316 U.S. 407 (1942), 1026, Columbia Broadcasting System, Inc. v. United States

Docket Nº:No. 1026
Citation:316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563
Party Name:Columbia Broadcasting System, Inc. v. United States
Case Date:June 01, 1942
Court:United States Supreme Court
 
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Page 407

316 U.S. 407 (1942)

62 S.Ct. 1194, 86 L.Ed. 1563

Columbia Broadcasting System, Inc.

v.

United States

No. 1026

United States Supreme Court

June 1, 1942

Argued May 1, 1942

[62 S.Ct. 1196] APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE SOUTHERN DISTRICT OF NEW YORK

Syllabus

1. To maintain a suit under § 402(a) of the Federal Communications Act of 1934, and the Urgent Deficiencies Act of October 22, 1913, 38 Stat. 219, 220, the action of the Commission sought to be set aside must be an "order," and the bill must state a cause of action in equity. P. 415.

2. Where regulations promulgated by order of the Federal Communications Commission, in the exercise of its rulemaking power, to govern its policy and action in the licensing of broadcasting stations, provide that there shall be no renewal of the license of stations whose contracts with a broadcasting network contain certain provisions proscribed by the Commission, and that such licenses may be revoked, which regulations, if valid, alter the contractual rights of the networks, a network organization whose business is so dependent upon the maintenance and renewal of such contracts that their cancellation, or the threat of it, will cause irreparable injury to its enterprise and property is entitled to a judicial review of the order and regulations whose validity is challenged, by a suit brought under § 402(a) of the Federal Communications Act of 1934, without awaiting action by the Commission for enforcement of the regulations against a station licensee. Pp. 416, 425.

44 F.Supp. 688 reversed.

Appeal from a decree of the District Court dismissing for want of jurisdiction a bill to set aside an order of the Federal Communications Commission.

Page 408

STONE, J., lead opinion

MR. CHIEF JUSTICE STONE delivered the opinion of the Court.

The Federal Communications Commission, by its order of May 2, 1941, as amended by its order of October 11, 1941, promulgated regulations which purport to require the Commission to refuse to grant a license to any broadcasting station which enters into certain defined types of contract with any broadcasting network organization. These regulations, it is alleged, affect adversely appellant's contractual relations with broadcasting stations and impair its ability to carry on its business in maintaining and operating its nationwide broadcasting network. The regulations, as amended on October 11, 1941, together with a supplemental "minute" promulgated by the Commission on October 31, 1941, are set forth at the end of this opinion. The question for our decision is whether appellant is entitled to secure a judicial review of the order by a suit brought under § 402(a) of the Communications Act of 1934, 48 Stat. 1093, 47 U.S.C. § 402(a), and the Urgent Deficiencies Act, 38 Stat. 219, 220, 28 U.S.C. § 47.

Pursuant to § 402(a), appellant brought the present suit against the United States in the Southern District of New York to enjoin enforcement of the Commission's order as contrary to the public interest and beyond the Commission's statutory authority, and on the further ground, if the order be deemed within that authority, that the statute is an unconstitutional delegation of legislative power by Congress in violation of Article I, § 1 of the Constitution, and operates to deprive appellant of property

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without due process of law in violation of the Fifth Amendment. The case was heard by a court of three judges, which permitted the Commission and the Mutual Broadcasting Company to intervene as defendants. It granted appellees' motion to dismiss the complaint for want of jurisdiction, 44 F.Supp. 688, and stayed the operation of the Commission's order pending direct appeal to this Court.

In 1938, the Communications Commission authorized an investigation

to determine what special regulations applicable to radio stations engaged in chain or other broadcasting are required in the public interest, convenience, or necessity.

Extensive hearings were held by a committee consisting of three members of the Commission at whose request the national networks, including appellant, intervened. In June, 1940, the committee made a report, on the basis of which briefs were filed and oral argument was presented before the full Commission by the three national networks and other interested parties. In May, 1941, the Commission issued its "Report on Chain Broadcasting," and ordered the adoption of the regulations which, in their amended form, are the subject of the present controversy.

