Court Opinion

ID: 9445019
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:18:32.181822+00
Date Added: 2024-06-11T17:30:06.220920
License: Public Domain

FAHY, Circuit Judge.
The Enterprise Company, appellant, the Beaumont Broadcasting Corporation, intervenor, and KTRM, Inc., each filed with the Federal Communications Commission an application for a construction permit for a new commercial television station at Beaumont, Texas, to operate on Channel 6. As the applications were mutually exclusive, they were designated for hearing in a consolidated proceeding. After the hearing the Commission, disagreeing with the decision of its trial examiner, who had favored the award of the permit to KTRM, granted the application of Beaumont, August 4, 1954,1 and denied those of Enterprise and KTRM. The decision of the Commission accompanying its order contains an analysis of its reasons. We find no basis upon which to disagree with the decision as of the time it was rendered. However, Enterprise also specifies as error the failure of the Commission to reopen the record to consider evidence of events which occurred subsequent to the order of August 4.
In exposition of the significance of these events we refer first to the reason given by the Commission for granting the permit to Beaumont. The Commission states that the error of its examiner in deciding KTRM should have the permit stemmed principally from her failure to award a preference to Beaumont in regard to diversification and concentration of media for mass communication. The Commission said in part,
“* * * Beaumont Broadcasting merits a clear superiority in this im*710portant area of comparison. There being no other significant difference among the applicants, there are no factors offsetting Beaumont Broadcasting’s superiority in this regard * * *. Having concluded that this factor of diversification and concentration is the determinative feature in this proceeding, it is well to set forth some of the principles which have guided us in awarding a preference to Beaumont Broadcasting. * *
The Commission thereafter added,
“* * * Commission is unable to conclude that significant differences exist among the applicants in any area of comparison other than that of diversification and concentration of control of media for mass communication. There are, thus, no significant countervailing circumstances or other factors of inferiority or superiority to balance the clear superiority to which Beaumont Broadcasting is entitled in the latter area. * * *”
Of special pertinence, the Commission found that KTRM had an AM broadcast station in Beaumont; that W. P. Hobby, under options held by him, could acquire up to 35 per cent of KTRM’s stock and thus become its largest stockholder; that exercise of his option also would enable him to increase his representation on the board of directors to one less than a majority; and that Mr. Hobby was president, director and controlling stockholder of the Houston Post Company, which publishes the Houston Post and is the licensee of an AM, an FM, and a TV station, all of which have some overlap of signal into the area to be served by the proposed TV station in Beaumont. Upon reviewing the factual situation in further detail, the Commission concluded,
“* * * Aside from questions of overlap, the preference due Beaumont Broadcasting over KTRM in this matter of diversification and concentration of mass communication media is plainly evident. * * * Tipping the balance in favor of Beaumont Broadcasting, then, are Hobby’s newspaper and FM interests in Houston. When consideration is given to the relatively small area into which the KTRM and Hobby interests are concentrated and to the fact that overlap occurs between the existing KPRC-TV and the proposed KTRM-TV, any remote doubts as to the superiority due Beaumont Broadcasting are emphatically resolved. * * *”
Both KTRM and Enterprise timely petitioned for reconsideration. By order of December 3, 1954, the Commission stayed the effectiveness of its decision of August 4 and set oral argument for December 21, 1954, on the petitions for reconsideration.
In the meantime, December 17, 1954, the Commission was advised of an agreement among Beaumont, KTRM and W. P. Hobby. Enterprise thereupon, December 20, 1954, moved for postponement of oral argument to enable it and the Commission to consider the effects of this agreement. In support of this motion, Enterprise urged that if upon scrutiny the agreement proved material to the comparative qualifications of the applicants, it should have time to move for a reopening of the record. The motion to postpone was denied and argument was held December 21st. By petitions dated December 22, 1954, and January 7, 1955, Enterprise asked the Commission to reopen the record for incorporation of the agreement, and, upon its basis, to find such change in Beaumont’s character as to require denial or dismissal of its application and grant of that of Enterprise.
