In the Matter of the Petition by ) March 8, 1984
)
WILLAMETTE TV & CABLE GUIDES )
320 S. W. Stark Street, Suite 219 )
Portland, OR 97204-2634 )
)
Denial of Application for Second- )
Class Mail Privileges for "CABLE )
CHOICE" ) P.S. Docket No. 16/97
APPEARANCE FOR PETITIONER:
Eric Sogge, Esq.
Kell, Alterman & Runstein
Bank of California Tower,
13th Floor
707 S.W. Washington Street
Portland, OR 97205-3572
APPEARANCE FOR RESPONDENT:
Jeffrey Zelkowitz, Esq.
Office of Mail Classification
Classification and Rates Dept.
Finance Group
United States Postal Service
Washington, DC 20260-1143
Duvall, William A.
Willamette TV and Cable Guides (Petitioner) is the publisher of "Cable Choice" (hereinafter, sometimes, the "publication"). By PS Form 3501 dated May 28, 1982, signed by Ross M. Hall, its General Manager, Petitioner made application for second-class mail privileges for the publication. (R-3) 1/
By letter dated March 22, 1983, the Director, Office of Mail Classification, United States Postal Service, (Respondent) advised Petitioner that it had been concluded that, subject to the outcome of this proceeding, the publication was not entitled to be entered as second-class mail matter. The reasons for that conclusion were that it had not been demonstrated that the publication met the required circulation standards; or that the publication had a legitimate list of subscribers; and Respondent asserted that the publisher did not provide information required in the course of reviewing the application.
There was a period of consultation between the parties, after which Respondent sent to Petitioner, under date of June 22, 1983, a second letter denying the application for second-class mail entry. In this notice Respondent stated that after considering certain materials submitted by Petitioner, Respondent was still of the view that the publication was not eligible for second-class mail privileges. Respondent conceded, however, that the publication did meet the paid circulation requirements on and after January 3, 1983. Petitioner's failure to provide records also was eliminated as a ground for denial. Moreover, in the June 22, 1983 letter, Respondent advised Petitioner that the conclusion that the publication is ineligible for second-class mail privileges is based upon the finding that it is a general publication designed primarily for advertising purposes under § 422.231, DMM, the pertinent provisions of which will be quoted later in this decision.
In its Amended Petition appealing the adverse ruling on its application Petitioner asserts, among other things, that "Cable Choice" has had a legitimate list of subscribers paying at a rate above a nominal rate since before January 3, 1983, and that it therefore met the standards of DMM §§422.221 and 422.223 before that date. Petitioner further asserts that it is not designed primarily for advertising purposes, and that it in every way meets the standards and conforms with the requirements of DMM § 422.231(b) through (e). It is Petitioner's position that Respondent's ruling is erroneous and that the publication is eligible for second-class mail entry.
The matter came on for hearing at which each party was represented by counsel who participated in the examination and cross-examination of witnesses, and each of whom has submitted proposed findings of fact, conclusions of law and supporting arguments. The proposed findings, conclusions, and arguments of both parties have been considered, and to the extent indicated herein they have been adopted. Otherwise, such proposals and arguments have been rejected for the reasons stated or because of their irrelevance or their immateriality.
At the hearing, Petitioner called the following witnesses: Ross Hall, Publisher, Willamette TV and Cable Guides; Mark Sparks, Editor and General Manager at Willamette TV and Cable Guides, and Editor of all of the several guides published by Petitioner, including "Cable Choice," the publication involved in this proceeding; Jane Jouett, Office Manager for Petitioner; Gary Eisler, Petitioner's General Manager from the Spring of 1981 until the Spring of 1982; and Frank Nuessle, Executive Vice-President and General Manager of Cablesystems Pacific.
Respondent called as its witness Edmond J. Wronski, mail classification specialist employed at the headquarters offices of Respondent.
By the pleadings of the parties, the scope of this proceeding was reduced to two issues, as follows:
1. Whether "Cable Choice" is a general publication "primarily designed for advertising purposes" within the meaning of DMM § 422.231 and its paragraphs (b), (c), (d), and (e); and
2. Whether, prior to January 3, 1983, "Cable Choice" met the circulation requirements for general publications prescribed in DMM §§422.221 and 422.223.
These issues will be addressed in the reverse order to that in which they are stated above.
