Rehearing and Rehearing En Banc Denied February 28, 1974.
For the prior history of the controversy over who is entitled to a construction permit to operate a commercial television station on Channel 9 in Orlando, Florida, now before us again in these consolidated appeals, one may turn to the decisions of this court enumerated in the margin.
In 1965 we vacated the Commission's award of the Channel to Mid-Florida Television Corporation, and caused the opening of the proceedings to additional applicants.
Eight applicants filed for permanent authority.
On March 29, 1967, the Commission denied the applications of Consolidated Nine and Comint for interim authority. Simultaneously it permitted Mid-Florida to continue interim operation on the Channel pending the award of the construction permit subsequent to the holding of a comparative hearing.
The controversy then proceeded to a comparative hearing on the applications for the construction permit of TV 9, Inc., Comint Corporation, Central Nine Corporation, Florida Heartland Television, Inc., and Mid-Florida. On January 10, 1972, the Commission granted the application of Mid-Florida "for a permit to construct a new television broadcast station to operate on Channel 9 at Orlando, Florida."
The principal basis for favoring Mid-Florida was the conclusion that its proposal ". . . offers the best practicable
Appellants advance a number of reasons for setting aside this decision. Among them is the failure of the Commission to give consideration, adverse to Mid-Florida, to the Roth letter and ex parte contacts with a former Commissioner heretofore discussed fully in our opinions in WORZ, Inc. v. F.C.C., 106 U. S.App.D.C. 14, 268 F.2d 889 (1959); and WORZ, Inc. v. F.C.C., 120 U.S.App. D.C. 191, 345 F.2d 85 (1965). We agree with the Commission, however, that these Roth and ex parte matters were not required to be considered by the Commission, for in our last cited case we stated, "we would agree that, absent any new evidence bearing upon them, the time has come to end litigation about them."
None of the parties disputes that in the comparative proceedings now before us, the Commission, in appraising Mid-Florida's qualifications compared with those of the other four appellant-applicants, could not rely upon evidence attributable to Mid-Florida's long operation on Channel 9 from 1958 to 1969. The reason is that such operation, as we have held, was never pursuant to valid authority. The competing applicants in the present proceedings were to be appraised on a basis of equality irrespective of past operation by Mid-Florida on the Channel. Comint requested the Review Board so to rule prior to the hearing. The request was denied by the Board and the matter left for decision by the Examiner. The result was that a very considerable amount of evidence came into the record respecting Mid-Florida's operation on Channel 9. This evidence is now conceded by all parties to have been inadmissible.
Contentions arising from this error must be considered in light of the position of the Commission and Mid-Florida that the inadmissible evidence, and any findings based thereon, were disregarded by the Commission, so that, it is said, the error was harmless. Appellants
The resultant question we think is two-fold. First it is whether such a pervasive commingling of admissible and inadmissible evidence, notwithstanding the disclaimer of Board and Commission of reliance upon the inadmissible, has created a record which is not a basis for decision from the standpoint of enabling the other parties fairly to compose a record supporting their own applications and, in the second place, it is whether the Board and Commission can be held with confidence to have entirely disregarded the inadmissible evidence. It is difficult to decide, but we have concluded that we should accept the unanimous disclaimer of the members of the Commission of reliance upon the inadmissible evidence except as we shall note. The introduction of the evidence we think did not preclude the applicants other than Mid-Florida from fairly composing a record in support of their own respective applications. We are fortified in these conclusions by the limited use made of the past performance evidence, that is, whether it influenced the Commission's position with respect to the standing of the respective applicants on the special comparative issues of ascertainment of community needs and proposed programming. The Commission placed each of the five applicants on an equal plane as to these issues, giving no preference to any applicant, a matter we now consider.
The Board agreed with the Examiner in placing on an equal footing all applicants with respect to ascertainment efforts and proposed programming, the "special issues."
The Board then concluded: "Even when we judge Mid-Florida's showing under the special issues without regard to the
Evidence of Mid-Florida's efforts on the ascertainment issue primarily consisted of the contents and results of two community surveys in 1966 and 1967. The 1966 survey was conducted under the supervision of Mr. Brechner and other station employees during Mid-Florida's operation of the station on the Channel. The other, in 1967, was a survey conducted by Universal Marketing Research, Inc., also during Mid-Florida's operation on the Channel.
The 1966 survey, however, was directed principally to determining the preferences and views of those solicited respecting past programming rather than ascertainment of community needs, although a few responses were directed towards the future. The difficulty is that the Board has not specified what information was deleted and what relied upon. Furthermore, if all references to past programming were deleted very little indeed would remain.
