For Record Only $//Fox Television (New York NY) TV ren FCC 95-40//$ $/300.309 Action Upon Applications; Form Of And Conditions Attache//$ $/300.403 Inquiry By The Commission On Its Own Motion/$ $/1.223 Petitions to intervene/$ FCC 95-40 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Application of ) ) FOX TELEVISION STATIONS, INC. ) File No. BRCT-940201KZ ) For Renewal of License for ) Station WNYW-TV, New York, ) New York ) MEMORANDUM OPINION AND ORDER Adopted: February 6, 1995; Released: February 6, 1995 By the Commission: 1. This order denies challenges to two orders by the Mass Media Bureau, which established procedures for an investigation of Fox Television, Inc. (Fox), the renewal applicant in this proceeding. The Metropolitan Council of NAACP Branches, et al. (the NAACP) has filed an application for review that seeks the termination of the investigation and designation of the application for hearing. Rainbow Broadcasting, Inc. (Rainbow) seeks to participate in the investigation. Rainbow and the NAACP also challenge subsidiary aspects of the investigation. I. BACKGROUND 2. In this proceeding, Fox seeks renewal of its license to operate Station WNYW-TV in New York City. The NAACP filed a petition to deny Fox's renewal application. The NAACP contends that Fox is unqualified to be a Commission licensee, in part, because of issues relating to alleged lack of candor by the licensee. Specifically, the NAACP alleged that, in 1985, when Fox obtained Commission approval for acquiring WNYW-TV and five other television stations, and in subsequent applications, Fox concealed from the Commission the extent of the ownership interest held by an Australian company, the News Corporation Ltd., in the parent company of the Fox television licensee companies. 3. To assist the Commission in resolving these issues, the Mass Media Bureau decided to initiate an investigation of the circumstances surrounding the Commission's approval of Fox's acquisition of the six stations. See Interim Procedural Order, File No. BRCT-940201KZ (Dec. 7, 1994) (First Procedural Order); Second Interim Procedural Order, File No. BRCT-940201KZ (Dec. 21, 1994) (Second Procedural Order). The investigation contemplated the production of relevant documents as well as witness depositions or interviews. Id. The Bureau afforded the NAACP an opportunity to participate in the investigation by providing access to all documents produced and by allowing it to attend depositions, at which the NAACP may pose a limited number of questions to the witnesses and suggest other questions to the Bureau. 4. The First Procedural Order envisioned that, at the conclusion of the investigation, the entire record of the investigation would be made publicly available. First Procedural Order at  1. It provided, however, that, during the investigation, communications to and from the Commission regarding the investigation and information adduced during the investigation should not be disclosed other than to the Commission and to attorneys for the parties and certain other persons. Id. at  4-6. The Second Procedural Order eliminated most of these restrictions on disclosure and deemed confidential only (1) the transcripts of witness interviews and depositions and (2) information, including documents, for which confidentiality was requested and granted. Second Procedural Order at  2. 5. Allegations regarding Fox's ownership and candor were also raised collaterally in another proceeding, which involved Fox's application for renewal of Station KTTV-TV in Los Angeles. Fox Television Stations, Inc., 9 FCC Rcd 62 (1993), app. pending sub nom. Rainbow Broadcasting, Inc. v. FCC, No. 94-1060 (D.C. Cir. to be argued Feb. 27, 1995). Specifically, Rainbow, which filed an application for a construction permit mutually exclusive with Fox's renewal application, sought to reopen the record in the Los Angeles proceeding to consider the NAACP's allegations. Id. at 66 n.15. In that proceeding, the Commission ultimately granted Fox's renewal application and denied Rainbow's mutually exclusive application for a construction permit because Rainbow was not financially qualified. The Commission also declined to consider the alien ownership issues in the Los Angeles proceeding because they would be considered in the proceeding in which they were first raised. 9 F.C.C. Rcd at 66 n.15. II. THE NAACP'S PLEADINGS 6. The NAACP's application for review and related pleadings raise three main issues. First, the NAACP argues that the Bureau erred in deciding to conduct an investigation rather than designating Fox's renewal application for hearing. Second, the NAACP challenges the confidentiality provisions of the First Procedural Order, arguing that the Bureau lacks the authority to close the investigation. Third, the NAACP seeks to delay the taking of depositions until document production is completed and privilege issues are resolved. 