A U.S. appeals court yesterday upheld one of the harshest rulings ever issued by the Federal Communications Commission--its decision to strip RKO General Inc. of its right to continue operating one of its most lucrative television stations.
In a unanimous decision, a three-judge panel here ruled that the FCC was correct in finding RKO unfit to hold a license to operate its Boston station, WNAC-TV.
However, in an admittedly narrow ruling of the FCC's action, the court directed the FCC to reconsider part of its 1980 decision in the 15-year-old case that also refused to renew RKO's broadcasting licenses for its New York and Los Angeles television stations.
The court ruled that the commission needed to provide further explanation in each of these two cases to justify the dramatic order the commission is seeking. The commission had grouped these licenses into one case and conditioned the outcome of the Los Angeles and New York licenses on the Boston decision.
In the Boston case, the court said "we believe the commission's answer is not open to doubt."
U.S. Circuit Judge Abner Mikva explained in his 46-page opinion for the court that the reason is "RKO displayed an egregious lack of candor" in the FCC proceeding in which RKO's Boston competitors challenged the company's qualifications to operate a television station.
The competitors--who later joined as New England Television Corp.--charged that RKO was unfit to hold a license because its parent company, General Tire & Rubber Co., engaged in extensive improper and illegal activities, including improper domestic political contributions, improper overseas payments and activities defrauding affiliate companies.
At the time, RKO denied the charges--even though most were confirmed later in a special report General Tire prepared in response to a complaint filed by the Securities and Exchange Commission. RKO also failed to notify the commission about the SEC investigation.
The record "irrefutably" shows that RKO "was playing the dodger to serious charges involving it and its parent company," the court decision said.
Noting that the "duty of candor is basic" to FCC proceedings, the court concluded that RKO's lack of candor is in itself enough to make a company unfit to hold a broadcasting license.
Under the court ruling, FCC lawyers say the commission now must determine if that lack of candor is also sufficient to deny the renewal of RKO's Los Angeles and New York television licenses. If the commission decides it is, RKO's 13 other radio and television stations could be in jeopardy, including WGMS-AM-FM, the Washington area's only commercial classical-music station.
Where renewal is not granted, RKO would be forced to give up its licenses without any financial recompense. In the Boston case, communications experts say RKO stands to lose at least $100 million, and possible twice as much. Another VHF, network-affiliated Boston station was sold a few months for $220 million.
RKO lawyers, however, indicated they intend to appeal the ruling.
FCC officials were very pleased with the ruling, which many communication experts had predicted would go against the commission.
Also pleased were RKO's Los Angeles and New York competitors. "We're confident the same factors that led to the disqualification of RKO in Boston will necessarily lead to the disqualification of RKO in Los Angeles," said Eugene F. Mullin, attorney for Fidelity Television Inc.
Consumer groups also were heartened by the decision, even though it was so narrow. "The court shows a willingness to take away a license when it is not justified," said Andrew Jay Schwartzman, executive director of Media Access Project. "It's a very strong reminder to broadcasters that a license is a privilege and not a right."