Poller v. Columbia Broadcasting System, Inc.

PETITIONER:Poller
RESPONDENT:Columbia Broadcasting System, Inc.
LOCATION:The Borden Company – Chicago Milk Division

DOCKET NO.: 45
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 368 US 464 (1962)
ARGUED: Nov 13, 1961 / Nov 14, 1961
DECIDED: Feb 19, 1962

Facts of the case

Question

  • Oral Argument – November 14, 1961
  • Audio Transcription for Oral Argument – November 14, 1961 in Poller v. Columbia Broadcasting System, Inc.

    Audio Transcription for Oral Argument – November 13, 1961 in Poller v. Columbia Broadcasting System, Inc.

    Earl Warren:

    Number 45, Lou Poller, Petitioner, versus Columbia Broadcasting System Incorporated, et al.

    Mr. Wolf.

    Morris Wolf:

    May it please the Court.

    This case presents to the Supreme Court for the second time the dangers that are inherent in permitting the three great television networks to acquire and operate in a proprietary capacity, stations of their own at the same time that they supply programs to affiliated stations in something akin to in agency capacity.

    In National Broadcasting Company against the United States from which the phrase ‘in a proprietary capacity’ and ‘in something akin to an agency capacity’ is quoted, this Court and its opinion by Justice Frankfurter upheld the FCC limitations on the location of radio stations which the networks might own, and quoted from the FCC report that the common ownership of network and station places the network in a position where its interest as the owner of certain stations may conflict with its interest as a network organization serving affiliated stations.

    This was similar to the condition which existed in the motion picture industry until this Court in United States against Paramount forbad producers of pictures to operate theaters.

    The first case that came up, which this danger had foreseen was U.S. against RCA where NBC wanted a station of its own in Philadelphia.

    It threatened its affiliate Westinghouse, that if it didn’t sell Westinghouse’s Philadelphia station to NBC, NBC would cancel or refuse to renew Westinghouse’s affiliation.

    You held, as we all know, that the antitrust aspect of NBC’s action was not washed out by FCC’s approval of the deal.

    The same thing has happened in this case.

    This time, CBS is the actor, and it has used its leverage as a network, the phrase used by the Chief Justice in U.S. against RCA on a much smaller affiliate than Westinghouse, and with much more devastating anti-competitive results than in the Westinghouse case.

    The third instance of the same thing is involved in the pending suit which the Chronicle Publishing Company of San Francisco, another affiliate of NBC, has brought in the District Court for the Northern District of California against NBC for using similar tactics to compel that plaintiff to sell its television station in San Francisco to NBC.

    John M. Harlan II:

    How does that broad issue — how does that broad issue tie in to the facts of this (Voice Overlap)

    Morris Wolf:

    I would like to — I’m just going to give you the facts of the case if I may.

    This is an appeal by Poller from the affirmance by the Court of Appeals of the District of Columbia Circuit of an order of Judge Holtzoff, granting the defendant’s motion for summary judgment and dismissing Poller’s complaint with courses.

    Judge Washington dissented from the judgment of the Court of Appeals which was made by Chief Judge Wilbur K. Miller and Judge Prettyman, this Court granted certiorari.

    The action was brought under Section 4 of the Clayton Act for damages sustained by Poller as the assignee of the Midwest Broadcasting Company by reason of the violation by the defendants, Columbia and others of Sections 1 and 2 of the Sherman Act.

    The alleged conspiracy, the violation alleged was a conspiracy among the defendants to reduce competition and hence restrain trade in the television broadcasting industry in Milwaukee and to attempt to monopolize that trade as far as it concerns ultra frequency broadcasting in Milwaukee and throughout the United States.

    The natural and intended result of the conspiracy as we claim was to force Poller to sell his television station to CBS at a distressed figure far below its real value, and this action is to recover the resulting damage.

    The Court of Appeals in an opinion by Judge Miller, accepted as true, all the exculpatory testimony of the defendants in their pre-trial affidavits and deposition and on that basis found as facts that there was no conspiracy, no restraint of trade, no monopolization or attempt to monopolize.

    “Hence,” he said, “Such injury as Poller sustained resulted from his own foolishness in investing so much money in his station when he had only an affiliation agreement with CBS which it cancelled in the exercise of its legal rights so to do.”

    Judge Washington dissented on the ground that Poller raised genuine issues of material fact as to whether there was a conspiracy against him in restraint of trade and the monopoly, and that Poller should have a chance to have these questions of fact decided by a jury particularly where he said, as here, “It is charged that the public has been deprived of maximum television service by a reduction of competition.”

    He pointed out that CBS’s freedom to select its customers did not sanction what amounts to a conspiracy to restrain trade and the monopoly.

    Of course, I realize that even if we win our battle in this Court, we have not won the war.

    I do not at all underestimate the skill of our opponents, but we shall gain all that we have a right to ask, an opportunity to present our full case to a jury to decide.

    In order to reduce the questions of fact, which we claim and which Judge Washington thought were raised, we must recite the transactions which resulted in the injury to Poller.

    In February 1953, Midwest Broadcasting Company, I think I — it will be less confusing if I speak of that company as Poller because he became the assignee of all of its rights at the end of 1955.

    Midwest Broadcasting Company which had been operating a radio station in Milwaukee was granted by FCC a permit for one of the three ultra-high frequency channels which FCC assigned to Milwaukee when FCC felt that it had opened a large number of new channels to ultra-high frequency broadcasting in order, as it said, to establish a truly nationwide and competitive television system because the previously 12 available very high frequency channels were so completely occupied that there was no room in them for further development.

    From the commercial point of view, these VHF channels were preempted almost exclusively by the three great networks and their affiliates.

    By 1954, CBS, NBC and ABC had affiliations with 90% of the operating stations in the United States, CBS itself with 202 of these stations.

    Morris Wolf:

    These 202 stations served 90% of the population of the United States.

    The development of ultra-high frequency broadcasting was difficult because no receiving sets then in the hands of the public could get UHF programs unless the owners attached converters which cost about $20 each, and it was a problem to get the set owners to make this investment.

    Poller, however, when he got his permission, had faith in his ability to solve this problem.

    He built his station in Milwaukee with the call letters WCAN-TV and in September 1953, he entered into an affiliation agreement with CBS-TV which at that time had no primary affiliation in Milwaukee and was very eager to affiliate with Poller.

    This was because, as the deposition show, CBS considered him a very promotion minded, sales minded, aggressive station operator.

    As I am sure you know, an affiliation agreement is an arrangement with one of the three national networks under which the network agrees to furnish programs to a local broadcasting station in return for which the local station must show at specified hours, programs and advertisements which the network have agreed with national advertisers, shall be shown in their self-owned and affiliated stations.

    The Poller agreement ran for two years.

    Potter Stewart:

    Is the latter provision —

    Morris Wolf:

    I beg your pardon?

    Potter Stewart:

    Certainly that latter provision the so called must buy.

    Morris Wolf:

    Yes.

    Potter Stewart:

    It’s part of the contract.

    Morris Wolf:

    Yes.

    That isn’t involved in this case however.

    It since has been abrogated as you know.

    The power of agreement ran for two years but it gave CBS-TV the unilateral right to cancel it at anytime with six months notice.

    CBS’s high opinion of Poller’s ability was justified for Poller had unexpectedly good results in getting thousands of TV owners in the Milwaukee area to convert so that they could see UHF programs, and CBS was highly complementary of its progress.

    In the meanwhile, Bartell’s —

    Charles E. Whittaker:

    May I ask you Mr. Wolf?

    Were there any conditions on that covenant respecting termination other than time?