In any event the 1966 survey we think cannot be relied upon since it falls within the ruling of the Board excluding all surveys which were the result of "the ascertainment of community needs and problems by [Mid-Florida] in its role as station operator, and by its principals and employees when engaged in station operations. . . ."
Similar difficulties exist with respect to the 1967 survey. The purpose of this survey was "to determine and evaluate public opinion of Channel 9-WFTV." The persons contacted were questioned about Channel 9 in comparison with other local television stations. Thus the survey was not directed towards the ascertainment of community needs, although it is perhaps true that likes and dislikes of people may have some relevance to community needs. One question, however, was specially directed to ascertainment of community needs:
But the answers to this question were lost,
As to Mid-Florida's program proposal the Board concluded that it was based on Mid-Florida's ascertainment efforts and not its past programming:
Even though the Board has held inadmissible all evidence in the record which relates to the past operation of Channel 9 by Mid-Florida with respect to programming,
Therefore, with respect to the special issues of ascertainment of community needs and proposed programming, the court can reach no conclusion as to Mid-Florida separate and apart from the inadmissible evidence and the influence of Mid-Florida's past operations on the Channel. The ascertainment and program problems are simply too intertwined with such past operations to enable the court to find a separate basis for approval of the Commission's position that Mid-Florida stands on an equal footing with the other applicants. As a group, therefore, the advantage is with them, though each of the four we agree is on an equal basis with the others. Even if it were possible to find support for an appraisal of Mid-Florida on these special issues, a basis therefor on admissible evidence has not been set forth by the Commission; if the Commission placed no reliance upon Mid-Florida's past performance we are unable to find the evidence which was relied upon. While we have declined to order an entire rehearing of this case due to the concededly inadmissible evidence, and findings of the Examiner based thereon, which the Commission assures us were disregarded, when we come to consideration of these particular issues the relation of past performance on the Channel by Mid-Florida to the conclusion reached by the Commission is too permeating to enable the court fairly to conclude that the Commission was not mistaken in finding an independent basis for its decision.
Comint raises a special matter relevant to its application when compared with all others. The principals of Comint include two local Black residents, Paul C. Perkins, who had a 7.17% voting stock interest, and James R. Smith, M.D., with a 7% like interest. Both have lived in the local area, of which about 25% of the population are Black, for more than 20 years, and have not only been active in advancing the interests of the Black members of the community but also have been primarily responsible for significant achievements in bettering conditions for the Black population.
No merit was accorded to Comint by reason of this Black ownership and participation, although some credit was given under the criterion of ownership participation
We think this is not an adequate disposition of the subject. To say that the Communications Act, like the Constitution, is color blind, does not fully describe the breadth of the public interest criterion embodied in the Act. Color blindness in the protection of the rights of individuals under the laws does not foreclose consideration of stock ownership by members of a Black minority where the Commission is comparing the qualifications of applicants for broadcasting rights in the Orlando community. The thrust of the public interest opens to the Commission a wise discretion to consider factors which do not find expression in constitutional law. Inconsistency with the Constitution is not to be found in a view of our developing national life which accords merit to Black participation among principals of applicants for television rights. However elusive the public interest may be it has reality. It is a broad concept, to be given realistic content.
The Commission's reliance upon its Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393 (1965) we think is not accurate. Although, as the Commission states, "The two primary objectives toward which the comparative process is directed are: (1) the best practicable service to the public; and (2) a maximum diffusion of
In passing upon considerations open to the Commission even on an application for renewal of a license this court has taken a stand against heavy reliance upon maintenance of the status quo. We have adverted to recognition by the Supreme Court of the connection between diversity of ownership of the mass media and diversity of ideas and expression required by the First Amendment. Citizens Communications Center v. F.C.C., 145 U.S.App.D.C. 32, 44, n.36, 447 F.2d 1201, 1213, n.36 (1971). In this same note, we said that "[a]s new interest groups and hitherto silent minorities emerge in our society, they should be given some stake in and chance to broadcast on our radio and television frequencies." As Commissioner Hooks pointed out in his concurring opinion in the present case,
149 U.S.App.D.C. 419, 420, 463 F.2d 822, 823 (1972).
A similar approach applies to the situation respecting Comint growing out of the interests of Mr. Perkins and Dr. Smith. It is consistent with the primary objective of maximum diversification of ownership of mass communications media for the Commission in a comparative license proceeding to afford favorable consideration to an applicant who, not as a mere token, but in good faith as broadening community representation, gives a local minority group media entrepreneurship.