7. The NAACP also requests immediate consideration of its application for review, urging that the proceedings now being conducted by the Bureau will make it impossible for the Commission ever to determine the full truth in this matter. As discussed below, we disagree with these contentions. Nevertheless, in the interests of ensuring full fairness to the parties, we have undertaken to resolve promptly these interlocutory appeals of the Bureau's procedural rulings. A. Propriety of the Investigation 8. The NAACP's application for review asserts that the evidence before the Commission raises a substantial and material question of fact regarding Fox's candor concerning its alien ownership and that under these circumstances a hearing is required under 47 U.S.C.  309. In the NAACP's view, the Bureau has already conducted a sufficient investigation by posing questions regarding Fox's ownership in two letters sent to Fox in March and May of 1994, and no further investigation is necessary or appropriate. The NAACP urges that it is entitled to a hearing under section 309 and is prejudiced by the limits placed on its participation in the investigation, in comparison with the panoply of procedural rights it would be entitled to in a full hearing. 9. The NAACP particularly takes issue with the Bureau's decision to conduct depositions and interviews as part of the investigation. The NAACP alleges that this will affirmatively harm the Commission's "truth seeking ability" at any future hearing. Motion for Immediate Consideration at 3 n.1. The NAACP maintains that the depositions will disclose the Bureau's and the NAACP's trial strategy to Fox. According to the NAACP, this will allow witnesses to discuss their testimony after the depositions, and to tailor and rehearse their future testimony, and will preclude spontaneous cross-examination in the future. Thus, the NAACP argues, the effectiveness of any future hearing will be compromised. 10. Fox replies that there is no need for either the current investigation or a full hearing. According to Fox, there are no material facts in dispute and the Commission could decide the validity of Fox's ownership as a matter of law. Fox contends that it made full disclosure of relevant facts at the time of its 1985 acquisitions. 11. We disagree with the NAACP's contention that the Bureau's course of action in this proceeding is defective. The use of predesignation investigations is a judicially-approved procedure. The court in Bilingual Bicultural Coalition on Mass Media, Inc. v. FCC, 595 F.2d 621 (D.C. Cir. 1978) (en banc), specifically held that if the Commission concludes from the initial pleadings that a factual uncertainty prevents summary renewal of a license, the Commission has the discretion to seek further information to resolve the factual uncertainty rather than to designate the application for hearing. 595 F.2d at 630 n.34. The method the Commission uses to resolve the factual uncertainty is up to the Commission. Id. at 634. Accordingly, we decline to set aside the Bureau's orders by terminating this investigation. 12. In this regard, we stress that no determination has yet been made whether to designate this application for hearing. The decision will be made in due course after the conclusion of the investigation. Thus, to the extent that the NAACP argues that it is being deprived of hearing rights under section 309, its arguments are premature. 13. As to the NAACP's claims that the investigation will taint any subsequent hearing, we find these objections overstated. The use of depositions in this investigation, for example, is not unlike their use in ordinary pre-trial discovery. By implication, taking depositions does not taint the subsequent trial. Indeed, generally speaking, trial practice favors disclosure of the issues and facts consistent with recognized privileges. See Fed. R. Civ. P. 26; Hickman v. Taylor, 329 U.S. 495, 501 (1947). Moreover, the Bureau has sought to minimize any risks by instructing that witnesses at the depositions not discuss their testimony with each other. By effectively applying the "rule on witnesses" to this investigation, the Bureau has satisfied a primary concern raised by the NAACP. Motion for Immediate Consideration at 7-9. NAACP's complaints about its limited participation in the investigation are also misplaced. As the court makes clear, although they should be afforded an opportunity to comment on the report of the investigation, petitioners to deny otherwise have no right to participate in a Bilingual investigation. 