    Morris Wolf:

    None at all.

    Charles E. Whittaker:

    None at all?

    Morris Wolf:

    None at all.

    In the meanwhile Bartell’s, who operated in other radio station in Milwaukee had obtained a second UHF permit with call letters WOKY.

    Those are the only letters I’ll ask you to remember because they’re so confusing.

    There are so many.

    Bartell’s equipment was poor, and Salant, the Vice President of CBS testified about it in most uncomplimentary terms.

    Bartell’s did not do well with WOKY.

    At the end of 1953 —

    Potter Stewart:

    I didn’t quite understand.

    Potter Stewart:

    Is this WOKY a UHF or VHF?

    Morris Wolf:

    UHF, this was the second UHF station —

    Potter Stewart:

    The second UHF station in Milwaukee.

    Morris Wolf:

    — in — this was the competitor of Poller Station.

    Charles E. Whittaker:

    Was this affiliated if I may ask you please, was it affiliated with one of the lead chain?

    Morris Wolf:

    No.

    He was not.

    He had no affiliation.

    Charles E. Whittaker:

    No affiliation.

    Morris Wolf:

    WOKY had no affiliation.

    It was an independent station.

    At the end of 1953, FCC in order to encourage the use of ultra-high frequency stations announced that it was considering a rule to allow any of its licensees to own two UHF stations in addition to the five VH stations which they previously had been permitted to own.

    CBS at that time owned three extremely profitable VHF stations in the key cities of New York, Los Angeles and Chicago, and had applications pending for the two more VHF stations which it was permitted to have.

    As soon as the UHF matter became to be agitated, CBS began looking into the situation and decided that if it wanted to take advantage of the UHF channels, one of the two most desirable markets in the United States to do so was Milwaukee, which had more than 400,000 homes.

    While CBS was making its investigation into the UHF situation, Congress also was looking into the situation, and Stanton, President of CBS told the Senate Committee in June 1954 that Poller’s station was a vigorously and aggressively manning UHF station and was doing well in Milwaukee.

    And Akerberg, Vice President of CBS-TV and one of the defendants had a meeting with Poller in New York just about that time, told Poller that CBS was very happy with the job that he was doing.

    By that time, over 200,000 owners of sets in the Milwaukee area had invested over $4 million in converters for UHF reception, and Poller already was on a profitable basis with sales of about $110,000 a month.

    But it was only a few days before or after these compliments from CBS that CBS asked the Birmingham, Alabama businessman named Holt with whom they’ve had some business connection to come to New York to discuss doing a very hush-hush job for CBS in Milwaukee.

    Holt came to New York, met the top management of CBS and agreed to accept the job which was to go to Milwaukee and try to get an option to buy Bartell’s WOKY station.

    Holt went to Milwaukee and in a few days returned to New York with an option to buy WOKY for $335,000.

    Of course the whole matter was to be kept secret from Poller, to ensure which, Holt and his communications to CBS adopted the code name Stonewall Jackson for the operation.

    Milwaukee was called Seven Pines, Birmingham was Fredericksburg and New York was Chancellorsville in their communications.

    With Poller’s station doing very well, and of course in complete ignorance of what CBS was doing behind his back, Poller signed a 15-year lease on an elaborate new studio, he and his wife individually guaranteeing the rent and proceeded to rebuild and reequip it.

    Salant, one of the Vice Presidents of CBS, testified that CBS must have known about Poller’s intention to improve his facility in this manner, for he said that Poller kept CBS fully informed of his plans, and Poller’s affidavit said that CBS encouraged him to go ahead.

    Potter Stewart:

    Was Holt the — was the agent of CBS or was the (Voice Overlap)?

    Morris Wolf:

    He was — he was an independent operator engaged with this particular job.

    Potter Stewart:

    In inquiring this option.

    Morris Wolf:

    I beg your pardon, to buy this option.

    Potter Stewart:

    Is there a plan that he was that — he was an undisclosed agent of CBS in acquiring this option?

    Morris Wolf:

    Well, if he was to acquire the option in his own name, but with the right to assign it to anybody.

    William J. Brennan, Jr.:

    I thought the allegation was that he actually was sent there by CBS.

    Morris Wolf:

    He was.

    William J. Brennan, Jr.:

    Do this for CBS.

    Morris Wolf:

    He was — he was to get the option for CBS.

    Charles E. Whittaker:

    Is there any allegation that the station of (Inaudible)

    Morris Wolf:

    The Poller.

    Charles E. Whittaker:

    No the other one.

    Morris Wolf:

    Bartell?

    Bartell’s —

    Charles E. Whittaker:

    Any allegations that Bartell knew that both was acting for CBS?

    Morris Wolf:

    Well, we alleged that — we allege that Bartell was one of the conspirators who did act with CBS with knowledge of what went on.

    I shall dwell on that a little more in detail as admitted by my — CBS, knowing Poller’s plans and knowing of this new lease that he had taken, said nothing about it’s dealings with Bartell’s for WOKY.

    About a month and a half after the option was obtained, FCC approved this rule allowing the networks to acquire two UHF stations.

    Poller had once wrote to Stanton, President of CBS, telling him about the new construction and promotional work he was engaged in, and said that if CBS wanted to buy a UHF station, Poller would be glad to talk to it about selling his station, WCAN.”

    Stanton, with the option on WOKY in his pocket, wrote to Poller that he wasn’t interested.

    Without a word of warning, a few days later, CBS sent Poller a telegram canceling its affiliation agreement, no reason assigned or explanation offered.

    It is not difficult to guess what happened when Poller got the telegram.

    He rushed to New York and unsuccessfully protested the cancellation.

    Salant of CBS was amazed that Poller protested the cancellation.

    He told Poller that that was one of the hazards of the business, that CBS would buy its own station, and cancel out its affiliate.

    He said to him, “You don’t oppose the inevitable, you don’t oppose the normal.”

    Well, Poller was really in difficulty.

    His affiliation agreement with CBS was cancelled and both NBC and ABC had or about or were about to enter into affiliation agreements with the only two VHF stations in Milwaukee.

    Poller had on his hands, his 15 years studio lease, his construction contract and his expensive equipment.

    So we come to the last act.

    As Salant describes it, in the course of our conversation, the suggestion developed that CBS might buy the physical equipment, studio lease and construction contract, but he told Poller right off the back that CBS wouldn’t do a thing about it unless Poller said that he would continue in business.

    This has to find Salant probably had nothing to do with the antitrust laws.

    Our standards of contract, I would like to think, have nothing to do with the antitrust laws and they are four times as high.

    I need not tell you that Poller said what CBS tell them that he had to say if he wanted to make his deal.

    He testified, “I knew I had a gun at my temple.

    Morris Wolf:

    I had to say yes, and I said yes.

    Then I made every effort to comply.”

    Thereupon, CBS agreed to buy Poller’s station for $500,000 and told Poller that he could have the poor WOKY equipment for which CBS had no use when it bought Poller’s superior equipment.

    Charles E. Whittaker:

    The word station does not include license.

    Morris Wolf:

    That’s right.

    Charles E. Whittaker:

    It does not.

    Morris Wolf:

    That — it does not.

    With Poller thus disposed of, CBS exercised its option on WOKY.

    Then CBS drew up an agreement in which Poller dutifully said, “As a matter of window dressing” as he testified that he intended to continue to operate WCAN-TV.

    However, before the agreement was signed, the provisions in it, assigning to Poller the WOKY studio and transmitter site without which he could not operate when he sold his own studio and transmitter right to CBS were stricken out.

    After this agreement was made with Poller, FCC without a hearing or an opinion kindly granted the application to transfer WOKY to CBS.

