Fidelity Television, Inc. v. F. C. C.

• Decision Date: 30 June 1975
• Docket Number: No. 73-2213,73-2213
• Parties: , 1975-1 Trade Cases P 60,191 FIDELITY TELEVISION, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, RKO General, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 684

515 F.2d 684

169 U.S.App.D.C. 225, 1975-1 Trade Cases P 60,191

FIDELITY TELEVISION, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, RKO General, Inc., Intervenor.

No. 73-2213.

United States Court of Appeals,

District of Columbia Circuit.

Argued Sept. 23, 1974.

Decided March 6, 1975.

Rehearing Denied June 30, 1975.

[169 U.S.App.D.C. 229] Walter H. Sweeney, Washington, D. C., with whom Edward P. Morgan, Washington, D. C., was on the brief, for appellant.

Joseph A. Marino, Associate Gen. Counsel, F. C. C., with whom Ashton R. Hardy, Gen. Counsel, and Joseph Volpe III, Counsel, were on the brief, for appellee. John W. Pettit, Gen. Counsel, F. C. C., at the time the record was filed, also entered an appearance for appellee.

Harold David Cohen, Washington, D. C., with whom John J. Duffy, New York City, was on the brief, for intervenor, RKO General, Inc. J. Laurent Scharff, Washington, D. C., also entered an appearance for intervenor RKO General, Inc.

Before LEVENTHAL and ROBB, Circuit Judges, and DAVIS ^*, Judge, United States Court of Claims.

DAVIS, Judge:

Nearly ten years ago, intervenor RKO General, Inc. filed an application for a three-year renewal of its license to operate KHJ-TV, Channel 9 in Los Angeles. Thus began a long saga which we may not even end today by affirming the Commission's decision in favor of RKO. ¹

I

RKO, a wholly-owned subsidiary of General Tire and Rubber Company, has operated KHJ since 1951. Joint Appendix at 52. Under the Federal Communications Commission's license-renewal scheme, see 47 C.F.R. § 73.630 (1965), this license came up for three-year renewal with those of other California licensees in 1965, and RKO filed an application for renewal on August 31, 1965. Two months later, on October 25, 1965, appellant Fidelity Television, Inc. filed an application for a construction permit to build a station at Norwalk, California, also to operate on Channel 9 and to blanket the same area. ² As applications

[169 U.S.App.D.C. 230] for mutually exclusive stations, the requests of RKO and Fidelity were designated for a comparative hearing by the Commission on June 8, 1966. Joint Appendix at 1-2; see Ashbacker Radio Co. v. F. C. C., 326 U.S. 327, 333, 66 S.Ct. 148, 90 L.Ed. 108 (1945). In setting the applications for a comparative hearing, the Commission as was its practice, limited the questions to be considered to the so-called "standard comparative issues," i. e., which of the proposals would better serve the public interest, and which of the applications should be granted. These standard issues did not include programming and certain other factors. ³

The Commission's rules provide, however, that an applicant might petition the Review Board for an enlargement of the issues so that evidence could be presented on, e. g., character or programming. See 47 C.F.R. § 1.229 (1973). Fidelity, on June 27, 1966, filed such a petition, requesting the addition of three issues: which applicant would provide for a more fair, efficient and equitable distribution of television services; the "service philosophy" of each applicant; ⁴ and the significant differences in programming proposed by each applicant. Joint Appendix at 44. The F.C.C.'s Review Board denied Fidelity's petition on October 27, 1966, and the Commission then rejected Fidelity's application for review of the Board's order on December 29, 1966. Ibid. at 161-63. The comparative hearing on the two proposals, on the standard comparative issue only, opened on February 27, 1967, and the record was closed for the first time on June 15, 1967. Ibid. at 45.

This proceeding did not, however, simply run its ordinary course through the hearing examiner ⁵ and the Commission after the hearing opened. On March 6, 1967, the Commission released a decision in Chapman Radio & Television Co., a four-sided comparative proceeding for assignment of a new television station in Homewood, Alabama. 7 F.C.C.2d 213 (1967). One of the competitors had requested the addition of a programming issue, and the Review Board had denied the request. The Commission took the opportunity to clarify the relationship between its general policy and the incorporation of a programing issue, stating that "a proponent of the programming issue should be required to make a prima facie showing that there are significant differences in the programing proposed and should relate his claimed substantial superiority in program planning to his ascertainment of community needs." 7 F.C.C.2d at 215. Chapman was then remanded to the Review Board to consider whether a programming issue should be added under the clarified standard. Ibid.

