Time Warner Entertainment Co., L.P. v. F.C.C.

• Decision Date: 30 August 1996
• Docket Number: 93-5350,Nos. 93-5349,93-1384,93-1266,s. 93-5349
• Citation: 93 F.3d 957
• Parties: TIME WARNER ENTERTAINMENT CO., L.P., Appellant/Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and The United States of America, Appellees/Respondents, Association of America's Public Television Stations, et al., Intervenors. & 93-5351.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 957

93 F.3d 957

320 U.S.App.D.C. 294

TIME WARNER ENTERTAINMENT CO., L.P., Appellant/Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and The United States of

America, Appellees/Respondents,

Association of America's Public Television Stations, et al.,

Intervenors.

Nos. 93-5349, 93-1266, 93-1384, 93-5350 & 93-5351.

United States Court of Appeals, District of Columbia Circuit.

Argued November 20, 1995.

Decided August 30, 1996.

[320 U.S.App.D.C. 298] Appeals from the United States District Court for the District of Columbia and Petitions for Review of Regulations of the Federal Communications Commission (92cv02494) (92cv02558) (FCC-93-164) (FCC-93-72).

Robert D. Joffe and Stuart W. Gold, New York City, argued the cause for appellants. With them on the briefs were Stephen S. Madsen, New York City, Brian Conboy, Theodore C. Whitehouse, and Albert G. Lauber, Jr., Allan A. Tuttle and Peter V. Lockwood, Washington, DC, entered appearances.

Jacob M. Lewis, U.S. Department of Justice, argued the cause for respondents. With him on the briefs were Frank W. Hunger, Assistant Attorney General, Eric H. Holder, Jr., United States Attorney, Mark B. Stern, U.S. Department of Justice, William E. Kennard, General Counsel, Federal Communications Commission ("FCC"), and Christopher J. Wright, Deputy General Counsel, Daniel M. Armstrong, Associate General Counsel, and Clifford G. Pash, Jr., Counsel FCC. Douglas N. Letter, Litigation Counsel, Barbara L. Herwig, Assistant Director, Bruce G. Forrest, and R. Craig Lawrence, Assistant United States Attorney, and Renee Licht, Sue A. Kanter, and Gregory M. Christopher, Counsel, FCC, entered appearances.

John F. Duffy, Washington, DC, argued the cause for intervenors Association of America's Public Television Stations, et al. With him on the brief were Mark H. Lynch, Marilyn Mohrman-Gillis, Washington, DC, Paula A. Jameson, New york City, and Nancy H. Hendry, Washington, DC.

William R. Malone, Washington, DC, argued the cause for intervenors National Rural Telecommunications Cooperative, et al. With him on the joint brief were Joseph L. Van Eaton, John B. Richards, Arthur S. Garrett, III, Lawrence R. Sidman, Washington, DC, Edward J. Perez, Los Angeles, CA, Patrick J. Grant, Washington, DC, Stephanie M. Phillips, Carl A. Fornaris, Miami, FL, and Paul J. Sinderbrand, Washington, DC. Sheila A. Millar and John B. Richards, Washington, DC, entered appearances for intervenor David U. Fierst and James E. Meyers, Washington, DC, were on the brief for intervenor Encore Media Corporation.

[320 U.S.App.D.C. 299] National Rural Telecommunications Cooperative. Teresa D. Baer, Washington, DC, entered an appearance for amici curiae The Alliance for Communications Democracy and City of Los Angeles, California. Robert A. Garrett, Washington, DC, entered an appearance for amici curiae City of New York, et al.

Angela J. Campbell, Andrew J. Schwartzman, and Gigi B. Sohn, Washington, DC, were on the brief for amici curiae Consumer Federation of America, et al. Douglas L. Parker entered an appearance.

John Thorne, Michael E. Glover, and James R. Young, Arlington, VA, entered appearances for amicus curiae Bell Atlantic Corporation. Edward P. Kearse, Syracuse, NY, entered an appearance for amicus curiae National Association of State Cable Agencies. David B. Goodhand, Elliot M. Mincberg, I. Michael Greenberger, and James N. Horwood, Washington, DC, entered appearances for intervenors Alliance for Community Media, et al.

Before BUCKLEY, RANDOLPH, and TATEL, Circuit Judges.

Opinion for the Court filed PER CURIAM.

Opinion dissenting in part filed by Circuit Judge TATEL.

PER CURIAM:

These are facial challenges to nine provisions of the Cable Television Consumer Protection and Competition Act of 1992, Pub.L. No. 102-385, 106 Stat. 1460 ("1992 Act"), and two provisions of its predecessor, the Cable Communications Policy Act of 1984, Pub.L. No. 98-549, 98 Stat. 2779 ("1984 Act"). A group of cable television system owner/operators and programmers contend that the following provisions infringe upon their First Amendment right to freedom of speech: sections 611 (public, educational, and governmental programming) and 612 (leased access) of the 1984 Act, and sections 3 (rate regulation), 10(d) (obscenity liability), 11(c) (subscriber limitation, channel occupancy, and program creation restrictions), 15 (premium channel preview notice), 19 (vertically integrated programming), 24 (municipal immunity), and 25 (direct broadcast satellite set-aside) of the 1992 Act.

