News America Pub., Inc. v. F.C.C., 88-1037

Decision Date29 March 1988
Docket NumberNo. 88-1037,88-1037
Parties, 15 Media L. Rep. 1161 NEWS AMERICA PUBLISHING, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, The Committee for Media Diversity, et al., Wilbert A. Tatum, Intervenors.
CourtU.S. Court of Appeals — District of Columbia Circuit

Howard M. Squadron and Burt Neuborne, with whom Slade R. Metcalf, New York City, Michael R. Gardner and James P. Denvir, Washington, D.C., were on the brief, for appellant.

Diane S. Killory, Gen. Counsel, with whom Daniel M. Armstrong, Associate Gen. Counsel, and C. Grey Pash, Jr., Counsel, F.C.C., Washington, D.C., were on the brief, for appellee.

Kenneth Berlin, Washington, D.C., for intervenor, Wilbert A. Tatum.

Andrew Jay Schwartzman and David W. Danner, Washington, D.C., were on the brief, for intervenors, Committee for Media Diversity, et al.

Timothy B. Dyk, Patrick J. Carome and Teresa D. Baer, Washington, D.C., were on the brief, for intervenor, CBS, Inc.

Floyd Abrams, New York City, and W. Terry Maguire were on the brief, for amicus curiae, American Newspaper Publishers Ass'n, urging reversal.

Steven R. Shapiro, New York City, was on the brief, for amicus curiae, American Civil Liberties Union Foundation and the New York Civil Liberties Union, urging reversal.

Marshall E. Lippman, New York City, was on the brief, for amicus curiae, Newspaper and Mail Deliverers Union of New York and Vicinity, urging reversal.

Steven R. Ross, Gen. Counsel to the Clerk, Charles Tiefer, Deputy Gen. Counsel to the Clerk, Michael L. Murray, Asst. Counsel to the Clerk and Janina Jaruzelski, Asst. Counsel to the Clerk, U.S. House of Representatives, Washington, D.C., were on the brief, for amici curiae, Speaker and Bipartisan Leadership Group of the U.S. House of Representatives, urging affirmance.

Before ROBINSON, SILBERMAN and WILLIAMS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILLIAMS.

Dissenting Opinion filed by Circuit Judge ROBINSON.

WILLIAMS, Circuit Judge:

On December 22, 1987 Congress passed and the President signed a 471-page Continuing Resolution (printed only in a 1,194-page Conference Report) appropriating all of the funds for the federal government for fiscal year 1988. Pub.L. No. 100-202, 101 Stat. 1329 (1987). On page 34, in a 379-word paragraph entitled "Federal Communications Commission Salaries and Expenses," sandwiched between a proviso concerning VHF channel assignments to educational stations and a restriction on cellular telephone systems in rural areas, appeared the following provision:

Provided, further, that none of the funds appropriated by this Act or any other Act may be used to repeal, to retroactively apply changes in, or to begin or continue a re-examination of the rules of the Federal Communications Commission with respect to the common ownership of a daily newspaper and a television station where the grade A contour of the television station encompasses the entire community in which the newspaper is published, or to extend the time period of current grants of temporary waivers to achieve compliance with such rules....

Making Further Continuing Appropriations for the Fiscal Year Ending September 30, 1988, H.Rep. No. 498, 100th Cong., 1st Sess. 34 (1987) ("Conference Report ") (emphasis added). The provision's sponsor was Senator Hollings, and we will refer to it as the Hollings Amendment or simply the Amendment. As of December 22 the sole holder of any temporary waiver of the sort specified in the italicized phrase was News America Publishing, Inc. Under the natural and we think only reasonable construction of the phrase, its sole effect was to forbid extension of those waivers.

Despite the Amendment, News America applied to the Federal Communications Commission on January 14, 1988 for extensions of its waivers. The Commission denied the requests on January 19, 1988, finding that the Amendment barred any such extension and declining to consider News America's petition or its constitutional challenges to the Amendment. News America Publishing, Inc., FCC 88-19, slip op. at 2 (Jan. 19, 1988). Naturally it did not reach the merits of News America's application. News America petitioned for review, moving for expedited treatment and for a stay of the FCC's order. We granted both motions and stayed the Commission's ruling until 45 days following our decision in this appeal.

