Cablevision Systems Corp. v. F.C.C.

• Decision Date: 22 June 2009
• Docket Number: Docket No. 07-5553-ag.
• Citation: 570 F.3d 83
• Parties: CABLEVISION SYSTEMS CORPORATION, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, United States of America, Respondents, WRNN License Company, LLC, Intervenor.
• Court: U.S. Court of Appeals — Second Circuit

570 F.3d 83

CABLEVISION SYSTEMS CORPORATION, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, United States of America, Respondents, WRNN License Company, LLC, Intervenor.

Docket No. 07-5553-ag.

United States Court of Appeals, Second Circuit.

Argued: April 7, 2008.

Decided: June 22, 2009.

Henk Brands (Allan J. Arffa and J. Adam Skaggs, on the brief), Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington, D.C., and Howard J. Symons and Tara M. Corvo (on the brief), Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Washington, D.C., for Petitioner.

Jacob M. Lewis (Matthew B. Berry, Joseph R. Palmore, and Nicholas A. Degani, Federal Communications Commission, and Thomas O. Barnett, John J. O'Connell, Jr., Catherine G. O'Sullivan, and Robert J. Wiggers, U.S. Department of Justice, on the brief), Federal Communications Commission, Washington, D.C., for Respondent.

Andrew G. McBride (Todd M. Stansbury and William S. Consovoy, on the brief), Wiley Rein LLP, Washington, D.C., for Intervenor.

Jane E. Mago, Marsha J. MacBride, and Erin L. Dozier (on the brief), National Association of Broadcasters, Washington, D.C., for Amicus Curiae National Association of Broadcasters.

Before WALKER, CABRANES, and RAGGI, Circuit Judges.

JOHN M. WALKER, JR., Circuit Judge:

The must-carry provisions of the Cable Television Consumer Protection and Competition Act ("1992 Cable Act" or "Cable Act") require cable operators to transmit, over their cable systems, the signals of certain broadcast stations operating in the same market. The statute also gives the Federal Communications Commission ("FCC" or "the Commission") authority to modify a given broadcast station's market, thus potentially changing the universe of cable operators required to carry that station. In this case, Cablevision, a cable systems operator, petitions for review of the FCC's decision to include certain Long Island communities in the market of WRNN, a station broadcasting from upstate New York, and the resulting order directing Cablevision to carry WRNN on its Long Island cable systems. Because we find no constitutional or legal error in the FCC's decision, we DENY the petition.

BACKGROUND

I. The 1992 Cable Act and Its Must-Carry Provisions

The must-carry provisions of the 1992 Cable Act require "cable operators," such as Cablevision, to carry the signals of a number of "local commercial television stations." 47 U.S.C. § 534(a). The statute caps the number of such stations that a cable operator must carry at "up to one-third of the aggregate number of usable activated channels" on that operator's system. Id. § 534(b)(1)(B). For our purposes, a "local commercial television station" is a broadcast station (i.e., a station that transmits its signal over the airwaves) that, "with respect to a particular cable system, is within the same television market as the cable system." Id. § 534(h)(1)(A).

A broadcast station's market "shall be determined by the Commission by regulation or order using, where available, commercial publications which delineate television markets based on viewing patterns." Id. § 534(h)(1)(C)(i). Currently, the Commission relies on the commercial publications of Nielsen Media Research that divide the nation into a series of coterminous geographic "Designated Market Areas" ("DMAs") based on viewership patterns. 47 C.F.R. § 76.55(e)(2). For example, the New York City DMA contains not only the five boroughs of the city, but also neighboring areas of Long Island, Connecticut, New Jersey, and upstate New York, as well as limited areas of Pennsylvania, because people in those areas, in the aggregate, watch the same television channels.

The upshot of the must-carry provisions is that, in general, each cable operator is required to carry the signal of every broadcast station in its DMA, until it has dedicated "one-third of the aggregate number of usable activated channels" on its system to such channels. 47 U.S.C. § 534(b)(1)(B); see also id. § 534(a)-(b), (h)(1)(C). Both Cablevision and WRNN are located within the New York City DMA, and Cablevision currently has fewer than one-third of its channels dedicated to must-carry stations.