On March 9, 1967, Fidelity filed a petition with the Commission requesting that it itself add programming and

[169 U.S.App.D.C. 231] needs-ascertainment ⁶ issues on the basis of Chapman, or that it remand to the Review Board for reconsideration in the light of Chapman. This application was denied on July 12, 1967, on the ground that Fidelity had not offered any new data and the data on which it had originally relied did not amount to the "prima facie showing" required under Chapman. Joint Appendix at 171-75. Fidelity then filed a further petition for clarification with the Review Board, seeking to ascertain that tribunal's position on whether it had in effect applied the Chapman standards initially. This was denied on September 22, 1967. Ibid. at 176-79

Concurrently, on March 2, 1967, the Department of Justice filed suit in the United States District Court for the Northern District of Ohio against the General Tire and Rubber Company, Aerojet-General Corporation, A. M. Byers Company, and RKO General, Incorporated (the latter three companies were subsidiaries of General Tire). United States v. General Tire & Rubber Co., No. C-67-155 (N.D.Ohio, filed Mar. 2, 1967). This action alleged that the four companies had violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, in that they had, among other things, engaged "in a combination and conspiracy to utilize reciprocity whereby the purchasing power of all of said defendants is used to coerce and persuade certain actual and potential suppliers of the defendants to purchase tires, wrought iron products, advertising time and other products and services from said defendants, in unreasonable restraint of . . . trade and commerce; . . ." Complaint at 6, United States v. General Tire & Rubber Co., supra.

Responding to this new development, Fidelity filed with the Review Board, on March 8, 1967, a petition to enlarge the issues to be considered at the comparative hearing to include a determination

in light of all the facts and circumstances surrounding the Complaint filed by the United States of America on March 2, 1967, against General Tire and Rubber Company, . . . whether RKO General, Inc., is qualified to be a licensee of the facility for which it is applying herein, or alternatively, whether such matters bear upon the comparative qualifications of RKO General, Inc.; . . . (Joint Appendix at 164.)

The Board denied the petition on June 20, 1967, saying that Fidelity's allegations of wrongdoing were not specific enough to warrant the addition of a "disqualifying character issue," but that "relevant facts and circumstances forming bases for the civil suit particularly as they relate to RKO's broadcast practices can be adduced by Fidelity under the standard comparative issue." Joint Appendix at 167-68. The Board also said that any grant to RKO would be conditioned on the Commission's right to reopen the case should the outcome of the antitrust suit be unfavorable to RKO. ⁷ Ibid. at 169.

[169 U.S.App.D.C. 232] All requests for additional issues having thus been disposed of, the comparative hearing continued on the standard comparative issue only, with Fidelity providing only a "superficial" inquiry into RKO's trade practices. Joint Appendix at 180. The record was, as noted above, closed for the first time on June 15, 1967, and the hearing examiner issued his proposed findings in September, 1967. Ibid. On February 9, 1968, however, Fidelity petitioned the examiner to reopen the record to receive newly discovered evidence depositions taken in the Government's antitrust suit. The hearing examiner reopened the record, but cautioned that "It is not being reopened as a repository for the record in the Ohio anti-trust suit. . . . Petitioner asks that the record be reopened for the purpose of taking evidence on the reciprocal trade practices of RKO. With the caveat that such evidence must be patently germane to RKO's stewardship of KHJ-TV that language is adopted as words limiting the scope of future hearing." Joint Appendix at 181-82. ⁸ The record was closed for good on August 26, 1968, and the initial decision of the hearing examiner came down on August 13, 1969.

The examiner's decision, without an overabundance of enthusiasm, recommended that RKO's application for renewal be denied and Fidelity be granted a construction permit to build a station to take over Channel 9. Joint Appendix at 151, 153. He found that General Tire and RKO had substantially contributed to the development of broadcast technology and had the capacity to run a good station. Ibid. at 137-41. However, he also found that KHJ's past performance in programming and community relations, particularly in the station's concentration on presenting old films and ignoring community criticism of excessive violence in some of the movies, was poor. Ibid. at 143. On the other hand, he gave Fidelity a demerit for an integration-of-ownership-and-management proposal which he felt was created just to win the license and would not be implemented. Ibid. at 150-51. Fidelity, however, was found superior in local ownership, in community-needs-ascertainment, and in providing for diversification of ownership of the mass media. Ibid. at 149. The examiner berated General Tire's anticompetitive practices, but did not give RKO a special character...