West Michigan Broadcasting Co. v. F.C.C.

• Decision Date: 13 June 1984
• Docket Number: No. 82-2513,82-2513
• Citation: 236 U.S.App.D.C. 335,735 F.2d 601
• Parties: WEST MICHIGAN BROADCASTING COMPANY, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Waters Broadcasting Corporation, National Association of Black Owned Broadcasters, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 601

735 F.2d 601

236 U.S.App.D.C. 335

WEST MICHIGAN BROADCASTING COMPANY, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION Waters Broadcasting Corporation, National Association of Black Owned Broadcasters, et al., Intervenors.

No. 82-2513.

United States Court of Appeals District of Columbia Circuit.

Argued Oct. 25, 1983.

Decided May 25, 1984.

As Amended June 13, 1984.

Appeal from an Order of the Federal Communications Commission.

Eric L. Bernthal, Washington, D.C., with whom Daniel F. Van Horn, Washington, D.C., was on the brief, for appellant.

David Silberman, Atty., F.C.C., Washington, D.C., with whom Bruce E. Fein, Gen. Counsel, and Daniel M. Armstrong, Associate Gen. Counsel, F.C.C., Washington, D.C., were on the brief, for appellee.

David H. Rozzelle, Washington, D.C., with whom Vincent J. Curtis and Patricia A. Mahoney, Washington, D.C., were on the brief, for intervenor Waters Broadcasting Co.

James L. Winston, Walter E. Diercks, J. Clay Smith, and Frederick D. Cooke, Jr., Washington, D.C., were on the joint brief for intervenors Nat. Ass'n of Black Owned Broadcasters, et al.

Allen S. Hammond, IV, and Andrew Jay Schwartzman, Washington, D.C., were on the brief for amici curiae Office of Communication of the United Church of Christ and Telecommunications Research and Action Center, urging affirmance.

Before WRIGHT and GINSBURG, Circuit Judges, and McGOWAN, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge J. SKELLY WRIGHT.

J. SKELLY WRIGHT, Circuit Judge:

Waters Broadcasting Corporation and West Michigan Broadcasting Company filed mutually exclusive applications with the Federal Communications Commission for a construction permit to establish a new FM radio station in Hart, Michigan. After conducting a hearing on which of the proposals would, on a comparative basis, best serve the public interest, an administrative law judge granted Waters' application. ¹ West Michigan appealed, and the Review Board reversed the ALJ and granted West Michigan's application. ² The case was then appealed to the full Commission which reversed the Review Board and granted Waters' application. ³ West Michigan now appeals to this court, arguing issues of both administrative and constitutional law. We affirm the Commission's decision in all respects.

In this case, under the criteria of the Commission's comparative evaluation process, both applicants were judged to be highly qualified. The competition was consistently viewed as a very close one. It was thus a case that forced the decisionmakers to examine with particularity the contours of the various factors that the Commission has traditionally used in evaluating comparative applications. That different results were reached at different stages of decision seems to reflect that at each level the various factors were re-examined and more precisely defined.

West Michigan is a corporation owned by three residents of Hart, Michigan, the community of license. Waters is a corporation owned by one resident of Muskegon, Michigan located about 30 miles from Hart. Waters' owner made a commitment to move to Hart if her application was granted. Relevant differences between the applications boil down to the following: The Commission awarded West Michigan's proposal to integrate its ownership and management a "substantial enhancement" for its owners' residence and civic activities in the community of license. In contrast, Waters' integration proposal received a "substantial enhancement" because Waters was owned by a black and a "moderate enhancement" because its owner lived within the service area of the proposed station--though not in the community of license itself--and was active in her community's civic affairs. The essence of West Michigan's challenge is that its "substantial enhancement" for local residence and civic activities should have been sufficient to merit award of the permit.

As a matter of administrative law West Michigan challenges the way in which these "enhancements" were used by the Commission. ⁴ First, it challenges the "enhancement" given to Waters' integration proposal for its owner's residence and community involvement in Muskegon. It argues that granting an enhancement for residence and community involvement in an area so distant from the community of license represents an arbitrary and capricious reversal of prior FCC policy. Second, West Michigan challenges the Commission's use of its "minority enhancement" in this case.