The critical last 18 words of the Amendment are general in form but not in reality; they burden a single publisher/broadcaster. We conclude that under the First and Fifth Amendments we must scrutinize such legislation under a test more stringent than the "minimum rationality" criterion typically used for conventional economic legislation under equal protection analysis. Although the decisions of the Supreme Court and this circuit leave some doubt as to the exact characterization of the proper standard, any that is appreciably more stringent than "minimum rationality" requires invalidation of the challenged phrase. 1


The FCC's newspaper-broadcast cross-ownership rule provides generally that the Commission may not grant a television broadcast license to a party who owns or controls a daily newspaper in the same community. 2 47 C.F.R. Sec. 73.3555(c). The Commission has, however, provided for both temporary and permanent waivers of the rule. If a broadcast licensee acquires a daily newspaper, the Commission's practice is to grant automatically a temporary waiver for one year or until the license renewal date, whichever is longer. Second Report & Order, 50 F.C.C.2d 1046, 1076 n. 25 (1975). Temporary waivers of varying durations are also available if a newspaper publisher acquires a broadcast station. See, e.g., Metromedia Radio & Television, Inc., 102 F.C.C.2d 1334, 1353 (1985), aff'd Health & Medicine Policy Research Group v. FCC, 807 F.2d 1038 (D.C.Cir.1986).

The Commission is ready to grant discretionary waivers or extensions on any of several grounds. The owner's having to sell at a distress price is one. Second Report & Order, 50 F.C.C.2d at 1085. Another is a showing that "separate ownership and operation of a newspaper and station cannot be supported in the locality." Id. Finally, the Commission allows waiver when "for whatever reason" the purposes of the rule would be best served by continued joint ownership. Id. The common theme of the last two grounds is obviously to grant a waiver where enforcement of the rule would defeat rather than advance the goal of media diversity. Indeed, in upholding the cross-ownership rules against constitutional attack, the Supreme Court explicitly noted that the availability of waivers--where the station and paper could not survive without common ownership--"underscore[s]" the reasonableness of the rules. FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775, 802 n. 20, 98 S.Ct. 2096, 2115 n. 20, 56 L.Ed.2d 697 (1978). 3

Although the Second Report & Order also provided for permanent waivers of the newspaper-broadcast cross-ownership rule, Second Report & Order, 50 F.C.C.2d at 1076 n. 24, 1085, the burden on an applicant for a permanent waiver is considerably heavier than for a temporary one. Health & Medicine Policy Research Group, 807 F.2d at 1042-43; FCC Brief at 27-28 n. 10. Only once, in a case involving "highly unusual facts," FCC Brief at 28 n. 10, has the Commission actually granted a permanent waiver of the newspaper-broadcast cross-ownership rule. See Field Communications Corp., 65 F.C.C.2d 959 (1977). 4 News America is a corporation controlled by K. Rupert Murdoch, a recently naturalized American citizen with extensive broadcast and newspaper holdings in Australia, Europe, and North America. Murdoch also controls Fox Television, Inc. ("Fox"), 5 which owns numerous television stations throughout the United States.

In November 1985 and November 1986, Fox secured FCC permission for its acquisition of the licenses, respectively, of WNYW-TV in New York City and WXNE-TV in Boston. Because News America owned the New York Post and the Boston Herald, these acquisitions required waivers of the cross-ownership rule, which the Commission granted (two years for the New York cross-ownership, 18 months for that in Boston). 6 Metromedia, 102 F.C.C.2d at 1353 (New York); Twentieth Holdings Corp., 1 F.C.C.Rcd. 1201 (1986) (Boston). Time ran out on March 6, 1988 for the New York interests, and in the absence of waiver extensions will run out on June 30, 1988 for those in Boston. Unless Murdoch sells the Herald or WXNE-TV or secures relief, Fox will face "administrative remedies to assure compliance," Metromedia, 102 F.C.C.2d at 1350, presumably including loss of the WXNE-TV license.

Counsel for News America have informed us by letter that it sold the Post effective March 7, thus appearing to moot its claims as to that newspaper and WNYW-TV. This change does nothing, however, to moot News America's constitutional challenge with respect to the Herald and WXNE-TV. 7

News America's primary claims 8 lie at the intersection of the First Amendment's protection of free speech and the Equal Protection Clause's requirement that government afford similar treatment to similarly situated persons. (Although the Equal Protection Clause appears only in the 14th Amendment, which applies only to the states, the Supreme Court has found its essential mandate inherent in the Due Process Clause of the Fifth Amendment and therefore applicable to the federal government. Bolling v. Sharpe, 347 U.S. 497, 74 S.Ct. 693, 98 L.Ed. 884 (1954).) Where legislation affecting speech appears underinclusive i.e., where it singles out some conduct for adverse treatment, and leaves untouched conduct that seems indistinguishable in terms of the law's ostensible purpose, the omission is bound to raise a suspicion that the law's true target is the message. Accepting that intuition without making an actual determination...

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