if another station enters its field is not sufficient. The appellant ('l'ri-Itnto) recognizes that such cannot be the criterion of econcnic injury herein. as it charges that the conpotition cenplained of will be destructive ad ruinous. This character of conpetition nay effect the public interest. convenience and necessity. which is the statuton criterion under which the Ce-issien ant act. IowevorthoCourtholdthat itwasnotthocasohsreadtho apeal was diaiesed. Another inportat subsequent case involving ocononic injury was the lpartalnrg Advertising Co. case decided in 1939. this conpay sought a construction pernit for s new station at Cpartaburg. tenth Carolina. to operate both day ad night. Station ”PA. a daytins only station already in operation there. alleged that it would be adversely affected by the proposed station. Irho licensee of WA testified that in 1938 the station's gross incono was 0700 less than the operating cost 9.11341ag 9. 12‘s ”W 101 ml 956 .c 951. n.c. cum: Court. (1939). 4!. of ”LOCO. however. the Ccaissien felt that "there is no evidence of the extent if any. to which the station's incono will be refined by the operation of the proposed station or that station '1er will be aablo to continue its service."]'00 'fhercfore. the Mission concluded that the licensee of ”PA ”failed to show that he has any interest which will be adversely affected by a grant of the instant application or that such a grat will result in an impairment of his ability as a licensee to serve the public interest. convenience and necessity.” Accordingly. the aplication of Spartanburg Advertising Company was granted.101 In the care of Sumit Radio Corporation. the Omission ealoyed a saswhat different approach. In this case. Strait had applied for a construction permit to establish a new special station in Akron. Ohio. unlinited cm. a: 1 1mm Allen 1'. Simona. licensee of station HADC. in a petition to intervene. stated that the addition of a new radio broadcasting service auld necessarily deplete his station's existing audience. talent and revenue. Another intervener. station NJ“ in Akron. charged that ”the grating of a license to another radio station in Akron would linit the scope of the activities of tut. distribute the audience of listeners ad 11.1: the program nate'tial. talent and support available to no.4” 100gzfl§gbug Advertisigg c... 1 rec 49s at 499 (1939). 10123.. p. 499. 102mm: mm Enoggtigg. 7 no 619. (1940). 1031132.. p. 621. 43 file Conniesion stated that: ”The evidence. however. does not substantiate the clains of ocononic injury. even if such nattsrs were cegnisable by the Connissicn.” ”the only other issue raised won the erg-net relates to the question of need for service. In view of the state-ants in the opinion of l: U. 222' (7 [CC Q44). Docket No. 507A. decided on loveaer 13. 1939. sons weehs after the argunent in this case was held. no further extended discussion of this question soens necessary.“ the Ce-ission further said: ...It should be noted that nothing in the Ce-unioetiens Act. our rules and regulations. or our policy requires a finding of a definite need to support the grant of a application. Cases where such a finding of need is not node are. however. to be distinguished fren situations in which a real loch of broadcast service is nadc clear. (loo W . 10‘ [id 213. (1939). In the latter class of cases the Coaission will give due consideration to this fact. the public interest. convenience and necessity which the statute provides as the basis for a grat. cannot be construed as a nadatc that actual necessity for the particular facilities not be shown. Neither the disjunctive forn nor the public convenience as an independent factor is to be atircly ignored. Indeed. the words "public necessity" in the Act are not to be construed narrowly. but rather as calling for thtorst wide- spread and effective broadcast service possible. ‘lho Co-ission found that the grat of an application would be in the public interest. convenience and necessity. An interpretation of the language used in the earao Court's lenders brothers decision was the issue in the case of the lrcsquo Isle broadcasting Coaay. froaquo Isle had requested authority fren the CCC to construct a station at Iris. reasylvaia. to operate on an alinitod tins basis. The application was grated but man broadcasting Coasny. licensee of station run in Iris. requested a rehearing. M. the only station mm” p. 621. as in brie. clainsd that scouonic injury would result fren the new operation.105 the petitioner urged that the language of the tuprao Court in the lenders brothers decision required the ICC to reconsider its decision and reopen the proceedings to consider the effect of the proposed ceastition on the public. the petitioner quoted the language of the Suprene Court: ...lhis is not to say that the question of conpetition between a proposed station and one operating under an existing license is to be entirely disregarded by the Co-iosion. and. indeed. the Ccaission's practice shows that it does not disregard that question. It nay have a vital and inortant bearing non the ability of the applicant adequately to serve his public; it may indicate that both stations .- the existing and the proposed n will go under. with the result that a portion of the listening public will be left without adequate service: it nay indicate that. by a division of the field. both suffixes will be coqellod to render in- adequate service... ‘lho Ccaission. however. stated that tho euprena Court had node it perfectly clear that “Congress inth to leave ccaetition in the field of broadcasting where it found it” and to pernit ”a licensee to survive or ouccab according to his ability to nnhn his progran attractive to the public.” the Coaission further said. "...a licensee is not entitled to be protected fren ceastition and the ICC is under no duty to nahe findings on the effect of such conpetition on the licenses. If. however. the finacial qualification of the applicant depends on his ability to conpete for business with the existing licensee. the question of the effect of competition on the applicant is an inortant fact to be considered by the Coaission in deternining whether the applicant is finacially qualified. for the statute requires an applicat to be finacially qualified to operate a station....".“.7 105W. 3 FCC 3 “ 5- “94°" lo‘lblgo. Po as 107 MM ’0 .- d1 the Ce-ission further stated that there is a vital distinction between the situation where a applicant is not finacially qualified. ad the case where the applicat is finacially ad otherwise qualified but where the effect of grating his aplication will be to drive a existing station out of business.108 ...l'he statutory requirenent that a aplicat be finacially qualified to operate a station nukes relevant in acne cases the effect which the competition of the existing licensee will have on the applicat. for where the applicant's finacial qualification depends on his ability to eonpete successfully for business with the other licensees. tho Connission canot grant hin a license unless he can show that he ca derive sufficient revenue free the pagration of a station to nabs hin financially qualified. The Cc-ission continued: ...In the case at bar. the petitioner does not allege that the applicat is not finacially qualified in all respects but. in effect. is complaining of the ceastitive effect which the applicant's successful operation of its new station will have on the petitioner. The statute. however. does not require the Coaission to consider the effect which the conpetition of the new station will have on the existing station. for by hypothesis. the existing station was finacially qualified when the license was grated to it ad the statute nahos his success or failure in the broadcasting business depend solely on "his ability to nabs his progran attractive to the public." the buprens Court guarded against the possibility of its opinion being construed as requiring the Coaission ever to consider the effect which the emotition of a new station would have on the existing licensee. by adding the following laguage iaediatcly aftehaho portion of the opinion quoted by the petitioner. 111.110. the ICC quoted the laguage of tho buprene Court in the banders decision as follows: 108”- s '0 '- 1‘”m.. p. 9. “0211- s '0 ’0 n-w-nr 48 ...It is inescapable that the intent of Congress would be coalctoly nullified and the Supras Court's declaration concerning the desirable effects of conpetition would be rendered entirely noaningless if the ICC were required to deny to a new station pernission to enter the field nerely because it would adversely affect the ability of a existing station to continue to serve the public. It is ialicit in the idea of free conpetition that public interest cannot possibly be adversely affected by the failure of an existiq station to survive due to increased conpetition because this result cannot follow unless the new station's conpetitivo efforts enable it to render a superior public service. In other words. under the statute. conpetition which a applicant had to face nay be iaortat because his financial qualifications nay depend on it: but the offset of coastition with which an existing licasoo is confronted as the result of the operation of a new station need not be considered by the Co-ission under the statute because whatever that effect nay be. it is only the end- t which a systa of free ceastition is designed to produce. bcgardless of whether or not the bupreno Court's reasoning could be considered illogical end/or faulty. the Coaission ruled that the grat of a license to Irosquo Isle would serve the public interest. conveniaoe and necessity because the public would have the benefit of iaroved service ad a wider choice of progran. In 191.1. the case of WW can before the b.C. Circuit Court of Appeals. In this case. Colorado hadio Corporation sought to have the rec deny I. U. loyors' application for a third station in Denver. Colorado. on the grounds of oceanic injury. the appeal was disnissod by the Court because the public interest was not shown to be affoctod.112 In a concurring opinion. Associate Justice bdgerton stated in part: um" W 10' “’W. 118 m 2‘ at 1'» 9-C- Circuit Court. 194.1). k9 ...‘l'ho Sanders case pernits an appellant to cone hero. but not to succeed here. on the basis of financial injury to hinsclf. In order to succeed. one who appeals against the granting of a license not present reasons why the license should not be gr. ted. the buprene Court held in the tenders case that injury to the appellat. author licensee. is not such a reason. The fact of injury to bin entitles him to present relevat nattsrs. but is not itself a relevat nutter; it entitles bin to be heard. but it is not stigg the things concerning which he is entitled to be heard. The najority of the judges further stated that the Sadcrs ease decides that ccactition between an existing ad proposed station is to he considered by the Couission only when it bears "upon the ability of the aplicat adequately to serve his public." i.e.. when it shows that the applicat. ad not nerely the existing station. will either "go ader" or "be conpolled to render inadequate service.” However this was not the case harm!“ In the case of bwing broadcasting Conpay in September of 19“. the Co-ission appeared to be following the sac policy that it had set down in Colorado badio Corporation (with the support of the courts) ad Irosquc Isle broadcasting. In this case. both Ewing and the Mississippi broadcasting Conpay had petitioned for pernits to erect new stations in Jachson. liississippi so widely separated frequencies. However. lississippi broadcasting protested the grat of the construction pernit to lwing. claining that the ”petitioner is apprehensive that the grant of a construction pernit in the instat case nay preclude favorable action by the Ce-ission on petitioner's application for a station at Jaehsa. lississippi.’ in that the Cc-ission nay decide that the facts do not . 1; A “31211.. p. 23. llé m. . I. 3.. 50 warrant the establisbsnt of two new standard broadcast stations in 113 chbflo In other words. Iississippi broadcasting feared that a grat to [wing would preclude favorable consideration of its own appli- cation. the ICC stated in its decision that if llississippi brosdcasting's apprehension ate-ad fren this hypothesis. such fears were groundless. citing the tenders brothers case. Ceastition fren a second station in Jackson was ruled not to be a factor in the decision and the application 116 was therefore granted. In the years between 19“ and 19119 there were few. if ay. cases board or decisions node by either the ICC or the courts that significantly altered Coaission or court policy regarding the econcnie injury issue. ‘lhon. in 19119. the D.C. Circuit court raaffirned its position previously tahcn regarding ocaenic injury and the need for new stations in the an of W. In dour-hiss vim-char e In station should be adnitted to an area already served by three or four stations the D. C. Circuit Court said: no leptons Court node clear in ICC v Sanders brothers bsdio btation that Congress intended to nahe broadcasting a coastitivo business and that the usual rules relating to the certification of public utilities do not apply. It said in 309 03 at 1173: "In short. the broadcasting field is open to anyone. provided there is an available frequency over which he can broadcast without interference to others. if he shows his constancy. the adequacy of his equip-ant. and financial ability to nehe good use of the assigned channel.” 