"A Case Study of the First Variable Annuity Program," Commercial "Accountants vs. Economists Concepts of Break-Even Analysis," and Financial Chronicle, August 13, 1959.

NAA Bulletin, December, 1959. Reprinted in Anton and Firmin, Economics (Special Text 41-158), Fort Gordon, Georgia; Civil Contemporary Issues in' Cost Accounting (Boston: Houghton Affairs School, United States Army, 1959.

Miffin, 1966). "Private Placement Loans for Small Business,” Journal of Insur- “The Size and Maturity of Direct Placements,” Journal of Finance, ance, October, 1959.

March, 1960. Reprinted in Weston and Woods, Basic Financial "Accountants vs. Economists Concepts of Break-Even Analysis," Management (Belmont, Calif.: Wadsworth, 1967). NAA Bulletin, December, 1959.

"Risks-Premium Curves for Different Classes of Long-Term "The Size and Maturity of Direct Placements,” Journal of Finance, Securities, 1950-1966,” Journal of Finance, June 1969. (with March, 1960.

Roger Miller) Reprinted in E. Bruce Fredrickson, Prontiers of "The Performance of the College Retirement Equities Fund," Investment Analysis, 2nd ed (Scranton, Pa.: International Text

Journal of College and University Personnel Association, February, book Co., 1971). 1960.

“A Model for Accounts Receivable Management,” Managerial "Improving the Evaluation of Stock and Bond Yield,” Commercial Accounting, January 1966. Reprinted in Shultz, Readings in and Financial Chronicle, April 28, 1960.

Financial Management 2nd ed. “The Economic Cost of Money-Capital,” Public Utilities Port- “Net Income, Financing and Rising Prices,” Quarterly Review of nightly, June, 1960.

Economics and Business, Autumn 1968. Reprinted in Serraino, “Capital Budgeting," Bulletin of National Society for Business Singhvi and Soldofsky, Frontiers of Financial Management (CinBudgeting, Spring, 1961.

cinnati, Ohio: South-Western Publishing Co., 1971). “Comments on Life Insurance Lending to Small Business," Journal "Yield-Risk Performance of Convertible Securities," Financial of Finance, May, 1961.

Analysts Journal, March-April, 1971. "Growth Yields on Common Stock," Financial Analysts Journal,

Special Reports: Sept.-Oct., 1961. "Stock or Shares,” and “Money Order," Encyclopedia Britannica,

The Investment Policies of the Iowa Public Employees Retirement 1962 Edition.

System-Review and Recommendations, (1964) prepared with "Restatement and Projection of Yield on Common Stock,” Como Mr. Ernest V. Zuber. (Iowa City, Iowa: Bureau of Business and mercial and Financial Chronicle, June 20, 1963.

Economic Research, 1964) 151 pages. (This Report was preGrowth Yields on Common Stock: Theory and Tables (Iowa City, pared at the request of the Iowa Employment Security ComIowa: Bureau of Business and Economics Research, University

mission which administers IPERS). of Iowa) 1964—with James T. Murphy.

More Recent Publications: "Capital Budgeting Practices in Small Manufacturing Companies,” included in Studies in the Factor Markets for Small Business Firms,

“Net Income, Financing and Rising Prices, “The Quarterly Review edited by Dudley G. Luckett (Ames, Iowa: Iowa State Univer

of Economics and Business, Autumn 1968. sity) 1964.

“Yield-Risk Performance Measurements," Financial Analysis Jour

nal, Sept.-Oct. 1968. Lectures in Financial Management, 4th ed. (Columbia, Missouri: Lucas Press) 1964.

“Nominal versus Effective Rates on Savings," Burroughs Clearing “IPERS- An Investment Profile,” Iowa Business Digest, March, “How BAI'Would Measure Investment Performance,” Commercial

House, April 1969 (with Mr. Joe Lavely). 1965. "Significance of DJIA Stock Yields As a Measure of Portfolio. Discussion of "Private Sector Asset Management and the Effective

and Financial Chronicle, May 29, 1969. Acumen," Commercial and Financial Chronicle, September 9, 1965.

ness of Monetary Policy: Theory and Practice," by Hyman P. “The WHAT, WHY,

and HOW of Capital Budgeting for Smaller Businesses," Iowa Business Digest, January, 1966.

