Johnson accused the FCC of a "complacent and comfortable hear-no-evil, see-no-evil slouch in front of the radio and television set of America." He also charged the agency with "almost complete lack of concern" for programming standards. The attack on their own agency was issued by Johnson and Cox in connection with the renewal of the licenses of more than 200 radio stations. Applicants for renewal, Johnson noted, must say what proportion of their programming is devoted to such categories as news and public affairs, and instructional, agricultural and religious programs. Two of the applicants who won approval, he said propose no news programming. And seven plan no public affairs programs. Twenty-three stations indicated they plan to allocate less than 1 percent of their air time to public affairs, he said. Cox said such stations "are downgrading their commitments in the more expensive and difficult, and often less popular, program categories because they feel the majority of the commission won't do anything about it. I think this represents abdication of one of our major regulatory responsibilities." Some station owners, he noted, argue that attempts to force them to provide certain types of programs would violate their constitutional rights to free speech. These arguments "arise more from a desire to be free from the observance of standards of service which may restrict profits than from a burning desire for freedom of expression," he said. Mr. HYDE. Chairman Staggers, because of the statement you have read, may I just say that the majority of the Commission felt the showings made by the stations did warrant the issuance of renewal licenses. The CHAIRMAN. Yes, we understand that and I think the record is clear on that. One of the matters in which this committee is interested is the trafficking in broadcast station licenses. Any study of this question necessarily will involve matters pending before the FCC. However, in view of the Pillsbury case decision, which was not appealed by the Federal Government, the committee will not at the present time question any Commissioner respecting the mental processes by which he has arrived at any particular decision, either in a transfer or any other case. Section 136 of the Legislative Reorganization Act of 1946, which is included in the rules of the House of Representatives, provides that to assist Congress in "appraising the administration of the laws" each standing committee of the House of Representatives shall "exercise continuous watchfulness" of the execution of the laws by the administrative agencies of the Government within the jurisdiction of the committee. The fact that a matter is pending before the Commission does not prohibit objective questioning for the purpose of appraising the Commission's administration of its organic law. For example, the committee receives numerous complaints about the unnecessary delays and expense related to pending cases. Certainly the Pillsbury case should not be construed to prevent this committee from making inquiry into the causes of such unnecessary delay and expense and making inquiry into what the appropriate remedies should be. As I said, we will avoid prying into the mental processes by which a Commissioner reaches a decision, but we would be abdicating our responsibilities under the Reorganization Act of 1946 if we did not make objective studies of pending matters before the independent agencies when such studies are necessary in the public interest. Mr. HYDE. Chairman Staggers, if I may just offer this comment, we will want to cooperate with you in every degree possible. Since you are going to, as I understand it, have some hearings on the matter of possible trafficking in licenses, I would not want to discuss it at length at this time unless you ask me to. I would like to mention, however, that we have certain rules which put a very severe limitation on assignment and transfer of broadcast facilities. A particular rule is known as the 3-year rule, which precludes the assignment of the license which has been held less than 3 years unless there are very compelling reasons which would justify a waiver. In addition, we must examine any application on its merits and make a public interest determination before approval might be granted. The CHAIRMAN. Perhaps if the rule does not permit, maybe this committee can help. I would like to insert an