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FCC Proposes Lottery for Awarding Radio, TV Station Licenses

January 30, 1989

WASHINGTON (AP) _ Licenses for new radio and television stations would be granted by a random lottery under a proposal Monday by the Federal Communications Commission, which called the present licensing process slow, costly and not guaranteed nded to draw numerous challenges. It also has been a way for minorities and women to become broadcast owners.

But the commission said the ″complexity, length and expense of the comparative process has become unduly burdensome to applicants and the FCC, without providing commensurate, meaningful assurance that it produces or is more likely to produce the best qualified licensees.″

FCC Chairman Dennis R. Patrick said the lottery is ″faster, it is arguably more equitable.″

Commissioner Patricia Diaz Dennis said that under the current system, one applicant in most cases will buy out a competing applicant during the challenge process, and the FCC merely approves the settlement.

″I’m told that 80 percent of all our cases settle, and in those cases we then play absolutely no role in enforcing our comparative criteria,″ Dennis said. ″So the applicant with the worst comparative qualifications can simply buy out the other applicants and we will routinely approve the settlement.″

She said she was concerned about how the public benefits ″by having applicants pay each other $65,000 to $70,000 even before they begin to build a station.″

But Andrew Schwartzman, executive director of the Washington-based Media Access Project advocacy group, said the lottery proposal was ″an outrageous, last-ditch effort to substitute a roll of the dice for government officials defining and implementing the public interest.″

″It’s spitting in the face of minorities and women and experienced broadcasters and instead it’s going to bring in the buccaneers on the night flight from Las Vegas,″ Schwartzman said.

The commission previously has instituted lottery procedures to award licenses for low-power TV stations and cellular telephone operations. Commissioner James H. Quello, in a separate statement, said ″while it is true that lotteries have been successful in reducing massive backlogs in the low- power service, our experience with cellular demonstrates lotteries may create more problems than solutions.″

He said ″the commission’s ultimate responsibility is to select the best applicant. ... If lottery procedures are ulimately employed, then the commission must make sure that all lottery applicants have the highest financial, technical and character qualifications.″

Schwartzman claimed that when Congress in 1982 gave the FCC the power to use the lottery process, it did not envision it being used for full service broadcasters.

The commission, in its proposed rule-making notice, said the comparative hearing process ″frequently operates to delay service to the public without providing substantial offsetting benefits in terms of selecting ‘better’ applicants.″

″The comparative process often leads decision-makers to make distinctions among applicants on the basis of insubstantial factual differences and ... to award licenses that are based, at most, on marginal differences having little or no real relevance to the level or quality of service to be provided to the public.″

It said the lottery process would be less costly to applicants, and, therefore, ″would lower entry barriers and encourage newcomers to enter the broadcast industry.″

The comparative process conducts hearings to compare applicants on factors ranging from the extent to which applicants would diversify media ownership, the degree to which media owners would be integrated into station management, whether such owners were local residents or minorities and the degree of differences in the area in populations to be served.

Administrative law judges then grant preferences to applicants on each comparative factor. The applicant with the best comparative record receives the license, pending appeals - a process the FCC said may take anywhere from three years to five years.

Dennis said the lottery would preserve two major items of the comparative hearings: credit for diversification of ownership and minority ownership.

″I think that what we’ve set up in this item will insure that minority applicants and those with no other broadcast interests will do at least as well under a lottery as they would have done under a comparative hearing,″ she said.

The proposal will be open for public comments following its official publication in about two weeks, the FCC said.

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