Nelson Bros. Bond & Mortgage Co. v. FEDERAL RADIO COM'N

• Decision Date: 05 December 1932
• Docket Number: 5533.,No. 5530,5530
• Citation: 62 F.2d 854
• Parties: NELSON BROS. BOND & MORTGAGE CO. (STATION WIBO) v. FEDERAL RADIO COMMISSION (JOHNSON-KENNEDY RADIO CORPORATION et al., Interveners). NORTH SHORE CHURCH OF CHICAGO, ILL. (STATION WPCC) v. SAME.
• Court: U.S. Court of Appeals — District of Columbia Circuit

62 F.2d 854 (1932)

NELSON BROS. BOND & MORTGAGE CO. (STATION WIBO) v. FEDERAL RADIO COMMISSION (JOHNSON-KENNEDY RADIO CORPORATION et al., Interveners).

NORTH SHORE CHURCH OF CHICAGO, ILL. (STATION WPCC) v. SAME.

Nos. 5530, 5533.

Court of Appeals of the District of Columbia.

Argued May 2, 1932.

Decided December 5, 1932.

Levi Cooke, of Washington, D. C., for appellant Nelson Bros. Bond & Mortgage Co.

Levi Cooke and Edward Clifford, both of Washington, D. C., for appellant North Shore Church.

Thad H. Brown, D. M. Patrick, and Fanney Neyman, all of Washington, D. C., for Federal Radio Commission.

M. W. Willebrandt, of Washington, D. C., for intervener Johnson-Kennedy Radio Corporation.

Bethuel M. Webster, Jr., and Paul M. Segal, both of Washington, D. C., for intervener Strawbridge & Clothier.

Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ, and GRONER, Associate Justices.

ROBB, Associate Justice.

Appeals from a decision of the Radio Commission granting the application of the Johnson-Kennedy Radio Corporation (Station WJKS) of Gary, Ind., that it be assigned the 560 kc. frequency shares by Stations WIBO (owned by the Nelson Bros. Bond & Mortgage Company) and WPCC (owned by the North Shore Church) of Chicago, Ill.

Station WJKS commenced broadcasting in August, 1927, with a frequency of 1,290 kc. and 500 watts power, sharing time with Station WSBC of Chicago. Under the reallocation in November, 1928, the station was assigned a frequency of 1,360 kc. and shared time with Station WGES of Chicago. Shortly thereafter, as a result of its complaint to the Commission of interference, the station was granted a power output of 1,250 watts daytime and 1 kw. nighttime, and continued to operate on that frequency and power. In February, 1931, the station applied for the frequency of 560 kc. and unlimited time, and suggested that, if the granting of its application "would require the removal of a station or stations using the facilities requested in an overquota State of the fourth zone, then the applicant desires Stations WIBO and WPCC, Chicago, as the stations to be removed." The application was designated for hearing before the chief examiner and notice given appellants and other parties in interest. Over a period of seven days voluminous testimony was taken.

After a careful review of the established facts, the examiner recommended that the application be denied. He found that the station is rendering a commendable public service on its present part-time assignment, but that the service "would be improved by the installation of the most modern radio equipment and the operation of this station in the most efficient manner on its present frequency." He further found that it is possible that "more objectionable interference would result from the operation of Station WJKS on the 560 kc. channel than now results from the operation of this station at Gary on the 1,360 kc. channel, since Station WNOX at Knoxville, Tenn., is separated from Gary by a distance of only 440 miles, whereas the nearest station on applicant's present assigned frequency, operating with 1 kw., is at Syracuse, N. Y., separated from Gary by a distance of 600 miles." He also found that Stations WIBO and WPCC "are meritorious stations, serving public interest, convenience, and necessity"; that "the owners and operators of these stations have at great cost prepared themselves to exercise the broadcasting privileges heretofore granted them by the Federal Radio Commission, and in the opinion of the examiner, clear and sound reasons of public policy demand that these broadcasting privileges be not taken from them and assigned to applicant station"; that Stations WIBO and WPCC provide radio service for people within the service area of the applicant station, who also "receive a large proportion of their radio broadcasting service from stations operating in the State of Illinois, none of which service may be charged against the quota of the State of Indiana." (Italics ours.)

Exceptions to the report were filed by the Johnson-Kennedy Radio Corporation, of which appellants received notice. Thereafter, without notice to appellants or other parties in interest, the Commission filed a statement of facts and grounds for its decision, together with its order, stating the issue to be "whether or not the public interest, convenience, and/or necessity would be served by the granting of this application and the consequent forfeiture of the facilities now assigned Stations WIBO and WPCC." The decision of the examiner was reversed, and the application of the Johnson-Kennedy Radio Corporation granted. The Commission found that the applicant station "now renders an excellent public service in the Calumet region (in which Station WJKS is located) and the granting of this application would enable that station to further extend and enlarge upon that service"; that the "granting of this application and deletion of Stations WIBO and WPCC would work a more equitable distribution of broadcasting facilities within the fourth zone."

