KCST-TV, Inc. v. F.C.C.
| Decision Date | 25 January 1983 |
| Docket Number | INC,KCST-T,No. 81-2265,81-2265 |
| Citation | 699 F.2d 1185 |
| Parties | , Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Arthur B. Goodkind, Washington, D.C., with whom Peter M. Connolly and Warren C. Zwicky, Washington, D.C., were on the brief, for petitioner. Alan Naftalin, Washington, D.C., also entered an appearance for petitioner.
William J. Roberts, Atty., U.S. Dept. of Justice, Washington, D.C., with whom Robert B. Nicholson and Barry Grossman, Attys., U.S. Dept. of Justice, Washington, D.C., were on the brief, for respondent U.S.A. Margaret G. Halpern, Atty., U.S. Dept. of Justice, Washington, D.C., also entered an appearance for respondent U.S.A.
Jane E. Mago, Atty., F.C.C., Washington, D.C., with whom Stephen A. Sharp, Gen. Counsel, and David M. Armstrong, Associate Gen. Counsel, F.C.C., Washington, D.C., were on the brief, for respondent F.C.C.
Before TAMM, WILKEY and SCALIA, Circuit Judges.
Opinion for the court filed by Circuit Judge TAMM.
The network non-duplication rules generally provide that a cable system located within a certain distance of a network-affiliated television station must delete the duplicative network programming of a distant station that is carried on the system. An exception to the rules, which is found in 47 C.F.R. Sec. 76.92(g), is that a cable system need not delete the programming of a television signal that is significantly viewed in the community where the system is located. The policy of the Federal Communications Commission (Commission or FCC) is to keep a station on the list of significantly viewed stations even if the station is actually no longer significantly viewed. KCST-TV sought a waiver of section 76.92(g) on the ground that a distant station, KNBC-TV, is no longer significantly viewed in San Diego County. The Commission refused to consider evidence of KNBC's lack of significant viewing because KCST did not demonstrate the rule's economic impact on KCST. We find that section 76.92(g) has no logical application in the face of a showing that a distant station is not significantly viewed, and we find no apparent policy basis for requiring a showing of economic impact before considering evidence of lack of significant viewing. Therefore, the Commission acted arbitrarily in not giving KCST's waiver application a "hard look." We set aside the Commission's order and remand the case for further proceedings.
The major television networks usually grant each of their affiliates exclusive rights to network programming within the affiliate's market. See First Report and Order in Dockets 14895 and 15233, 38 F.C.C. 683, 703 n. 29 (1965). Since the early 1960's, the FCC's "network non-duplication rules" have required cable systems to protect this network program exclusivity. Id. at 742-43. 1 Cable systems must delete network programs broadcast by a distant station when those programs duplicate programs broadcast by local network affiliates. 47 C.F.R. Sec. 76.92(a) (1981). 2 The premise of the network non-duplication rules is that a station's audience would be diluted if there were program duplication, which would diminish the station's advertising revenues and which might threaten the quality of the station's programming or the survival of the station. See Wheeling Antenna Co. v. United States, 391 F.2d 179, 183 (4th Cir.1968); Blytheville TV Cable Co., 68 F.C.C.2d 1065, 1067 (1978).
In 1978 the FCC adopted a new exception to the network non-duplication rules. See Network Programming Exclusivity Protection--CATV, 67 F.C.C.2d 1303, 1305-06 (1978), aff'd, Spartan Radiocasting Co. v. FCC, 619 F.2d 314 (4th Cir.1980) (codified at 47 C.F.R. Sec. 76.92(g) (1981)). The exception provides that a cable system is not required to delete the duplicating signal of any station that is "significantly viewed" in the cable system's community. 47 C.F.R. Sec. 76.92(g) (1981). The Commission reasoned that significantly viewed stations are over-the-air competitors of local stations and, therefore, should be treated as local stations rather than distant ones. Network Programming Exclusivity Protection--CATV, 67 F.C.C.2d 1303, 1305 (1978).
