United Broadcasting Co. won a decisive battle last week when federal regulators approved a $1.75 million settlement in which two other companies dropped a lawsuit challenging a renewal of the company's WDJY-FM radio station license.

The station is number one among Washington-area teen-age listeners and is among the top 10 overall in Arbitron's fall 1985 ratings.

The Bethesda broadcasting company owns nine radio stations, including WYST-AM and FM in Baltimore and WINX-AM in Rockville.

The FCC approved United's plans to pay nearly $1.3 million to District Broadcasting Co. and $475,000 to Hispanic Broadcasting Corp. -- minority-owned broadcasting companies -- for the withdrawal of a lawsuit filed at the U.S. Court of Appeals that contested prior FCC approval of United's license renewal.

The two contenders also promise not to seek the license before Oct. 1, 1995.

United had no comment on the settlement.

Attorney Thomas Schattenfield of the Washington law firm Arent, Fox, Kintner, Plotkin & Kahn, who has represented United for a decade, said, "When it's final it will be the first time in the memory of man that they will be able to operate radio stations and focus on them without having to fight off the challenges that have been going on."

The challenging of radio licenses at the FCC is not unusual, and partnerships or settlements between contenders are common.

Broadcast licenses, which come up for renewal every five to seven years, can be challenged as long as contenders certify they are not doing so for material gain, that they are financially qualified to run a station and that they have not misrepresented information to the FCC. Challenges are made on the basis of quality of programming, business conduct and other considerations.

United Broadcasting's former owner, millionaire radio magnate Richard Eaton, who died five years ago, had battled contenders for radio licenses across the nation for more than a decade. Eaton, who started in radio broadcasting in Washington in 1947, was a white broadcaster who pioneered black radio programming.

But Eaton ran into problems in the late 1960s, when another broadcasting group alleged that WOOK-AM, another Eaton station in the District, was engaged in an illegal numbers game "in the guise of religion."

In 1975, the FCC denied a renewal of a license of WOOK-AM after finding "various ministers had used WOOK-AM from 1966 to mid-1969 to broadcast lottery information by means of scriptural citations that were in reality thinly disguised 'numbers game' tips . . . in return for monetary donations," which violated state and federal laws.

United also lost a Miami radio license on grounds of fradulent billing for advertising.

District Broadcasting Co. and Hispanic Broadcasting Corp. contested the license of WDJY, formerly WOOK-FM, in 1978 on allegations of fradulent billings and misconduct at other stations owned by the company.

Morton Berfield of Cohen & Berfield, a Washington law firm representing District Broadcasting, said, "Essentially, we were arguing that our people could operate the station more in the public interest than United had. The commission had denied the license for WOOK-AM. . . . We were arguing the allegations that arose in that case."

In 1983, the FCC found the company was entitled to a license renewal on the basis of a good past programming record, reversing an FCC review board decision that District Broadcasting was better fit to run the station. District Broadcasting and Hispanic Broadcasting Corp. then filed suit at the U.S. Court of Appeals for the D.C. Circuit.

Meanwhile, United's radio licenses across the country were held in deferred status by the FCC during the 1970s, while competing applicants came in. United settled one way or another with all the contenders.

One source close to the company said that as soon as infractions at one station were discovered, it set off a chain reaction whereby other station licenses were contested.

"Everybody speeds on the Beltway. Some get caught and are made an example of," he said. "It was easy to make an example of Eaton; it was easy to say, 'Look, he lost one license; he must be a bad guy.' . . . It's unfortunate because in Eaton's case it wasn't true."

Andrew Schwartzman, executive director of the Media Access Project, a D.C. consumer group, faulted the FCC for favoring license holders in license renewal cases. The FCC "has made it difficult for challengers and forced them to give up," he said.

The practice of settling with contenders for new broadcast licenses is different, he said, because it has led to greater minority participation in the broadcasting industry.