595 F.2d at 634 and n.55. B. Confidentiality Provisions 14. In its application for review, the NAACP challenges the provision of the First Procedural Order restricting the disclosure of confidential information concerning the investigation. According to the NAACP, the Bureau had no basis to treat the proceeding as non-public and acted in contravention of the public's and the media's right of access to administrative proceedings. The NAACP characterizes the restriction on disclosure as an unconstitutional prior restraint on free speech. It contends that public interest benefits would flow from public scrutiny of and participation in the investigation. 15. Much of this issue has been mooted by events subsequent to the application for review. In particular, the Second Procedural Order eliminated most of the restrictions on disclosure contained in the First Procedural Order, defining as confidential only transcripts of witness depositions and interviews, and documents that have since been disclosed. Second Procedural Order at  2. Indeed, the NAACP concedes in its Motion for Immediate Consideration at n.1 that this has become a "side issue." 16. In any event, it is well established that the Commission has the discretion to conduct non-public investigations. See FCC v. Schreiber, 381 U.S. 279, 292 (1965). See also SEC v. Jerry T. O'Brien, Inc., 467 U.S. 735, 744-45 (1984). We have routinely exercised this discretion and initiated non-public investigations where this would better serve the public interest. See, e.g., Inquiry into Alleged Abuses of the Commission's Auction Processes, 9 FCC Rcd 6906, 6907  10 (1994); Payola Inquiry, 42 RR 2d 847, 848  2 (1978). In particular, the basis cited for treating the testimony here as confidential -- the need to ensure that the witnesses will not be improperly influenced during the investigation -- provides an appropriate basis for exercising that discretion. C. Deposition Schedule 17. The NAACP seeks postponement of the depositions scheduled by the Bureau until privilege claims have been resolved and all documents are produced. However, a substantial number of documents have now been produced, and depositions have commenced, with the NAACP participating under agreed procedures. We will dismiss this matter as moot. III. RAINBOW'S PLEADING 18. Rainbow argues that it should be granted party status or otherwise be allowed to participate in this proceeding. It points out that it alleged in the Los Angeles proceeding that Fox had committed a "pattern of misrepresentation." Rainbow suggests that its participation is necessary to ensure that Fox's conduct with respect to alien ownership is examined in the context of the alleged pattern of misrepresentations and that Rainbow's participation "may be the only means of ensuring that the FCC will take a 'hard look' at this issue." Objection at 7 (emphasis in original). Fox replies that Rainbow lacks standing to participate in the NYC license renewal proceeding, and in any event its motion to intervene is untimely. 19. We find that Rainbow has not demonstrated that its participation at this stage would assist the Bureau's investigation. We reject its assertion that only it can guarantee that the issues will be adequately addressed. Rainbow did not take the initiative in developing the relevant issues. Rather, in the Los Angeles proceeding, it merely referred the Commission to the allegations made by the NAACP, which is already participating in the investigation. 9 FCC Rcd at 66 n.15. Moreover, in the Los Angeles proceeding, the Commission considered and rejected Rainbow's allegations of a "pattern of misrepresentation," concerning matters relevant to Fox's Los Angeles renewal application. Id. at 65-67  27-37. Thus, Rainbow has provided no justification for its belated injection into this phase of the proceeding, which the Bureau is attempting to conduct on an expedited basis. Rainbow will have the opportunity to comment informally on the publicly available record of the investigation once it is issued. IV. ORDERS 21. ACCORDINGLY, IT IS ORDERED, that the Motion for Immediate Consideration of Application for Review of Interim Procedural Orders, and for Prompt Commencement of a Public Section 309 Hearing, filed December 27, 1994, by the Metropolitan Council of NAACP Branches, et al. IS GRANTED in part and IS DENIED in part. 22. IT IS FURTHER ORDERED, that the Application for Review of Interim Procedural Order, filed December 15, 1994, by the Metropolitan Council of NAACP Branches, et al. IS DENIED. 20. IT IS FURTHER ORDERED, that the Motion to Reschedule Depositions, filed December 29, 1994, by the Metropolitan Council of NAACP Branches, et al., IS DISMISSED as moot. 23. IT IS FURTHER ORDERED, that the Objection and Emergency Petition for Relief, filed December 12, 1994, by Rainbow Broadcasting, Inc. IS DENIED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Secretary