scribers. There was no CATV system in Greenfield, which was the third of WRLP's cities of assignment. The latest television factbook indicates that there are now 15 CATV systems in WRLP's contours. Eleven CATV systems carry its signal. Four CATV systems do not carry WRLP's signal. Of the four systems that do not carry WRLP, three cannot receive WRLP's signal and it is not available at their head ends and it is not available in the communities where these three CATV systems are in operation, because of terrain, distance, and other causes. One of these systems (Bennington) attempted to obtain microwave service and WRLP protested. The Bennington CATV system had to spend thousands of dollars to prove that WRLP's signals could not be received in Bennington. The Commission, upon receiving this proof, granted a microwave license to serve the Bennington CATV system. According to Mr. Putnam's testimony, WRLP serves about 100,000 homes. The total number of CATV subscribers amounts to about 25,000. Therefore, 67 percent of the CATV subscribers can receive WRLP's signal via CATV systems. There are about 8,000 CATV subscribers who cannot receive WRLP's signal, but it is not available either to other television viewers in the community or at the CATV system's antenna site, so Mr. Putnam cannot prove injury in any way. Mr. Putnam stated that Massachusetts communities can issue exclusive franchises to CATV systems. NCTA's legal department is of the opinion that Massachusetts communities can, as in almost all States, simply issue nonexclusive permits to do business to CATV systems or easements to use public ways, alleys, etc. There is no provision of law allowing local governments in Massachusetts to grant exclusive franchises to CATV systems. Members of NCTA advise this association that their permits are not exclusive. In fact, where the term "franchise" is used it is a misnomer for a simple permit to do business, because there is no provision of law in Massachusetts allowing exclusive franchises to be granted. Mr. Putnam testified to the effect that he tried repeatedly to obtain simultaneous nonduplication agreements from CATV operators in Massachusetts. Members of NCTA advise us that Mr. Putnam's proposals looked toward obtaining the privilege of WRLP's signal being the exclusive National Broadcasting Co. (NBC) outlet in his area. In other words, he objected to other NBC stations' signals being received by the CATV systems, regardless of duplication or nonduplication of WRLP's programs. That is quite different from a simultaneous nonduplication agreement. It was a bid by WRLP for a monopoly position with respect to NBC network service in WRLP's service area. (See exhibit C for an example of this.) The 10 CATV systems which were in operation when WRLP went on the air naturally felt some responsibility to their subscribers not to change their viewing patterns unless they so desired. One CATV system in Athol, Mass., entered into an agreement with Mr. Putnam's television station to receive its signal in preference to Westinghouse's channel 4 in Boston, Mass. The CATV subscribers signed a petition with hundreds of signatures protesting this change and asking that the Boston television station be placed back on the CATV system. The city council in Athol, Mass., also protested this change vigorously. With that experience in mind, other CATV operators were not likely to take kindly to Mr. Putnam's suggestion that his station be the exclusive NBC outlet in its area of operations. Mr. Putnam testified that he had tried unsuccessfully to obtain an agreement from two members of the NCTA board in WRLP's service area. There are two members of the NCTA board from New Hampshire. They are Mr. A. J. Malin, of Rochester, N.H., and Mr. Albert J. Ricci, of Keene, N.H. Mr. A. J. Malin informs us that he is not even acquainted with Mr. Putnam and that he does not even have a CATV system in WRLP's service area, hence there have been no communications of any kind about an agreement. Mr. Albert J. Ricci formerly owned the Keene (N.H.) CATV system and that system has carried WRLP since it went on the air. Mr. Ricci informs us that Mr. Putnam's proposals have always been to allow WRLP to be the exclusive NBC outlet in that area. He did not want other NBC-affiliated television stations to be received on the CATV system in Keene, regardless of duplication or nonduplication. If Mr. Putnam was referring to Athol, Mass., this community is not actually within the grade B service area of WRLP, the transmitter of which is only 15 miles from Athol. Athol has a CATV system and is theoretically within the city grade contour of WRLP-TV, but engineering estimates predict less than grade B service from WRLP-TV in Athol. (See exhibit B, hereto.) This disparity is caused by mountainous, forrested terrain between the transmitter location and Athol. Hence, Mr. Putnam's testimony is inaccurate in this respect, also. This example underscores the importance of NCTA's proposals contained in the Mackay bill (H.R. 14201), which would reduce to a minimum the amount of evidentiary hearings which the Commission would have to conduct. The exaggerated claims of broadcasters alleging adverse economic impact should have to be tested in the crucible of evidentiary hearings before the public is deprived of the privilege of obtaining a CATV reception service. If this committee listens to the suggestions of broadcasters that the rules should be uniform in the top 100 television markets and those below the top 100 such markets, the uniformity should follow the rules applicable to the markets below the top 100, because only in this way can the broadcasters allegations be tested through cross-examination and an examination of the complaining television stations' books in order to establish the truth or inaccuracy of the broadcasters' claims. This would be much more logical than to force a CATV operator