1. The pertinent regulations of the Postal Service governing circulation requirements for second-class mail eligibility, insofar as this proceeding is concerned, are found in the following subsections of DMM section 422:
".221 List of Subscribers. General publications must have a legitimate list of subscribers who have paid or promised to pay, at a rate above a nominal rate, for copies to be received during a stated time. ***"
* * *
".223 Free or Nominal Rate Circulation. Publications primarily designed for free circulation and/or circulation at nominal rates may not qualify for the general publications category. Publications are considered primarily designed for free circulation and/or circulation at nominal rates when one-half or more of all copies circulated are provided free of charge to the ultimate recipients, or are paid for at nominal rates by the ultimate recipients, or when other evidence indicates that the intent of the publisher is to circulate the publication free and/or at nominal rates. The distribution of all copies of a publication is considered, whether circulated in the mails or otherwise."
2. Petitioner, relying on Exhibits P-18 and P-19 and the testimony of Jane Jouett, asserted that the publication met the requirements quoted above starting with the date November 15,
1982, and continuing through March 28, 1983, and up to the date of the hearing. (Tr. 96-99)
3. Consideration of Exhibit P-19 would appear, at first, to indicate that the publication had reached the required number of paid subscribers a few weeks earlier than January 3, 1983, the date by which Respondent concedes that Petitioner had achieved the circulation objective. Exhibit P-19, however, as indicated by its explanation in the upper left-hand corner thereof, does not include the number of copies circulated free, as shown in column 5 of Ex. R-2.
4. Respondent's witness, Mr. Wronski, computed circulation of the publication as follows for a given week:
Step I
Total other paid subscriptions (P-18, col. 3) were added to total news stand sales (R-2, col. 2) to produce the total number of subscribers recognized by DMM 422.221 as meeting the requirements for a "legitimate list of subscribers."
Step II
Total 16-weeks subscribers (P-18, col. 2) were added to free circulation (P-2, col. 5) to produce the number of "ultimate recipients" of the publication who received it without paying or promising to pay a subscription rate above a nominal rate.
Step III
The totals derived as above were compared and, starting as of January 3, 1983, and for subsequent dates, the recognized "paid subscribers" outnumbered those persons receiving the publication free or at nominal rates.
5. January 3, 1983, is the date by which the publication achieved an excess of paid subscribers over those "ultimate recipients" for whom copies were supplied free or at nominal rates.
6. The word "advertising" is defined in DMM § 422.232 in the following language:
a. General. The term advertising includes all material for the publication of which a valuable consideration is paid, accepted, or promised; that calls attention to something for the purpose of getting people to buy it, sell it, seek it, or support it.
b. Specific. If an advertising rate is charged for the publication of reading matter or other material, such material shall be deemed to be advertising. Articles, items, and notices in the form of reading matter inserted in accordance with a custom or understanding that textual matter is to be inserted for the advertiser or his products in the publication in which a display advertisement appears, are deemed to be advertising. If a newspaper or periodical advertises its own services or issues, or any other business of the publisher, whether in the form of display advertising or editorial or reading matter, this is deemed to be advertising. Public service advertisements for which no consideration has been paid are not considered advertising for postal purposes.
"Articles, items, and notices," if any, of the type referred to in the second sentence of subsection b., above, are counted as "advertising" in the tabulation in Finding of Fact 17, as stated in footnote 2 on page 12, post. In addition to the method of accounting, as stated, for these "articles, items, and notices," this regulation requires that these insertions be made upon the basis of a "custom or understanding", the burden of showing which is upon Respondent. No such "custom or understanding" has been shown to exist.
7. It has not been disputed, but in order to lay a foundation for discussion of this issue, it is assumed to be beyond question that the publication which is the subject of this proceeding falls within the category of "general publications," as that term is defined in DMM § 422.21, as follows:
".21 Contents. General publications must be originated and published for the purpose of disseminating information of a public character or they must be devoted to literature, the sciences, art, or some special industry."
The assumption just stated is predicated upon the physical appearance and content of the publication, and it is supported by the fact that in the letters of March 22 and June 22, 1983, advising Petitioner of the decision to deny the application for second-class mail entry of the publication, subject to the outcome of this proceeding, Respondent cited and quoted, in part, the provisions of DMM § 422.231, the text of which begins with the words "General publications ***."
8. It is presumed that it also is recognized that the largest segment of each issue of Cable Choice is made up of news and information of a public character consisting of listings of programs that will be available on certain cable television channels at certain hours during a stated period of time, and that these programs appeal to an audience of wide-ranging tastes and interests; including such diversified subjects as cartoons, opera, films, cooking, sports, drama, popular music in its various forms, politics, nature, travel and many other subjects too numerous to mention.
9. The advertising issue is to be determined by measuring the publication by the standards established in Postal Service regulations published in § 422.231 of the Domestic Mail Manual. The pertinent portions of these standards are as follows:
".231 Publications Designed for Advertising Purposes. General publications primarily designed for advertising purposes may not qualify for second-class privileges. These include, but are not limited to:
* * *
"b. Publications owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of any other business or calling of those who own or control them.
