Court Opinion

ID: 9471500
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:34:00.697954+00
Date Added: 2024-06-11T17:42:26.314080
License: Public Domain

Opinion for the court filed by Circuit Judge MIKVA.
Dissenting opinion filed by Circuit Judge WILKEY.
MIKVA, Circuit Judge:
This case involves a license renewal hearing for an FM radio station. The hearing presented a contest between the current holder of the license, Radio Station WABZ (WABZ) and the challenger Victor Broadcasting, Inc. (Victor). The Federal Communications Commission (FCC or Commission) renewed the license of the incumbent WABZ. Victor brought this appeal to challenge the FCC’s comparative analysis of the strengths and weaknesses of Victor and WABZ. Included within the general challenge is the specific issue of whether the Commission adequately considered WABZ’s duplication of the programming of its sister AM station, WWWX. We conclude that the FCC was “painstaking and explicit in its balancing” and that its findings were reasonably articulated and based on substantial evidence. See Central Florida Enterprises, Inc. v. FCC (Central Florida II), 683 F.2d 503 (D.C.Cir.1982) (Wilkey, J.), cert. denied, - U.S. -, 103 S.Ct. 1774, 76 L.Ed.2d 346 (1983); Miner v. F.C.C., 663 F.2d 152 (D.C.Cir.1980). We thus affirm the FCC’s decision.
I. Background
WABZ has owned and operated an FM station in Albemarle, North Carolina since 1958. WABZ also owns a daytime-only AM station, WWWX, in the same community. During the day, both stations operate and WABZ-FM duplicates WWWX-AM programming in its entirety. Radio Station WABZ, Inc., 90 F.C.C.2d 818, 836 (1982) (hereinafter referred to as Hearing). WABZ-FM’s only independent programming occurs in the evening or the early morning. The FM station, on an average day, presents 31 minutes of independent, non-duplicative, non-entertainment programming. Id. On some days, the FM station presents almost an hour of non-du-plicative public affairs or non-entertainment programming. WABZ’s non-duplicated programming primarily “consists of local and syndicated religious programs, an occasional special musical or religious event, and live coverage of high school football games.” Hearing, 90 F.C.C.2d at 843 n. 139. None of this programming is broadcast during the “graveyard shift.” Rather, WABZ airs the programs at “times convenient to its listeners.” Id. at 840. Numerous affidavits filed with the FCC attest to the high standard of WABZ’s service to the community.
In July 1975, WABZ filed a license renewal application for its FM station. Shortly thereafter, Victor filed a competing application. Because the two applications were mutually exclusive, the FCC designated them for a comparative hearing. See Designation Order, 43 Fed.Reg. 8,181, corrected, 45 Fed.Reg. 10,732 (1978). The ad*759ministrative law judge who presided at the hearing recommended that the Commission grant the renewal application of WABZ. Hearing, 90 F.C.C.2d at 810.
In July 1982, the Commission adopted the administrative law judge’s findings and granted WABZ’s license renewal application. Id. at 846. The FCC relied on a comparative analysis — that is, it weighed the benefits of granting the license to Victor as against the benefits of renewing WABZ’s license. As a necessary preliminary step to this balancing, the Commission examined several factors and determined which applicant was in a preferred position with respect to those factors. The FCC first assessed a moderate comparative demerit against Victor for its many reporting violations in its other station operations. Although the violations were inadvertent, the Commission concluded that “Victor’s numerous violations reflect an inattention to [FCC] reporting requirements which we do not want to encourage.” 90 F.C.C.2d at 827. The individual who would serve as the station’s general manager was responsible for the reporting violations.
The Commission then considered the issues of diversification and “best practicable service.” Because Victor would introduce a new station to the community, the FCC concluded that Victor deserved a clear preference for diversification. However, the FCC also concluded that this preference was somewhat diluted by Victor’s interests in radio stations in other communities in South Carblina and North Carolina. Id. at 831. Within the category “best practicable service,” the Commission considered integration of ownership and management, efficient use of frequency, and WABZ’s past broadcast record. As regards integration, the Commission considered whether owners would be involved in the radio station’s daily management. Because an owner would serve as its general manager, Victor received a preference for integration. That owner, however, was responsible for the reporting violations. The FCC thus concluded that the owner’s “demonstrated indifference to our reporting requirements diminishes the preference which Victor would otherwise receive on this issue. Id. at 833.