    Earl Warren:

    Well, Mr. Wolf, do I understand that at the end, CBS cancelled out the — its contract to sell him the equipment of the — his competitor?

    Morris Wolf:

    No, they are not the equipment, just the studio lease and the transmitter location.

    Earl Warren:

    Well, I know — I know that Mr. Poller sold that to — to CBS.

    Morris Wolf:

    That’s right.

    Earl Warren:

    Now, he got back in return what —

    Morris Wolf:

    He — the contract originally said that he was to get back a lease of the WOKY studio, and the WOKY transmitter site.

    Earl Warren:

    Yes.

    Morris Wolf:

    But that provision was stricken out of the agreement before it was signed.

    So he had no studio lease and he had no transmitter site.

    Earl Warren:

    Was that over his objection?

    Morris Wolf:

    I don’t know.

    There’s nothing in the evidence to show.

    I would rather guess, I would be inclined to guess that he wanted it stricken out because he wasn’t going to operate anyway and he didn’t want to have the obligations of the studio lease.

    That could be my guess.

    There’s nothing in the testimony — in the record that I have here to show one way or the other.

    But it was obvious that after that was stricken out, it would’ve been impossible for him to operate.

    As I said, the — the FCC without a hearing or an opinion granted the application to transfer WOKY to CBS.

    The order was made by three out of seven commissioners, two commissioners dissented, two did not act.

    The dissenting Commissioner who wrote an opinion said, “CBS’s entry as a licensee into the Milwaukee market, therefore, not only these places an independent permanently but raises questions concerning the type of operation which the remaining UHF operator, Poller, will be in a position to conduct.

    Morris Wolf:

    This was in the opinion of the dissenting Commissioner.

    On February — in February 1955, closing under the purchase agreement between Poller and CBS took place.

    Poller then was in this position.

    He had transferred to CBS, all his physical assets and his contracts, including the lease of his studio and of his transmission location and CBS continued that operation with his studio, his equipment and his transmitter location.

    Charles E. Whittaker:

    But under the Bartell license?

    Morris Wolf:

    Under the Bartell license, that’s right.

    Poller had no studio and no transmitter site.

    His affiliation agreement with CBS was at an end and he could not get one with NBC or ABC, they already were committed.

    As a matter of fact, so clear was it to Poller that he could not continue after the station was sold to CBS, but already in January, two months before closing under his contract with CBS, in anticipation of the discontinuance of its business, the stockholders of Midwest had adopted the plan of liquidation and dissolution.

    When Poller got the WOKY equipment, put it in storage, the WCAN-TV was out of business.

    It never went back.

    It kept its permit alive, but has not operated.

    There is no evidence of the subsequent events except that later, a man named Storer who had wanted to buy Poller’s station but had been discouraged by CBS from doing so, acquired a third VHF station in Milwaukee whereupon CBS and he entered into an affiliation agreement, where that VHF station and CBS promptly closed WOKY, its UHF station thus confirming what Poller had said from the beginning that CBS planned to destroy any hope that UHF stations would be successful on a commercial plane in protection of its vested greater interest in VHF operation.

    These indeed are the outlines of the course of events that led to the silencing of Poller’s UHF station.

    As presented to the trial court after the motion for summary judgment, the record consisted of the pleadings, interrogatories and answers, affidavits and depositions.

    The trial court and the Court of Appeals as well treated this record as if there had been a complete trial of the case in court, as if both sides had rested and as if it now were up to a jury to bring in a verdict.

    These courts also considered that they themselves were the jury, should determine, whose testimony they believed and decide the motion to dismiss on the basis of this belief incredibility.

    With all due respect, I submit that this record — this method of disposing of a motion for summary judgment under Rule 56, that judicial atomic bomb, shows a complete misunderstanding of the scope of such a motion and can produce a fall-out which will wreck the whole theory of pretrial preparation of jury cases.

    In the first place, it assumes that a record like the one here represents the entire case that can be presented to the jury, and therefore, as a safe basis on which to render a verdict.

    Plaintiff and defendants both have had their full say.

    This is totally unrealistic.

    Every trial lawyer knows that pretrial procedure never was designed or used to bring out the entire case of either side.

    If as the lower court here thought, these trial procedures presented all that there was in the way of evidence and if in addition, the Court on motion for summary judgment might pass on the credibility of such witnesses as filed pretrial affidavits or gave pretrial depositions, there would be very little need for juries.

    All cases could be determined on summary judgment, probably to the great delight of the trial courts which shudder at the thought of time consuming antitrust jury cases.

    Certainly, neither side is obliged to call any witnesses pretrial certainly not all the witnesses it may wish to call neither as either side required to ask any witness on cross-examination, all the questions, it will want to ask the witness in court.

    The essential purpose of each side pretrial is to get as much damaging evidence from the other side as it can to use at the trial while revealing as little of its own evidence as is possible.

    In the second place, the Court on consideration of motions to dismiss may not base their action or their determination of the credibility of witnesses.

    That is solely a function of the jury which sees and hears the witnesses.

    The function of Rule 56 and it is a most important one, is to permit the dismissal of an action where there are no questions of fact which would entitle the plaintiff to go to a jury, the pure unadulterated questions of law.

    Because this is the essential feature of my argument, I must mention the leading case on the use and the views of the motions for summary judgment is Arnstein against Porter in a 154 F.2d which is not in our brief.

    Morris Wolf:

    Judge Jerome Frank’s opinion in that case, presents my argument on my — on this point so much better than I can, but except for a possible accusation of plagiarism, I should’ve copied it in toto instead of using my own language.

    I quote just a few sentences from it.

    “Although part of plaintiff’s testimony on deposition, does seem fantastic, yet plaintiff’s credibility, even as to those improbabilities should be left to jury.

    It follows that as credibility is unavoidably involved, a genuine question of material fact presents itself.

    It has been said, that as the appearance and manner of the witness is often a complete antidote to what he testifies, we cannot very well overestimate the importance of having the witness examine and cross-examine in the presence of the court and jury.

    This brings us to the consideration of the questions of fact which should have been left to a jury in this case.

    First, we mentioned three general principles of law which are relevant to our discussion.

    The first is, like where there are number of acts, all calculated to bring about one result, if the result is illegal, it is not safe by reason of the fact that some of the individual acts or even all of them individually leading up to the final result maybe legal.

    Felix Frankfurter:

    Mr. Wolf, may I interrupt you (Voice Overlap) —

    Morris Wolf:

    Yes indeed.

    Felix Frankfurter:

    — on the question of the propriety of the summary judgment, on page 278 excerpts from the official transcript, the trial court said I am going to assume the fact to be as claimed by the plaintiff for the purposes of this motion, would you mind elucidating that for a moment?

    Morris Wolf:

    Well, he said that but he didn’t do it and the Court of Appeals expressly said the contrary.

    Court of Appeals accepted the testimony of those witnesses who were defendants and whom we called for cross-examination and I’m going in a minute to say —

    Felix Frankfurter:

    Alright.

    Morris Wolf:

    — who they were if I may.

    The events from the — the summons to hold at Birmingham, to the closing down of WCAN constituted a single transaction, fractions of which separately considered may have been legal, but the end result of which was illegal.

    Salant of CBS testified, he was asked, “Regardless of what the dates were in regard to the formal actions, it was all part of one transaction.

    You aren’t going to buy the station of WOKY-TV and continue to let Poller be your affiliate in Milwaukee, were you?”

    “No.”

    The other general principles are that people are responsible for a result which a jury finds as the natural consequence of their acts and that acts speak louder than words.

