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The second part of the multiple ownership provision is subject to serious objection. Under this provision the Commission would be forbidden to adopt any rules or regulations fixing the number of broadcast stations which may be licensed to any particular person. The Commission, however, is authorized in acting on individual applications to make a fair and equitable distribution of radio broadcast factilities as between various applicants when such action can be taken consistent with the requirements of section 307 and the “equities of existing licensees.” Finally, it is provided that a person shall not be permitted to have stations in a single broadcast band which provide primary service in the aggregate to more than 25 percent of the people of the United States.
At the outset, it should be pointed out that although section 19 purports to deal with problems of multiple ownership, at the same time it appears to modify in a vague sort of way the requirements of section 307 (b) by requiring the Commission under certain circumstances to consider the "equities of existing licensees.” No suggestion is contained either in the bill or accompanying statement as to the meaning or purpose of this provision. Further clarification is necessary, because on the 307 (b) problem as we see it, the equity as between two communities.
You have community A and B, and the question is which of those communities will need radio service more. If it is community A it ought to get the station regardless of the equities of existing licensees. We feel that there is a case where the public has an equity in getting the proper distribution of service.
Before considering the specific provisions of the new section I should state that we believe that it is undesirable to attempt to write a single standard on multiple ownership which should govern all classes of service. The Commission has never felt it possible to adopt a single rule for the various broadcast services. For example, in standard broadcast there is no specific provision concerning the maximum number of stations which a single licensee may own.
You should have in mind my earlier statement with respect to the decision of the Commission denying Columbia the right to acquire an eighth station in San Francisco. However, there is no rule. Such determinations are made on a case-to-case basis. In FM, on the other hand, the Commission has from the outset had a six-station limit on the number of stations. In the case of television we originally started out with a limit of three stations and have raised it to five stations. We have consistently announced that we are at all times prepared to consider a revision of these rules if an appropriate showing is made.
The 25-percent rule proposed in section 19 would lead to unfortunate results. On the basis of the 1940 census 25 percent of the people would be approximately 33,000,000 people. This would mean that a single person could have stations serving, for example, the entire population of 20 of the 22 States west of the Mississippi.
In our view that is not a provision conducive to the prevention of monopoly of the radio facilities of the United States. I think that ing the entire area of every one of 20 out of the 22 States west of the Mississippi River that at some point along the line the Federal regusissippi River that at some point along the line the Federal regulatory authority ought to be entitled to blow the whistle and call a halt and say, “You have enough. You have your share.”
I have had a table prepared showing the population in each of the nine officially designated regions in the country. They are listed below:
Population New England (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut).
8, 437, 290 Middle Atlantic (New York, New Jersey, Delaware, Pennsylvania) -- 27,539, 487 South Atlantic (Maryland, West Virginia, Virginia, North Carolina, South Carolina, Georgia, Florida)
17, 823, 151 East South Central (Kentucky, Tennessee, Mississippi, Alabama) 10,778, 225 West South Central (Oklahoma, Arkansas, Louisiana, Texas) - 13, 064, 525 East North Central (Wisconsin, Michigan, Illinois, Indiana, Ohio)- 26, 626, 342 West North Central (North Dakota, Minnesota, South Dakota, Nebraska, Iowa, Kansas, Missouri)
13, 516, 990 Mountain region (Nevada, Utah, Colorado, Arizona, New Mexico, Montana, Idaho, Wyoming)
4, 150,003 Pacific region (Washington, Oregon, California)
9, 733, 262 You will note that under the 25-percent rule a single person would be permitted to own stations serving all the population in any of these nine areas and, indeed, in several combinations of two or three of these areas. Even considering such populous regions as the East, a single person could own stations serving virtually all of New England and the Middle Atlantic States.
To illustrate the extent that an application of this rule might lead us, I have had an examination made of the last hundred standard broadcast applications that have been granted by the Commission without a hearing. This included a typical cross section of the various types of standard broadcast applications that the Commission is called upon to consider. They were for operation on local, regional, and clear-channel 1-B frequencies.