The category labeled “Efficient Use of Frequency” included two issues. First, the Commission compared the size of the audience which each applicant would reach. Because Victor would serve 30% more people, Victor received a “slight preference.” The characterization of the preference as “slight” reflects the fact that the extra territory that Victor would reach already received three or four radio stations. Second, the Commission considered program duplication and assessed a moderate comparative demerit against WABZ. Id. at 836. WABZ made no showing to justify its program duplication. The Commission, however, noted that although program duplication leads to a demerit for the incumbent, “it does not ... merit a preference to the applicant which proposes no duplication.” Id. at 836 n. 93.
Finally, the Commission considered WABZ’s past broadcast record. The Commission concluded that WABZ’s performance was superior and deserved a particularly strong comparative preference. Id. at 839. In reaching this result, the FCC noted that the station had devoted more than 20% of its broadcast time to non-entertainment programming. Additionally, numerous affidavits attested to WABZ-FM’s service to the local community. Id. at 841. The Commission concluded that “the station’s impressive reputation in the community, together with its emphasis on local programming, demonstrates a superb commitment to serving the community, which is far above a level of mediocre service which might minimally warrant renewal.” Id. at 842.
The FCC then integrated these factors into a comparison between WABZ and Victor. After concluding that structural factors such as diversification and integration have less significance than does a record of superior performance, the Commission found that “Victor’s advantages under diversification and best practicable service are insufficient to overcome its demerit for *760the reporting violations and WABZ’s distinct preference for past broadcast record as diminished by its moderate demerit for proposed program duplication.” Id. at 846. Because the Commission concluded that the public interest would best be served by WABZ’s continuing service, it granted the license renewal and denied Victor’s application for a new facility. Thereafter, Victor brought this appeal.
II. Analysis
A. The Court’s Bole
It is well-established that to determine whether to renew a radio station license the FCC must engage in a “comparative weighing of pro-renewal considerations against anti-renewal considerations.” See, e.g., Central Florida II, 683 F.2d at 507. The role of the court in reviewing an FCC decision reached after a comparative hearing is narrow. Central Florida Enterprises, Inc. v. FCC (Central Florida I), 598 F.2d 37 (D.C.Cir.1978) (per Wilkey, J.), cert. dismissed, 441 U.S. 957, 99 S.Ct. 2189, 60 L.Ed.2d 1062 (1979). In Miner v. FCC, 663 F.2d 152 (D.C.Cir.1980), this court explained its function when reviewing an FCC comparative hearing:
It is necessary only that we satisfy ourselves that the agency acted within the bounds of its statutory and constitutional authority, that it has followed its own procedural rules and regulations, that its findings of fact are reasonably articulated and based on substantial evidence in the record as a whole, that its conclusions do not deviate greatly from past pronouncements without sufficient explanation, and that in general it has engaged in reasoned decision-making. ... [I]t is not our judicial job to direct the Commission on how to run the comparative hearing process, beyond assuring that the administrative process respects the rights of the public and of competitors assured under the Communications Act ... and that it produces rational decisions based on factors generally known in advance, [footnotes omitted].
Id. at 155 (quoting Fidelity Television, Inc. v. FCC, 515 F.2d 684, 699-700 (D.C.Cir.), cert. denied, 423 U.S. 926, 96 S.Ct. 271, 46 L.Ed.2d 254 (1975)). In Central Florida I, 598 F.2d at 49, this court succinctly summarized the proper standard of review: “[T]he agency must engage in reasoned decision-making, articulating with some clarity the reasons for its decisions and the significance of facts particularly relied on.” We must proceed cautiously, however, to avoid substituting our judgment of how the public interest may be furthered for that of the agency.
B. The Commission’s Actions
In reviewing license applications, the FCC must consider, under the Federal Communications Act, “whether the public convenience, interest, or necessity will be served thereby.” 47 U.S.C. § 307(a) (1976). In the instant case, Victor argues that the FCC did not adequately assess the public interest because it failed to compare properly the benefits of its application against the benefits of WABZ’s continuing service. Victor’s principal contention is that, because of WABZ’s program duplication, the Commission should have discounted substantially WABZ’s record of superior past performance.