[62 S.Ct. 1197] The relevant facts stated in the bill of complaint are as follows: appellant or its predecessor has been engaged in the business of nationwide network or chain broadcasting since 1927. It has a large amount of physical property used in the business, and has built up a valuable goodwill. For its broadcasts, it maintains a staff of employees and expends large amounts for musicians and broadcasting performers. It has commitments by long-term contracts aggregating more than $4,000,000 for broadcasting expenditures, including those for the use of land and buildings and for the furnishing of news and broadcasting programs in the next few years. Appellant's total property devoted to its broadcasting business exceeds $18,000,000 in value;

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its earnings from the network exceeded $3,000,000 in both 1939 and 1940.

Chain broadcasting is the means by which radio programs are made available to all or a large part of the nationwide radio audience. It is defined by the Communications Act, 47 U.S.C. § 153(p), as the "simultaneous broadcasting of an identical program by two or more connected stations." The chain broadcaster prepares radio programs, for which it engages performers in advance, and simultaneously broadcasts them over a large number of radio stations to which the programs are transmitted from some central point of origination by wire telephone lines leased by the broadcaster, here the appellant. The programs, which are prepared well in advance of the broadcast and given by persons employed for the purpose by appellant, are of two classes -- commercial programs sponsored and paid for by advertisers, and sustaining programs furnished by appellant and not paid for by any advertiser.

Appellant's network comprises 123 stations in 122 cities in the United States. It is so operated as to enable ninety percent of the radio audience of the United States to listen simultaneously to programs provided by appellant and broadcasted over these stations. Appellant owns and operates seven of the stations, and leases an eighth, all licensed by the Commission. With the remaining 115 stations, it enters into individual contracts, usually for periods of five years, terminable in some instances by appellant on twelve months' notice. By these contracts, appellant undertakes to furnish each station with an average of at least sixty hours per week of network sustaining and sponsored programs. The sustaining programs are furnished without charge, the station being free to use them or not as it chooses. Appellant undertakes to furnish the station with all commercial programs which the sponsor requests the station to broadcast, and to pay the station a specified

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hourly rate for the use of its facilities in broadcasting such programs. Appellant agrees not to furnish its programs to other stations in the same city; the affiliated station, with exceptions not now material, agrees not to broadcast the program of any other network. Of critical importance in the present litigation is the stipulation of the affiliated station that it will, upon not less than twenty-eight days' notice from appellant, broadcast the sponsored or commercial program furnished to it by appellant for at least fifty "converted" hours (averaging seventy-nine regular clock hours) per week.

These provisions of appellant's contracts are alleged to be indispensable to the maintenance and efficient operation of its network and to the existence of a strong and efficient network broadcasting system, and necessary to enable appellant to compete with other advertising media. On May 2, 1941, the Commission issued its order which, as amended by its order of October 11, 1941, promulgated the "Chain Broadcasting Regulations" of which appellant complains, and which the Commission characterized in its Report as "the expression of the general policy we will follow in exercising our licensing power."1 The regulations provide that no license shall be granted to a [62 S.Ct. 1198] broadcast

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station having contracts with a network organization, containing any of several provisions which are characteristic of appellant's contracts with its affiliates. These included provisions by which the station is prevented from broadcasting the programs of any other network organization (3.101); or which prevent another station serving substantially the same area from broadcasting the network programs not taken by the station applying for license, or prevent another station serving a substantially different area from broadcasting any program of the network organization (3.102); or by which the station contracts for affiliation with the network for a period longer than two years (3.103); or by which the station "options for network programs any time subject to call on less than 56 days' notice or more time than a total of three hours" within each of four specified segments of the broadcast day, the regulation declaring

such options may not be exclusive as against other network organizations, and may not prevent or hinder the station from optioning or selling any or all of the time covered by the option, or other time, to other network organizations

(3.104); or which prevent the station (a) from rejecting...

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