The Federal Communications Commission decision Thursday to strip RKO General Inc. of television licenses in three major markets sent shock waves through the broadcast industry yesterday, raising the possibility of similar decisions soon involving other firms and millions of dollars in brodcast licenses and merges.
Cautious broadcasting industry officials said that while they doubted that their own licenses could face similar threats, some industry representatives called the decision "shocking" and "abominable."
But the decision, which the FCC based on a record of illegal payments here and abroad by RKO's parent company, General Tire and Rubber Co., suggests a tough-minded approach to license renewals by the FCC and a new emphasis on evaluating questions beyond broadcast policies.
The FCC, in an unprecedented action, striped RKO of its licenses to operate television stations in Boston, Los Angeles and New York.
In addition, RKO has 13 other broadcast properties and the commission asked for public comment on what steps it should take in connection with those stations.
This year alone, three RKO holdings, AM stations in San Francisco and Los Angeles, and an FM station in Los Angeles are scheduled to come up for renewal.
Broadcasting observers strongly suggested yesterday that it would be difficult for the FCC to approve the renewals of those outlets after condeming the General Tire practices in the cases of the three television stations.
But the case also focuses renewed attention on other similar cases. For example, the proposed merger of General Electric Co. and Cox Broadcasting Corp., involving 11 Cox outlets worth at least $400 million could be affected by the RKO decision. If approved by the FCC, the GE-Cox deal would be the largest merges in broadcast history.
A coalition of citizen groups has sought to deny the station transfers in light of GE corporate practices, including a record of antitrust violations, pollution and labor law violations and questions about corporate payments raised by GE disclosure four years ago.
"The issue in the GE case is also corporate character," said Samuel Simon, executive director of the National Citizens Committee for Broadcasting, one of the merger's challengers. "It's encouraging to find out that when the commission finds this kindof activity, it is willing to enforce the law."
In addition to the GE-Cox case, the commission is also considering a case involving a subsidiary of Cowles Communication Corp., whose license for WESH-TV in Daytona Beach, Fla., is now under review in light of Cowles settling a mail fraud case with the government.
The FCC is evaluating a purchase by Westinghouse Electric Corp. of KODA-FM in Houston in light of disclosures by the company that they are under investigation for alleged price fixing and that some company officials made questionable payments.
RKO's only Washington property, WGMS AM and FM is not scheduled for license renewal until late next year. The station's manager, Jerry Lyman, said all he knew of the RKO case was what he read in the newspapers.