    Before coming to these questions of fact, however, we discussed for a minute a matter which is not a question of fact, does not depend on anybody’s credibility and is exactly the kind of question as to which a motion to dismiss is appropriate.

    This is the question, whether as a matter of law, CBS-TV, a separate or autonomous division of CBS Incorporated, can be a party to a conspiracy with CBS Inc.

    when the division is not incorporated, assuming as we do, that under Timken it could be a conspirator, if it were incorporated.

    The Court of Appeals held that in the absence of a charter, CBS and CBS-TV were one entity and could not conspire with each other anymore than, if I may invent (Inaudible), a child en ventre sa mere could conspire with his mother.

    Judge Washington thought that the absence of a charter was not controlling, but he did not base his dissent on that ground.

    We feel, looking at the situation realistically, if a court may pierce the corporate veil and hold two corporations to be one, where they are functionally one, the Court may cut the corporate veil and hold that one corporation as two, where they are functionally two.

    We maintain this position, but we need not rely on it.

    We pointed out —

    Potter Stewart:

    Mr. Wolf, was the — does the record —

    Morris Wolf:

    I beg your pardon?

    Potter Stewart:

    Does the record show that this — that this unincorporated subsidiary, CBS- TV, was functionally a separate corporation?

    Morris Wolf:

    Not a separate corporation.

    Potter Stewart:

    No, I say functionally.

    Morris Wolf:

    Functionally, entirely separate.

    Potter Stewart:

    In what respects?

    Morris Wolf:

    Well, it had its own officers.

    It had its own bank account.

    It signed the contract for example with Poller, the affiliation contract.

    Its records were kept separately.

    In every — in every way, in which it could be separate functionally it was.

    The purpose of CBS in having these various divisions was the key to separate activities of his business in separate channels, and each of these channels therefore operated autonomously.

    Of course, CB — the controlling CBS as if it were a holding company had final say on general — matters of general policy.

    Potter Stewart:

    Now, what do you mean it has its own officers?

    Is there a President of CBS-TV as well —

    Morris Wolf:

    Yes —

    Potter Stewart:

    — (Voice Overlap) of CBS?

    Morris Wolf:

    Yes, there is president, vice-president, treasurer and secretary.

    It’s all in the record.

    Tom C. Clark:

    How did they sign the contract?

    Morris Wolf:

    I beg your pardon.

    Tom C. Clark:

    How did they sign the contract?

    Morris Wolf:

    Yes.

    Tom C. Clark:

    CBS-TV or what?

    Morris Wolf:

    CBS-TV.

    Well, they have assigned the CBS-TV a division of CBS Inc.

    Potter Stewart:

    By whom or (Voice Overlap)?

    Morris Wolf:

    By the president of CBS-TV.

    Potter Stewart:

    So, identified —

    Morris Wolf:

    I beg your pardon.

    Potter Stewart:

    So this is kind of — he was identified and signed the contract?

    Morris Wolf:

    I don’t — I don’t remember whether in the signature it said that or the testimony says that he was the man who signed, it was that.

    Tom C. Clark:

    The contract is in the record?

    Morris Wolf:

    Yes, it is Your Honor.

    The contract is on page 82.

    No, the contract is on page 50 — 60.

    The signature is on page 59.

    Signature is Akerberg at the bottom of 59 who was the Vice President.

    He signed it in the wrong place, but he is the Vice President of CBS Television, page 59.

    John M. Harlan II:

    That’s an interesting document.

    This means that you could have a conspiracy to violate the antitrust laws if I understand you correctly where only one corporation is involved if you can show conspiratorial activity between heads of different departments.

    Morris Wolf:

    I say that where you could show that, if there was a charter, there’s no reason why looking at it realistically, you can’t show that.

    The only difference is that there is not a charter.

    However, I don’t want to take too much time on this because, I’m really —

    (Inaudible)

    Morris Wolf:

    This is theoretical matter which is not necessary for me to establish in order to — in this part of my case.

    I’m really pointing it out more than for any other purpose to say that this is a matter, properly disposable on a motion for summary judgment, but whether individuals not connected with CBS or CBS-TV conspired is purely a question of fact defending for a determination on their credibility.

    Judge Rosenman’s statement that the testimony of various — of the witnesses we called must be believed as a matter of law we deny.

    And I now come to a consideration of Holt.

    Holt was the man from Birmingham who put in motion, what ultimately resulted in the elimination of Poller’s television station in Milwaukee.

    We claim that he was a conspirator, that he conspired with CBS to bring about this result that knowing the purpose and likely effect what the CBS have plotted at request of CBS and for a valuable consideration, he performed in order to carry out the plot, acts which he knew were necessary in order that it should be done.

    William J. Brennan, Jr.:

    What did he get out of this?

    Morris Wolf:

    $10,000.

    William J. Brennan, Jr.:

    Not bad.

    Morris Wolf:

    It is perfectly true that Holt denied not only that he conspired with CBS in the plot to put Poller out of business but that he had the faintest idea that there was such a plot and the Court of Appeals believed him.

    We can see that a jury too, after seeing and hearing Holt may believe him, but we respectfully deny that the Court had a right to accept his statement as a basis for a summary judgment against this.

    Potter Stewart:

    What was Holt’s occupation?

    Morris Wolf:

    I beg your pardon.

    Potter Stewart:

    What was Holt’s occupation?

    Morris Wolf:

    He was a general businessman.

    I’m going to speak of that in a minute.

    Potter Stewart:

    Was he a television broker?

    Morris Wolf:

    He had a lot of experience in television.

    May I tell you —

    Potter Stewart:

    Yes, yes please.

    Morris Wolf:

    — what his experience was?

    I’m going to say that if an alleged conspirator’s denial that he was a conspirator was considered sufficient as a matter of law to establish that he was not, there would be very few convictions of conspiracy.

    We believe that even from Holt’s own testimony already given, quite outside of what might be developed further at a trial, quite outside of the impression that this manner on the witness stand might give, a jury probably will disagree with the Court of Appeals about Holt’s credibility.

    Will you not believe that a jury will accept as true his story of the initial briefing session in New York at which all the top men of CBS were present which he was asked to get this option?

    According to his story, he asked no information and was given none about the job he was about to undertake.

    He thought he was picked out for the job because he was a country boy probably could handle Bartell’s better than a city slicker.

    In fact, he was not a country boy not to consider whether Birmingham is a country town.

    He had years of experience in television, had been chairman of the Federal Reserve Board and was on terms of mutual confidence with CBS.

    “He took it for granted,” he says, “That if CBS bought WOKY, it would move its programs to that station” and he was given background written material before he left New York which showed that Poller’s station, WCAN, had television affiliation.

    How much more he learned about the Milwaukee area situation after he began talking to Bartell’s, we cannot know until he is examined on that subject.

    It may be as, I have said, that in spite of all we can show, the jury still will decide that Holt did not know what was going on and the CBS had been smart enough to select for the delicate job of getting the option one of the few men in the United States withhold experience in television and in finance who was naïve enough not to understand what CBS was up to.

    William J. Brennan, Jr.:

    Why Fredericksburg (Voice Overlap)

    Morris Wolf:

    Pardon me.

    William J. Brennan, Jr.:

    Why Fredericksburg (Voice Overlap)

    Morris Wolf:

    Oh, this was — this was so that if anybody saw the correspondence, they wouldn’t know that it was about Milwaukee and New York.

    William J. Brennan, Jr.:

    (Voice Overlap) are these TV Programs?

    Morris Wolf:

    I beg your pardon.

    Well —

    William J. Brennan, Jr.:

    Section.

    Morris Wolf:

    — this was just part of the strategy.

