We thus had the anomolcus situation that entirely different procedures were followed in transfer cases than is customary in the handling of applications for new stations, although the standards prescribed by the act were substantially identical. For in the case of licensing new stations the procedure followed, and which would continue to be followed if these amendments are enacted, is designed to insure that everyone who is interested in applying for a particular broadcast frequency has an opportunity to do so. This has usually resulted in a competitive situation where the Commission has a choice between applicants. It is difficult to reconcile procedures which on the one hand take such pains to insure the fullest competition among applicants for new stations and on the other hand permit a licensee to transfer to whomever he pleases-provided the transferee selected is qualified. This is particularly difficult to understand when the section under consideration specifically provides for following the same procedure on transfer cases as for original applications but changes the substantive standards.

In order to cure this discrepancy, the Commission adopted the socalled AVCO procedure for dealing with transfers. This is found in section 1.323 of the Commission's rules, which is exhibit 5. [Under this procedure when a transfer application is filed with the Commission, it is held in abeyance for 60 days during which time an advertisement is carried in the Federal Register and in the newspapers of the community served by the station to the effect that the existing licensee proposes to transfer his station license and the terms and conditions of the sale. The notice provides that any other person wishing to apply for the facilities on the same terms may do so. If no one applies, the Commission acts on the transfer application on its merits. But if other parties come in, the Commission gives comparative consideration to all applications, granting the application of the original proposed transferee if it appears from the applications that it is best qualified to serve the public interest, and setting all applications for comparative hearing if it is unable so to determine. If after hearing it appears that the proposed transferee is the best qualified, the application is granted. However, if the Commission concludes that one of the competing applicants is best qualified, an order is entered denying the transfer application and granting consent to a transfer to the competing applicant if the parties enter into a contract and file a new joint application within 30 days. The licensee is not required to file such application.

The Commission believes that the adoption of this procedure enables it to carry out more adequately the congressional intent that the best qualified person should be licensed for each available frequency. Nor does the procedure harm the existing licensee since under its terms he either sells his station to the person he selected under the terms and conditions specified in the contract or he sells to another person on the same terms, or retains his station. Thus, we think the adoption of this procedure has improved the Commission's ability to insure the maximum utilization of the limited number of broadcast facilities. But it would appear that the amendment to the act which allows the Commission to consider only the qualifications of the proposed transferee would invalidate this procedure.

Another defect of the amendment arises out of the situation where frequencies and licenses are made the subject of traffic. Congress has

made it clear that licenses are to be granted only to those qualified to operate in the public interest.

The statute specifically provides that licensees acquire only a right to use their frequencies for a limited period and do not acquire any vested or property right. Under the statutory scheme, the Commission has consistently maintained that when a person secures licenses upon a representation that he will operate the station in the public interest, and then proceeds to sell such licenses, he is engaged in trafficking in licenses and that the transfer should not be approved. The Commission is able to do this under the present statute which requires a finding that the transfer is in the public interest. It might be difficult to arrive at the same result when the only finding required is that the transferee is qualified. This would make it extremely difficult to prevent an increase in license trafficking.

Section 14

Section 312 as presently written provides for the revocation of a station license for false statements, either in applications or statements of fact which may be required by section 308, or because of conditions revealed by such statements which would warrant the Commission in refusing to grant an original license, or for failure to operate substantially as set forth in the license, or for violation of, or failure to observe any of the restrictions and conditions of the act, Commission's regulations, or provisions of treaty. Section 14 would amend this provision so as to authorize a revocation of license, either because of conditions coming to the attention of the Commission since the grant of such license which would have warranted the Commission in refusing to grant such license, or for violation of, or failure to observe the conditions of a cease-and-desist order issued by the Commission. The purpose of omitting the specific language of section 312 is not clear. As we construe section 14 we believe that a false statement of fact or a violation of treaty or any of the other matters now mentioned in section 312 would be grounds for refusing to grant an original license and therefore would similarly be grounds under the new section 14 for revoking a license. This being so, it is difficult to see what purpose is accomplished by deleting the specific grounds for revocation. now contained in the act and substituting therefor a more general statement which presumably comprehends all of the specific provisions now in the act. One of the declared objectives of the present bill is to replace general language with as much specificity as possible and this change in section 312 appears to be a step in the opposite direction.