"c. Publications that consist principally of advertising and articles about advertisers in the publication.
"d. Publications that have only a token list of subscribers and that print advertisements free for advertisers who pay for copies to be sent to a list of persons furnished by the advertisers.
"e. Publications published under a license from individuals or organizations and that feature other businesses of the licensor."
Each of the five criteria quoted above will be separately considered.
10. The first sentence in the regulation is "General publications primarily designed for advertising purposes may not qualify for second-class privileges." Respondent's position is that Cable Choice is a general publication that is designed primarily for advertising purposes. (Resp.'s ltr. of June 22, 1983) Petitioner's position is that the publication is primarily intended to inform the viewer-customers of Cablesystems Pacific, the television cable company serving the east side of Portland, Oregon, under an exclusive franchise. It is also intended to inform viewers of broadcast television who do not have cable service. (Tr. 27, 110-111) P.F.F. 4
11. A reasonable way in which to start to resolve this issue is to determine Petitioner's own concept of its primary design and purpose. Petitioner's views on this point, for obvious reasons, are not necessarily correct or binding upon others.
12. Cable Choice is owned and published by Petitioner, Willamette TV & Cable Guides, in existence since April or May 1981 as a division of Willamette Newspapers Incorporated, 320 S.W. Stark Street, Suite 219, Portland, Oregon 97204. Willamette Newspapers Incorporated is wholly-owned by Guard Publishing Company, a family corporation owned by the Baker family of Eugene, Oregon. None of them is in the television business (Ex. R-3, items 2, 3, 4, 5; Tr. 17-18).
13. Petitioner's sole business is publishing viewer guides for broadcast and cable television. Petitioner designs and publishes six different guides to inform viewers of cable television in the Portland area of the specific program schedule of the particular television cable company of which they are customers, rather than one guide covering the programming of several cable companies. Petitioner believes that such separate "custom" guides better serve viewers of cable television than the unwieldy guides that attempt to cover programming of several cable companies. (Tr. 19, 25, 76) P.F.F. 3
14. The publisher succinctly defined the Petitioner's purposes in publishing Cable Choice, and other similar guides, as being (a) to put out the best quality guides for the readers who want a good cable television and broadcast guide, and (b) to make a profit. (Tr. 19, 30)
15. Petitioner's initial business plan contemplated publishing viewer guides each tailored to the specific programming of an individual cable television company. When Petitioner learned in the fall of 1981 that Cablesystems Pacific had been awarded the cable television franchise for the east side of Portland, Petitioner approached Cablesystems Pacific with the idea of publishing such a guide for the viewers of Cablesystems Pacific. Cablesystems Pacific did not solicit Petitioner for this purpose, nor did it intend to publish such a guide itself. (Tr. 27-28, 114) P.F.F. 7
16. Petitioner competes with several other publishers of viewer guides to broadcast and cable television programming in Portland. This competition is not only for readership but also for advertising revenue (Exs. P-1, P-2, P-3, P-4, P-5, Tr. 20-25). P.F.F. 8
17. Accepting, for present purposes, the assumption that the publisher of a publication is the entity best qualified to know the motivation which prompted the undertaking of the issuance of the publication, it is an appropriate next step to look at the publication, itself, to determine whether the publisher has achieved its objective, purpose, and design. Such a look has been taken at this publication. In so doing, four issues of Cable Choice, Exhibits R-7, R-10, P-16, and P-22, were selected at random and the contents of each were measured with the following results:
____________
Subject Matter R-7 R-10 P-16 P-22
Total Pages 40 52 48 48
Pages of Advts. 8 1/2 18 3/4 14 1/4 14 2/3
Pages of CSP Advts. 2 6 1/2 5 1/4 7
Pages of Articles 2 1/2 4 9 3 2/3
Masthead, decoder,
Channel & FM Guides 1 1 1 2/3
Program Log 26 3/8 21 3/4 18 1/2 22 1/6
___________
No attempt was made in the above presentation to be mathematically precise in terms of column-inches in the statements of the quantities of the various components of the different issues of the publication. Rather, the effort was to make a reliable estimate, based upon actual examination of each page of each exhibit in the sample, in order to arrive at a fair impression of what each issue contains, subject to the explanation in the footnote. 2/
18. In the latter part of 1982, Petitioner settled on 48 pages as the size of the typical issue of the publication. With this fact in mind, the foregoing tabulation is in general agreement with the description of the publication given by Petitioner. The following statements present a more detailed description by Petitioner, and this description bears many striking similarities to the results found and reported in Finding of Fact 17, supra.
