Opinion for the court filed by Circuit Judge J. SKELLY WRIGHT.
J. SKELLY WRIGHT, Circuit Judge.
FCC regulations require cable television operators,
In the course of reviewing those petitions, we have concluded and now hold that the must-carry rules are fundamentally at odds with the First Amendment and, as currently drafted, can no longer be permitted to stand.
The Supreme Court has repeatedly stressed that "[e]ach medium of expression * * * must be assessed for First Amendment purposes by standards suited to it, for each may present its own problems." Southeastern Promotions, Ltd. v. Conrad, 420 U.S. 546, 557, 95 S.Ct. 1239, 1246, 43 L.Ed.2d 448 (1975). See also Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 501, 101 S.Ct. 2882, 2889, 69 L.Ed.2d 800 (1981) (plurality opinion). Mindful that in applying the broad principles of the First Amendment to new media we must remain sensitive to the "differing natures, values, abuses and dangers" of each method of expression, Kovacs v. Cooper, 336 U.S. 77, 97, 69 S.Ct. 448, 459, 93 L.Ed. 513 (1949) (Jackson, J., concurring), we examine in detail the nature of cable television technology, the history and purposes of the FCC's regulation of that technology, and prior judicial assessments of the constitutionality of that regulation.
A. Cable Television Regulation and the Origins and Purposes of the Must-Carry Rules
Cable television and ordinary commercial broadcast television operate on the basis of wholly different technical and entrepreneurial principles. See generally Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 104 S.Ct. 2694, 2701, 81 L.Ed.2d 580 (1984). Conventional broadcasters radiate electromagnetic waves from a transmitting antenna. The waves are intercepted by the viewer's television receiver, typically via a rooftop antenna, and decoded to produce a video image. Broadcasters derive their revenues not by selling the signal to the viewer but by selling time to advertisers.
In contrast, cable operators charge subscribers a fee for the right to view programming from a variety of broadcast and non-broadcast sources.
Although initially reluctant to exercise jurisdiction over cable, by the mid-1960's the FCC had changed its position and undertook comprehensive regulation of the budding industry. See generally United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968) (canvassing early history of FCC regulation of cable); D. LE DUC, CABLE TELEVISION AND THE FCC (1973). Fully recognizing that the statutory basis for its jurisdiction was far from explicit, the Commission nonetheless believed that oversight was imperative lest the "explosive" growth of the cable industry undermine the regulatory framework already established for ordinary broadcast television. Rules re Microwave-Served CATV, First Report and Order in Docket No. 14895, 38 FCC 683, 685, 697-716 (1965) (First Report and Order); CATV, Second Report and Order in Docket No. 14895, 2 FCC2d 725 (1966) (Second Report and Order).
The Commission's objective was not merely to protect an established industry from the encroachment of an upstart young competitor, although such a result was clearly the byproduct of the regulatory posture that developed.
Almost from the beginning, the must-carry rules were a centerpiece of the FCC's efforts to actively oversee the growth of cable television.
Although the economic analysis initially advanced in support of the must-carry rules was somewhat complicated, the Commission's general objective was straight-forward: to assure that the advent of cable technology not undermine the financial viability of free, community-oriented television. If cable were to "drive out television broadcasting service," the Commission reasoned, "the public as a whole would lose far more — in free service, in service to outlying areas, and in local service with local control and selection of programs — than it would gain." First Report and Order, 38 FCC at 700. The must-carry rules, together with a comprehensive body of related regulations, would channel the development of the nascent cable industry to limit the risks it might pose to conventional broadcasting, "society's chosen instrument for the provision of video services." Inquiry Into the Economic Relationship Between Broadcasting and Cable Television, 71 FCC2d 632, 644 (1979) (Economic Inquiry Report).
At the time of the initial promulgation of the rules, the Commission acknowledged that it had insufficient data to "predict with reliability" the extent of the risk posed by cable. First Report and Order, 38 FCC at 711. See also Second Report and Order, 2 FCC2d at 744-745. But the economic analysis posited by the broadcasting industry (and now espoused by the
A central premise of this analysis was that a significant proportion of cable subscribers would cease to view local television unless such signals were carried by the cable system. At first blush, as the cable industry vigorously pointed out, this assumption was somewhat counter-intuitive. Almost without exception, the must-carry rules only mandate carriage of signals that can already be picked up off the air.
But, as the FCC pointed out when it first enacted the rules, the technical availability of off-air signals does not necessarily defeat the assumption that without the must-carry rules a significant number of cable subscribers might curtail their viewing of local broadcast television. Even so minor a task as flicking an A/B switch, the Commission suggested, "is an obvious deterrent to its use." First Report and Order, 38 FCC at 702. Moreover, with or without a switch local signals are available to the subscriber only if the antenna remains attached. Yet, the Commission observed, one of the main selling points of cable is the prospect of dispensing with unsightly or expensive antennas. Id. at 702 n. 25. Finally, even if the antenna remains in place, cable retransmission of UHF signals usually provides a far clearer picture than is available off-air. Thus, the Commission suggested, without the benefit of must-carry UHF stations would be at a significant competitive disadvantage. Economic Inquiry Report, 71 FCC2d at 713; see also Cable Television Program Syndicated Exclusivity Rules, 79 FCC2d 663, 718 (1980) (Syndicated Exclusivity Rules.)
In sum, at the time of their original promulgation the Commission viewed the must-carry rules as critical stones in the regulatory bulwark erected to guard against destruction of free, community-oriented television. By forcing cable systems
When it first promulgated the must-carry rules in the mid-1960's, the Commission recognized that it could not prove the factual predicates of its analysis. Although frankly relying on its "collective instinct" and "intuition," Inquiry Into Economic Relationship Between Television Broadcasting and Cable Television, 65 FCC2d 9, 14 (1977) (Notice of Inquiry), it concluded that it would be inconsistent with its responsibilities to "withhold action until indisputable proof of irreparable damage to the public interest in television broadcasting has been compiled — i.e., by waiting `until the bodies pile up' before conceding that the problem exists." First Report and Order, 38 FCC at 701.
