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Mr. HARRIS. Now, I have a statement that has been sent to me by. Senator John F. Kennedy, which I will put in the record in a moment. It is on this particular subject, and includes this statement: *** the most effective way of insuring that such a policy [of nondiscrimination] is followed is to prohibit the Commission from effecting a discrimination between applicants for a broadcast station by including as a factor in reaching its decision a preference to the applicant with no or fewer associations with or ownership interests in media of mass communications.
I think that gets back to what Mr. Flynt and some others were referring to a moment ago. You can say it by law but how can you prevent the individual who is going to determine these things from arriving at a conclusion in his own mind after hearing all of the information that would result in the same thing?
Mr. Hanson. I do not think that you can in the case where the balance of the scales is so delicate that it is just the impression of the examiner or the impression of the majority of the Commission at one time. But that balance has not been so delicate in many of the cases I have discussed, on the basic theory of what is best in the public interest.
Mr. Harris. Thank you very much, Mr. Hanson. We are very glad to have had your testimony this morning.
As this point I should like to include in the record a letter from Senator Kennedy of Massachusetts, together with a suggested amendment to the bill, and a statement to accompany it. (The documents referred to are as follows:)
UNITED STATES SENATE,
Washington, D. C., April 11, 1956. Hon. OREN HARRIS, House of Representatives,
Washington, D. C. DEAR OREN : Enclosed is a memorandum commenting on the problem of “diversification” in the awarding of television channels and a copy of suggested legislation. You will recall that I mentioned this material to you earlier.
I have not had an opportunity to study the material, but I would appreciate it if you would give this your consideration and I would very much like to know your reaction to it. Sincerely yours,
JOHN F. KENNEDY, The newspaper amendment (H. R. 6986) to the Communications Act of 1934 would prohibit the Commission from adopting any “rule or regulation of substance or procedure” which would effect a discrimination against a newspaper applicant for broadcast facilities. The proposed amendment contains the exact language of a bill which was first introduced in the House about 10 years ago. This bill was adopted by the House in the 82d Congress as section 7 (c) of the so-called McFarland Amendments to the Communications Act. It was eliminated from the McFarland bill by the conference committee because the Commission assured the Congress that it did not have the power to effect any discrimination against newspapers and that, as a matter of licensing policy, it would not discriminate against newspaper applicants in the future.
During the hearings on the pending newspaper amendment, the Chairman and the General Counsel of the Commission, both testified in opposition to the bill. They both stated that the Commission does not believe that it discriminates against newspaper applicants, that the bill is ambiguous, and suggested, in effect, that, if Congress believes the Commission discriminates against newspaper applicants, the bill should spell out precisely how it is intended to change The Commission's present licensing policy.
Fortunately, the legislative history of the newspaper amendment reveals clearly what the House intended to accomplish by its adoption. Congressman Harris, one of the managers of the bill, explained the reason and purpose of the amendment, on the floor of the House, as follows:
“During the hearings on S. 658 held in August 1950 and April 1951 by the House Committee on Interstate and Foreign Commerce, and in executive consideration of the bill, the subject of the Federal communications policy with respect to newspaper applicants was discussed by witnesses and members of the committee. Fear was expressed that the Commission might at some future date attempt to adopt a blanket rule or follow a blanket policy of denying applications for radio or television station licenses solely because the applicant is engaged in the gathering and dissemination of information. This apprehension was strengthened by a statement of the Commission's policy vis-a-vis newspaper applicants contained in a dissenting opinion of the then Chairman-in which he was joined by Commissioner Webster-in the case of the application of Hearst Radio, Inc.-WBAL—and Public Service Radio Corp. which was decided on June 18, 1951. Chairman Coy's statement read as follows:
“ 'The Commission is committed to the principle that unless there are overriding considerations, preference should be given to a nonnewspaper, non-multipleowner applicant as against an applicant which publishes a newspaper or has other broadcast stations in order to encourage the greater diversification of control of the media of mass information. This principle, unlike that of integrated and local ownership, is not grounded on the fact that there is any basis for assuming that one applicant is more kely to carry out its program proposals than the other, but is a reflection of the congressional policy expressed by the Communications Act, and that the public interest is best served by having as wide an ownership as possible of the media of mass communications.'
