to do its job in those particular areas. That does not mean going overboard and making it punitive. I am against that.

Mr. WASILEWSKI. I know

you are, sir.

The CHAIRMAN. But we must see to it that some of the things that we have exposed in the last few years are not thrust upon the people again. As a matter of fact, I was quite interested in the statement made by the Chairman of the Federal Communications Commission, apparently before your organization in Chicago, when he said, "These things are of the past. They will never be any more."

I have a few additional questions suggested by the staff.

Mr. AVERY. Mr. Chairman, before you propound those questions, would you yield to me!

The CHAIRMAN. Yes.

Mr. AVERY. Several times throughout these hearings various members of the committee have made a broad, general reference to "restoring public confidence in the industry and the regulatory agencies." I don't like to let that inference lie without some further expression on it. Personally I don't feel that the public has lost confidence in the broadcasting industry. Maybe the inference was not meant to be as broad as that. Certainly we all recognize certain disclosures, part of which are contained in this committee report, and others in addition to those, can't be condoned by the public. By the same token, I don't think that any person being completely objective about it could take a series of incidents which proportionately are very limited as compared to the entire industry, and on that basis alone draw the conclusion that the public generally had lost confidence in the industry and the regulatory agencies as well. We go through these things periodically. Every industry has to grow up. The railroad industry had to grow up. We developed a series of rules and regulations both by statute and rulemaking authority to regulate the railroad industry and other segments of the transportation industry. The television industry particularly has just come of age in my opinion during this particular decade. So we are going through a period of growing pains. I think by and large the industry has done a pretty good job of self-regulation.

As far as programing is concerned, that keeps getting back into the picture again here. The only censor the radio industry has ever had has been the listening public. We are all agreed generally we get tired of commercials, we get tired of one thing or another, but I think the radio industry has been pretty responsive to adjusting their programing to what the people desire to hear and to which they are receptive.

I think by and large the television industry has followed the same pattern. We had recently some dramatic disclosures on quiz shows. In my opinion, in a few more months the public would have probably come to the same conclusion as did the district attorney of New York and the Oversight Subcommittee. Without citing any specific examples, I don't want the record to be unchallenged that the complete confidence of the public has been destroyed in the industry, and if it has, certainly we are not going to be able to restore that confidence merely by passing some additional rules and regulations for the industry.

I think those comments, generally speaking, would apply to the regulatory agencies as well. Of course, they have made mistakes. Judges have made mistakes. Members of Congress have made mistakes.

Mr. YOUNGER. No.

Mr. AVERY. I might add, Mr. Younger, in that respect if you read all of the hearings of the Oversight Committee in the fine print, you find where they were noted. They did not make the headlines, but they are there.

The CHAIRMAN. Some of them made headlines.

Mr. AVERY. Not as many headlines as did the regulatory agencies. As I say, you can't come to any specific conclusion on this. But certainly I want to say the industry has a lot of problems. You have to solve part of them and we will have to help you solve part of them. By and large, probably you have developed a media of communication in a very short period of years that has completely reorganized our whole concept of public and personal relations. It is easy for me to understand that these problems have developed. It is our collective responsibility to try to solve them.

Mr. WASILEWSKI. Thank you, sir. I agree with you.

The CHAIRMAN. I do not think that you will find that I or anyone else on this committee who have been involved in these matters has made any broad statement that the entire industry has been engaged in practices referred to. I made the statement on one occasion before the CBS conference here that the practices were widespread. Anyone who denies that, certainly is just not familiar with the facts, because these were network programs and by far the majority of the stations throughout the United States are affiliated with one or the other network. If that did not make it widespread, I don't know what would.

Mr. Ford, the Chairman of the Commission, in replying to this committee's request several days ago, gave us information-and it is a matter of record here that 11 percent of the broadcasting industry had participated in some form of what has been referred to as "payola" or under-the-cover payments. That is actual payola involving payments of money. There was also a total of 29 percent or somewhere between the 11 percent and the 29 percent which was involved in the very matter we are talking about in section 317 here, and that was accepting free public records or records at reduced rates. Nevertheless, in any society where you have 11 percent engaged in something that is against public policy, I think it becomes quite serious.

