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In effect, the bills would limit the application of the "diversification of control of the media of mass communications” principle. Under this principle the Commission, in passing upon applications for station licenses, takes into consideration the fact that an applicant owns, controls, or is affiliated with another medium of mass communication, such as newspapers or theaters. This principle has been upheld by the courts (Scripps-Howard Radio, Inc., v. F. C. C., et al., 189 F. 2d 677 (D. C. Cir. 1951), cert. den., 342 U. S. 830; Mansfield Journal Co., et al. v. F. C. C., 180 F. 2d 28 (D. C. Cir. 1950). In the Scripps-Howard case, the court stated that where one applicant is free of association with existing media of communication and the other is not, the Commission, in the interest of competition and consequent diversity, which is a part of the public interest, may let its judgment be influenced favorably toward the applicant whose situation promises to promote diversity. In Associated Press v. United States (326 U. S. 1, 20 (1945)), an antitrust case, the Supreme Court stated that the first amendment to the Constitution of the United States rests on the assumption that “the widest possible dissemination of information from diverse and antagonistic sources” is essential to the public welfare.
It is believed that the bills would unduly restrict the Commission in its consideration of the competitive situation that would result from the grant of an application for a construction permit or station license to a newspaper or to a person who has an interest in, or is associated with, a newspaper.
This proposed legislation is contrary to antitrust policies and objectives. The general policy underlying the antitrust laws is that competition, and therefore the public interest, is best promoted when there is a large number of competitors. This same policy is inherent in the diversification principle as applied by the Federal Communications Commission.
In view of the foregoing considerations, the Department of Justice is unable to recommend the enactment of the bills.
The Bureau of the Budget has advised that there is no objection to the submission of this report. Sincerely,
WILLIAM P. ROGERS, Deputy Attorney General.
FEDERAL COMMUNICATIONS COMMISSION,
Washington, D. C., December 2, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D. C. DEAR CONGRESSMAN PRIEST: This is in reply to your committee's requests for the Commission's comment concerning H. R. 6968 and H. R. 6977, identical bills to amend the Communications Act of 1934 with respect to the application of that act to persons connected with any medium primarily engaged in the gathering and dissemination of information.
Since these bills are identical, the Commission has prepared one set of comments applicable to both bills. We are enclosing, herewith, copies of the Commission's comments concerning this proposed legislation. The Commission will be pleased to furnish any additional information or comments concerning these proposals which your committee may desire. The Bureau of the Budget has informed us that it has no objection to the submission of these comments to your committee. Sincerely yours,
GEORGE C. McCONNAUGHEY, Chairman. STATEMENT OF GEORGE C. MCCONNAUGHEY, CHAIRMAN OF THE FEDERAL COMMUNI
CATIONS COMMISSION, ON H. R. 6968 AND H. R. 6977, BILLS TO AMEND SECTION 308 OF THE COMMUNICATIONS ACT
These two bills, H. R. 6968 and H. R. 6977, are identical. Each would add a new subsection to section 308 of the Communications Act providing that the Commission could not adopt any rule which would discriminate against persons because of their interest in any medium "primarily engaged in the gathering and dissemination of information.” The bills would also prohibit the Commission from denying any application solely because of any such interest.
The question of newspaper ownership of radio facilities has been frequently considered by Congress, the Commission, and the courts. In fact, the conference
committee considering the Communications Act amendments of 1952, deleted from that legislation the identical provision now proposed in H. R. 6968 and H. R. 6977. In rejecting this provision, the conference committee stated that it was unnecessary for the reasons that the Commisison did not have the authority to promulgate any rule discriminating against newspapers, or to arbitrarily deny an application solely because of such interest. We fully agree with this opinion of the conference committee.
What exactly are the Commission's policies with resect to applicants who have newspaper interests? In noncomparative proceedings, the fact of newspaper ownership is irrelevant except insofar as it may indicate that a grant of the application would be contrary to the public interest because it would result in an undue concentration of control of the media of mass communication. Moreover, the Commission has never denied an application in an uncontested case solely because the applicant had newspaper interests. The only instance in which the Commission has denied an application in a noncomparative case because of circumstances surrounding the applicant's newspaper interests was the Mansfield Journal case. There the record clearly demonstrated that the applicant had used its monopoly newspaper position in an attempt to force a radio station out of business through coercive pressure on advertisers. Incidentally, in that case the coercive practices were subsequently held by the courts to violations of the antitrust laws.