In the ensuing years the Commission has repeatedly repromulgated and fine-tuned the must-carry rules. See Commission Proposals for Regulation of Cable Television, 31 FCC2d 115, 118-120 (1971); Cable Television Report and Order, 36 FCC2d 143, 173-176 (1972). It has, however, never reconsidered or seriously questioned the elaborate and concededly speculative premises on which its economic defense of the rules rests.
This approach is in sharp contrast to the Commission's treatment of several other components of the regulatory framework imposed in the early years of its regulation of cable television. After conducting a comprehensive economic analysis based on a detailed and highly sophisticated examination of a number of discrete television markets, the Commission eliminated the distant-signal-carriage and syndicated-exclusivity rules.
In the context of this wide-ranging deregulatory effort, the Commission acknowledged a radical shift in its perception of the role of cable in the array of viewing options available in a given community. Abandoning its initial view of cable as an auxiliary service that merely supplemented broadcasting by improving reception in outlying areas, the Commission now recognized cable as a legitimate, independent vehicle for providing alternative video services to the public. Economic Inquiry Report, 71 FCC2d at 645-646. With respect to the specific question of the continued value of the distant-signal and syndicated-exclusivity rules, the Commission found that its general economic analysis had failed to substantiate the intuitive fears on which the rules had been premised since the mid-1960's.
Id. at 661. Stating that the comprehensive nature of its analysis enabled it to speak "with a clarity which is uncommon in matters of public policy," the Commission found that "continued regulatory intervention is not merely unnecessary, it is counterproductive." Id. at 659.
B. Prior Constitutional Challenges to Cable Regulations
On several occasions the Supreme Court has addressed questions concerning the breadth of the FCC's jurisdiction over cable television. See United States v. Southwestern Cable Co., supra, 392 U.S. at 178, 88 S.Ct. at 2005 (generally approving FCC jurisdiction over cable if "reasonably ancillary" to its regulation of broadcast television); United States v. Midwest Video Corp., 406 U.S. 649, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972) (Midwest I) (finding rule requiring cable operators to originate local programming within FCC's jurisdiction); FCC v. Midwest Video Corp., 440 U.S. 689, 99 S.Ct. 1435, 59 L.Ed.2d 692 (1979) (Midwest II) (striking down as beyond the FCC's jurisdiction rules requiring cable operators to make channels available for local access). See also Capital Cities Cable, Inc. v. Crisp, supra, ___ U.S. ___, 104 S.Ct. 2694, 81 L.Ed.2d 580 (discussing federal preemption of state laws regulating cable). However, in marked contrast to the extensive First Amendment jurisprudence developed in the context of the broadcast media, see, e.g., FCC v. League of Women Voters of California, 468 U.S. 364, 104 S.Ct. 3106, 82 L.Ed.2d 278 (1984); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969), the Court has never confronted a challenge to the constitutional validity of the must-carry rules or any other regulation affecting cable television.
In the lower federal courts questions concerning the constitutionality of various cable regulations arose almost from the first moment the Commission asserted its regulatory jurisdiction over the industry. The initial challenges, which were brought when cable was in its infancy and apocalyptic visions of its impact were common, met with little success. See, e.g., Titusville Cable TV, Inc. v. United States, 404 F.2d 1187 (3d Cir.1968); Black Hills Video Corp. v. FCC, 399 F.2d 65, 69 (8th Cir.1968); Buckeye Cablevision, Inc. v. FCC, 387 F.2d 220 (D.C.Cir.1967); Carter Mountain Transmission Corp. v. FCC, 321 F.2d 359 (D.C.Cir.), cert. denied, 375 U.S. 951, 84 S.Ct. 442, 11 L.Ed.2d 312 (1963).
These decisions took one of two paths to dispose of the cable operators' First Amendment contentions, often in a single brief paragraph. The most common approach was simply to treat cable and broadcast television as indistinguishable for purposes of First Amendment analysis. Because it was well established that broadcast media could be subject to regulation far more intrusive than the First Amendment would tolerate in other contexts, it naturally followed for these courts that cable regulation, a variant on the same theme, should be subject to no more exacting scrutiny. See, e.g., Black Hills Video Corp. v. FCC, supra, 399 F.2d at 69 ("[i]t is irrelevant * * * that [cable] systems do
In recent years the lower federal courts have subjected FCC regulation of cable television to a far more rigorous constitutional analysis. It is now clearly established, for example, that cable operators engage in conduct protected by the First Amendment. See, e.g., Tele-Communications of Key West, Inc. v. United States, 757 F.2d 1330, 1336 (D.C.Cir.1985); Preferred Communications, Inc. v. City of Los Angeles, 754 F.2d 1396 (9th Cir.1985); Midwest Video Corp. v. FCC, 571 F.2d 1025, 1052-1057 (8th Cir.1978), aff'd on other grounds, 440 U.S. 689, 99 S.Ct. 1435, 59 L.Ed.2d 692 (1979). Most of these courts, mindful of the Supreme Court's repeated admonitions to be sensitive to the unique features of each medium of expression, have cautioned against reflexive invocation of the more forgiving First Amendment standards applicable to broadcast regulations. See, e.g., Preferred Communications, Inc. v. City of Los Angeles, supra, 754 F.2d at 1403; Home Box Office, Inc. v. FCC, 567 F.2d 9, 44-45 (D.C.Cir.) (per curiam), cert. denied, 434 U.S. 829, 98 S.Ct. 111, 54 L.Ed.2d 89 (1977).
