Monroe Communications Corp. v. F.C.C., 89-1092
| Decision Date | 10 April 1990 |
| Docket Number | No. 89-1092,89-1092 |
| Citation | 900 F.2d 351 |
| Parties | , 17 Media L. Rep. 1703 MONROE COMMUNICATIONS CORPORATION, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION, Respondent, Harriscope of Chicago, Inc., et al., a Joint Venture d/b/a Video 44, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Harry F. Cole, with whom Gene A. Bechtel, was on the brief, for petitioner.
Sue Ann Preskill, Counsel, F.C.C., with whom Robert L. Pettit, Gen. Counsel, and Daniel M. Armstrong, Associate Gen. Counsel, F.C.C., were on the brief, for respondent. Diane S. Killory, Attorney, F.C.C., also entered an appearance for respondent.
N. Frank Wiggins, with whom Stanley B. Cohen and J. Brian De Boice were on the brief, for intervenors.
Before WALD, Chief Judge, SILBERMAN and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge SENTELLE.
Monroe Communications Corporation ("Monroe") petitions this Court for review of a decision of the Federal Communications Commission ("FCC" or the "Commission") awarding Video 44 ("the station") a renewal of its license to operate station WSNS-TV in Chicago, Illinois, and to deny Monroe's mutually exclusive application for a construction permit. Specifically, Monroe contends that the Commission's award of a renewal expectancy to Video 44 was arbitrary and capricious and that the Commission improperly refused to consider evidence of obscene broadcasts by Video 44.
We find that the Board arbitrarily and capriciously awarded a renewal expectancy to Video 44 in light of record evidence of Video 44's marked and apparently permanent cutback in non-entertainment programming through the latter part of its prior license period. Further, we conclude that the Commission arbitrarily failed to consider in the license renewal proceeding allegations of obscene broadcasts by Video 44. We therefore grant Monroe's petition and remand this case to the Commission for further proceedings consistent with this opinion.
When choosing among mutually exclusive applicants for broadcast facilities, the Commission considers a number of factors to predict which applicant will likely best serve the public interest. When all competitors are applicants for an initial license, the Commission focuses on, among other things, each applicant's diversification, meaning the number of other media outlets already owned by the applicant, and integration, meaning the extent to which the owners of the applicant will be involved in the management of the station. See Policy Statement on Comparative Broadcast Proceedings, 1 F.C.C.2d 393 (1965). When one of the applicants already has a license for the station in issue and is seeking renewal of its license, the Commission may grant that applicant a "renewal expectancy" which may be sufficient to outweigh the advantages a challenger may have with respect to diversification and integration. Cowles Broadcasting, Inc., 86 F.C.C.2d 993, 1015 (1981) (Cowles II ), aff'd sub nom., Central Florida Enterprises, Inc. v. FCC, 683 F.2d 503 (D.C.Cir.1982), cert. denied, 460 U.S. 1084, 103 S.Ct. 1774, 76 L.Ed.2d 346 (1983) (Central Florida II ).
An incumbent applicant may be entitled to a renewal expectancy if its performance during the preceding license term has been " 'substantial,' " meaning " 'sound, favorable and substantially above a level of mediocre service which might just minimally warrant renewal.' " Cowles II, 86 F.C.C.2d at 1006 (quoting Cowles Florida Broadcasting, Inc., 62 F.C.C.2d 953, 955-56 (1977)). In deciding whether to award a renewal expectancy, the Commission focuses on non-entertainment programming broadcast by the station, including news, public affairs, and public service announcements. See, e.g., Radio Station WABZ, Inc., 90 F.C.C.2d 818, 840-42 (1982), aff'd sub nom. Victor Broadcasting, Inc. v. FCC, 722 F.2d 756 (D.C.Cir.1983). A licensee is expected to ascertain and respond to community needs and problems in its non-entertainment programming in order to earn a renewal expectancy. Radio Station WABZ, 90 F.C.C.2d at 840-42; In re Simon Geller, 90 F.C.C.2d 250, 270-71 (1982), rev'd on other grounds sub nom. Committee for Community Access v. FCC, 737 F.2d 74 (D.C.Cir.1984); In re WPIX, Inc., 68 F.C.C.2d 218, 402 (1974).
