Midwest Video Corporation v. United States

Decision Date13 May 1971
Docket NumberNo. 20439.,20439.
Citation441 F.2d 1322
PartiesMIDWEST VIDEO CORPORATION, Petitioner, v. UNITED STATES of America and Federal Communications Commission, Respondents.
CourtU.S. Court of Appeals — Eighth Circuit

Harry M. Plotkin, Washington, D. C., Wayne W. Owen, Little Rock, Ark., George H. Shapiro, David Tillotson, Washington, D. C., for petitioner, Moses, McClellan, Arnold, Owen & McDermott, Little Rock, Ark., Arent, Fox, Kintner, Plotkin & Kahn, Washington, D. C., of counsel.

Edward J. Kuhlmann, Atty., Federal Communications Commission, Washington, D. C., Richard W. McLaren, Asst. Atty. Gen., Howard E. Shapiro, Alan A. Pason, Attys., Dept. of Justice, Washington, D. C., Richard E. Wiley, Gen. Counsel, John H. Conlin, Assoc. Gen. Counsel, Federal Communications Commission, Washington, D. C., for respondents.

Before VAN OOSTERHOUT, GIBSON and LAY, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

Petitioner, Midwest Video Corporation, seeks review of the first report and order adopted by the Federal Communications Commission (FCC) on October 24, 1969, reported at 20 F.C.C.2d 201, and its order denying reconsideration adopted June 24, 1970, reported at 23 F. C.C.2d 825. The foundation for such orders was laid by notice of proposed rule making and notice of inquiry reported at 15 F.C.C.2d 417 relating to community antenna television systems (CATV).

Petitioner operates CATV systems in Missouri, New Mexico and Texas. Some of its systems have microwave authorization and some systems have more than 3500 subscribers. Petitioner was substantially engaged in its CATV operations long prior to the institution of the rule making proceedings here involved.

The FCC, asserting authority to do so pursuant to the Communications Act of 1934 as amended, 47 U.S.C.A. § 151 et seq., adopted: (1) Rules requiring all CATV systems with 3500 or more subscribers to produce original programs to a significant extent and to have available facilities for the production of such programs after April 1, 1971, as a condition to its right to continue to function as a CATV system. (2) Rules limiting type of programs which CATV systems may transmit upon the basis of a program of per channel charge. (3) Rules governing the program origination of all CATV systems.

Petitioner contends that Congress has not by the Communications Act or otherwise authorized the FCC to prescribe such rules. We agree with the petitioner's contention and set aside the origination rule for the reasons hereinafter stated.

The principal attack is upon the origination rule referred to at item (1) above. Section 74.1111 of the Commission's rules so far as here material reads:

"(a) Effective on and after April 1, 1971, no CATV system having 3,500 or more subscribers shall carry the signal of any television broadcast station unless the system also operates to a significant extent as a local outlet by cablecasting and has available facilities for local production and presentation of programs other than automated services. * * *"

Cable casting is thus defined in § 74.1101:

"(j) Cablecasting. The term `cablecasting\' means programing distributed on a CATV system which has been originated by the CATV operator or by another entity, exclusive of broadcast signals carried on the system."

No direct authority is granted to the FCC by the Communications Act to regulate CATV systems. CATV came into existence subsequent to the enactment of the Communications Act of 1934. Consequently it is not surprising that nothing can be found in the Act or its legislative history bearing upon the intention of Congress with respect to CATV regulation. Many efforts to enact legislation covering CATV have failed to meet with success. The growth of CATV has been explosive. Courts have found the issue of the right of the FCC to regulate CATV to be extremely troublesome. The concern is not over the power of Congress to regulate CATV but over the authorization Congress has actually made.

Descriptions of CATV systems coverering both off-the-air and microwave fed types, the function of CATV and the pertinent history of its development are fully discussed in the FCC reports and in United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001, and Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176. See Black Hills Video Corp. v. F. C. C., 8 Cir., 399 F.2d 65. No need exists to re-cover this ground here.

CATV operations are of two types, off-the-air and microwave. Off-the-air systems capture television and radio signals off the air by means of a high antenna convert or modify the signal by electronic equipment and carry the converted signal to subscribers for a fee by coaxial cable and wire. Microwave systems use amplifying devices to bring distant signals over the air to the receiving end of its station from which it conveys the signal to customers in the same manner as off-the-air systems. The FCC first asserted jurisdiction over microwave fed systems and later asserted jurisdiction over off-the-air systems. The courts appear to attach no significance to the distinctions between off-the-air microwave fed systems. See Southwestern Cable Co., supra, p. 167 of 392 U.S., 88 S.Ct. 1994.

In any event the authority of the FCC in our present case does not appear to turn on the competing use of the spectrum by microwave fed operations. The rules are applied in the same manner to both off-the-air and the microwave operations.

In Southwestern Cable Co., the Supreme Court upheld the right of the FCC to require CATV systems to carry signals of local television stations, the non-duplication of local programing and the restriction of CATV transmission of distant signals into the one-hundred largest television markets (except for such services as existed on February 15, 1966).

