Among broadcasters, perhaps no other company has suffered so many assaults on its reputation as RKO General. Since the mid-1960s, rivals who have coveted RKO's broadcasting licenses have been accusing the chain of unethical conduct. That is a serious charge against any broadcaster, since the Federal Communications Commission can revoke the licenses of companies it considers to be of questionable character -- even if they are not convicted of violating the law. Last week the FCC may finally have pulled RKO's plug. Edward Kuhlmann, an FCC administrative law judge, denied RKO's application to renew its license for KHJ-TV in Los Angeles, and stripped the company of its licenses for twelve radio stations and one other TV outlet. Declared Kuhlmann: "No case ever before decided by this commission presents dishonesty comparable to RKO's."
The decision is a dramatic rebuke and potential financial disaster for RKO's parent company, Akron-based GenCorp (formerly General Tire and Rubber). Unless the ruling is overturned on appeal, the value of RKO assets -- now estimated to be worth $750 million or more -- could plummet by 90%. Reason: most of the value of a broadcasting station resides in its license. Nonetheless, GenCorp may be able to salvage some of its RKO investment. The company has agreed to sell its highly regarded KHJ-TV to the Walt Disney Co. for $217 million and three radio stations to other buyers.
Allegations of RKO improprieties arose in 1965, when investors challenged KHJ-TV's license, claiming that RKO was not broadcasting in the public interest. Later, detectives hired by rivals discovered that General Tire was maintaining slush funds for such uses as improper overseas payments and questionable campaign contributions. RKO lost its license for Boston TV station WNAC in 1980. Among the misdeeds cited by the FCC judge last week: the chain allegedly filed false and misleading financial statements between 1971 and 1975 and overcharged its advertisers on 55% of its ad invoices during a 17-month period in 1983 and 1984.
A. William Reynolds, GenCorp's chairman, called the judge's decision last week "unprecedented and unjustified." A spokesman for GenCorp claimed that the company fired the employees responsible for the misdeeds. The decision against GenCorp could conceivably be appealed all the way to the U.S. Supreme Court.