“The majority of the Commission failed to go along with the views expressed by the then Chairman Coy and Commissioner Webster. It had the following to say with respect to newspaper applications:
* Newspaper ownership does not automatically disqualify an applicant. It is a factor which is considered, but only in relation with the other aspects of comparative determination and as it bears upon the final decision of whether a grant to the applicant in question is in the public interest. The record does not show that the common control of WBAL and the Baltimore newspaper, has been employed adversely to the interests of the listening public, and an inference can reasonably be drawn that these conditions which have previously obtained will continue.'
“The views held by the Commission majority with respect to the interpretation of the Communications Act in connection with newspaper applications for radio and television licenses accurately reflect the views on this subject held by the House Committee on Interstate and Foreign Commerce. However, because a substantially different exposition of the Commission's policy with respect to newspapers was made by the then Chairman Coy and by Commissioner Webster, and because it was claimed that this exposition of the Commission's policy reflected congressional policy expressed in the Communications Act, the House committee felt it desirable to include in S. 658 the so-called newspaper amendment. It is the purpose of this amendment to make it clear beyond any reasonable doubt that the Communications Act does not authorize adoption by the Commission of any blanket rule or any arbitrary policy with respect to the granting of radio or television stations to newspapers.”
There is no question but that the Commission in acting upon competing television applications has adopted a “blanket rule” and “arbitrary policy" of discriminating against newspaper applicants. This discrimination results from a policy which the Commission describes as encouraging the diversification of the media of mass communications”. It is precisely the policy which former Chairman of the Commission Wayne Coy expressed as the Commision's policy in his dissenting opinion in the WBAL case. It is precisely the policy which was intended to be repudiated by the adoption of section 7 (c) of the McFarland bill. The policy has been consistently applied by the Commission, not only to discriminate against newspaper applicants, but also to discriminate against an applicant associated with any other medium of mass communication, such as a radio station, television station or moving picture theater.
The Commission's diversification policy is expressed in terms of awarding a preference in a comparative hearing to the applicant which has no or fewer present interests in other media of mass communications. It is obvious that in a contest between a newspaper and a nonnewspaper applicant, a discrimination against the newspaper applicant results just as much from awarding a preference to the nonnewspaper applicant because it is not connected with any newspaper as would result from penalizing the newspaper applicant because it is connected with a newspaper.
There can be no criticism of a Commission licensing policy which would deny a newspaper applicant where a grant would bring about a condition inconsistent with the policy of the antitrust laws. The vice of the Commission's diversification policy is that it is applied where a grant to the newspaper applicant would concededly be entirely consistent with the spirit and letter of the antitrust laws. It is difficult to conceive how the Commission could more effectively discriminate against an applicant which is connected with a newspaper or an existing radio station than by awarding a preference to a competing applicant because it does not have such a connection. The Commission has never supplied any basis in fact or in experience for its assumption that the public interest is served by awarding. a preference to the applicant which has no or fewer present communications interests. As a matter of fact, this drastic governmental restriction on expansion in the media field, when applied to a newspaper, raises a serious constitutional question. There is no sound public policy which requires the Commission to reduce a newspaper owner to the status of an inferior applicant, or which requires it to penalize a radio station owner for his foresight in pioneering in the broadcasting industry. Moreover, the policy is wholly unrealistic because once the applicant with no other communications interests receives a grant, there is nothing to prevent him from selling his television station to a newspaper or radio station owner, or to prevent him from starting or buying a newspaper or buying one or more existing radio stations.
The inequity and inherently discriminatory nature of the Commission's diversification policy is apparent when it is realized that under it an applicant which has had a long and distinguished record of serving a community in the newspaper or radio field is for that reason alone under a comparative disadvantage when competing with an applicant with no such connection. The Commission pays lipservice to the criteria of past broadcast record and previous broadcasting experience but preferences awarded on such factors to newspaper applicants are nullified by the application of the diversification criteria.