At issue in Home Box Office were a number of FCC regulations limiting the programming fare a cablecaster
The court rejected the FCC's argument and sustained the First Amendment challenge. Concluding that the regulation should be treated as an incidental burden on speech, the court applied the test announced
Measured against this standard, the court found the regulations wanting. They failed the first component of the test because the FCC had "not put itself in a position to know" whether its fears about the effect of cable television on local broadcasting were "real or merely * * * fanciful." Id. at 50. The regulations failed to clear the second O'Brien hurdle because they were "grossly overbroad," indiscriminately limiting the programming of cable systems whether or not the limits in fact served to protect the interests the rules purported to serve. Id. at 51.
In sum, the Supreme Court has never addressed the constitutional validity of the must-carry rules or of any of the analogous FCC regulations affecting cable television. To the extent the Court has considered the issue at all, it has described the question as "not frivolous." Midwest II, 440 U.S. at 709 n. 19, 99 S.Ct. at 1446 n. 19. In the lower federal courts the initial trend was to sustain the regulations against First Amendment and due process challenges. In recent years, however, the courts have subjected governmental regulation of cable to far more exacting constitutional scrutiny. The 1977 decision in Home Box Office suggested that FCC regulation of cable could withstand analysis under the First Amendment only if the Commission proved that the regulation burdened speech only incidentally, served an important governmental interest, and was no broader than necessary to further that interest.
C. The TBS and Quincy Petitions
1. TBS. In 1980 TBS petitioned the FCC to institute rulemaking to consider deleting the must-carry rules. Petition For Rulemaking To Delete The Cable "Must Carry" Rules, October 15, 1980, Turner JA at 5-17. In support of its petition TBS argued that the regulatory environment had changed substantially since the original promulgation of the rules and that the factual premises and economic assumptions on which the rules were premised had long since been disproved or abandoned. Id. at 6-11. In addition, it suggested that the must carry-rules could not survive the constitutional test set out in Home Box Office. Id. at 11-16.
TBS's economic grievance was straightforward. As a cable programmer, TBS is in the business of selling a package of programming to the independent cable operators, who actually deliver the cable signal in the communities they are franchised to serve.
Two weeks later the Commission issued a three-page memorandum order in which it formally denied the petition for rulemaking. Opinion and Order, Turner JA at 1-4. Its First Amendment analysis was limited to a single, unadorned citation to the Eighth Circuit's decision in Black Hills Video Corp. v. FCC, supra. The Commission acknowledged that the rules were "intended to compel carriage of broadcast signals in place of alternate programming that subscribers, if given their choice, might otherwise choose" and that the rules place cable programmers "on an unequal footing" because they "take cable channels out of the marketplace where nonbroadcast program originators might otherwise have been able to negotiate for their use." Turner JA at 3. Nonetheless, it concluded that TBS had failed to demonstrate that the countervailing interest of protecting local television had ceased to justify continuation of the rules. Believing that rulemaking would be premature until "a more complete factual base," id., were developed, the Commission denied TBS's petition.
TBS now petitions for review of that denial, requesting, in the alternative, that we set aside the rule as unconstitutional or compel the Commission to institute rulemaking to reconsider the rules.
2. Quincy. Quincy operates a cable television system in Quincy, Washington, a small town approximately 125 miles equidistant from Seattle and Spokane. At the origin of this proceeding Quincy had a 12-channel capacity, and all 12 channels were in use. Exercising its editorial and commercial discretion, Quincy had elected to provide its subscribers with a channel that originated on the cable system itself, the signals of the three network affiliates in Seattle, the largely duplicative signals of the three network affiliates in Spokane, a Spokane-based public broadcasting station, and four other channels offering a wide variety of public affairs and entertainment programming. Of the 12 channels, only the four Spokane stations could be received without the benefit of cable.
In 1979, after conducting a survey, Quincy came to believe that its subscribers would prefer to view three specialized cable
In April 1980 the Cable Television Bureau of the FCC denied Quincy's waiver request. Letter from Willard Nichols, Chief of Cable Television Bureau, to Quincy Cable TV, Inc., April 28, 1980, Quincy JA at 1. Technically not under the compulsion of the must-carry rules until the Spokane stations requested carriage,
On the eve of oral argument the court learned of factual developments occurring during the pendency of the petition and remanded the case to the FCC for reconsideration in light of the changed circumstances.
II. THE FIRST AMENDMENT: STANDARD OF REVIEW
The task of determining the appropriate standard of First Amendment review to apply to the must-carry rules requires us to address two distinct questions.
A. The Scarcity Rationale
It has become something of a truism to observe that "differences in the characteristics of news media justify differences in the First Amendment standards applied to them." Red Lion Broadcasting Co. v. FCC, supra, 395 U.S. at 386, 89 S.Ct. at 1804. See also FCC v. Pacifica Foundation, 438 U.S. 726, 748, 98 S.Ct. 3026, 3040, 57 L.Ed.2d 1073 (1978); Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495, 503, 72 S.Ct. 777, 781, 96 L.Ed. 1098 (1952); Tele-Communications of Key West, Inc. v. United States, supra, 757 F.2d at 1338-39. The suggestion is not that traditional First Amendment doctrine falls by the wayside when evaluating the protection due novel modes of communication. For the core values of the First Amendment clearly transcend the particular details of the various vehicles through which messages are conveyed. Rather, the objective is to recognize that those values are best served by paying close attention to the distinctive features that differentiate the increasingly diverse mechanisms through which a speaker may express his view.
This sensitivity to the uniqueness of each medium precludes facile adoption of the First Amendment jurisprudence that has developed around challenges to FCC regulation of broadcast television and radio. From the perspective of the viewer, no doubt, cable and broadcast television appear virtually indistinguishable. For purposes of First Amendment analysis, however, they differ in at least one critical respect. Unlike ordinary broadcast television, which transmits the video image over airwaves capable of bearing only a limited number of signals, cable reaches the home over a coaxial cable with the technological capacity to carry 200 or more channels.
