Allentown Broadcasting Corp. v. Federal Communications Commission

222 F.2d 781

• Court: Court of Appeals for the D.C. Circuit
• Decided: August 19, 1954
• Docket: Nos. 11897, 11957
• Status: Published

Opinions

BAZELON, Circuit Judge.

This is an appeal from an order of the Federal Communications Commission granting the license application of the Easton Publishing Company for the assignment of a standard radio station at Easton, Pennsylvania, and denying that of Allentown Broadcasting Corporation for the same assignment at Allentown, Pennsylvania, 14 miles away.¹ It marks the third appearance of these parties before this court since their mutually exclusive applications were filed in 1945.²

When the Easton Company first appealed to this court from a June 1947 order of the Commission awarding the license to the Allentown applicant, we remanded the case “for findings upon the comparative needs of the two communities for new radio service and the relative abilities of the applicants to serve the greater need.”³ In February 1950, the Commission, rejecting a joint request for a final decision without further hearings, set aside the prior grant to Allentown, and reopened the record.⁴ In March 1950, both applicants petitioned this court for writs of mandamus and prohibition directing the Commission to make a finding on the existing record. These petitions were denied on October 23, 1950,⁵ and in March 1951, hearings in the reopened proceedings were commenced by the Commission.

Pursuant to our mandate, the Hearing Examiner made findings as to the comparative needs of the two communities, and the relative abilities of the applicants to serve the greater need. On the question of community need, the Hearing Examiner noted, inter alia, that Easton had only one standard broadcast station, whereas Allentown had three in addition to the one being operated by appellant under temporary authority of the Commission.⁶ But in applying § 307(b) of the Communications Act of 1934,⁷ which requires the Commission to provide a “fair, efficient and equitable distribution of radio service * * *,” the Examiner also noted that Allentown had a population about three times that of Easton, and was growing at about four times the rate of Easton.⁸ She concluded that the “over-all evidence” showed a greater need for additional service in Allentown. For this reason, and because she viewed the record as casting grave doubt upon the reliability of the Easton applicant,⁹ her Initial Decision recommended a grant to the Allentown company.

The Commission in the order now challenged reversed the finding of a greater need in Allentown, and set aside various findings reflecting adversely on the ability shown by the Easton applicant to serve its community’s need. It found that both applicants proposed well-balanced program service, that slight differences between the two with respect to equipment, management and the like, fairly well canceled out,¹⁰ and that “considered separately” in terms of need for additional service of the type proposed by the applicants, “there is little room for choice between the two communities.” ¹¹

In those circumstances of what it regarded as closely balanced community needs and applicant abilities, the Commission found the following to be the “decisive factor” in compelling a grant of the additional facility to Easton:

“ * * * Allentown is presently served by three standard broadcast stations located in and broadcasting local programs for that city, as well as receiving daytime service from the station located in adjoining Bethlehem, while only one standard broadcast station is located in and broadcast [sic] local programs for the Easton community. Thus, the residents of the Allentown community .presently are afforded a choice between local standard broadcast programs and stations, a choice which can only be made available to the residents of the Easton community by means of an additional standard broadcast service.”

This “choice of local service” principle is a gloss on § 307(b) of the Communications Act of 1934, supra. It was first applied by the Commission in Northwestern Ohio Broadcasting Corp.,¹² upon the crucial findings that the choice between the two communities was “indeed a difficult one,”¹³ and that both applicants “propose[d] to render meritorious program services designed to meet the needs of the respective communities * * */'¹⁴ Since we affirmed on appeal because there was. “no error in the record,”¹⁵ our approval of the “choice of local service” principle was limited to its application in circumstances of otherwise approximately equivalent community need and applicant ability to serve such need. Although in the present case .the Commission purported to find such equivalence, we think there is no substantial evidence in the record as a whole—‘including the Hearing Examiner’s Initial Decision—to support the essential underlying finding that the ability of the applicants to serve their respective communities was • about equal.¹⁶ Hence, we hold the Commission’s error is fatal to the order under review and requires that the case be remanded for reconsideration by the Commission.

