What tipped the FCC vote
was a letter from Reps. Dingell and Markey,
Miles believes.
They told the FCC that dereserving WQEX
"would be an extremely shortsighted decision" and
"would establish a corrosive precedent" for all of pubcasting.

FCC won't allow dereservation of WQEX, Pittsburgh

Originally published in Current, Aug. 5, 1996. See also complete text of the FCC order.

Because WQED had a fallback plan for getting out of debt, the FCC has declined to let it sell off its second channel. The Pittsburgh station may now end up swapping channels with a local religious broadcaster, selling the other channel and keeping half or less of the proceeds.

The commission met a congressionally imposed 30-day deadline, July 24, to rule on WQED's petition to remove the noncommercial reservation from sister station WQEX. But what the commission said was, "No."

Dereservation of WQEX would be "inconsistent with the commission's stated goal, over the past four decades, of promoting the growth of public television and the broadcast of educational programming," the commission ruled.

FCC commissioners originally were split 2-2 on the petition, according to an FCC source, but by the 24th had agreed to reject the dereservation. They found WQED had "an alternative remedy ... that would have a substantially less adverse impact on our noncommercial allotment policies."

In a separate statement released Aug. 1, Commissioner Rachelle Chong said she sees compelling reasons to support WQED's "creative" bid for relief, but "reluctantly" went along with the FCC staff recommendation because WQED had the alternative of the channel swap. Commissioner James Quello joined in support of Chong's statement.

WQED President George Miles attributed the defeat to a letter strongly opposing the petition from Reps. John Dingell (D-Mich.) and Edward Markey (D-Mass.), the ranking minority members of the House Commerce Committee and its telecom subcommittee. "We heard that swung the votes," says Miles.

Dingell and Markey told FCC Chairman Reed Hundt that dereserving WQEX "would be an extremely shortsighted decision ... to address the short-term financial hardship WQED is claiming" and "would establish a corrosive precedent" for all of public broadcasting.

Channel 16 is "an asset but it's not one that they are free to dispose of," a Markey aide told Current. "If they can't make a go of it, then it reverts back to the FCC."

That firm line echoes the commission's own order, released last week. The commission has "repeatedly favored the long-term structural integrity of its noncommercial channel allotments scheme ... over the needs of particular licensees," the order said. In the past, the FCC noted, it had rejected a dereservation request even when the noncommercial station was threatening to go dark.

This time the commission stuck by its principle, though it means WQEX may still go off the air and the remaining public TV station would earn millions less through the swap than by selling Channel 16 outright.

Opponents will fight swap

The FCC's action leaves WQED with several immediate alternatives. It can request reconsideration by the commission, go to the U.S. Court of Appeals, or move ahead with the backup plan, says Steven Lerman, a Washington attorney for the station.

Lerman says the FCC ignored part of the mandate that Congress gave to the FCC in April to expedite a ruling on WQEX. Congress had said "the threat to the public of losing or impairing local public broadcasting service" was a criterion for dereserving the station. He contends that service already has been impaired.

But the legislation also names other criteria, including one that lawyers can debate forever: "the public interest." Congress did not require the commission to grant the dereservation, the FCC pointed out. Even though WQED was "clearly" in financial distress, dereserving Channel 16 was not appropriate, it ruled.

The commission declined to "prejudge or signal approval" of WQED's contingency agreement with religious broadcaster Cornerstone TeleVision.

But, given the commission's reliance on the fallback position in its ruling, it will be difficult for it to turn down the Cornerstone swap, observes WQED Chairman James Roddey.

Though the FCC proceedings ahead will be more routine than the dereservation petition, the swap probably will be opposed vehemently by progressive watchdog groups.

The Alliance for Progressive Action, and a would-be applicant for Channel 16, Pittsburgh Educational Television Inc., argued against the petition at the FCC, and PET unsuccessfully asked the FCC to revoke the WQEX license because the licensee admitted being insolvent. (The FCC responded that it doesn't require solvency as long as the station stays on the air.)

"We're going to fight the Cornerstone deal," says West Virginia University sociology professor and activist Jerold Starr, who is active the Alliance for Progressive Action and PET. "It's unacceptable to the campaign to save Pittsburgh public television. It not only deprives the public of an important educational frequency, but it also delivers half or more of the proceeds to the enemies of public television." Starr refers to Cornerstone, a local religious broadcaster that carries conservative programs including Pat Robertson's shows.

He contends that WQED is overseen by pro-business laypeople like Roddey, a cable TV operator, who would find it acceptable to share a windfall with Cornerstone.

Roddey rejected the charge. "I have nothing to do with Christian broadcasting, or with conservatives," he told Current.

The deal with WQED will nevertheless be quite beneficial for Cornerstone, which will be "rewarded beyond its wildest dreams," Pittsburgh Post-Gazette observed recently.

Answer to prayers

The little religious broadcasting company will get to keep a UHF broadcasting channel--the noncommercial one now used by WQEX--and will also receive half of the proceeds from selling its present unreserved channel--60 percent if the sales price is over $45 million.

"In our mind, it's an answer to our prayers," Cornerstone Treasurer Tom Scott told the Post-Gazette. With the money, the company can afford to go digital when the time comes.

"Some observers looked at this arrangement and wondered if WQED had used the law firm of Moe, Larry and Curley as its negotiators," a Post-Gazette writer quipped, "but Cornerstone held all the cards." It owned the only unreserved UHF channel that WQED could swap for.

Miles said he negotiated the deal himself and signed it just before petitioning the FCC for dereservation June 24. WQED would have been in default of its big loan agreement with the Mellon Bank if he hadn't signed a contingency deal to lessen the bank's risk, Miles says. The bank had "reminded" him: "you should be signing that agreement." A spokesman for the bank declined to comment on the loan relationship.

The station listed debts totalling $14.5 million in its petition to the FCC, including $8.75 million owed to Mellon Bank, according to the commission. An unaudited WQED statement showed the station's liabilities exceeding its assets by $10.7 million as of March.

For the past fiscal year, WQED broke even overall, Miles says, though it showed a $2 million deficit if restricted revenues are not counted.

The debts piled up as the station's once-successful national production operation lost underwriters in the early '90s under longtime President Lloyd Kaiser. Interim President Donald Korb explained that the station didn't cut back spending quickly enough.

To dispel allegations of corruption, the board hired former U.S. Attorney J. Alan Johnston to examine WQED practices in 1993, and when the lawyer's report came back, board leaders assured the board that there was no evidence of corruption, but they didn't release it publicly or give it to all board members.

The Alliance for Progressive Action asked the commission to demand that the station release the Johnston report, but the commission declined. "The requested documents relating to allegations of mismanagement and fraud by prior management are not relevant to our determination here," the commission concluded.



To Current's home page

Earlier news: Pennsylvanians in Congress insert mandate for FCC consideration in an appropriations bill.

Text of the FCC's order.


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