Am. Tel. & Tel. Co. v. Delta Communications Corp.

• Decision Date: 25 February 1976
• Docket Number: Civ. No. 1564(C).
• Citation: 408 F. Supp. 1075
• Parties: AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Plaintiff and Counter-Defendant, v. DELTA COMMUNICATIONS CORPORATION, Defendant and Counterclaimant, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY, et al., Counter-Defendants.
• Court: U.S. District Court — Southern District of Mississippi

408 F. Supp. 1075

AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Plaintiff and Counter-Defendant, v. DELTA COMMUNICATIONS CORPORATION, Defendant and Counterclaimant, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY, et al., Counter-Defendants.

Civ. No. 1564(C).

United States District Court, S. D. Mississippi, E. D.

February 25, 1976.

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George H. Butler, Phineas Stevens, Lawrence J. Franck, Jackson, Miss., O. Winston Cameron, Meridian, Miss., J. G. Kilpatric, New York City, Guerry R. Thornton, Atlanta, Ga., John P. Fons, New York City, for American Tel. & Tel. Co., a New York corporation, plaintiff and counterdefendant.

R. E. Wilbourn, T. K. Holyfield, Meridian, Miss., Rufus Creekmore, Jackson, Miss., John C. Dawson, Robbin R. Dawson, Houston, Tex., Thomas M. P. Christensen, Fairfax, Va., for Delta Communications Corp., a Mississippi corporation, defendant and counterclaimant.

Alex A. Alston, Jr., Jackson, Miss., James H. Kelley, James R. Loftis, III, Washington, D. C., for American Broadcasting Companies, Inc.

Sherwood W. Wise, Thomas G. Lilly, Jackson, Miss., Timothy B. Dyk, James Robertson, Ronald J. Greene, Washington, D. C., for CBS, Inc.

E. L. Brunini, William Timothy Jones, Jackson, Miss., David S. Hope, Philadelphia, Pa., for National Broadcasting Co., Inc.

Walter W. Eppes, Jr., Thomas Y. Minniece, Paul M. Neville, Meridian, Miss., for Southern Television Corp.

CLARK, Circuit Judge.^*

After sifting every bushel of speculative chaff suggested by the claimant, the court finds not a single grain of antitrust wheat to sustain the claims asserted. The thousands of pages of depositions and affidavits presented and the hundreds upon hundreds of pages of memoranda, motions, replies, and answers do not show any genuine issue of fact as to any claim which will support any antitrust violation. Summary judgment is clearly proper as to every possible antitrust issue.

The massive proof adduced shows this television broadcaster's failure was due to technological limitations and operational problems encountered in commencing its business life that were not the fault of any party sued. The station never had a viewing audience to sell that was worth more than the networks offered at various times to pay. The antitrust statutes do not require networks to subsidize the entry of a television station into the broadcast market. Similarly, no antitrust violation was committed by the carrier of the television signal nor by the existing local broadcaster either singularly or in combination with the networks. Enforcement of the carrier's authorized tariffs was free from antitrust violation. The established broadcaster was not shown to have taken any action in furtherance of its local-area monopoly and the claims against it based on that status are unfounded. Alleged Communications Act violations are dismissed as matters within the primary jurisdiction of the regulatory agency. In the exercise of its discretion the court dismisses the pendent state antitrust claims.

American Telephone & Telegraph Company (AT&T) originally brought this action against Delta Communications Corporation (Delta) to recover 19,524.31 dollars, an alleged indebtedness for television audio and visual local-channel communications service to Delta's television station WHTV-TV in Meridian, Mississippi.¹ Delta denied this liability asserting illegality of the tariffs covering these particular services. Delta also filed a counterclaim against AT&T Columbia Broadcasting System, Inc., later changed to CBS, Inc. (CBS); American Broadcasting Company, Inc. (ABC); RCA Corporation, later changed to National Broadcasting Company, Inc. (NBC); and Southern Television Corporation, WTOK-TV (Southern), charging these counterdefendants with anticompetitive practices aimed at the destruction of Delta specifically and ultrahigh-frequency (UHF) television stations generally. This cause is now before this court on separate motions for summary judgment by the original plaintiff and each of the counterdefendants.