Minsky, Journal of Finance, May 1969. "A Model for Accounts Receivable Management (A Guide to

“Risk-Premium Curves for Different Classes of Long-Term Se Decision Rules for Extending Credit)” Managerial Accounting,

curities, 1950–1966,” Journal of Finance, June 1969 (with

Roger Miller). January, 1966. "Growth Yields on Common Stock Since 1900,” Quarterly Journal of

“What's in a Bond Rating,” Journal of Financial and Quantitative Business and Economics, Winter, 1965.

Analysis, June 1969 (with Thomas Pogue). “A Note on the History of Bond Tables and Growth Models Used

“Convertible Preferred Stock: Renewed Life in an Old Form," for Common Stock," Journal of Finance, September, 1966.

The Business Lawyer, July 1969. “Comments on Pension Funds as They Relate to Increased Mobility"Marginal Business Loans ... Differences by Bank Size,” Burroughs

in the Public Service," Proceedings of the Iowa Conference on Clearing House, November 1969. Mobility in the Public Service, December 1 and 2, 1965. This con- “Er Ante and Ex Post Yields on Bonds: Concepts and Measureference was sponsored by the Iowa Capitol Chapter of the Ameri- ments," Mississippi Valley Journal of Business and Economics, can Society for Public Administration.

May 1970 College and University Retirement Programs: A Review of Their Ade

Frontiers of Financial Management (Readings) Cincinnati:

Southquacy Under Realistic Assumptions (Iowa City, Iowa: Bureau of Business and Economic Research, University of Iowa) 1966.

Western Publishing Company (1971), coedited with William

Serraino and Surendra Singhvi. “Pensions and Pension Costs," Iowa Business Digest, April, 1967. "College Retirement Benefits Planning," Journal of Risk and Insur

"Yield-Risk Performance of Convertible Securities,” Pinancial ance, June, 1967.

Analysls Journal, March-April, 1971, "Yield-Risk Measurements of the Performance of Common Stock," Institutional Holdings of Common Slock, 1900-2000: (History, Pro

Journal of Financial and Quantitative Analysis, March, 1968. jection and Interpretation) (Graduate School of Business Adminis"Rights Timing,” Financial Analysts Journal, August, 1967. (with tration, University of Michigan, 1971). Mr. Craig R. Johnson.)

“Reply" to comment on “Risk-Premium Curves for Different "Classified Common Stock," Business Lawyer, April, 1968.

Classes of Long-Term Securities,” by Richard W. McEnally. Items Reprinted in Books of Readings:

Both the reply and comment appeared in the Journal of Finance, "Intermediate-Term Financing," Essays on Business Finance, 3rd

September 1972. Revised Edition, Wilford J. Biteman, Merwin H. Waterman,

"How Companies Manage Cash,” Pinancial Executive, October and others. Reprinted in Corrigan and Ward, Financial Manage

1972 (with Dennis Schwartz). ment-Policies and Practices (Boston: Houghton Mifflin, 1963). “Risk-Premium Curves: Empirical Evidence on Their Changing "Growth Yields on Common Stock,” Pinancial Analysts Journal, Position-1950 to 1970," Quarterly Review of Economics and Busi

Sept.-Oct., 1961. Reprinted in E. Bruce Fredrickson, Frontiers of ness, Spring 1973 (with Edward Jennings).
Investment Analysis (Scranton, Pa.: International Textbook Financial Management, Cincinnati, Ohio: South-Western Publish-
Company, 1965).

ing Co. (publication scheduled for January, 1974).

Appendix E

FCC ORDERS RELATING TO MULTIPLE OWNERSHIP OF STANDARD,

FM, AND TV BROADCASTING COMPANIES

PERSONAL TRUSTS AND CUSTODY ACCOUNTS

(Before the Federal Communications Commission, Wash- unless otherwise indicated a bank holding as trustee has

ington, D.C., 20554, FCC 72–391, 75954, Docket unqualified power to vote and acquire or dispose of the No. 18751, RM-1460)

stock of the licensee company? (In the matter of amendment of sections 73.35, 73.240 and tion to control the management or policy of a broadcast

B. Assuming that banks execute disclaimers of inten79.636 of the Commission's rules relating to multiple company as to stock held by the banks as trust investownership of standard, FM and television broadcast ments over which

they hold the power to determine how stations.)

the stock will be voted, is the 1 percent benchmark REPORT AND ORDER

specified in Sections 73.35(b), 73.240(b) and 73.636(a)(2) Adopted: May 9, 1972; Released: May 11, 1972.