11’ 1 adca ti c an , 10 too 393 at 394. (1944)- u‘m.. p. 394. 51 Under that view of the statute. the public interest. coup venience and necessity to uhich the Act refers are served by effective conpetition between strong conpetitors. Coupetition of course is between broadcasters on different frequencies covering the sons area. If there is only one applicant for a given frequency in a given area. the eon-unity need for a new station and the relative ability. above the nininuu require-onto. of the applicant to render service are i-atorial. but if the choice nust be nade between tuo qualified applicants. the problen.hsa a different aspect. And. if a choice not be nude between two os-Initios. still further considerations are involved. In the latter case. the public interest and an equitable distribution of service nay well require a doternination of the relative needs of the coununities for sore service and the fplativo abilities of the applicants to nest the greater neod.‘ ln‘lerch of leC. the Con-dasion issued its opinion in thquattor of the .plieation of the Voice of fill-- broodeastiag Co.. Cullen. ‘nlabaaa. for a oonstruetien.poruit to erect a,new standard broudsast station in that tone. the ICC had before it a petition for rehearing. filed by the Cello. broadcasting Co.. lissnsoo of station um. Cult-ea. protesting the grant of the new'stetion. dneng the grounds for pretest. Callu- breadeasting alleged eesnsnie injury to itself and injury to the public as the result of destructive eo-etition between its station and that of do Voice of Calhoun. Colleen alleged that "there is not sufficient aveilabloior potential advertising budgets or assent available as revenues to radio stations located inLCullaun.‘dlabeaa. to pay the actual cost of operating two such stations in that city or annual“ ' “’W 175 '14 3“ at 3“. (1“!)- n W 1‘ "c 770- (195°)- u931.94.. p. 775. 52 It was also alleged that the establishment of a new station would result in either '(1) destruction of um. or depreciation of the quality of its service. or (2) in the discontinuance of the proposed new station beoonu of insufficient rovenue."129 'fhe Co-ission. however. felt that these conclusions were not "ported by the facts. 'fho Conisoion took the position. as it had in the past. that the public interest strongly favors constition and cited the tenders brothers decision. the Co-iosion also stated that: Petitioner attqts to circ-vent the recognised purpose of the act by equating private with public interest. it argues that the establishnent of mother broadcast station in Culle- will cause Um'o pregr- service to deteriorate and thus the public interest will suffer. but this obviously does not follow since the public will be enjoying not only petitioner's service but a new service. Ihot thonblienayleoeatenspeint itwillgainat ”Mel ‘ Iinilarly the public interest is not oonoorned with the possibility that the new station or um. nay be forced to cease operation because of inadegnate revenues. 'i'he likelihood ‘d oven the certainty of sons business failures is the price of conpetition. Congress in deternining that the broadcast industry should be cepetitive has decided that the price is netlfio high considering the benefits which flow therefren. be do not believe that the results of establishing two stations in - area which at the tins can allegedly support only one ca be foreseen. Ono station nay rapidly drive the other out of business; both stations nay survive either by attracting sufficient additional revenue or by reducing onpeesu without necessarily degrading their pregr- service since quality of prep. service cannot be noesured by cost alone; one or both stations say be content to operate at a less either pernnently or until the business situation pernits the develops“ of additional cf u up ’o ’1’e l A . u an... p. 115. u .. p. 715. . \e- { t I ' . 'I J -3 g - 'f ' _ 7' ' ' v 4 r 1 t x C I ' v ‘ g . 4 ' ‘ . ') ~ ‘. - h l ‘I‘ i 6 ‘ ' A . ’ l . ‘ . . t . , . r ' I ‘ I , ' . I - ' . , . g ' ‘ ‘ II! J ‘ I A ‘I . ‘ . V A ‘ ' ~ ' ‘ t ‘ . - z I . '.‘ ‘ ‘ .. ' . . ). '1 ‘h - , 4 . ' ‘ , ‘1 f ," . 'I . ..: 2’. r: . . n. . I . -. . : g . ,1 ‘ . 'w I . ' ' I 5 ‘ LI: ‘ ) ' . 1 _:‘¥ . I I. ‘l “ ‘ “ ‘ . A I .'.J . .J .‘ I '. A ' ‘ ‘ I , , . .‘. . .J . . 1 - 1 ‘ a H g . . 'r' ,t, .. .‘ ‘ I ,2 {,a '1 . .' I ., 4 . . '} . , . I, ‘ I , ' ‘ ..‘ u I . I . ‘1 i ‘ I '1 o 1’ l x A .‘ ' ., L , . , I I ' c k x . . .IAJ ; . . ‘ . r '. - 't , .‘ ‘ ‘ I ' ‘ .J' . a . ' : .‘ \ ' r - . . ‘ ‘ - l . ' , x . n A ' I ' . l 1 , ._ .. a t J . - . e s F ' _ v , a _ ‘ l ‘ v . , 4 r l J ( u . . , . ‘ ‘ . - . ~ 6 ‘ 1’. ' - - .v I n l 1 ‘ v - , . . .5 m e “a g... .- . ... - ~ van a...- t . a o ..o n to u a e an on 0"»- 9 ~. g ..vvq.u. era ‘war>.o-~~Iu.. ‘- .m- e ‘ v | O I b i f D 53 revenues. The possibilities are numerous. and since they lie in the future and ston true the interaction of indivihal purposes...the ultimate results...upon the service rendered the public cannot be predicted. Detailed infernatien of the present business situation obtained at a beefing would not nahe prediction substantially noro possible. 3 noroover. scanning the worst possible results arose fren the establishment of the new etetion. the situation would be self- correcting and injury to the public. if any. would be of short duration. If either station by reason of luck of revenue been-es unable to discharge its responsibility of providing a progran service in the public interest. that station will lihowiso be unable to secure a renewal of license and not leave the field clear for the other station. If both stations should cease operations. the way would then be open for the establish-cut of a new station for which. in the instant case by nfitienor's own figures. there would be adequate support. Thus against speculative and at the most temporary injury to the public interest as a result of conpetition we not weigh the very real and permanent injury to the public uhioh would result fren restriction of constition within a regulatory scheme designed for a conpetitivc industry .dwithsut thesafoguardsuhiebareneceoearywhors government seeks to guarantee to my business enterprise greater security th- it can obtain by its own motitivo ability. With theoc considerations in mind. the Commission has detersined that. as a natter of policy. the possible effects of oupotition will be disregarded in passing upon applications for t stations. is here reeffirn that determination-1:123...“ the Casuission did state homver. that "There can be no doubt at all. since the decision of the buprue Court in m 1 fig. the Goodwill StationI Inc“ 321 2.1. 265. (1909). that the decision of whether the facts alleged in the petition warrant the holding of a hearing nay be .do by the Comission on the pleadings presented." 126 Although. in Voice of Cullnuu. the hearing asked for by Culln‘ res denied. the Cauiseion had not disclained power to linit licenses on lzam‘eg 'o ’7‘o 1241214.. p. 176. ”52“.. p. 716. 1261b1d.. p. 113. .a- Slo cogetitive grounds in broadcasting cases. the rec in 1934 indicated in a decision (Radio Cleveland. ll lb 348) that issues regarding econonic injury to an existing station are separate free issues regarding the establiel-ent of a second station in a «unity. the Co-ission node clear that such issues would not be stricken in a protest proceeding. but the burden of proof would be placed on the protestant.127 ’In the Radio Cleveland case. a protest was filed by station "MC in Cleveland. Isnnesseo. against the establisluont of a new 1000 watt statiea by non Cleveland. nu Co—ission found um one as standing as a "party in interest” within the noaning of Section 30! (c) of the Connmications Act. however. the Co-ission stated that the station owner fist ”do‘so'ne'thing noro than set forth in his protest vague. non- specific. conclusionary argunents and allegations; he not allege those facts upon which his conclusions as to the inpropriety of the Co-ission's grant without hearing are predicted. Ifhese facts nust be alleged with specificity; they nust be concrete. basic facts."m 'i'he Co-iesion stated that the burden of proof is on the protestant to: l. Deter-ins vdlether the Cleveland narhot will provide sufficient revenues to the proposed station so as to pernit the applicant to adequately serve his Whli‘o 2. Deter-ins whether the advertising potential of the Cleveland nsrhet is such that both stations. the existing and proposed. nay go under with the result that a portion of the listening public will be left without adequate service. 127 Radio glevglend. 11 II 348 (1954). 128 121.10- p. 349. 55 3. beteraine whether the advertising potential of the Cleveland nerhet is so slight that by a division of the field both stations. the existing and the parsed. will be cenpelled to render inadequate service. the Ce-ission designated the application of Clevel-d broadcasting the hearing. but if the rationale of the Cull-an case had been followed here. it would have precluded consideration of these criteria. Ieoever. the Ce-ission decided to afford consideration pending further in- vestigation of the problems.no In a case which clarified the scope of inquiry in a protest hearing. the Co-iesion heard the Cuberland Valley broadcasting anny in 195‘. In this case. H166. Iranklin. Tennessee and "MRI. Echinnville. Ionnessee protested the grant of a new station to operate in HcHinnville daytins only. The ICC ruled that "a protestant objecting to authorisation of a second station in its com-unity will be given an opportunity to present evidence bearing on the competitive aspects of a second station in.n snail nerhet but the burden of proof and of dewonstrating the netsriality ad relevancy of the facts alleged is en the protestant." the issues in this case were the one as those in badio Cleveland. and this case was designated for hearing also. pending further consideration of the probln.”t In ......‘.. to the Cumberland Valley case 1. the 1955 mu. bouthorn broadcasters case. A protest was filed by bouthland broadcasting Co.. licensee of mo. and New Laurel Radio Station. Inc.. licensee of 129Mo. Po 35°o 130 Me p 'o 350. 131Cunbcrlnnd gallez Bragdcggtigg Co“ Inc. 11 RR 840 (195‘). I ’ a , l A l ‘ U ' I l I I 1 1 ' ‘ ‘ ‘ D , 0 I t . . n . ‘ ‘ ‘ ‘ I U ‘ . r . . .4 ’ } ‘ r J . n ' ' u , . A , ‘ ‘ ; ‘ ‘ l r. - . . j ‘. ' f ’ o ' . t . , ‘. l —o---. 56 run. both located in Laurel. Iisoisaippi. against the establishent of a new station. requested by sunrises Southern. (wan. 'fho criteria foreskin aprotest in this causes the one as those inc-borland. and India Cleveland. The Commission. following its reasoning in the Voice of Cullnen. stated that hearing on these issues (eesnsnie injury) would be . abuse of process.132 the Ce-iasisn stated: ...It is our opinion that the possibility that coqetitien between radio stations nay result in detriment to the public by reason of lowered quality of program service or the complete elimination of one of the competitors is. as 3 practical nutter. a fact which is incapable of proof.1 3 the Mission continuod: ...lloreover. even if the possible effects of the new competition. which petitioners have alleged night result. were capable of proof. we have grave doubts as to whether they should properly prevent this Cos-ission fron issuing a license to an applicant who is otherwise qualified. Nor do we believe that the language of the Sanders case would require us to do so. is we see it. the Court at this point in the tenders opinion Elnora it cited the danger f a station-being forced to render inadequate service one not so nuch directing the Co-ission as to what factors it must consider. but rather reserving the question of whether such factors should be considered -- which was not than before the o- for further deliberation by the ' mums Up to a period of ties shortly before the leaders ease. the Ce-ission. as a natter of policy. had considered these eesnsnie factors. In Anerican bouthcrn. however. the ICC stated: mmmmmo 11 an 1054. (195:). l”Ibid" p. 1056. 