The distinction is of fundamental significance in light of the Supreme Court's oft-repeated suggestion that the First Amendment tolerates far more intrusive regulation of broadcasters than of other media precisely because of the inescapable physical limitations on the number of voices that can simultaneously be carried over the electromagnetic spectrum. See, e.g., FCC v. League of Women Voters of California, supra, 104 S.Ct. at 3116; see also Preferred Communications, Inc. v. City of Los Angeles, supra, 754 F.2d at 1403.
As this and other courts have recognized, the "scarcity rationale" has no place in evaluating government regulation of cable television.
Home Box Office, Inc. v. FCC, supra, 567 F.2d at 45. See also Preferred Communications, Inc. v. City of Los Angeles, supra, 754 F.2d at 1404; Omega Satellite Products Co. v. City of Indianapolis, 694 F.2d 119, 127 (7th Cir.1982); Note, Cable Television and the First Amendment, 71 COLUM.L.REV. 1008 (1971).
Nor do we discern other attributes of cable television that would justify a standard of review analogous to the more forgiving First Amendment analysis traditionally applied to the broadcast media. We cannot agree, for example, that the mere fact that cable operators require use of a public right of way — typically utility poles — somehow justifies lesser First Amendment scrutiny. See Omega Satellite Products Co. v. City of Indianapolis, supra, 694 F.2d at 127. The potential for disruption inherent in stringing coaxial cables above city streets may well warrant some governmental regulation of the process of installing and maintaining the cable system. But hardly does it follow that such regulation could extend to controlling the nature of the programming that is conveyed over that system. No doubt a municipality has some power to control the placement of newspaper vending machines. But any effort to use that power as the basis for dictating what must be placed in such machines would surely be invalid.
Nor, on this record, can we concur in the suggestion that the "natural monopoly characteristics" of cable create economic constraints on competition comparable to the physical constraints imposed by the limited
Indeed, once one has cleared the conceptual hurdle of recognizing that all forms of television need not be treated as a generic unity for purposes of the First Amendment, the analogy to more traditional media is compelling. Two influential commissions have in fact reached precisely that conclusion. In the words of the Cabinet Committee on Cable Communications, "[C]able development has the potential of creating an electronic medium of communications more diverse, more pluralistic and more open, more like the print and film media than like our present broadcast system." CABINET COMMITTEE ON CABLE COMMUNICATIONS, CABLE: REPORT TO THE PRESIDENT, Ch. I, p. 14 (1974). See also SLOAN COMMISSION ON CABLE COMMUNICATIONS, ON THE CABLE 92 (1971) ("Cable television, by freeing television from the limitations of radiated electro-magnetic waves, creates * * * a situation more nearly analogous to that of the [print] press.").
In sum, beyond the obvious parallel that both cable and broadcast television impinge on the senses via a video receiver, the two media differ in constitutionally significant ways. In light of cable's virtually unlimited channel capacity, the standard of First Amendment review reserved for occupants of the physically scarce airwaves is plainly inapplicable. Accordingly, we must look elsewhere to determine the appropriate yardstick against which to measure the constitutionality of the must-carry rules.
B. The Appropriateness of Treating The Must-Carry Rules as an Incidental Burden on Speech
That cable television shares attributes of the more traditional press does not, of course, suggest that the First Amendment interposes an impermeable bulwark against any regulation. As the Home Box Office court observed, for cable, no less than for other media, the First Amendment draws a distinction between "incidental" burdens on speech — regulations that evince a governmental interest unrelated to the suppression or protection of a particular set of ideas — and restrictions that are "intended to curtail expression — either directly by banning speech because of * * * its communicative or persuasive effect on its intended audience * * * or indirectly by favoring certain classes of speakers over others * * *." 567 F.2d at 47-48.
Thus the threshold question before us, as before the court in Home Box Office, is whether the intrusion worked by the challenged regulations merits treatment as an "incidental" burden on speech. In Home Box Office the court found that the FCC cable rules there at issue were best understood as embodying an interest unrelated to speech and therefore qualified for the analytic track set out in O'Brien and its progeny. That conclusion, as we now show, is far less certain in the context of the present challenge.
In one sense, of course, as is invariably the case,
Yet even so understood, the Commission's objective is a far cry from the sort of interests that typically have been viewed as imposing a merely "incidental" burden on speech. Although not intended to suppress or protect any particular viewpoint, the rules are explicitly designed to "favor certain classes of speakers over others." Home Box Office, Inc. v. FCC, supra, 567 F.2d at 48. Their very purpose is to bolster the fortunes of local broadcasters even if the inevitable consequence of implementing that goal is to create an overwhelming competitive advantage over cable programmers. Opinion and Order, Turner JA at 3. Under the protective aegis of the rules, local broadcasters are guaranteed the right to convey their messages over the cable system while cable programmers must vie for a proportionately diminished number of channels. In the case of systems saturated with mandatory signals, cable programmers are shut out entirely from the only forum capable of conveying
Viewed from the perspective of the cable operator, the entity that delivers a preselected package of channels to paying subscribers, the must-carry rules are equally intrusive. The rules coerce speech; they require the operator to carry the signals of local broadcasters regardless of their content and irrespective of whether the operator considers them appropriate programming for the community it serves. The difficulty is not so much that the rules force operators to act as a mouthpiece for ideological perspectives they do not share, see Wooley v. Maynard, 430 U.S. 705, 714, 97 S.Ct. 1428, 1435, 51 L.Ed.2d 752 (1977), although such a result is by no means implausible.
Although in cable's infancy cable operators served exclusively as passive conduits of broadcast signals, their editorial role has expanded dramatically over the course of the industry's brief history. See generally H.R.Rep. No. 98-934, 98th Cong., 2d Sess. 20-22 (1983). No longer mere "funnel[s] for other broadcasting," Note, The Wire Mire: The FCC and CATV, 79 HARV.L.REV. 366, 367 (1965), operators now select from "a rich variety" of additional options, including locally originated cablecasts, and the programming of over 40 independent cable networks, which offer such diverse fare as movies, sports, news, live coverage of public events, and specialized presentations aimed at individual segments of the national audience. In re Community Cable TV, Inc., 54 Rad.Reg.2d (P & F) 1351, 1359 (1983). See generally H.R.Rep. No. 98-934, supra, at 21.