On January 28, 1955, the Commission issued a memorandum opinion and an order affirming its August 4 decision. Enterprise’s effort to have the record reopened was rejected, the Commission ruling that it was premature to consider the “executory” agreement. The Commission thereupon refused to modify its finding as to control of media for mass communication. The Commission also sup*711plied an additional reason for its order by concluding that Beaumont should be preferred to Enterprise in the area of programming and possible effectuation thereof, but it still regarded the media of mass communication factor as vital.
The relevancy of the new developments to the highly important question of diversification and concentration of control of media for mass communication is clear. In the words of the Commission the agreement provided,
“* * * that upon the happening of certain contingencies Beaumont Broadcasting will cause to be formed a new corporation to which the television permit granted to Beaumont would be transferred, and in which W. P. Hobby and Beaumont Broadcasting would have interests. One of these contingencies is the reaffirmance by the Commission of the Decision of August 4, 1954.”
KTRM was to receive $55,000 of expenses from Beaumont, the successful applicant, for withdrawal of its petition for reconsideration and related pleadings. W. P. Hobby, formerly, as already set forth, a stockholder of KTRM, was to make a loan to Beaumont to enable it to make the payment to KTRM, and was to receive an option to purchase a 32% per cent stock interest in the new corporation. Beaumont was to hold 62% per cent of the stock. The construction permit awarded Beaumont was to be assigned to the new corporation. Mr. Hobby was to give up his stock option in KTRM and assign his interest in KTRM to KTRM.
The Commission had found in its August 4 decision that the ownership interests of Mr. Hobby in KTRM tipped the balance against KTRM and in favor of Beaumont. Had his transition to a similar position in a new corporation which was to take over Beaumont’s interests occurred before August 4, the balance well might have been tipped from Beaumont to appellant Enterprise or to KTRM. The new arrangements, therefore, argue persuasively in favor of their consideration by the Commission in deciding between Enterprise and Beaumont, KTRM having dropped out as a consequence of the agreement. The ex-ecutory character of the agreement, in the sense that it was subject to Commission approval, would not have caused its consideration to be premature, for not only had a new factual situation come into being by reason of its execution but the agreement was to become operative as between the parties if the decision of August 4 in favor of Beaumont stood. Therefore, in determining whether that decision should stand it was timely to consider the agreement, if it should be considered at all in connection with the August 4 decision.
We are also told, however, that there must be an end to administrative proceedings so that the public interest will be served by the permittee going forward with the authorized construction. This view has some force in support of the failure of the Commission to reopen; but it is outweighed by other factors. The public interest also requires that the relative merits of competing applicants be weighed before the award goes to either. This is the special purpose of comparative proceedings. And in such proceedings the Commission has repeatedly stressed the importance of the facts regarding concentration or diversification of media for mass communication. Indeed, as the Commission said in its August 4 decision, this was the “determinative feature” of the present case. Furthermore, Mr. Hobby’s ownership interests on August 4 were determinative of this particular feature. A shift in those interests among the parties to the comparative proceedings was a shift in the foundations of the August 4 decision. Furthermore, the shift was the result of financial arrangements of such a nature and so timed as to require the Commission to scrutinize them to determine whether or not they constituted an abuse of the Commission’s processes. See Clarksburg Publishing Co. v. Federal Communications Commission, 96 U.S. App.D.C. 211, 225 F.2d 511. Although the contract was entered into about four *712months after August 4 and therefore could not be included as a ground for reconsideration in the petition required by section 4052 to be filed within 30 days, this raises no statutory or other legal bar to incorporation of the facts in the record. This is so because the August 4 decision was still open. It had not become final in the sense that it was no longer subject to change upon reconsideration. The Commission itself recognized this as late as December 3, 1954, when it stayed its August 4 order “in order to maintain the status quo, pending disposition by the Commission of the petition for reconsideration and rehearing filed in the subject petition.” Even if Enterprise could not as of right obtain reconsideration based on events which occurred after the record was originally closed or after its petition for reconsideration was filed, questions we lay aside, the Commission had power to grant such reconsideration. As we held in Albertson v. Federal Communications Commission, 87 U.S.App.D.C. 39, 41-42, 182 F.2d 397, 399-401, jurisdiction over an order remains with the Commission until the time for appeal has expired, and that time is tolled by an application for rehearing. See, also, Fleming v. Federal Communications Commission, 96 U.S. App.D.C. 223, 225 F.2d 523.