article in the record at this time. (The article referred to follows:) [From Broadcasting magazine, Feb. 27, 1967] STATION TURNOVER EVENS OFF THE 1966 RECORD: FEWER STATIONS TRADED, but FOR MORE MONEY Trading in radio and television stations was brisk in 1966, despite the imposition of new government controls and a tightened money market. For 1967 brokers foresee no diminution in the number or value of stations changing hands, unless the general economy goes to pot. A year ago brokers were worried about recently imposed FCC restraints, one a ruling prohibiting, without good cause, the resale of any kind of station within three years of its acquisition, and the other an interim policy designed to discourage buyers from acquiring more than three television stations (no more than two of them VHF's) in the 50 biggest markets. The three-year holding rule may have kept some stations off the market, but its effects are now described as minimal. The interim policy on growth of TV groups has been waived often enough to diminish its restraints on station trading. What the brokers, did not anticipate at this time last year, when BROADCASTING published its preceding report in this "Perspective" series, was the drying up of mortgage money that characterized 1966. There is general agreement that more stations would have changed hands if financing had been looser. With the easing of the money market in recent weeks, the climate has begun to change. It is this climate that colors the attitude of station brokers for 1967. If things continue as they are, if the war in Vietnam doesn't impinge further on the general economy, if the general economy continues at its present satisfactory pace, then the market for the sales of TV and radio stations should continue its upward climb-in numbers and in dollar volume. That "if" is underscored by the station brokers, whose business it is to bring buyers and sellers together. It is particularly emphasized in the light of the most recent reports of cutbacks in automobile production and resulting layoffs of employes. Problems in 1966. Take the tight-money situation that developed last fall. Buyers dwindled (one broker claims they fell by half). Sellers, long acustomed to cash payments for their properties, first refused to sell on terms, then withdrew their properties from the market, and finally, those who seriously aimed to sell boosted their prices to take into account the fact that they were going to get only a down payment in cash. Nevertheless trading of stations continued at a good clip in 1966. Although unit sales dipped below the 1965 figures, 1966 was not too bad. In 1966, 409 individual station properties changed hands, down 27 from 1965's 436. Dollar volume of sales in 1966 totaled $135.7 million, $600,000 above 1965's $135.1 million. For 1967, the station brokers feel more bullish. Most of them acknowledge that they had a pretty good year dollarwise in 1966, some claim it was their best year. All see 1967 as a good year too, with qualification; some anticipate even a better year. Already in 1967, they point out there have been some pretty big sales put together: WKYT-TV Lexington, Ky., being sold by Taft Broadcasting Co. to the Bluegrass group for $2.5 million. KOY-AM-FM Phoenix, being sold by Glenn Snyder and his associates to John G. Johnson and his Southern Broadcasting Co. group for $2.1 million. KMBC-AM-FM Kansas City, Mo., being sold by Metromedia to Bonneville International (Mormon Church) for $2.2 million. And also included in their calculations are the major sales already approved by the FCC, sales that were negotiated in 1966 but not approved until 1967 was well on its way; especially the Trigg-Vaughn group purchase by Doubleday & Co. for $14,125,018. The others: WSNS-TV Chicago, a construction permit taken over by Harriscope Broadcasting and the local Essaness Theaters which calls for the former to put up $500,000, and the latter, $485,830. WICC Bridgeport, Conn., sold to the New York Daily News-WPIX-FM-TV group for $2,050,000. Top Seconds. What interests the brokers for the coming year are what is termed the "secondary" markets-those broadcast properties in cities below the top dozen or 20, where stations are not frozen into what a broker called "dynasties." He was referring to the increasing transactions in the second echelon of TV-radio markets, many of which showed up the transfers that