We have held that the business of broadcasting, being a species of interstate commerce, is subject to the reasonable regulation of Congress. Technical Radio Lab. v. Fed. Radio Comm., 59 App. D. C. 125, 36 F.(2d) 111, 66 A. L. R. 1355; City of New York v. Fed. Radio Comm., 59 App. D. C. 129, 36 F.(2d) 115; Chicago Federation of Labor v. Fed. Radio Comm., 59 App. D. C. 333, 41 F.(2d) 422; KFKB Broadcasting Ass'n v. Fed. Radio Comm., 60 App. D. C. 79, 47 F.(2d) 670; Journal Co. v. Federal Radio Comm., 60 App. D. C. 92, 48 F.(2d) 461; Trinity Methodist Church v. Fed. Radio Comm., 61 App. D. C. 311, 62 F.(2d) 850.

The question, therefore, in this case is whether the decision of the Commission assigning to the applicant station the frequency enjoyed by Stations WIBO and WPCC since 1928 "and the subsequent forfeiture" of the assignment held by Stations WIBO and WPCC is a reasonable exercise of regulatory power or an arbitrary and capricious assertion of power.

Station WIBO was established in April, 1925, and represents a total cost of about $346,000, less a reserve for depreciation of about $54,000. It employs 55 persons; has monthly operating expenses of from $16,000 to $18,000. It serves a radius of from 50 to 100 miles, and, on the basis of its earnings, is estimated to be worth between $500,000 and $700,000. There is not even a suggestion that it has failed to comply in any respect with the regulations of the Commission; on the contrary, it affirmatively appears that this station has been operated in the public interest.

Station WPCC was established in July, 1924, and is owned by the North Shore Church of Chicago. Prior to the installation of this broadcasting station, the church was largely in debt. The installation of the radio greatly increased the church's audiences. There are 20 radio stations in Chicago broadcasting about sixty hours of religious programs on Sundays, but there are practically no weekday spiritual programs broadcast except those of Station WPCC. That the operation of this station has been in the public interest clearly appears.

In the reallocation of 1928 following the enactment of the Davis Amendment (Act of March 28, 1928, § 5, 45 Stat. 373 47 USCA § 89), the Commission found that conditions warranted the assignment of the frequency of 560 kc. to Station WIBO (originally established in April, 1925) and Station WPCC (originally established in July, 1924), and the assignment of the frequency of 1,360 kc. to Station WJKS (originally established in August, 1927). The evidence fails to disclose that there has been a material change in conditions since the reallocation of 1928.

The Davis Amendment declared it to be the policy of Congress that the people of the five zones established by the Radio Act of 1927 are entitled to equality of radio broadcasting service, both of transmission and of reception, and that, in order to provide such equality, the licensing authority shall, as nearly as possible, make and maintain an equal allocation of broadcasting licenses, bands of frequency or wave lengths, periods of time for operation, and of station power, to each of the zones, "and shall make a fair and equitable allocation of licenses, wave lengths, time for operation, and station power to each of the States, the District of Columbia, the Territories and possessions of the United States within each zone, according to population."

It will be observed that the statute directs the licensing authority to establish and maintain, "as nearly as possible," equality of broadcasting service to each of the several zones, and to "make a fair and equitable allocation of licenses," etc., to each of the states within those zones. The requirement that there shall be an equal allocation to each of the zones, and "a fair and equitable allocation" to the states within each zone, according to population, is significant. Crawford v. Burke, 195 U. S. 176, 190, 25 S. Ct. 9, 49 L. Ed. 147; Johnson v. United States, 225 U. S. 405, 415, 32 S. Ct. 748, 56 L. Ed. 1142; Brewster v. Gage, 280 U. S. 327, 337, 50 S. Ct. 115, 74 L. Ed. 457. The fourth zone, in which the stations directly involved in this controversy are located, comprises the states of Indiana, Illinois, Wisconsin, Minnesota, North Dakota, South Dakota, Iowa, Nebraska, Kansas, and Missouri. Congress declared that the people of all the zones are entitled to equality of broadcasting service, but evidently recognized that the licensing authority might not be able to establish and maintain an exact mathematical equality among the zones, hence the language, "establish and maintain as nearly as possible." After providing for the establishment and maintenance of nearly equal facilities among the zones, Congress, in dealing with the problem, evidently anticipated that greater difficulty would arise in undertaking to equalize allocations to the several states within a zone, and therefore provided...