The bill is designed to prevent such practices as rigged and deceptive television and radio programs, especially quiz shows. In December 1959, the Attorney General surveyed the recent disclosures of such practices in his report to the President on "Deceptive Practices in Broadcasting Media." (See H. Rept. 1258, 86th Cong., pp. 61-90.) In that report the Attorney General concluded that by promulgating additional rules and regulations under their affirmative statutory duty to protect the public interest in broadcasting and advertising, the Federal Communications Commission and the Federal Trade Commission could take effective action against such practices. In submitting the report the Attorney General stated that "it seems premature to recommend any substantial legislative changes until the agencies and the industry have had an adequate opportunity to show the effectiveness of present and recommended action in dealing with the problems under existing authority" (H. Rept. 1258, p. 63). If, however, the Congress deems it advisable to make the proscribed activities a crime, it is believed that there are certain features of the instant bill which should receive further consideration. It is believed that the bill is too broad in its coverage and might even operate as a threat to freedom of speech in areas presumably not contemplated by the measure. For example, a political speech containing incorrect facts might, under this bill, be alleged to be a broadcast of matter "with intent to deceive the listening or viewing public." Also, in the field of dramatic expression, there are many instances of legitimate "dramatic license" which may deceive portions of the audience. If false broadcasts are to be dealt with by legislation, it would seem desirable to enact a bill more narrowly drafted to cover the specific abuses recently disclosed. It is noted that, for the purposes of the measure, advertising matter which is broadcast in connection with a "program" shall be held to be part of such program. However, the term "program" is not defined and it is not clear whether it would include or is intended to include "spot" advertising announcements not a part of a larger entertainment or informational program. The Bureau of the Budget has advised that there is no objection to the submission of this report. Sincerely yours, LAWRENCE E. WALSH, Deputy Attorney General. EXECUTIVE OFFICE OF THE PRESIDENT, Hon. OREN HARRIS, BUREAU OF THE BUDGET, Washington, D.C., April 18, 1960. Chairman, Committee on Interstate and Foreign Commerce, House of Represenatives, Washington, D.C. MY DEAR MR. CHAIRMAN: This is in reply to your letter of February 12, 1960, requesting the views of this office with respect to H.R. 10242, a bill to amend the Communications Act of 1934, to strengthen the effectiveness of the Federal Communications Commission in assuring that broadcasting licensees operate in accordance with the public interest. The Bureau of the Budget would have no objection to the enactment of legislation for this purpose. Sincerely yours, PHILLIP S. HUGHES, Assistant Director for Legislative Reference. Hon. OREN HARRIS, U.S. DEPARTMENT OF JUSTICE, OFFICE OF THE DEPUTY ATTORNEY GENERAL, Washington, D.C., April 15, 1960. Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice concerning the bill, H.R. 10242, to amend the Communications Act of 1934, to strengthen the effectiveness of the Federal Communications Commission in assuring that broadcasting licensees operate in accordance with the public interest. Section 307 of the Communications Act of 1934 (47 U.S.C. 307) provides that broadcasting licenses shall be granted for no longer than 3 years and renewed for the same period. The bill would amend the section to authorize the Commission, in the alternative, to grant a conditional renewal for not to exceed 1 year on such conditions as the Commission shall deem appropriate. Upon expiration of the conditional license, a renewal of the original license may be granted for a term not to exceed 3 years if the Commission finds that the licensee has met the conditions imposed in the conditional renewal and that the public interest, convenience, and necessity would be served thereby. Section 312 of the act (47 U.S.C. 312) authorizes the Commission to revoke station licenses on certain specified grounds. The bill would amend section 312 so as to authorize the Commission to suspend, rather than revoke, any station license for a term not to exceed 30 consecutive days for (a) failure to operate according to the terms of the license, (b) violation of provisions of the Communications Act or failure to observe rules or regulations authorized by the act, or (c) violation of cease and desist orders. In his report to the President on deceptive practices in broadcasting media, December 30, 1959 (see H. Rept. 1258, 86th Cong., pp. 61-90), the Attorney General pointed out that under existing law the Federal Communications Commission has only one express sanction which it may impose upon a broadcasterrevocation of his license. The Attorney General indicated that the drastic nature of this sanction might well explain its infrequent use in the past, and stated that the Commission should be expressly authorized to impose less severe sanctions for actions violating the Communications Act or regulations issued pursuant to it. Such sanctions could include temporary suspension or conditional licenses (H. Rept. 1258, pp. 89-90). The objectives of the measure appear to be in accord with the Attorney General's recommendations. The Bureau of the Budget has advised that there is no objection to the submission of this report. MY DEAR MR. CHAIRMAN: This is in reply to your letters of April 6, 1960, requesting the views of this office with respect to H.R. 11397, a bill to amend the Communications Act of 1934 by adding thereto a new section to prohibit commercial bribery for the purpose of inducing the broadcast performance of musical works, and H.R. 11398, a bill to amend the Communications Act of 1934, to strengthen the effectiveness of the Federal Communications Commission in assuring that broadcast licensees, filing renewal applications, continue to operate in accordance with the public interest. The Bureau of the Budget is in general agreement with the purposes of both bills, but would like to call