which is contrary to the public interest before the Commission should consider it. Mr. FLYNT. Then I will rephrase the question that our committee chairman just asked. Do you feel that you as a Commissioner have, under existing law, full power and authority to deny or withdraw a license from a subsidiary in a case where the parent company is disqualified for the license which the subsidiary seeks to get or to have renewed? Mr. DOERFER. Yes, but there is this qualification: let's take an illustration. Let's assume that a company is convicted of an antitrust violation, but the court, having the power to revoke the license, does not revoke the license. It is my understanding that Congress in 1952 indicated that it did not want the FCC to revoke that license on the theory of the injustice of double jeopardy. With respect to a parent company, certainly the Commission may have the authority, but again if in the divestiture proceeding the court did not see fit to divest the subsidiary and correct an abuse, I cannot say that the Commission would be warranted in inflicting the extreme sanctions of revocation. After all, there is a relationship, Congressman Flynt, between a sanction which the FCC administers and which a court does. A $5,000 fine or a $2 million fine may give one pause for thought. Mr. FLYNT. Let me ask you this: If John Doe is the sole stockholder of A company, which is a licensee, and if he is convicted, you would certainly then go behind the corporate identity and associate the sole individual with the corporation that owns it? Mr. DOERFER. The answer to that is an unqualified yes. Mr. FLYNT. All right. Then would you permit a licensee subsidiary company to hide behind the cloak of corporate separation and treat that company differently than you would treat A company, which was owned by an individual other than by a parent company? Mr. DOERFER. Absolutely not; but I wanted to add that whether or not there would be an absolute license revocation depends upon the facts of the condition and the circumstances. Mr. FLYNT. Let me at this point insert in the record by reading section 311 of the Communications Act, which reads: The Commission is hereby directed to refuse a station license and/or the permit hereinafter required for the construction of a station to any person (or to any person directly or indirectly controlled by such person) whose license has been revoked by a court under section 313. Mr. DOERFER. Yes. I would like to underscore the last line: whose license has been revoked by a court * * We just wouldn't let him back in. I assume that is what that means. They might show change of circumstances or something. I wouldn't know. But literally it is the court that does the revoking, and then we refuse reentry. Mr. FLYNT. Thank you, Mr. Chairman. The CHAIRMAN. In other words, the act requires the Commission to refuse such station license when the court has revoked such license, but if the court convicts someone in an antitrust proceeding, as an example, and does not revoke the license, then you are not required to take such action, but you may if you feel it necessary. Is that true? Mr. DOERFER. Yes; we may if we found it necessary. Of course, Mr. Chairman, I am speaking for myself, and my reaction is, if it were within the power of the court to revoke the license and if it had it under consideration and did not do so, I think it would be rather presumptuous on the part of the FCC to inflict a further penalty. I don't know what short of revocation can do. It may be, as a work study committee has indicated, that Congress should permit the Commission to levy or assess some fines. I am not passing judgment on that at this time because it is under consideration, but it is shocking to me that no offense may be punishable with a $5,000 or $10,000 fine and here we are disenfranchising a lot of people of a property which may be worth millions. There is a gap there which I think the Congress should consider, and not necessarily the Commission. The CHAIRMAN. We will get to that later. Mr. DOERFER. There is attached a prohibition against-and I forget the wording-unusual punishment or fines. It is part of our tradition. It is not as easy from the inside as it is from the outside. Mr. FLYNT. However, let me add this right there in response to what you just said, Mr. Doerfer, that a license issued by the Federal Communications Commission is, according to my way of thinking, a privilege rather than a right. Mr. DOERFER. Indeed it is, and if the violation was directly a flaunting of a public trust, that is one thing. But where an organization finds that for 25 years everybody thought it was perfectly legal, and then, by a five-to-four decision in the Supreme Court of the United States, wakes up one morning and finds out that it is illegal, it is quite a stretch of the imagination to say that that is conduct contrary to the public interest, that it requires not only divestiture but governmental action by an agency or bureau that had nothing to do with the prosecution to impose its own concept of what it hoped perhaps the Court should have done. The CHAIRMAN. The committee will adjourn until tomorrow morning at 10 o'clock, in the same room, at which time Mr. Radigan will be the first witness in the presentation of representative comparative cases and the application of the comparative criteria. The committee is adjourned. Thank you very much. (Whereupon, at 12:30 p.m., the committee adjourned until 10 a.m., Thursday, May 15, 1958.) COMMISSIONS AND AGENCIES -4. S. Congress. House. HEARINGS BEFORE A SUBCOMMITTEE OF THE ✓ COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE. HOUSE OF REPRESENTATIVES EIGHTY-FIFTH CONGRESS SECOND SESSION MAY 15, 20, 21, 22, 26, 28, AND JUNE 2, 1958 PART 8 Printed for the use of the Committee on Interstate and Foreign Commerce |