Coalition for Preservation of Hispanic Broadcasting v. F.C.C., s. 87-1285

• Decision Date: 27 March 1990
• Docket Number: 88-1588 and 88-1596,88-1564,87-1287,Nos. 87-1285,87-1299,s. 87-1285
• Citation: 893 F.2d 1349,282 U.S.App.D.C. 200
• Parties: COALITION FOR THE PRESERVATION OF HISPANIC BROADCASTING, et al, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION, Respondent, Univision Holdings, Inc., et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1349

893 F.2d 1349

282 U.S.App.D.C. 200

COALITION FOR THE PRESERVATION OF HISPANIC BROADCASTING, et

al, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION, Respondent, Univision Holdings, Inc., et al., Intervenors.

Nos. 87-1285, 87-1287, 87-1299, 88-1564, 88-1588 and 88-1596.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 11, 1989.

Decided Jan. 12, 1990.

Opinion on Denial of Rehearing March 23, 1990.

Rehearing En Banc Granted March 27, 1990.

Petition for Review of Orders of the Federal Communications commission.

Martin E. Firestone, for Hispanic Broadcasting Systems, Inc., with whom Bruce A. Eisen, for Coalition for the Preservation of Hispanic Broadcasting, and Richard S. Rodin, Washington, D.C., for Susan M. Jaramillo, were on the joint brief for petitioners in Nos. 87-1285, 87-1287, 88-1564, and 88-1596.

Morton L. Berfield, with whom Lewis I. Cohen and Roy W. Boyce, Washington, D.C. were on the brief for petitioner, Hispanic Broadcasting Limited Partnership, in No. 87-1299.

James P. Riley, with whom Robert A. DePont, Washington, D.C., was on the brief for petitioner, TVL Corp., in No. 88-1588.

Sue Ann Preskill, Counsel for the FCC, with whom Diane S. Killory, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, Washington, D.C., and S. Lee Martin, Counsel, FCC, were on the brief for respondent in all cases.

Richard E. Wiley, with whom John C. Quale, Washington, D.C., and Diane Z. Goldman were on the brief for intervenors, Univision Holdings, Inc., et al., in Nos. 87-1285, 87-1287, 87-1299, 88-1564, 88-1588, and 88-1596. James R. Bayles also entered an appearance for Univision Holdings, Inc., et al.

Linda K. Smith and David H. Solomon, Washington, D.C., entered appearances for intervenor, Station Representatives Ass'n, Inc. in Nos. 87-1285, 87-1287, 87-1299.

L. Andrew Tollin and Leon T. Knauer, Washington, D.C., entered appearances for intervenor, Seven Hills Television Co., in Nos. 87-1285, 87-1287, 87-1299, and 88-1564.

N. Frank Wiggins, Washington, D.C., entered an appearance for intervenor, Fouce Amusement Enterprise, Inc., in Nos. 87-1285, 87-1287, 87-1299.

John L. Tierney, Richard F. Swift and Ann Bavender, Washington, D.C., entered appearances for intervenor, Bahia de San Francisco Television Co., in Nos. 87-1287 and 87-1299.

Before MIKVA, EDWARDS and WILLIAMS, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

Opinion filed by Circuit Judge WILLIAMS, dissenting in part and concurring in part of the judgment.

MIKVA, Circuit Judge:

In these consolidated cases, three companies comprised of Hispanic investors, an association claiming concern with preserving Hispanic broadcasting, and an Hispanic individual petition this court for judicial review of two orders of the Federal Communications Commission ("FCC" or "Commission"). The first order approved a settlement agreement providing for the grant of license renewal applications for Spanish International Communications Corporation ("SICC") and Bahia De San Francisco ("Bahia") subject to the prompt transfer of the licenses to a holding company controlled by Hallmark Cards, Inc. ("Hallmark"). The first order also denied petitions for acceptance of competing applications for the SICC and Bahia stations by two of the companies bringing petitions in this case. See Spanish International Communications Corporation, 2 FCC Rcd. 3336 (1987). The second order granted applications to transfer control of the licenses to Hallmark and denied applications which sought to block the transfer. See Spanish International Communications Corporation, 3 FCC Rcd 4319 (1988).