1. WABZ’s past performance and its duplication of programming
This case reflects the tension between the “renewal expectancy” and the policy against “automatic renewal.” The renewal expectancy is based on a concept that “the public itself will suffer if incumbent licensees cannot reasonably expect renewal when they have rendered superior service.” Citizens Communications Center v. FCC, 447 F.2d 1201, 1213 n. 35 (D.C.Cir.1971). For many years this court and the FCC have struggled over the weight to be accorded to a broadcaster’s renewal expectancy. See, e.g., Fidelity Television, Inc. v. FCC, 515 F.2d 684 (D.C.Cir.), cert. denied, 423 U.S. 926, 96 S.Ct. 271, 46 L.Ed.2d 254 (1975). We have concluded that, as a corollary to the rule that the FCC must engage in reasoned decision-making, the Commis*761sion may not create an irrebuttable presumption in favor of the incumbent. In a comparative hearing, automatic license renewal clearly is improper. See, e.g., Citizens Communications Center v. FCC, 447 F.2d at 1213-14.
The Commission, however, ' may consider the incumbent’s renewal expectancy as one factor in the balance. In Central Florida II, this court upheld an FCC policy which provided that “renewal expectancy is to be a factor weighed with all the other factors, and the better the past record, the greater the renewal expectancy ‘weight.’” Central Florida II, 683 F.2d at 506. The “renewal expectancy,” however, must be factored in for the benefit of the public and not for the benefit of the incumbent. Id. at 507. In the instant case, Victor would have us adopt a rule that, as a matter of law, duplication of programming prohibits a finding of superior performance and extinguishes renewal expectancies. It is established FCC policy that duplication of programming is a “wasteful and inefficient use of two frequencies.” Hearing, supra, 90 F.C.C.2d at 835 (citing AM-FM Program Duplication, 46 F.C.C.2d 277 (1974)). We cannot agree with Victor’s position, however, that duplication per se negates a renewal expectancy.
Before the Commission can evaluate the weight, if any, that should be given to the renewal expectancy, it must first consider the incumbent’s record of previous service. The better the previous service, the more weight the renewal expectancy receives. In Central Florida II, this court upheld the FCC’s treatment of the incumbent’s past service. There the Commission reviewed the licensee’s community reputation and the degree to which the programming was community-oriented. In the instant case, the Commission examined the same factors and concluded that WABZ’s past performance record was superior. WABZ’s performance record reflected an “impressive commitment to serve[ ] the needs of Albermarle (sic).” Hearing, supra, 90 F.C.C.2d at 840.
To evaluate WABZ’s past performance, the FCC examined the station’s entire record of service on the relevant frequency. The Commission did not separately analyze the benefits flowing from the duplicative programming and from the independent programming. Rather than address duplication in its initial analysis of past performance, the FCC chose to treat duplication elsewhere in its balancing. This approach was reasonable. In Central Florida II, we addressed a similar issue: whether the FCC had properly considered the incumbent’s prior violations of FCC rules. In language applicable to the instant case, we rejected this issue of timing:
We note that there is some confusion between the Commission’s pleadings and the Commission’s decision as to whether the main studio move violation was weighed against the renewal expectancy, or diminished the renewal expectancy to .begin with.... An analysis of this hy-pertechnical issue would be relevant only were we to concede that it matters when the various factors are weighed, but this sort of timing should not, must not, be critical.... The merit or lack of merit in the incumbent’s record ... and all the other factors are to be weighed, all at once, with an eye toward the public interest. Nothing is removed from the scales until the balance is struck....
Central Florida II, 683 F.2d at 506 n. 16 (emphasis added). As that case implied, so long as the final comparative evaluation is complete, we do not require that the Commission consider the factors in any predetermined order.