With due respect, therefore, the court does not accept the Commission's position based either on the Policy Statement or lack of advance assurance of superior community service attributable to such Black ownership and participation, an assurance not required, for example, for favorable consideration of local residence, accompanied with participation, on the issue of integration of ownership with management. Reasonable expectation, not advance demonstration, is a basis for merit to be accorded relevant factors.
Appellants TV 9, Inc., Central Nine, Florida Heartland, and Comint, prior to release of the Review Board's decision, filed with the Board on November 12, 1971 a joint petition to remand, to reopen the record and to enlarge the issues to determine the effect upon Mid-Florida's basic and comparative qualifications of a federal indictment of November 1, 1971, against Martin Segal. Mr. Segal was then the Secretary, a Director and the General Counsel of Mid-Florida, owning 1.540% interest in Mid-Florida. He and fifty-eight additional persons were named in the indictment following a task force investigation conducted by the Department of Justice, with overtones of violations of the Organized Crime Act of 1970. The indictment was built around alleged illegal gambling activities, with enumerated overt acts charged in furtherance of the conspiracy, allegedly violative of Title 18 U.S.C. §§ 2 and 1955, as well of State law.
The petition to reopen and enlarge the issues states the following respecting Mr. Segal's relationship to Mid-Florida:
Mid-Florida informed the Commission that Mr. Segal had resigned as an officer and director on November 9, 1971, because of his physical condition. It appears that on October 27, 1971, he had been shot and severely wounded by his
Mid-Florida petitioned to amend its application to show the removal of Mr. Segal from involvement in its affairs. The company had adopted a resolution to the effect that until the charges were resolved he would not be involved and would be requested, when able, to sell his stock to the corporation with the right to repurchase should the criminal charges be resolved in his favor. The petition to amend was opposed by appellants since, as they contended, it was designed to enable Mid-Florida to escape demerit due to the situation respecting this officer, citing, inter alia, WORZ, Inc., 36 F.C.C. 1535, at 1543 (1964), and Mid-Florida Television Corp., supra, 33 F.C.C.2d at 13, to the effect that to allow such an amendment in the circumstances would give Mid-Florida a comparative advantage — i. e., elimination of a disadvantage — "which post designation amendments are not permitted to accomplish."
The Review Board — with Commission approval — allowed Mid-Florida to amend as requested, to reflect that Mr. Segal was divested of all authority and that Mid-Florida had offered to purchase his interest. The Board and Commission correlatively ruled that since Mr. Segal was no longer associated with the applicant, Mid-Florida was relieved of responsibility for any misconduct on his part, mooting the issue posed by the petition to reopen the record.
We think the Commission was not required to deny the requested amendment suspending the continuation of Mr. Segal's participation in Mid-Florida's affairs. We are aware of the diversity of decisions bearing in one way or another on the problem, and we are unable to find in them a clear decisional line. In Fisher Broadcasting Co., 30 F.C.C. 177 (1961) the amendment was allowed, with consequences that the pre-amendment situation was held by the Commission to have become moot. The amendment, however, concerned a change in an ownership interest of a principal and raised no issue with respect to character. In Grayson Television Co., 11 F.C.C.2d 881 (1968), the Commission refused to allow an amendment to reflect the fact that a minority stockholder with an interest in another station had withdrawn. It was thought that to allow the amendment might give the applicant a preference with respect to diversification. And see News Sun Broadcasting Co., 24 F.C.C.2d 770 (1970). In Chapman Radio and Television Co., 26 F.C.C.2d 891, 893 (1970), the Commission denied permission to amend. The petitioning applicant sought to show that a principal, whose conviction of crime was on appeal, had assigned his interest. The Commission refused to allow the applicant's belated attempt to improve in this manner its over-all comparative status. The Commission subsequently held:
38 F.C.C.2d 871 (1973).
We think our duty is clear. We note first the fact that Mr. Segal's active connection with Mid-Florida has been suspended, and we assume is perhaps ended, regardless of the fate of the petition to amend. Moreover, the facts which gave rise to that petition occurred after the Mid-Florida application was filed. For these reasons we do not disturb the Commission's grant of the petition to amend. We disagree, however, that permitting the amendment mooted the significance of the facts which gave rise to it with respect to the applicant's character, or mooted any other consideration relevant to the matter.