    Evidently he was a civil war historian.

    Felix Frankfurter:

    How much did you say the consideration was — the total consideration?

    Morris Wolf:

    The total consideration from Bartell’s —

    Felix Frankfurter:

    WOKY, Bartell’s.

    Morris Wolf:

    $335,000.

    Felix Frankfurter:

    And Holt got $10,000.

    Morris Wolf:

    Holt got $10,000.

    Felix Frankfurter:

    Out of the 330 or was an addition to the 330?

    Morris Wolf:

    No.

    That was in addition to the three.

    Potter Stewart:

    And your client got what, half a million?

    Your client got $500,000?

    Morris Wolf:

    Yes.

    Charles E. Whittaker:

    It was as I understand it that this equipment is from the Bartell’s station?

    Morris Wolf:

    That’s right.

    That was useless that he got that.

    So much for Holt, now as to Bartell’s, just how much Bartell’s knew about this scheme, we cannot tell.

    There were three Bartell’s who owned WOKY.

    None of them was examined on deposition.

    One of them submitted a brief affidavit in which he said he had no knowledge that CBS was the interested party.

    He adds by way of hearsay that he is sure that none of his associates had.

    Just what will be developed at a trial, when he and his associates are examined, we cannot tell.

    However, the evidence is clear that Bartell’s, long before closing the CBS under their option agreement with Holt, knew that CBS was the interested party.

    With this information, they nevertheless went ahead and completed their deal, surely knowing what the result would be as far as Poller was concerned.

    If knowing that, they went ahead and carried out the option agreement, the jury may find that Bartell’s joined the conspiracy since they could not have been compelled to complete their agreement with CBS when they found out that in the circumstances of the matter, the agreement violated the antitrust law.

    What testimony would be brought out of the trial if the case from other witnesses, nobody can tell at this time.

    There were three other CBS people of the meeting with Holt in New York from whom nothing has been — has been heard, the three other shareholders of WOKY from whom nothing has been heard.

    As we’ve said, there is no obligation on Poller pretrial to call all the witnesses that he had or to examine those who were called as exhaustively as he could.

    If as we have argued, the jury may find that there was a conspiracy among CBS and others, we come to the next question, was the conspiracy in violation of the antitrust laws?

    Court of Appeals thought as a matter of law that it was not.

    Judge Washington thought that this was a question of fact for a jury.

    We consider the purpose and the effect of the conspiracy.

    What was the purpose of the conspiracy?

    There is not a word in the record from any CBS witness which answers the question of why CBS undertook the destruction of Poller.

    What explanation CBS may give at a trial, we do not know.

    We assert that the purpose of CBS was to buy Poller’s station as cheaply as possible in order to own and operate WOKY as the only UHF station in the Milwaukee area with the effect on competition described hereafter.

    Morris Wolf:

    We can see that CBS denied all of this.

    We also admit that the incomplete record now before this Court on pretrial evidence does not go nearly so far toward proof as we expect to go on the trial of the case.

    However, what other reason could CBS have had?

    We start out with the undisputed fact.

    Poller was an exceptionally able and successful station operator, was producing good results with his UHF station through not only exceptionally of good by highly surprising.

    Up to the time of the cancellation of the affiliation agreement, CBS had had no complaint against Poller, any quarrel or disagreement with him concerning any matter connected with his operation of the station or his relations with CBS.

    The next circumstance is that it is not normal to terminate an affiliation agreement where this agreeable situation exists.

    Stanton testified, “We don’t change any affiliation agreement because of when it is based on performance.”

    Then he was asked, “Where the operator is performing well and the station is prosperous and things are satisfactory, it is advantageous to you, you’ll normally continue regardless of the two-year limitation.”

    That is absolutely correct.

    In spite of this general policy all through the case, appears statements by Stanton and by Salant that since they had refused Poller’s request to modify the six months cancellation notice, Poller should have known better than to make a long-term lease, build a fine new station as if the six months cancellation notice was an exception or provision in the CBS affiliation agreements.

    As the matter of fact, the record show that in — I beg your pardon.

    Earl Warren:

    You said it wasn’t unusual.

    Morris Wolf:

    No, as if it was.

    They spoke of it —

    Earl Warren:

    Yes.

    Morris Wolf:

    — as if it was unusual.

    Now, I am about to say that in the record, it appears that 75 of their affiliation agreements contain cancellation clauses of six months or less.

    No affiliation agreement could be for more than two years under the FCC regulations.

    If affiliates could not depend on more than one year which is the longest cancellation notice provided in any of the affiliation agreements, how could the industry ever have been built?

    If it was extremely unwise with the six months cancellation notice for an affiliate to invest the large amount in his station, it would be only slightly less reckless for him to do it with the one year cancellation notice and all the stations in the whole industry would have been built on a makeshift basis.

    The fact is that in spite of the short-term of these affiliation agreements, the whole stability of the industry depends and has been built on the supposition that affiliation agreements will be renewed indefinitely as long as the station operator is loyal and skillful.

    Stanton himself, President of CBS, recognized this and agreed that “broadcasters invest large sums of money in stations in reliance on the affiliation agreement even though they know that it is terminable in the two-year period.”

    Although as we have said, CBS has not advanced any explanation of why it withdrew its affiliation agreement from Poller, both Stanton and Salant have pretended that their most adherent wish was that Poller would continue in business in competition with their WOKY station.

    Stanton said, “All I was interested in doing, looking back on it, was seeing that we didn’t diminish the number of stations operating in the community.”

    And Salant, his — the assistant who handled this transaction said, “I said to Poller that I didn’t want CBS or me to be in a position where we were acquiring one station and putting another off the air.

    And I told him I would not consider buying his equipment unless I was sure, as sure as one could be and I was sure too that there would be the same number of stations on the air after this whole thing was completed as there were now.

    The jury may believe this, but there is enough evidence in the record to allow the jury to disbelieve the sincerity, the CBS’s protestations that it desired or expected Poller to remain in business in competition with CBS.

    It is true that in the agreement Poller said that he continued — intended to continue to operate his station, but as the agreement itself shows, CBS did not agree to provide any location for its operation since there was no location in which Poller could operate a station when he got Bartell’s old equipment, there was nothing for him to do except put it in the warehouse which is what he did, which was perfectly obvious to CBS.

    So a jury may decide —

    Potter Stewart:

    How long did you tell us that WOKY —

    Morris Wolf:

    I beg your pardon.

    Potter Stewart:

    How long did you tell us that WOKY had been in business in Milwaukee in competition with CBS?

    Morris Wolf:

    It has been in business before it was taken over about eight months.

    Potter Stewart:

    Before it was taken over — and it was not doing well, was it?

    Morris Wolf:

    It was not doing well, no.

    Charles E. Whittaker:

    Bartell (Inaudible) Bartell said they’ve been doing in longer or shorter time?

    Morris Wolf:

    They have been going just about a month shorter time than Poller has.

    William O. Douglas:

    But Poller (Inaudible) himself —

    Morris Wolf:

    He is what?

    William O. Douglas:

    I don’t understand.

    How long had Poller been going?

    Morris Wolf:

    He’s been in business about two or three months or longer than Bartell’s.

    So as I say, the jury may decide that CBS’s insistence on keeping Poller in business was nothing but pretence, and that both CBS and Poller knew very well that when CBS bought Poller’s equipment and location for their own station, he was through and that was the purpose of their purchase of WOKY in the first place.

    The reasons they bought Poller’s equipment and locations were first, they wanted to be sure that Poller had a fast and sure demise.

    The second was if they had a bad conscience.