to the committee's attention the technical objections raised by the Federal Communications Commission, the Department of Justice, and the Federal Trade Commission. Sincerely yours, PHILLIP S. HUGHES, Assistant Director for Legislative Reference. Hon. OREN HARRIS, U.S. DEPARTMENT OF JUSTICE, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice concerning the bill, H.R. 11397, to amend the Communications Act of 1934 by adding thereto a new section to prohibit commercial bribery for the purpose of inducing the broadcast performance of musical works, and the bill, H.R. 11398, to amend the Communications Act of 1934, to strengthen the effectiveness of the Federal Communications Commission in assuring that broadcast licensees, filing renewal applications, continue to operate in accordance with the public interest. H.R. 11397 would add a new section 508 to the Communications Act of 1934 making it a crime, punishable by imprisonment for not more than 1 year or by a fine of not more than $1,000, or both, for (1) any station licensee to accept payment in any form as inducement to perform a musical work or recording in which the payer, or person having the payment made, has a pecuniary interest; (2) for any person having such interest to pay or promise to pay a station licensee to induce him to play a musical work on his station; (3) for any station employee to accept money from anyone but his employer in consideration of selecting a musical work for broadcast; and (4) for any person paying or promising to pay a station employee as an inducement for performing or selecting the performance of any musical work. Persons with a pecuniary interest in a musical work are authorized however, to make a bona fide purchase of time on a station to sponsor the musical work. In his report to the President on deceptive practices in broadcasting media (see H. Rept. 1258, 86th Cong., pp. 61-90), the Attorney General pointed out that present section 317 of the act, coupled with the criminal sanctions of section 501, makes "payola" a criminal offense as to a broadcasting station only, and he recommended the enactment of legislation which would also make "payola" on the part of employees of stations a criminal offense (H. Rept. 1258, p. 90). As the bill would be limited to "payola" as it relates to musical works, the question arises as to whether it is intended as a substitute for more sweeping legislation affecting "payola" in all phases of broadcasting. In his report, the Attorney General did not recommend that any curative legislation be limited to musical compositions. The committee may wish to consider the desirability of including all forms of "payola" and of casting such proposals within the framework of the present section 317. Section 307 of the Communications Act of 1934 (47 U.S.C. 307) provides that broadcasting licenses shall be granted for no longer than 3 years and renewed for the same period. H.R. 11398 would amend the section to give the Commission additional authority to grant a conditional renewal for not to exceed 1 year upon such conditions as the Commission shall deem appropriate. Upon expiration of the conditional license, a renewal of the original license may be granted for a term not to exceed 3 years if the Commission finds that the licensee has met the conditions imposed in the conditional renewal and that the public interest, convenience, and necessity would be served thereby. Also, the bill would amend section 307 to provide that in passing upon renewal applications, the Commission shall consider violations of the provisions of the new section 508 (relating to "payola"), which would be added to the act by H.R. 11397. The Commission would also be required to consider, in such renewal proceedings, whether the applicant has ratified or consented to conduct by its officers or employees in violation of the new section 508, such consent to be presumed from recurrent violations "over a period of at least 6 months found by the Commission to constitute a pattern or practice." In his aforementioned report, the Attorney General recommended that conditional renewal authority be expressly conferred on the Commission (H. Rept. 1258, p. 90). H.R. 11398 appears to be in accord with this recommendation of the Attorney General. The Bureau of the Budget has advised that there is no objection to the submission of this report. Sincerely yours, LAWRENCE E. WALSH, Hon. OREN HARRIS, FEDERAL TRADE COMMISSION, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: This is in response to your request of April 6, 1960, for comment upon H.R. 11397, 86th Congress, 2d session, a bill to amend the Communications Act of 1934 by adding thereto a new section to prohibit commercial bribery for the purpose of inducing the broadcast performance of musical works. This bill would amend the Communications Act of 1934 to make it unlawful for any station licensee to accept payment for performing or selecting the performance of any particular musical work or recording thereof in which the party making the payment has a pecuniary interest. The bill would also make it unlawful for any employee of a broadcast station or any other person to accept payment from any person other than his employer for selecting a particular musical work or recording thereof for broadcast. The bill contains corresponding prohibitions against persons making such payments. Violators would be subject to punishment by fine and imprisonment. The bill specifically excepts from the aforementioned prohibitions the purchase of broadcast time in order to sponsor a musical work or recording thereof. H.R. 11397 is similar in purpose to section 3 of H.R. 11341, upon which the Commission has already commented to you by letter of April 11, 1960. It differs, however, in form and scope. Whereas H.R. 11341 would amend the present law which provides for disclosure by a licensee that broadcast matter is paid for, to cover and place responsibilities upon the person who makes the payment, H.R. 11397 would enact a new section prohibiting the payment or receipt of compensation for performing or selecting the performance of a musical work or recording. The Commission perceives no evil in the payment of compensation for the broadcasting of any matter, provided disclosure of such payment is made to the employer, in the event