19. Cable Choice is published weekly and generally consists of 48 pages (Ex. R-3, item 8a; Tr. 79). Each issue consists principally of television program schedules in a "rolling log" format and has a masthead, a "decoder" identifying the lineup of channels in Cablesystems Pacific's system, and an FM guide (Exs. P-13, P-16, P-17, P-20 to P-22, R-1, R-7 to R-13; Tr. 166). P.F.F. 19
20. In addition to program schedules, the contents of Cable Choice generally include two to three pages of editorials and articles, two to two and one-half pages of advertisements by Cablesystems Pacific, and six and one-half to seven pages of advertisements of other advertisers. (Tr. 80) P.F.F. 21
21. Cable Choice carries a variety of local advertisements, including more advertisements for local broadcast television stations, alone, than for Cablesystems Pacific (e.g., Ex. P-7, pp. 17, 27, 31; Tr. 41). Other advertisers include a radio station, a home remodeling service, a video movie rental business, attorneys, a chiropractic clinic, a weight-loss clinic, a hair design studio, a driveway and sidewalk paving contractor, a restaurant, a carpet seller, a spa and pool distributor, a handicraft store, and a supermarket (e.g., Ex. P-7; Tr. 82). P.F.F. 25
22. On the question of whether the first sentence in § 422.231 requires the denial of second-class mail entry to Petitioner for Cable Choice, the evidence is summarized as follows:
(a) Cable Choice is a "general publication" as that term is defined in § 422.21, and it is so recognized by Respondent;
(b) By volume, advertising matter in Cable Choice ranges roughly between 20 per cent to 35 per cent of the total content;
(c) Advertising matter of CSP ranges from about 25 per cent to about 50 per cent of the total amount of advertising in the publication; but
(d) CSP advertising represents only between 5 per cent to approximately 15 per cent of the total content of the issues.
(e) The program log occupies from about 37.5 per cent to 65 per cent of the total volume of the publication.
(f) None of the above statistical data is inconsistent with, and all of it serves to corroborate the statements on behalf of Petitioner as to its intent and design of the publication, and as to the purposes to be served by it.
(g) There is no proof that "articles, items and notices" (DMM § 422.232b.) are inserted in the publication as the result of any "custom or understanding" between Petitioner and CSP, and, in any event, such articles, items and notices, even if counted as "advertising", do not make advertising the predominant characteristic of the various issues of the publication.
23. Also to be denied second-class mail entry are "***b. Publications owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of any other business or calling of those who own or control them."
24. Guard Publishing Company, Eugene, Oregon, is a family corporation owned by the Baker family, also of Eugene; Guard Publishing Company owns Willamette Newspapers Incorporated, of Portland, Oregon; Willamette Newspapers Incorporated has a division known as Willamette TV and Cable Guides, which, in turn, publishes Cable Choice. (Tr. 17)
25. Cablesystems Pacific is a limited partnership, of which the general partner is Rogers' Cablesystems, Toronto, Ontario, Canada, and there are some other limited partners, of whom 90 per cent are individuals and some are corporations. All of the partners are from Oregon. (Tr. 108)
26. Mr. Hall, Publisher of Cable Choice and Mr. Nuessle, Executive Vice-President and General Manager of CSP testified on behalf of the parties they represented that: (1) neither Petitioner, on the one hand, nor CSP, on the other hand, has any proprietary interest in the other; (2) there are no common employees who are shared by the Petitioner and CSP; and (3) they do not share any office space, facilities, or equipment. Mr. Hall stated further that neither Petitioner, nor any of the companies listed above with whom it is affiliated, is in the cable television business. As Mr. Nuessle of CSP put it, "We're in the cable business and Willamette is in the business of producing a guide ***." (Tr. 17-18, 108-109, 112)
27. In its application, Petitioner answered "No" to the questions "Are any of the owners or stockholders of Petitioner interested financially in any business or trade represented by the publication?" and "Have any of the persons or concerns which advertise in the publication any interest therein?" (Ex. R-3, items 10, 11) P.F.F. 6 So far as the evidence in this proceeding shows, the relationship between Petitioner and CSP has not changed from that shown above.
28. Although the Agreement between Petitioner and Cablesystems Pacific provides that Petitioner will furnish copies of Cable Choice for Cablesystems Pacific to use in soliciting potential customers (Ex. P-6, p. 4, § 4(a); Tr. 115), Cablesystems Pacific, in addition to the fact that it neither owns nor controls Petitioner, does not use Cable Choice in promoting sales of its cable services. (Tr. 72-73, 115, 125-126)
29. To present a situation in which DMM § 422.231b. is applicable there must be, first, an individual, group, or concern engaged in at least two businesses, one of which is publishing. Next, the publishing business must be so operated that it fairly can be said to function "as an auxiliary to and essentially for the advancement of" one or more of the other businesses. The ingredients required to invoks the provisions of DMM § 422.231b. are not present in this case.
