Alianza Federal De Mercedes v. F. C. C., 74-1895

• Decision Date: 29 April 1976
• Docket Number: No. 74-1895,74-1895
• Citation: 539 F.2d 732,176 U.S.App.D.C. 253
• Parties: ALIANZA FEDERAL de MERCEDES et al., Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellants, Hubbard Broadcasting Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 732

539 F.2d 732

176 U.S.App.D.C. 253

ALIANZA FEDERAL de MERCEDES et al., Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellants, Hubbard Broadcasting Inc., Intervenor.

No. 74-1895.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 23, 1975.

Decided April 27, 1976.

As Amended April 29, 1976.

Tracy A. Westen, Washington, D. C., for appellants.

Daniel M. Armstrong, Acting Associate Gen. Counsel, F. C. C., Washington, D. C., for appellee. Ashton R. Hardy, Gen. Counsel, F. C. C., Joseph A. Marino, Associate Gen. Counsel, F. C. C., Washington, D. C., at the time the brief was filed, and Julian R. Rush, Jr., counsel, F. C. C., Washington, D. C., on brief.

James P. Riley, Washington, D. C., with whom Frank U. Fletcher and Marvin Rosenberg, Washington, D. C., on brief for intervenor.

Before LEVENTHAL and ROBB, Circuit Judges and SOLOMON, ^* United States Senior District Judge for the District of Oregon.

Opinion for the Court filed by Circuit Judge LEVENTHAL.

LEVENTHAL, Circuit Judge:

Alianza Federal de Mercedes, a Mexican-American group in New Mexico, challenges a Federal Communications Commission Order ¹ which granted a 1971-1974 license renewal to Hubbard Broadcasting's KOB-TV station in Albuquerque, New Mexico. ² Alianza contends that access to broadcast license financial information is necessary to measure the adequacy of a licensee's past performance. Alianza also asserts that it raised substantial and material issues of fact about KOB-TV's programming and employment practices sufficient to demonstrate prima facie that license renewal would contravene the public interest. We hold that disclosure of licensee financial information is not required as a matter of law, and that no substantial and material issues of fact were raised that would require an evidentiary hearing on the Petition to Deny the Renewal Application. We therefore affirm the FCC's approval of KOB-TV's license renewal application.

I. BACKGROUND

Alianza is a non-profit New Mexico corporation organized in 1963 to combat discrimination against Mexican-Americans. It estimates its membership at approximately 3,000 families of Mexican-American descent. Alianza has taken an active role in seeking to make Albuquerque stations responsive to the needs of the Mexican-American community an ethnic group that comprises some 40 percent of Albuquerque's population. In July, 1971, Alianza petitioned the FCC to be allowed to inspect the KOB-TV Form 324 financial statements in its files, ³ and asked for an expedited decision. The FCC rejected the expedited decision request. Appellants Alianza and William Higgs thereupon filed a timely petition to deny the license renewal application. Appellants emphasized particularly KOB-TV's failures to present programs on discrimination against Mexican-Americans and on the question of whether Mexican-Americans were illegally deprived of Spanish land grants.

On September 2, 1971, the Commission denied the request for inspection of KOB-TV's financial statements. ⁴ This court initially declined to review that decision on the ground that the issue was raised prematurely. ⁵

Hubbard Broadasting, intervenor here and the licensee of KOB-TV, filed an opposition to appellants' petition to deny renewal of its broadcasting license, and Alianza filed a reply.

On August 28, 1974, the Commission issued its opinion. The FCC found: 1) petitioners did not meet the burden of presenting substantial and material allegations of fact indicating that renewal would be prima facie inconsistent with the public interest; 2) KOB-TV's programming has been responsive to the problems of the public which it serves, including Mexican-Americans; 3) there was no showing that the licensee had abused its overall programming discretion by (a) treating the discrimination and land grant questions only in news programming, (b) failing to seek out Alianza to present its views, or (c) failing to use public service announcements dealing with the discrimination and land grant questions; 4) KOB-TV's programming proposals are responsive to ascertained community problems and need not be judged by an overall quantitative standard; 5) KOB-TV's application demonstrates substantial compliance with the ascertainment Primer; 6) KOB-TV's employment statistics indicate adequate commitment to its policy of equal employment opportunity.