134 Mo g ’o 1057a 57 ...Cor deliberations lead :s to the conclusion that considerations of such factors would. in set. be contrary to the entire rqulatory sch-o. as laid down by Congress in the Ce-nications Act. which is designed for a conpetitive broadcasting idustry end not for an industry where govoruuut seeks to guarantee a business enterprise gretsgr security than it can obtain by its on protective” ability. the Ce-ission continued: ...hecsguisin. however. that we are here fuceduith an open question. (see W ll lb 3“. and application of We. 11 II 840. vhm th- Ce-isoien expressed a desire for further consideration of the general problen ”raised by protestants seeking hearing issues in the constitive aspects of new stations") as oral org—ant will be held at fiicb the policy and legal “nations raised an a. reoolvod.1 ‘fbe Ce-iesion therefore withheld the grant of a new channel to horiean bouthern until bearings could be held. Oral argusnt was held on Iobruary Il. 1955. hereafter. the Ce-issien designated the eesnsnie injury issues for evidentiary hearing. placing the burden of proof open the protest-ts}37 Ifhe eoeaie issues involved were those: (1) to dotsrnino whether the Laurel narhet will provide sufficient revenues to the proposed station as as to pernit the qplieaut to adequately serve its public. (I) to dotsrnino whether the advertising potential of the Lurol narhet is such as say indicate that one or both of the existing stations and the proposed station will go under. with the result that a portion of the listening public will “ ldt “Mt was (3) to dotsrnino whether the advertising potential of the Laurel narhet is so slight that by a division of the field. one or both of the existing stations and the pru'sed station. will be cqellod to render inadequate service. . ”M. p. 1057. ”Sign. p. 1031. ”W. 1...... mm. 13 n 927 st 91,. (1957). 138 ' I!!!» p. 930- 58 there were two additional issues ad the burden of proving then was placed upon the applicant. these issues regarded the financial qualifications of the applicant. and a1legedunisrepresentations of fact contained in the applicant's application.13, Ihen the evidentiary hearing was held. however. both southlend .d low Laurel had abandoned their allegations with respect to issues 1. r and 3. and stated that they would not 1......“ avid-co on than. Aeoordiagly. they were not considered further by the caesium.“° is a result. the co-isaion never was eblo to ”hold an oral ar- {gwnont at whieh the policy and legal questions raised*will be resolved.“ leweoor. the donniesienteontinnod: ...In view of our deternination that the applicant. Anerican Southern Broadcasters. is not financially qualified to construct. own and operate its proposed station. we conclude that the public interest and necessity would not be served by a grant I‘lthe appli- cation of.a-erican louthern Broadcasters. the protests of Iouthlend and low Laurel were dionissed. the Co-ieeion's action of love-bar 2d. 1954. grating tho Qplieatien of eneriean louthern for a construction pernit was reversed and the qplication denied on can»: 13. 1951.“3 Further clarification of this issue cone in 1955. subsequent to the first‘anerican southern proceedings. when the Con-dasion heard the case of lrodell broadcasting Co. In this case the Ce-iseien stated ‘3’Mo p 'o ”0. “0m. p. m. “up“. . p. 941. 14.2 pid” p. 941. .4‘ ‘b 59 that issues regarding econonic injury to an existing station are probably not relevant to the question of whether establish-ant of a second station in a connity would be in the public interest. the rec did say that such issues would not be st'richon in a protest proceedings. but the burden of proof of don'onstreting the netsriality and relevancy of the issues would be placed on the protestat.“: 'l'ho Ge-ioeion held oral arguent in the case because of the usolved questions relating to econonic isowoo raised by the inericen Iouthern case. despite policy statenents already nude in the Voice of ecu-.- decision which preceded it. As a result of the hearing. a construction pernit was granted to lrodell. la its decision. the we .do a policy statuont to the effect that. "lho Mission nay not withhold a pernit or license on the basis of oo-callod econonic injury considerations or consider the effect of legal conpetition. encqt perhns in cases involving Section 301 (b) of the Act. Ivan if the ce-ission had power to consider oesnenic effects. as a nettor of policy it will not do so in passing on application for new broadcast netball“ fubsoquontly. however. in 1’51. in the case of George A. Israell ll. the Ce-iesion found that the operator of the only existing station in e ce-uity had standing to protest the grant of an application for a new station in the unity. the withdr-nl by the proteatnt of econonic injury issues previously specified in a hearing of the Iornell case did notfiflify its showing that it would be injured by ooqetition. MW 12 n 573. (ma). -‘ 'I ")l! ‘l l "1 i 1 i. --. "H J“ . I ' Iri‘ “'11.: - 9-...- ...u '4', I 's'ffi“ u- ‘ 60 or affect its standing. according to the Mission“, the crucial question in this case was whether a grat would cuss econonic injury adversely affecting the public internal“ la the Voice of Cullnen case. the Ce-ission had not discleined power to linit licenses on «fictitive grade in broadcasting cases. but decided in that particular case it would not be in the public interest to do so. Iebsequent cases have shown the Ce-isoion's vacillatien between ahission and refusal of consideration of econonic injury and cognitive factors. In 1337. however. the Cs-ission went further in the Ionthoestern Interprises case. declaring that not only should econonic injury not be considered as a natter of policy. but that the me was without jurisdiction to consider ic.1‘7 'fhie conclusion was based upon the ass-tion of an overall Congressional policy of prenoting coqetition. and the fact. that broad- casting was not subject to the sons detailed regulation as telephone and telegrqh service. as that censtitien was the chief regulator of perforlonce. the we also noted that Congress had failed to adopt proposals to require a finding of need before a license could be issued. 1“ la the loutheestorn case. the Ce-iosion discleined any authority even to consider the adverse effects of legal constition upon service MW. 16 n 21“. (1957). l ‘6Lhidu ’. 17“. 161“”... m. . p. 1393. 1“leariage on I. 1333 Iefore a taboo-itteo of the senate Ce-ittee on lot-ratat- and 'bt.".'c.-.'¢.s.g9Sh_92!‘£231J—;l£—IQIIHIIJ r. 33. (lOAI). cl to the public. the Ce—issien refused to consider the effect of econaie factors on coastitien ova when there wee a possibility of failure of both stations and interruption of service with consequent injurytothepublic. lhelCCrogardedthedoorleftopenbytho Barons Court as am. ad seisod upon ”this opportunity new to disclain ay power to consider the effects of legal csaetition upon the public service in the field of broadcastingfl'“, if it were to consider econonic effects. the Coaissioa said. it oust engage in a detailed ooasn-carrier-type enainatien of the existing station's efficiency. its proper rate of return. ad the prices charged advertisers. factors which it believed congress had excluded fren consideration in the broadcasting field. the Ce-ission said that. ”flan after careful consideration of Congressional intent (a) in the original enact-at of the Ce-aicstisns Act relating to broadcasting. (b) specific provisions prescribing the regulation of broadcasters as can carriers (faction 3 (h); (c) subsequent rejection by Congress of proposed aenaonts of the Act which would delete the requirasnt estodenadaoprovidodbylectienflfl (b)adinstesdrsquiretho Co-ission to give effect to the needs of a coanity and the 3.3. Inprene Court's interpretation of Congressional intat (fenders case). we conclude that we do not have the power to consider the adverse effects of legal conpetition upea service to the public."1’° 'fhe Ceaission further stated that . "Until Congress gives us the power to pernit aonething less tha free conpetition in the industry. “’sreeeeut legelation ad Interadia Coastition. W my. wine. 1939. p. me. ”“gghggim htggisas v rcc. :2 no 603 at 614.. (1957). o ) I 0 1;. I .J I . 62 we have no power to save either the public or the protestant fren certain of coastition's asafortable effects."151 In one of s saber of cases subsequent to the loutheastern In- torprisss decision ad policy statasnt. the Co-ission supported its position in nicer loosiisn Village Indie. Inc.. decided April 16. 1331.151 Kaiser had applied for a construction pernit ad nu Ltd. sought to stop the grant by protecting econonic injury. the ICC ruled for Kaiser. using the sac rationale it gave in the doutheastern decision. It stated that. ”the ICC will disregard possible effects of coastition in passing upa aplications for now brosdcast stations. both as a natter of policy ad becase it lacks statutory power to do sell” A coalete reversal of the Ceaissien‘s Southeastern Enterprise policy can in the 1333 District of Colonbia Circuit Court decision in W.“ that the grat of a new license to last Georgia broadcasting Ceaeny An existing licasee clainsd would not nerely injure its operation. but would also injure the public interest because valuable service would be destroyed. the ICC had de- clinod to consider this erg-ant. relying upon the decision ad the reasoning it had used in the Isothesstern Interprises “no.1” the Appellate Court. based its decision won the laguage that __.A__ 1, as ’o .l‘o ”Wm. 22 m “I. (1957)- “fiug” p. m. 1"chi-men hgmtm Co. v a. 25s ne no. (use). 1”“‘Wv my Po 139‘- aye— ‘ I -- h . . A ‘ o . .-._.._ . V. J . f ‘ . ...¢e~os-o ...‘w I _.. ‘..-.... -»~.. r g f H _ i I Q Q. l A -7- ... , A ...‘o‘ o ~ ~ -.- V 4.. . 63 the barons Court used in the lenders csoo. which apparently left the bur open for consideration of econonic issues when it becao aparsnt that one or both stations night go under. The Court stated: ...thus it seas to us. the question whether a station nahes 03000. or 310.000. or 630.000 is a natter in which the public has no interest so long as ocrvice is not adversely affected; service any well be i-rovod by conpetition. but. if the situation in a given area is such that available revenue will not support good service in noro than one station. the public interest any well be in the licensing of one rather than two stations. To license two stations where there is revenue for only one nay result in no good service at all. do econonic injury to an existing station. while not in and of itself a nutter of nonent. becones iaortent when on the facts it spells dininution or destruction of service. At that point the elaent of “jury ceases to be a natter of purely private concern.1 The Court further said that: ...rho basic charter of the Co-ission is. of courst. to act in the public interest. It grants or daies licenses as the public interest. convenience ad necessity dictate. Whatever factual elasnts wake up that criterion in any given problcn-oand the problen nay differ factually free case to cacao-nest be considered. tech is not only the power but the hty of the Coaaisoion. Is in the present case the Ceaiesion had the power to dotsrnino whether the econonic effect of a second license in this area would be to dosage or destroy service to a extent inconsistent with the public interest. Ihother the problen actually exists deptg’e upon the facts. and we have no findings upon the point. ...ihis opinion is not to be construed or applied as a nandate to the Co-ission to hear ad decide the econonic effects of every new license great. It has no such weaning. lie hold that. when an existing station licensee offers to prove that the econonic effect of aothor station would be detrinsntal to the public interest. the Co-ission should afford a opportunity for presentation of such proof and. if the evidence is substantial (i.e.. if the protestat ‘SGCdtf‘Oll. Meg ’o 443. 157 Mo g ’o “3o 64 does not fail entireiysto nest his burden). should make a finding or findings. the Court continued: ...l‘he Co-ission says that. if it has authority to consider ocaenic injury as a factor in the public interest. the whole basic concept of a competitive broadcast industry dis- appears. fle think it does not. Certainly the Supreme Court did not think so in the Sanders brothers case. supra. Rivets econonic injury is by no means always. or even usually. reflected in public dctrincnt. Competitors nay oevercly injure each other to the great benefit of the public. be broadcast industry is a conpetitive one. but competitive effects may under sons sets of circastanceo produce detrinent to the public intertgg. When that happens the public interest controls. ...‘fho Co-ission says it lacks the ”tools" -- weaning specifications of authority free the Congress -- with aieh to nnhe the mutations. valuations. sshoaloe. ots.. required in public utility regulation. We thinh no ash elaborate oquipnent is ncassary for the tech here. As we have just said. we think it is not incabent ace the Ce-iseion to evaluate the probable eesnsnie results of every license great. Of course the public is not concerned with whether it gate service free A or free I or free both conbincd. the public interest is not disturbed if A is destryood by I. so long as I renders the required service. The public interest is affected aa service is affected. he think the probla arises when a protestant offers to prove that the grant of a new lieasc would be detrinontal to the public interest. The Ce-ission os equipped to receive and appraise such evidaco. if the protestat fails to beer the burda of proving his point; (and it certainly is a heavy burden) therenaybeaendto thenattor. If hisshowingis substantial. or if therelu a genuine issue posed. findings should he ends. lheCourtfnrthereaidthot: ...torhas Carroll did not cast its proffer of proof onectly in terns of the public interest. or at least not in terns of the whole public interest. it any be argued that it offered to prove only detrinent to its own ability for service. he are inclined to give it the benefit 13s m" p. «3. 