The Commission has articulated three purposes underlying its renewal expectancy policy. First, incumbents' performances are proven, whereas challengers have only paper proposals to offer: "Thus, not only might replacing an incumbent be entirely gratuitous, but it might even deprive the community of an acceptable service and replace it with an inferior one." Cowles II, 86 F.C.C.2d at 1013. Second, "[l]icensees should be encouraged through the likelihood of renewal to make investments to ensure quality service." Id. Third, "[c]omparing incumbents and challengers as if they were both new applicants could lead to a haphazard restructuring of the broadcast industry...." Id.
This Court has condoned some degree of renewal expectancy for a broadcaster's meritorious past record, noting that " 'the incumbent's past performance is some evidence, and perhaps the best evidence, of what its future performance would be.' " Central Florida II, 683 F.2d at 506 (quoting Central Florida Enterprises v. FCC, 598 F.2d 37, 55 (D.C.Cir.1978), cert. dismissed, 441 U.S. 957, 99 S.Ct. 2189, 60 L.Ed.2d 1062 (1979). The Commission, too, has indicated that a station's past performance is relevant primarily insofar as it is probative of the station's likely future performance. Simon Geller, 90 F.C.C.2d at 271.
This Court has also expressed concern, though, that the Commission has in the past been too reluctant to deny renewals to incumbent television license holders in comparative challenges. Central Florida II, 683 F.2d at 510. In Central Florida II we warned the FCC not to "chant 'renewal expectancy' and grant the license" in a case where the justifications underlying the renewal expectancy policy are attenuated. Id. at 510 n. 40.
At the beginning of the previous license term, in December, 1979, licensee Video 44 offered conventional television programming and broadcast a substantial amount of non-entertainment programming. During the 1979-1982 license term, Video 44 gradually converted the station to a subscription television service ("STV"), 1 offering STV programming for at least 23 hours each day by the end of the term. The station continued, though, to broadcast conventional, non-entertainment programming from 6:00 a.m. to 7:00 a.m., Monday through Friday, showing a nationally distributed program called "Health Field" and a show about local and statewide issues called "Illinois Press." By the end of the license term, Video 44 had essentially closed down its local production facilities. Video 44's other broadcasts included a substantial number of "adult" films which contained nudity, offensive language, and various sexual acts.
The Administrative Law Judge ("ALJ") who conducted the initial comparative renewal hearing between Video 44 and Monroe concluded in the Initial Decision that Video 44 was not entitled to a renewal expectancy. Video 44, 102 F.C.C.2d 419 (ALJ 1985). In so deciding, the judge focused on the latter part of the previous license term, in which Video 44 cut back its non-entertainment program markedly, because he concluded that Video 44's performance after switching over to the STV format was probably more probative of its likely future performance than its programming before the format change. Id. at 458. Absent any renewal expectancy in favor of Video 44, the ALJ concluded that the license should be awarded to Monroe because the factors of integration and diversification favored Monroe. Id. at 462-63.
Upon Video 44's petition for review, the Commission's Review Board did two things. First, the Review Board sought guidance from the full Commission on the question of whether the standards applicable in a conventional comparative renewal licensing proceeding are also applicable to an incumbent license renewal applicant which had provided an STV service during the license term under review. Video 44, 102 F.C.C.2d 408, 412-13 (Rev.Bd.1985) ("Review Board I "). Second, the Review Board added, sua sponte, the issue of whether Video 44 had transmitted obscene material in violation of 18 U.S.C. Sec. 1464 ("the obscenity question"). Id. at 410-12.
The Commission responded that STV and conventional licensees have the same obligation to ascertain community needs and interests and to present programming in response to those needs and interests. Video 44, 103 F.C.C.2d 1204, 1207-08 (1986) ("Video 44 I "). Second, the Commission deleted the obscenity question, concluding that the Commission should not review allegations that a licensee has broadcast obscene material unless a local prosecution has already found that the material was obscene. Id. at 1208-11. On reconsideration, the Commission modified its decision with respect to the latter issue, explaining that it would consider obscenity allegations in renewal proceedings, but only where those allegations were raised contemporaneously with the allegedly obscene broadcasts. Video 44, 3 F.C.C.Rcd 757, 759 (1988) ("Video 44 II ").
Following the full Commission's decisions on the significance of the provision of STV service and the obscenity issue, the Review Board reversed the ALJ and concluded that Video 44's non-entertainment programming throughout the previous license term, taken as a whole, merited a renewal expectancy. Video 44, 3 F.C.C.Rcd 3587, 3592 (Rev.Bd.1988) ("Review Board II "). The Review Board further concluded that this renewal expectancy was sufficient to outweigh the advantage Monroe may have had with respect to diversification and integration. Id.
The full Commission...
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