Moreover, even were we to require that the FCC consider the impact of duplication in its analysis of “past performance,” we would not conclude that the Commission’s approach in the instant case was unreasonable. Past performance must be evaluated with an “eye toward the public interest.” Central Florida II, 683 F.2d at 507 n. 16. That is, the FCC must evaluate past performance in relation to the listening audience, in terms of benefit to the public. Although some of the programming originated at the sister station, the evidence *762before the Commission indicates that the public perceived the benefit as flowing from WABZ’s broadcasts. After noting the numerous affidavits the administrative law judge received, the FCC concluded: “[WABZ’s regular listeners] . .. uniformly attested to WABZ-FM’s high quality of service to the community, commending it for its locally originated programming and its cooperation with local service organizations.” 90 F.C.C.2d at 842 (emphasis added). None of the affiants limited their praise to the independent programming. Because the public’s perception of a radio station’s performance is relevant to the Commission’s determination of the public interest, the Commission reasonably based its analysis of WABZ’s performance on the station’s entire broadcast record.
Upon review of the FCC’s order, we conclude that its finding of “superior performance” by WABZ is supported by substantial evidence and is otherwise reasonable. WABZ devoted more than 20% of its broadcast time to non-entertainment programming. This programming was broadcast at times convenient to the listening public. Additionally, both testimony before the administrative law judge and numerous affidavits praised WABZ’s service to the community. Not a single complaint was introduced into evidence. Because WABZ had a superior record of past performance to the community, it usually would be entitled to a heavily-weighted renewal expectancy. Central Florida II, 683 F.2d at 506.
There is nothing inherent in program duplication that eviscerates renewal expectancies. The policies that underlie a renewal expectancy were most clearly stated in Cowles Broadcasting, Inc., 86 F.C.C.2d 993, 1013 (1981), aff’d, Central Florida II, 683 F.2d at 507. The FCC here iterated the same policy concerns. Three “justifications” support a renewal expectancy:
(1) There is no guarantee that a challenger’s paper proposals will, in fact, match the incumbent’s proven performance. Thus, not only might replacing an incumbent be entirely gratuitous, but it might even deprive the community of an acceptable service and replace it with an inferi- or one. (2) Licensees should be encouraged through the likelihood of renewal to make investments to ensure quality service. Comparative renewal proceedings cannot function as a “competitive spur” to licensees if their dedication to the community is not rewarded. (3) Comparing incumbents and challengers as if they were both new applicants could lead to a haphazard restructuring of the broadcast industry especially considering the large number of group owners. We cannot readily conclude that such a restructuring could serve the public interest.
Central Florida II, 683 F.2d at 507 (footnote omitted) (quoting Cowles Broadcasting, Inc., 86 F.C.C.2d 993, 1013 (1981)). These “justifications” are intended as aids in the Commission’s decisional process. They do not replace the Commission’s primary directive to act in the public interest. Indeed, there may be circumstances where the public interest requires a renewal expectancy although all the justifications are not affirmatively shown. Simply, the three guidelines are not rigid tests to be met by each applicant. This is reflected in our Central Florida II decision where we did not require, for example, the incumbent to show that restructuring would occur or that investment in the station was of a certain level. We turn then to the guidelines and their applicability to this case.
The first justification for a renewal expectancy reflects a concern over the unknown quality of the challenger. Because of this uncertainty, a denial of the incumbent’s license renewal application may “deprive the community of an acceptable service and replace it with an inferior one.” Id. Victor presses the argument that denial of a duplicating station’s license will never deprive the community of an acceptable service because the meritorious programs will still be available on the originating station. The argument is unpersuasive, at least if the duplicating station provides some independent programming. If the station provides independent programming, *763the fact that the challenger proposes more hours of non-entertainment programming than the incumbent offers, does not automatically entitle the challenger to the incumbent’s license. The Commission could reasonably conclude that the public interest would not be served by replacing a known-quality service with a greater amount of possibly inferior service. Simply, quantity may not always be better than quality.**
Applying this rationale to the instant case, the loss of WABZ’s license would deprive the community of an acceptable service in that it would directly lead to the loss of approximately 31 minutes per day of' non-entertainment programming — programming that was “particularly responsive to the needs of Albemarle.” Hearing, supra, 90 F.C.C.2d at 840. On a per day basis, the amount may appear de minimus. However, 31 minutes per day translates into over 180 hours per year of known-quality programming. And, all of the 180 hours of service is provided at times convenient to the public. A conclusion that this is acceptable service is not unreasonable. On the other side of the equation, Victor offered only paper proposals. As with all proposals, uncertainty exists as to whether the promises of future behavior will be kept. In this case, those uncertainties were heightened by Victor’s numerous violations of FCC rules. The Commission thus acted properly when it decided to not heavily weigh Victor’s proposed services.
