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Letter to Chairman Metcalf, June 27, 1974, from Ronald L. Kuehn, Jr.,
Letter to Chairman Metcalf from Chairman Owen Daly II, Equitable
Letter to Chairman Daly from Chairman Metcalf, June 28, 1974..
Letter to President Robert W. Haack, New York Stock Exchange
"The Instititutional Investor Disclosure Act: An Analysis of the Con-
Letter to Staff Director Vic Reinemer from Lloyd H. Feller, legal asisstant
Letter from Board Chairman William T. Dentzer, Jr., Depository Trust
Letter from First National Bank of Boston Board Chairman Richard D.
Letter from Chairman Metcalf to FTC Chairman Lewis A. Engman, re-
Letter to Senator Metcalf from D. Thomas Trigg, chairman of the board,
Letter to Chairman Metcalf from Ralph Hocker, associate director,
Letter to Chairman Metcalf from Philip H. Burch, Jr., research professor, Bureau of Government Research, Rutgers University, October 14, 1974, with enclosures regarding Phelps Dodge and Southern Railway interlocks....
Letter to Chairman Metcalf from James J. Needham, New York Stock
Burlington Northern Inc. board of director interlocks with banks, a staff study by Interstate Commerce Commission Bureau of Accounts, November 12, 1974..
TUESDAY, JUNE 25, 1974
SUBCOMMITTEE ON BUDGETING,
MANAGEMENT, AND EXPENDITURES AND THE
COMMITTEE ON GOVERNMENT OPERATIONS,
Washington, D.C. The subcommittees met at 10:45 a.m., pursuant to recess, in room 1318, Dirksen Senate Office Building, Hon. Lee Metcalf (chairman of the Subcommittee on Budgeting, Management and Expenditures) presiding.
Present: Senator Metcalf.
Also present: Vic Reinemer, staff director; E. Winslow Turner, chief counsel; Alan Chvotkin, professional staff member; Jeanne A. McNaughton, chief clerk, Lyle Ryter, minority counsel, of the Subcommittee on Budgeting, Management, and Expenditures; and Jane Fenderson, counsel, of the Subcommittee on Intergovernmental Relations.
Senator METCALF. This is a continuation of the oversight hearings of the Subcommittee on Budgeting, Management, and Expenditures and the Subcommittee on Intergovernmental Relations.
This morning we are pleased and honored to have before us the chairman of the Federal Communications Commission, Mr. Richard E. Wiley. Mr. Wiley, you have a prepared statement. We are delighted to have you here. If you will introduce your colleagues we will go right ahead.
STATEMENT OF HON. RICHARD E. WILEY, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION, ACCOMPANIED BY WALLACE JOHNSON, CHIEF, BROADCAST BUREAU, AND WILLIAM WHITE, COMMON CARRIER BUREAU
Mr. WILEY. Thank you, Mr. Chairman.
I have with me the chief of the Broadcast Bureau, Mr. Wallace Johnson; on my right, Mr. William White of the Common Carrier Bureau.
Mr. Chairman and members of the subcommittee:
Thank you for inviting me to be here today to discuss questions concerning the collection and use of ownership information with respect to communications companies under the Commission's regulatory jurisdiction.
I want to commend you for holding this series of hearings. You have caused us to focus additional attention upon the ownership information we require to be filed and the uses to be made of it.
Some inadequacies have been revealed and we are considering possible modifications and improvements. Some of these can be accomplished through rulemaking; others may need to await increased computer capability now in the development stage.
I might also mention, Mr. Chairman, that we are cooperating with the Inter-Agency Corporate Disclosure Committee, whose work is being coordinated by the General Accounting Office.
Let us look at the Commission's present capabilities in this regard in the context of the three principal types of companies subject to our regulatory authority-communications common carriers, broadcast stations, and cable television systems.