    As Salant said at this transaction which he had engineered, it was not the sort of thing you enjoy or appreciate, surely a under statement, not that the Sherman Act has any insurance against business cruelty.

    The third was that it was a tremendous benefit to CBS.

    Together, the bargain price, a brand new station with fine equipment in working order and to be able to continue without interruption, the operation which Poller was performing so well.

    As to the Bartell equipment, CBS — CBS had no use for it.

    It wasn’t even testified that Poller asked for it.

    The real purpose of giving this to Poller was to create some pretence that Poller would stay in business but the pretence became quite transparent when it was obvious that when he got the equipment, he had no place to put it.

    Having considered the purposes of the CBS activities, we now consider their effect.

    Assuming that a jury found that there was a conspiracy among the defendants to get Poller’s station for CBS-TV, could the jury find that the conspiracy had the effect of a restraint of trade or an attempt to monopolize the Sherman Act?

    We submit that a jury surely could so find.

    In the first place, the conspiracy directly affected the Milwaukee area market.

    Before CBS bought WOKY and used its leverage as a network to force Poller to sell his station, there were two independent UHF stations in the Milwaukee area competing not only with each other, but also with the Milwaukee area VHF stations for local and national spot advertising and local news programs with the further potentiality of competing for affiliations with any of the three national networks no matter how unlikely it was that Bartell’s with their inferior operation could win such an affiliation.

    After CBS bought WOKY, Poller was out of business.

    There was only one UHF station in the Milwaukee area and that was owned and operated not by an independent but by the largest of the three giant networks.

    This naturally in the words of the opinion in U.S. against du Pont led to the insulation from free competition of the Milwaukee area markets for local and spot advertising and local news programs and remove the possibility of competition for network affiliations as far as Poller’s station was concerned.

    Morris Wolf:

    That station no longer existed.

    As to the VHF stations, there was one competitor less, as to UHF, there was competitor at all left.

    That market was closed completely.

    It is no defense to CBS that Bartell’s might not have survived even if CBS had not entered the market.

    It is true, within our opinion, a UHF station in Milwaukee without a network affiliation could not be profitable.

    How long Bartell’s might have lived, we do not know.

    There is no evidence with respect to his earning history or its net worth.

    In any event, it was in the market competing with Poller until CBS put through its deal.

    These were the considerations that Judge Washington pointed out.

    He thought that Poller’s case was stronger than Westinghouse’s.

    In that case, at least there would have been as many stations left in Philadelphia and Cleveland after the exchange as there were before whereas in our case, there was one less station when Poller was put out of business in Milwaukee.

    As to Section 2 of the Sherman Act, Judge Washington found substantial indications that CBS had monopoly power over UHF in Milwaukee when it cancelled Poller’s affiliation and the jury might so find.

    If the anti-competitive effect of CBS were limited to Milwaukee, that would be enough, and if only Poller were injured that would be enough.

    But in fact, the anti-competitive effect to what CBS did in the Milwaukee market affected televisions throughout the United States.

    Every UH — UHF operator in the United States was put on notice that if he established a successful UHF station in his community, CBS, NBC or ABC for its own purposes might come in to his community by — apply for a new license or buy the license of the competing UHF operator and do to the successful UHF operator in that community what it did to Poller in Milwaukee.

    The fact that the number of stations, the networks could buy was limited, would not change this situation because no operator could tell whether one of those it could buy would be his.

    Charles E. Whittaker:

    You can tell that the relevant market was UHF or television?

    Morris Wolf:

    I think it was both.

    I think the immediate market, the most immediate was UHF in Milwaukee, the next was UHF throughout the United States, and the final was Television UHF and VHF.

    That’s our position.

    Charles E. Whittaker:

    One more question if I may please.

    I understood you to say that this left only one VHF station companies but you mean two, have you not?

    Morris Wolf:

    Oh there was two but it didn’t affect the number of VHF station.

    Charles E. Whittaker:

    But left only one UHF?

    Morris Wolf:

    Left no UHF station in competition with the one that CBS bought.

    This kind — can I have a second.

    But beyond this, by acquiring an exclusive position in what CBS had selected as one of the two best markets for UHF in the United States, CBS could conduct its operations in such a way as to influence adversely the growth of UHF throughout the United States in protection of its vastly greater interest in VHF.

    Ultimately as we have said, CBS abandoned its UHF Milwaukee station when it got an affiliation with the third new VHF station in Milwaukee.

    “Will Salant’s words be prophetic?”

    This is what he said.

    Morris Wolf:

    I think it would be the kiss of death to UHF if either NBC or CBS abandoned a UHF station.

    Psychologically, it would be terrible.

    That’s just what CBS did in Milwaukee.

    When one thinks of the hundreds of thousands of set owners in the Milwaukee area who bought converters in order to hear UHF broadcasts and consider their feelings, when CBS closed the only UHF station available to them, Salant’s statements that this might be the end of UHF seem no exaggeration.

    In view of these specific results in the Milwaukee area it is unnecessary for us to argue any of those general propositions, which as Justice Frankfurter says there’s such a temptation to do when you get him to a specific case.

    May I close with a short quotation from an opinion of Justice — of Judge Jerome Frank in the case in which Mr. Justice Brennan sat, (Inaudible) against Goldsmith in conclusion, “We cannot avoid observing that the case is another mistaken effort to save time by an attempt to dispose of a complicated set of facts on a so called motion for summary judgment.”

    Earl Warren:

    Judge Rosenman.

    Samuel I. Rosenman:

    Your Honors please, the decisions below were based upon the acceptance of all of the material facts which were alleged by the petitioner here, Poller.

    If you say that we did not accept statements about code names and things like that, those are what we designate as immaterial statements.

    They are the kind of antitrust language which Mr. Justice Frankfurter referred to in the preceding case as newspaper antitrust language.

    What we are concerned with here is very simply, but very definitely, was Section 1 violated?

    Was Section 2 violated?

    And it does no good to talk about getting called up and having trade names, code names and things like that.

    Perhaps the Court doesn’t agree that that’s the way this business should be conducted, but this Court has held in the Eastern Railroad case that disputes about business ethics are not questions of antitrust law.

    Even unfair means of competition, which Judge Washington referred to below, have nothing to do with private suits for treble damages.

    Those are things which the Federal Trade Commission can issue a cease-and-desist order, but they’re not things for which a man can sue in treble damages.

    Here, we have involved the question, was there under the Clayton Act, an injury to the business or property of Mr. Poller by anything forbidden in the antitrust laws?

    We say that Columbia caused no injury to Mr. Poller and we say that nothing that Columbia did was forbidden by the antitrust laws.

    We have no disagreement with the facts, but there are certain facts which my friend neglected to tell you which I must.

    At the time when CBS decided because of its long displayed interest in UHF, which was a means of opening up the spectrum so that there would be more competition in television broadcasting.

    There was the following condition in Milwaukee.

    There were three VHF channels authorized and one operating.

    There were three UHF channels authorized and two operating.

    CBS made up its mind that when the Commission permitted networks to buy two UHF stations in addition to five UHF stations — VHF stations that one of the places it would buy a UHF station would be Milwaukee.

    Perhaps Your Honors are not entirely familiar with the difference between VHF and UHF stations.

    VHF stations are the stations which have been on the air since back in 1949.

    UHF stations, the entire opening of the UHF spectrum have been authorized only since 1952.

    Now although, it has been authorized since 1952, Your Honors can take judicial notice that here in the City of Washington, there was never a UHF station until just recently.

    And the recent UHF station is purely educational supported by charitable contributions, not a commercial station, not competing with the VHF and incidentally, it’s a station which Your Honors cannot get unless you buy an adapter, modify your antenna and seek the good offices of repairmen.