took place last year-Amarillo, Tex.; Little Rock, Ark.; Denver; Jefferson City and Sedalia, both Missouri; Peoria and LaSalle, both Illinois, Grand Junction; Montrose and Durango, all Colorado; St. Petersburg, Fla.; Wichita, Kans., and San Jose, Calif. More markets of such size are going to be involved in station transfers in 1967. This is the assumption by those who watch this area of activity in broadcasting. Another factor making for optimism is, according to several brokers, the rise in the sale of daytime-only radio stations. For more than a year, it is pointed out, daytimers were not selling; buyers seemed loath to acquire radio stations that had to go dark at sundown. In recent months, however, more of these daytimers are being bought. The answer, according to one broker, is the increasing sophistication of buyers-coupled, he added, with the increasing willingness of bankers to finance such acquisitions. One of the more significant surprises last year, notwithstanding the so-called soft market, was the tremendous upward leap in prices paid for radio stations. In total, the dollar volume for radio stations jumped by one-third over the $56 million in 1965. In 1966, although there were fewer radio stations sold, the total dollar volume reached $76.6 million. This is the peak volume in the last 13 years, and $11 million above the previous high of $65.5 million in 1959. As 1967 headed toward the close of its first quarter, the sensitivity of brokers to general economic well-being was evident in their hedges on the prospects for 1967. The recent cutbacks in automobile production stirred their latent fears; the President's call for a 6% temporary "war' surtax caused them to qualify their general bullishness, and the talk in the financial press of a possible economic softening has dampened their usual optimism. None, however, has as yet directly attributed to these actions any major effect on station sales. Perhaps one of the most interesting facets of station sales last year was dualmajor group owners acquiring new outlets in top markets and the multiple ownership chanegs in individual cities. During 1966, Westinghouse acquired KFWB Los Angeles, General Electric bought wSIX-AM-FM-TV in Nashville, the Steinman group purchased WTEV (TV) in the New Bedford, Mass.-Providence, R.I., area, Capital Cities purchased KPOL-AM-FM in Los Angeles. And Avco Broadcasting bought KYA and KOIT (FM) in San Francisco, WGN Continental Broadcasting acquired кCTO (TV) (now KWGN-TV) in Denver, Storer bought WIHS-TV in Boston (now WSBK-TV), a UHF station, and also acquired KFMU (FM) in Los Angeles to go with its KGBS there, and Metromedia Inc. purchased two California stations-KEWB Oakland and, as a compansion, KSFB (FM) across the bay in San Francisco. Los Angeles saw the most stations changing hands-four. During the year. KFWB went to WBC, KPOL-AM-FM to Capital Cities, KGLA (FM) (now KADS [FM]) to McLendon and KFMU (FM) to Storer. The San Francisco area ranked next in total station sales, three. There KYA and KOIT (FM) went to AvсO, KEWB and KSFR (FM) to Metromedia. In Boston, two UHF television stations changed hands; WISH-TV was purchased by Storer, and wXHR-AM-FM-TV by Kaiser Broadcasting and the Boston Globe jointly (now WKBG-TV for wXHR-TV, and requested wCAS for WXHR). Two FM stations changed hands in New York market during the year; WRFM (FM) was bought by Bonneville International, and WFME (FM) in Newark, N.J., by Family Stations Inc. The same number of FM stations changed hands in Chicago: WFMF (FM) to a group headed by George A. Rafel, and WDHF (FM) to advertising executive L. W. Frohlick. And in Detroit, WDTN (FM) was bought by the McLendons. And, in 1966, John B. Walton Jr. added two more station properties to his already existing portfolio-KCUL-AM-FM Fort Worth and KELP-AM-TV El Paso. The year also saw Kansas City Southern Industries become a group owner with the purchase of WEEK-TV Peoria and WEEQ-TV La Salle, both Illinois, and of Kwos and KCRG-TV Jefferson City and KмOS-TV Sedalia, both Missouri. Units Down. Of the 409 stations that changed ownership in 1966, 367 were radio properties, 11 were TV-radio combinations and 31 were TV-only stations. These were all below the unit changes in 1965-22 less radio stations, four less TV-radio groups, and one less in the TV-only category. But, although total dollar volume of $135.7 million was slightly