The term "significantly viewed" was created in 1972 when the FCC adopted new rules for determining when cable systems were required or permitted to carry specific television signals. See Cable Television Report and Order, 36 F.C.C.2d 143, 170-71, 174-76 (1972). 3 The significantly viewed standard was used, first, as one of the criteria to establish the rights of television stations to carriage on cable systems and second, as one of the criteria to establish the rights of cable systems to carry a given television signal without that signal counting against the number of distant signals permitted to be carried under the FCC's rules. Id. The rules limiting distant signal carriage were repealed in 1980. Report and Order in Dockets 20988 and 21284, 79 F.C.C.2d 663, 889-90 (1980), aff'd sub nom. Malrite T.V. of New York v. FCC, 652 F.2d 1140 (2d Cir.1981), cert. denied, 454 U.S. 1143, 102 S.Ct. 1002, 71 L.Ed.2d 295 (1982). "Significantly viewed," however, remains a part of the regulatory scheme that determines whether a cable system must carry a given station and whether the network non-duplication rules are applicable. See 47 C.F.R. Secs. 76.57(a)(4), .59(a)(6), .61(a)(5), .92(g) (1981).
Significantly viewed signals in a given county are those that are listed in the Reconsideration of the Cable Television Report and Order, 36 F.C.C.2d 326, 379-463 (1972), plus those that have been proven significantly viewed since 1972. 47 C.F.R. Sec. 76.54 (1981). The FCC's 1972 list was based on figures from Arbitron audience measurement surveys taken during three one-month periods in 1970 and 1971. Reconsideration of Cable Television Report and Order, 36 F.C.C.2d 326, 347 (1972). The Commission listed all television stations in each county in the nation that came within its definition of significantly viewed. To have been included in the 1972 list, a station had to achieve a minimum three percent share of total non-cable television viewing in the county and a non-cable net weekly circulation of at least twenty-five percent. Id. at 345 (codified at 47 C.F.R. Sec. 76.5(k) (1981)). 4 The Commission has established procedures under which stations not deemed to have been significantly viewed in 1972 can be recognized as having become significantly viewed since then. See Cable Television Report and Order, 36 F.C.C.2d 143, 229 (1972) (codified at 47 C.F.R. Sec. 76.54(b) (1981)). The Commission has also established procedures under which stations not on the air when the 1972 list was prepared can be recognized as significantly viewed. See Report and Order in Docket 20371, 56 F.C.C.2d 265, 270 (1975) (codified at 47 C.F.R. Sec. 76.54(d) (1981)). The FCC, however, has never adopted procedures for deleting a station from the 1972 list. The Commission justified this omission as an effort to "get cable moving." See generally Cable Television Report and Order, 36 F.C.C.2d 143, 164-65 (1972). The Commission wished to avoid disruption of established viewing patterns and to guarantee that cable systems would not be required to drop a signal once its carriage had begun. Id. at 175 n. 45.
KCST-TV is a UHF station in San Diego, California, and is an affiliate of the NBC television network. Until 1978 San Diego cable systems 5 were required to delete Los Angeles station KNBC-TV's network programs when they duplicated KCST's programs. Under the 1978 exception to the network non-duplication rules, however, San Diego cable systems need not delete KNBC's programs because KNBC is deemed to be significantly viewed in San Diego County.
Counties are the geographic unit that the television audience measurement services 6 use in gathering viewing information. San Diego County is an unusually large county. It is more than half the size of New Jersey, which has twenty-one counties. Contingent Petition of KCST-TV for Stay and Special Relief at 8, CSR-1270, Joint Appendix (J.A.) at 8. Northern San Diego County is almost equidistant from the cities of Los Angeles and San Diego. On the other hand, the city of San Diego is more than fifty miles south of the county's northern border and more than one hundred miles south of Los Angeles. Because of these geographic features, the ability of television viewers in northern San Diego County to receive the signals of Los Angeles stations directly off the air differs markedly from that of viewers in the City of San Diego. Also, San Diego County has a well-developed cable market, with more than thirty-eight percent of the county's television homes connected to cable in 1980. Supplement to Contingent Petition of KCST-TV for Stay and Special Relief, Exhibit 1 at 2, CSR-1270, J.A. at 32. Most Los Angeles television stations are carried on San Diego County's cable systems, and viewing levels for Los Angeles stations are much higher in cable homes than in homes receiving television signals off the air. Contingent Petition of KCST-TV for Stay and Special Relief at 4, CSR-1270, J.A. at 4.
When the FCC compiled the 1972 list, KNBC met the significantly viewed test in San Diego County. The other two Los Angeles network affiliates, KABC and KNXT, did not achieve significantly viewed status. Therefore, the adoption of the 1978 exception to the network non-duplication rule, which employs the 1972 list in determining which stations are significantly viewed, eliminated KCST's right to network non-duplication protection. However, the ABC and CBS affiliates in San Diego retain their network non-duplication protection because KABC and KNXT are not on the 1972 list.
In April 1978 KCST...
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