The second change proposed by section 14 appears desirable. This is the provision authorizing the Commission to issue cease-and-desist orders against licensees where the licensee has failed to operate substantially as set forth in the license or has violated any provisions of the act, of the Commission's rules or regulations, or any applicable treaty. Violation of a cease-and-desist order is grounds for revocation. The Commission has long felt the need for some means of enforcement of the act and for the prevention of violations of the act or its rules short of the extreme penalties of revocation or criminal prosecution which it is naturally loathe to invoke. We believe that the ceaseand-desist procedure outlined in this section, which provides adequate protection to all parties involved, and allows appeal to the courts from any order of the Commission, will provide an improvement in the

machinery for enforcing the act while guaranteeing to the stations full protection of all their legitimate rights.

Section 15 (S. 814, pp. 59–61, 65–68, 523–525, 643, 943–944)

This section contains extensive amendments to section 315 of the act concerning political broadcasts during election campaigns. Specifically it extends the protection of the act so as to require equal opportunities not only to candidates but also to authorized spokesmen of legally qualified candidates or of recognized political parties, and to persons who desire to take a position on public measures appearing on the ballot in the nature of referenda or bond issues. Moreover, station licensees, specifically prohibited from exercising any censorship, are relieved of liability for libel or slander, a provision which has previously been recommended by the Commission.

Senator MAGNUSON. Where appropriation is close to your heart, this section is close to the hearts of the members of this committee.

Mr. DENNY. Of course, my only interest in appropriation is really getting the job done. No matter what Congress appropriates for the Commission, the Commissioners will still get $10,000. We are not working on a percentage basis, but we really do feel that if Congress is going to give us the work to do, it ought to give us the tools with which to get the work done.

With two exceptions the new material which would be added by this section appears desirable. The first exception is found in the new section 315 (c). Under this section the licensee would be forbidden during a political campaign to permit the use of his station for or against any candidate for public office excepting the candidate himself, his qualified opponents, persons authorized by them, or authorized representative of recognized political parties whose candidate's name appears on the ballot. In the Commission's opinion, this represents a serious limitation on free speech.

Moreover, the prohibition is very undesirable. Minority parties fighting for an opportunity of getting on the ballot at the succeeding election would be forbidden to use the radio. The health of our democratic system depends in large measure upon the rights of minority groups to present their views to the American public. The amendment would also be extremely unfair to nonpolitical groups such as the League of Women Voters, the local county or State bar associations, labor unions, manufacturers' associations or others who might wish to express their support or opposition to one or more of the candidates. Of course, in many cases the spokesmen of such groups would be able to have themselves designated in writing as the spokesmen of the candidate for public office so that they could broadcast their views. But in some instances a recognized group might not be able to secure an authorization from any candidate. Thus, a bar association would not be able to express its opposition to a bipartisan judicial nominee unless it could secure approval from the candidate himself, which is hardly likely. It should be further pointed out that a citizen wishing to endorse an entire ticket could not do so unless specifically authorized by each of the candidates, and it is not even clear whether under the section a candidate for one office could endorse persons running for other offices on the same ticket unless he first secured their written permission. Finally, the subsection would probably prevent news

analysts or commentators from using the air during political campaigns, unless they refrained from discussing the campaign. The adoption of subsection (c) would, in our opinion, be a great obstacle to the proper functioning of radio in a democracy.

The second subsection that I would like to discuss briefly is subsection (e).

I trust that I have made it clear that with the exception of subsections (c) and (e), section 15 is a definite improvement on this matter of political broadcast. It is just these two points that we think are undesirable. The other part of that section we think is quite good.

Subsection (e) provides that a licensee shall not permit any political broadcasts for a period beginning 24 hours prior to and extending throughout the day on which a national, State, or local election is to be held. The purpose of this section appears to be to prevent the making of sensational and uncorroborated charges on the day of election which the opponent finds himself unable to answer. While such practices should be outlawed, if possible, I do not think subsection (e) accomplishes the result, because the same thing can be done at the last minute on the day before election and thus the opponent would be prevented from answering it. Moreover, there are many times when the use of radio on or immediately before election day to reach the electorate is legitimate.