1391’s!" p. 443. 1‘01.“- s ’0 “4- 65 of the nest favorable interpretation. in any event. whatever proof Carroll had is already in the record. If it does not support a finding of detrinont to the public interest. but nerely of dotrinnt to Carroll. the Coaission can readily so find. the Court raended the case to the Coaission for further findings. which were node in the West Georgia broadcasting case in 1359. in its prelininary statenent. the Coaission said: l. On August 1. 1951. the Coaission adopted its decision reinstating and reaffirning after a protest filed by Carroll broadcasting Co.. the grat of the application of West Georgia Broadcasting Co.. for a pernit to construct a station at Ircnon. Georgia. before the Coaission for consideration at this tins is the decision of the 0.8. Court of Appeals for the 0.C. Circuit. dated July 10. 1958. in W- W. 258 12d “0. (1558) wherein this proceeding was raended for findings pertinent to the econonic injury issue to which the Ce-ission had previously directed no findings of fact because of its deternination In re Application of intention- 22mm5.ndmii.ssli2m ”I!“ (1950). that it had no power to consider the effect of legal coastition and that as a natter of policy it, would disregard the possible effects of coastirion. the Ceaission continued: 1. he eesnsnie injury issue roads as follows: ...fo dotsrnino aothor a grat of the aplicatia would result in such a econonic injury to the protestat (Carroll) as would iaair the protestat's ability to continue serving the public. ad if so. the nature ad extent thereof. the areas ad populations affected thereby. and the availability of a broad- cast service to such areas ad populations. ...‘lhs protestat did not clain that a new station in nearby brass would destroy was is Carrolltsn but rather that one 1‘ a. ’o “‘o “W52... 27 m 161 a 1“. 0””- mmc. .. m. ‘6 station in the area could bring the public progr-ing of a higher type ad quality tha two. ...Carroll did not aticipats that its station would go ador if a new station were licensed to operate in Irena. Irena is 11 niles fren Carrollton with a population of 2.300 (1252 census) while Carrollton hes a population of 1.753. the case which Carroll had presented to the Ceaission had eahasiscd unity satisfaction with its station ad the fact that profits were rather low. All aspects of the cconony of the Carrollton- Irasn area were casidared ad offered into cvidace.l” the preeidat of Carroll broadcasting expressed the opinion that if the applieat'e lieasc were grated the following would occur: . 1. Audience would be diverted and ability to sell advertising would be reduced. 2. Advertising rates would be forced downward. ad a reduction of incono would result. sustaining progras when he discontiaod as staff heels be out. ‘ After hearing all of the evidence the Ce-ieaion concluded that: “If it should be ascaod that certain ehages will result in station Will's operation because of a new station in the area. still con- sideration act be given to whether the ehages proposed to be incurred by bill are the only ones reasonable to institute or whether other access could be incurred which night has less effect on the listaing ”‘1..n1‘7 ”nun v- 163. mm" p. 163. “m0 o P0 1“. 1‘7Ibl‘ag ’o 17’s 61 the Coaission reacted te the protestat's clain that ehages auld be necessary if a new station were allowed by stating that reliance upon assertions of the protestat were insufficient and that the protestat had not sustained the burden of proof in this area. however. even if the Caiseia accepted the predictions of Carroll as to ehages that would occur. “the outset to which the public would be injured is not as sub. statial as to warrat the conclusion that a grat would not serve the public interest. oonvaisncc and necessity.”1“ the Ce-isoion hold that even if alleged conditions were to netsrialiae. the public would also be acquiring a new service ad a choice of services in caeneation for the loss of sons ms progras. this was the persuasive factor in the Co-ission'e nind. the real ad pornaont injury to the public resulting free the restriction of c-atition is to be weighed against the speculative injury to the public interest free "autism“, Accordingly. the Ce-ission grated out Georgia's application on the groad that the protestat had not shown that eoaetitien would result in such injury that the public should be deprived of a choice of services fro-coasting stations. and that thotaof braa ehouldnotbodaied i to first local radio outlet. 170 the Carroll-lost Georgia decision. therefore. had the effect of re- quiringthettthsaissiamuahsfindingsoneesnonisinjurydnsto ”1931.. p. 173., “’93.. p. 114. ‘7°ibie.. p. 17.. 68 new conpetition upon the public in each case where an existing licensee offers substatial evidence thereof. bubsequcnt ICC decisions have followed the reasoning of Carroll. but have linited its iaact by requiring the protestant to file a application for renewal of his licaso. banks of this procedure are the cases of W. 11 lb 150a (soc 1959) ad W1. 11 lb 551 (ICC 1958). ICC Ceaiesioncr Iyde pointed out in the lichels case that. "I would not require a application for annual of license of on applicat the already has a lieasc. I would not use this hind of procedure as a sanction against the exercise of rights [freeden of conpetition] given by Congress.” 11 Jacob I. layer. writing in the W stated that: ...binee the Carroll broadcasting decision there has been little further develop-out of the threshold doctrine of econonic injury affecting the public and thus pro- cluding the grat of a application. In one respect. however. the Co-ission scan to have gone beyond the technical roquirasnts of the Carroll decision. In mun brig. l9 Rh 10011. (1960). an intorventor clainsd that econonic injury would inpair its ability to serve the public ad was grated intervention even though it did not clain that the totality of service ”gilable to the public would be dininishsd or haired. « In the [orig case. lsrtin [orig had apliod for a construction pernit to erect a new 1 hw station in Johastown. bow forh. our broadcasting Corp.. licasee of station um. Clovcrsville. bow forh. requested that the issues in the application proceedia he alarged to include the econonic 1.....1” "W. 17 n :57 .. sec. (195:). 1723““ g, layer. baders brothers bevisitod. W m; 1191310 at 300. bpring. 1961. "Mg. 1: as 1034. (1960). I , I O 1.: wJ .. A b | _] I l . .1 4-. ‘ a I ‘O 69 In support of its request. Iillt alleged that Clovorsville ad Jehnstown lie adjacent to each other and are hnown as Mn Cities: 11‘ econonically the two cities were very nuch entwined. urn further catended in the Coaission's words. that: ...Annuel average revenue of “It for the three years 1956. 51. 53 was 3119.000 ad that it nust do a annual value of about 3106.000 to break even. It had cstinatod that the gross potential revenue of standard broadcast stations in the ceanities involved is approxinately 3160.000. and based upon this cstinatc. it alleges that if a new station collects an canal revenue of 312.000 fren this area. as forecast by the applicat. the Wilt broadcasting Corp. would enact” an operating loss of approxiuately 316.000 a year. this. argued but: "...would result only in a drastic iupeirnsnt of the valuable public service which has now for several years been established by hilt. bhould there be a division of the field. such publ“ service could not possibly be adequately naintaincd.” ‘ the Caission antinued: ...In the absence of a protest free the applicat...it appears that the allegations node by the petitioner as to the adverse effects that a new station would have upon it. together with its allegation that such effects would result in a drastic iaairueat of the service now rendered by it. required cnlargencnt of the issues to include the econonic issue in accordance with the nun-«v- request. «a 21W. 11 ll 20“. and 253 I2d M0.( 53). Accordingly the Ceaiosion adopted issue 01. which was to: ...deternine whether a grat of the application would result incnchaeconaic injurytoillltbroadcastingCorp. as would iaair its ability to csntiae servicing the public. "m. p. 1m. mm. .. 1m. l7‘m‘og 'o 10”. 1" Meg 'o 10”. 10 ad. ifso.thanaturoadententthereof. thearcesad populations affected thereby. ad the availabili of other broadcast service to such areas ad populations. & April 13. 1930. the Ceaiosion's broadcast bureau requested reconsideration by the Co—issicn of its previously grated petitia to Ill! aich enlarged the issues to include eccnaic considerations. the bursa asserted in substace that I-t failed to allege facts which show a dotrinent to the public interest as opposed to noro econonic injury to Wilt. ad that in the absence of such a showing there was no basis for alarging the inane. Ithe bureau cited the Carroll case as athority for its view", the C-ission. however. daiod the bureau's petition for reconsideration saying that. “the burden of proof is on war ad it asuldbegiuenaoppertaitytcaowthatthelicaeiaofaothsr station would he datrinantal to the public intorost."“o the decided cases have involved the probla of whether econonic iaact ay bar a aplicatia: but they have largely disregarded the question of the action which should be taco when a grat of a appli- cation would adversely affect the public interest. “It ...I- i-plitit in the canon broadcasting doctrine. states Jacob layer. that the Ceaission can not grat the new application after finding that its grat would have a adverse effect on the public “WC‘ouul ._—._ eve mm” p. 1035. "’33.. p. 10st. may, p. was. 1“Mayor. m. p. 331. to If how-e -..s 11 One very recent treatneat of the subject by the courts. in m iv r u d. 215 32d 332. (1959). supports this view as follows: . ...In nany fields. including both Mentions and air trasportetion. an operating lieasc requires a prelininary finding of public interest. convenience and necessity. the public interest requires service for the public. It therefore requires that. if there be only enough business toeupport mgtiabyonelieasee. thoroastbeonly one licensee. lleycr. however. states that: ...t'he above quotation is nisloading as it applies to the eo-nicatisns field. Iaerent in the Ce—icationm Act is the rcquiracnt that licensees subuit periodic renewal applications. which nust tha be governed by the sac considerations which affect the grat of a original aplisatia. W 133 '3‘ ”7o 3“! (LC. Circuit. 1950). ...Consequently. even though an application nay be denied on Carroll broadcasting groads. the enisting station is not granted an indefinite period of do fact: nonopoly since the applicat any file a actually enclosive applicat”. against the existing station's renewal application. liayer continues: ...the situation at renewal tine could present a host of problens. In ay narhet with are tha one existing station seeking renewal of license. a question would i-ediately arise whothsrallraaelepplicatiensehsuldhotreneedas nutually exclusive with the new application. ...to the extent that the rationale of the tenders brothers dicta ad of the Carroll broadcasting decision is in- terpreted as requiring that the am of the broadcast services provided to the public be the best available. it would soon that all other stations in the narhet would need to be included in further proceedings. since they night propose and/or provide less satisfactory public service tha either 181I|lsycr. a. cit.. p. 331'. 133m" h 3:1. . s i . .) 1| 1 ) ' A. k I 4 I ‘I . - '. 0'! u. ‘.‘ ‘ -A . v . h . .7 - J v 1 , l . V . 4" I‘. f .1 “ S 1 l | ’ ’ t I . “r 0.. . ‘ ‘ ‘. ‘ C h I '7 ‘ I ,.' 1 | ‘ Q . i 1 1 ‘ . 1 ~ “ '; J ' I I v I . ‘ ‘ e . . . 1 . ’ . ‘.. - z I. y , .1 J ‘ I ‘3 ‘ x e O Y . .-. v ‘ I. . . . ‘ ,i — A. d V.. \ . ' . a O O ' E . . I 0.. 12 the new applicat or the objecting station. In practical terns. such nultiparty hearings would be involved ad expensive for all concerned. and would increase the probleus of sainistering the Act. thus. although sub- sequent decisions nay reveal that this possibility is noro idle speculation. it is noteworthy that Carroll broadcasting 3:“ opened a new problen area while closing a old one. At the present tine. the Coaission policy in the Carroll-lost Georgia cases ad the ruling of the Court 'in‘the Carroll case serve as guidelines for Coaission action when protests involving econonic injury are node. Litigation caoerning the issueof econonic injury. allaablc if the protestat ca present sufficient facts to "port his clain. would appear at tho prosat tine to constitute a substatial barrier to entry to the broadcasting field. 0n the other hand. the burda of proof. as the court in Carroll stated. lies heavily ace the protestat to justify his clain that the public interest will suffer if coactition is psaitted. Chater III will consider problas posed by the present ad past policy of the courts ad the ICC: e.gest a perspective for viewing the overall probla of whether or not econonic criteria should be used by the Ca-isoion in gratin aplicaticno: ad discuss aothor such criteria are needed in via of the present condition of Al radio. 