a reasonable and proper standard as to stock held by

banks in their trust departments, or should a higher By the Commission: Commissioner Robert E. Lee figure, such as 3 percent be permitted. concurring in the result; Commissioner Johnson dissenting 4. We shall treat with Question B first. The trust and issuing a statement in which Commissioner Bartley departments of banks are unique entities. They operate joins.

under the trust laws of their respective states and act in 1. The Commission has before it for consideration the

a number of capacities in their fiduciary functions. The Notice of Proposed Rule Making and Notice of Inquiry bulk of trust business deals with the management of (FCC 69–1286, released November 25, 1969) and the trusts that are created in many ways. For instance, they comments filed in response thereto. Comments were hold pension and profit-sharing trusts of companies which filed by the American Bankers Association (ABA), the

are created by contract. In most of these pension and petitioner in this proceeding and by American Broadcast profit-sharing trusts, the bank has the sole power to coning Companies, Inc. (ABC); Broadcast-Plaza, Inc. trol the vote of the stock, but there are a few exceptions (Travelers’ Insurance); Columbia Broadcasting System, such as a case in which the trust must invest in the Inc. (CBS); Corinthian Broadcasting Corporation (Co commercial company that sets up the trust account rinthian); General Electric Broadcasting Company, Inc. by contract. (GE); RKO General, Inc. and Time-Life Broadcast, Inc.) (RKO/Time-Life); Storer Broadcasting Company (Storer); Taft Broadcasting Company (Taft); and WGN Continental Broadcasting Company, Inc. (WGN).

5. The remainder of trust accounts in the trust depart

ment deal with personal trusts and custody accounts. ADMINISTRATIVE CONFERENCE HELD

Personal trusts cover executorships and administrator

ships, testamentary trusts, intervivos trusts (revocable 2. Also, on September 1, 1970, at the request of the and irrevocable) and guardianships and committees for ABA, an administrative conference was held at the offices minors and incompetents. They must be handled on an of the Commission. Senior trust officers from 4 large individual basis and the purposes of the trusts vary banks orally presented papers on various aspects of trust widely: A number of these trusts have a co-trustee, and department operations and responded to questions fol in such cases, the bank acts as bookkeeper-adviser and lowing the presentations. The ABA also submitted, in has a partial or whole voting right. In the custody and response to the Notice of Inquiry, certain statistical data investment advisory accounts, the bank is the holder of concerning (a) interlocking directorates between the record, but the decisions are all made by the owner of banks and the licensees; and (b) loans by banks to licensees the trust assets. Thus, the bank is a bailee agent that acts in which they hold the power to vote stock held in their strictly on instructions. trust departments.

6. As to the operation of the trust accounts, the bank 3. The Notice of Proposed Rule Making solicited com- follows the terms of the trust instrument from which the ments on the following two questions:

trust was created. Testamentary trusts are created out A. Is the filing of trust agreements or abstracts thereof, of estates and are created for two principal purposes: (a) as required by Section 1.613(b) of the Commission's deferral of tax consequences and (b) to provide for the Rules, necessary so that the Commission will have ade testator's beneficiaries. The other types of personal trusts quato information to enable it to carry out its responsi- are created for many purposes such as care of children, Lilities under the Communications Act and other Com- payment of child support, alimony or other marriage mission's Rules and policy? If such filings are necessary settlements, or some other specific purpose. In these in some cases, could they be dispensed with partly or trusts, the bank quite often is limited in its investments entirely in others, for example by the presumption that to stocks on stato approved lists. If there is no approved

1

list in the given jurisdiction, the banks follow the "prudent

10% BENCHMARK man” rule based on precedents contained in trust and fiduciary law. The ABA contends, in its comments and in

10. With the questions of attribution and aggregation the testimony at the administrative conference, that banks decided, and with the scope of divestiture at various peracquire and hold stocks for investment purposes and not centages outlines, we now turn to the question of whether to control the management or policies of a company, and under the foregoing attribution and aggregation guidelines.

we should raise the 1% benchmark as it applies to banks in furtherance of this policy endorses the filing, by banks, The ABA strongly urges that the benchmark be raised to of disclaimers of the intent to control the managements 10%. Traveler's Insurance, RKO, Time-Life and WGN or policies of such companies.

