Connecticut Committee Against Pay TV v. FCC

• Decision Date: 08 March 1962
• Docket Number: 16315.,No. 16278,16278
• Parties: CONNECTICUT COMMITTEE AGAINST PAY TV, Stanley Warner Management Company, Loew's, Inc., Connecticut Theatres, Manchester Drive-In Theatre Corporation, Outdoor Theatres Corporation, Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, RKO Phonevision Company, Intervenor. CONNECTICUT COMMITTEE AGAINST PAY TV et al., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION, United States of America, Respondents, RKO Phonevision Company, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

301 F.2d 835 (1962)

CONNECTICUT COMMITTEE AGAINST PAY TV, Stanley Warner Management Company, Loew's, Inc., Connecticut Theatres, Manchester Drive-In Theatre Corporation, Outdoor Theatres Corporation, Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, RKO Phonevision Company, Intervenor.

CONNECTICUT COMMITTEE AGAINST PAY TV et al., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION, United States of America, Respondents, RKO Phonevision Company, Intervenor.

Nos. 16278, 16315.

United States Court of Appeals District of Columbia Circuit.

Argued December 1, 1961.

Decided March 8, 1962.

Mr. Marcus Cohn, Washington, D. C., for appellants in No. 16278 and petitioners in No. 16315.

Mr. Martin Jay Gaynes, Washington, D. C., entered an appearance for appellants in No. 16278 and petitioners in No. 16315.

Mr. Paul Dobin, Washington, D. C., also entered an appearance for petitioners in No. 16315.

Mr. Max D. Paglin, Gen. Counsel, Federal Communications Commission, with whom Mr. Daniel R. Ohlbaum, Asst. Gen. Counsel, Federal Communications Commission, was on the brief, for appellee in No. 16278 and respondent in No. 16315.

Mrs. Ruth V. Reel, Counsel, Federal Communications Commission, also entered an appearance for appellee in No. 16278.

Mr. Richard A. Solomon, Atty., Dept. of Justice, entered an appearance for respondent United States of America in No. 16315.

Mr. Harold David Cohen, Washington, D. C., with whom Mr. W. Theodore Pierson, Washington, D. C., was on the brief, for intervenor.

Mr. Vernon D. Kohlhaas, Washington, D. C., also entered an appearance for intervenor in No. 16278.

Before EDGERTON, BASTIAN and BURGER, Circuit Judges.

BURGER, Circuit Judge.

This matter comes to us on a consolidated proceeding arising out of an appeal under Sec. 402(b) of the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U.S.C.A. § 151 et seq., and on a petition for review under Sec. 402(a) of the Act. Both the appeal and the petition seek review of a Report, Decision and Order of the Federal Communications Commission granting RKO Phonevision Company, the Intervenor authority to conduct a three year trial operation of "pay" or subscription television in Hartford, Connecticut, to be operated by Zenith Radio Corporation Phonevision system.

In 1955 the Commission issued a Notice of Proposed Rule Making in which it sought an expression of views from interested parties on the question whether the Commission had the power to authorize pay-television operations and, if it had such power, whether such operations would be in the public interest. Subsequently the Commission issued a series of reports which in essential part concluded that the Commission had statutory power to authorize some form of direct payment or subscription television system. The several reports set forth the following among the conditions under which such a system would have to operate initially: (1) trial authorization would be limited to a three year period; (2) the public could not be forced to purchase any special receiving equipment; (3) the licensee would be required to retain full freedom of program choice and subscription rates to be charged; (4) the trial of any one system would be limited to any one of the twenty major markets which have four television stations. Hartford is one of those areas.

In June, 1960, the RKO Phonevision Company, purchaser of the assets of television station WHCT in Hartford, applied for authority to utilize that station for a pay-television trial under the terms established by the Commission. The RKO Phonevision Company is a wholly owned subsidiary of RKO General, Inc., and will hereafter be referred to as RKO. Hearings on the application were held before the Commission in October, 1960 and in February, 1961 the application was granted.

In essence RKO proposes to provide subscription television programs over WHCT approximately 40 hours a week, of a total 70 hour broadcasting schedule, using a "Phonevision" system which is supported by direct payment of charges by subscribers.¹ During these forty hours the signal beamed from WHCT will be garbled or "scrambled" by an encoding device, thus preventing general reception. Those who wish to subscribe will rent a decoding mechanism provided by the Phonevision System which when attached to their conventional television receivers will decipher the garbled signal and convert it into a normal image on the television screen. Installation of the decoder in the subscriber's set will cost an estimated $7.50 to $10 and rental charges on the decoder thereafter may not exceed $.75 weekly. Subscribers will be free to terminate subscriptions at the end of any month. The Intervenor contemplates a maximum of 40,000 subscribers.

Individual program cost will vary from $.25 to $3.50 with the majority of offerings predicted to fall within the $.75 to $1.50 range. Subscribers will be billed on the basis of a record of usage kept by a paper billing tape installed inside the decoder which will perform the function of a meter. Since the entire operation is to be financed by this direct payment arrangement, no commercial messages will be broadcast during the 40 hours this system is operative.

At the time of the Commission's decision, RKO had done no more than discuss and explore probable programming with prospective suppliers of contemplated program material, and had neither made nor received any firm commitments as to precisely what would be televised once the subscription broadcasting operation commenced. Plans called for a major portion of the forty hours of subscription time to be devoted to first run motion picture films, with the residue of time given to legitimate theatre, opera, ballet, concerts, educational features, art and children's films, and sports features as they occur and are available. The Commission predicted that programming along these lines should not entail substantial limitation on the types of programs the Hartford public would see generally, since with only insignificant exceptions the same or similar programs which the subscription system would displace in the WHCT broadcasting schedule would be offered by other stations in the Hartford area.

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