1811 M. . p. 302. m m wslscrrasmxsuouurmmccurnnsssssm Wimmmmmmmnsmcs first. it will be helpful to suaarire the practice of the courts and the Ceaiesion in considering the iaact of new coastition on existing stations. which has varied widely over the years. boring the thirties. the Cs-issice regularly tech into occoat the nature and extent of econonic injury aioh would be caused to existing stations by the grat of a new application. It ca be said in a narrow case that the Csaission never denied a application soth because it would inflict finacial horn on a existing station. beaver. aplications were frequently denied on the related ground that insufficient public need had been shown for the proposed service. A law review study ”511.1.“ in 19111 .1..... that so applications ..t. denied for this reasa during the years 1931-33. (9 W m :73. see (1941))!” the following grounds for decision in the W case illustrate the considerations which were taken into accoat by the Ceaissien at that tine: 1”bred I. ford. 'bcenonie considerations in licensing of radio bmt tum-0." 1' WW 1’1 u 1’1. (19.1). _ 73 1b l. the [all liver. liessachuoctts area has adequate broadcast service. 2. the applicat has not shown a public need for the radio broadcast service he proposes. 3. the record does not show that sufficient csasrcial support could be reasonably expected to enable the enieting station to catinuc its operations and at the sac tins to sustain the applicant in its proposed operations. 5. the grating of the aplicatien adsr casideratioa would not are the public interest. convenience or mutt]. hate in the 1930's. the Ccaission's policy on econonic injury was altered substantially. a change which led to the labsrh m Mucous in the buprene Court. In them”. decided in 1939. the Coaissioe reversed its earlier ruling that the applicat had failed to show need for the service proposed. breover. it rejected the idea that in all cases a positive need not be shown by the applicant. In this case the Coaission said: It should be noted that nothing in the Caaications Act. our bulcs ad begulations. or our policy requires a finding of a definite need to support the grat of a application.... the public interest. conveniace or necessity which the statute provides as the basis for 'a grat canot be con- strucd as a nadatc that actual necessity for the particular facilities atst be shown. . leithsr the disjactive fern nor the publimiace as a independent‘fator is to be entirely ignored. Indeed. the words 'public necessity' in the act are not to be construed narrowly. but rather as calling for the no“ widespread ad effective broadcast service possible. 7 13 (1939) . n1 laws 1 h .JICCSN at332. Inm. 1 ICC 331 at 553. (193’)- 73 the Ce-ission's new view on econonic inset was forcefully erproeosdinanepiniondeayingrehearing aftertbegrantofasesend station 'in Spartanburg. Iouth Carolina: In the radio broadcast field. public interest. con- venieuca and necessity is served not only by the establisbent and protection of nonopolie-s. but by the widest possible utiliration of broadcast facilities. conpetition between stations in the ace ce-unity inures to the public good because only by attracting and holding listeners can a broadcast station successfully cenpete for advertisers. Ceqetition for advertisers which neans conpetition for listeners necessarily results in rivalry between stations to broadcast progr- calculated to attract and hold listeners. which necessarily results in the inprevenent of the quality of their progr. service. thih‘e the essence of the Aneric- systen of bmtm. m. in substantially the view cake- by the suns-- court in an m case. In effect it neent that an existing station was not entitled to protection fren equities so long as the eeqetitien was not harnful to the public interest. following Iorld Her ll. the broadcast industry's accelerated growthbrought thetotalnderofdletatiens frennder lOOOin ms beneath-37mm. Ch-gesinesgineeringrulee.nadeinlu7. penitted n-y additional aesig-ente not theretefore possible under the Itendarde of Good Ingineering prestice. l'hese additional assig-ents. fer the nest part. providednere services in the one areas. Ivan though the odor of stations tripled. coverage of the lad area of the hitod sun. has new wary um. sinee 19mm laced with increased cepetitieu. existing stations esntiued theissueofeeeneniciqast. lolengerahletecententthettheywere *— 4; ‘— l".Ipertnhurjg Advertising Co.. 7 '06 £9! at m. (1,100). Interd. w p. l”. . ‘ ._ . ‘4 I . 4» I . U i t C is , J . 5 A. ‘ A . 0 1 I 4 o. 2 lo 3) J“! "ca-o 76 entitled to protection fren the econonic effects of ceastition. sens broadcasters presented the argaat that grate of additional stations in a csaunity would be harnful to the public at large by causing a overall deterioration in progra service. 190 In 1’50. the Ceaission clarified the issue sonswhat by refusing to reconsider the authorisation of a second service in the town of Galina. .1..... Wow lhe Ccaissien held that the eoneeauacee of eeaetitien were in- possible to predict. but that ova if the worst were assaed and both stations went under. injury to the public would be short-lived since it could be expected that a new applicat would soon apear. the eeaissien stated x has against speculative ad at the nest teaorary injury to the public interest as a result of conpetition we act weigh the very real and pernanent injury to the public which would result fren restriction of ceastition within a regulatory schae designed for a csnpetitive industry ad without the safeguards which are necessary where gsveraent seeks to guarantee to ay business aterprise greater security than it can obtain by its own csnpetitive ability. With these considerations in nind. the Ceaiseion has deternined that. as a natter of policy. the possible effects of conpetition will be disregafnd in passing ”on applications for new broadcast stations. [even years later in 1957. the Co-iesion went a step further. in disposing of a econonic injury issue raised in the W m case. the rec stated for the first tine that it had no statutory atherity ”to consider the effects of legal ceastitia pen the public service in the 21.14 of broadcasting."” mm. . p. 19:. ”W. n rcc no. (1950). l’zcnlllll. we. ’e 11‘s "W 11 '06 ‘05- (1957)- —.I‘- 71 the effect of this decision however. was sntreuely short-lived. In 1958 the Ce-iasion's position was reversed by the District .of Colabia Court of Appeals in the Carroll case: ...lle hold that. when an existing. licensee offers to prove that the econonic effect of another station would be detrimental to the public interest. the Csaission should afford an opportunity for presentation of such proof and. if the evidence is substantial (i.e.. if the protestant does not fail entireiy‘to nest his burden) should nehe a finding or findings. . the court continued: ...frivate econonic injury is by no neans always. or even usually. reflected in public detrinent. Capetitors nay severely injure each other to the great benefit of the public. the broadcast industry as a ceastitivo one. but ceastitivo effects nay ader sons sets of cir- castaces produce detrinsat to the public intangt. Iha this heppas the public interest eontrols. this is epprouinately where the nutter rests today. As a nettor of law. the Ceaiesisn canot refuse to casider the ecaaic effects of a new grant where a enisting station offers to prove resultat injury to the public at large. ftatiens nay apsel to the Goaissisn under Ioctionm (b) (6) oftheacteaapersseeggriovedadattqt to show that detrinat would result to the public interest if a addi- tiaal station were allocated to a specific narhet. ”Section 30! (c) of the Act fornerly specified that grate of applications were subject to protest for a period of thirty days. During that tine. any party in interest night for-ally register opposition and request a public hearing. Congress. however. in the recent 1960 Anenasnts to the Co—nicatisns Act. abolished the pretest procedure and in lieu thereof has provided that any party in interest nay file with the coaissien a petition to deny any application (whether as originally filed or as aended) at any tine prior to the day the Ceaiesion grants it. the petitioner nust serve a copy _.a —__a w ‘— lg‘W- 15' n‘ W “ “L “’5'" 1”carton. 2, cit.. p. “3. 73 of such a petition on the applicant. The applicant is afforded an opportunity to naho a fornal reply. If the application and the pleadings raise serious questions as to*whether a grant of the application will serve the public interest. the Commission must designate the application for public hearing on specified issues. giving due notice to the applicant and other parties in interest. On the other hand. if the application and the petition raise up natcrial questions. the Commission must cake the grant. deny the petition. and leap; a concise statenent of reasons for denying the petition.” ‘ It would appear fro-Lthe Con-ission's actions over the past twenty years beuever. that the nature of the evidence produced by the existing station would have to be extranely cenpelling to persuade the sec to reach such a finding. The cost of such a proceeding night well be prohibitive fro-nthe standpoint of an already hardpressed station. In contending that a narhet will not support another station. the existing licensee is in effect arguing a kind of econonic "nutual exclusivity." raising the possibility that his one authorisation will be considered cooperatively with that of the applicant. this was in fact does in the W case. l7 or 557. (1958). and the existing station pronptly dropped its objections. What then. should be done with regard to this allocation problenl should agineering standards be altered! Iarry f. Iaraer. in his best W ....... Although the tri-partite structure of clear channel. regional and local stations with the four classes of stations exists on the hooks. there has been a couplets breakdown of the engineering standards. The flexibility of the 1939 rules and standards has donelished the eo-ealled non-ally protected contours 1“Ivlelter I. Emery. Broadcasting and Qggeggggnti legpggsibilitigg W. Iichiga state University Press. 1961. p. 186. 79 of all classes of stations. Interference is now‘nessured in terns of population and service area. As long as an applicant will render service or increase his service to an additional number of persons and to an increased service arse. and provided that there will not be in- creased electrical interference to existing stations. the Commission will grant the application. Directional entennas have been employed extensively to locate an increased nunber of stations. on classes 2. 3 and 4 channels. It is further believed that the assignnent of linited tins and daytins stations on clear-channel fr"“"‘{;, presege a breakdown of the clear-channel station. Werner continues: the published decisions do not reflect the breakdown of the engineering standards. It is believed that a greater percentage of stations have been licensed without hearing. hence no published information is available on the extent of the interference. populations served. etc. An exanination of administrative action taken‘witheut hearing would probably disclose that the interference vslues to - new and existing stations sates! :y for the interference - actually discussed in hearings. ’ While it appears that engineering standards are in need of sons clarification and revision. it is not within the scope of this paper to consider possible modifications of the Conniesion's engineering staderds. Section 503 of the Communications Act gives the ICC the power to allocate radio channels. This task has been csalicated by technical. aeial and econonic factors. One of the najor difficulties before the Connission is the technical limitation inherent within the bread- casting art. With only 96 channels available. the Coaiseien is con- fronted with the task of providing broadcast service to the widest 1’71“” r. Warner. Edie and television law. Albany. low tort. Istthew bender ad Co.. lac.. 1948. p. 278. ‘9 d.. p. 278. entent possible.1” Iobssure. theprinaryfactionofthel’CCis thesauitsble distribution of broadcast facilities throughout the wire and radio comicatiene services. but closely connected with the engineering problas of allocation are the social and econonic aspects which give contour ad neaing to the allocation plen ultinatoly a...... there can be no clear-cut definition of ”social” and ”econonic” factors. they are broad concepts which are given neaing by intuitive judgnonts and colored by usage.“ for the purposes of this paper. "social" refers to the service to the people of the United dtates. including the extent be which broadcasting assists in the develop-at of national. may and individual well-being. We” refers to the reveaes available to the broadcast stations, in order to provide a service to the public. dfforts have been node in the past to asnd the Ccanications Act. with particular attention given to Section 307. which deals with allocation of broadcast facilities. In the 00th Congress. first leeeion in 1M7. hearings were held before a subceaittoe of the denote Coaittoe on interstate and rereign Coaerce concerning Bill ember d. 1333. the Hhite-Ilolverton Bill. One of the provisions of the bill would have aended loction 307. subsection (b) be read as followoiml ...(b) In considering applications for licenses. and adifications thereof. the Coaission shall nahe such ”’nerner. 