Mr. WASILEWSKI. Mr. Chairman, just for the purposes of slight clarification, my recollection is that Mr. Ford's statement regarding the 11 percent of the station licensees who had received, as you put it, payola, in one form or another, included a very few who had received money as such, and then the additional adding up to 11 percent was other considerations.

The CHAIRMAN. Valuable consideration.

Mr. WASILEWSKI. Yes.

The CHAIRMAN. But there was that other group that received less valuable consideration and that was some where between 11 and 29 percent.

Mr. WASILEWSKI. I fail to recall all of that.

The CHAIRMAN. Fifty-nine percent reported no such practice whatever. They are to be commended for that. You don't have to pass murder laws against 100 percent of the population of the country. You only have to put a rotten apple in a barrel and let it stay there for a while and you will see what happens to the barrel.

Mr. Younger.

Mr. YOUNGER. I just want to get into this act for a minute. I think one of the difficulties with this whole industry is not reached by this legislation, which is this buying and selling of stations. In other words, taking a capital gains profit. Until pretty soon the last man who buys it has a big investment which he cannot get a return on in a normal way, and he goes out on this great advertising scheme or any other method by which he can get some return. I think the record shows that you have stations where they have 30, 40, or 50 commercials an hour. That is the only way the owner can make a profit off their bad investment which they have been led into because some promoter who had the station, put on a program that has enticed the youngsters or at least a listening audience, and they got a good rating and then sold it on that rating. I don't know how we are going to reach that, but I think a good deal of the evil comes about in that way. It is on these transfers. I think the Commission ought to be more careful, I think you folks ought to be interested in seeing to it that the transfers of these stations are legitimate and proper, and there ought to be a better screening of these transfers than now exists. That is all. The CHAIRMAN. I will say that the legislation does deal with transfers.

Mr. YOUNGER. To that extent, yes.

The CHAIRMAN. I want to get your answers to these questions: You state that you are opposed to the suspension of licenses. Have you supported the FCC's proposed rule change providing for shorter term licenses in certain circumstances?

Mr. WASILEWSKI. No, sir.

The CHAIRMAN. You have not supported them?

Mr. WASILEWSKI. That is correct; we have not supported.

The CHAIRMAN. Have you opposed it?

Mr. WASILEWSKI. Yes, sir.

The CHAIRMAN. Is it correct, then, that you oppose both suspension and shorter term licenses?

Mr. WASILEWSKI. Yes, sir.

The CHAIRMAN. In other words, you oppose any effective enforcement powers for the FCC?

Mr. WASILEWSKI. No, sir. We think they have effective enforcement powers with revocation and cease and desist.

The CHAIRMAN. Do you think there is less likelihood that a licensee would appeal a suspension order than a revocation or a cease and desist order?

Mr. WASILEWSKI. I believe so, sir.

The CHAIRMAN. If the suspension is important, the licensee is likely to appeal it, isn't it?

Mr. WASILEWSKI. I would say he is likely to appeal, but I would say he is more likely to appeal a revocation or a cease and desist order.

The CHAIRMAN. Thank you very much, Mr. Wasilewski, for your testimony this morning.

Mr. WASILEWSKI. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Thomas K. Fisher, vice president and general attorney for Columbia Broadcasting System. That is the network, I believe.

STATEMENT OF THOMAS K. FISHER, VICE PRESIDENT AND GENERAL ATTORNEY, CBS TELEVISION NETWORK AND CBS TELEVISION STATIONS

Mr. FISHER. Mr. Chairman, members of the committee, and I would like to add, Mr. Lishman, also, I am vice president and general attorney of CBS television network and CBS television stations, operating television divisions of Columbia Broadcasting System, Inc. With me are Jules Dundee, vice president, station administration, of the CBS Radio Division, Geraldine B. Zorbaugh, vice president and general attorney of the CBS Radio Division, and Mr. Leon R. Brooks, assistant general attorney.