Further inquiry into the matter must be conducted with careful and sympathetic regard for Mr. Segal's physical condition, but with this qualification matters of this sort cannot simply be passed over even though Mr. Segal's association with Mid-Florida is suspended or discontinued. The character qualification of Mid-Florida, in and of itself and comparatively, remains for inquiry and decision as it may be reasonably affected by the circumstances surrounding the bringing of the criminal charges against Mr. Segal.
Two further matters need attention:
1. In awarding a preference to Mid-Florida by reason of the nature of its integration of ownership with management, the Commission relied in significant part upon the civil participation of Mr. and Mrs. Brechner. The record indicates that the Commission's appraisal of their civic activities might have included activities related to Mid-Florida's past performance. On the remand the appraisal must be made without reliance upon inadmissible evidence, the avoidance of such reliance to be demonstrated so as to be subject to intelligent review. We attach importance to this, for although we do not now disturb the preference accorded Mid-Florida over TV 9 under the criterion of integration of ownership with management, we think the issue is closer than the Commission indicates. Its analysis of the subject does not persuade the court of the "substantial" character of Mid-Florida's preference over TV 9 in this regard.
2. Should the Commission in the exercise of a sound discretion reopen the record, otherwise than in respect to the Segal matter, it shall be reopened for all applicants in the respects in which it is thus reopened.
The grant to Mid-Florida is set aside and the case is remanded to the Commission for further proceedings not inconsistent with this opinion. Notwithstanding the protracted time involved already, and our reluctance to extend it,
It is so ordered.
FAHY, Senior Circuit Judge:
The Commission has suggested that the case be reheard en banc. In part the suggestion is directed to the court's position with respect to what the Commission has referred to as the "Black ownership" phase of the case. Several contentions and misunderstandings of the Commission made in its suggestion for rehearing en banc lead to this Supplemental Opinion.
It is said that the court erroneously has held that merit should be accorded Comint due only to the Black ownership of some of its stock. This is not the position of the court in this case. The court rests its position upon both the stock ownership of Dr. Smith and Mr. Perkins and their participation in station affairs.
The Commission mistakenly refers to the court's holding as directing the Commission to adopt a "new comparative policy of awarding preferences for Black or minority ownership, per se." Not only has the court not relied solely upon minority ownership, but our opinion makes no mention of a preference in this matter.
The position of the Commission is that the comparative standing of an applicant due to personal attributes of an individual stockholder is not enhanced unless the stockholder demonstrates an intent "to devote significant time to station management in a meaningful capacity." While no doubt sound as a general policy statement, this position does not preclude that of the court in this case. The Policy Statement upon which
The petition for rehearing of intervenor, Mid-Florida Television Corporation, is denied, and we note that the petition for rehearing en banc of appellee, Federal Communications Commission, has also been denied.
Statement of Circuit Judges MacKINNON, ROBB and TAMM, as to the reasons why they would grant the motion for rehearing en banc.
With all respect to the ends which the majority has in mind, it is respectfully submitted that the means they have adopted are constitutionally suspect. The panel concedes that a "preference" cannot be given because of race and so the opinion permits race to be considered as a "merit" in the FCC's evaluation of license applications. There is no substantial difference between the two statements, both are discriminatory and it is submitted impermissible. We vote for rehearing en banc.
Statement of Circuit Judge WILKEY as to the reasons why he would grant the motion for rehearing en banc.
With all due respect to the ends which my distinguished colleagues obviously have in mind, I respectfully submit that the means they have adopted are constitutionally suspect. The panel's opinion on motion for rehearing stressed that the factor of race is not to give rise to a "preference," but it is to be considered as a "merit" in the FCC's evaluation of license applicants.
Semantics aside, the reason why race is an impermissible factor is logically obvious. Race, sex, national origin have been ruled out as factors on which to predicate any government action because they are factors which the individual is powerless to change. Religion as a factor is also outlawed, not because it cannot be changed, but because we consider it too vital and important to require a man to change it to gain governmental favor.
I think this country and its courts long ago reached the conclusion that race could not be a merit or demerit, and that any decision based on race as a factor was constitutionally wrong, morally wrong, and dangerous. There is no way by which a white, yellow, or red man can achieve the same "merit" point awarded the black man here. This is, as I understand the word, discrimination.
33 F.C.C.2d at 21-22.
"Merit" or "favorable consideration" is a recognition by the Commission that a particular applicant has demonstrated certain positive qualities which may but do not necessarily result in a preference. "Merit," therefore, is not a "preference" but a plus-factor weighed along with all other relevant factors in determining which applicant is to be awarded a preference.