above the 1965 total of 135.1 million, expenditures for the purchase of radio stations were at a new high level for the 13 years BROADCASTING has been keeping records. For radio properties, a total of $76.6 million was spent, up over 1965's total by $20.7 million. The big slump in dollar volume took place in the combination TV-radio group; last year only $28.5 million was spent in this category; almost $21 million less than the $49.7 million spent in 1965. Dollar volume in the TV only group also moved up, by $1.2 million. In 1966, $30.6 million was spent in the TV-only class, up above 1965's total of $29.4 million. Multimillion Dollars. Top price in 1966 sales was the $9.7 million paid by General Electric for wSIX-AM-FM-TV. And the next highest price last year was the $9.1 million paid by Westinghouse Broadcasting for KFWB. Westinghouse actually had agreed to pay $10,750,000 for the radio station, but the long delay in obtaining FCC approval resulted in a renegotiated sales price. Also topping the list of multimillion dollar sales was the $8.2 million paid by Capital Cities for KPOL-AM-FM. Other major sales in 1966: $5.9 million for KGNC-AM-FM-TV Amarillo, Tex., by Stauffer Publications. $5,775,000 for WTEV (TV) by the Steinman group. $4.4 million for KYA and KOIT (FM) by Avco. $3.75 million for KARK-AM-FM-TV Little Rock, Ark., by John C. Mullins. $3.5 million for KCTо(TV) by WGN Continental Broadcasting Co. $3.15 million for Kwos, KCRG-TV and KмOS-TV, by Kansas City Southern Industries Inc. $3,088,650 for WEEK-TV and WEEQ-TV by Kansas City Southern Industries Inc. $2.5 million for KREX-AM-FM-TV Grand Junction, KREY-TV Montrose and KREZ-TV Durango, all Colorado, by the XYZ Television group (headed by James R. and William D. Williams, but including former principal owner Rex Howell as a minority stockholder). $2,459,000 for KEWB, by Metromedia. $2,295,000 for KFDA-TV Amarillo Tex.; KFDW-TV Clovis, N. M., and KBSW (TV) Elk City, Okla. (now KFDO-TV Sayre, Okla.), by Perry Bass and his group. $2,276,513 for WIHS-TV by Storer Broadcasting. $1,750,000 for WXHR-AM-FM-TV by Kaiser Broadcasting and the Boston Globe jointly. $1.5 million for KCUL-AM-FM by John B. Walton Jr. $1,315,500 for WSUN-AM-TV St. Peterburg, Fla., by H. Y. Levinson. $1,359,360 for KLEO Wichita, Kan., by W. Clark Swanson and others. $1,026,277 for KLOK San Jose, Calif., by M. Philip and W. Thomas Davis. $1 million for WMIE Miami by Louis J. Appell Jr. and his Susquehanna Broadcasting group. $1,060,000 for WNAM Neenah-Menasha, Wis. by Miles Kimball Co. The year 1966 also saw the highest price paid yet for an FM station; this was the $850,000 paid by the Bonneville International group for WRFM (FM). And in the next level, wFME (FM) sold for $535,000 to Family Stations Inc., a nonprofit, California-based group of FM stations. 77-336 0-67—35 1 In computing the number of stations traded an AM-FM facility, or an AM only or FM only was counted as 1 radio unit. 2 Includes single properties consisting of radio and TV stations. NOTE.-Dollar volume figures represent total considerations reported for all transactions, whether majority or minority interests were involved. In many transactions involving joint radio-television properties, individual values were not assigned to the radio and television stations. Such sales are reported in the column headed "Combined radio-TV." Other major FM sales: WFMF (FM) Chicago bought by George A. Rafel, George A. Collias and Howard Grafman and associates, for $450,000. WDHF (FM) Chicago, bought by L. W. Frohlick, an advertising executive, who also owns WNCN (FM) New York, for $427,000. KGLAFM Los Angeles (now KADS[FM]) to the McLendon group for $400,000. The CHAIRMAN. I would like to ask just one question. I will ask perhaps one, and then I will submit the rest of them. I will read this first. It comes from a communication of the FCC: Radio can serve as an instrument of democracy only when devoted to the communication of information and the exchange of ideas fairly and objectively presented. A truly free radio cannot be used to advocate the causes of the licensee. It cannot be used to support the candidacies of his friends. It cannot be devoted to the support of principles he happens to regard most favorably. In brief, the brodcaster cannot be an advocate. Do you remember these words? Mr. HYDE. I do. They come from the Mayflower decision. |