In every case where the diversification policy is applied the newspaper or multiple-station owner is always the loser on this issue. In other words, whenever the diversification policy is applied, it amounts to an irrebuttable presumption that the public interest would be adversely affected by granting the newspaper (or radio station) applicant in preference to the nonnewspaper (or nonradio station) applicant, and to an equally irrebuttable presumption that the public interest would be better served by a grant to the applicant which has no association with any existing media of communications. Thus, even in those comparative television cases where the Commission has granted a newspaper applicant (Tampa Tribune, Biscayne Bay (Miami), Knoxville, Tenn.), the Commission awarded a preference to one or more of the losing applicants on the diversification factor. In short, the newspaper applicant always loses on the diversification factor. Therefore, the newspaper applicant starts out with one strike against him in any comparative case involving a nonnewspaper applicant. If the applicant owns a newspaper and radio station it starts with two strikes. This stigma has nothing to do with the number of other nswspapers in the area, the number of other radio stations or other mass communications media in the area ; it has nothing to do with the location of the newspaper or the radio station with which the newspaper or radio station is connected. The policy is applied mechanically. The applicant with the most interests in existing media loses on this comparative factor; the applicant with no or fewer interests wins.
The Commission has never supplied a logical nexus between the tabulation of the interests of competing applicants in communications media and their respective qualifications as applicants, nor the bearing of such tabulation on the merits of their respective proposals. Moreover, there has never been a case in which the Commission has determined on the basis of evidence adduced in a comparative hearing how or why the public was likely to be harmed if the successful applicant had ownership interests in newspapers or radio stations, or precisely how and why the public would be benefited by the fact that the successful applicant has no other connections with any communications medium. The diversification policy is used by the Commission as a convenient device to select the successful applicant in a comparative hearing on the basis of the identity of the applicants rather than the merits of the applicants' proposals and their respective abilities to effectuate their proposals. The criterion of diversification: as it is applied by the Commission has no place in the Commission's decisional process because mere association with or lack of association with existing media. of communications has never been shown to have any rational or logical con
nection with or bearing upon an applicant's ability or lack of ability to operate a television station in the public interest. This is the necessary and inevitable conclusion which follows from the fact that the Commission has granted radio and television stations in hundreds of uncontested cases to newspaper or multiple-station owners, permits assignment and transfers to such persons, and regularly renews their licenses. The Commission has never suggested that ownership of or connection with other communications media is a factor to be considered in such cases.
If the Commission's diversification policy is unsound and unfair to applicants identified with a medium of mass communications, then in every case where a preference is awarded on the basis of the “diversification factor," the Commission's ultimate decision must necessarily be unfair. In attacking the Commission's diversification policy one is not seeking to dictate how the Commission should decide comparative television cases in which newspapers or radio stations are applicants. All one is objecting to is the employment of a comparative criterion which is unsound and unfair to a certain class of applicants, and therefore leads to an unfair and inequitable result whenever it is used by the Commission.
If the licensing policy which Congress desires the Commission to follow in acting upon competitive broadcast applications is one which does not discriminate against an applicant merely because it is engaged in the newspaper business or merely because it is the owner of a radio station, the most effective way of insuring that such a policy is followed is to prohibit the Commission from effecting a discrimination between applicants for a broadcast station by including as a factor in reaching its decision a preference to the applicant with no or fewer associations with or ownership interests in media of mass communications. This would require the Commission to apply the same policy with respect to the effect of association with other media in comparative broadcast proceedings as the Commission has consistently applied in noncomparative cases involving a newspaper or multiple-station owner. At the same time, the amendment should make it clear that it would not preclude the Commission from denying a newspaper applicant where a grant would result in a condition in the mass media field which is inconsistent with the antitrust laws.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 308 of the Communications Act of 1934 is amended by adding at the end thereof the following new subsection :
“(d) In acting upon mutually exclusive applications, the Commission shall not effect a discrimination between applicants by including, as a factor in reaching its decision, a preference to the applicant with no or fewer associations with or ownership interests in media of mass communications, nor shall any application for a construction permit or station license, or for the renewal, modification, or transfer of such permit be denied by the Commission on any consideration of the applicant's association with or ownership interest in other classes of broadcast stations or other media of mass communications: Provided, however, That the foregoing shall not restrict in any way the applicability of section 313 nor the power of the Commission to limit, according to law, associations with, or ownership interests in broadcast stations where such association or ownership would tend, contrary to the public interest, to result in violations of the laws of the United States made applicable by section 313.”
