National Ass'n of Independent Television Producers and Distributors v. Federal Communications Commission, s. 1026

• Court: U.S. Court of Appeals — Second Circuit
• Writing for the Court: Before HAYS, and OAKES, Circuit Judges, and CHRISTENSEN; HAYS
• Citation: National Ass'n of Independent Television Producers and Distributors v. Federal Communications Commission, 502 F.2d 249 (2nd Cir. 1974)
• Decision Date: 18 June 1974
• Docket Number: 1027 and 1047,Nos. 1026,D,s. 1026
• Parties: NATIONAL ASSOCIATION OF INDEPENDENT TELEVISION PRODUCERS AND DISTRIBUTORS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. WESTINGHOUSE BROADCASTING COMPANY, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. WARNER BROS., INC., and Columbia Pictures Industries, Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. American Broadcasting Companies, Inc., et al., Intervenors. ockets 74-1168, 74-1283 and 74-1348.

Page 249

502 F.2d 249

NATIONAL ASSOCIATION OF INDEPENDENT TELEVISION PRODUCERS AND DISTRIBUTORS, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of

America, Respondents.

WESTINGHOUSE BROADCASTING COMPANY, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of

America, Respondents.

WARNER BROS., INC., and Columbia Pictures Industries, Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of

America, Respondents.

American Broadcasting Companies, Inc., et al., Intervenors.

Nos. 1026, 1027 and 1047, Dockets 74-1168, 74-1283 and 74-1348.

United States Court of Appeals, Second Circuit.

Argued April 5, 1974.

Decided June 18, 1974.

Katrina Renouf, Washington, D.C. (Margot Polivy, Edward J. Kuhlmann, and Renouf, McKenna & Polivy, Washington, D.C., on the brief), for petitioner National Association of Independent Television Producers and Distributors.

John D. Lane, Washington, D.C. (J. Carter McKaig, Ramsey L. Woodworth, and Hedrick & Lane, Washington, D.C., on the brief), for petitioner Westinghouse Broadcasting Co., Inc.

Stuart Robinowitz, New York City (Theodore C. Sorenson, George P. Felleman, Donald E. Brown, and Paul, Weiss, Rifkind, Wharton & Garrison, Jerome S. Boros and Fly, Shuebruk, Blume & Gaguine, New York City, on the brief), for petitioners Warner Bros., Inc. and Columbia Pictures Industries, Inc. and intervenors National Committee of Independent Television Producers and Samuel Goldwyn Productions.

Ronald S. Konecky, New York City (Hardee, Barovick, Konecky & Braun, New York City, Peter Bierstedt and Pierson, Ball & Dowd, Washington, D. Co., on the brief), for intervenor Time-Life Films, Inc.

Arthur Scheiner, Washington, D.C. (Robert D. Hadl and Wilner & Scheiner, Washington, D.C., on the brief), for intervenor MCA, Inc.

Kenneth A. Cox, Washington, D.C., for Sandy Frank Co. as amicus curiae.

Thomas N. Frohock, Washington, D.C. (James A. McKenna, Jr. and McKenna, Wilkinson & Kittner, Washington, D.C., on the brief), for intervenor American Broadcasting Companies, Inc.

J. Roger Wollenberg, Timothy B. Dyk, Sally Katzen, and Wilmer, Cutler & Pickering, Washington, D.C. and Eleanor S. Applewhaite, New York City, on the brief, for intervenor Columbia Broadcasting System, Inc.

Joseph A. Marino, Associate Gen. Counsel, Federal Communications Commission (Daniel R. Ohlbaum, Acting Gen. Counsel, Daniel M. Armstrong and Philip V. Permut, Counsel, Federal Communications Commission, Washington, D.C., on the brief), for respondents Federal Communications Commission and United States of America.

Thomas E. Kauper, Asst. Atty. Gen., and Howard E. Shapiro, Atty., Dept. of Justice, Washington, D.C., on the brief, for United States of America.

Before HAYS, and OAKES, Circuit Judges, and CHRISTENSEN, District judge. ^*

HAYS, Circuit Judge:

This action comes to us on petitions to review an order of the Federal Communications Commission which amended the Prime Time Access Rule (PTAR). 47 C.F.R. 73.658(k) (1973). We hold that the Commission failed to allow adequate time for the amendments to become effective. We enjoin the Commission from making the amendments effective before September 1975. Otherwise we dismiss the petitions without prejudice to their renewal after the Commission has had an opportunity to conduct any further proceedings it may deem desirable.

I.

