Certiorari Denied October 12, 1959. See 80 S.Ct. 50.
Petition for Rehearing Denied January 15, 1959.
BAZELON, Circuit Judge.
Functional Music, Inc., seeks judicial review of rules promulgated by the Federal Communications Commission in 1955, which rules restrict the practices of FM licensees furnishing a radio music service on a subscription basis. In doubt as to whether review was authorized by § 402(a) or by § 402(b) of the Federal Communications Act, Functional initiated review proceedings under each provision as a precautionary measure.
Petitioner-appellant is the licensee of FM broadcasting station WFMF, Chicago. Since 1949 it has restricted its program format predominately to background music. Additionally, it has superimposed upon traditional broadcasting services, a subscription music operation.
In 1950 the Commission, for the purpose of formulating a policy to govern "functional programming," commenced a study of the practices of broadcasters engaging in FM subscription services. Particular interest was manifest in the factor of program control by the subscribing party, since the Commission feared that background music programming, which is highly specialized and directly adaptable to subscribers' needs, was formulated in their interest rather than that of the general public. On December 31, 1953, the Commission released a notice of proposed rule making which suggested that functional music operations did not constitute broadcasting as defined by § 3(o) of the Communications Act.
After conducting hearings, the Commission in 1955 established rules which in substance adopted the changes proposed in 1955.
While the parties have not specifically put in question our jurisdiction to examine the validity of the 1955 rules in these proceedings, jurisdiction is, of course, always a threshold consideration.
The rules here attacked were initially promulgated in 1955. It very well may be that they were then sufficiently final to support judicial review.
Sections 402(a) and 402(b) of the Communications Act, under which these review proceedings have been initiated, are by definition mutually exclusive.
Consequently, we proceed to an examination of the 1955 rules. Those rules, restricting the operation of a subscription music service by FM licensees, rest on the Commission's determination that such functional programming is not broadcasting within the meaning of § 3(o) of the Communications Act. According to the Commission, various practices of functional broadcasters, namely, presentation of a highly specialized program format, deletion of advertising from subscribers' receivers, and exaction of a charge for these services, dictated a finding that functional music operations constitute point-to-point communications. And in its brief, the Commission sought to illustrate this conclusion by likening petitioner's functional music service to other services held to be point-to-point communications. In Bremer Broadcasting Co., 2 F.C.C. 79 (1935), for example, transmission of coded horserace results was held to be a service not covered by a license to broadcast. And similar treatment was accorded messages transmitted for a local police department (Adelaide Lillian Carrell, et al., 7 F.C.C. 219 (1939)), and programs furnishing spiritual, vocational and marital advice to specified listeners (Scroggin & Company Bank, 1 F.C.C. 194 (1935)).
However, the practices pointed to by the Commission do not form a basis for concluding that functional operations are non-broadcasting in nature. Nor do we believe that the cases cited in the brief are in point. For the Communications Act specifies that broadcasting is "the dissemination of radio communications intended to be received by the public * * *."
Whether or not petitioner's functional music service may be barred as objectionable
DANAHER, Circuit Judge (dissenting).
The Commission had distributed FM radio frequencies pursuant to an allocation plan as distinguished from AM frequencies granted in response to specific applications. Logansport Broadcasting Corp. v. United States, 1954, 93 U.S.App.D.C. 342, 345, 210 F.2d 24, 27. It has been seeking to allocate FM channels in the public interest so as to achieve a more effective use of the frequency space assigned for FM broadcasting. The Commission recognized, however, that FM had fallen short of development of a sound economic base.
Various licensees, including WFMF, prior to rule-making, had undertaken by means of simplex transmission to exploit a functional music operation in an endeavor to compete in the general radio advertising market. The Commission inaugurated studies of developments in this field which culminated, after a period of years, with the issuance on December 31, 1953 of a notice of proposed rule-making. The Commission emphasized that the FM broadcast band was not to be converted to some new specialized non-broadcast service or services. On the contrary, the Commission decided to grant special communications authorizations only to permit a subsidiary service as an adjunct to the main undertaking, namely, use of the already allocated FM frequency to accomplish an FM broadcast service to the public.
In the notice of proposed rule-making with regard to functional music, the Commission specifically invited comments directed toward its tentative conclusion that functional music was not "broadcasting." WFMF, with other FM licensees who had already been experimenting with functional music operations, submitted comment, and after the Commission on March 22, 1955 had issued its report and order, they filed petitions for reconsideration. They argued then that functional music services were broadcasting. The petitions for reconsideration, including that of Station WF MF, were denied, and neither the licensee of WFMF nor any other licensee appealed, either from the Commission's report and order adopting the new rules or from the orders denying the petitions for reconsideration.