The total population served by all these hundred stations came to approximately 24,000,000; 9,000,000 less than the 25-percent rule con
ined in the bill. Since these grants were made without a hearing it meant that in each case there was no one else who requested the same facility. This means that if a single person had filed all of the 100 applications the Commission would have been required to grant all the applications under the 25-percent rule provided the applicant was financially qualified to construct and operate the stations.
From another point of view, the 25-percent rule would make it impossible, for example, for a single person to own two 50-kilowatt stations in such scattered regions as New York City and Chicago. The difficulty which such a rule miglit cause in practice is best illustrated by the situation of the networks.
The table set forth below gives an estimate in round figures of the primary service of the stations owned by each of the three networks
Columbia Broadcasting System, National Broadcasting System, and American Broadocasting Co. The figures are as follows:
1 The figures included in these tables are rough approximations only and are not offered as an exact count of the population served by the various stations but merely to give the committee a general idea of the effect the proposed amendment might have on network-owned stations under certain conditions. Of course, if the proposed amendment was enacted into law, the Commission would undertake to make detailed and exact population counts before applying the rule. The method employed involved counting the population within the normally protected daytime contours of the various stations. Where the contour line intersected a county, the entire county was counted if more than 50 percent of its area was included within the protected contour and the county was not counted at all if less than 50 percent of its area was included within the protected contour.
2 CBS owns a 45-percent interest.
You will note from the examination of these tables that for each of the three networks the combined totals of the New York and Chicago outlets alone exceed 33,000,000. Hence, each of the networks would have to divest itself of either the Chicago or New York outlets. Even having done this, CBS would still be required to dispose of one or more additional stations and NBC of at least two, in order to bring themselves within the 25-percent rule. The Commission has considered the problem of network ownership of stations and has determined that on a Nation-wide basis it is not against the public interest for a network to own stations in certain key cities such as New York, Chicago, San Francisco, Los Angeles, and Washington. This is based on the fact that these cities are not concentrated in one area but reach across the entire country and also that network operations are facilitated by the ownership of stations in key cities. Certainly, a much more serious problem is raised by the same person owning a station in every city in New England, for example, than is involved in the ownership of stations by the networks in key cities. Yet, under the proposed amendment the networks would have to dispose of many of their existing stations, while one person would be permitted to own a station in every city in New England.
Commissioner Jett has asked me to file a separate statement of his views with respect to section 19, which is quoted in full in my statement and is as follows:
SEPARATE STATEMENT OF COMMISSIONER JETT WITH RESPECT TO SECTION 19 I regret that due to my attendance at the World Telecommunications Con. ference I could not be present to present my views in person. I do believe, however that Chairman Denny has prepared an excellent statement and I am glad to be able to join with him on all points except in regard to section 19.
The second part of the multiple-ownership provision beginning near the bottom of page 29 of S. 1333 may well prove to be one of the most controversial matters to be dealt with by the committee. A logical argument can be made against any limitation of ownership under our free competitive system. On the other hand a good argument can be made in favor of placing some restrictions in the law to make certain that broadcasting does not fall into the hands of a few people and thereby become a potential and powerful mouthpiece to subvert our democratic system. I am disposed to support the latter, provided the law is carefully worded to take care of special situations, such as network-owned stations. Accordingly, while I do not go along with the 25-percent rule I do feel that a provision based on coverage of listeners comes closer to solving this problem than any other formula.
While I have no specific substitute to offer at this time for the 25-percent provision I should like to suggest that the Committee investigate other possibilities in respect to the ownership of stations. In conducting any study ample weight should be given to the following factors:
(1) The present ownership situation as related to population served. I do not believe that any undue concentration of control now exists since there is an abundance of competition today in all of the principal cities.
(2) Ownership of multiple stations, including one in a community or area which does not receive primary service from other stations. In a recent case the Commission found that the public interest would best be served by making a grant in favor of an applicant who did not own any station rather than grant a fourth station in the State to the competing applicant.
(3) Geographical distribution. In my dissenting opinion in the KQW transfer case I pointed out that it may prove to be far worse to grant a specified number of stations to one person to provide service in a concentrated region than to grant the same or a larger number on the basis of wide geographical distribution.
