Central Florida Enterprises, Inc. v. F. C. C., 76-1742
| Decision Date | 17 May 1979 |
| Docket Number | No. 76-1742,76-1742 |
| Citation | 194 U.S.App.D.C. 118,598 F.2d 37 |
| Parties | , 4 Media L. Rep. 1502, 4 Media L. Rep. 2009 CENTRAL FLORIDA ENTERPRISES, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee. Cowles Broadcasting, Inc., Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from an Order of the Federal Communications Commission.
Joseph F. Hennessey, Washington, D. C., with whom Lee G. Lovett and Richard C. Rowlenson, Washington, D. C., were on the brief, for appellant.
Daniel M. Armstrong, Associate Gen. Counsel, Washington, D. C., with whom Robert R. Bruce, Gen. Counsel and Jack David Smith, Counsel F. C. C., Washington, D. C., was on the brief, for appellee.
Robert A. Marmet, Washington, D. C., with whom Harold K. McCombs, Jr., Washington, D. C., was on the brief, for intervenor, Cowles Broadcasting, Inc.
Edward J. Kuhlmann, Washington, D. C., was on the brief for amicus curiae urging the Commission's decision to be reversed and remanded.
Before ROBINSON and WILKEY, Circuit Judges, and FLANNERY, * District Judge for the United States District Court for the District of Columbia.
Opinion for the Court filed by Circuit Judge WILKEY.
OUTLINE OF OPINION
OUTLINE OF OPINION
Page
I. ISSUES IN COMPARATIVE RENEWAL PROCEEDINGS
PAST AND PRESENT ........................................... 40
II. THE COURSE OF THE LITIGATION ................................. 44
A. The Initial Decision ...................................... 45
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1. Designated Issues ..................................... 45
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a. The Main Studio Move ............................... 45
b. Mail Fraud ......................................... 45
2. Standard Comparative Issues ........................... 46
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a. Diversification of Media Ownership ................. 46
b. Best Practicable Service ........................... 46
(1) Integration of Ownership and Management ........ 46
(2) Cowles' Past Service ........................... 47
c. The Public Interest Finding on the Two Standard
Comparative Issues ............................... 47
B. The Commission Decision ................................... 47
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III. ANALYSIS ..................................................... 49
A. The Designated Issues ..................................... 51
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1. The Main Studio Move ................................... 51
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2. The Mail Fraud Issue ................................... 52
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B. Standard Comparative Issues ............................... 53
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1. Diversification ........................................ 53
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2. Best Practicable Service ............................... 54
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a. Integration ......................................... 55
b. Cowles' Past Performance ............................ 56
IV. CONCLUSION ................................................... 58
Appellant, Central Florida Enterprises, Inc. (Central), appeals a decision and accompanying orders by the Federal Communications Commission (Commission) denying its application for a construction permit for a new commercial television station to operate on Channel 2 in Daytona Beach, Florida, and granting the mutually exclusive application for renewal of license to Intervenor Cowles Florida Broadcasting, Inc. (Cowles). 1 Appellant contends that the Commission acted unreasonably and without substantial record support in preferring Cowles' renewal application. We agree, vacate the Commission's orders, and remand for further proceedings.
What is at issue here is the validity of the process by which the competing applications of Central and Cowles were compared and the adequacy of the Commission's articulated rationale for its choosing to renew Cowles' license. This may well be a typical comparative renewal case, hence the careful scrutiny we give the Commission's procedure and rationale herein.
Aside from the specific facts of this case, there is other evidence indicating the state of administrative practice in Commission comparative renewal proceedings is unsatisfactory. 2 Its paradoxical history reveals an ordinarily tacit presumption that the incumbent licensee is to be preferred over competing applicants. 3 Because the Federal Communications Act fairly precludes any preference based on incumbency Per se, 4 the practical bias arises from the Commission's discretionary weighing of legally relevant factors. 5 Of course, the general preference, and A fortiori the disposition in any given instance, may be a lawful exercise of the Commission's "substantive discretion." However, it is the judicial function to insure that such discretionary choices as are entailed in these proceedings are rigorously governed by traditional principles of fairness and administrative regularity.
Comparative analysis is implicit in any scheme of allocation and has always been at least formally a consideration in broadcast licensing. The procedural setting for such a comparative review is the licensing hearing provided by Section 309(e) of the Communications Act. 6 The Supreme Court held in Ashbacker Radio Corp. v. FCC 7 that under Section 309(e) where two or more applications are mutually exclusive there must be a joint comparative hearing. This court had occasion to elaborate what is entailed by such a "full hearing" in Greater Boston Television Corp. v. FCC:
(T)he findings must cover all the substantial differences between the applicants and the ultimate conclusion must be based on a composite consideration of the findings as to each applicant. 8
Although Ashbacker dealt with two original applications, this court and the Commission have consistently held that the doctrine governs renewal proceedings as well. 9
A less tractable matter has been the question of the substantive criteria to assure a fair comparison. The development of those criteria has been committed largely to the discretion of the Commission, with occasional and quite general guidance from the courts, as in Greater Boston, supra. The standards, evolved gradually over the course of the Commission's comparative proceedings, were reviewed and restated in the 1965 Policy Statement on Comparative Broadcast Hearings. 10 Logically, criteria for comparison should be derived from and relate to the defined Objectives of the comparative hearing. The Commission so proceeded, identifying in the Policy Statement the primary Objectives of the comparative hearing as "the Best practicable service to the public" and the "Maximum diffusion of control of the media of mass communication." 11 The principal factors relevant to the "best practicable service" issue were the extent of participation of owners in station management, programming proposals, past broadcast record, technical capacity, and character. 12 Diversification of ownership of the mass media was described as being "of primary significance." 13 Further, upon an appropriate showing, the parties could raise any other relevant factors.
The applicability of the Commission's usual comparative criteria to comparative Renewal proceedings has been uncertain. The fact of incumbency without more would appear legally irrelevant under the statute. 14 Although the 1965 Policy Statement pretermitted "the somewhat different problems raised when an applicant is contesting with a licensee seeking renewal of license," 15 the Commission subsequently held that the 1965 Policy Statement "should govern the introduction of evidence in this and similar proceedings where a renewal application is contested." 16 The weight given to the 1965 criteria would still depend on the facts of each case.
Despite the apparent statutory assurance of a freewheeling inquiry into the relative merit of challenger and incumbent licensee, the history of Commission practice reveals a strong preference for renewal. 17 Further, until fairly recently, such choices by the Commission were routinely affirmed by this court. 18 This general phenomenon has been rationalized into what we have called on occasion "a renewal expectancy." 19 The question arises, material in this case, to what extent such an expectancy is compatible with the full hearing guaranty of Section 309(e). This was essentially the question we confronted in Citizens Communication Center v. FCC. 20 There we struck down the Commission's 1970 Policy Statement Concerning Comparative Hearings Involving Regular Renewal Applicants 21 because it foreclosed the fully comparative inquiry mandated by the statute as construed in Ashbacker. Under that Policy Statement, if there were a showing of past "substantial service," a licensee would be renewed without consideration of comparative issues. Citizens thus stands for the proposition that "the Commission may not use renewal expectancies of incumbent licensees to shortcircuit the comparative hearing." 22
We did note the relevance of the incumbent's past performance:
We do not dispute, of course, that incumbent licensees should be judged primarily on their records of past performance. Insubstantial past performance should preclude renewal of a license. . . . At the same time, superior performance should...
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