30. The next regulation on which Respondent relies, DMM § 422.231c., designates as ineligible for second-class mail privileges "Publications that consist principally of advertising and articles about advertisers in the publication." Most of the articles in Cable Choice are prepared by Petitioner's staff or by writers it hires, although Petitioner has occasionally asked Cablesystems Pacific to prepare an article or it has published an article furnished by CSP, on a space-available basis. (Tr. 80-81, 87) Cablesystems Pacific does not tell Petitioner what articles to run or what to write in the articles, nor is Petitioner paid for them. (Tr. 87, 117) P.F.F. 22 Petitioner's editor writes the editorials in Cable Choice, on subjects of broadcast and cable television. (Tr. 85)
31. Adverting once more to the random sample of the issues of the publication the results of which are tabulated in Finding of Fact 17, it is found as follows:
_____________
Subject Matter R-7 R-10 P-16 P-22
1. Total Pages 40 52 48 48
2. All advertisements 8 1/2 18 3/4 14 1/4 14 2/3
3. All articles 2 1/2 4 9 3 2/3
4. Total ads & articles 11 22 3/4 23 1/4 18 1/3
5. Excess of L.1 over L.4 29 29 1/4 24 3/4 29 2/3
______________
Keeping in mind the similarity of the above figures to those given in the testimony of Petitioner's witness as to the contents of the typical issue of Cable Choice (F.F. 19, 20 and 21, supra), it is established as a mathematical fact that the publication does not "consist principally of advertising and articles about advertisers in the publication."
32. Respondent asserts that Petitioner's publication is ineligible for second-class mail entry because it is proscribed by DMM § 422.231 d. as being among those "Publications that have only a token list of subscribers and that print advertisements free for advertisers who pay for copies to be sent to a list of persons furnished by the advertisers." (emphasis supplied) The disposition of the circulation issue in this proceeding on the basis of Respondent's stipulation regarding January 3, 1983, and as discussed and stated herein in Findings of Fact 1 through 5 encompasses, also, the disposition of this issue. In any event, the fact that in excess of 16,000 out of some 24,000 fully paid subscribers voluntarily paid the price and sought the publication clearly removes the "token list" problem from this phase of the proceeding. Data available as of the date of the hearing showed that approximately 8,000 copies of Cable Choice were being mailed to persons who were receiving subscriptions, without cost to the recipients, for four months following their initial subscriptions for one or more of CSP's cable services. (Tr. 100)
33. It earlier has been stated that Petitioner learned in the Fall of 1981 that CSP had been awarded the cable television franchise for the east side of Portland. (F.F. 15, supra) Petitioner believed it could gain an edge over its competitors by establishing its viewer guide as the one that would be favored by viewers of Cablesystems Pacific. Petitioner wanted to accomplish this by having its viewer guide introduced directly to the viewers of Cablesystems Pacific at the time they hooked up to the cable television service, in order to establish readership habits that would lead to renewals of subscriptions to Cable Choice (Tr. 30-31) P.F.F. 9
34. Petitioner does not have the capacity to introduce and market Cable Choice directly to viewers of Cablesystems Pacific at the time they hook up. (Tr. 29, 31) Cablesystems Pacific has this capacity; Petitioner therefore sought its help in this effort; and discussions followed with Cablesystems Pacific about the terms of this help. (Tr. 30, 112-113) P.F.F. 10
35. The discussions between Petitioner and Cablesystems Pacific resulted in their Agreement, dated April 7, 1982, under which Cablesystems Pacific gave Petitioner the required promotional and marketing help by agreeing to buy a four-month subscription to Cable Choice for each new viewer at $2.50 each (Ex. P-6, p. 4, § 4(b); Tr. 32). Cablesystems Pacific agreed to give Petitioner pertinent information about each new viewer for subscription purposes, and Petitioner pays Cablesystems Pacific $1.60 per viewer for this information. (Ex. P-6, pp. 4-5, § 4(c); Tr. 33) P.F.F. 11 Petitioner asked that the contract with viewers mention that $2.50 of each viewer's payment would pay for the four-month subscription, but CSP refused to accede to that request. (Tr. 105, 117, 135)
36. Petitioner's Agreement with Cablesystems Pacific also provides for other promotional help for Cable Choice from Cablesystems Pacific, such as Petitioner's right to have its promotional materials inserted in Cablesystems Pacific's billings to viewers, and referrals of advertising. (Ex. P-6, pp. 5-6, § 4(e), (f)) P.F.F. 13
