United States v. Southwestern Cable Co Midwest Television, Inc v. Southwestern Cable Co, s. 363

• Decision Date: 10 June 1968
• Docket Number: Nos. 363,428,s. 363
• Parties: UNITED STATES et al., Petitioners, v. SOUTHWESTERN CABLE CO. et al. MIDWEST TELEVISION, INC., et al., Petitioners, v. SOUTHWESTERN CABLE CO. et al
• Court: U.S. Supreme Court

392 U.S. 157

88 S.Ct. 1994

20 L.Ed.2d 1001

UNITED STATES et al., Petitioners,

v SOUTHWESTERN CABLE CO. et al.

MIDWEST TELEVISION, INC., et al., Petitioners,

v. SOUTHWESTERN CABLE CO. et al.

Nos. 363, 428.

Argued March 12 and 13, 1968.

Decided June 10, 1968.

[Syllabus from pages 157-158 intentionally omitted] Henry Geller, Washington, D.C., for petitioners United States and Federal Communications Commission.

Ernest W. Jennes, Washington, D.C., for petitioners Midwest Television, Inc., et al.

Arthur Scheiner, Washington, D.C., for respondent Southwestern Cable Co.

Rob- ert L. Heald, Washington, D.C., for respondents Mission Cable TV, Inc., et al.

Mr. Justice HARLAN delivered the opinion of the Court.

These cases stem from proceedings conducted by the Federal Communications Commission after requests by Midwest Television¹ for relief under §§ 74.1107² and 74.1109³ of the rules promulgated by the Commission for the regulation of community antenna television (CATV) systems. Midwest averred that respondents' CATV systems transmitted the signals of Los Angeles broadcasting stations into the San Diego area, and thereby had, inconsistently with the public interest, adversely affected Midwest's San Diego station.⁴ Midwest sought an appropriate order limiting the carriage of such signals by respondents' systems. After consideration of the petition and of various responsive pleadings, the Commission restricted the expansion of respondents' service in areas in which they had not operated on February 15, 1966, pending hearings to be conducted on the merits of Midwest's complaints.⁵ 4 F.C.C.2d 612.

On petitions for review, the Court of Appeals for the Ninth Circuit held that the Commission lacks authority under the Communications Act of 1934, 48 Stat. 1064, 47 U.S.C. § 151 et seq., to issue such an order.⁶ 378 F.2d 118. We granted certiorari to consider this important question of regulatory authority.⁷ 389 U.S. 911, 88 S.Ct. 235, 19 L.Ed.2d 258. For reasons that follow, we reverse.

I.

CATV systems receive the signals of television broadcasting stations, amplify them, transmit them by cable or microwave, and ultimately distribute them by wire to the receivers of their subscribers.⁸ CATV systems characteristically do not produce their own programming,⁹ and do not recompense producers or broadcasters for use of the programming which they receive and redistribute.¹⁰ Unlike ordinary broadcasting stations, CATV systems commonly charge their subscribers installation and other fees.¹¹

The CATV industry has grown rapidly since the establishment of the first commercial system in 1950.¹² In the late 1950's, some 50 new systems were established each year; by 1959, there were 550 'nationally known and identified' systems serving a total audience of 1,500,000 to 2,000,000 persons. ¹³ It has been more recently estimated that 'new systems are being founded at the rate of more than one per day, and * * * subscribers * * * signed on at the rate of 15,000 per month.'¹⁴ By late 1965, it was reported that there were 1,847 operating CATV systems, that 758 others were franchised but not yet in operation, and that there were 938 applications for additional franchises. ¹⁵ The statistical evidence is incomplete, but, as the Commission has observed, 'whatever the estimate, CATV growth is clearly explosive in nature.' Second Report and Order, 2 F.C.C.2d 725, 738, n. 15.

CATV systems perform either or both of two functions. First, they may supplement broadcasting by facilitating satisfactory reception of local stations in adjacent areas in which such reception would not otherwise be possible; and second, they may transmit to subscribers the signals of distant stations entirely beyond the range of local antennae. As the number and size of CATV systems have increased, their principal function has more frequently become the importation of distant signals.¹⁶ In 1959, only 50 systems employed microwave relays, and the maximum distance over which signals were transmitted was 300 miles; by 1964, 250 systems used microwave, and the transmission distances sometimes exceeded 665 miles. First Report and Order, 38 F.C.C. 683, 709. There are evidently now plans 'to carry the programing of New York City independent stations by cable to * * * upstate New York, to Philadelphia, and even as far as Dayton.'¹⁷ And see Chan- nel 9 Syracuse, Inc. v. F.C.C., 128 U.S.App.D.C. 187, 385 F.2d 969; Hubbard Broadcasting, Inc. v. F.C.C., 128 U.S.App.D.C. 197, 385 F.2d 979. Thus, 'while the CATV industry originated in sparsely settled areas and areas of adverse terrain * * * it is now spreading to metropolitan centers. * * *' First Report and Order, supra, at 709. CATV systems, formerly no more than local auxiliaries to broadcasting, promise for the future to provide a national communications system, in which signals from selected broadcasting centers would be transmitted to metropolitan areas throughout the country.¹⁸