in the grade A of a television station in the top 100 television markets to attempt to carry an almost impossible burden of proof; namely, to establish that he will not adversely affect the develop→ ment or growth of a still unborn and unapplied-for UHF television station However, NCTA's proposals contained in the Mackay bill (H.R. 14201) would provide for carriage and the simultaneous nonduplication of all truly local television stations, and would eliminate the necessity for evidentiary hearings. This is a simple approach which is much preferable from an administrative and efficiency viewpoint to inviting a large number of evidentiary hearings and it combines the advantage of a uniform procedure which would be applicable in all television markets. Mr. Putnam did not tell this committee that the WRLP audience is sold as a bonus along with that of its mother television station, WWLP, also owned by Mr. Putnam. When Mr. Putnam first made these charges in 1964 before the FCC, WWLP revenues had since 1957 exceeded the $1 million mark. These revenues have constantly increased since then. Only seven other UHF stations in this country had amassed revenues in excess of $1 million at the time he made his charges. The combined balance sheet for WWLP and WRLP show impressive profits for UHF stations (see exhibit B, hereto). The trade press recently quoted Mr. Putnam as claiming still much greater profits from his UHF operations. This committee should ask him for these figures. These figures would dispel the fear that CATV systems are having an adverse economic impact on UHF stations and would corroborate NCTA's claim that CATV systems actually increase the viewing audience of UHF television stations and place their signals on a parity with the much stronger VHF signals. In its publicity to sell advertising, WRLP tells a story which is very different from the one it tells this committee. In a brochure which it distributes to the trade and potential advertisers, it states: "Community antenna systems, plus VHF and UHF translators, extend the WRLP signal to 15,000 TV homes beyond the area measured by the rating surveys for off-air reception on channel 32. This is bonus coverage difficult to include in the rating surveys and extending well beyond normal signal patterns of WRLP. "Viewers in southern Vermont and New Hampshire and northern Massachusetts watch WRLP on channels 2, 4, 6, 9, 10, 32, 74, and 81. This helps to explain the difficulty in recording people's viewing habits by channel number." The brochure mentions 15,000 TV homes from CATV and translators. Yet only 6,975 are outside indicated coverage area-7,985 are inside. Total of both is 14,960. But the brochure states the 15,000 homes are "beyond the area measured by the rating surveys for off-air reception on channel 32 ***""* * * extending well beyond normal signal patterns of WRLP." This can be construed as agreement that the 6,975 CATV and translator TV homes within the indicated contour are outside normal off-the-air reception. None are translator TV homes within the contour. (See exhibit B, hereto, and exhibit 8 attached to exhibit B.) EXHIBIT A NETWORK STUDY-TELEVISION SECOND INTERIM REPORT BY THE OFFICE OF The first radio conference convoked in 1922 to consider the need for Federal regulation of radio and the form it should take, was presided over and guided in its deliberations by President Hoover, then Secretary of Commerce. (There were subsequent conferences in 1923, 1924, and 1925.) In 1922, the conference resolved that radio was, in nature, a "public utility" and should be regulated by the Federal Government as such (p. 96, post). In 1924, President Hoover, who was the prime mover in providing the conceptual basis for Federal regulation informed Congress (see p. 78, post): "Radio communication is not to be considered as merely a business carried on for private gain, for private advertisement, or for entertainment of the curious. It is a public concern impressed with the public trust and to be considered primarily from the standpoint of public interest to the same extent and upon the basis of the same general principles as our other public utilities." Experience gained in his somewhat futile attempts to regulate radio under inadequate powers conferred by the Radio Act of 1912 had convinced President Hoover that broadcast channels were in the nature of public property and that their use must be limited to selected licensees of the Government who would be required to operate them in the "public interest"-among other things to provide fair opportunity of access to broadcasting facilities under a general standard imposed by Congress. They should be "regulated so as to give the maximum service." Limitation on the number of stations, however, combined with the rapidly increasing commercial utility of radio, caused President Hoover to fear both "monopoly" and the necessary "entry into the dangerous field of censorship," which a licensing system involved. The "quality of the program" service should, according to Hoover, be one of the principal criteria in determining who would be permitted to broadcast. Hoover warned that in this process: "We cannot allow any single person or group to place themselves in a position where they can censor the material which shall be broadcasted to the public, nor do I believe that the Government should ever be placed in the position of censoring this material. "It seems to me therefore that the fundamental thought of any radio legislation should be to retain possession of the ether in the public and to provide rules for the orderly conduct of this great system of public communication by temporary permits to use the ether. It should be kept open to free and full individual development, and we should assure that there can be no monopoly over the distribution of material." The notion that radio should be regulated in the same form as "other publie