Indeed, in the context of reviewing the FCC's power to promulgate regulations mandating public access to cable channels, the Supreme Court explicitly acknowledged the breadth of the editorial judgment exercised by cable operators. Midwest II, 440 U.S. at 707-08 n. 17, 99 S.Ct. at 1445 n. 17. No less than the access regulations at issue in Midwest II, the must-carry rules "significantly compromise" the cable operator's editorial discretion: "Even when not occasioning the displacement of alternative programming, compelling cable operators indiscriminately to accept * * * programming will interfere with their determinations regarding the total service offering to be extended to subscribers." Id. Moreover, unlike access rules, which serve countervailing First Amendment values by providing a forum for public or governmental authorities, the must-carry rules transfer control to local broadcasters who already
That the intrusion into cable operators' editorial autonomy is deep does not, of course, require the conclusion that the rules are inappropriate for analysis under the O'Brien test. Cf. Procunier v. Martinez, supra, 416 U.S. 396, 94 S.Ct. 1800, 40 L.Ed.2d 224. Nonetheless, the Supreme Court's prior treatment of other laws and regulations that impinged on the editorial function engenders at least some doubt about the appropriateness of shunting the must-carry rules onto the analytical track reserved for other incidental burdens on expression. Even for broadcasters, regulations that transfer control over programming content to others have met with approval only grudgingly and then only in highly specialized circumstances and without reference to the O'Brien balancing formulation. See CBS, Inc. v. FCC, 453 U.S. 367, 396, 101 S.Ct. 2813, 2830, 69 L.Ed.2d 706 (1981). More significantly, as the Court made clear in Miami Herald Publishing Co. v. Tornillo, supra, once outside the special constitutional realm reserved for privileged occupants of the physically scarce airwaves, the First Amendment guards against governmental intrusions into the editorial function even more jealously. Compare Red Lion Broadcasting Co. v. FCC, supra, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371.
Indeed, if Miami Herald supplies the appropriate mode of First Amendment analysis, our inquiry would be at an end without any need for testing the rules against the other O'Brien factors or applying any other form of interest-balancing.
In short, our examination of the purposes that underlie the must-carry rules, the nature and degree of the intrusions they effect, and prior judicial treatment of analogous regulations leaves us with serious doubts about the propriety of applying the standard of review reserved for incidental burdens on speech. Although the goal of the rules — preserving local broadcasting — can be viewed as unrelated to the suppression or protection of any particular set of ideas, the rules nonetheless profoundly affect values that lie near the heart of the First Amendment. They favor one group of speakers over another. They severely impinge on editorial discretion. And, most importantly, if a system's channel capacity is substantially or completely occupied by mandatory signals, the rules prevent cable programmers from reaching their intended audience even if that result directly contravenes the preference of cable subscribers. Indeed, as a matter of established regulatory policy, the Commission considers the desires of cable subscribers to be irrelevant to the application of the rules. See, e.g., In Re Group W Cable, Inc., 57 Rad.Reg.2d (P & F) 637, 639 (1984). This conscious disregard of subscribers' viewing preferences is difficult, if not impossible, to reconcile with the Supreme Court's repeated admonition that the interests of viewers should be considered "paramount" in the First Amendment calculus. Red Lion Broadcasting Co. v. FCC, supra, 395 U.S. at 390, 89 S.Ct. at 1806.
We need not, however, definitively decide whether a more exacting standard than that announced in O'Brien and applied in Home Box Office is the correct test for evaluating the constitutionality of the must-carry rules. For even if we assume that the regulations burden speech only incidentally and therefore can pass muster under the First Amendment if they "further an important or substantial governmental interest" and impose a restriction "no greater than is essential to the furtherance of that interest," Home Box Office, Inc. v. FCC, supra, 567 F.2d at 48, we have concluded that the must-carry regulations, as written, are clearly impermissible.
III. THE STANDARD APPLIED
A. The Substantiality of the Governmental Interest
The Commission contends that the must-carry rules serve the interest of preserving free, locally-oriented television.
In many circumstances the mere abstract assertion of a substantial governmental interest, standing alone, is insufficient to justify the subordination of First Amendment freedoms. Two such circumstances are relevant to this petition. First, if, as petitioners allege, the Commission has generally concluded that cable poses no threat to broadcasting, this change in perspective clearly would undermine its suggestion that "localism" is sufficiently important or substantial to warrant the significant abridgment of protected activity effected by the must-carry rules. Second, as this court stressed in Home Box Office, in the administrative context O'Brien's substantial interest requirement "translates
We address each issue in turn.
In a burst of deregulatory activity unparalleled in its history, the FCC has recently dismantled large portions of the extensive regulatory structure under which both broadcast and cable television have labored for many decades. See, e.g., Revision of Programming and Commercialization Policies, Ascertainment Requirements, and Program Log Requirements for Commercial Television Stations, 49 Fed.Reg. 33588 (1984) (to be codified at Part 73 of 47 C.F.R.) (Revision of Programming). Details aside, the thrust of this movement has been the Commission's belief that the public interest in diverse video options is best served by deferring to the marketplace. Id.; Economic Inquiry Report, 71 FCC2d at 697. As part of this comprehensive endeavor, the Commission has eliminated numerous regulations which, like the must-carry rules, were premised on the desire to protect local broadcasters from competition from the expanding cable industry. See, e.g., Syndicated Exclusivity Rules, 79 FCC2d 663 (deleting distant-signal and syndicated-exclusivity rules). In addition, it has authorized a wide array of new multichannel video competitors to over-the-air broadcast television and exempted them from any obligation to carry local programming. See, e.g., Inquiry Into the Development of Regulatory Policy in Regard to Direct Broadcast Satellites, 90 FCC2d 676, 691-692 (1982) (DBS Inquiry).