Mr. HARRIS. Mr. Henley, we have to adjourn in a few minutes, but do you have anything on behalf of the Commission that you wanted to say for the record ?
STATEMENT OF J. SMITH HENLEY, ACTING GENERAL COUNSEL
OF THE FEDERAL COMMUNICATIONS COMMISSION
Mr. HENLEY. We have no prepared statements on any of these bills.
We brought a number of staff people we thought would be qualified to discuss all of the bills or the various bills with the committee. We want to be heard at the committee's convenience. It is late, and if the committee prefers to adjourn until another day or call us back later, we would be happy to meet with the committee's wishes in that respect.
Mr. Harris. I think you will probably have to do that because this particular item here and the one with reference to political broadcasts are two subjects that obviously require some discussion. I hoped that we could conclude hearings on these matters this morning, because we do not want to be rehashing the same thing over and over. There are several witnesses yet to be heard.
Is Mr. Salant of the Columbia Broadcasting here?
STATEMENT OF RICHARD S. SALANT, VICE PRESIDENT OF THE
COLUMBIA BROADCASTING SYSTEM—Resumed
Mr. SALANT. I can make a statement in 2 minutes and submit my prepared statement, if that is convenient to you.
Mr. HARRIS. I have a wire from the president of your company in which he indicated he wanted to personally appear and testify but he wanted to be put off until May sometime when he could be here. We advised him that we were going to try to conclude the hearings on these bills today so that we could proceed and get the record printed. I advised him by wire myself that if we did not conclude today we would set another date and notify him and if it was his pleasure to come we would be glad to have him.
We received a wire from Mr. Stanton that you would be here today and would testify for the company.
Now in view of what has happened and the time has about run out on us this morning, I wondered if you would not prefer to wait until another day is set and either you or Mr. Stanton or whoever you decide could come back on that day.
Mr. SALANT. Sir, we have no preference. There is a very heavy schedule within the next month also, as you may know, and I am perfectly willing to make a brief statement and submit the prepared statement today.
Mr. HARRIS. Very well, if that is your desire.
Mr. SALANT. I will submit the prepared statement which I have here.
(The statement referred to follows:)
FURTHER STATEMENT OF RICHARD S. SALANT, VICE PRESIDENT, COLUMBIA
BROADCASTING SYSTEM, INC. Mr. Chairman and members of the subcommittee, my name is Richard S. Salant, vice president of Columbia Broadcasting System, Inc. You may recall that I appeared before you on February 3, 1956, to testify in support of H. R. 6810, a bill which would amend section 315 (a) of the Federal Communications Act.
Since my testimony on February 3, there have been a number of developments relating to section 315. I am here again today to comment on some of these developments and particularly to present the views of CBS concerning two new bills, H. R. 10217 and H. R. 10529, which have been introduced since I was last here.
First, however, I should note that apparently the developments since February 3 seem to indicate that there is rather general agreement that, as I testified, section 315 as it now stands has undesirable consequences and frustrates the fulfillment of television's potentialities as part of the free press and in its role of informing the people of the political issues and candidates of the day. The testimony before this subcommittee subsequent to mine and the introduction of H. R. 10217 and H. R. 10529, together with the Commission's support tjf H. R. 10217, indicates that there is now rather general agreement that section 315 as it stands is, in fact, undesirable and should be amended. With that conclusion, of course, CBS agrees. The question now seems to be not whether to retain section 315 as it is, but rather how it should be amended.
We recognize that the problem of how to regulate broadcasts by political candidates is delicate and difficult, and that reasonable men can disagree on