Federal Communications Commission: Excerpts from address of Commissioner Frederick W. Ford before the Television & Radio Advertising Club of Philadelphia, Feb- FCC drafting new legislation and rules to curb "quiz" and Justification for amendment to the Communications Act to 65 65 64 National Association of Broadcasters, letter from Vincent T. National Broadcasting Co., Inc., letters from Thomas E. Ervin, vice National Recording Corp., letter from Bill Lowery, president. Scott-Textor Productions, Inc., letters, from Hal B. Cook, executive Westinghouse Broadcasting Co., Inc., letter from J. E. Baudino, vice 157 147, 157 163 COMMUNICATIONS ACT AMENDMENTS TUESDAY, APRIL 12, 1960 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS AND POWER, OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 1334, New House Office Building, Hon. Oren Harris, chairman, presiding. The CHAIRMAN. The committee will be in order. This morning the Subcommittee on Communications and Power begins hearings on H.R. 11341, H.R. 10241, H.R. 10242, H.R. 11397, H.R. 11398, S. 1898 and H.R. 7017 introduced by our colleagues on this committee Representative John Bennett, Representative Celler, the chairman of the Judiciary Committee, and myself. The bills deal with a number of different but related subjects such as deceptive broadcasting, sponsorship identification, license suspension, payoffs in connection with license applications, and mandatory hearings in connection with original license applications. The events which were responsible for the introduction of several of these bills are too well known to require any detailed description. Many of the provisions contained in these bills are traceable directly to the proceedings conducted during the first session of this Congress by another subcommittee of the Committee on Interstate and Foreign Commerce; namely, the Special Subcommittee on Legislative Oversight. The bill H.R. 11341 which I introduced on March 23, 1960, is aimed specifically at carrying out a number of recommendations contained in the report submitted on February 9, 1960, by the Oversight Committee. Thus we are moving from the rigged quiz and payola hearings which received such widespread attention and publicity in highlighting certain grave abuses in the broadcasting industry, to another phase the legislative phase-wihch is aimed at the enactment of legislation to prevent recurrences of these abuses in the future. This is as it should be because the hearings of the Oversight Committee were conducted strictly for a legislative purpose. In legislating in this area this committee and the Congress have a job to do which is not an easy one. It is one thing to uncover specific instances of wrongdoing. It is quite another thing to write legislation which seeks to draw a clear line between conduct which should be outlawed and conduct which should be required in the public interest. As frequently is the case in the field of Government regulation of industry, Congress can lay down only general principles and objec 1 tives and must leave to the regulatory agencies the application of these principles and objectives on a case-by-case basis, or through rulemaking. In establishing objectives and principles in the areas with which the bills are dealing, the committee must be mindful both of the public interest and the practical needs of the industry to be regulated. Thus this committee is seeking information in these hearings on two basic questions: what does the public interest require with respect to honest broadcasting, sponsorship identification, granting of original broadcasting licenses and suspension of licenses, and what are the legitimate and practical needs of the broadcasting industry and others concerned in these areas. It will not be easy to find proper answers to these questions, and the committee will have to depend to a considerable extent on the cooperation of the industry, the bar and the Federal Communications Commission. It is my sincere hope that this cooperation will be forthcoming because the committee is deadly serious about this legislation. I want to emphasize this because it seems that some elements in the industry are included to consider some of these questions in a rather jocular vein. The problem of legislating in these areas is not made any easier when there is some doubt as to whether the Congress can count on responsible cooperation the part of the regulatory agencies whose job it is to administer broad delegations of power in the light of the rule of reason. If the agencies are either unwilling or incapable to perform this function which is an admitted difficult one, they are failing to fulfill the principal purpose for which they were established. I feel we have had some recent unfortunate examples of just such failure. When the independent regulatory agencies are referred to as arms of Congress, this terminology has reference particularly to the rulemaking and interpretative functions of the agencies. The agencies should ask themselves the same questions that this committee must ask what does the public interest require? What are the needs of the industry and others concerned with the practicalities of the situation? And if there appear to be any conflicts, how can they best be resolved? I have taken time to point out some of the difficulties confronting this committee in connection with this legislation. I feel very strongly on this subject. It is my hope that with the proper cooperation of all concerned we can enact legislation which will protect the public interest without hamstringing those who must live under the laws enacted by the Congress. At this point in the record, there will be inserted copies of the bill and reports from the agencies. (The documents referred to follow :) [H.R. 11341, 86th Cong., 2d sess.] A BILL To promote the public interest by amending the Communications Act of 1934, to require a public hearing before the original granting of broadcast licenses, to regulate "payoffs" and "swap-offs" between applicants for such licenses, to grant authority to suspend such licenses, to make more effective the requirement regarding announcements as to broadcast matter which is paid for, to prohibit certain deceptive practices in the case of quiz programs, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, AMENDMENTS TO SECTION 309 Section 1. (a) The section heading and subsections (a) and (b) of section 309 of the Communications Act of 1934 (47 U.S.C. 309) are amended to read as follows: "ACTION UPON APPLICATIONS; FORM OF AND CONDITIONS ATTACHED TO LICENSES; 'PAYOFFS' AND 'SWAP-OFFS' BETWEEN APPLICANTS "SEC. 309. (a) Before the Commission grants to an applicant— 66 "(1) a broadcast station license, "(2) a permit for construction of a broadcast station, or "(3) authority for modification of a broadcast station license or of a permit for construction of a broadcast station in any case in which, because of the substantial nature of the proposed modification, the Commission is of the opinion that the application should be designated for hearing, the Commission shall hold a public hearing in the area which is to be served by the broadcast station to be constructed or operated under the permit or license applied for, or constructed or operated under the permit or license with respect to which such authority for modification is