A Federal Communications Commission administrative law judge Tuesday ruled that RKO General Inc. is unfit to hold licenses for 14 radio and television stations around the country because of offenses that include lying to the FCC, overcharging advertisers and falsifying records.
''No case ever before decided by this commission presents dishonesty comparable to RKO's,'' Judge Edward J. Kuhlmann wrote in a 75-page decision that concluded RKO was disqualified from holding broadcast licenses on the ''character issue'' of the Federal Communications Act.
Officials of RKO's parent company, GenCorp Inc. of Akron, Ohio, said they disagreed strongly with the decision and would appeal to the entire commission, which must decide whether to enforce the judge's decision.
Judge Kuhlman's decision noted: ''There is not a single case of fraudulent billing practices investigated and reviewed by this commission (that) exhibits as many practices affecting as many advertisers over as many years.''
The judge's findings, which covered wrongdoing between 1972 and 1985, said senior officials of the company destroyed copies of an internal audit report to prevent the FCC from discovering it and then pressured Internal Revenue Service officials who knew of the report not to mention it. The ruling also said RKO's former chief controller, John Fitzgerald, lied during FCC investigations about the destruction of materials.
The FCC official found that on at least 30 occasions, RKO knowingly submitted false annual financial reports to the FCC and, even after being informed of its wrongdoing, repeated the violations.concluded that under the circumstances, RKO could not be trusted in future dealings with the FCC and called for the unprecedented step of lifting all its broadcasting licenses.
''Probably never before or again will we have a case that involves this many stations or this much deceit,'' said a spokeswoman for the FCC. ''The implications for the industry are enormous'' if the commission upholds the judge's decision, she said.
Kuhlmann found that RKO altered audience rating reports that were provided by an outside service in order to overcharge advertisers. The RKO stations also charged advertisers for prime time commercials but broadcast them at other hours when the audiences were smaller and charged for advertising on more stations than actually carried the commercials. In 1984, near the close of the initial FCC hearings, RKO informed the commission that its radio networks had engaged in fraudulent billing practices and said that it would return more than $13 million in overcharges to advertisers and affiliates.
Industry analysts called the decision a turning point in a complex, 22-year legal battle between RKO and the commission and a clear signal to broadcast licensees that the character issue is still alive, despite Reagan administration moves to deregulate broadcasting.
''This is a reminder that until such time as Congress repeals the Communications Act, like it or not, the FCC has to regulate broadcasters as trustees of the public airwaves,'' said Andrew Schwartzman, executive director of the Media Access Project, a public-interest law firm representing citizens groups. ''Judge Kuhlmann has laid out a rather clear pattern of abuse, which no right-thinking person could reconcile with trusteeship.''
In a worst-case scenario, RKO could be forced to turn over its licenses to the FCC and would not be allowed to sell the stations, a move that industry sources said could mean a loss of about $1 billion in assets to the company. However, the FCC has rarely used its power to pull broadcasting licenses, and FCC watchers expect the commission to allow the stations to be sold.
As each of RKO's broadcast licenses has come up for renewal, other applicants have challenged the licenses. The FCC ruled in September that RKO could try to arrange settlements with competitors for its remaining licenses, a situation in which each contender for the license would get a portion of the sale price.
RKO's problems began in 1965, when Fidelity Television Inc. challenged RKO's application for KHJ-TV in Los Angeles. Although the FCC renewed the license for the Los Angeles station, other challenges followed. In 1980 the commission stripped RKO of its license to operate Boston station WNAC-TV because of the involvement of GenCorp (then General Tire and Rubber Co.) officials in an overseas bribery scandal, improper advertising deals and a lack of candor in disclosing financial information.
After the 1980 decision, the FCC ruled that RKO's fitness to hold licenses for its other stations would be decided in a rehearing of the Los Angeles case.
''In a case that's been going on for 22 years, there are going to be adverse decisions along the way,'' said Timothy Dyk, of Washington's Wilmer, Cutler and Pickering and RKO's chief attorney in the case. ''We hope the FCC will reverse it.''
In addition to the Los Angeles television station and Washington radio station WGMS-AM-FM, RKO properties include KHJ-AM and KRTH-FM, Los Angeles; WHBQ-TV and WHBQ-AM, Memphis; WOR-AM and WRKS-FM, New York; WRKO-AM and WROR-FM, Boston, KFRC-AM, San Francisco; WAXY-FM, Fort Lauderdale, and WFYR-FM, Chicago.