RKO TV license case heads for federal court
Boston — One of the nation's largest broadcast empires -- the 16 television and radio stations owned by RKO General Inc. -- faces an uncertain future. Much could depend on two forthcoming appointments to the Federal Communications Commission (FCC), which last June 4 found the New York-based firm "unfit" to retain ownership of three of its most valuable operations.
The FCC appointments, expected by late spring, probably will have no immediate affect on the decision -- involving KHJ-TV Los Angeles, WNAC-TV Boston , and WOR-TV New York -- which is being appealed in federal court.
But they could have considerable impact on whether RKO General ultimately is forced to give up the stations.
Both seats to be filled by President Reagan have been held by commissioners who voted with the majority in the 4-to-3 decision against the firm -- which appears to be the harshest disciplinary action by the FCC in its 48 years as the nation's watchdog over the public airwaves.
The license cancellation, effective last July but stayed by the FCC pending outcome of the RKO General appeal, stems from illegal business practices involving the latter's parent company, General Tire and Rubber Company of Akron, Ohio.
The wrongdoing, which occurred in 1971 and 1972, came to light through a report General Tire and Rubber Company filed with the US Securities and Exchange Commission.
In moving to revoke the three TV licenses, the FCC concluded that the firm had engaged in anticompetitive practices and knowingly submitted false financial statements. It therefore ruled RKO General "unqualified" to hold the station licenses.
Although not involved in the commission's ruling, 13 other company-owned broadcast outlets, including a fourth TV station in Memphis, Tenn., and radio stations in Boston, Chicago, Fort Lauderdale, Fla., Los Angeles, Memphis, New York, San Francisco, and Washington, D.C., could be in jeopardy.
To prevent this, the company has sought to transfer these licenses to a newly formed subsidiary.
The FCC, however, voted 6 to 1 last Sept. 30 to postpone action on the petition pending final disposition of the current litigation.
A three-judge federal appeals court in Washington is expected to take up the case next fall.
It could be several more years, however, before the matter is resolved, depending on the outcome of these proceedings.
Some observers suggest that if the matter is sent back to the FCC the outcome might be quite different even if some form of penalty against RKO General is imposed.
The FCC, if upheld by the courts, could yank the three television station licenses outright, force RKO General to sell these lucrative holdings, place the firm on probation for a specified period, impose a lesser penalty, or drop the matter without punitive action.
The company's b roadcast holdings have an estimated value of $400 million.