applied for. The permit, license, or authority applied for may be granted only if the applicant establishes affirmatively at such hearing that the public interest, convenience, and necessity will be served by the granting to him of such license, permit, or authority. The Commission shall give notice of such hearing in newspapers of general circulation, and over broadcasting stations, in such area at least ten days before such hearing. This subsection shall not apply to any application for renewal of a broadcast station license or for renewal of a permit for construction of a broadcast station. "(b) (1) If upon examination of any application provided for in section 308 (except any application to which subsection (a) of this section applies) the Commission shall find that public interest, convenience, and necessity would be served by the granting thereof, it shall grant such application. "(2) If upon examination of any such application the Commission is unable to make the finding specified in paragraph (1) of this subsection, it shall forthwith notify the applicant and other known parties in interest of the grounds and reasons for its ability to make such finding. Such notice, which shall precede formal designation for a hearing, shall advise the applicant and all other known parties in interest of all objections made to the application as well as the source and nature of such objections. Following such notice, the applicant shall be given an opportunity to reply. "(3) If the Commission, after considering such reply, shall be unable to make the finding specified in paragraph (1) of this subsection, it shall formally designate the application for hearing on the grounds or reasons then obtaining and shall notify the applicant and all other known parties in interest of such action and the grounds and reasons therefor, specifying with particularity the matters and things in issue but not including issues or requirements phrased generally. Any party in interest who is not notified by the Commission of its action with respect to a particular application may acquire the status of a party to the proceeding by filing a petition for intervention showing the basis for his interest at any time not less than ten days prior to the date of hearing. Any hearing subsequently held upon such application shall be a full hearing in which the applicant and all other parties in interest shall be permitted to participate but in which both the burden of proceeding with the introduction of evidence upon any issue specified by the Commission, as well as the burden of proof upon all such issues, shall be upon the applicant." (b) The first sentence of subsection (c) of such section 309 is amended by striking out "in subsection (a) hereof" and inserting in lieu thereof "in paragraph (1) of subsection (b) of this section". (c) Such section 309 is further amended by redesignating subsection (d) of such section as subsection (f), and by inserting immediately after subsection (c) of such section the following new subsections: "(d) (1) Before the earliest date on which an order of the Commission granting a broadcasting station license or a permit for construction of a broadcasting station is no longer subject to rehearing by the Commission or review by any court, no applicant for such license or permit, as the case may be, shall directly or indirectly pay or promise to pay to any other applicant for the same license or permit any money or other thing of value as consideration for such other applicant's withdrawal as such an applicant, unless the applicant proposing to make such payment and the applicant to whom it is proposed to be made both first file with the Commission a petition for Commission approval of such proposed payment and the Commission thereafter approves such proposed payment. The Commission shall approve any proposed payment to an applicant, pursuant to a petition filed under this paragraph if, but only if, the amount or value of the payment is not in excess of the aggregate amount determined by the Commission to have been legitimately and prudently expended and to be expended by such applicant in connection with preparing, filing, and advocating the granting of the application for the license or permit sought by him. "(2) If the Commission approves any proposed payment to an applicant pursuant to a petition filed under pararaph (1) of this subsection, it shall give public notice of such approval, and (unless an order of the Commission has been issued granting such license or permit, as the case may be, to an applicant other than the applicant proposing to make such approved payment) the Commission (A) shall set aside any order granting such license or permit which was issued before the date on which such notice is given and permit the person to whom such grant was made to file a new application, and (B) during the period of 30 days after the date on which such notice is given, shall accept applications which may be filed by other persons for such broadcast station license or permit for construction of a broadcast station, as the case may be. "(e) (1) It is the sense of Congress that 'swap-offs' in the case of broadcast station licenses and permits for construction of broadcast stations are contrary to the public interest, convenience, and necessity. As used in this subsection the term 'swap-off' means any arrangement whereby an applicant for a broadcast station license or a permit for the construction of a broadcast station, in return for the withdrawal of any other applicant for such license or permit, agrees not to file an application for, or to withdraw as an applicant for, any other broadcast station license or permit for construction of a broadcast station. "(2) In acting on applications for broadcast station licenses and permits for construction of broadcast stations and on applications for approval of transfers of such licenses and permits the Commission shall take into account the policy declared in paragraph (1) of this subsection. In order to give effect to the policy declared in parargaph (1) of this subsection the Commission shall prescribe regulations requiring applicants to file with the Commission, at such times and in such manner and form as the Commission shall require, such information as the Commission shall deem to be necessary for such purpose." AMENDMENTS TO SECTION 312 SEC. 2. Section 312 of the Communications Act of 1934 (47 U.S.C. 312) is amended by (1) redesignating subsections (d) and (e) of such section as subsections (e) and (f), respectively, and (2) striking out subsections (a), (b), and (c) of such section, and inserting in lieu thereof the following: "(a) The Commission may revoke any station license or construction permit— "(1) for false statements knowingly made either in the application or in any statement of fact which may be required pursuant to section 308; "(2) because of conditions coming to the attention of the Commission which would warrant it in refusing to grant a license or permit on an original application; "(3) for willful or repeated failure to operate substantially as set forth in the license; "(4) for willful or repeated violation of, or willful or repeated failure to observe any provision of this Act or any rule or regulation of the Commission authorized by this Act or by a treaty ratified by the United States; |