We are being urged by Victor and the dissent to hold that 180 hours of independent non-entertainment programming can never be considered an acceptable level of service. To so hold would vastly and improperly expand the court’s role. Indeed, this suggestion would place us in the business of superimposing quantitative parameters on the FCC’s discretion. Our review power surely does not allow us to engage in a de novo quantitative analysis. Such an analysis is firmly entrusted to the agency— that body with experience in the field and with full access to all relevant material. So long as the agency articulates its reasons and engages in reasoned decision-making, the court should not second-guess the FCC’s determination of an acceptable level of service.
The second rationale for a renewal expectancy is that it encourages investment in the station, which in turn ensures quality service. With duplicating stations, the financial investment that ensures quality service may be the duplicating station itself. That is, the duplicating station may be a source of revenues necessary to ensure the quality service of the originating station. Without the duplicating station’s funds, the originating station might not be able to remain on the air or, alternatively, might not be able to offer the same quality of programming. In the instant case, WABZ did not prove that its duplication was economically necessary. Thus, Victor argues that there should be no renewal expectancy". In so arguing, Victor misconstrues Cowles Broadcasting: continuing investment is one method to gauge the public interest; it is not a requirement in itself. It would be nonsensical to require that despite a high quality of service to the public, WABZ should lose its license because it did not invest some unknown amount of cash in the station. Moreover, if each applicant had to prove as a prerequisite to license renewal *764an additional investment in the station, the agency might find itself in the uncomfortable position of requiring unnecessary expenditures. We decline to impose this requirement.
The final justification for the renewal expectancy is the avoidance of haphazard industry restructuring. That is, the public interest is advanced if there is no rapid turnover of licensees. In the instant case, Victor points to no evidence that weakens this rationale. As in the FCC’s decision in Cowles Broadcasting, affirmed by this court in Central Florida II, the Commission made no finding that restructuring would or would not occur.
Program duplication does not inevitably foreclose a conclusion that the public interest would best be served by a renewal of the duplicating station’s license. In part, we reach this result because program duplication does not inherently undercut the Cowles Broadcasting guidelines. More importantly, however, we reach this result because we can envision the situation where the public interest is best served by the duplicating station’s remaining on the air, despite the applicant’s inability to affirmatively prove each guideline. Indeed, the case sub judice presents such a situation. Here, the strongest support for WABZ’s renewal expectancy is that policy which reflects a concern over replacing an acceptable level of service with possibly inferior service. That policy deserved special weight in this case because WABZ’s past performance was “superior” — as opposed to average or substantial — and because Victor’s proposal had to be examined against its previous inattention to FCC rules. The possibility clearly existed that the public would be harmed if WABZ lost its license. Accordingly, the Commission acted reasonably when it granted WABZ a renewal expectancy. Neither Victor nor the dissent have demonstrated why the financial investment or haphazard restructuring guidelines are relevant to a determination cf the public interest under the particular facts in this case.
2. The Comparative Analysis
Victor’s second argument is that the Commission improperly conducted the comparison between the contestants. In addition to superior performance, diversification and integration were the Commission’s primary focus. We briefly review the Commission’s treatment of these factors as a prelude to our examination of the FCC’s comparative analysis.
Rather than arbitrarily announcing a weight to be given to Victor’s “preference” for integration and diversification, the FCC carefully considered the record and clearly articulated its reasoning. See Hearing, 90 F.C.C.2d at 830-33. In each instance, the Commission first determined which party had the preference, and then considered the significance of any mitigating factors. Thus, for example, the Commission determined that the common ownership of Victor and other radio stations in the region — although not in the broadcast area — somewhat diluted Victor’s preference for diversification of media ownership. Id. at 831. Similarly, the Commission reasoned that a series of FCC rule violations committed by Victor’s proposed manager “demonstrated indifference to [FCC] reporting requirements” and thus diminished Victor’s “preference” for integration of ownership and control. Id. at 833. The Commission also examined the extent of the competitors’ broadcast range and concluded that Victor was to be preferred because it reached a larger geographic area. Id. at 834. At the same time, the FCC found that the extra territory Victor reached already was serviced adequately, and therefore reduced the weight of Victor’s range preference. On the other side of the balance, the Commission assessed a moderate comparative demerit against WABZ for its duplicative programming. The FCC found that WABZ had offered no justification for this inefficient use of the frequency. Moreover, the duplicative broadcasting “detracted] somewhat from [WABZ’s] past broadcast record.” Id. at 842. However, the Commission concluded that duplication did not preclude a conclusion that WABZ’s broadcast *765record had been meritorious. In part, the FCC based this result on its rules that allow 100% duplication in small communities such as Albemarle. AM Station Assignment Standards, 2 RAD.REG.2d (P & F) 1658, 1676 (1964).