In cases involving mutually exclusive applications, the Commission must determine on a comparative basis which of two or more applicants, who usually possess the minimum qualifications, would best serve the public interest. In such comparative proceedings, the Commission must, in accordance with the rulings of the courts, consider and evaluate all of the factors which the parties advance as indicating differences between them.
One of these factors is the interests which the parties already possess in the media of mass communication. These media include radio and television stations, newspapers and motion-picture theaters. Where this issue with respect to the media of news communication has been raised, the Commission has followed a consistent policy; it has always evaluated the various mass media interests of the applicants, and has recognized the relative benefits to be derived from diversification of those media. These benefits are: The encouragement of competition between the various media, the avoidance of concentration of control over the avenues of communicating fact and opinion to the public, and making available to the public a more varied approach to questions of interest. This policy of encouraging diversification has been specifically approved by the courts.
I must emphasize one fact, while the Commission has maintained a consistent policy with respect to diversification, that factor is merely one of the numerous factors which the Commission must evaluate in any comparative proceeding. And diversification is not necessarily the controlling factor. It may or may not be depending on the facts of the particular case. A preference awarded for diversification may be slight or it may be substantial. A newspaper may prevail despite the diversification factor because of its superiority with respect to program plans, integration of ownership and management, local ownership or past broadcast experience. The Commission's recent grants to newspaper applicants in Tampa, Fla., and Miami, Fla., are merely illustrative of the fact that such applicants, because of superiority in other factors, can win out over nonnewspaper opponents.
In fact, newspaper ownership may constitute an asset to an applicant. The fact that an applicant has operated a newspaper in the community in question may demonstrate its ability to perform outstanding public service in that community, as well as its ability to respond to the community's particular needs.
The Commission is of the opinion that if this proposal becomes law it might have unfortunate results. It might preclude the Commission from considering local newspaper ownership even as merely one of the many factors that the Commission would have to evaluate. Actually, it is difficult to say exactly what this legislation would or would not do, since some of its terms are so ambiguous. No definition is included of the term “discrimination.” Nor are we able to tell the precise meaning of the clause prohibiting the Commission from denying an application “solely” because of an applicant's interest in any medium primarily engaged in the gathering and dissemination of information.
Would this legslation prevent the diversification factor from being used against newspaper applcants but permit its use against those controlling other mass media? If so, this would be discrimination in favor of newspapers. If it is
meant to preclude consideration of all mass media interests, it would mean the Commission could not even take into consideration the number of other radio or television interests an applicant might have. And it might prohibit the Commission from considering the fact that an applicant was publishing a "scratch sheet” or operating a "racing wire network” in aid of illegal gambling.
In summary, we believe that legislation such as this, which in our opinion might prohibit consideration of the diversification principle in comparative licensing proceedings, would not serve the public interest and would be contrary to the many Federal laws concerned with fostering competition. Moreover, we do not think legislation is necessary to protect newspapers from discrimination. The fact that newspapers have an interest in approximately 30 percent of the television stations in the country is eloquent testimony to the lack of any such need.
COMMENTS OF TIIE FEDERAL COMMUNICATIONS COMMISSION ON H. R. 6968 AND
H. R. 6977, BILLS TO AMEND THE COMMUNICATIONS ACT WITH RESPECT TO ITS APPLICATION TO PERSONS CONNECTED WITH ANY MEDIUM PRIMARILY ENGAGED IN THE GATHERING AND DISSEMINATION OF INFORMATION
H. R. 6968 and H. R. 6977 are identical bills which would add a new subsection (d) to section 308 of the Communications Act, which would prohibit the Commission from promulgating any rule which would discriminate against any person because of ownership, interest in or association with any medium "primarily engaged in the gathering and dissemination of information” and would further prohibit the Commission from denying any application solely because of any such interest, association or ownership.