    I can’t get them in my hotel room.

    Samuel I. Rosenman:

    I mention that to show to Your Honors that UHF has a very, very difficult job competing with VHF.

    And the fact is that the UHF stations have gone down in numbers while the VHF station — stations are increasing in numbers.

    This is all through the record Your Honors, but the dis — the Circuit Court of Appeals or the District of Columbia Circuit has taken judicial notice of this time and again that UHF cannot compete with VHF under the normal circumstances.

    Now —

    Potter Stewart:

    I thought the — I thought that there was a saturation of VHF channels.

    Samuel I. Rosenman:

    There is sir.

    Potter Stewart:

    How can they still be increasing in numbers?

    Samuel I. Rosenman:

    Well, in different localities, there are certain numbers of channels which are VHF, but the number of stations has increased since the time of this episode with Poller in Milwaukee, but if UHF were received on equal terms with VHF, by then there would be many more channels.

    For example in Washington, you have four channels of VHF.

    There would be many more channels on which you could get other programs and all you’re able to get in UHF in Washington and in the District of Columbia is an educational station providing that you go to the expense and trouble that I have indicated.

    William J. Brennan, Jr.:

    The manufacture receiving sets (Inaudible) and they get both.

    Samuel I. Rosenman:

    They are beginning — they are not — there are some companies that do manufacture and the FCC is trying to get set manufacturers to put some sort of a jack in the end, or a jack in so that they can be converted to UHF.

    The fact is that even — even with this jack, the set is more expensive than a similar VHF set, so that there is extreme discouragement about UHF television.

    Felix Frankfurter:

    Could you please tell me whether the difference whether there is a difference in context — content or difference in receptivity?

    Samuel I. Rosenman:

    There’s only a difference in receptivity and in expense.

    The UHF station in Washington broadcasts very astronomical programs now which Your Honor could see if your set were equipped for that.

    Now, this is a situation when Columbia announced that in spite of it, in order to advance the art of television and to open up more competition, it would go into the UHF and it had to pick a place.

    The place that it picked was Milwaukee.

    At this time, it had an affiliation contract with Poller.

    Now, what is an affiliation contract?

    Here in Washington, CBS has an affiliation contract with WTOP channel 9, so that if you turn on to channel 9, you will either get some local program, either of local interest or local news or within certain hours, if you turn it on, you will get a network program; a network program which goes practically over the United States.

    So that as my friend said, 90% of the people, or 80% of the people can see it if they wish, they can flip the knob and look at an NBC program or they can flip the knob again and look at an ABC program.

    They can flip it again and see an independent local television program, so that to speak about monopoly by CBS or lack of competition borders on the absurdity.

    You all must take judicial notice of the fact that you have your choice, CBS has about a third of the affiliates, NBC has similar, ABC has not quite as much as the other two combined — as the other two have.

    Charles E. Whittaker:

    What’s happened mutual, is it gone?

    Samuel I. Rosenman:

    Mutual Your Honor is only in radio.

    It doesn’t have a — it doesn’t have a TV program.

    Earl Warren:

    Judge Rosenman, I don’t know whether it’s pertinent or not but could you tell us how these three big networks compare in numbers of UMFs if they have affiliations — affiliations with?

    Samuel I. Rosenman:

    I wish I could Your Honor, I do not know.

    Earl Warren:

    Well it probably is pertinent to the case.

    Samuel I. Rosenman:

    We’re going over until tomorrow.

    I’ll have the figures for Your Honor.

    I don’t think that they’re pertinent to the issues here, but I will have it.

    Now, when Mr. Poller made his affiliation agreement to CBS, this was a UHF station he was building, and he came in and he got this affiliation agreement.

    Now this affiliation agreement under the rules of the FCC cannot last longer than two years. They must be renewed every two years, so that every two years, Mr. Poller knew that CBS might not renew his affiliation for any number of reasons.

    Either the operation was bad, or CBS might want to go into that market itself, or for any number of reasons.

    Now, he was put — Poller was put on notice again by a further provision in the affiliation agreement that he was subject to having his agreement of affiliation canceled at any moment.

    Not at any moment, but on six month’s notice so that we have the agreement which lasts only two years and we have an overriding provision that CBS might at anytime on six month’s notice cancel this affiliation.

    Felix Frankfurter:

    Either — either the driving of the affiliation or cancellation requires the intervention of the FCC.

    Samuel I. Rosenman:

    No sir, that is correct.

    That is correct.

    Now, Mr. Poller testified, this is the plaintiff testifying, that he looked upon this whole thing with a great deal of trepidation that he was spending money building up his studio, and he was worried about this.

    And he came to CBS a number of times and said, “Won’t you give me either the usual year’s cancellation or guarantee that I will be able to subsist for two years, and each time this was reviewed.

    Felix Frankfurter:

    What are the usual years?

    Samuel I. Rosenman:

    There are some that have six months as my friend has said.

    The usual thing, the majority is to provide two years at which time they can be not renewed or a cancellation on one year’s notice.

    Even the two-year contracts provide that if they are not cancelled by a notice, they continue indefinitely so that even the two-year contract can be terminated by a notice saying that when the two years are up, don’t look to us for a renewal.

    Now —

    Potter Stewart:

    Judge Rosenman, at the time that this affiliation was entered into between Poller and CBS were there — how many VHF stations were there in Milwaukee?

    Samuel I. Rosenman:

    At that time sir, I have the figures and they’re in the record.

    At that time, there were 386 —

    Potter Stewart:

    No, in Milwaukee.

    Samuel I. Rosenman:

    — stations on the air.

    Potter Stewart:

    No, go ahead.

    Samuel I. Rosenman:

    Oh in Milwaukee.

    In Milwaukee when it entered into the affiliation, there was — there were two UHF —

    Potter Stewart:

    Yes.

    Samuel I. Rosenman:

    — and one VHF which had been there some four years.

    Potter Stewart:

    Only one VHF?

    Samuel I. Rosenman:

    Yes sir.

    Potter Stewart:

    And that I assume was affiliated with a different network.

    Samuel I. Rosenman:

    That was affiliated with NBC.

    Now to complete that picture —

    Potter Stewart:

    Yes.

    Samuel I. Rosenman:

    — at about the time that CBS went in to Milwaukee, a second VHF appeared on the scene and two years later a third VHF appeared on the scene.

    So that CBS in 19 — starting in 1956 was competing single-handedly against three affiliated VHF stations, three VHF stations.

    Potter Stewart:

    Two of which I suppose were affiliated.

    Samuel I. Rosenman:

    Two of which were affiliated.

    William J. Brennan, Jr.:

    And has CBS acquired the third now?

    Potter Stewart:

    Yes.

    Samuel I. Rosenman:

    CBS hasn’t acquired the third.

    CBS, the so-called “monopolist”, was forced out of business in Milwaukee by competition from VHF.

    The monopolist was forced out of business by its competition in Milwaukee.

    Potter Stewart:

    And it is now affiliated with the third VHF.

    Samuel I. Rosenman:

    After it was forced out of business, this monopolist then went to the third VHF station and affiliated with the third VHF station.

    Potter Stewart:

    But in short, the reason seems evident now that the — it’s a question that occurred to me, why — why in view of this competitive disadvantage which UHF has, why did CBS affiliated within UHF station in Milwaukee and the fact is that that was all there available to them.

    Samuel I. Rosenman:

    That was all there was — was available.

    Potter Stewart:

    At that time that this affiliation was entered into.

    Samuel I. Rosenman:

    Yes sir.