It is urged that the proceedings had lost a comparative character, and therefore that the Commission could consider the agreement only under section 310 (b),3 separate and apart from any further comparison of Beaumont's qualifications with those of Enterprise. This is another way of pressing the argument of finality. But, we repeat, the events in question, though they occurred subsequent to the August order and the petition for reconsideration, struck at the very basis which had been assigned by the Commission for its decision, and were disclosed at a time when the decision was still open for reconsideration. In these circumstances nothing in the language of sections 310(b) or 405 deprived the Commission of power to receive the new evidence and to reconsider or redecide the case on a comparative basis. If this is not done the advantages of the comparative hearing are lost and its purposes frustrated. Section 310(b), important as it is in the total scheme of the Act, is no substitute for the comparative procedures available to applicants for the same permit. That section covers the situation where a transfer, assignment or other disposition of a construction permit or station license or any right thereunder, or a transfer of control of any corporation holding any such permit or license, is desired. Application must be made to the Commission, which must find that the public interest, convenience and necessity will be served thereby. Obviously these provisions do not come into play so long as a comparison between competing applicants is or should be active; and we hold that unless such comparison is kept active to take into account the new agreement here involved the rights of competing applicants are denied. Enterprise, KTRM and Beaumont had applied for the same permit. The permit was granted to Beaumont primarily because of the Hobby interests in KTRM and because, on other grounds, Beaumont was found to be superior to Enterprise. While the proceedings were still before the Commission on petition for reconsideration the Hobby interests became the subject of an agreement with Beaumont for their transfer from KTRM to a new corporation in which Beaumont was to have 62y2 per cent of the stock and Hobby 32% per cent. Unless Enterprise is considered comparatively with Beaumont after Beaumont entered into this agreement the proceedings lose their comparative character. Though the agreement could not become effective without Commission approval, it had been made. The very making of it, and its terms, constituted important new facts bearing upon the relative merits of the two remaining *713applicants.4 ***Furthermore, unless Enterprise can be heard comparatively with respect to those new facts its status as an applicant is lost. It could then object or protest, not as a competitor of Beaumont for the permit itself, but only as “any party in interest” after a final award had been made to Beaumont.
The Commission must have latitude in bringing finality to its choice between applicants but the circumstances to which we have referred impel us to conclude that in the public interest the Commission, in the exercise of a sound discretion, should have reopened the record for reception of evidence of the new developments and to complete comparative consideration in light of those developments. This does not mean that the grant of the permit to Beaumont must now be set aside by us, or must be set aside by the Commission when it reopens the record and considers the new evidence. Whether or not the permit to Beaumont should be revoked, or should be awarded to Enterprise, is for the initial decision of the Commission after taking account of this evidence in reappraising the comparative qualifications of Beaumont and Enterprise. The Commission should also consider the changed financial status of these applicants due to the agreement, as well as the terms and character of the agreement as they bear upon the processes of the Commission and the public interest. See Clarksburg Publishing Co. v. Federal Communications Commission, supra.
Reversed and remanded for further proceedings consistent with this opinion.

. The decision of August 4, 1954, is sometimes referred to in the proceedings as having been rendered August 6, 1954. The decision and order are dated August 4th but were released August 6th.

. 66 Stat. 720 (1952), 47 U.S.C.A. § 405, amending 48 Stat. 1095 (1934).

. 66 Stat. 716 (1952), 47 U.S.C.A. § 310 (b), amending 48 Stat. 1086 (1934).

. We assume that KTRM is no longer an applicant.