In May 1970 the FCC, after lengthy preliminary studies and extensive hearings, enacted the Prime Time Access Rule. 23 F.C.C.2d 382, 401-02, modified on reconsideration, 25 F.C.C.2d 318, 336-37. ¹ Simply stated, the rule prohibited television stations in the fifty largest metropolitan areas from broadcasting network programs in more than three of the four evening hours in which most people watch television ('prime time'). To assure that the remaining hour ('access time') would be available for independently created programs, the rule prohibited the showing of feature films recently televised within the market or 'off-network' programs (previous network programs, or 're-runs') during access time. ²

The FCC enacted the rule to combat the stranglehold the three major networks had acquired over prime time programing. The three networks had acquired virtually exclusive power to determine what millions of television viewers could watch every evening. The Commission found that 'the public interest requires limitation on network control and an increase in the opportunity for development of truly independent sources of prime time programing.' 23 F.C.C.2d at 394.

On petitions for review we held that PTAR and the financial interest and syndication rules neither exceeded the Commission's statutory authority nor violated the First Amendment. Mt. Mansfield Television, Inc. v. FCC, 442 F.2d 477 (2d Cir. 1971). On the constitutional issue we held that the rule, 'far from violating the First Amendment, appears to be a reasonable step toward fulfillment of its fundamental precepts . . ..' Id. at 477. However, we recognized the experimental nature of the rule and warned that our holding did not preclude a further review of experience with the rule if it proved to be inimical to the public interest. Id. at 479.

The FCC from the start also conceded the experimental nature of the rule and declared its intent to review its effects from time to time. 23 F.C.C.2d at 401. On October 30, 1972, the Commission issued a Notice of Inquiry and Notice of Proposed Rule Making, 37 F.C.C.2d 900, in which it announced its intention to consider modifications in or repeal of the rule. More than forty parties filed comments with the Commission. On July 30 and 31, 1973, the FCC conducted oral hearings. On November 29, 1973, the Commission announced that it had decided on certain changes in the rule. These were formally adopted in a Report and Order dated February 6, 1974 (hereinafter referred to as 'Report'). 44 F.C.C.2d (1974). The petitions now before us attack the modifications of the rule ordered by the Commission.

The Commission modified the rule in several ways. ³ First, it eliminated access time altogether on Sunday evenings, reduced access time to one half-hour other evenings, and pegged access time to a particular time slot (7:30-8 P.M. in the Eastern and Pacific Time Zones, 6:30-7 P.M. in the Central and Mountain Zones). Second, the Commission provided that a station might devote one half-hour of access time each week to certain types of network programing (children's specials or documentary or public affairs programs). Third, the Commission made certain adjustments for time zone differences and sports 'runovers' and sports associated programs. Fourth, the Commission completely barred feature films from access time. ⁴

Two groups of petitioners have attacked the revised rule. ⁵ The first group, which we shall identify with the National Association of Independent Television Producers and Distributors (NAITPD), seeks a return to the original PTAR. This group contends that the Commission did not give the rule an adequate test period and that the modifications of the rule subvert the purposes behind the original rule, increase network dominance, and impose unconstitutional restraints on speech. ⁶ The group further argues that the effective date of the modifications in unreasonable.

A second group, which we shall identify with Warner Bros., Inc., seeks total repeal of the rule. ⁷ The group maintains that experience with PTAR shows that it has increased network dominance and has failed to improve grogram diversity. The group argues further that the ban on feature films and off-network programs in access time is contrary to the public interest and violates the First Amendment.

In view of our disposition of the case we need not consider the merits of either of the attacks on the revised rule or the FCC's justifications for its action.

II.

NAITPD and Time-Life Films have attacked the effective date of the new rule as unreasonable because it does not give independents who have produced programs for access time in reliance on the rule sufficient opportunity to withdraw from these ventures without unnecessary expense. We agree.

The FCC first mentioned the September 1974 effective date in its informal report of January 24, 1974. The Commission formally adopted that effective date in its Report and Order of February 6, 1974. Thus the parties will have had notice of the effective date for only eight months or less.

The FCC claims that the effective date is unassailable because it complies with section 4(c) of the Administrative Procedure Act, 5 U.S.C. 553(d) (1970), which provides that a regulation may be made effective 'not less than 30 days' after publication. As the language of the statute indicates, this provision merely establishes a minimum period of notice. It does not authorize the use of an effective date that is arbitrary or unreasonable. Cf. 5 U.S.C. 706(2)(A) (1970).

In its Report the Commission noted that Warner Bros. and MCA had urged that immediate repeal of PTAR was feasible, while others had proposed a notice period much longer than eight months. Report PP75, 76, 44 F.C.C.2d at . The Commission decided to make the changes effective in September 1974. Id. P113, 44 F.C.C.2d at . The Commission based this decision on a finding that 'the public interest is served by making improvements in any rule effective at a reasonably early date' and that a lengthy lead time was unnecessary 'in view of the limited expansion of network programing which we have decided to permit.' Id. 44 F.C.C.2d at .

In promulgating the original rule the Commission allowed a much longer grace period. The Commission permitted the networks sixteen months to phase out their domestic syndication and foreign distribution activities. 23 F.C.C.2d at 399. This enabled the networks to dispose of their inventories of re-runs without incurring larger losses. The Commission also allowed sixteen months before making PTAR effective. Id. On...