The federal government's interest in the ethical standards of the broadcast industry is facing a stiff challenge in what could be one of the longest and fiercest court battles in American corporate history.
At issue are the business practices of RKO General Inc. and its right to retain its prime-market television stations -- KHJ-TV (Channel 9) Los Angeles, WNCA-TV (Channel 7) Boston, and WOR-TV (Channel 9) New York.
The expected litigation, which some close to the scene suggest could take years to resolve, will challenge a June 4 Federal Communications Commission (FCC) decision terminating the firm's right to operate the three stations as of July 4.
In its long-awaited ruling, the FCC found that RKO is "unfit," "unethical," and "untrustworthy" and directed it to dispose of the stations.
The 4-to-3 decision pulling the three television station licenses, unless overturned in the courts, may place in jeopardy 13 other RKO-owned broadcast outlets -- another television station and 12 radio stations -- which are not up for license renewel at this time. Involved are broadcast holdings estimated in excess of $400 million.
Responding to the commission's ruling, company officials branded it as "the most unfair and discriminatory decision ever handed down by a government agency" and said it would be appealed through the courts.
The New York-based RKO General has been in hot water with the FCC ever since certain of its business dealings, involving it and the parent General Tire & Rubber Co. of Akron, Ohio, came to light in a federal Securities and Exchange Commission report.
The FCC-cited "misconduct," which occurred between 1971 and 1976, included falsification of records, illegal campaign contributions, bribery of certain foreign government officials, and pressuring large-volume commercial buyers of General tires to advertise on the firm's broadcast affiliates.
The FCC decision, unless stayed by the courts, leaves in doubt what might happen to the stations, although it is unlikely they would actually go off the air. What seems more likely is the temporary shift of the license to other operators pending a court decision.
RKO General had arranged to sell WNAC-TV to New England Television Corporation, a local combine that included members of the Boston black community. That sale and pending license transfer was blocked last Jan. 31 when the commission, on a similar 4-to-3 vote, revoked the license the firm has held since 1948.