NOVEMBER

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FCC EXAMINER RECOMMENDS *
APPROVAL OF UPT-ABC MERGER F^
Favorable Commission
Ruling Seen Leading
To Films-TV 'Marriage'
WASHINGTON—The merger of
United
Paramount Theatres and American Broadcasting
Co. was approved by Leo Resnick,
Federal Communications Commission hearing
examiner, on Thursday (13) in an initial
decision granting all applications involved
in the sweeping catch-all case.
Resnick declared that DuMont was not controlled
by Paramount in the sense of FCC's
five-station maximum ownership rule, and
granted licenses to Paramount for its Los
Angeles TV station, KTLA, and to DuMont
for its existing three stations, as well as
opening the way for DuMont to apply for
two additional TV outlets.
STATION TRANSFERS GRANTED
Resnick swept away the arguments to the
effect that Paramount should have applied
for permission to transfer its 50 per cent
interest in radio station WSMB and its
ownership of WBKB-TV from the corporation
dissolved under the consent decree to the
new theatre company, United Paramount
Theatres. He granted consent to these transfers
and then proceeded to authorize sale of
WBKB-TV, Balaban & Katz Chicago station,
from United Paramount Theatres to CBS.
WBKB had been sold by UPT to CBS for
$6,000,000, contingent upon FCC approval of
the UPT-ABC merger.
ABC's four exisiting television stations in
Los Angeles, San Francisco, Chicago and
New York under the initial decision can be
transferred from ABC to the new American
Broadcasting-Paramount Theatres and Chicago
and New York radio stations now operated
by ABC as well as UPT's WSMB and
WXYZ, and ABC wholly owned subsidiary
radio and TV station in Detroit.
On the merger issue, Resnick found that
although ABC has been "aggressive" in obtaining
affiliations and in pioneering "certain
practices," it
has been unable to compete effectively
with NBC and CBS in either radio or
television. ABC has neither the working
capital nor the "diversity of revenue-producing
activities," he found. The merger would
provide capital for strengthening of ABC
programming, and hence would create competition
in
the network field.
DENIES ANY MONOPOLY
Re.snick denied that the merged company
could dominate the field by virtue of its
size, and said radio corporation would still
"dwarf" the merged company. He found no
merit in the fear that UPT seeks the merger
to suppress television development because
"pursuing such a course would have only a
relatively minor adverse affect on television,
would cripple UPT financially, and would
produce only a minute increase in attendance
at UPT's own theatres."
External competition will compel the
merged company to promote vigorously its
activities, particularly in radio and television,
Theatre TV Hearings
Delayed to Jan. 26
WASHINGTON — The Federal Communications
Commission on Thursday
(13) postponed the main body of the
hearings on theatre television licenses for
the motion picture industry from January
12 to January 26.
The FCC explained that witnesses have
been unable to obtain hotel reservations
because of the January 20 inauguration of
General Eisenhower as President.
The commission also announced that
the proposed spectrum locations for theaare
TV channels as outlined by the film
industry witnesses in the recently concluded
engineering phase of the hearings,
have been made part of the issues
to be argued in the principal hearings in
January.
During the hearings the industry put
forth several alternative frequencies as
feasible for theatre television, including
some now allocated to common carriers,
such as American Telephone and Telegraph.
Resnick argued. Failure to follow this course
would mean lack of audience for the radio
and television stations and more patrons in
the theatres.
As to competition for produce, Resnick said
that in his opinion theatres and television
will not be competing for the same films.
The producers will not sell films to television
until sponsors can pay as much as theatres,
and in any case the trend is away from use
of theatre films on TV. Even in the field
of films specially made for TV the "majors"
may find their late start dooming them to a
minor place in the field.
UPT's $30,000,000 annual gross purchases
of films did not impress Resnick when coupled
with the argument that it might be used to
gain discriminatory advantages. In view of
consent judgement's requirement that pictures
be licensed picture by picture and
futhermore, "is to make no package deals
for theatre and television . . . We cannot
credit with reasonable probability any suggestion
that an unfair competitive advantage
might accrue to ABC in the purchase of
films, as a result of being associated with
UPT."
Resnick did not believe that competition
between home and theatre TV and between
free and pay-as-you-see TV could well be
considered since the competitive situations
involved are "too remote and spectulative."
"ABC-UPT is legally, technically, financially
and otherwi.se qualified to be a licensee of
tlie commission. Its officers, and directors
are likewise qualified," Resnick found, and
said, "There is no rea.sonable probability that
the merger will substantially lessen competition
or tend to monopoly in any .section
of the country or in any line of commerce."
Resnick, dealing with the question of
whether Paramount pictures exerts any con
trol over DuMont found that Paramount doe
own all the 560,000 shares of DuMont's clas
B stock and 43,200 shares of 2.4 per cent o
its class A. "However, the extensive investi
gation conducted into the 'actualities' of th(,
Paramount-DuMont relationship, particularh:
in recent years, discloses that under tht'A
leadership of Dr. DuMont, the class A officersjl
and directors dominate the corporate man- '
agement and policy of the DuMont organization
and that the veto power possessed by :
Paramount, as the class B stockholder, hai'tj
not been exercised and is applicable to a
limited class of situations not likely to occur ij
in the foreseeable future."
Resnick said that Paramount and DuMonti
have no joint operations and are, in fact,!
competitive in some fields.
NOT FORCED BY DECREE
As to the failure of Paramount to seek FCC!
-I
permission to transfer of its television and!
radio properties from the old company to the:
new theatre company after the consent de-,
cree, Resnick did not agree with Paramount's
contention that the transfers were forced byj
the consent decree and hence were involuntary,
but did not feel under circumstances
of transfer that "the failure to provide formal!
notices of transfers . . . should operate as a|
bar ..."
'
Resnick felt that the failure might "bci
explained by the preoccupation of the Para-I
mount people with the tremendously com-1
plicated and deadhne-studded problems of.
the reorganization and divestiture ..."
Resnick, in granting Paramount a licensej
operate KTLA-TV. which has been under
to
temporary authority as have the DuMont;
stations pending settlement of the control:
issue, said he was "impressed" with Para-i
mount's compliance with the consent decree.
He said, "We have a reasonable expectation':
which the Para-
that the antitrust activities
mount people are abandoning in the unregulated
field of motion picture distribution
will not be imported into the licensed
field of broadcasting."
MAY SET A PRECEDENT
Paramount has no policy restricting sale of
films for showing on television, nor do they
prohibit their established stars from appearing.
Sponsors can't compete price-wise with
tlieatres and "other things complicating the
question of release of these films are the
restrictive agreements imposed upon the major
producers by the American Federation of
Musicians and the various guilds, and the
uncertain status of television rights to some
of the feature films."
Accordingly, Resnick found Paramount and
its officers fully qualified to be FCC licensees,
a decision which, if not reversed by the full
commission, will open tlie doors to oilier film
companies wliicli have been entangled in
antitrust actions.
FCC's broadcast bureau is regarded as
certain to appeal to tlie full commission for
a reversal of Resnick's initial decision, but
it is believed that the commission will uphold
Resnick.
8 BOXOFFICE November 15, 1953