utilities' receded before the increased use of radio as an advertising medium and the competitive conditions provided thereby. In 1925 the fourth national radio conference took cognizance of the evolution of radio and resolved that: "***benefit to the listener must be the basis for broadcasting service (but recognition of that principle) does not bring the broadcaster into the category of recognized public utilities *** and such matters as regulation of rates and other similar features of supervision exercised by governmental bodies over public utilities generally, should still *** remain under the exclusive control of station owners." Congress in the Radio Act of 1927 and the Communications Act of 1934 did not specifically exempt broadcasting from "public utility" status as it did from status as a "common carrier." However, it did not provide for public utility type regulation with regard to rates and other similar business activities of broadcasters. Indeed it accepted the concepts of competition and public service as the principal tenets of regulation. The rapidly developing commercial competition for advertising revenues among stations was considered adequate to regulate the business aspects of broadcasting. The maintenance of "competition" in broadcasting at all levels has remained a cardinal and essential feature of the regulatory pattern. Its principal purpose is to avoid monopoly of broadcast facilities or overconcentration of control over broadcast matter. As President Hoover had said the "dangerous field of censorship" could not be avoided. But, under the Radio Act, censorship and control of programs was intended to be widely dispersed among "local monopolies" and limited by the social responsibility imposed on licensees to seek out and serve the needs and interests of their communities for broadcast service. Under this system, no central group would be "placed in a position" to "censor the material-broadcasted to the public." That carefully devised pattern of "safety" in numbers and geography has been largely nullified, in practice, through the growth and development of networks— first in radio and then in television. Despite the adoption of a regulatory pattern based on competition, the analogy to "public utilities" has continued. In its first comprehensive statement of the element of the "public interest" the Radio Commission stated that the: "(Correct analogy' was with those public utilities) engaged in purveying commodities to the general public, such as, for example, heat, water, light and power companies, whose duties are to consumers (just as is the case with these utilities) a broadcaster uses a franchise from the Federal Government to bring its commodity over the channel through the ether to the home." A minority (two Commissioners) opposed the Chain Broadcasting Regulations in 1941 partly on the ground that because of the responsibility of broadcasters to provide a "balanced" program service and "inherent" natural limitations: "There is no open market condition in the business of broadcasting as in other businesses. Nature has determined that. To attempt to circumvent these basic economic laws is fraught with peril to an industry which has hitherto achieved a marked degree of success." (Emphasis supplied.) (See p. 133 post.) Indeed as late as 1956, Senator Bricker, former chairman and than a ranking member of the Committee on Interstate and Foreign Commerce of the Senate, in describing the "very nature of the broadcasting business" said: "The individual station is subject to license. It is controlled and regulated by the rules of the Commission; it is responsible to the public interest; it is, in fact, a public utility." (For further detail on the legislative history of the Radio Act, see p. 59, post.) FURTHER EXCERPTS FROM FCC DOCKET No. 12782 (VII) EFFECT ON ALTERNATE SOURCES OF PROGRAMS It is indicated that alternate sources of first-run programs appropriate for nighttime exhibition have been drastically reduced, if they are not "virtually nonexistent," at present. At most, they appear to constitute a mere pittance of the maximum of diverse and antagonistic" program sources which a truly competitive national television industry might sustain and support 59 (pp. 755–771). The restrictive control exercised by network managers over network programs is both economic and creative. Also they control the production and supplyand to a considerable degree the distribution of programs in the nonnetwork or syndication market. New product for that market is now composed almost exclusively of "off network" filmed program series, that is, programs which, in previous seasons, were designed and produced either by network managers or under their direct supervision and control and were exhibited in network schedules. Such programs, usually film series, after their network "run," frequently become "available for domestic syndication" and are "sold" on a station-to-station basis.60 The net result of these practices on the public interest in "the widest practicable variety in the choice of programs available for broadcasting" 61 is servere, indeed. No matter which way he may turn, the station licensee must choose most of the programs from which he constructs his evening schedule from among stocks of "new" and "used" programs which are almost exclusively from the same ultimate source the managers of the three television networks.62 Even though an individual licensee diligently seeks to program in accordance with the public interest in his community as he has discovered it, the "lions share" of his schedule--both network and nonnetwork-must, of necessity, be composed of programs designed and produced either currently or in the past seasons by or under the control of the network managers. Thus, the independent judgment of the station licensee is immobilized and he is virtually reduced to choice between "tweedledum and tweedledee." The Commission has adopted as a part of the public interest in program service, the test laid down by the Supreme Court of the United States that the first amendment to the Constitution of the United States requires that the content of our "free press' be drawn from as many "diverse and antagonistic sources" as possible. See pp. 1157-1158, post. Each of the network companies has a syndication "arm" and taken together they distribute a large part of the syndicated fare available to the public. Almost invariably in those cases where the program is distributed in syndication by an independent company, the network managers retain a share-often 50 percent-in the profit of such syndication. 