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COMMERCIAL RADIO INST. v. WESTERN PENNSYLVANIA CHR

March 23, 1977

COMMERCIAL RADIO INSTITUTE, INC., a corporation, Plaintiff,
v.
WESTERN PENNSYLVANIA CHRISTIAN BROADCASTING COMPANY, a corporation, Defendant



The opinion of the court was delivered by: COHILL

 This is an action for specific performance of a written agreement and a preliminary injunction. A preliminary injunction will be issued pending a final hearing in this matter.

 The plaintiff is Commercial Radio Institute, Inc. (CRI), a Maryland corporation. The defendant is Western Pennsylvania Christian Broadcasting Company (WPCBC), a Pennsylvania corporation. Jurisdiction lies by virtue of diversity of citizenship between the parties and the amount in controversy, which is alleged to exceed $10,000. 28 U.S.C. ยง 1332.

 On May 2, 1973, Pittsburgh Television, Inc. filed with the Federal Communications Commission (FCC) an application for a construction permit to build and operate a new commercial television station on UHF Channel 22 at Pittsburgh, Pennsylvania. On September 26, 1973, defendant, WPCBC, also filed an application for a construction permit for Channel 22.

 On December 14, 1973, Pittsburgh Television Inc. assigned its application to plaintiff, CRI.

 CRI and WPCBC thus became the competitors for Channel 22. To settle the matter CRI and WPCBC executed an agreement dated August 1, 1974, whereby CRI agreed to apply for a different UHF Channel, thereby enabling WPCBC to obtain the Channel 22 permit promptly. The FCC approved the agreement, granted WPCBC's application for Channel 22 on December 2, 1974 and issued the construction permit on March 17, 1975.

 The permit was good for a period of eighteen months, until September 17, 1976. During this period WPCBC obtained a modification of the permit to enable it to increase the broadcasting power of Channel 22 and an extension of the permit's expiration date to February 5, 1977.

 The dispute here arises over an interpretation of Section 4A and B of the agreement of August 1, 1974. It states:

 
"4. WPCBC recognizes certain rights of CRI in this matter which stem from equity and fundamental fairness, and in recognition of these rights, further agrees as follows:
 
A. WPCBC has every intention of promptly proceeding with the construction and operation of the proposed station. However, WPCBC appreciates that despite its present strong intent to immediately proceed to construct there is always the possibility, however remote, that it might not be able to do so. CRI filed initially for the proposed facility, but has agreed to amend its application to specify different facilities in order to permit a grant of the WPCBC application, thereby promptly rendering an additional television service to the people of Pittsburgh. WPCBC agrees that if because of some unknown future event it is unable to effectuate its current intention to promptly institute the proposed service, WPCBC hereby grants to CRI an option to acquire WPCBC's construction permit for reimbursement of WPCBC's full expenses, subject to the approval of the Commission, if at any time during the term of the construction permit or extensions thereof the Board of WPCBC determines that for reasons presently unanticipated, it cannot fulfill its current plans to promptly construct.
 
B. This option may be exercised by CRI without any necessity of formal action by WPCBC's Board if WPCBC has failed to 'substantially construct' *fn3" prior to the date on which a timely application to extend construction permit (FCC Form 701) must be filed under the Commission's Rules.

 According to CRI, since WPCBC had failed to "substantially construct" Channel 22 by the original expiration date of September 17, 1976, CRI had the right to exercise the option to acquire the WPCBC construction permit. By letter of September 21, 1976, CRI notified WPCBC of its intention to exercise the option set forth in Section 4B of the agreement.

 Counsel for WPCBC responded by letter of September 23, 1976, stating that CRI's "exercise of the 'option' is either premature or the 'option' has expired."


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