The settlement agreement was approved after an ALJ determined that the stations in question were subject to the de facto control of an alien in violation of Sec. 310(b)(3) of the Communications Act of 1934, 47 U.S.C. Sec. 310(b)(3) (1982). The principal question presented is whether the Commission's approval of a full market value sale to Hallmark prior to the final resolution of the renewal proceedings contravenes the Commission's policy forbidding assignment at full value of broadcast stations by a licensee, whose qualifications are under investigation, until the Commission has determined that the licensee has not forfeited its broadcast authorization. See Jefferson Radio Company v. FCC, 340 F.2d 781, 783 (D.C.Cir.1964). If indeed the Commission has changed its Jefferson Radio policy, we must determine whether it has explained adequately its departure from existing policy. We affirm the Commission's rulings declining to accept the competing applications and declining to review the actions of another federal court in administering a bidding process that led to the selection of Hallmark as the transferee. However, we hold: (1) that the three companies, as prospective competitors for the licenses, have standing to challenge the Commission's approval of the settlement and transfer; and (2) that the Commission departed from the policy upheld in Jefferson Radio. Because this case does not fall within any of the established exceptions to Jefferson Radio, we remand this case to the Commission to complete the renewal proceedings that were pending at the time the transfer was approved or to enunciate and explain a new policy that would modify Jefferson Radio.

I

A. Statutory Background

Section 310(b) of the Communications Act precludes the Commission from granting a broadcast license to foreign nationals or their representatives or to foreign corporations. 47 U.S.C. Sec. 310(b)(1), (2). In addition, under the provision at issue in this case, "[n]o broadcast ... license shall be granted to or held by [a United States corporation] of which any officer or director is an alien or of which more than one-fifth of the capital stock is owned ... or voted by aliens or their representatives." 47 U.S.C. Sec. 310(b)(3). Congress' motivation in passing this restriction was based primarily " 'upon the idea of preventing alien activities against the Government during the time of war.' " Noe v. FCC, 260 F.2d 739, 741 (D.C.Cir.), cert. denied, 359 U.S. 924, 79 S.Ct. 607, 3 L.Ed.2d 627 (1959) (quoting 68 Cong.Rec. 3037 (1927)).

B. Procedural History

1. Proceeding before the ALJ

SICC and Bahia (collectively, "SICC") were the licensees of six television stations broadcasting in the Spanish language. A seventh Spanish language station was licensed to the Seven Hills Television Company, which was controlled by many but not all of the principals who controlled SICC. SICC's corporate predecessors began acquiring broadcast stations in 1961. Prior to initiating in 1983 the renewal hearing at issue in this case, the Commission, with knowledge of the relationships giving rise to the hearing, unconditionally granted various applications by SICC to acquire stations and repeatedly renewed SICC's broadcast licenses. After a staff investigation precipitated by an outside complaint, the Commission designated for hearing the renewal applications for each SICC station. The principal issue was whether the corporate licensees of the stations were controlled by aliens or their representatives in violation of Section 310(b) of the Act. After a full evidentiary hearing, the ALJ found that SICC had violated Sec. 310(b)(3) because Reynald V. Anselmo, president and a director of SICC, had acted as the representative of the Azcarraga family, Mexican citizens and owners of a Mexican media empire. Spanish International Communications Corporation, FCC 86D-1, Initial Decision at p 176 (January 8, 1986). While the Azcarragas' stock holdings in SICC did not exceed the 20% statutory limitation, the ALJ concluded that the family's financial and personal relationships with American principals of SICC, particularly Anselmo, gave the family a degree of influence and control over the SICC stations which "greatly exceeded that permitted by Section 310(b)."

According to the ALJ this influence manifested itself at several levels. The composition and ownership of the board of directors of licensee corporations were affected by the Azcarragas' financing of stock purchases for selected principals. For example, Anselmo, a former employee in the Azcarragas' media empire, purchased interests in SICC stations with Azcarraga financing. As president and a director of all of the licensee companies, Anselmo personally selected all station managers. In addition, a major portion of programs broadcast by SICC stations originated from Televisa, a Mexican production company in which the Azcarragas had a controlling interest. The ALJ regarded Anselmo as the chief conduit of the Azcarragas' influence and as a "representative of aliens" within Sec. 310(b)(3). These facts, coupled with the "historic financial and personal ties between [l]icensees and the Azcarraga family," resulted in "an abnormal relationship ... whereby the [SICC] stations were dependent on foreign subsidiaries" for financing, programming and management. Thus the ALJ denied the renewal applications. He invited the parties, however, to seek "a less drastic remedial solution, such as a corporate restructuring" by raising the matter in an application for review of his decision.

2. The Settlement Agreement

The licensees appealed the ALJ's decision to the Commission's Review Board and several third parties filed exceptions to the ALJ decision. The exceptions challenged: (1) the ALJ's refusal to consider whether SICC abused the Commission's processes by filing lawsuits against Spanish Radio Broadcasters of America ("SRBA") (one of the excepting parties) and other potential witnesses in the proceeding against SICC; and (2) the ALJ's refusal to consider whether there was misconduct or misrepresentation sufficient to violate the Commission's policy on character qualifications.

While the exceptions were pending before the Board, SICC submitted a proposed settlement agreement whereby the SICC licenses would be renewed for the limited purpose of promptly...