(4) Engineering considerations should not be overlooked since it is a wellknown fact that the lower frequencies in the standard broadcast band provide greater coverage for a given amount of power than the higher frequencies. For example, a 5-kilowatt station operating on 550 kilocycles and located in an area of good soil conductivity will provide service over a radius of 238 miles. However, a station similarly situated which employs 750 kilowatts and operates on 1,600 kilocycles will provide primary service out to only 210 miles. Thus, by the mere accident of being assigned a low frequency, the licensee is given a competitive advantage over those who must use higher frequencies in his locality.
Reverting to the 25-percent provision, it is true that the population when figured on this basis represents about 33,000,000 people, and if this provision is not changed some lecensees would be required to divest themselves of stations they now own. This would undoubtedly work a hardship on the public, as well as licensees. I have in mind the high operating costs of networks, for example, and the fact that income derived from network-owned stations helps to maintain a high standard of network-program service. Moreover, since network-owned stations are located in large population centers and operate competitive for Nation-wide or regional andiences, some special provision should be worked out to take care of such cases. It is important to bear in mind in this connection that no person may own more than one station in each of these populous centers; therefore, while the total population served by network-owned stations may greatly exceed the 25-percent figure, there is positive assurance that each such licensee will have many competitors in the key outlets. This factor, if carefully evaluated, may justify the exceptions I recommended for network-owned stations,
If population coverage is used as a basis with exceptions for network-owned stations it would not follow that the Commission is required to grant licenses up to the limits specified in the law. The present wording requires the Commission to "make and maintain a fair and equitable distribution of radio broadcast facilities as between various applicants therefore when such action can be taken consistent with the requirements of section 307 and the equities of existing licensees.” Moreover, while the proviso sets a ceiling it would be incumbent upon the Commission to consider the equities in each case and apply the statutory standard of public interest, convenience, or necessity. Accordingly, there need not be any fear that this or any future Commission will embark upon a wholesale licensing policy to applicants desiring a multiplicity of stations. Indeed, there is no provision in the present law or any rule of the Commission which prevents the granting of licenses to a single person to serve all of the population with any number of stations that may be desired. But the Commission has wisely decided to limit the ownership of stations in order to provide for the greatest possible diversification of ownership. That is not to say that I agree with a fixed arbitrary limit, such as a maximum of six FM stations to one person, or five television stations, or the implied policy of six standard stations. I am opposed to any restriction which specifies a particular ceiling for the reasons given above, and in particular, the fact that engineering considerations may make it desirable to permit more stations to be owned in certain power and frequency categories than in the lower portion of the band.
I am certainly no advocate of monopoly of the broadcast facilities of the country.
Thé CHAIRMAN. May I interrupt you? It is now almost half past twelve. I wonder if we should take a recess at this time. Are you about through?
Mr. DENNY. I have only about a page and a half or so. I can be done in 5 or 10 minutes.
The CHAIRMAN. Proceed, then.
Mr. DENNY. I was saying that I am not an advocate of monopoly of the broadcast facilities. I have given serious consideration to the question of how many stations these large networks ought to own. It does seem to me that they do have a great deal of power in the stations that they now own. Truly they have even more power through the affiliation contracts. However, by and large, I think they are doing a good job. I think that the power that has been placed in these national networks has been well placed. I think that by and large it is in good hands.
I think this: that the economics of network broadcasting are such that if we are to have network broadcasting in the United States as we know it today they have to have enough stations in order financially to support a network. They do not make money on their network operations. They lose money on those. Where they make money is from the management of the stations that they own.
If the 25-percent rule went into effect and the networks were required to divest themselves of all but, say, two of their stations, I think that there then would be a serious question as to whether we would continue to enjoy the type of network broadcast service that we have today. I think that is something that the Committee does want seriously to consider. I am conscious that we do have great power concentrated in these networks, but I am satisfied that it is not too much power for what we get in return. To change the rule and to change the economic conditions under which they have developed these networks might do violence to our present system. I know that they will deal with that fully, and I know they are very adequate to deal with