Petitioner TBS contends that in the course of this deregulation the Commission has disclaimed the very premises on which the must-carry rules are founded.
TBS places particular reliance on the conclusions of the Economic Inquiry Report, the Commission's comprehensive analysis that culminated in deletion of several of the must-carry rules' regulatory siblings. "Upon examination of the economic evidence," the Commission stated, "we conclude that competition from cable television does not pose a significant threat to conventional television or to our overall broadcasting policies. * * * [C]able does not appear to be a major negative force on the financial situation of television broadcasters * * *." 71 FCC2d at 661, 688. These conclusions, if given the broad applicability their sweeping tone suggests, would fatally undercut the Commission's argument that the must-carry rules serve the important end of preventing the destruction of free, local broadcasting.
The Commission parries this potentially mortal thrust by contending that the Economic Inquiry Report focused only on the effect of deleting the distant-signal and syndicated-exclusivity rules and "expressly assumed the continuation of the must carry rule[s]." Brief for respondents in No. 83-2050 at 11. That characterization is, at the very least, debatable. With the conclusions of the Economic Inquiry Report already in mind, the Commission, citing "administrative efficien[cy]," did explicitly exclude the must-carry rules from the proceedings that looked toward actual deletion of the distant-signal and syndicated-exclusivity rules. Notice of Proposed Rule-making, 71 FCC2d 1004, 1006 (1979). TBS, however, focuses not on these rulemaking proceedings but on the antecedent Economic Inquiry Report.
More fundamentally, there is an obvious difference between reserving a matter for later consideration and holding its existence constant in the course of analyzing the interplay of other variables.
But even if we accept the Commission's position that it continues to stand by the economic assumptions on which the must-carry rules are premised, we would still be unable to conclude that it has adequately carried its heavy burden of justification. For if the FCC has not repudiated the rules' underlying assumptions, neither has it proved them. Twenty years ago the Commission acknowledged that it simply did not know what effect the advent of cable television would have on local television. First Report and Order, 38 FCC at 710 ("we think it impossible, with the data at hand, to isolate reliably the effects of CATV"). Relying on what it later described as "a more or less intuitive model" and its "collective instinct," Notice of Inquiry, 65 FCC2d at 9, 14, it concluded that the threat to local television was sufficiently plausible to warrant promulgation of the must-carry rules. In light of the concededly speculative nature of its analysis, however, the Commission expressly recognized its "responsibility to get the facts * * * and to act upon them by revising or eliminating the restrictions on CATV as new information or experience more clearly illuminated the locus of the public's interest in the matter." Economic Inquiry Report, 71 FCC2d at 649-650 (footnotes omitted).
For many of its cable regulations, the Commission, with admirable vigor and creativity, has met its acknowledged responsibility to move beyond unsubstantiated intuition. For the must-carry rules, however, the Commission's promise "to get the facts" remains unfulfilled. Id. In the two decades since the rules' original promulgation, the Commission has never seriously examined any of the admittedly speculative links in the chain of reasoning advanced in support of the rules. In particular, it has never sought support for the assumptions that are the linchpins of its analysis: (1) that without protective regulations cable subscribers would cease to view locally available off-the-air television either because they would disconnect their antennas or because the inconvenience of a switching device would deter them; and (2) that even if some cable subscribers did abandon local television, they would do so in sufficient numbers to affect the economic vitality of local broadcasting. Indeed, as noted above, to the extent the Commission has addressed these issues at all, it has questioned their validity.
In short, here, no less than in Home Box Office, the FCC has failed to "put itself in a position to know" whether the problem the rule seeks to cure — the destruction of free, local television — "is a real or merely a fanciful threat." 567 F.2d at 50. That approach, we have concluded, falls far short of the burden the government must affirmatively bear to prove the substantiality of the interest served by the rules. See First National Bank of Boston v. Bellotti, supra, 435 U.S. at 786, 98 S.Ct. at 1421; Preferred Communications, Inc. v. City of Los Angeles, supra, 754 F.2d at 1406 n. 9. Although in some instances "complete factual support * * * for the Commission's judgment or prediction is not possible or required," FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775, 814, 98 S.Ct. 2096, 2121, 56 L.Ed.2d 697 (1978), as we now explain, the particular circumstances of this constitutional challenge make continued deference to the Commission's concededly unsupported determinations plainly inappropriate.
Economic Inquiry Report, 71 FCC2d at 949 (concurring statement of Commissioner Fogarty). In light of the Commission's express unwillingness to premise intrusive regulations on unsubstantiated speculation, we find it difficult to sustain the suggestion that we defer to the Commission's admittedly unproven belief that the must-carry rules in fact serve the substantial interest of protecting local broadcasting.