The Commission has on various occasions attempted to assess the relationship between community antenna television systems and its conceded regulatory functions. In 1959, it completed an extended investigation of several auxiliary broadcasting services, including CATV. CATV and TV Repeater Services, 26 F.C.C. 403. Although it found that CATV is 'related to interstate transmission,' the Commission reasoned that CATV systems are neither common carriers nor broadcasters, and therefore are within neither of the principal regulatory categories created by the Communications Act. Id., at 427—428. The Commission declared that it had not been given plenary authority over 'any and all enterprises which happen to be connected with one of the many aspects of communications.' Id., at 429. It refused to premise regulation of CATV upon assertedly adverse consequences for broadcasting, because it could not 'determine where the impact takes effect, although we recognize that it may well exist.' Id., at 431.

The Commission instead declared that it would forthwith seek appropriate legislation 'to clarify the situa- tion.' Id., at 438. Such legislation was introduced in the Senate in 1959,¹⁹ favorably reported,²⁰ and debated on the Senate floor.²¹ The bill was, however, ultimately returned to committee.²²

Despite its inability to obtain amendatory legislation, the Commission has, since 1960, gradually asserted jurisdiction over CATV. It first placed restrictions upon the activities of common carrier microwave facilities that serve CATV systems. See Carter Mountain Transmission Corp., 32 F.C.C. 459, aff'd, 116 U.S.App.D.C. 93, 321 F.2d 359. Finally, the Commission in 1962 conducted a rule-making proceeding in which it reevaluated the significance of CATV for its regulatory responsibilities. First Order and Report, supra. The proceeding was explicitly restricted to those systems that are served by microwave, but the Commission's conclusions plainly were more widely relevant. The Commission found that 'the likelihood or probability of (CATV's) adverse impact upon potential and existing service has become too substantial to be dismissed.' Id., at 713—714. It reasoned that the importation of distant signals into the service areas of local stations necessarily creates 'substantial competition' for local broadcasting. Id., at 707. The Commission acknowledged that it could not 'measure precisely the degree of * * * impact,' but found that 'CATV competition can have a substantial negative effect upon station audience and revenues. * * *' Id., at 710—711.

The Commission attempted to 'accommodat(e)' the interests of CATV and of local broadcasting by the imposition of two rules. Id., at 713. First, CATV systems were required to transmit to their subscribers the signals of any station into whose service area they have brought competing signals.²³ Second, CATV systems were forbidden to duplicate the programming of such local stations for periods of 15 days before and after a local broadcast. See generally First Report and Order, supra, at 719 730. These carriage and nonduplication rules were expected to 'insur(e) many stations' ability to maintain themselves as their areas' outlets for highly popular network and other programs. * * *' Id., at 715.

The Commission in 1965 issued additional notices of inquiry and proposed rule-making, by which it sought to determine whether all forms of CATV, including those served only by cable, could properly be regulated under the Communications Act. 1 F.C.C.2d 453. After further hearings, the Commission held that the Act confers adequate regulatory authority over all CATV systems. Second Report and Order, supra, at 728—734. It promulgated revised rules, applicable both to cable and to microwave CATV systems, to govern the carriage of local signals and the nonduplication of local programming. Further, the Commission forbade the importation by CATV of distant signals into the 100 largest television markets, except insofar as such service was offered on February 15, 1966, unless the Commission has previously found that it 'would be consistent with the public interest,' id., at 782; see generally id., at 781—785, particularly the establishment and healthy maintenance of television broadcast service in the area,' 47 CFR § 74.1107(c). Finally, the Commission created 'summary, nonhearing procedures' for the disposition of applications for separate or additional relief. 2 F.C.C.2d, at 764; 47 CFR § 74.1109. Thirteen days after the Commission's adoption of the Second Report, Midwest initiated these proceedings by the submission of its petition for special relief.

II.

We must first emphasize that questions as to the validity of the specific rules promulgated by the Commission for the regulation of CATV are not now before the Court. The issues in these cases are only two: whether the Commission has authority under the Communications Act to regulate CATV systems, and, if it has, whether it has, in addition, authority to issue the prohibitory order here in...