The FCC then integrated all the above factors into an “overall comparative evaluation.” Victor, the challenger, received a “preference” for integration of ownership, a “preference” for diversification, a “slight credit” for comparative coverage, and a “moderate comparative demerit” for numerous reporting violations. In ^contrast, WABZ, the incumbent, received a “particularly strong comparative preference” arising from its renewal expectancy and “a moderate demerit” for program duplication.
To determine whether the FCC’s results were reasonable, we cannot merely tally the number of merits and demerits on each side. As we recognized, and approved, in Central Florida II, the FCC’s policy is to weigh the structural factors of diversification and integration less than it weighs a renewal expectancy. 683 F.2d at 509. Indeed, in that case we affirmed a license renewal after a comparative hearing had returned results similar to those in the case sub judice. The challenger had preferences for diversification and integration while the incumbent had a record of substantial performance. The incumbent, however, also had received a demerit for an illegal studio move. Id. Because diversification and integration are less weighty than past performance, the FCC granted the renewal expectancy. There, we accepted the FCC’s conclusion. Similarly, we here conclude that the FCC’s balancing was not unreasonable.
The Commission was explicit in its balancing and careful in its explanation of the offsetting merits. Throughout its analysis, the Commission correctly focused on the public interest and not on the interest of the incumbent. It may be that Victor would provide better service. But this is a judgment within the discretion of the Commission that we should not — and indeed cannot — second-guess. It was not unreasonable for the Commission to conclude that the public would be better served by a station which had a superior performance record, but which broadcast only a small amount of independent programming, than by a station which was only a paper proposal and which already had evinced an inattention to FCC regulations. The dissent would have us rigidly apply the guidelines established by the Commission, and ratified by this court, as if those guidelines were a three-part mold into which every renewal expectancy must fit. We have not so read the Commission policy about license renewals in the past and we have no authority to impose such a policy upon the Commission in this case. The touchstone allowing for a renewal expectancy must be a benefit to the public. That benefit can be found even if the route differs from the talismanie approach urged by the dissent.
III.- Conclusion
We find that the Commission carefully explained its analysis, and that its findings were supported by the record and were reasonable. We thus affirm the Commission.
Our holding, however, does not sound a retreat from our concern about “automatic license renewal.” Our review will continue to probe the Commission’s procedures to ensure that it does not revert to an irre-buttable presumption in favor of the incumbent. Whether the Commission uses the tripartite guidelines of Cowles Broadcasting or a different analysis, it must reasonably find that the public interest will be served by granting a renewal expectancy. Our decision today merely reflects our conclusion that, in this case, the FCC met the requirement for reasoned decision-making in the performance of its function.

Affirmed.

The dissent, infra, assumes that a station which stays on the air longer will always provide a better service to the public: “[T]he only program service lost would be the thirty-one minute average per day of original non-entertainment programming and the additional minutes of other unspecified entertainment transmissions. That might be considered a cheap price to pay for twenty-four hours of new and different programniing.... ” Dissenting Opinion, infra, at 775. Assuming arguendo that this court should become involved in any de novo balancing, the dissent’s assumption that more is always better is groundless. A few examples illustrate this: a challenger could propose more programming, but could schedule all its non-entertainment, public interest programming at times not convenient to the listening public; a challenger could propose more programming but could air shows with no interest to its audience; a challenger could propose more programming but then fall short of its proposal. In all instances, the public interest would be better served by the incumbent station that offers less.