Moreover, this is demonstrably not an instance in which "complete factual support * * * for the Commission's judgment or prediction is not possible * * *." FCC v. National Citizens Committee for Broadcasting, supra, 436 U.S. at 814, 98 S.Ct. at 2121. When the FCC first asserted jurisdiction 20 years ago, the cable industry was in its infancy and its impact on local broadcasting could not be gauged with accuracy. In that historical context, courts faced with nonconstitutional claims concerning the breadth of the FCC's jurisdiction consistently and appropriately deferred to the Commission's admittedly speculative fears that the advent of cable television would displace local broadcasting. See, e.g., United States v. Southwestern Cable Co., supra, 392 U.S. at 175, 88 S.Ct. at 2004. Nearly two decades have now passed, and the Commission has shown itself capable of the most sophisticated analysis of the effects of cable on conventional television. See Economic Inquiry Report, 71 FCC2d at 673. And yet, even in the context of a serious constitutional challenge, a context in which it must affirmatively bear the burden of proof, Elrod v. Burns, 427 U.S. 347, 362, 96 S.Ct. 2673, 2684, 49 L.Ed.2d 547 (1976) (plurality opinion), it continues to rely on precisely the kind of "speculative allegations" it expressly refuses to credit elsewhere. DBS Inquiry, 90 FCC2d at 691. At some point, especially where First Amendment rights are at stake, the Commission must do more than ask us to defer to its "more or less intuitive model" and "collective instinct" to sustain its assertion that a rule is both necessary and important. Economic Inquiry Report, 71 FCC2d at 634. Where, as here, the Commission itself has expressly acknowledged that its regulatory premises are susceptible of empirical proof
B. The Congruence Between Means and Ends
Even were we to conclude that the Commission adequately demonstrated the substantiality of the interest served by the must-carry rules, we could uphold their validity only if the restriction on activity protected by the First Amendment were "no greater than is essential to the furtherance of that interest." Home Box Office, Inc. v. FCC, supra, 567 F.2d at 48, quoting United States v. O'Brien, supra, 391 U.S. at 377, 88 S.Ct. at 1679. The task of evaluating the constitutional sufficiency of the congruence between the government's means and its ends is often a delicate one. On the one hand, we must, at the very least, make sure that the challenged regulation not gratuitously impinge on protected activity that poses no threat to the interest the agency is seeking to further. United States v. Albertini, ___ U.S. ___, ___, 105 S.Ct. 2897, 2907, 85 L.Ed.2d ___ (1985). On the other hand, we must be careful not to lose sight of our proper role in the constitutional scheme. As this court recently had occasion to observe, our duty to police the First Amendment's requirement that intrusive governmental action be narrowly tailored to the evil sought to be corrected does not imply the authority to "finetune" administrative regulations. White House Vigil for ERA Committee v. Clark, 746 F.2d 1518, 1529 (D.C.Cir.1984); see also Clark v. Community for Creative Non-Violence, ___ U.S. ___, 104 S.Ct. 3065, 3072, 82 L.Ed.2d 221 (1984). An agency typically has broad discretion over the manner in which it endeavors to effect its public interest objectives. Once we have determined that the agency action falls within the wide range of constitutionally permissible regulatory options, our task is at an end.
Fully aware of the breadth of the agency's discretion and the concomitant limits on the scope of our review, our analysis leaves us with no doubt that the must-carry rules, as currently drafted, represent a "fatally overbroad response" to the perceived fear that cable will displace free, local television. FEC v. National Conservative Political Action Committee, ___ U.S. ___, 105 S.Ct. 1459, 1470, 84 L.Ed.2d 455 (1985). We stress that "[w]e are not quibbling over fine-tuning * * *." Id. at 1471. For, as we now show, it is difficult to imagine a less discriminating or more overinclusive means of furthering the Commission's stated objectives.
In the Commission's own words, the must-carry rules are designed to "maintain the availability of local broadcast service to both those who [are] cable subscribers and those who [are] not." Opinion and Order, Turner JA at 2. The goal is to assure that "as many communities as possible * * * have the opportunity of enjoying the advantages that derive from having local outlets
But, if the goal is to preserve "localism" and not "local broadcasters," the must-carry rules are "grossly" overinclusive. Home Box Office, Inc. v. FCC, supra, 567 F.2d at 50. The rules indiscriminately protect each and every broadcaster regardless of the quantity of local service available in the community and irrespective of the number of local outlets already carried by the cable operator. The 18th station is entitled to carriage no less than the first even if its programming is virtually duplicative of the viewing fare already transmitted over the cable system.
We readily acknowledge that it is for the Commission as Congress' delegate and not
It may well be that in some circumstances requiring carriage of the 18th broadcast station is consistent with the objective of preserving free, community-oriented television. And we certainly do not mean to imply that there is such a thing as too many communicative outlets in a given community. It is not the fact of the 18th station that is troubling, but the fact that it is guaranteed a channel even if carriage effectively bumps a cable programmer, regardless of the extent it impinges on the cable operator's editorial autonomy, and irrespective of whether it thwarts viewer preferences. Given the substantial First Amendment costs implicit in this sweeping guarantee, the Commission must make some effort to move beyond the amorphous in defining the interest served by the must-carry rules. Until it establishes a baseline for its general objective of preserving free, community-oriented television — measured by the number of local broadcast stations in the community, the amount of local programming, or any other criterion within its discretion to choose — we simply cannot know whether the rules are adequately tailored to pass constitutional muster. In this circumstance, the Commission has fallen far short of its "affirmative obligation" to show the requisite fit between means and ends. Revision of Programming, 49 Fed.Reg. at 33593 n. 46.
In addition to their complete indifference to the quantity of local television already available either over the air or on the cable system itself, the rules' overinclusiveness lies in their indiscriminate protection of every broadcaster regardless of whether or to what degree the affected cable system poses a threat to its economic well-being. Indeed, the Commission has expressly taken the position that the "financial health" of the broadcaster is irrelevant to its absolute right to occupy a channel on the local cable system. First Report and Order, 38 FCC at 713.
Significantly, this complete absence of any effort to analyze the extent to which the must-carry rules further their stated
We note again that it is for the Commission and not this court to ascertain which broadcasters or classes of broadcasters are sufficiently at risk to warrant protection. We observe only that the Commission's failure to draw any lines at all makes it impossible to conclude that it has satisfied its affirmative obligation to prove that the rules are "sufficiently tailored to the harms it seeks to prevent to justify its substantial interference" with First Amendment rights. FCC v. League of Women Voters of California, supra, 104 S.Ct. at 3124. At some point the goal of preserving localism becomes undifferentiated protectionism.