Clearly, then, when petitioner's FM license had expired and thereafter was renewed in 1955, it was taken subject to the Commission's determination that functional music operations would be authorized only pursuant to an SCA, secondary in nature and deemed to have no status whatever apart from the FM license. WFMF and the entire industry were on notice that the Commission would authorize only "multiplex" transmission by which there might be simultaneous transmission of two or more signals within a single channel. The Commission made it abundantly clear that an FM broadcast band, already allocated to a particular area in the public interest, was not to be converted in large degree to commercial or industrial operations where the subscribers, and not the public, would control the receiving sets, decide when they should operate, at what volume, and what portions of what programs were to be deleted. In short, the Commission decided as a matter of policy, that FM bands were to be used for the purpose for which they had been allocated, and that functional music operations might be authorized on those FM bands only in a manner subsidiary to
Thus, the earlier permitted use of simplex conferred no right upon WFMF, nor was its FM license modified when, later, the period of permitted use of simplex was terminated. Rather, the petitioner, was bound to conform to the terms of the FM allocation for which it had applied and to which it had agreed. In sum, our petitioner possessed thereafter no vested right to 900 subscribers or any other number. It had no vested right to a 50 to 60 mile coverage by simplex as distinguished from half that distance by multiplex. It had no vested right to freedom from competition. The Commission well may expect that areas including present WFMF subscribers who may not through multiplex be served by this petitioner, will receive service from some other FM licensee which may undertake FM broadcasting in the area if assured of a measure of financial support. In any event the use of FM frequencies for broadcasting and not for special subscription services is the objective, and we should not say it is not a proper one.
From the present record, we were shown that there now are 96 subsidiary communications authorizations outstanding for functional music by FM broadcast stations. Of these, 59 pursuant to the rule, are engaged in multiplex transmission. In areas where feasible and where suitable equipment is or will become available, the Commission, no doubt, is justified in expecting other FM stations will convert to bring themselves in conformity with the 1955 rule, as the 59 have already done.
As noted, the Commission's functional music rules were adopted after protracted rule-making proceedings in which all parties, including WFMF, had ample opportunity to present their views. In my judgment the Commission is commanded by the Act to accomplish the objectives it sought here to achieve. The Commission simply decided that the specialized simplex service was not to be permitted to pre-empt the valuable spectrum space allocated to FM frequencies intended to be devoted to broadcasting. This was a public interest determination required to be made by law. Thus the Commission's rule-making was entirely within the Commission's competence.
"The Communications Act must be read as a whole and with appreciation of the responsibilities of the body charged with its fair and efficient operation. The growing complexity of our economy induced the Congress to place regulation of businesses like communication in specialized agencies with broad powers. Courts are slow to interfere with their conclusions when reconcilable with statutory directions." United States v. Storer Broadcasting Co., 1956, 351 U.S. 192, 203, 76 S.Ct. 763, 770, 100 L.Ed. 1081; cf. Federal Communications Comm. v. Pottsville Broadcasting Co., 1940, 309 U.S. 134, 144-146, 60 S.Ct. 437, 84 L.Ed. 656; Federal Communications Comm. v. W J R, 1949, 337 U.S. 265, 69 S.Ct. 1097, 93 L.Ed. 1353.
I think, we are bound to affirm the Commission's action.
Without discussion, the Commission adhered to its earlier conclusion that an FM functional music service was not broadcasting. Arguing that two and a half years had elapsed since announcement of a multiplex requirement, that multiplexing was a feasible communication system, and that sufficient multiplexing equipment was then available to fill the needs of functional broadcasters, the Commission denied a blanket postponement of the multiplexing requirement. It recognized, however, that an immediate simplex termination might be unduly harsh as to licensees then in the throes of converting their simplex equipment to multiplex equipment. The Commission therefore provided for individual short-term waivers of the multiplexing rules for FM broadcasters then engaged in equipment conversion. To afford the Commission sufficient time to process applications for such a waiver, permissible simplexing was extended for a two-month period.
"(b) Appeals may be taken from decisions and orders of the Commission to the United States Court of Appeals for the District of Columbia * * *" by, inter alia, an applicant for a construction permit or station license, or by an applicant for a renewal, modification, transfer, or assignment of such an instrument, whose application has been denied; by any party aggrieved by an order granting or denying such an application; or by the holder of a construction permit or station license whose authorization has been revoked, modified, or suspended by the Commission.
The orders reviewable under each of the two provisions are not intrinsically different. Scripps-Howard Radio Co. v. Federal Communications Comm., 1941, 316 U.S. 4, 8, 62 S.Ct. 875, 86 L.Ed. 1229. The orders encompassed by § 402(b) directly affect the radio-licensing function of the Commission, and in the interest of uniformity, appeal therefrom is concentrated in the Court of Appeals for the District of Columbia Circuit. All other Commission orders may be reviewed alternatively in the Court of Appeals for the Circuit where the party resides or has its principal office, or in the Court of Appeals for the District of Columbia Circuit. 64 Stat. 1130 (1950), 5 U.S.C.A. § 1033 (1952). A statutory revision in 1952 broadened the class of orders included within § 402(b). H.R.Rep. No. 1750, 82d Cong., 2d Sess. 16 (1952); S.Rep.No. 42, 82d Cong., 1st Sess. 11 (1951).