II. PRELIMINARY ISSUES

A. Mootness. Shortly after the Commission granted (on Aug. 28, 1974), KOB-TV's license renewal for the 1971-1974 period it granted (on Sept. 27, 1974) a renewal of license for the period October 1, 1974, to October 1, 1977. Alianza did not seek denial of the 1974-77 renewal application. In our view, the unopposed grant for 1974-77 does not moot this appeal from the 1971-74 term license grant.

It has been basic to the understanding of the renewal process by both Congress and the Commission that a licensee runs on his past record, ⁶ and that grants of licenses are subject to the limitations of the Communications Act. ⁷ Two of those limitations ⁸ are the right to judicial review, and the obligation of the Commission to give effect to any resulting judgment. If giving effect to a judgment of this court culminates in a Commission order vacating its grant of KOB-TV's 1971-74 license renewal, this would work a change in the basis for granting or denying a 1974-77 term to KOB-TV. As of 1974, KOB-TV would have no outstanding license to renew, it would no longer have any legitimate renewal expectancies, ⁹ and could file a new application only after a one-year interval. ¹⁰ A case is not moot when, as here, substantial ongoing rights of the parties continue to turn on the resolution of the issues it poses.

B. The Standard of Review. There is no assertion that the Commission has acted beyond its statutory authority. Hence we review the Commission's renewal standards and application of those standards only to assure that the Commission did not abuse its discretion or act arbitrarily or capriciously. We use the same frame of reference in evaluating the Commission's statement of reasons for denying a hearing. See Columbus Broadcasting Coalition v. FCC,164 U.S.App.D.C. 213, 217, 505 F.2d 320, 324 (1974).

A hearing is required only when a petition to deny makes "substantial and specific allegations of fact which, if true, would indicate that a grant of the application would be prima facie inconsistent with the public interest." Stone v. FCC, 151 U.S.App.D.C. 145, 151, 466 F.2d 316, 322 (1972). A hearing is not required when facts are undisputed or when the case turns on only the "inferences to be drawn from facts already known and the legal conclusions to be derived from these facts." ¹¹

III. APPELLANTS' SPECIFIC OBJECTIONS TO LICENSE RENEWAL

A. Responsiveness of Programming to Community Needs

Appellants want this court to require the Commission to use quantitative standards or evaluations in measuring past programming adequacy. This is an area in which qualitative evaluations are suspect as intrusions into the broadcaster's First Amendment freedoms but in which the Commission nevertheless has an obligation to assure operation in the public interest.

Appellants stress the need for a better measure of performance than the current Commission method requiring a licensee to identify community problems, and to explore an undefined number of those problems through undefined types of public interest and news programming. We have not been insensitive to the weaknesses in the Commission's ascertainment process. In Stone v. FCC, we noted that failure to include such non-problem areas of interest as family life, art, and social interaction may leave out public needs that are "often much more important in both everyday life and in media programming than the problems of a community." ¹² Disclosure of financial information might be helpful as a means of gauging public interest programming, but we cannot say that the Commission is required as a matter of law to make such information available.

Appellant's second argument is that public interest programming that is allocated in only a minuscule amount to serving the needs of a 40% minority community is prima facie inconsistent with the public interest. However, this argument was never clearly articulated to the Commission in the first instance or in a petition for rehearing.

1. Disclosure of Financial Information

The FCC uses financial information in its regulatory activities. It requires that a station not only file an annual financial statement describing operating expenses on Form 324, but also disclose its balance sheet to the public at renewal time.

The Commission considers revenue adequacy and reinvestment relevant when it is alleged that the addition of a new station to a market area will threaten an overall reduction in public interest programming, or when it is considering approving a change in ownership. See Carroll Broadcasting Co. v. FCC, 103 U.S.App.D.C. 346, 258 F.2d 440 (1958); Wichita-Hutchinson Co., Inc., 19 FCC 2d 433, reconsidered in part, 20 F.C.C. 2d 584, transfer denied, 20 F.C.C. 2d 951 (1969). But when the Commission is considering the renewal of an application and no opposing group is seeking that license, the issue is not which applicant or how many licensees will best serve the public interest. The Commission simply determines whether the licensee has operated in the public interest in the past, and whether its proposed programming makes it likely to operate in the public interest in the future. ¹³ Once that determination is made, the Commission does not try to evaluate whether the licensee could have done a better job of operating in the public interest. The Commission assures itself that the station has carried out a study that adequately ascertains the local community's perceived problems, and that the station has carried programming responsive to some of the identified problems. Since there are no standards about how much...