■ We discuss three phases of the record which compel us to this view. They are: (1) Uncertainty as to programming plans; (2) Reluctance, evasiveness and lack of candor; and (3). Monopoly and concentration of communications media.

(1) Uncertainty as to programming plans. At the 1946 hearing, the Easton applicant indicated that it would acquire a network affiliation if at all possible, and its proposed program schedule at that time included a number of network programs. But at the 1951 hearing, its proposed program schedule contained no network.programs, and no mention was made of possible network affiliation on direct’ examination. On cross-examination, however, the general manager of Easton, first flatly denied any present intention to affiliate,¹⁷ then spoke of a “remote possibility that sometime in the indefinite future, we might affiliate,”¹⁸ and, finally, admitted that if licensed, “we would probably explore the possibility” and if a desirable network affiliation were available would take affirmative steps to secure it.¹⁹

Although it is plain from this testimony that a network affiliation was contemplated, the Easton applicant, as the Hearing Examiner pointed out, offered no testimony as to “what programs now proposed would be scrapped to make way for network programs.” Without such information, the Commission could not reasonably reach a conclusion in favor of the Easton Company on one of the crucial issues before it, namely, the Eas-ton Company’s ability to provide a choice of “locally originating programs.”

(2) Reluctance, evasiveness, and lack of candor. The Hearing Examiner concluded that Easton’s principal witnesses were reluctant, evasive, and had “not made * * * frank, candid and honest disclosures * * Although this conclusion was based in large part upon an evaluation of the demeanor, bearing, delivery, etc., of the Easton witnesses who appeared before the Examiner,²⁰ the Commission felt obligated to make an independent evaluation of the evidence because “the Examiner’s findings were primarily based on her evaluation of testimony by one witness rather than on her judgment as to the credibility of different witnesses who make contradictory statements * * We cannot agree that the Examiner’s findings are entitled to any less weight than findings which resolve a conflict between witnesses. Both involve a determination based upon an evaluation of the witnesses’ demeanor, bearing and delivery; and it has been specifically held that the uncontradicted testimony of a single witness may be rejected on the basis of such factors, and that this is a judgment best made by the trier of fact who “had the witnesses before it * * *.”²¹

The Commission, after independently examining the cold record, reversed the Examiner’s findings and concluded that the testimony in question “properly viewed, gives an overall appearance of con-

sistency, candor and straightforwardness.” ²² But as Judge Learned Hand recently observed, “ * * * we are not to be reluctant to insist that an examiner’s findings on veracity must not be overruled without a very substantial preponderance in the testimony as recorded.”²³ We briefly describe certain matters appearing in the cold record which convince us that there is no such substantial preponderance in the present testimony.

(a) In connection with the question of a network affiliation, the Easton witness, as noted earlier, first spoke of the “remote possibility * * * in the indefinite future” of a network affiliation, but later, under prodding, conceded that Easton would act affirmatively to acquire one if licensed.

(b) On direct examination, the President of the Easton Publishing Company testified that in addition to the Easton Express, which his company published, dailies published in Allentown, Bethlehem, Bangor (Pennsylvania), Newark, Plainfield (New Jersey), New York City, and Philadelphia circulated in the Eas-ton area. On cross-examination it developed that the combined Easton area circulation of the Allentown and Bethlehem dailies was around 500, compared to 44,400 for the Express. We think the Examiner rightly concluded that'the witness sought to create the misleading impression that his newspaper had substantial competition from the Allentown and Bethlehem dailies.²⁴

It cannot be said that the evasiveness and lack of candor of Easton’s witnesses related to matters of little consequence, for the Easton Company’s monopoly position and the provision of locally-originating rather than network programs were issues of paramount importance in the proceedings before the Commission. In any event, as the Supreme Court has made clear, the importance of the matters concealed, obscured or evaded

“ * * * is beside the point. The fact of concealment may be more significant than the facts concealed. The willingness to deceive a regulatory body may be disclosed by immaterial and useless deceptions as well as by material and persuasive ones. We do not think it is an answer to say that the deception was unnecessary and served, no purpose.”²⁵

(8). Monopoly and, concentration of communications media. The Easton applicant publishes the only newsp'aper in Easton. It is the licensee of one of two FM radio stations, and of the only television station in that community. Such concentration of communications

media has been viewed by the Commission as contrary to the public interest,²⁶ and this court has upheld that view.²⁷ Although recognizing that diversification of news sources is a “public interest” factor, the Commission did not find it controlling here because (a) Easton’s newspaper and radio operations would be “substantially separate”; and (b) there was no evidence that Easton had used its newspaper ownership “to attempt to obtain a monopoly over news sources * * *, or otherwise in a manner not in the public interest.”

At the hearing the general manager of the proposed Easton station, an employee of the Easton Publishing Company for 16 years, testified that he was assigned to “this phase of the Easton Publishing Company activities” because for many years he had thought “that a radio station would be a very, very valuable complement to our newspaper activities * * He also testified that “accounting and everything like that” for the FM station currently operated by the Easton applicant are handled by the Easton Express. This scarcely portrays a picture of “substantially separate” operation.

There is no dispute that for twelve years, from 1936 to 1948, the Easton Express failed to carry the program logs for station WEST, the city’s only standard broadcast station, although during that period it regularly carried the logs of the New York City network stations. While the Commission did not approve this practice, it felt that the change of heart since 1948 was “some indication of the lack of an intention to freeze out WEST,” and concluded “that the Easton Publishing Company is not disqualified to be a station licensee solely because of its newspaper ownership and activities.”

Such conduct may, of course, be a highly significant factor,²⁸ particularly when the offending applicant already enjoys a formidable control over communications media in the community. Whether the Commission considered this former practice in weighing the relative abilities of the competing applicants does not clearly appear from the record. But even if it did, it apparently deemed such conduct inconclusive in light of its findings that (1) the radio and newspaper operations would be “substantially separate,” (2) Easton had not equivocated regarding its network affiliation and programming plans, and (3) its witnesses had presented consistent, candid, and straight-forward testimony. Since we hold these findings erroneous, the Commission must re-evaluate the effect of the Easton Company’s news monopoly and its past conduct on the issue of the relative abilities of the two applicants to serve in the public interest. Upon such re-evaluation, these factors may well assume a different and perhaps decisive importance.

Contrary to appellant’s contention, we think the Commission did consider existing or authorized FM and television facilities in Easton as bearing upon the relative needs of the communities for an additional AM facility.²⁹ Since operations under the television authorization did not commence until after the hearing, there is nothing in the record to show the extent to which actual operation has affected the need for an additional AM outlet for local self-expression in Easton. We are unwilling, however, in light of the protracted history of this controversy, to order a further hearing “to bring the record up to date * * *.”³⁰

We have considered other contentions advanced by appellant and find them without merit.

Reversed and remanded for a rede-termination in accordance with this opinion.

1 . The Allentown"Corporation filed the appeal in case No. 11897 before the Commission acted upon its petition for rehearing; the appeal in case No. 11957 was filed after the Commission denied the petition for rehearing. Case No. 11897 is therefore dismissed as premature and we consider only the appeal in case No. 11957.

2 . By reason of the proximity of the two cities, simultaneous operation of the proposed stations would cause mutually destructive interference. Two other applicants for these facilities are no longer in the case.

3 . Easton Publishing Company v. Federal Communications Comm., 1949, 85 U.S.App.D.C. 33, 40, 175 F.2d 344, 351.

4 . Allentown was, however, permitted to continue the operation of its Station WHOL, a license for which was granted on February 2, 1949, and which had been built in accordance with a construction permit dated June 8, 1948.

5 . Easton Publishing Company v. Federal Communications Comm., 1950, 87 U.S. App.D.C. 344, 185 F.2d 987.

6 . See note 4, supra.

7 . 48 Stat. 1084 (1934), as amended, 47 U.S.O.A. § 307(b).

8 . Easton had a population of 33,589 in 1940 and 34,410 in 1950, an increase of 2.4%; Allentown’s population in 1940 was 96,904 and in 1950 was 106,233, an increase of 9.6%. No significant change is introduced by making a comparison in terms of the built-up communities contiguous to the two cities.

9 . Initial Decision, Conclusion No. 37.

10 . Commission’s Decision, Conclusion No. 12.

11 . Id., Conclusion No. 13.

12 . ' 3 Pike & Fischer Radio Reg. 1945 (1948).

13 . Id. at 1953, Conclusion No. 4.

14 . Id. at 1954, Conclusion No. 6.

15 . Sky Way Broadcasting Corp. v. Federal Communications Comm., 1949, 85 U.S.App.D.C. 425, 176 F.2d 951.

16 . Universal Camera Corp. v. National Labor Relations Board, 1951, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456.

17 . “By Mr. Rollo:

“Q. I notice in your analysis of Exhibit No. 84, your proposed program schedule, that you do not include any network programs on your proposed AM schedule. A. That is correct.

“Q. That is your present plan, is it? A. That is the present plan.

“Q. You no longer desire to affiliate with Mutual? A. There has been no conversation with Mutual in the past five years.

“Q. You recall you originally testified you planned to affiliate with Mutual, do you not? A. I said we expected to discuss it with Mutual, but no arrangements have been made. *****

‘•‘By Mr. Schildhause:

“Q. Mr. Rounsley, you stated, did you not, that you had no current plans to affiliate your proposed AM station with the network? A.. That is correct.”

18 . “Mr. Rollo: Did you answer a question of mine to the effect that you did not intend to affiliate with the network?

“The Witness: I did not say we did not intend to, I said we made no overtures at all. That is in the remote possibility that some time in the indefinite future ice might affiliate.” [Emphasis supplied.]

19 . “The Presiding Officer: Mr. Rounsley, I am a little confused about this network proposition. I wish you would tell me what your plans are with respect to network. Now let us not talk about the dim distant future, let us talk about some-. thing not quite so far away.

“The Witness: If we have an AM facility we would probably explore the possibility of a network affiliation. We would naturally have to see what was available, what the terms are, something we do not know now, but we would explore that possibility.

“The Presiding Officer: Am I to understand you would not wait for somebody to come to you?

“The Witness: That is correct. In other words, we would have to have something to affiliate before we talk business.

“The Presiding Officer: It is still not clear in my mind. Do you plan to sit by and wait for somebody to approach you, or what would be your procedure?

“The Witness: I think we would probably see what was available, and after we saw what was available, if there was a network that we thought was desirable and available, we would probably call them.” [Emphasis supplied.]

20 . An examiner’s findings “based on that, part of the evidence which the printed words do not preserve” are not ordinarily reviewable by the agency. Judge Learned Hand in National Labor Relations Board v. Universal Camera Corp., 2 Cir., 1951, 190 F.2d 429, 430. That the instant finding is not derived solely from evidence preserved in the printed record is illustrated by at least two findings of the Examiner. One Easton witness, she found, “when * * * questioned * * * displayed an attitude of evasiveness and lack of candor on the subject [of Easton’s plans for a network affiliation].” [Emphasis supplied.] And she found that another witness, in testifying as to the circulation of newspapers in the Easton area, “created the impression that the Easton Empress [published by the applicant company] has substantial competition from the Allentown and Bethlehem daily newspapers.” Attitudes displayed and impressions created by a witness are usually demonstrated by hesitations, intonations and inflections of voice, gestures, etc., as well as by what appears in the printed record.