Such authority was predicated upon 47 U.S.C.A. § 152(a) making the provisions of the Act applicable to "interstate or foreign communication by wire or radio" and the broad statements of purposes in 47 U.S.C.A. § 151 directing the FCC to "make available * * * to all the people of the United States a rapid, efficient, Nation-wide, and world-wide wire and radio communication service. * *" Reliance is also placed on § 153(a) and (b) defining wire and radio communications, and §§ 307(b) and 303(f) relating to providing equitable allocations of broadcasting facilities.

The Court in Southwestern Cable by way of limitation states:

"There is no need here to determine in detail the limits of the Commission\'s authority to regulate CATV. It is enough to emphasize that the authority which we recognize today under § 152 (a) is restricted to that reasonably ancillary to the effective performance of the Commission\'s various responsibilities for the regulation of television broadcasting. The Commission may, for these purposes, issue `such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law,\' as `public convenience, interest, or necessity requires.\' 47 U.S.C. § 303(r). We express no views as to the Commission\'s authority, if any, to regulate CATV under any other circumstances or for any other purposes." 392 U.S. 157, 178, 88 S.Ct. 1994, 2005.

The compulsory origination rule here goes far beyond the regulatory power approved in Southwestern Cable Co. The traditional CATV operation differs greatly from that of originating programs. For origination, substantial investment in entirely new and different equipment is required. Additional personnel is needed for program origination. The record, as the Commission impliedly concedes, provides no accurate estimate of the increased cost that would be involved. See paragraph 25 of the first report.

The Commission recognizes that smaller CATV operations could not afford to provide origination services and concedes that there is no consensus as to the appropriate cutoff point of ability to provide origination. The Commission then arbitrarily adopts 3500 subscribers as the cutoff point.

In paragraph 24 of the first report, the Commission cites instances where CATVs with more than 3500 subscribers have lost money on origination. Only approximately 10% of the existing CATV operations now have more than 3500 subscribers. At paragraph 4 of its first report, 20 F.C.C.2d p. 20, the Commission states:

"4. Those commenting on behalf of CATV interests generally agreed that CATV program origination serves public interest and should be encouraged, though they almost uniformly opposed our proposal to require origination as a condition for the carriage of broadcast signals (notice, pars. 15-16). On the other hand, broadcast interests — particularly those without CATV holdings — generally urged that program origination should be prohibited altogether, or at least restricted to local originations of the public service type, and that advertising should be barred. It is claimed that this is necessary to prevent potential fractionalization of the audience for broadcast services and a siphoning off of program material and advertising revenue now available to the broadcast service."

Thus it appears that both the CATV interests and conventional broadcasters are opposed to compulsory CATV origination.

In Fortnightly, the Supreme Court states that television results from the combined activity of broadcasters and viewers. After carefully analyzing the function of CATV, the Court holds that the CATV operation falls on the viewers' side of the line, and then goes on to say:

"Essentially, a CATV system no more than enhances the viewer\'s capacity to receive the broadcaster\'s signals; it provides a well-located antenna with an efficient connection to the viewer\'s television set. It is true that a CATV system plays an `active\' role in making reception possible in a given area, but so do ordinary television sets and antennas. CATV equipment is powerful and sophisticated, but the basic function the equipment serves is
...

To continue reading

Request your trial
5 cases
  • Midwest Video Corp. v. F. C. C.
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • February 21, 1978
    ...18397, 20 F.C.C. 201, 202-04 (1969). This court set that rule aside as beyond the Commission's jurisdiction. Midwest Video Corp. v. United States, 441 F.2d 1322 (8th Cir. 1971). In a split decision, the Supreme Court reversed, sustaining the mandatory origination rule as also "reasonably an......
  • General Telephone Co. of Southwest v. United States
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • September 14, 1971
    ...U.S.App.D.C. 262, 387 F.2d 220 (1967); Black Hills Video Corp. v. FCC, 399 F.2d 65 (C.A.8, 1968); but cf. Midwest Video Corp. v. United States (FCC), 441 F.2d 1322 (C.A.8 May 13, 1971) where an order of the Commission requiring CATV systems serving more than 3500 subscribers to originate pr......
  • United States v. Midwest Video Corporation 8212 506
    • United States
    • U.S. Supreme Court
    • June 7, 1972
    ...of Appeals set aside the regulation on the ground that the FCC had no authority to issue it. Held: The judgment is reversed. Pp. 659 675. 441 F.2d 1322, Mr. Justice BRENNAN, joined by Mr. Justice WHITE, Mr. Justice MARSHALL, and Mr. Justice BLACKMUN, concluded that: 1. The rule is within th......
  • INSURERS'ACTION COUNCIL, INC. v. Markman
    • United States
    • U.S. District Court — District of Minnesota
    • May 21, 1980
    ...as a condition to use of highways) (criticized in Watson, supra 348 U.S. at 82 n. 3, 75 S.Ct. at 175 n. 3); Midwest Video Corporation v. United States, 441 F.2d 1322 (8th Cir. 1971) (F.C.C. could not force cablecasters into entirely new business of program origination as condition to enteri......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT