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FCC v. COHN

September 5, 1957

FEDERAL COMMUNICATIONS COMMISSION, Applicant,
v.
Ralph M. COHN, Vice President and General Manager, Screen Gems, Inc.; Screen Gems, Inc.; Charles Miller, Secretary, Revue Productions, Inc.; Revue Productions, Inc.; John L. Sinn, President, Ziv Television Programs, Inc.; Ziv Television Programs, Inc.; W. A. Handley, Assistant Secretary, MCA-TV, Ltd.; and MCA-TV, Ltd., Respondents



The opinion of the court was delivered by: BRYAN

This is a proceeding brought by the Federal Communications Commission to enforce administrative subpoenas duces tecum, pursuant to 47 U.S.C.A. §§ 409(f) and (g), and an order of the Commission directing the production of the material called for by the subpoenas, pursuant to 47 U.S.C.A. § 401(b). The subpoenas were issued in connection with the work of the 'Network Study Committee' of the Commission which is engaged in a comprehensive study of radio and television network broadcasting. They are addressed to various corporations engaged in the independent production and sale of television programs and officers of these companies, who are the respondents here.

The proceeding was heard before me on the petition of the Commission and the answers of the various respondents supplemented by extensive affidavits.

Respondents contend that the court should not enforce these subpoenas on the grounds that

 (a) Respondents are not subject to the regulatory power of the Commission and the material sought is irrelevant and immaterial to any proceeding or investigation which the Commission is authorized by law to bring or make.

 (b) The material sought is irrelevant to and outside the scope of the network study in connection with which the subpoenas were issued.

 (c) The subpoenas are technically defective because they were not properly issued by the Commission as the statute requires.

 Respondents also assert that, in any event, the subpoenas are unreasonable and oppressive and that the court, in its discretion, should limit the material which respondents are required to produce. Thus this proceeding involves both the validity and the scope of these subpoenas.

 The subpoenas which the Federal Communications Commission seeks to enforce in this proceeding were signed and issued on April 23, 1957 by Chairman McConnaughey of the Commission, as Chairman of the Commission's Network Study Committee. They directed the respondents to appear at an investigatory hearing before a designated presiding officer (the Chief Hearing Examiner of the Commission) on May 1, 1957 and to produce the described books, papers, documents and data.

 The order sought to be enforced was adopted by the Federal Communications Commission en banc on June 5, 1957, *fn1" and, inter alia, confirmed the subpoenas previously issued as continuing and remaining in force, and again directed the several respondents to appear before the presiding officer and to produce the material which the subpoenas called for.

 The facts as they appear from the papers before me are as follows:

 The investigation in which the subpoenas were issued originated in 1955 when Congress made an appropriation of $ 80,000 for fiscal year 1956 for a comprehensive 'study of radio and television network broadcasting' and of the adequacy of the Commission's rules governing broadcasting. *fn2" On July 20, 1955 the Commission adopted Delegation Order No. 10 *fn3" establishing a Committee composed of Chairman McConnaughey and Commissioners Hyde, Bartley and Deofer to conduct this study. The Committee came to be known as 'the Network Study Committee'. The Commission's order expressly delegated to the Committee, under 47 U.S.C.A. § 155(d)(1), the duty of carrying on the study of radio and television network broadcasting for which the special appropriation had been made, with the same powers and jurisdiction conferred by law on the Commission itself. It may be noted that the Committee consisted of a majority and a quorum of the Commission. 47 U.S.C.A. § 154(a, h).

 On November 21, 1955 the Network Study Committee adopted its 'Order No. 1' *fn4" instituting an investigation under the authority of 47 U.S.C.A. § 403, to obtain information 'necessary to discharge its (the Federal Communications Commission's) proper functions and duties.' The order and its accompanying Public Notice *fn5" set forth the basic guidelines for the investigation and indicate the objects, purposes and subject matter of the inquiry deemed necessary effectively to implement the mandate of the Commission under the Delegation Order. The Public Notice stated that:

 'Basically, the Network Study will concern itself with the broad question whether the present structure, composition and operation of radio and television networks and their relationships with their affiliates and other components of the industry, tend to foster or impede the maintenance and growth of a nationwide competitive radio and television broadcasting industry.'

 The Committee determined that as far as possible its inquiry should encompass 'a comprehensive factual analysis of the broadcasting industry as a whole.' It stated that if the study was to be genuinely effective it 'should not be limited to the network organizations, as such, and their activities and operations, but, as well, that it should embrace all of the relationships between the several networks; the relationship between the networks and their owned and operated stations as well as their affiliated stations; and the activities of advertising agencies functioning in the field of broadcasting, talent agencies, national spot representatives and the producers and distributors of television programs.' *fn6"

 Respondent corporations, Screen Gems, Inc., Revue Productions, Inc., Ziv Television Programs, Inc., and MCA-TV, Ltd., are engaged largely, if not entirely, in the business of producing and distributing motion pictures and programs for television broadcasts. Their productions include a number of well-known and widely exhibited entertainment features such as the Ford Theatre, Adventures of Rin Tin Tin, Circus Boy, Father Knows Best, Highway Patrol, filmed features of the Playhouse Ninety series, etc.

 These producers are independent of the television networks. The networks have no financial interest in them nor they in the networks. They obtain television rights to stories, revise such stories to make them suitable for television film production or programming, and work up an end product. In addition, some of the respondents also acquire feature films for television distribution and some 'live' shows are produced.

 The end product must then be distributed. Occasionally respondents license or sell a program for network exhibition, which involves the telecast of a print and its simultaneous reception in many cities across the country through coaxial cable or micro-wave relay. In most instances respondents' customers are either the sponsors of products advertised in conjunction with the exhibition of the films or local stations (most of which are affiliates of the networks), who in turn dispose of them to local or regional advertisers or to national advertisers on a 'spot' basis. When so 'syndicated' film is shipped to individual stations by the respondents to be shown at such times as the station determines. Occasionally film is shown simultaneously over networks in some cities, and, in other localities, is exhibited at different times as a syndicated property.

 In some instances independent producers or distributors may enter into joint profit-sharing arrangements with the networks concerning a particular program.

 In December 1956 the Network Study Committee mailed a 'TV Program Questionnaire No. 1' to the respondents and others similarly engaged in the independent production and distribution of television programs. The questionnaire sought detailed information on respondents' business operations. Among other things, it called for statements of profits and losses, production costs, and billings (sales prices) to every customer for every program. It contained numerous questions relating to the types of programs produced, the names of the customers who used them and the terms on which they were used.

 Respondents conferred with the staff of the Committee and agreed to supply it with much of the information requested. However, they steadfastly insisted on their right to withhold detailed financial information regarding their operations, and particularly the details of their production costs for specific programs and of their dealings with and prices charged to specific customers.

 On March 20, 1957 the Communications Commission made an order en banc *fn7" reciting the negotiations between its Network Study Committee and the respondents and the position which respondents had taken, and authorizing and directing the Committee to institute a formal investigatory proceeding pursuant to 47 U.S.C.A. § 403. It also authorized the Committee to employ compulsory process pursuant to § 409(e).

 Pursuant to that order the Committee, on April 23, 1957 adopted 'Network Study Committee Order No. 2'. *fn8" This order constituted Chief Examiner Cunningham of the Commission as a 'board' within the meaning of 47 U.S.C.A. § 155(d)(1), and directed him to conduct an investigatory hearing on May 1, 1957. The subpoenas duces tecum involved here were then issued by ...


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