all support the 10% position urged by the ABA; GE, CBS, RULES LIMIT HOLDINGS

and ABC support a 5% position; Corinthian supports a

benchmark of at least 3%; and Taft and Storer urge an 7. The Commission rules now in force limit holdings to increase in the limitation, but do not state a specific bench1% in companies that have over 50 shareholders when mark. The rationale set forth by the ABA, is that all existsuch 1% holdings in companies exceed the maximum ing presumptions of control in statutes are at least 10% number of stations permitted by the rules. These limita- and as high as 20%. Specifically cited as a 20% standard tions are 7 AM, 7 FM and 7 TV stations. As to TV, the is the alien control ownership provision of Sections 222(d) interest in the 7 TV stations may not exceed an interest and 310(d)(4) of the Communications Act of 1934, as in 5 VHF stations. At the time of the ABA filings, based amended. Urged as support of the 10% standard are the on a survey of the 19 largest banks, there were violations Public Utility Holding Company Act of 1935 and the Inof the 1% rule by banks that would require divestiture of vestment Company Act of 1940 (as supplemented by state $976,000,000 involving 25 companies. On the same basis, statutes in California and Ohio). Also urged as a 10% the divestiture required by the 19 banks at the following support are the Federal Aviation Act and the Federal percentages would be:

Deposit Insurance Corporation Act. The foregoing 10%

standards deal with presumption of control and it is urged At 3%-$256,000,000 (15 companies).

that the Commission should follow such 10% standard as a At 5%-84,000,000 (9 companies).

presumption of control. At 10%-4,000,000 (1 company).

11. The Securities Act of 1934 also set a 10% standard While we have no data beyond the survey, the foregoing for reporting of insider activities and possible corporate figures adequately indicate the scope of the problems for takeovers. However, in December, 1970, the “Corporate the purposes of our decision herein.

Takeover Act" was enacted which now requires that re8. We must also make a threshold decision concerning ports be filed, with minor exceptions when an investor attribution of ownership as well as aggregation of owner

reaches a 5% position in a company rather than the previship. As we stated in the previous proceeding in this case

ous 10% reporting benchmark. (Docket No. 15627, released June 17, 1968, 13 FCC 2d 12. Another contention of the ABA is that any bench357), we reiterate that, for the purposes of the multiple mark under 10% will have a clear depressing effect on the ownership, rules, we will consider the person or entity that broadcast industry's ability to raise needed capital in the controls the right to determine how the stock is voted as institutional money markets as well as causing severe the owner of the stock. Thus, in cases in which banks have hardships in divestitures of existing holdings. The parties any right to vote the stock, irrespective of whom the bene- that urged a less than 10% benchmark based their posificial holder is, the bank will be considered the owner for tions on the same or similar positions as those urged by the purpose of the multiple ownership rules.

the ABA, but the percentages urged would have wiped out

any violations as to their own company. The summary AGGREGATION OF STOCK

thrust of all the comments is that if divestiture is ordered,

there will be an “overhang” on broadcast stock which 9. As to the question of aggregation of stock, we will would depress the stock, and that banks may well release follow our attribution rule. Therefore, in cases in which all broadcast stocks because of the administrative burdens the bank holds any right, partial or whole, to determine of attempting to comply with the multiple ownership rules. how the stock will be voted, the stock will be aggregated to the bank. For example, if the bank possesses the power

BENCHMARK SHOULD BE RAISED to vote 3% of the shares of a given company (even though 13. The Commission has considered the questions raised it is held in 1,000 trust accounts), the bank will be con- in the Notice and the testimony submitted in the comsidered to have a 3% position in the company. The Com- ments and at the administrative conference and is of the mission has adopted aggregation of ownership of stock in opinion that the benchmark should be raised for the reatrust accounts where banks hold any right, either partial or sons urged by the parties. With rare exceptions, the banks whole, to vote for the reason that any large position in

are passive investors who manage the trusts for investment itself has the potential to be a force in management purposes for the beneficiaries and not to control the manbecause banks generally vote the stock one way. The

agement or policies of a broadcast company. To help insure testimony in the comments and at the administrative by banks that hold stock in an amount that exceeds the

this passive role, the Commission will require a disclaimer conference by the trust officers clearly pointed out that reporting requirements but is less than the benchmark conthe banks (where they hold the sole power to vote) tained in the multiple ownership rules. We have examined generally vote all the stock of a given company in the the various so-called “10% control" figures cited in the same way. (Transcript, Administrative Conference, page above statutes and conclude that those standards were a 27.)

legislative determination as to & particular industry or

duty, but that they are not, ipso facto, applicable to broad"Survey taken as of April 3, 1969,

casting,

1