To reduce the complex matrix of facts, inferences, and suspicions that complicate this proceeding, the court waived its local rule so as to allow extended discovery before requiring each of the parties to file a memorandum which specified the legal theories and the supporting facts upon which they would rely in this litigation.² Delta's initial and responsive memoranda have failed to delineate any precise theories supporting its counterclaim assertions. Instead, it presented numerous general accusations supported by legal citations which are not consistently apposite. To give the respondent the benefit of the doubt in ruling on the pending motions for summary judgment, this court has constructed the strongest tenable delineations of antitrust violations which can be combed from the documents presented. In addition to giving Delta the advantage of structuring for it the best possible legal theories, this court, as required in summary judgment actions, has resolved every issue of disputed material fact in favor of Delta and has drawn every reasonable inference from those facts in Delta's favor on each of the theories constructed. Poller v. CBS, 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962).

The intricate development of this opinion is intended to provide a judicial blueprint which will detail the basis for the court's decision on every portion of the extensive legal and factual development produced by industrious counsel on both sides of the multiplex issues in this difficult cause. The court has explicated the reasons for rejecting every contention advanced, both to fully inform the parties of the processes followed and thereby subject its reasons to their most intimate and arduous testing for error and to reassure itself of the independent soundness of each disposition individually.

I. FACTS

A. The History of Delta's WHTV Television Station

The television industry has a peculiar competitive history. Competition in the industry has been limited both by regulation of applicants and by the technology of television broadcasting. Not only must applicants be well financed, but only a few stations can be allowed to broadcast in each coverage area. Use of the VHF spectrum, which was initially the only band used, has always been restricted by the Federal Communications Commission (FCC) in every broadcast area. Often in small municipalities like Meridian only one VHF station will be allowed. In an effort to promote competition in the television industry, the FCC has been more liberal in licensing UHF television stations. For quite some time, however, these UHF stations suffered in their competitive efforts because then existing television receivers had to be supplementally equipped with a special channel receiver to enable the set to pick up signals in the UHF band. In addition, special antennae are often required for UHF reception. In 1964 Congress passed an act requiring that all new television receivers have the capability to pick up UHF signals.³ This legislation directly led to a flood of applications and to a great influx of new UHF stations. Thirty-seven of those new stations, including WHTV, however, "went dark" between 1966 and 1972.

Among those who became excited by the increased development which liberal licensing of UHF television produced was Weyman Walker. Although he had extremely limited experience in television broadcasting, Walker was able to attract significant investors and decided to incorporate and operate a UHF station in one of three markets. He contracted with a television expert to survey and report on the Meridian television market. This report was prepared in the summer or fall of 1966. It ranked Meridian 159th in the national television market. The report estimated that any new television station going into this market would probably suffer losses for the first 2 years. It warned of the possibility of no immediate network affiliation and recommended that any entry be based on a limited operating day.⁴

In 1968, at the time Walker and his associates were considering the development of a UHF television station in Meridian, Mississippi, the Meridian television market was monopolized by Southern, a very profitable television station with the call letters of WTOK. Southern was then affiliated with CBS, and had been since 1954. Its rate of payment from the network at that time was 500 dollars per hour which provided it with income approximating 6,000 dollars per week. In addition, the CBS network was paying the substantial signal delivery charges of AT&T in connection with its programming. The physical monopoly which Southern enjoyed because of the inherent technical limitations of the television industry was electronically shared with at least two other VHF television stations — WDAM in Hattiesburg, Mississippi and WLBT in Jackson, Mississippi, both NBC affiliates — which encroached upon the Meridian market. These stations overlapped 24% of the projected Delta market.

August 28, 1967, Walker, as station manager of the newly-founded corporation, Delta, visited with officials of ABC to inquire about affiliation with his new television station. On that occasion Walker was told "Build it and we will look at it." Then too he became aware of ABC's policy not to affiliate a television station which has an average primetime audience of less than 5,000 viewing households. ABC did not pay a station rate to stations having an average prime-time audience less than 7,000 nor did they pay program delivery charges for stations having an average primetime viewing audience less than 10,000. The minimum station rate which would be paid if this level of viewership could be attained was 100 dollars per hour.

In July of 1967 Delta obtained a construction permit from the FCC to build television station WHTV in Meridian. Sometime between August and December of 1967 Delta's Walker made...