94.43.... p. 219. mm" p. an. alliance. w. p. 814. 81 distribution of licenses. frequencies. hours of operation and of power aeng the several states and cc-inities as to provide a fair. efficient and equitable distribution of radio service to each of the sac. ivi e i W- (ch-Is“ portion underlined) it the presat tine the act reads: ...oquitable distribution aeng states ad ce-nities ”ineofer as there is a daad for the sae.” (A. .‘.to 10.3. ‘7'IC‘.‘.¢to 307 (b), the effect of the aadnat would have boa to delete the re- quiraent of daad ad instead require the Ceaission to give effect. to the needs ad requiraats of the various ceaaities. the purpose of this aenaat was to "bria about a fairer distribution of radio broadcast fccilitiss in the country ad at the sac tine discourage a policy which grants licenses wholesale sialy on daad."1u latest. in his bash W states that: ...n is believed that this annasnt Eu] designed to rectify the philosophy of the m decision. in that and sinilar opinions the Ceaissien abadaed the requirenent that a applicant nahe an affirnative showingastothenoedfornewordnprovodbroedcast £‘Ct11‘1CUo ...lhe are filing of a application new furnishes con- 203 elusive ovidace as to the need for broadcast facilities. turner continues: ...‘fhe effect of the m decision has boa to greatly increase the nunber of broadcast stations. At the I. 1333 hearings. the fear was expressed that the saturation point for broadcast stations had been reached. particularly in the large netropolitsn districts. ...‘fhe Ceaiesion opposed section 9 of d. 1333 if the intent of that asnaent is to require the Coaission to consider mm" p. 915. ' 2°3l5“eg ’e‘.15o 81 econonic factors in the allocation of broadcast facilities. via.--the ability of a coaunity to support an additional radio station. ...‘i‘ho broadcast industry opposed the aendnent on the ground that "this leads directly into the rate-regulation type of activity.”204 hill 8. 1333 never cae before either the house or the Senate for a vote and the "offensive” ”about, to Section 301 (b) was never enacted into law. - Notwithstanding the fact that anenaents to the Co-unications Act such as the one proposed in 8. 1333 were never enacted. several court decisions indicate that the Cos-ission has sons power to protect existing licensees. The Supra-s Court. in announcing the rule that no protection was to be afforded to existing licensees. (m m1!) . nevertheless indicated that the ICC should consider whether too nuch eapatition would put all licasees out of business ad there- fore nabs it iaossible for any to serve the public. dinilsr views have boa expressed by lower courts: ...‘fhe noro loss of profits to a existing station would at. of course. be a adequate basis for denying a lieasc to a proposed station. If. however. the result of the grat to the proposed station is to echo it finacially iaossible for a existiq station to cations its operation or naintain a higher level of service. the reoultat loss of service night be adverse to the public interest ad therefore warrant daying the new license. (District of Colabia Circuit Court) (”sums no 0. 0. Circuit court also stated in the 1950 m case: ”‘33.. p. 915. 20 (1952) . atic ati 202 Ild 298 at 302. LC. Circuit. .h ..o V. n .. . ,d 83 ...l‘o license two stations where there is revenue for only one any result in no good service at all. do econonic injury to an existing station. while not in ad of itself a nutter of nonent. becones inportant when on the facts it spells dinunition or destruction of service. At that point the '58?“ of injury ceases to be of purely private concern. According to this stataat. ocaenic injury to a statia because a natter of public concern when service to the public is adversely affected. the probla boeaes hes ad a to deteaino that service is being injured or destroyed by ceastitien. then. ace the judgnent of the son that pregr-ing is being injured as a result of coastition. astationer stations oouldbebarredordeletodfrathenarhet in ".‘1ao ‘lhe appellate court in m stated that the ICC possessed the necessary authority ad adninistrative tools to echo such decisions and iuplaent then: ' ...ble think no such elaborate equipnentffound in coaon carrier rcgulation_7 is necessary for the task here. As we have just said. we think it is not loci-bent upon the Coaiseisnzao evaluate the probable results of every lieasc gra . 'l'he court further stated: ...Iho public interest is not disturbed if A is destroyed by9.solongas1renderstherequirodservica. the public interest is affected when service is affected. We think the probla arises when a protestat offers to prove that the grant of a new license would be detrinatel to the public interest. ...lhs Ceaission is equipped to receive ad apraise such ovidace. if the protestat failure bear the burda of proving his point...therc nay be an end to the netter. 1f 20%....11. man... u». us. 3071331.. p. «5. O M his showing is substantial. or if themis a genuine issue posed. findings should be node. the court indicated that perhaps m did not offer its proof in terns of the public interest. It nay be argued that it offered to prove only datrinent to its own ability for service. the Coaiseion has stated: ...Iestriction of coastition is a corollary of exclusivity. and exclusivity is tolerable only by the aplication of public utility concepts or techniques. “has cease carrier techniques are aloyed in the broadcast business to the extent necessary to acconplish the objectives urged upon us. a subtle. indirect. but nonetheless a real trans- fornation fren coastitive regulatory practices to public utility regulation will inevitably result. this we dea contrary to the specific provisions of the Coanications Act. the intent of Congress. and the intemetation of that act in the m case. can the Ceaission felt that if it were to consider oceanic effects it would be put in the position of engaging in a detailed cease carrier type exainatioa of the existing stations' officiacy. its proper rate of return ad prices charged advertisers. factors which it believed Congress had excluded fra consideratia in the broadcasting field. the ICC does. however. regulate broadcast activities which touch on the business relations of its licensees to a certain extat. Ier angle. the W. although addressed in terns of statia licasees. actually governs specified relations betwoa stations or applicats ad networks. mm" p. m. MW. 22 I00 605 u m- (1957* 85 In a cease carrier case in 1953. W. (3“ Cd 06. (1953). the ICC allowed a new radietelcgraph service won the ground that overall national policy favored conpetition whenever feasible. the tarsus Court. however. raaded the case to the Ceaissien. holding that the ICC should first dotsrnino that ceastition wee beneficial under the circaotaces. Although indicating that the Ceaission night properly foralats a rule favoring coastition whenever reasonably feasible. the Court said that it act exercise its own judgnont in doing so ad not nerely. rely upon a supposed congressional policy. stating: ...we think it not inachissiblo for the Ceaission. when it nukes naifeet that in so doing it is conscientiously exercising the discretion given it by Congress. to reach a conclusion whereby authorisations would bemated' whaever eapatition is reasonably feasible. the opinion “Washes it clear that there is no inevitable logical requiraent thet the oceanic oonsoquaoes of eeastitioe be considered aew in each case. Instead. the ICC should consider those consequa‘ta in reaching its gaerel rule. rather tha nerely relying ace a supposed overall ooureosionel policy acoustically fevoria conpetition in each case. I Iowover. the court in m indicated that since the public interest is the controlling factor ad staderd. it act be considered separately in each case. Richard A. Givens. a layer and odor of the low Iorh her. writing 1- the W mm: ”W. m m. u .. :6. (1m). 86 ...l'he fact that conpetition nay sonotines be wasteful nust be considered in_ the light of t fact that the applicant for entry [to broadcasting_ is willing to stake his investant on his belief that he can pcrforn a service for which people will be willing to repay hin. ...Iurtheruere. aside fren m new atry. the new of new entry into a industry exerts a powerful influence upon the conduct of established enterprises. Thus it is clear that if price is high. service inadequate. or daand unfulfilled. the field will appear particularly attractive to potatial aewceners. the established firms will there- fore strive to avoid a situation not only eat of their concern for public interest. and to avoid political in- tervanticn. 3“ also to asks the atry of new conpetition less likely. It appears to no that if the Ceaissien would revoke licasee or withhold renewal of licenses of these stations with poor pregr—ing records. it would not have to rely on the threat of entry of aothor station in a particular narhet. the ICC has eelden if ever revoked a broadcasting license on grounds of inadequate or poor overall progra-lag. One example should suffice to illustrate this point: In 1958-59. eight radio stations in Georgia operated on temporary licasee for are then a year. Renewals were held up by the ICC because the stations had carried little or no agricultural. educational and religious progr—iag. 'fhe Ceaissien had under advisaent the question of whether to hold public hearings. On July 15. 1959. as a leading trade journal reported it. these stations. “which had been sitting on a ICC hot seat for are then a year were renevod fren their uncenfortable positions.“ By a l: to 2 vote (one Coaissioner was absent and didn't vote) all these licenses were rescued. It is aesaed that the licensees node satisfactory explanations of their past perfornaco and gave adequate aesuracos to the Coaissien that mir future progr-ing would serve the ”1“ interest. 311cm». w. p. 139:. 211' alter I. fiery. 91' W Iichiga state University Irese. 196 . p. no. 87 Unfortunately. the Marion in general has not adequately con- sidered the job that present licasees are doing as a nutter of policy. At the present tins. prices nay be low. service adequate and daend filled. but under the law the Conclusion has felt cowolled to issue new licenses if applicants were finacially and technically qualified ad a frequency was available. lxisting stations. under lection 309 (d) as a party in-interost nay. however. file a petition to deny any application at any tine prior to the day the Coaission grants it. because of the nature of radio broadcasting and its technical character. there is no way that the existing station licensee can neat the new osaetition by expanding his facilities. strengthening his signal or diversifying into other fields. without emission approval. the bread- caster has only one coaodity that advertisers and the public are interested in -- air ties for prograing and sale to the advertiser. Ihe broadcaster can. if he so desires. cut his rates to attract are business. with the usual result that he has less revenue with which to ast his expenses and provide were and better service which auld. hopefully. attract noro listeners and clients. It is ny assertion that becase of this revenue decline. sustaining prograaing of a public service nature suffers and the qualitative level of progra-sing in general declines. therefore. it is ny contention that licensing policies that do not recognise the special and unique nature of broadcasting in the area of aaotition are not in the public interest. A deeuion by the ICC to weigh the issue of oceanic injury and its effect upon the public interest would era that substantial linitetion sf atry to broadcasting is in the public interest. me Ceaission's policy appears to be waving in this direction as indicated by the M 88 decision and subsequent cases that acknowledge the right of an existing station to sons consideration of its econonic status. lir. Givens continues his case against ICC use of econonic con- siderations in licensing new All stations. citing anti-trust laws as a deterrent to consideration of linited entry to the broadcast field: ...‘lhe antitrust laws are snphatic in their condsnnation of any attenpt to exclude csnpetitors. ...loenenic factors do not favor lbsitatisn of entry except where it is clearly compelled by specific circunstances in the industry. It uould therefore appear proper to hold that in the absence of highly persuasive facts concerning the specific industry. regulatory bodies should not restrict entry into that; industries on the basis of scone-dc considerations. Givens continues: ...De the specific facts of the broadcasting industry justify linitation of entry on econonic grounds not- withstanding the conclusions snerging fren a synthesis of antitrust and regulatory policies? The answer not clearly be no. 0n the contrary... the degree of regulation authorized by the act is less than that authoriaed in nest regulatory statutes. 'fhe anti-trust laws are fully appli- cable to fissdcasting and no eruption power is granted by the act.2 It is ny assertion that neither anti-trust policy nor section 153 (h) of the act support these conclusions. The anti-trust provisions of the ce-Inicatiens Act. designed to prevent great concentration of power in the industry. have long been held not to linit the Co-iesion's authority to grant or deny licenses in the public interest. In m lctworh. 