21 . Quock Ting v. United States, 1891, 140 U.S. 417, 422, 11 S.Ct. 733, 35 L.Ed. 501; National Labor Relations Board v. Howell Chevrolet Co., 9 Cir., 1953, 204 F.2d 79, 86, affirmed 346 U.S. 482, 74 S.Ct. 214; Zimmer v. Acheson, 10 Cir., 1951, 191 F. 2d 209, 212. See National Labor Relations Board v. Dinion Coil Co., 2 Cir., 1952, 201 F.2d 484, 487-490, for an excellent historical discussion of the limited role of reviewing courts in evaluating “demeanor evidence.”

22 . Commission’s Decision, Conclusion No. 4.

23 . National Labor Relations Board v. Universal Camera Corp., 2 Cir., 1951, 190 F. 2d 429, 430. See also United States Steel Co. v. National Labor Relations Board, 7 Cir., 1952, 196 F.2d 459, 467; Ohio Associated Tel. Co. v. National Labor Relations Board, 6 Cir., 1951, 192 F.2d 664, 668.

While .the Universal Camera case involved the "judicial review provision of the-Labor Management Relations Act, 1947, 61 Stat. 148, 29 U.S.C.A. § 160(e), the Supreme Court held that these provisions are equivalent to the judicial review provisions of the Administrative Procedure-Act, 60 Stat. 243-244 (1946), 5 U.S.C.A. § 1009(e), .which apply to the instant proceeding. Universal Camera Corp. v. National Labor Relations Board, 1951, 340 U.S. 474, 487, 71 S.Ct 456, 95 L.Ed. 456.

24 . Another example, which, if less significant, is nonetheless revealing, is the professed inability of the President of the’ Easton applicant to state the amount of dividends paid by his company for 1950. ’ Since he had been with the company for 33 years, .had attended weekly directors’. meetings, and in addition to being president, was treasurer and a stockholder of the company, his claimed ignorance does not appear credible.

25 . Federal Communications Comm., v. WOKO, Inc., 1946, 329 U.S. 223, 227, 67 S.Ct. 213, 215, 91 L.Ed. 204.

30 . Interstate Commerce Comm. v. Jersey City, 1944, 322 U.S. 503, 514, 64 S.Ct. 1129, 1134, 88 L.Ed. 1420. The Court observed: “Administrative consideration of evidence — -particularly where the evidence is taken by an examiner, his report submitted to the parties, and a hearing held on their exceptions to it — always creates a gap between the time the record is closed and the time the administrative decision is promulgated., This is especially true if the issues are difficult, the evidence intricate, and the consideration of the case deliberate and careful. If upon the coming down of the order litigants might demand rehearings as a matter of law because some new circumstance has arisen, some new trend has been observed; or some new fact discovered, there would be little hope that the administrative process could ever be consummated in an order that would riot be subject to reopening.”

See also Communications Act Amendments, 1952, § 14(h), 66 Stat. 720 (1952), 47- U.S.C.A.- § 402(h), providing that “unless otherwise ordered by the court * * . the Commission shall give effect to the judgment of the court reversing an order . of the Commission “upon the basis of' the proceedings already had * * *_>>.

26 . See, e. g., WSMB, Inc., 5 F.C.C. 55 (1938); R. R. Jackman (WREN), 5 F.C.C. 496 (1938); Louisville Times Co., 5 F.C.C. 554, 559 (1938).

27 . Scripps-Howard Radio, Inc. v. Federal Communications Comm., 89 U.S.App.D.C. 13, 19, 189 F.2d 677, 683, certiorari denied, 1951, 342 U.S. 830, 72 S.Ct. 55, 96 L.Ed. 628; Plains Radio Broadcasting Co. v. Federal Communications Comm., 1949, 85 U.S.App.D.C. 48, 52, 175 F.2d 359, 363.

28 . Cf. Mansfield Journal Co. v. Federal Communications Comm., 1950, 86 U.S.App.D.C. 102, 109, 180 F.2d 28, 33.

29 . See Easton Publishing Co. v. Federal Communications Comm., 1949, 85 U.S.App.D.C. 33, 38-40, 175 F.2d 344, 349-351.