The only relevant exception to this must-carry rule occurs under the statute's market modification provision. Pursuant to this provision, the FCC may, on written request, add certain communities to, or exclude certain communities from, a given broadcast station's market "to better effectuate the purposes" of the statute. § 534(h)(1)(C)(i). If a given community is excluded from a station's market, cable operators in that community are no longer required to carry that station. If a given community is added, cable operators in that community must commence carriage of that station's signal unless they already devote one-third of their channels to local broadcast stations. See id.

In considering market modification requests, the statute instructs the FCC to

afford particular attention to the value of localism by taking into account such factors as—

(I) whether the station, or other stations located in the same area, have been historically carried on the cable system or systems within such community; [the "historical carriage factor"]

(II) whether the television station provides coverage or other local service to such community; [the "local service factor"]

(III) whether any other television station that is eligible to be carried by a cable system in such community in fulfillment of the requirements of this section provides news coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; [the "other stations factor"] and

(IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community [the "viewing patterns factor"].

47 U.S.C. § 534(h)(1)(C)(ii)(I)-(IV). The FCC's interpretation and application of this provision lies at the heart of this dispute.

II. The Turner Litigation

Shortly after the passage of the 1992 Cable Act, several cable operators mounted a First Amendment challenge to the legislation by claiming that the statute, on its face, impermissibly burdened the rights both of cable programmers, who produce television shows exclusively for cable distribution (e.g., HBO, TNT), and of cable operators, who actually transmit the programming to consumers via coaxial cable (e.g., Cablevision). In Turner Broadcasting System, Inc. v. FCC ("Turner I"), 512 U.S. 622, 114 S.Ct. 2445, 129 L.Ed.2d 497 (1994), the Supreme Court held that the statute's requirements were content neutral, and therefore subject to intermediate scrutiny. The Court's majority opinion announced that, at least in the abstract, the statute served three "important," interrelated interests articulated by Congress in the statute's findings: "(1) preserving the benefits of free, over-the-air local broadcast television, (2) promoting the widespread dissemination of information from a multiplicity of sources, and (3) promoting fair competition in the market for television programming." Id. at 662, 114 S.Ct. 2445. The majority, however, concluded that "deficienc[ies]" in the record prevented it from determining whether the statute was sufficiently tailored to further those interests without substantially burdening protected speech and remanded for further proceedings. Id. at 667-68, 114 S.Ct. 2445.

Significantly, the majority noted that the district court had not addressed whether the language of the market modification provision, with its references to "the value of localism" and to stations "provid[ing] news coverage of issues of concern to such community," altered the content-neutrality of the statute. Id. at 643 n. 6, 114 S.Ct. 2445 (quoting 47 U.S.C. § 534(h)(1)(C)(ii)). The Court did not address this point. Id. In a dissent joined by three other justices, Justice O'Connor, relying in part on the language of the market modification provision, wrote that the must-carry regulation was content-based, and thus subject to strict scrutiny, such that it could only be justified by a compelling governmental interest and would have to be narrowly tailored to achieve its intended purpose. Id. at 680, 114 S.Ct. 2445.

In 1997, with a more fully developed record before it, the Supreme Court held that "the must-carry provisions further important governmental interests" and that the provisions did not violate the First Amendment because they did "not burden substantially more speech than necessary to further those interests." Turner Broad. Sys., Inc. v. FCC ("Turner II"), 520 U.S. 180, 185, 117 S.Ct. 1174, 137 L.Ed.2d 369 (1997). None of the opinions in Turner II specifically mentioned or cited the market modification provision.

III. Market Modification Decisions in the New York City DMA

In 1996, Cablevision petitioned the FCC to exclude a number of communities from the markets of several local broadcast stations, including WRNN, a station licensed in Kingston, New York that transmitted its signal from Overlook Mountain in Woodstock, New York. The FCC's Cable Services Bureau (the "Bureau") granted Cablevision's request in part and denied it in part, excluding communities in Long Island's Nassau and Suffolk counties from WRNN's market, but declining to exclude communities elsewhere, such as New York's Westchester County and Connecticut's Fairfield County. Cablevision Sys. Corp. ("1996 CSB Order"), 11 F.C.C.R. 6453 (1996). In making both decisions, the Bureau noted that, in the New York DMA, reliance on the four enumerated factors alone would not allow it to "take into account the particular difficulties faced by these stations in light of the purposes of the carriage rule." Id. at 6475 ¶ 50. Accordingly, the Bureau also considered the station's "Grade B contour," i.e., the area within which viewers can receive its broadcast signal over the air, and the "geography and terrain" separating the target...