This case involves the disposition of two applications for construction permits for standard broadcast stations. One application was filed by the Easton Publishing Co. for Easton, Pennsylvania, and the other by the Allentown Broadcasting Corp. for Allentown, Pennsylvania. Both were for the same frequency, and, despite the fact that neither station would render service to the other community, simultaneous operation of the two stations would cause mutually destructive interference.
Hearings were first held in 1946 and resulted in the grant of the Allentown application. The Court of Appeals for the District of Columbia Circuit reversed the Commission and remanded the case for 'findings upon the comparative needs of the two communities for new radio service and the relative abilities of the applicants to serve the greater need.' Easton Pub. Co. v. Federal Communications Commission, 85 U.S.App.D.C. 33, 40, 175 F.2d 344, 351.
New hearings were held in 1951 by an examiner whose initial decision recommended that the Allentown application be granted. Easton filed exceptions to that decision with the Commission, and after oral argument the Commission issued its final decision, disagreeing with its examiner and granting the station to Easton. The Commission made detailed findings of fact as to the qualifications of the applicants and the nature of the communities to be served. Most factors provided no basis for choosing between the applicants. Both were found legally, technically and otherwise qualified to become the licensee; both communities were equally in need of the programs proposed to be broadcast by each applicant. One factor, however, was crucial in determining, under § 307(b) of the Communications Act, which applicant should receive the license. Allentown had three local stations; Easton only one. The Commission recognized that Allentown was a city almost triple the size of Easton and growing at a greater pace, but held that Easton's need for a choice between locally originated programs was decisive.
The Court of Appeals reversed. Its examination of the record in detail demonstrated to it that findings of fact of the Commission that overruled findings of the Hearing Examiner were erroneous. Since these Commission findings, it thought, were the basis for that body's ultimate finding of Easton's ability to serve, it directed the Commission to revaluate the 'issue of the relative abilities of the two applicants to serve in the public interest.' It held that there was no substantial evidence in the record to support the determination that 'the ability of the applicants to serve their respective communities was about equal.' It concluded that, without support for this underlying finding, it was improper to apply the "choice of local service" principle. In view of the importance to the administration of the Act, certiorari was granted to review this decision. 348 U.S. 910, 75 S.Ct. 296.
The more important question presented by this certiorari, as stated by petitioner, is whether the Federal Communications Commission, in awarding AM licenses between mutually exclusive applicants for different communities, can select one community over another on the basis of the former's need only if it has first found that the applicants are approximately equal in their ability to serve their respective communities.
The judgment of the Court of Appeals that such a preliminary finding was necessary was predicated upon the requirement of its earlier decision in this same controversy, which was not appealed, that there must be, as stated above, findings not only on comparative needs of the communities but also as to the 'relative abilities of the applicants to serve the greater need.' Easton Pub. Co. v. Federal Communications Commission, 85 U.S.App.D.C. 40, 175 F.2d 351. The Court of Appeals, as we understand its opinion in the present case, thought that the "choice of local service" principle applied only where community need and applicant ability to serve such need were both approximately equal.
The Commission challenges this position. It asserts that, when mutually exclusive applicants seek authority to serve different communities, the Commission first determines which community has the greater need for additional services and then determines which applicant can best serve that community's need. Otherwise, argues the Commission, the needs of the community would be subordinated to the ability of an applicant for another locality. The position of the Commission was made quite clear in its judgment on Allentown's petition for rehearing.