payment is made to an employee, and the members of the listening public are fully and adequately informed with respect to the payment in connection with the broadcast. The Commission, therefore, favors the approach of section 3 of H.R. 11341 over H.R. 11397. Further, H.R. 11397 is limited to the selection and performing of musical works and recordings, whereas the problem that has arisen is much broader and pertains to the broadcasting of various types of matter. Again, preference is expressed for section 3 of H.R. 11341 in that it is broadly applicable to all broadcast matter. H.R. 11397 does place liability upon employees of radio or television broadcasting stations and other persons, in addition to licensees, for accepting payment. As already pointed out in our report on H.R. 11341, we feel that recipients of payments other than licensees should also be covered by such legislation as may be decided upon, and the Commission has recommended that H.R. 11341 be amended in that respect. In view of time limitations, this report has not been submitted previously to the Bureau of the Budget. By direction of the Commission. EARL W. KINTNER, Chairman. FEDERAL COMMUNICATIONS COMMISSION, Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is with further reference to your request for our comments on H.R. 7017, a bill to amend the Communications Act of 1934 for the purpose of substituting a "pregrant procedure" for the "protest procedure" now provided for by section 309, and for other purposes. As you undoubtedly know, following the introduction of H.R. 7017, hearings were held in June 1959 before the Communications Subcommittee of the Senate Committee on Interstate and Foreign Commerce on several proposals to amend the Communications Act of 1934. Among these was S. 1898, a bill to amend section 309 along lines similar to those proposed by H.R. 7017. During the course of the hearings, a considerable area of disagreement developed between the Federal Communications Bar Association and the Commission regarding certain fea tures of the pregrant procedures proposed in S. 1898. After consultations between the FCBA and representatives of the Commission, language acceptable to both groups was forwarded to the Senate subcommittee, after which S. 1898, as amended, was reported out favorably and ultimately passed by the Senate. Also, some time in August of 1959, the Commission made available to your committee on an informal basis the materials which were supplied to the Senate subcommittee. Inasmuch as the amended version of S. 1898 is substantially similar to H.R. 7017, we feel that the views expressed on S. 1898 adequately reflect the Commission's thinking on H.R. 7017. Those views, which were expressed in letters approved by the Commission, have since been printed in the Senate hearings on S. 1898 and accompanying Senate Report No. 690, which deals with the new pregrant procedure. Copies of both the hearings and Senate Report No. 690 are enclosed. For your information, we should like to direct your attention to pages 36 to 40 of the hearings, which set out the Commission letter referred to above, and to pages 40 to 47 and 54 to 66, which contain a discussion of the problems which gave rise to the proposed pregrant procedure. We direct your attention also to pages 10 to 14 of Senate Report No. 690, which contains the new version of S. 1898, as reported out by the Senate subcommittee. Sincerely yours, FREDERICK W. FORD, Chairman. The CHAIRMAN. At this point in the record, my colleague, the gentleman from Michigan, Mr. Bennett, who unfortunately is unable to be with us today, and who is the ranking minority member, desires to include a statement in the record on these proposals. Without objection, it will be included in the record. (The statement referred to follows:) STATEMENT OF HON. JOHN B. BENNETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN Mr. Chairman, I thank the subcommittee for the opportunity of making this presentation in support of H.R. 10241 and H.R. 10242; bills which I introduced on February 8, 1960, to amend the Federal Communications Act. I am certain that most members will agree that the testimony adduced before the Legislative Oversight Subcommittee last fall clearly demonstrated the need for legislation to increase and clarify the authority of the FCC over licensees, and to provide criminal penalties against those who would deliberately utilize the airwaves to deceive and defraud the American public. I want to say at the outset that in addition to the legislation under consideration by the subcommittee this week, it is my opinion that immediate consideration should be given to proposals which would close a glaring gap in this area by bringing the unregulated networks under the jurisdiction of the FCC. I introduced a bill, H.R. 5042, on February 26, 1959, to accomplish that objective. I repeat my request made to the chairman in a letter dated February 8, 1960, that early consideration be given to this vital legislation. With the exception of the provision in H.R. 10242 for conditional license renewals, the basic principles contained in my bills were subsequently endorsed by the Legislative Oversight Subcommittee in its interim report to the Congress (H. Rept. 1258). They are also to be found, in whole or in part, in other bills since introduced which are before you today. The Attorney General had previously recommended legislation of this type. Thus, the subject matter is well known to most members and I feel that my presentation can be brief. H.R. 10241 provides stiff criminal penalties for all persons found responsible for the broadcasting of deceptive or fraudulent programs where the individual's acts are accompanied with an "intent to deceive." My bill is not limited to deceptive quiz shows. Legislation so restricted would, in my opinion, be of little significance. These shows are off the air now and, in fact, were off the air a full year before the Oversight Subcommittee's hearings. The American public needs broader protection from unscrupulous persons who seek to enter the Nation's living rooms with deceptive matter. I refer specifically and pointedly to deceptive and misleading advertising, and to attempts to sell such things as phonograph records without revealing the commercial nature of the representations made. |