61 See Learned Hand, J. pp. 1148-1150, post. 2 Not many station licensees protest. Apparently they find it economically "convenient" to accept the 'dictates" of the managers of the networks which they collectively compose. (VIII) OVERALL EFFECT ON PUBLIC INTEREST IN COMPETITION This situation is almost the direct antithesis of the anticipated continuing "condition of competition" relied upon by Congress as the principal safeguard of the public interest in broadcast service and upon which our present system of broadcast regulation was constructed. As we have said, President Hoover had warned Congress and the industry in 1924 63 that the system of broadcast regulation, based on licensing of "local monopolies" which he had then proposed would, unless carefully guarded by the Government against noncompetitive practices, be peculiarly susceptible of monopolization; that constant vigilance would be required to protect the public interest against the "naked commercial selfishness" of those who might seek to gain control either of broadcast facilities or of the content of broadcast service, or both. He could not, of course nor could Congress-have foreseen all the varied forms in which such monopolization or overcentralization might take. However, Congress, first in the Radio Aet of 1927 and then in the Communications Act of 1934, aware of these dangers, provided a sufficiently elastic authority to enable the Commission to strike down each new set of restraints on competition as they arose and thus, continuously to maintain and encourage "conditions of competition" in broadcasting at all levels, adequate to safeguard and protect the public interest (pp. 772-782, post.). (c) Duties and responsibilities of broadcasters and network managers as "free press. 71 64 All television program service-whether it be drama and other entertainment or news and public affairs-is afforded the protection of the first amendment to the Constitution of the United States as a part of the product of a "free press." But to acquire the characteristics of our "free press" and to qualify for the high privilege such constitutional protection affords, obliges the assupmtion, by broadcasters, of appropriately high duties and responsibilities. As Judge Justin Miller said: 65 *** the broadcaster, being *** vested with a monoply by virtue of his license, is charged with a higher duty than to program so close to the line as to require excuse or rationalization *** the dominant characteristics (of the broadcasters vocation) concern the service rendered to the pubilc in the vital field of education, information, and instruction in many subjects ranging over the entire field of American culture * * * This statement echoes similar statements by President Hoover during the formative period of radio regulation. Speaking in 1924 of the "wonderful (technical and commercial) development" of radio he said (Post, p. 115): *** in our self congratulation let us not forget that the value of this great system does not lie primarily in its extent or even in its efficiency. Its worth depends on the use that is made of it. It is not the ability to transmit but the character of what is transmitted that really counts. *** For the first time in history we have available to us the ability to communicate simultaneously with millions of our fellow men, to furnish entertainment, instruction, widening vision of national problems, and national events. An obligation rests on us to see that it is devoted to real service and to develop material that is transmitted into that which is really worthwhile. For it is only by this that the mission of this latest blessing of science to humanity may be rightfully fulfilled." 66 It is axiomatic under our system of free competitive enterprise that, unless regulated by the government in the public interest, a commercial monopolyespecially one purveying goods or services useful or necessary to large numbers of consumers is inconsistent with and, mayhap, highly damaging to our basic 63 See p. 11, note 48, ante. 64 For further discussion see pp. 106-109, post. 6 Post. p. 109. 66 President Hoover's concern as to the use to be made of the vast reach of radio suggests the immense importance of mass communication in a large democracy. The need for adequate means of free communications to serve the purposes of democracy has been a guide post in the progress of Western society. In Ancient Greece, the "cradle" of democracy and Western culture, political philosophers assumed that a society based on free democratic institutions was impractical except in a city-state small enough to enable its inhabitants to assemble in a single agora or a single theater where they could hear the voice of the orator or actor. Ever since, free institutions have been largely dependent for their development on consonant developments in free mass communications. In our consideration of the role of television in our society, President Hoover's thought that it is the "character of what is transmitted that really counts" seems particularly apposite when we realize that television is rapidly acquiring the technical capability to supply both agora and theater for the "democracy and great society of the world." |