In presenting its comments concerning this proposal, the Commission believes it would be helpful to explain the policies which it has followed and is now following with respect to applicants for radio facilities who are newspaper owners. Newspaper ownership, as such, has never been a bar to holding a radio station license and the Commission does not now have, nor has it ever had, any rule or regulation which discriminated against applicants because of newspaper interests. In 1944, after extensive hearings, the Commission determined that no rules should be adopted which would act as a bar to newspapers becoming the licensees of radio stations. In this connection, it should be noted that in 1952, the House passed a provision identical to that proposed in these bills, as part of S. 658, 82d Congress. However, the House provision was deleted by the conference committee on S. 658, which states in its report (H. Rept. No. 2426, 82d Cong., pp. 18–19):
“The Senate bill contained no such provision, and the provision is not included in the conference substitute. This provision was omitted from the conference substitute because the committee of conference felt that it was unnecessary. It is the view of the conference committee that under the present law the Commission is not authorized to make or promulgate any rule or regulation the effect of which would be to discriminate against any person because such person has an interest in, or association with, a newspaper or other medium for gathering and disseminating information. Also the Commission could not arbitrarily deny any application solely because of any such interest or association.”
The Commission is in complete agreement with this statement as to its existing powers.
In exercising its licensing functions, the Commission does take into consideration, to the extent relevant, the fact that an applicant may have newspaper interests. Where the Commission is not required to make a choice between competing applicants, the newspaper interests of an applicant are only important to the extent that they may indicate that a grant of the application will not be in the public interest because it would result in an undue concentration of control of the various media of mass communication in a given area.
In no instance, however, has the Commission found it necessary to deny an application in a noncomparative proceeding solely because of an applicant's newspaper interests. The only instance in which the ownership of a newspaper has resulted in denial of an uncontested application is in Mansfield Journal (13 F. C. C. 23, affirmed, 86 U. S. App. D. C. 102, 80 F. 2d 28), where the record showed the newspaper had been used in a manner violative of the antitrust laws in an attempt to drive a local radio station out of business. See Lorain Journal Co. v. United States (342 U. S. 143).
In those instances where mutually exclusive applications for radio facilities are filed, the Commission is required, pursuant to statute to hold a comparative
hearing and on the basis of the hearing record, to choose the applicant best qualified to operate the station in the public interest. In most such comparative cases the Commission is faced not with the question of determining whether the applicants possess the minimum qualifications to be licensees, but rather with making determination as to which of two or more qualified applicants would best serve the public interest. In making this comparative determination the Commission is required to consider all of the various factors which the adversary parties advance as indicating differences between them, and must "reach an overall relative determination upon an evaluation of all factors.” Johnston Broadcasting Company v. Federal Communications (85 U. S. App. D. C. 40, 175 F. 351).
One of the complex factors which the adversary parties often urge and which the Commission is obligated to consider and evaluate concerns the interests which the applicants may already possess in the media of mass communication, such as other radio or television stations, newspapers, or motion picture theaters. In those comparative cases where such interests in media of mass communication has been made an issue the Commission has followed a policy of giving a preference on that issue to the applicant who has no other or fewer mass-media interests, including newspaper interests.
The reasons for this policy of preferring applicants without newspaper interests in the same area as the proposed stations, may be simply stated. The basic aim of a comparative hearing—to choose the applicant who could render the best broadcast service in the public interest-must be achieved with recognition of the fact that a broadcast station is one of several types of mass communications. The medium most similar to broadcasting in its coverage and scope is the daily newspaper. Diversification of control of both media in any area results in more competition between them, avoids concentration of control of the avenues of communicating fact and opinion to the public, and makes available the fruits of a more varied approach to questions of interest to the community.
This policy of the Commission was fully considered and endorsed by the courts in Scripps-Howard Radio, Inc. v. Federal Communications Commission (89 U. S. App. D. C. 13, 189 Fed. 677, cert, den. 342 U. S. 830).
It is important to note, however, that the diversification factor is not necessarily controlling in determining which of two applicants is to receive a grant. It is merely one of many factors which the Commission must evaluate in seeking to determine which applicant will better serve the public interest.
In many instances the newspaper applicant has prevailed because of its superiority in one or more of the other areas of comparison, such as program plans, integration of ownership and management, local ownership and past broadcasting experience. A recent example of a newspaper applicant winning a television grant over a nonnewspaper opponent in found in the Commission's decision in The Tribune Company, (9 Pike & Fischer, R. R. 719). See also, Orlando Daily Newspapers, Inc., et al. (11 F. C. C. 760); The Hampden-Hampshire Corp. (4 Pike & Fischer, R. R.); and Lubbock County Broadcasting Co. (6 Pike & Fischer, R. R. 949).