    Now, on behalf of my client, I wish to point out also that I think CBS planned in there, because CBS believed in UHF.

    Dr. Stanton had said time and again that UHF will be the savior of the TV business by opening up many more channels and again, with (Inaudible) to my client I say, it went in there in order to prove that UHF could succeed.

    It did not prove —

    William J. Brennan, Jr.:

    Tell me Judge Rosenman, were there any other localities or as many, I think Mr. Wolf said 200 thousand conversions have been made whether — are the others like that?

    Samuel I. Rosenman:

    There are localities where conversions have been made.

    I don’t — I don’t remember that figure of 200 —

    William J. Brennan, Jr.:

    I thought — perhaps, I misunderstood Mr. Wolf.

    I thought he said that Poller had succeeded in getting something like that number of conversions at $20 a piece or something.

    Samuel I. Rosenman:

    There are some cities Your Honor where there are only UHF stations.

    William J. Brennan, Jr.:

    Oh I see.

    Samuel I. Rosenman:

    And in such cities where there is no competition, in those cities where there is no such competition, UHF can survive.

    Samuel I. Rosenman:

    Now, don’t take my word for it Your Honor that UHF cannot fight VHF.

    The plaintiff said so that if UHF station doesn’t have an affiliation, it cannot survive.

    And it says so very dramatically, and it is the very foundation of the case here.

    There was and is no place in the United States where a non-affiliated UHF station could or can operate, and survive in competition with stations owned by or having affiliation with the national network.

    At no time material to this action, could a UHF television station remain in existence at Milwaukee without the advantage of an affiliation with CBS, NBC or ABC.

    This is the very foundation of this case.

    Hugo L. Black:

    How many openings were there in VHF in Milwaukee?

    Samuel I. Rosenman:

    I beg your pardon.

    Hugo L. Black:

    I understand you said that there were three allocations from the Milwaukee.

    Samuel I. Rosenman:

    There are now three allocations and three stations on the air.

    Hugo L. Black:

    And how long is that allocation been in effect?

    Samuel I. Rosenman:

    The allocations have been there for many years.

    The first station went on way back in 1947, NBC affiliate.

    The second station went on about this time when we were buying UHF, 1954, that went to ABC as an affiliate.

    Then the third one came on two years later, 1956, but we kept on competing for three years after that with our UHF station until finally we had to succumb and we went to the VHF.

    William J. Brennan, Jr.:

    Well, do I get this Judge Rosenman, the network may own only five VHF stations.

    Samuel I. Rosenman:

    That’s correct sir.

    William J. Brennan, Jr.:

    And I take it that at all times we’re involved with here you already had your five?

    Samuel I. Rosenman:

    We had three sir but we had applications for two others.

    William J. Brennan, Jr.:

    And where were the other two?

    Samuel I. Rosenman:

    The other — well, they were in other cities.

    William J. Brennan, Jr.:

    Other cities.

    Samuel I. Rosenman:

    New York and San Francisco.

    William J. Brennan, Jr.:

    But — were your five — what I’m trying to get at — were your five exhausted?

    Samuel I. Rosenman:

    The five —

    William J. Brennan, Jr.:

    Except by affiliation, you couldn’t have another VHF station.

    Samuel I. Rosenman:

    That’s right.

    The three we had and two applications we had, that’s five.

    William J. Brennan, Jr.:

    So you couldn’t buy anything else in Milwaukee.

    Samuel I. Rosenman:

    That’s right, that’s right.

    Samuel I. Rosenman:

    And we couldn’t have bought those two UHF until this time, 1954, when the FCC said we will let networks own seven stations providing only five can be VHF.

    Now, what is the complaint here Your Honor?

    The complaint is two-fold; first that we carried out the terms of our agreement.

    We were told that we could cancel this affiliation at any time within six months.

    That’s what we did.

    The second complaint is that we didn’t deal with Poller.

    We dealt with Bartell’s.

    Now, why didn’t we deal with Poller?

    Poller had an affiliation and he wanted to sell his station.

    There’s a man very active in the television business by the name of Storer, and he and Storer began to negotiate, this station that Poller owned.

    He wanted to sell.

    He was asking for $2 million for his station, $2 million.

    Bartell’s was asking for one sixth of that amount, $335,000.

    CBS decided that it would buy a station for $335,000 instead of $2 million and that serves as the gravamen of the complaint here, that instead of going to Poller and paying him $2 million, we went to Bartell’s and bought it for one sixth as much.

    Now to add insult to injury, because we think it was, included in this $2 million, it’s conceded that his equipment, the actual physical assets were worth only a half a million, that’s what we paid.

    He doesn’t contend that he got an inadequate price for that, as what he paid for they told us, and that’s what we paid him; one half of million dollars plus all of the old Bartell equipment which he said was worth $50,000, a figure which we have to take here in the summary judgment.

    But included in the $2 million figure was the value of his affiliation with CBS.

    This is a very valuable thing, an affiliation with a network.

    And he asked for $2 million, although the physical assets were worth only a half a million, because, and only because, he had an affiliation with CBS.

    Felix Frankfurter:

    May I ask — may I ask, the various business tactics that Mr. Wolf referred to in the invidious sense in which — the invidious inferences could be drawn from that on (Inaudible), did this precede or follow the desire of CBS to acquire either Poller’s station or Bartell’s station?

    Samuel I. Rosenman:

    They followed the determination by CBS that it would not pay $2 million but would pay $335,000.

    Now, Your Honors are familiar with many cases where when a seller knows that a very rich entity like CBS is in the market for a station; that the price goes up.

    There was nothing unusual perhaps the code names were a little dramatic, but there’s nothing unusual in a company sending a broker which is what Holt was, sending a broker out to get an option on a piece of property, and not telling the seller who the purchaser was.

    Now, what is the reason for that?

    The reason for it is to keep the price down.

    This is done Your Honors practically everyday in the real estate business.

    The man wants to buy a piece of real estate.

    He doesn’t let the seller know that he’s assembling a big plot, and therefore shoot your price up, or that a large corporation is buying his plot and therefore, shoot your price up.

    He sends a broker around to buy this as cheaply as possible.

    Felix Frankfurter:

    Or even Uncle Sam — or even Uncle Sam buying a property.

    Samuel I. Rosenman:

    Does Uncle Sam do that Your Honor?

    Felix Frankfurter:

    Well I mean uncle — I mean imminent domain I’m thinking.

    Samuel I. Rosenman:

    Oh, I see.

    Uncle Sam may get — may have a broker buy before —

    Felix Frankfurter:

    I don’t know whether about the broker but the point is equally applicable that Uncle Sam doesn’t — does know at times that he’s going speak to condemn because the price will go up against even the United States.

    Samuel I. Rosenman:

    Well, if Uncle Sam does it, it must be good business practice.

    Felix Frankfurter:

    Well, what is good enough for Uncle Sam etcetera?

    Samuel I. Rosenman:

    That’s right.

    [Laughter] That’s good enough or if the United States is good enough for CBS, point of phrase, but the point I wish to make sirs is that there’s nothing involving Section 1 or Section 2 here.

    What difference does it make, whether we let Bartell’s know?

    Bartell’s swears he didn’t know.

    He swears that he was so thunderstruck when he heard it was CBS to whom the option was being assigned that after he hung up, he had a double take and he called, hold again and he said, “What did I hear you say?

    Was it CBS that was buying this?”

    Now, this may not be tactics the court approves off.

    Poller doesn’t approve of them, but the question is do these tactics violate Section 1 of the Sherman Act or Section 2 of the Sherman Act?

    Obviously, they’re irrelevant, those sections.

    Earl Warren:

    We’ll recess now Judge —