37. In addition to setting out the arrangement for introducing Cable Choice to Cablesystems Pacific's viewers by means of the four-month subscription, the Agreement between Petitioner and Cablesystems Pacific provides that Petitioner may refer to Cable Choice as the "official" guide to Cablesystems Pacific's programming (Ex. P-6, p. 3, § 3(a)). This designation is of some benefit to Petitioner now, but will decrease as Cable Choice becomes established in the market under its own name. (Tr. 39) The Agreement provides that Petitioner will not publish another guide called "Cable Choice" (id., p. 2, § 2(a)), but that provision does not survive termination of the Agreement. (Tr. 215) The Agreement prescribes the format for Cable Choice (Ex. P-6, p. 2, § 2(b)); that format was drawn up to match the format of another viewer guide, Channels, published by Petitioner for viewers of another cable company and not to specifications of Cablesystems Pacific. (Tr. 34, 193) The consideration to Cablesystems Pacific is two full pages of advertising at no cost in each issue of Cable Choice, plus space on the back cover at no charge during the Agreement's first six months. (Ex. P-6, pp. 6-7, § 6(a)) P.F.F. 14
38. The primary consideration to Petitioner under its Agreement with Cablesystems Pacific is the help in marketing and promoting Cable Choice. (Tr. 29, 38) The four-month subscription is Petitioner's primary method of marketing and promoting Cable Choice. (Tr. 142) Petitioner keeps all circulation and advertising revenue from Cable Choice and is paid nothing by Cablesystems Pacific for publishing Cable Choice. Cablesystems Pacific has no financial interest in Cable Choice. (Tr. 30, 38, 123) P.F.F. 17
39. The Agreement between Petitioner and Cablesystems Pacific expired according to its terms on December 31, 1982 and has not been renewed (Ex. P-6, p. 7, § 7; Tr. 137, 141). Cablesystems Pacific still helps Petitioner promote subscriptions to Cable Choice by means of the initial four-month subscription. (Tr. 137, 142) P.F.F. 18
40. The arrangement between the parties to the Agreement is not altogether unlike similar, but informal arrangements, for example, for medical services, that existed on the frontiers of this country in its early days, and which may still exist in some localities. In such arrangements, two parties skilled in different areas agreed to exchange goods and services on a basis agreed to be satisfactory to both. In exchange for the services of the physician, a carpenter might pay in terms of a number of hours or days of work, or a farmer might pay in quantities of meat, vegetables, or other produce. The physician did not acquire the right to direct the carpenter in the building of barns or the farmer in the planting and raising of his produce, and the carpenter and farmer did not become supervisors or controllers of the doctor in his medical and surgical practices. Clearly, neither party to these types of agreements controlled the other, but there was cooperation between them for their mutual benefit and betterment. There is a comparable relationship between Petitioner and CSP.
41. Lastly, Respondent alleges that second-class mail privileges for Cable Choice must be denied because the grant of such privileges is prohibited by DMM § 422.231e. This provision proscribes "Publications published under a license from individuals or organizations and that feature other businesses of the licensor." The Agreement between Petitioner and Cablesystems Pacific does not grant Petitioner a license or other form of permission to publish Cable Choice (Ex. P-6). Neither party considers that Petitioner has or indeed requires such a license or permission to publish Cable Choice. (Tr. 39, 138) Petitioner could continue to publish Cable Choice notwithstanding a demand by Cablesystems Pacific that it stop publishing. (Tr. 218) P.F.F. 16
42. Petitioner obtains the vast majority of the program schedules for Cable Choice not from Cablesystems Pacific but from TV Data, a national company (with no connection to Cablesystems Pacific) which makes those schedules equally available to Petitioner's competitors. (Tr. 40) For a final review of the accuracy of program schedules before publication, Petitioner meets weekly with Cablesystems Pacific. (Tr. 89) P.F.F. 20
43. It has been stated earlier that Petitioner's editor writes the editorials in Cable Choice, on subjects of broadcast and cable television. (F.F. 30, supra, Tr. 85) Cablesystems Pacific objected and complained about some editorials (Exs. P-14, P-15; Tr. 85-86, 117-118). Nevertheless, Petitioner made no change in its editorial policy. (Tr. 86, 118, 221) P.F.F. 23
44. Cablesystems Pacific has asked to review editorials and articles in advance of publication in Cable Choice, but Petitioner has declined to let Cablesystems Pacific do so (Exs. P-14, P-15; Tr. 90, 220-221). Cablesystems does not tell Petitioner what to print in Cable Choice, and Petitioner and Cablesystems Pacific consider that Petitioner has sole control of the content and publication of Cable Choice. (Tr. 40, 118, 222) P.F.F. 24 These uncontroverted facts are incompatible with a licensor/licensee relationship.
