KHJ Enveloped in Scandal

Thursday, December 5, 2002

Page 18

REMINISCING (Column)

KHJ Enveloped in Scandal

By ROGER M. GRACE

It was in 1965 that RKO General, owned by General Tire and Rubber Company (later dubbed GenCorp), applied for renewal of its license to operate KHJ, Channel 9. Renewal was challenged by Fidelity Television of Norwalk, which wanted the license for itself.

Fidelity’s initial charge was simply that KHJ offered second-rate programming — which was true. The challenge soon broadened, however, and an anticompetitive practice was alleged: that KHJ required its vendors — if they wanted to continue to sell to KHJ — to be advertisers.

An administrative law judge found in favor of the challenger. However, the FCC in 1972 remanded the matter for further findings.

Although licenses must be renewed every three years, the KHJ license was simply placed in limbo, while the commission and the parties dawdled through the years.

Meanwhile, the Justice Department and the SEC were spurred to start examining RKO’s television operations…doing so at government’s usual leisurely pace.

It not until June 6, 1980 that the FCC finally acted on the 1965 application for renewal of KHJ’s license, as well as the contested applications by RKO for renewal of licenses to operate its stations in New York and Boston. The FCC said “no” to renewal.

On Dec. 4, 1981, the U.S. Circuit Court of Appeals for the D.C. Circuit upheld the action as to the Boston station, WNAC-TV, which, like KHJ, had twisted arms of vendors to advertise. Its lack of candor with the FCC and other, even more serious, transgressions were also cited. The court said in the course of the opinion:

“General Tire’s misconduct, ranging from bribery and fraud abroad to the maintenance of secret cash funds for political contributions at home, inevitably casts a shadow on the character of its wholly owned subsidiary.”

However, the court remanded the matter to the FCC for further findings with respect to KHJ and RKO’s New York station, WOR-TV. It said that the outcome of those stations’ bids for renewal were improperly tied by the FCC to the disposition of WNAC’s application.

“The need for a remand and further action by the Commission is discomfiting in a fifteen-year-old case, but this extended proceeding has hardly been a model for the administrative process,” the court remarked. “We admonish all parties to get on with the task.”

The parties did not pick up the pace.

An FCC administrative law judge, Edward Kuhlmann, issued a 75-page decision on Aug. 11, 1987. He pointed to the “character issue” and recommended that the FCC strip RKO of its licenses to operate KHJ-TV, WOR-TV, and 12 radio stations, including KRTH-AM and KRTH-FM (formerly KHJ-AM and FM) in Los Angeles. Among his findings were that the company’s chief controller “repeatedly lied” about the destruction of an audit report to prevent the FCC from discovering it, and that RKO lied about the ratings of its shows to attract advertisers. Kuhlmann wrote:

“[N]o case ever before decided by this Commission presents dishonesty comparable to RKO’s. There is not a single case of fraudulent billing practices investigated and reviewed by this Commission, which exhibits as many practices affecting as many advertisers over as many years.”

With an appeal pending before it, the FCC urged that RKO sell off its stations to bring the controversy to a conclusion. By selling the stations, facilities included, RKO could stave off the potential fate of having its licenses yanked, reassigned to others, and being left with nothing but transmitters over which it could not transmit and a lot of used broadcasting equipment.

On July 20, 1988, the commission gave approval to a deal under which Fidelity, which had challenged KHJ’s license renewal, would be awarded the license, and would then transfer it to the Walt Disney Company, which would wind up with the KHJ facilities. Disney was to pay $324 million, with $105 million being retained by Fidelity, the balance going to RKO. In December, 1988, Disney gained possession of the assets.

Thus ends a tale of two scandals: one scandal entailing RKO’s lying under oath and bribing of officials, the other being the 23 years of governmental foot-dragging between the time RKO applied for KHJ’s license renewal and when its license was transferred.

Disney changed Channel 9’s call letters to KCAL on Dec. 2, 1989.

Then Disney bought the ABC network in 1996 and, in light of limitations on ownership of stations, was forced to sell KCAL. The buyer was Young Broadcasting. Young then sold the station to Viacom, which also owns CBS. The FCC, which is loosening restrictions on ownership of multiple stations, in May approved CBS’s holding in L.A. of both KCBS and KCAL.

So, “Judge Judy” is being aired locally both on KCBS and KCAL. And, if Channel 2 preempts CBS programming for some reason, such as airing a Raiders game, the CBS shows will be broadcast over Channel 9.