In any given comparative proceeding the weight to be given the diversification factor will, of course, depend on the particular facts of the case having in mind the needs of the area which the applicants propose to serve. As with other comparative factors, a preference for diversification may be slight or significant depending on the number of mass-media interests an applicant may have, their location, and the competition from other media that may be available. It must also be remembered that ownership of a newspaper in the community where a radio facility is sought may operate as an asset to an applicant. The past operation of the newspaper may indicate ability and desire to perform an outstanding public service and to remain attuned to the needs of the community. Moreover, ownership of a local newspaper may enable an applicant to present a better proposal for furnishing a news service to the community by means of radio and television.
Thus, while the Commission has followed a policy of giving weight, in appropriate circumstances, to the factor of diversification of the media of mass communications, that factor has never been an absolute one. Moreover, the figures with respect to newspaper ownership of radio and television stations demonstrate conclusively that this policy has not operated as a bar to newspaper applicants. Thus, as of January, 1955, newspapers had some interest in over 30 percent of the television stations operating in the United States.
The Commission believes that the proposed amendment to the Communications Act might be interpreted as prohibiting the Commission from considering, in
cases involving comparative consideration of mutually exclusive applications, the ownership of a local newspaper by one of the applicants as a factor in determining which applicant would better serve the public interest. We are of the opinion that the purpose of the Communications Act, as well as the policy underlying other Federal laws concerned with promotion of competition, would be seriously undermined if the Commission were precluded from considering in its licensing proceedings the question of the diversification of control over the media of mass communications as one of the elements of the public interest, convenience, and necessity.
Moreover, we believe that the language used in the proposal is unusually ambig. uous and thus could lend itself to many additional interpretations. The section does not define what is meant by “discrimination.” Moreover, it is not made clear what is meant by the clause which would prohibit the Commission from denying an application "solely" because the applicant is interested in, is associated with or owns any medium primarily engaged in the gathering and dissemination of information. In our opinion it is not clear what effect this provision would have, or what effect it is intended to have, on the present policies of the Commission with respect to applicants for licenses who have newspaper interests.
While the provisions of these bills purport to protect newspapers against discrimination in licensing, it could result in discrimination in favor of newspapers and against other mediums of information. For, while it would prevent use of the factor of newspaper ownership against a newspaper applicant in comparative proceedings, it would apparently not similarly preclude the use of the diversification principle against applicants controlling other mediums of information, such as theaters and radio or television stations. If, on the other hand, this provision is intended to protect owners of other information mediums as well as newspaper owners, then it might have the result of precluding the Commission from considering the number of radio stations a single licensee may own or control.
In addition, this provision might preclude the Commission from preferring an applicant seeking his first radio station over another applicant who already owns several stations where other pertinent factors are balanced. It might also be argued that this provision would preclude the Commission from considering as a factor affecting qualifications that an applicant for license is the publisher of a scratch sheet on horse or dog racing events or engaged in gathering and disseminating similar information by use of extensive wire networks even though it could be clearly established that such information was published or disseminated for the sole purpose of aiding or abetting illegal gambling.
The Commission believes that the concept of fostering the diversification of control of the mediums of mass communications is inherent in the first amendment, the antitrust laws and the Communications Act, and this concept has been forcefully recognized by the Supreme Court in Associated Press v. United States (326 U. S. 1). It is our opinion that any legislation which would preclude the Commission from giving appropriate attention to these fundamental considerations in carrying out its licensing functions would be clearly contrary to the public interest. As we have stated, we believe that the legislation under consideration is susceptible to such an interpretation. Moreover, we are of the opinion that legislation designed to protect newspapers from discrimination in licensing proceeds in the sense of any exclusionary rule or policy is unnecessary, and that the present licensing policies of the Commission provide equal treatment and opportunity for newspaper applicants while at the same time taking full account of the factors, both pro and con, indicative of the comparative ability of particular newspaper applicants to serve the public interest.
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington, D. C., November 30, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: This is in reply to your letters of June 25, 1955, requesting the views of this Office with respect to H. R. 6977 and H. R. 6968, bills to amend the Communications Act of 1934 with respect to the application of that