45. Cable Choice also carried advertisements for dish antennas for receiving television signals directly from satellites (which would allow a person to receive the same signals Cablesystems Pacific offers through its cable service), and Cablesystems Pacific angrily objected (e.g., Exs. P-13, p. 29; P-16, p. 41; P-17, p. 38; Tr. 83-85, 94-95). Cablesystems Pacific also objected to advertisements for local broadcast stations appearing in Cable Choice and in its initial negotiations with Petitioner asked Petitioner not to carry them. Petitioner refused, and it continues to run such advertisements. (Tr. 41-42) P.F.F. 25 This manner of doing business negates the claim that Petitioner in publishing Cable Choice is the licensee of CSP.
1. As of, and since, January 3, 1983, Cable Choice met, and has met, the paid circulation requirements of §§422.221 and 422.223 of the Domestic Mail Manual.
2. Cable Choice is a general publication which is not designed primarily for advertising purposes within the meaning of the first sentence of § 422.231 of the Domestic Mail Manual.
a. The purpose and design of the publication were stated by the publisher to be to produce a good cable TV guide and to make a profit for the publisher.
b. The oral evidence adduced by Petitioner supports and corroborates the publisher's statement of the publication's purpose and design.
c. A measurement of the actual content of a random sampling of the issues supports and corroborates the publisher's statement of the publication's purpose and design.
d. To the extent it was contrary to the publisher's statement of purpose and design of the publication, the evidence adduced by Respondent was not persuasive.
e. Respondent's listing of the publication's content, e.g. page 27 of its post-hearing submittal, present to the eye and tend to create in the mind of the reader an exaggerated concept of the amount of advertising material in the publication - even assuming, arguendo, the accuracy of its categorization of all of the references as advertising, an assumption the validity of which is not accepted.
3. To the extent, if any, that circumstances of this case may be thought to give rise to a presumption that Cable Choice is primarily designed for advertising, the facts disclosed by the record rebut such presumption by an overwhelming margin.
4. Cable Choice is not primarily designed for advertising purposes within the meaning of § 422.231b., Domestic Mail Manual, for the reason that it is not owned or controlled by any person or entity other than Petitioner, and it is not conducted as an auxiliary to or for the advancement of any business or calling other than that of Petitioner.
5. Cable Choice is not primarily designed for advertising purposes within the meaning of § 422.231c., Domestic Mail Manual, for the reason that it does not consist principally of advertising and articles about advertisers in the publication.
a. The preponderance of the evidence of record does not support Respondent's position on this issue, but it is contrary thereto. (F.F. 31, supra)
6. As of January 3, 1983, Petitioner established its eligibility for second-class mail entry insofar as § 422.231d., Domestic Mail Manual is concerned, and there is no evidence that it has not maintained that eligibility to the present.
a. Non-compliance with this regulation consists of two parts - (i) token list of subscribers; and (ii) free advertisements for advertisers who pay for copies to be sent to designated persons. The uncontradicted proof that the list of subscribers who pay for their own subscriptions to Cable Choice far exceeds a "token" list is more than enough to resolve this issue. Above and beyond that proof, however, the record makes it very clear that CSP performs a service for Petitioner for the performance of which it is compensated by two pages of advertising in each issue of Cable Choice. The fact that no money is paid to Petitioner by CSP for that advertising by no means shows that the CSP advertising appearing in Cable Choice is free, for it is not. Such advertising is neither a gift from Petitioner nor free advertising. CSP earns it.
7. Cable Choice is not published under a license; hence, it may not be regarded as ineligible for second-class mail entry under the provisions of § 422.231e. of the Domestic Mail Manual.
C O M M E N T
I
In Respondent's post-hearing submittal, under the caption "The Director's Decision that Cable Choice is Primarily Designed For Advertising Purposes Should Be Sustained" the following, somewhat defensive, argument is made:
"The Advertising Restrictions in Domestic Mail Manual §§422.231(b) - (e) Should Not Be Narrowly Construed.
"As discussed above, the restriction against entering publications 'primarily designed for advertising purposes' as second-class mail should not be narrowly construed, supra at 20-21. This principle should apply with equal force to each of the specific types of advertising publications described in subsections (b) through (e) of Domestic Mail Manual § 422.231. While Respondent believes that Cable Choice is ineligible for second-class privileges under any construction of these subsections, it submits that anything other than a broad construction of these subsections would defeat the general purposes of the advertising restrictions."
It is natural, and it is expected of Respondent, that it vigorously support the position adopted in the letters of March 22 and June 22, 1983, from which Petitioner took the appeal which gave rise to this proceeding. Such zealous support for a position may, however, create a tendency toward a construction of language that is believed to lead to the desired outcome. On the other hand, such vigor and energy may at times need to be diluted with a bit of restraint.