In the face of an extreme underrepresentation of minorities in the ownership and management of broadcast media enterprises the Commission has followed policies of promoting minority ownership and management. Because Waters is wholly owned by a black who will have full management responsibility for the station, the Commission granted a "substantial enhancement" to its application. West Michigan argues that, as a matter of both administrative and constitutional law, the FCC was wrong to grant such an enhancement where the community of license (i.e., Hart, Michigan) contains no significant black population. ⁵

I. THE PROCESS OF COMPARATIVE EVALUATION

Because the issues in this case all derive from the nature of the Commission's comparative evaluation process, we will first discuss the goals and structure of that process. The nature of the process as a whole will become an important factor in our analysis.

A. The General Framework of the 1965 Policy Statement

The general evaluative framework that the Commission uses in its comparative process was first set out in its Policy Statement on Comparative Broadcast Hearings, 1 FCC2d 393 (1965) (hereinafter Policy Statement ). In the Policy Statement the FCC stated that the process of comparison was designed to attain two general policy objectives: "the best practicable service to the public" and "a maximum diffusion of control of the media of mass communications." 1 FCC2d at 394. Although stated separately, the Commission made clear that the two objectives were closely related: "Since independence and individuality of approach are elements of rendering good program service, the primary goals of good service and diversification of control are * * * fully compatible." Id. It also made clear that this relatedness rested on the view that our society benefits from exposure to a broad diversity of ideas and perspectives, a view of the public interest that it derived in large part from the Supreme Court's First Amendment jurisprudence:

As the Supreme Court has stated, the first amendment to the Constitution of the United States "rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public." * * *

Id. at 394 n. 4 (quoting Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 1424, 89 L.Ed. 2013 (1945)); see TV 9, Inc. v. FCC, 495 F.2d 929, 937 (D.C.Cir.1973), cert. denied, 419 U.S. 986, 95 S.Ct. 245, 42 L.Ed.2d 194 (1974). See also FCC v. Nat'l Citizens Committee for Broadcasting, 436 U.S. 775, 794-797, 98 S.Ct. 2096, 2111-2113, 56 L.Ed.2d 697 (1978) (discussing relationship between the FCC goal of diversification of ownership and the First Amendment concern for promoting diversity of viewpoint); Citizens Communications Center v. FCC, 447 F.2d 1201, 1213 n. 36 (D.C.Cir.1971) (same). See generally Special Project, Media and the First Amendment in a Free Society, 60 GEO.L.J. 871, 1006-1014 (1972).

After discussing its policy goals, the statement focused on how six specific factors related to those goals and how each would be considered in future comparative proceedings. Although most of these factors have been discussed in detail in subsequent cases, they will all be briefly outlined here. Although the contentions of West Michigan focus on the second factor--participation in station affairs by station owners--we will here briefly outline all six of the factors so that the process can be understood as a whole.

1. Diversification of control of the media of mass communication. The Commission deemed it to be relevant whether an applicant's owners have ownership interests in other broadcast stations and other media of mass communication. To increase diversification of control and thus, presumably, "independence and individuality of approach," credit is given to entities controlled by those with few or no interests in other mass media entities. 1 FCC2d at 394-395.

2. Full-time participation in station operation by owners. The Commission considered integration of ownership with management to be a factor "of substantial importance." It was viewed as highly relevant to providing the "best practicable service" as well as complementing the diversification goals. The greater the degree of integration of ownership and management, the easier it is to focus on those responsible for station operations. Similarly, integration of ownership with management makes it more likely that diversification of ownership will result in diversification of control.

The Commission's consideration of ownership participation, however, goes beyond the "quantitative" issue of how extensive owner participation in management will be. If an owner actually exercises day-to-day control over the enterprise, it becomes reasonable to evaluate an application in terms of the individual attributes of the owner. Such factors "as * * * [a participating owner's prior broadcast] experience and local residence," are thus considered under this category as "qualitative enhancements" to an application's proposal regarding its integration of ownership with management. Id. at 395-396. Most of the questions at issue in this case concern the FCC's use of "qualitative enhancements."

3. Proposed program service. Exceptional programming proposals are considered relevant. But because the Commission recognized the difficulty of making prospective comparative evaluations, "[d]ecisional significance [is] accorded only to...