13.. l NC. 107 32d 212. 223. (3.6. Circuit. 1939). the court said: ' 213°1mg mus. ’e 1‘00. um” p. “00- .4. -. I“.— w I \l) .l .,I O 7‘4... auuru I G. e ‘4 ' O i , 0 v . l . . . ' It. .0. ‘i ' I: i . . .. V‘ ‘ . 'I 0.. .J , 7 l ' .d ‘O . .- . .4! .. O a' V‘. J v -l ,1 ‘ --.vv-‘Ov- m ...Hhile it is true that it was the intention of Congress to preserve conpetition in broadcasting. and while it is true that such intention was written into Section 316 of the Coo-snications Act. it certainly does not follow there- fron that Congress intended the Omission to grant or deny an application in any case. other than in the interest of the public. Just as a nonopoly -- which nay result fren the action of the Co—iesion in licensing too few stations -- nay be detrimental to the public interest. so nay destructive conpetition. effected by the granting of too nany licenses. the test is not whether there is a .nspely. on the one hand. or an overabundance of conpetition. en the other. but whether the granting or denying of 3: application will best serve the interest of the public. The anti-trust provisions of the Co—uications Act bar certain concentrated holders fron conpeting. Isa 48 Itat. 1081. ‘7 I.I.C. paragraph 311. (1952) (prohibiting the granting of a license when I'ths purpose is and/or the effect thereof nay be to substatially lessen constition or to restrain cs-erce...or ulawfully to create nenspely in any line of co-erce.") thy. far fren being inconsistent with anti-trust policy. Ce-ission power to restrict constition nay esnstines be used for anti-trust moses: ...fhe nethed of uncontrolled titisn argued for in the present case as in fact one way of creating nonopolies... eavi in the field only unspelies which were sufficiently supported financially to withstand the destructive conpetition which night result fren arbitrary. careless action on the part 3‘ the Ce-isaion in the granting of new station licenses. ‘ In addition. the Co-issisn has stated that tectisn l” (1:) does not preclude application of cousn carrier concepts when necessuy to the proper discharge of its duty to ahinister radio licensing. (lee WW. 6 m ‘56- “34‘ (1930). w w, w— fir w a “W. 197 m m. 313- (M- “WM (1939). 21‘Y-hee letworh. mg. at 223-24.. ‘s. o O ‘V . . I ~r~v 'h o on . .K '0 .1 _ ... . V l i N I ‘ ‘ V " < . n f, ' | -1 . . _) ‘ . .4 | -.-. fi-n.“ .. ' o 'b . . r . . | I . l I , ' 1 I ‘ x . U . f n , - a “ ,1‘ nos ' l r ‘ I! on ’0 211 on rehearing. 1 ICC 501. (1939). faction 133 (h) nerely prevents use of title two of the Cs-nni- cations Act. dealing with c—n carriers. as a source of authority over radio. it need not be taco as liniting the power to license radio or other broadcasting grated in title three of the set. her does faction 133 (h). cncluding broadcasting fren the title two provisions for close supervision of cause carriers. warrnt the inference that Congress intended esqetitisn to be preserved notwithst-ding the public interest. (lee lashes letwerh Inc. v ICC at 222. which rejected the erg-set that the fact that radio is not regulated as a canon carrier i-lies that the Co-ission nay not protect radio against "enticed”. A policy of csqletely free censtition such as Civons advocates is not adequately s.ported by arguing that the results of constitisn cannot be predicted. ad that allowing a hearing nerely “ages protests lodged for purposes of delay. (lee herican Iouthern broad- casters (Illll). 11 II 105‘. 1056. license denied. 13 II 927 (1931)): ...‘fhe possibility that ceqetitien between radio stations nay result in detrinsnt to the public by reason of lowered quality of progr- service or the csqlete elininetion of one of the csnpetitors is a fact incapable of proof. to pernit the snisting stations to utiliae the protest procedure to force a useless hearing on these issues would“, under such circustances qpear to be an abuse of process. ‘fhe pretest procedure had been used effectively by ceqetiters to prevent a new radio or 1' station fren going on the air for as long as two or three years. (lee 102 Congressional Record. 1:16-10 [1956]). “tale Ln! gournal. notes. ”Iconsnic Injury in no Licensing: 'fhe fublic Interest Ignored. 072160 (1957). "’W. 11 '3 1°“- “’5" “’5‘" 91 To elininate ouch unnecessary delays the act was needed in 1956 (47 0.0.C. (faction 309 (c)). topple-ant- 6. 1951). to allow -a grant ' of license to rennin in effect despite pending protest proceedings if ”the Codesien affirnntively finds for reasons set forth in the decision that-tho public interest requires that the grant main in effect...."220 In 1960 the Act was further anended. abolishing the‘ protest procedure and instead pernittad parties in interest to file a petition with the Ce-ission to deny the grant of - application.an beyond these econonic factors however. there is a fid-s'ntal policy question to be raised. the First hsnhent nay csqel the dis- regarding sf eesnsnie injury in granting broadcast licenses. This has been asserted for three reasons: 1) rejection of a qualified applicant where available frequencies exist and where aspects of broadcasting which are "alike other nodes of expression” are not involved. would appear to be itself 'an abridgnsnt of freeden of the press; 1) the um henhsnt enum- «um the am of «m1... regulation of brosdcastiu which frequently aecaqanies linitatisn of entry; and 3) the underlying policies of freeddn of expression flowing fren the first henhent counsel against linitation of entry on econonic grounds)” these policies have.“ is alleged. been frequently recognised in such criteria as diversification of ownership. and would be violated by denying a qualified applicant on equal opportunity to ceqete for 220., m. (faction so: (c). ”.1..-c :. 1957. 225.1“! .o h". a. it‘s. 'e l.‘o ”him. wag ’o 1603. 92 viewers' ad listasue' attatia if frequencies are available.”3 the buprene Court has observed. however. that. "lhe facilities of radio are linited and therefore precious; they cast be left to waste- ful use without detrinat to the public interest.“ m 319 90 190 at 216. ("d”). this principle. together with the fact that the wording of bectien 326 of the Motion Act does not specifically include nation of ahission to broadcastia being guarateed ‘by the first acnasnt. would qpeer to nshe this issue irrelevat. the wording of bastion 326 provides tat: . ...Iothing in this Act shall be understood or construed to give the Ca-ission the power to censorship over the radio co-unications or signals transnitted by any radio station. and no regulation or condition shall be prcalgated or fined by the Ccaissisn which shall interfere with the r t of free speech by nouns of radio osnnnnication. . by this provision the Ccaissisn is not pernittad control over progran offered by estaliasd broadcasters. Is power of caoorehip is given the licasee ad the Cc-issisn is to regulate in the public interest. convenience ad necessity. the licensee is to broadcast ader the sac staderd. the Cc-ission cannot interfere with pregr-ing; this is the neaing ad intent of bectisn 326. Since radio broadcasting is by nature a field of linited coastitien for engineering as well as regulatory reasas. the allegation that the first Ansnasnt supports every applicat cannot be accepted. Using such reasoning. any applicant - 113W. ICC bisclains Power to Linit Coastition in broadcasting. 37: 1036 at 1030. (1957). ”‘0 up. bection 326. J 1.. . ’ 7-. ll . a 1. I) . . i . , : 1' ~‘ I a I i 7; '. » ;.. :.. ,\. :3. . , ; , V ,5 9‘ 1‘ i o I a 1 .1. l1 . l . J ‘Hi I'; ‘ l .' .: J: . . _ I ' ..‘l ya .1 ’1, b: -3 A' . . .. ' . J J‘ E J. ' 3 , . I . ;'_'_ '. A ' , .‘ {I 3, :. ‘l ' o . ( -‘ I - , J 1. I 'c. ' I - J I ’, ilk“ ’v 1 ‘ | .1 ' )1 1 j a . u I .4 (,0 .. . 1 . . ‘ .‘ l )' 1.1% ’. l , . . w,’ ‘5 . - . .1 J a x. u t i” J ‘J a . ‘ I 4 ‘j . . . . 3' .' . It ' J V I*~ l. .J.‘ U. .‘ J .3! 'J » I vs -I t 1. 31 ’l. J J J I z 1 l: a ,1 ( Q 2' .T; o J ,2 . .. - m-. ...a- w._..._.,.....-- I. v ‘ ' -"r t'-; p :3 a - 4; ‘ I ;\ . . O ,4 4 . . K. n‘ 93 turned down in a comparative hearing for adnission to broadcasting could plead injury on the grounds of restriction of freodsn of speech under the first bond-cu. and this has not been accepted by the Caiasion. bconcnict larvoy J. lovin. writiu in the W W pro-nt- the do: that: ...the fee has only hinted at cone ultinate non of ”adequacy" in applying its various licensing standards. A fuller. noro syntactic statenent and dovelopnat of such a norn will ultinately be necessary if spoctrun space is to 22 allocated and licensed in the “public interest“. 5 in order to achieve this scan of adequacy. Levin recs-ends the following: 1) The inconsistencies which riddle the rock decisions at conpetitive hearings should sonehow be ironed out. this night reduce the rich elsnent inplicit in joint hearings. and strengthen the relative position of applicants with less extensive finacial resources. 2) the ICC needs help in the fern of Congressional appropriations and the cooperation of universities and research foundations in studying at length the social basis and not”: inpact of its different licensing standards. Levin continues: ...for instance. it is high tins that policy nahers should ascertain the inpact of different licensia standards on the fern and content of radio progra-ing. the iaact of progra-in on listensrs' attitudes and values. ad finally the effect of changes in these attitudes and values on the listeners' political behavior. prejudices. creativity. and spontaneity. bffective zzshmy .7. Levin. "bocial warm Aspects of rec broad- mt menu-c stun-dam“. muse-W 2262“” p. 53. 91: allocation of the airwaves ”in the public interest” would soon eventually to require answers to such questions. ...‘l'he standards that have evolved to date are at best naheshift. instituted because practical problas of tracndous negnitude had to be faced and answered. It is are than tine to ferret out the inconsistencies and to test the significance of the standards in to”, of sons concrete core of adequacy of radio service. While the present fresco on All allocations nay indicate that the Coaission is conducting the re-enainatian of policy that Levin advocates. there has been no public discussion of whether or not radio should be casidared a public utility. since it serves the public interest. It has been subnittod that perhaps a public utility status for radio is to be preferred to the present confusing. soni-csactitive systa. Congress has the power to deusninate radio a public utility if it so desires. Judge lra lobinson. fornerly head of the federal badio Ceaission has stated: "Ihether you loch at it fren the listening and or the transnitting and. it is concededly a public utility.”2u And as regards the position of radio networks on the question. Judge bobinson said: ”It scene that every tins the broadcasters have a nesting. they resolve that their stations are not public utilities. the wish is nerely father to the thoughtfzz’ A sinilar view was given by forner ICC Chair-an. liclinch in brother. badio bower and Air-Channel begulatory Headaches. 23 gem W 643 at “lo-65. (1939). be stated: "Libs a public — vi ——7 2”Levin. 22:45.» p. 54. 22alsinl. 1s a broadcasting Station a fublic 0tility1.6 mus £1,115“. [ortnightlz 3“ at 34.5. (1930). :2 ’m. . p. 31.5. hr 95 utility. a broadcasting enterprise is a licensed nonopoly on a given frequency ad in a given area. in return for which license the enterprise sub-its to goverasnt regulation."23° It is true that Section 153 (h) of the Co-inications Act pro- video that a broadcaster in not a coaon carrier (with stated enceptiona): but nany nblic utilities are not scaon carriers. e.g.. electric light and power plats. therefore it would not follow free the fact that if a service is a scan carrier. it is also a public utility.231 1- W. the court held that aim so rates are. fined. or profits linited ”...public convenience. interest. or necessity should not be given aaning as bread as in public utility legislation." the argusents generally presented on both sides of the issue as to whether broadcasting in a public utility nay be saarised as follows: for: l) the phrase “public interest. conveniace and necessity" in borrowed fron public utility laws and naifests an intent on the part of Congress to iasse the strict obligations thereof in the broadcasting field. 2) the prion aty is to serve the public. 3) foint-to-point broadcasting is prohibited. 6) beta regulatm is not the deternining factor in the question. 2”brother. Indie fewer and Air-Channel regulatory headaches. 13 WW «3 .. as am). ”lat-sic, brown ad Join Wesley beid. bcgulatien of bedie broadcasting: Coactitive bntsrprise or fublic btilityl. 27 m W 269 at 2“ (19“). ”W ls badio a fublic btilityf. 11:177-91 (1950). 96 Against: 1) India is not a necessity and is not paid for by the public. 2) lo obligation to serve all equally. 3) be regulation of rates or linit on profits. 