I appreciate the opportunity of appearing before this subcommittee and presenting in behalf of CBS comments on certain pending bills. These bills pertain to the following subject matters in the field of broadcast regulation: action on applications for licenses and permits; payoffs and swapoffs in connection with applications; suspension of a station's license; conditional renewal of a station's license; rigged quiz programs; and amendment of section 317, dealing with sponsorship identification.

The CHAIRMAN. As a matter of procedure, I believe you advised the committee that you had a rather full statement that you wanted to present, but that you wanted to put it in the record and you were going to give a brief synopsis of it. Is that true, or do you intend to present the entire statement?

Mr. FISHER. I had intended to read it all, but I would like to summarize on the compulsory hearing and then perhaps read the latter portion, and particularly 317 where we think we have some

comments.

The CHAIRMAN. You may proceed, as you desire, Mr. Fisher.

Mr. FISHER. I should have preferred in presenting our comments to you to accompany them with suggested amendatory language. It is one thing to criticize a pending bill, but it is quite another thing to draft specific statutory language embodying suggested changes. Admittedly, one's comments can best be weighed and, in turn, criticized if proposed substitute statutory language is presented.

In the time available to us in preparing for this appearance we were unable to draft such language, but we would be happy, if you wish, to submit our suggested amendments to you in the near future. In this connection, I should like to add that we recognize that a careful attempt has been made by the drafters of the bills before you to meet a number of the problems with which the bills are concerned. This commendable approach by our legislators is appreciated by those of us upon whom the legislation has a direct impact.

55507-60- -7

ACTION UPON APPLICATIONS

CBS supports S. 1898. It believes that that part of section 1 of H.R. 11341, dealing with action upon applications, would create administrative difficulties which militate against its enactment.

Section 1 of H.R. 11341 would amend the Communications Act so. as to require a public hearing in the area which is to be served by a broadcast station on every application for a broadcast station license, or for a construction permit, or for substantial modification of such license or permit. At the hearing, the applicant is required to establish affirmatively that the public interest, convenience, and necessity will be served by the grant of the license or permit. The Commission is also required to give notice of the hearing in newspapers of general circulation and over broadcasting stations in the area to be served at least 10 days before the hearing. Applicants for renewal are exempt from these compulsory hearing requirements.

Thus, for the first time in the regulation of broadcasting a hearing would be required on each application for a license or construction permit even though uncontested and even though no objection of any kind to the grant has been raised.

Under the present act, a hearing on an application is required only if (1) the Commission is unable to find on the basis of the material submitted by the applicant that the public interest, convenience, and necessity will be served by the granting of the application; or (2) a party in interest protests the grant and specifies with particularity, facts showing that the grant was improperly made or would otherwise not be in the public interest.

it

In considering the amendment to section 309 proposed in H.R. 11341 may be appropriate to review briefly the history of section 309 (c), the so-called protest section of the act.

Prior to the adoption of that section in 1952, the Commission was required to hold hearings on applications where it was unable to find that the public interest, convenience and necessity would be served by the grant. Any person could object to an application, stating reasons why a grant would not be in the public interest and the Commission, after evaluating the allegations of the objecting party, would set the application for hearing if it was of the opinion that the public interest required a hearing. Under the Commission's rules, parties in interest were permitted to participate in any such hearing.

There was criticism of the Commission's alleged failure to designate applications for hearings when objections had been filed by interested parties in circumstances in which those objecting were of the view that hearings should have been held. This criticism resulted in the 1952 amendment to section 309, establishing a postgrant protest procedure. It provided that for a 30-day period following a grant, any party in interest could protest a grant and request a hearing. The Commission was required to postpone the effective date of the grant and designate the application for hearing if it found that the protest showed the protestant to be a party in interest and that he had specified with particularity, the facts, matters, and things relied upon.

This amendment was added for the purpose of assuring that hearings would be held when substantial public interest questions had been raised, and to assure further that applicants would not continue with