COMMUNICATIONS COMMON CARRIERS
The Commission is, of course, mindful of the importance of monitoring the patterns of stockholder voting power, especially among the larger blocks of stock in the various telecommunications companies. Information on corporate control, voting powers, officers, directors and large stockholdings is required in the annual reports of telephone and telegraph carriers.
However, in view of the industry structure of the domestic telephone industry, wherein Bell System companies account for about 82 percent of the revenues, General Telephone companies another 7 percent, and smaller holding company systems most of the remainder, it is of primary importance to review periodically the patterns of control in the parent holding companies.
In the domestic telegraph field there is only one carrier, Western Union Telegraph Co., which is a subsidiary of Western Union Corp. In the overseas telegraph sector, the field is dominated by three carriers, Western Union International, Inc., KCA Global Communications, Inc., and ITT World Communications, Inc., all of them controlled by well-known parent companies. Thus again, in the telegraph field, the primary need is to assess patterns of control in the parent holding companies.
Holding companies which are not also operating companies file form 10-K, a report required by the Securities and Exchange Commission, with the proviso that form H shall be filed in lieu thereof in cases where the form 10-K is not filed with the SEC. Form H covers details of corporate control, identity of officers and directors, financial status, investments, income and expenses of the respondent.
All of these annual reports require submission of information on the 30 largest stock holdings. Thus, an examination of the annual reports of 8 holding companies-American Telephone & Telegraph, General Telephone & Electronics, United Telecommunications, Continental Telephone, Western Union Corporation, WUI Inc., International Telephone & Telegraph, and RCA Corporation-should reveal the patterns of control in about 90 percent of the telephone industry, 95 percent of the overseas telegraph industry and 100 percent of the domestic telegraph industry. Percentages are based on total operating
However, we have found that there is a certain lack of consistency among these reports with regard to the reporting instructions relevant to information on stock ownership and voting powers. Therefore, in
the interest of uniformity and the desirability of eliciting information as to the identity of those persons or institutions having the beneficial interest and voting power in the 30 largest blocks of each class of stock in each reporting company, we are taking steps to initiate a rulemaking proceeding which would revise the reporting instructions for all annual reports of telecommunications carriers and nonoperating holding companies to require the same types of information as to the thirty largest stockholder voting powers.
As to interlocking directorates, part 62 of the Commission's rules"Applications to Hold Interlocking Directorates"-provides that only a duly authorized person may hold the position of officer or director in more than one carrier subject to the provisions of the provisions of the Commission Act of 1934, as amended.
No information is required to be reported, however, with respect to interlocking directorates between telecommunications carriers and other types of companies. We plan to review these reporting requirements from the standpoint of their adequacy particularly in the light of competitive developments in the communications industry.
There is no requirement that the identity of bondholders be reported. Information furnished to us by telephone and telegraph companies on debt issues includes the issue date, date of maturity, face amount, related premium or discount, the interest rate and amount of accrued interest. Also, in the case of advances from affiliated companies, the identity of the creditor company or companies is required to be reported.
On June 4, 1974, the Commission received proposals for a policy research contract dealing with information requirements for more effective regulation in the common carrier field. This projectinitiated some time ago-envisions a thorough review of the information now received by the Commission and an identification of additional types of information needed to make our common carrier regulation more timely and effective. These proposals are now being studied and may result in a contract award later this month.
Let us now look at the information ownership required to be filed by broadcast licensees.
The Commission's multiple ownership rules (§§73.35, 73.240, 73.636) provide in pertinent part that no license for a broadcast station shall be granted to any part if "such party, or any stockholder, officer or director of such party, directly or indirectly owns, operates, controls, or has any interest in, or is an officer or director of any other * broadcast station [of the same service] if the grant of such license would result in a concentration of control" in a manner inconsistent with the public interest.
In determining whether there is such a concentration of control, consideration is given to the facts of each case with particular reference to such factors as the size, classes of stations involved and the extent of other competitive service to the areas in question.
The rules further state that the Commission will, in any event, consider that there would be such a concentration of control contrary to the public interest for any party or any of its stockholders, officers
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