6) 'fha fCC is not a public utility co-ission. It 7 has no jurisdiction to investigate and supervise actual business operations. (It will be noted that argaents 3 and I: are characteristic of coaon carrier regulation. ‘ but coasn iars constitute only one class of public “htlith..)o ' In W. the court. in comparing the transportation Act and the Coanications Act stated: . ...but in spite of these differences (via. broadcasting enccpted fren the coasn carrier provisions and absence of rats regulation) the two acts contain vital sinilarities which nahe the analogy proper.... badio broadcasting. the subject of one. is affected with the public interest in fully equal neasure as railway transportation. the subject of the other. Congress recognised this fact by nahing the Cc—nications Act epoch in terns of public interest frcn beginning to and.... late fining is only one of any regulatory procedures. the fact that it is specified for carriers and not for broadcasters is by no nouns conclusive. In each cnse (railroads and radio stations). Congress has delegated the power to regulate public utilities in interstate con-arcs for the purpose of safeguarding a duel interest involving a reciprocal ad correlative relatmahip between the public ad the owner of the utility. Craving concern with the economic aspects of radio regulation nshes it worthwhile to canine this probla of whether or not radio is in fact a utility. however such an enainotion is beyond the score of this past. further research on this question would be of great value in helping to clarify the status of. radio as a csnpetitive aterprise ‘3 .. p. 1:1. '3‘rbis.. p. 132. 97 charged with serving the public interest. the possible use of econonic criteria by the ICC in dcternining allocations of new All radio stations ant be casidared as an enorcise of regulatory authority in such a nanner that the business syetcn of broadcasting will render progra service of noni— setisfaction to the ”ItCo 'fhe objectives of radio regulation in the econonic sphere have been outlined and should be clear. what. however. do they ialyf I believe that a portion or all of two basic categories of objectives stated by Iornnn lettinger in the W should be attained by the use of ocaenic criteria: ' 1) ‘fhe allocation of broadcast facilities in such a nsnner as to nahe radio signals and the progran they carry available to as neny listeners as possible. but also under conditions aich will provide stations the potentiality of revenues adequate for technical and progran canine of a standard that is in the public m“.‘to 2) Case facilities have been allocated. the enercise of general supervision of a nature that will result in a quality of service both tfignical and progran. in heepiu with the public interest. the conception of progra service as radio's ultinate utility act be given attaticn. bet a overcntcnaicn of regulatory activity will have far-reaching social. political ad econonic caaqaacou Accordingly. I believe that the following proposals put forth by lettingor. nay be of sons value in constructing a new and noro worhable allocatia policy. Ihey are as follows: A 2”liar-nan b. lettinger. ‘l'ho lcononic factor in Radio begulation. W. 9:115-28. April. 1933. p. 120. 236;bid.. p. 120. cl awn 98 l) Stations should be located in co-nunities or with respect to wider narhoting arena of sufficient econonic importance to insure the potentiality of financial support aggyuate to naintain operations in the public interest. 2) To the extent to which it is technically feasible. a station should be granted facilities sufficient to cover its logical area of social and econonic influence.238 3) btations in a lihe class serving the cane area should be grants: gs great a parity of coverage as is technically fO‘IAbICo 3 b) A sufficiently high standard of worhing capital and professional shill nust be required of new applicants for licenses to insure a grade of service which will interest listeners and will attract revenues withghich to naintain broadcasting in the public interest. 5) mien once it is established by careful econonic analysis that a «unity or logical area of service possesses as any stations of proper class and hind as it can reasonably support. then these stations should be safeguarded fron unreasonable further increases ”facilities and consequent ruinous and unfair conpetition. 6) this protection should be balanced. however. by fostering csaetition between stations. groups of stations. and -- to the extent that they are basically conpetitive -- classes of stations. as that vitality of service ’3! incentive for further inprovcnent nay be naintained. ' bafsguarding stations fren unreasonable conpetition requires scientific deternination of co-inities' potential advertising revenues. together with factual data on perforncnce of various classes of stations under different conditions: these two classes of infornation being ”Hug. . p. 122. 233m. 239m. 99 necessary to dotsrnino the linits of reasonable conpetition!” In order to foster conpetition. a reasonable balacs betwoa the various elonats in the broadcasting structure and flenibility in allocation are two constructive steps. Of course the goveraont cannot regulate nediocrity out of existence. but the fCC can safeguard the public by encouraging conpetition at a reasonably high level so that the best progran service will result. The public has a vital interest in the service it receives and is penalised by a policy of unlinited grants aich pulls down the good stations to the level of econonic survival. no Darwinian doctrine of “survival of the fittest” after the m decision has not resulted in progra-ing of a neesurably higher quality resulting fron increased conpetition.“ While radio is private in the property sense. it is public in the functional sense. laterally there can be no guarantee that even if the naber of stations were reduced. better prograing will autonntically result. fcrhaps stations with fewer conpetitore will not use added revenues to iarove or increase progran services to the public. 0n the other band. could the industry have continued rapid snpansion in the face of cnnllor profits. heavier losses. and increased coactitien for a relatively fired “or of advertising dollars! I do not believe that a situation of this hind could have been tolerated ach longer than it has been. It in up view that the judicious use of ocaenic criteria for deter-icing caission b the field of broadcasting should be the result of Congressional actia “31211.. p. 123. zl“Idols Conrad. bcsnaic Aspects of India begulation. W W. 3A: 2b3-30A at 303. April. 19“. 100 in the event that the Omission cannot find justification for such a policy under the present Ccmunications Act. e e he ch." With regard to the rec'- policies on programing standards and practices of licensees and allocation policies. there are a number of areas that can be approached. A study could be made of whether the present engineering standards of the co—ission adequately neat the hands placed upon then. or if they to. in fact. a set of rules nore frequently wnived than observed by the rec. "hot effect upon programing. and public service progre-ing in particular. does the addition of s second or third station in a onall one or two station narhet hovel ls progre-ing improved through eoqetitien. does it renain about the one in quality and frequucy. or does it decline in both quantity and quality? to there a need for an entirely new broadcasting section of the Co-Inications Act? Could the present act be effectively anended or nodified to handle contenporary and future problas not envisioned in 1935 and the years when amend-ants of the act were nude? have increased bchnical knowledge and the nere insistent denands of the herican people for noro ad better progra-ing been adequately understood and dealt 1th by the Coulissionl Is there a need for a nore ccnprehensive and specific progran policy with regard to types end quality of prograns! It is quite evident that the area involving the conpetitive and business status of broadcasting needs investigation and clarification. to broadcasting. for enanple. reelly a sort of quasi-public utility; should it be considered an area of cenpletely free conpetition; or should the Ce-iseion assert nere control over the assign-out of spectrun space 101 and the need for new stations! these are a fan suggestions for further research in the general probla area with which this study has been concerned. BIBLIOGIAPH! £223.: hery. Walter I. ad asti an Gov en . last Lansing: lichigcn State University Press. 1961. Warner. harry P. Ladle and television L91. Albany. llew York: Katthew lender Co.. Inc.. 1948. g n t o I" ‘0“! Iltthfl .u‘.’ “op Inc.. 1933. u 1 le tall. I. J. "lcononic Injury theory of Appealable Interest llnder the Mic-un- Act.” W: s (larch. 191.0). 836. . Irather. J. ”Radio Power and Air-Channel Regulatory headaches.” W 13 (1939). 663- . Drown. Stanley and Ioid. John Wesley. “Regulation of Indie broadcasting: Coupetitive Interprise er Mlle Utility?” W. 27 (191.1). 249. Conrad. ldwin I. "lcenonic Aspects of Radio Regulation.” um mm at (mu. ma). m. 'lconenic Injury to an‘lnisting Station as M for Appeal.“ A; m. ll (April. 1940). 11?. "federal (imitations Act-ought to Appeal under Section to: (b) as an "aggrieved person.“ W. 11 (January. 191.0). 93. "Ice Disclains lower to Linit «petition in Broadcasting.” w W. 37 (Iovonber. 1951). 1036.. ”Ice hagulatien of Coopetitien sneng Indie letworhs.” W 51 (1951-42). «3. 102 103 Ind. Frederick. “Icononic Considerations in Licensing of Redio broadcast Iacilities.” W. 17 (1961). 1’1. lord. Frederick. ”bone Current broblens in broadcast Regulation .” WW. 17 (1960). 76. Givens. Richard A. ”Refusal of Radio and television Licenses on Iconenic Grounds." Virginig Ll! Min. ‘6 (1960). 1391. Goldie. I.I. "Rcononic end Regulatory troblsns in the broadcast tield.” * want. so (195‘). :21. Role. G.R. and bale. R.b. ”conpetition or Control: Radio and television Ironic-acne." W 107 (blotch. 1959). 585. Iansen. Victor R. "broadcesting and the Anti-trust Laws." M W. 22 .mt-n. 1957). 571. leinl. Robert D. ”Is e broadcasting Station a tublic Utility?” tub“; figlitieg [grtnightlb 6 (1930). 344. Iettinger. bornen 8. "the Icononic Factor in Radio Regulation.” g; malls!» 9 (April. was). us. buntley. R.R. ”Growing Pains in breedcaet bogulation." 1W 2w. lb (1937). 186. Irion. b. Gifford. "rec Criteria for bvaluating conpeting Applicants.” W. #3 (January. 1959). 497. ”Is Radio a Public Utility?” W. 11 (1940). 177. Reyes. hueilo b. “the Recennendetions of the betworh Study Staff: A btudy of boa-Price Discrininatien in broadcast television." We» 17 (1959). 303. Levin. larvey J. "brondcest Regulation and lnternodi- Gmtitien." W. 45 (love-bet. 1959). 1th- . “Social Welfare Aspects of I00 broadcast Licensing Standards." c o c oc olo 13 (1953). 39. leyer. Jacob H. 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Ill. “Coupetition in the broadcasting of Ideas and Intertainnentushall Radio take over television!“ W. 101 “Pr“. 1933). 711- 11“. Junk B "m Sui-r- em." W. A (January. 1940). 13A. broadcasting Industry Periodicals "Address to the lentnchy broadcasters Association by trederich it. Ferd.” W. 62: 42. October 23. 1961. "At Chicego: A linow of Ileny Hoods." W. 62:51:. April 9. 1962. 'birth Control for All Rediol" W. 52:27. April 9". 1961. "eqstition is tougher: traces postwar trend." 6.1!. tower. » W. 57:30. October 19. 1959. . ”Current Statistics." W. 62:97. Mgust 20. 1962. "Decade of Decision: broadcasting in the 60's--Bpecia1 Report.” W. 171:27. April 1. 1960. "00 Control Over Rates. Profits?" W. 55:33, July 14, 1958. 105 'license Outback night Help Radio Inprove. says lord.” W 32:1. October 23. 1961. “Profits and protection. an editorial.“ bol taisheff. broadcasting. 62:122. April 9. 1962 . "ten questions regarding the 200's proposal.” groggcestm. 62:69. lay 21. 1962. . "the Short View. an editorial." Sol taishoff. W 57:126. October 5. 1959. |'Iould Radio birth Control Help?” W. 62:33. April 16. 1962. W W. n11.11519.2122- loo 11337 W- love-Mr 8. 1961. a -1 n - W 1965-196 . lubers 11-27. A W W 80th Congress. lot Session. 1947. sese_le£eriel . 11 RR 105‘. (1955). license denied 13 II 927. (1957). d ' t n. am: 131. (1936). W- 5 rec 139. (1938). W 258 m Mo. (use). 2122ch 3.4;; 939, 1 zcg. 113m 24. (1941). WW- 10* m m. (1939). W- 11 n m. (1954)- W- 6 rec 7. (1939). MW. 202 :24 293. (1952). W- 175 ns 3“. (19:9). 106 m bgaggastig go. 10 '00 393. (1944). 1.1; 343; gm; Eggs mums. . 3 no 317. (1933). W. 346 08 86 (1953). m 1 mderl baths“. 309 03 470. (1940). the dwil tio . 337 08 265. (1949). m y as)”; brothers. 289 09 206. (1933). M. 7 900 544. (1939). W. 16 RR 274a. (1957). e b c i t t {dicagtigg 2. v [5. 94 12d 244. (1937). Egbert 2. gen. g. 17 n 531. (195:). W- :2 n 313. (1933); :3 er 996. (1937). MW. 22 m 941. mm. W 31.2 n: 143. (1931). W- 4 n m. was). W- 91 m m. (193:). mm. :9 n 1031.. (1960). m. 3:9 vs 190. (1943). MN. I. rec 23:. (1937). W- 8 rec 3. (ma). 1 W- 94 n: 249. (1337). mm. 11 n 348. (1954). W- 1 '00 1‘3. (1934)- W. 2: rec 605. (1951). W- 7 m 4”. (1,39). m . 7 no 619. (1966). W- 6 m l056. (1938). ... «heart-s. 7 too 501.. (19 ). 107 W. 107 22d 956. (1939). MW. 351 08 192. 13 RR 2161. (1953). W. n n 150.. (1959). W. 14 '00 770. (1950). e d s i o. 27 200 161. (1959). W. 68 22d 432. (1933). W. 107 92:! 212. 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