Before I leave section 15, I should add that Commissioner Jett is opposed to the proposed section 315 (e) on the ground that broadcasting should be as free as other media for the dissemination of news and opinion. There is a further point that he should like to call to the attention of the committee with respect to reports made by Members of Congress that licensees have demanded script in advance of political broadcasts on the ground that the Federal Communications Commission requires them to obtain such material. This, of course, is not true. However, Commissioner Jett believes that in order to avoid any future misunderstanding the law should specifically prohibit the Commission from issuing any rule or requirement that script be submitted in advance of a political broadcast.

It is Commissioner Jett's thought that if that were written specifically into the law then these stations would not be in a position to misrepresent the facts that the requirement of the script is a requirement of the Federal Communications Commission. It is not. It is their own idea to get those scripts and we do not ask them to do it. Section 16 (S. 814, pp. 24-29, 40, 59, 65, 130–137, 516, 944)

This section would divide section 326 into two subsections. Subsection (a) provides that nothing in the act shall be construed to give the Commission the power to regulate the business of any licensee unless otherwise specifically authorized by the law.

The purpose of this provision is not clear. Historically, the language set forth in proposed subsection (a) is derived from the Supreme Court's opinion in the Sanders case and has been relied on

1

1 The language referred to appears in Federal Communications Commission v. Sanders Bros. Radio Station (309 U. S. 470, at p. 475), and is as follows: "But the act does not essay to regulate the business of the licensee. The Commission is given no supervisory control of the programs, of business management, or of policy. In short, the broadcasting field is open to anyone, provided there be an available frequency over which he can broadcast without interference to others, if he shows his competency, the adequacy of his equipment, and financial ability to make good use of the assigned channel."

by the industry as showing a lack of statutory authority to promulgate the chain broadcasting regulations. The Supreme Court rejected this contention in the network case. The Commission does not claim

the right to regulate the business of licensees.

Senator MAGNUSON. What do you mean by business there? Mr. DENNY. We issued these network regulations which said that stations could not make contracts which contained certain restrictive clauses which we found were not in the interests of proper Nation-wide broadcast service and the networks argued that it was illegal for us to do that because we did not have the right to regulate their business. We say we are not regulating their business. We are getting at these problems of exclusive contracts which tie up radio service. And the Supreme Court sustained us. They said that is not business regulations, but is a rule which, under the present act the Commission is authorized to make.

Now, while I am on the subject of the chain broadcasting regulations, I might complete the thought and say that this bill would deprive the Commission in the future of the power to make such regulations, but it would write the regulations which we have promulgated

into the law.

I make two points in this statement: One is that I do not think that we should be deprived of the power. I urge that we have not abused the power, since we have only exercised it once, and the manner in which we have exercised it is now proposed to be written into the law. I think that we can be trusted with the power. If you do not trust this agency, I think Congress should get an agency that it can trust with the power, but I think that the business, being a dynamic one, and these matters being subject to change, that the right to make regulations of that sort ought to be in the hands of the administrative agency if it is to do a decent job.

Senator CAPEHART. May I suggest at this point that I would like to have you place those regulations into the record.

Mr. DENNY. I have them with me, and I shall place them in the record at this point.

Senator CAPEHART. I mean the regulations that you say you have issued which the trade objected to but which, under this law, would be a part and parcel of the law. Is that what you said?

Mr. DENNY. Yes; it is proposed in section 19 of this bill to write our regulations into the statute. We say leave them as regulations and leave us with the power so that (a) we can change them if they need changing and so that (b) we can devise further regulations of this type, if further regulations of this type are necessary. Do not deprive us of the power unless there is some feeling that we have abused it, and I am suggesting that we have not abused it, since the only time we have exercised it was to promulgate these regulations which under this bill would go into the law.

Senator CAPEHART. You will place the regulations in the record at this point, if that is agreeable.

The CHAIRMAN. That will be done. Of course, I may say that the regulations are probably 95 percent written into the bill as introduced. Of course, the trouble over the regulations, the controversy which we had back 2 or 3 years ago, was not so much as to the terms of the regulations themselves, but the opposition was based on the definite belief