We sustain the constitutionality of these provisions, with the exception of section 11(c)'s "program creation provision." We hold that the challenge to this portion of section 11(c) is not ripe for judicial decision, and we consolidate the remaining challenges to section 11(c) with Time Warner Entertainment Co. v. FCC, No. 94-1035, which addresses the same issues and is being held in abeyance pending reconsideration by the Federal Communications Commission of regulations contested in that action.

I BACKGROUND

The first cable television systems were built in the late 1940's to carry broadcast television signals to communities in remote or mountainous areas. They were intended to enhance broadcast television, not to compete with or replace it. Turner Broadcasting Sys., Inc. v. FCC, 512 U.S. 622, ----, 114 S.Ct. 2445, 2451, 129 L.Ed.2d 497 (1994) ("Turner"). The industry quickly developed, however, and by the 1970's cable systems began to carry not only television broadcast signals but also new programming designed specifically for cable. H.R. REP. NO . 934, 98th Cong., 2d Sess. 20-21 (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4658.

Broadcast and cable television are distinct in their operations. While broadcast stations emit electromagnetic signals from a central antenna that are picked up by television sets within the antenna's range, in cable systems the transmitter is physically connected to the sets of individual subscribers by conventional or optical fiber cables that are similar in function to telephone lines. Because these cables must be laid in public rights-of-way and easements, cable operators must secure the necessary permits from local governments. Thus, their operations must be franchised.

The cable industry is comprised of cable operators, who own the physical assets and franchises and transmit the signals, and cable programmers, who produce programs for sale or license to the operators. Cable operators will often have ownership interests in programmers, and vice versa. These are known as "vertically integrated" entities. Cable operators create some of their own programming, but much of it comes from outside sources, including local and distant broadcast stations and such national and regional cable programming networks as CNN, ESPN, and C-Span. Cable subscribers select the stations they wish to receive by choosing among various plans ("tiers") of cable service. At an additional cost, a subscriber may receive "premium" channels (such as HBO and Showtime). Many systems also offer "pay-per-view" programs for which a subscriber pays a fee each time a specific movie or program is selected.

Prior to 1984, cable television was largely regulated at the local level, primarily through the franchise process. H.R.REP. NO. 934, supra, at 19, reprinted in 1984 U.S.C.C.A.N. at 4656. The 1984 Act established a national policy for the local, state, and federal regulation of cable; but it continued to rely on local franchising as the primary means of regulation. Id.

The 1984 Act authorized local governments to require cable operators to set aside channels for public, educational, and governmental ("PEG") programming. Id. It also required operators of cable systems with more than 36 channels to set aside a percentage of those channels for commercial use by entities unaffiliated with the operator ("leased access"). Id. at 48, reprinted in 1984 U.S.C.C.A.N. at 4685. The Act also allowed local authorities to regulate rates for basic cable services if a cable system did not face effective competition. Id. at 19, reprinted in 1984 U.S.C.C.A.N. at 4657. The FCC defined "effective competition" in such a way, however, that 97 percent of all systems were exempt from rate regulation. S. REP. NO . 92, 102d Cong., 2d Sess. 4 (1991), reprinted in 1992 U.S.C.C.A.N. 1133, 1136.

The cable industry experienced dramatic growth following the enactment of the 1984 Act, and Congress was soon confronted by the problems that accompanied this growth. Accordingly, it launched a two-year review of the industry. This study laid the ground for the passage of the 1992 Act, which revised certain provisions of the 1984 Act, left others in place, and enacted a number of new provisions. We will refer to the two statutes collectively as "the Cable Acts."

Soon after the new legislation was enacted, the FCC initiated a rulemaking to implement and interpret section 10. Implementation of Section 10 of the Cable Consumer Protection and Competition Act of 1992: Indecent Programming and Other Types of Materials on Cable Access Channels, 7 F.C.C.R. 7709 (1992) (notice of proposed rulemaking). At the conclusion of the rulemaking, the FCC issued two orders construing section 10 and promulgating regulations to implement it. Implementation of Section 10 of the Cable Consumer Protection and Competition Act of 1992: Indecent Programming and Other Types of Materials on Cable Access Channels, 8 F.C.C.R. 998 (1993) (first report and order); Implementation of Section 10 of the Cable Consumer Protection and Competition Act of 1992: Indecent Programming and Other Types of Materials on Cable Access Channels, 8 F.C.C.R. 2638 (1993) (second report and order). Time Warner petitioned this court to review these orders.

Shortly after the FCC initiated its rulemaking, five lawsuits challenging various provisions of the Cable Acts were filed in the United States District Court for the District of...