Interpretation of agency regulations is subject, in general, to the rules applied to statutory construction. One such rule is that in the absence of indication to the contrary, words are to be given the meaning ascribed to them in normal, everyday parlance.
In addition, there are criteria stated in some court decisions which must be kept in mind when the application of the regulations of an executive agency is brought into question, as in this proceeding. In Accardi v. Schaughnessy, 347 U.S. 260, (1954) the Court said that regulations validly prescribed by a government administrator are binding upon him as well as the citizen, and this principle holds even when the administrative action under review is discretionary in nature. Other cases, of which there are many, in which it has been held that an executive department or agency is bound by, and is to be held to the terms of its own regulations include Service v. Dulles, 354 U.S. 363 (1957) citing Accardi, supra; Murray v. United States, 154 Ct. Cl. 185 (1964); and United States v. Coleman, 478 F.2d 1371, C.A. Cal. (1973). Of equal importance is the rule announced and enforced by the courts whichis to the effect that "Interpretation of regulations so as to make law is not favored." Carey v. Local Board No. 2, Hartford, Connecticut, 297 F. Supp. 252, DC Conn. (1969); aff'd. 412 F.2d 71 (1969); Schafer v. Mitchell, 304 F. Supp. 1227, DCND, Cal. (1969); City of Hartford v. Hills, 408 F. Supp. 901, DC Conn. (1976).
Respondent in this proceeding has run afoul of the above rules. The foregoing comment is in no way intended to be hypercritical. Its insertion is intended to suggest that careful thought should be given to the precise language of the regulation or statute which it is intended to apply to a given publication or set of circumstances.
On the basis of the facts revealed in the record of this proceeding, to construe DMM § 422.231b. - e. as being applicable to Cable Choice so as to require denial of second-class mail entry to the publication would be to give to the language of those regulations an interpretation and construction of a decidedly impermissible broadness of scope.
II
It may be thought by some to be unusual that no responses have been made in this decision to the elaborate legal argument, with citations to many cases, presented by Respondent in its Proposed Findings and Conclusions. The reason for this apparent anomaly is that it never was made clear that any factual situation delineated by DMM § 422.231 is descriptive of or applicable to Petitioner and its publication. Hence, none of the crucial factual matters have been established to which such legal arguments and precedents should, or could, be applied.
1. The publication Cable Choice, published by Willamette TV and Cable Guides, Portland, Oregon, has complied with the requirements for second-class mail entry set forth in §§422.221 and 422.223 since January 3, 1983.
2. The aforesaid publication, Cable Choice, is not a publication designed primarily for advertising purposes within the meaning of § 422.231 and paragraphs b. through e. thereof, Domestic Mail Manual.
3. Respondent's decision to deny Petitioner's application for second-class mail privileges for the publication Cable Choice is set aside.
4. The application of Willamette TV and Cable Guides for second-class mail entry for the publication Cable Choice is granted, effective as of January 3, 1983.
1/ Some abbreviations used herein are: R-3 = Respondent's Ex. No. 3; P-2 = Petitioner's Ex. No. 2; DMM = Domestic Mail Manual; P. (or R.) F.F. (or C.L.) = Petitioner's (or Respondent's) Proposed Findings of Fact (or Conclusion of Law); Tr. (No.) = Transcript page; CSP = Cablesystems Pacific.
2/ In the computation of the advertising content, photographs of actors or scenes from films were counted as advertisements for Cablesystems Pacific (CSP) when the Pay-Per-View (P-P-V) Channel was mentioned, and the telephone number to call to order the service was given. This method of counting unduly increased the CSP advertising content of the publication because, by their very nature, such ads constitute information and notice to then-existing P-P-V subscribers of coming attractions of interest. The page containing the masthead, et cetera, was not counted except that it was included in the total number of pages of each issue. Without information as to the date, time, and channel of the showing, current CSP subscribers would be forced either (1) to search every item of every page of the log until the desired item could be found; (2) to check every channel every hour in order to be able to find the show; or (3) to go to another guide to get the information - an alternative which any prudent publisher would regard as strenuously to be avoided. It is to be kept in mind that by the time the CSP customer gets the guide, he has already paid his cable hook-up fee; hence, he must previously have subscribed to cable television. While there are some free guides available, and the Sunday issue of the daily newspaper carries a cable and broadcast television guide, 80 percent of the viewers of CSP subscribe to Cable Choice. (Tr. 20-25, 111) About 90 percent of CSP's viewers also receive, at extra cost, at least one of its six "premium" channels. (Tr. 128)