Regulation of emerging video technologies requires a delicate balancing of competing interests. On the one hand, a regulatory framework that throttles the growth of new media or otherwise limits the number and variety of outlets for expression is likely to run afoul of the First Amendment's central mission of assuring "the widest possible dissemination of information from diverse and antagonistic sources," Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 1424, 89 L.Ed. 2013 (1945). On the other hand, unfettered growth of new video services may well threaten other deeply ingrained societal values. In particular, the complete displacement of expressive outlets attuned to the needs and concerns of the communities they serve not only would contravene a long-standing historical tradition of a locally oriented press but might itself disserve the objective of diversity.
When the Commission strikes this balance in favor of regulations that impinge on rights protected by the First Amendment, it assumes a heavy burden of justification. As the Supreme Court made clear long ago, "Mere * * * preferences or beliefs respecting matters of public convenience may well support regulation directed at other personal activities, but be insufficient to justify such as diminishes the exercise of rights so vital to the maintenance of democratic institutions." Schneider v. State, 308 U.S. 147, 161, 60 S.Ct. 146, 150, 84 L.Ed. 155 (1939). Even where the infringement on protected First
After extensive examination of the purposes and effects of the must-carry rules, we have concluded that the Commission has failed to carry this heavy burden. After the passage of nearly two decades, and despite its demonstrated capacity to do so, the Commission has failed entirely to determine whether the evil the rules seek to correct "is a real or merely a fanciful threat." Home Box Office, Inc. v. FCC, supra, 567 F.2d at 50. Moreover, because the must-carry rules indiscriminately sweep into their protective ambit each and every broadcaster, whether or not that protection in fact serves the asserted interest of assuring an adequate amount of local broadcasting in the community, the rules are insufficiently tailored to justify their substantial interference with First Amendment rights.
We stress that we have not found it necessary to decide whether any version of the mandatory carriage rules would contravene the First Amendment. We hold only that in their current form they can no longer stand. Accordingly, with respect to petitioner Quincy, we vacate the order requiring compliance with the must-carry rules and imposing a fine for its failure to do so. With respect to petitioner TBS, we vacate the order that reaffirmed the constitutional validity of the rules as a basis for denying the petition for rulemaking. Given our general conclusion that the rules are unconstitutional, we need not confront the delicate question of our power to compel rulemaking. Should the Commission wish to recraft the rules in a manner more sensitive to the First Amendment concerns we outline today, it is, of course, free to do so. We would consider the constitutionality of the product of that effort at the appropriate time.
Until recently a cable operator's must-carry obligation arose only if it elected to transmit at least one broadcast signal. See 47 C.F.R. § 76.5(a). Under the Commission's newly revised definition, however, carriage of local stations is mandatory even if the operator otherwise carries no broadcast signals. See Report and Order, FCC 85-179, April 11, 1985, at 7, 10. Ironically, under the revised approach cable systems that carry only broadcast signals will not be subject to the must-carry rules. Id.
In the Second Report and Order the Commission did look at studies suggesting, for example, a general pattern of growth in the number of homes served by cable. 2 FCC2d at 738-744. But, because of their incompleteness, the Commission concluded that such studies were of "limited value." Id. at 744.
The Commission suggests that Home Box Office is inapposite because the decision was confined to issues relating to non-broadcast programming. The argument is unavailing. We note first that TBS describes both CNN and CNN Headline News as "non-broadcast" services. Brief for petitioner in No. 83-2050 at 3. In any event, the Home Box Office court expressly repudiated the reasoning of decisions that had upheld the constitutional validity of regulations prohibiting transmission of distant broadcast signals. 567 F.2d at 45 n. 80. With respect to Black Hills Video, the case relied on by the Commission in this controversy, the court stated: "To the extent that Black Hills Video stands for the proposition that the Commission in some sense `owns' the broadcast spectrum and can condition use of the signals accordingly, it must be rejected." Id. Moreover, although the decision did suggest that the rationale justifying lesser First Amendment scrutiny for broadcast regulation (the "scarcity rationale") might retain some force in the context of granting a microwave license to a cable operator, it expressly did not suggest that the FCC's power over microwave radio links implied a constitutionally permissible authority over cable generally. Indeed, in its general discussion of the inapplicability of the scarcity rationale to cable the court drew no distinction among the various sources of signals ultimately transmitted to the subscriber. 567 F.2d at 44-45.
While, of course, it cannot be said with absolute certainty that invalidation of the must-carry rules would redress this economic injury — a cable operator might still elect not to purchase any TBS programming — certainty is not a constitutional prerequisite. See Valley Forge Christian College v. Americans United for Separation of Church & State, 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982) (injury must be "fairly" traceable to the challenged action and "likely to be redressed by a favorable decision") (emphasis added); Autolog Corp. v. Regan, 731 F.2d 25, 31 (D.C.Cir.1984). Where, as here, TBS can point to assertions by cable operators that, but for the must-carry rules, they would carry its programming, we have no doubt that the likelihood that the injury would be redressed by a favorable decision is sufficiently high to confer standing. In any case, the Supreme Court has recognized that a plaintiff who has been entirely deprived of any opportunity to compete has standing to challenge the constitutionality of that deprivation. Regents of University of California v. Bakke, 438 U.S. 265, 280-81 n. 14, 98 S.Ct. 2733, 2742-43 n. 14, 57 L.Ed.2d 750 (1978) (plurality opinion).
We need not decide whether the cable operator's editorial discretion is of the same order as that of a broadcaster or a newspaper. See Midwest II, 440 U.S. at 707-08 n. 17, 99 S.Ct. at 1445 n. 17. We have no doubt, however, that it is of sufficient magnitude to implicate the First Amendment.
Neither the Commission nor the intervenors direct our attention to any suggestion in the Act or elsewhere that the must-carry rules serve as anything more than a convenient reference point for determining where a local signal ends and a distant signal begins. By invalidating the must-carry rules on First Amendment grounds, we do not, of course, suggest that they may not continue to serve that function.
Commenting on the disparity between the rule's goal of preserving localism and the effect of its application to Quincy Cable, the dissenting Commissioner in Quincy observed:
Quincy JA at 34-36 (Commissioner Jones, dissenting).