Paducah Newspapers, Inc. v. FCC

• Decision Date: 30 June 1969
• Docket Number: 22027.,No. 22007,22019,22007
• Citation: 414 F.2d 1183,134 US App. DC 287
• Parties: PADUCAH NEWSPAPERS, INC. (Television Station WPSD-TV), Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Egyptian Cablevision, Inc. and Southern Video Corporation, Benton Television Company, Intervenors. HIRSCH BROADCASTING COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Benton Television Company, Egyptian Cablevision, Inc. and Southern Video Corporation, Intervenors. TURNER-FARRAR ASSOCIATION, etc., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Egyptian Cablevision, Inc. and Southern Video Corporation, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

134 US App. DC 287, 414 F.2d 1183 (1969)

PADUCAH NEWSPAPERS, INC. (Television Station WPSD-TV), Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Egyptian Cablevision, Inc. and Southern Video Corporation, Benton Television Company, Intervenors.

HIRSCH BROADCASTING COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Benton Television Company, Egyptian Cablevision, Inc. and Southern Video Corporation, Intervenors.

TURNER-FARRAR ASSOCIATION, etc., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Egyptian Cablevision, Inc. and Southern Video Corporation, Intervenors.

Nos. 22007, 22019, 22027.

United States Court of Appeals District of Columbia Circuit.

Argued December 16, 1968.

Decided June 30, 1969.

Petition for Rehearing Denied August 14, 1969.

Mr. Arthur Stambler, Washington, D. C., with whom Messrs. George O. Sutton and Thomas N. Frohock, Washington, D. C., were on the brief, for petitioners. Mr. James A. McKenna, Washington, D. C., also entered an appearance for petitioners in No. 22,027.

Mr. D. Biard MacGuineas, Counsel, Federal Communications Commission, with whom Messrs. Henry Geller, Gen. Counsel, John H. Conlin, Associate Gen. Counsel, Federal Communications Commission, and Howard E. Shapiro, Atty., Department of Justice, were on the brief, for respondents. Mrs. Lenore G. Ehrig and William L. Fishman, Counsel, Federal Communications Commission, also entered appearances for respondents.

Mr. William P. Bernton, Washington, D. C., for intervenors, Egyptian Cablevision, Inc. and Southern Video Corporation. Mr. John J. Baker, Washington, D. C., also entered an appearance for intervenors, Egyptian Cablevision, Inc. and Southern Video Corporation.

Mr. Donald P. Zeifang, with whom Mr. John D. Matthews, Washington, D. C., was on the brief, for intervenor, Benton Television Co.

Before McGOWAN, TAMM and ROBINSON, Circuit Judges.

McGOWAN, Circuit Judge:

This case is the latest in a series in this court that have challenged the Federal Communications Commission's failure to hold hearings under 47 C.F.R. § 74.1107 (1968).¹ All of these cases have turned upon the interpretation the Commission and this court have given to the rules promulgated by the Commission in its so-called Second Report and Order, 2 F.C.C.2d 725 (1966), in which it established its jurisdiction over and sought to regulate the further expansion of CATV.² In these cases this court has affirmed the Commission's actions in deference to the Commission's expertise in the formulation of communications policy, without an unduly rigorous scrutiny of the application of basic principles of proper administration by the Commission.

On a number of occasions, however, we have issued warnings to the Commission that, although in the particular case an affirmance was in order, further specificity in the proof and clearer articulation of the considerations which underlay the Commission's findings would be required in the future.³ Our task, then, in assessing the propriety of the Commission's waivers in this case, should be to see whether the warnings issued in our earlier opinions have been heeded sufficiently to satisfy the essential axiom that administrative actions be rationally explicable, consistent, and in accordance with existing policy as stated in statutory or regulatory guidelines.

I

At issue here are three consolidated petitions to review a Memorandum Opinion and Order of the Commission granting waivers of the hearing requirement of 47 C.F.R. § 74.1107 (1968), and authorizations to begin operations to seven CATV systems in the Paducah, Kentucky-Cape Girardeau, Missouri-Harrisburg, Illinois hereinafter designated the "Paducah" market.⁴ Petitioners, the licensees of the three network-affiliated VHF stations in the Paducah market, are located in the three principal⁵ cities of the market. Other television services already extant in the market include one educational VHF station in Carbondale, Illinois, and only one other CATV system, located in Mayfield, Kentucky (population 10,762). In addition, one UHF station, which significantly is not a petitioner here, has been authorized to begin operations in Paducah and presumably is proceeding apace to commence broadcasting; and another UHF channel has been allocated to Cape Girardeau, although no applicants for that franchise have yet come forward. The applicants for the CATV systems intervenors in this case are Benton Television Co., which plans to construct a system in Benton, Kentucky, and Egyptian Cablevision, Inc., and Southern Video Corp., which plan to construct systems in the towns of Marion, West Frankfort, Carbondale, Johnston City, Murphysboro, and Carterville, all in Illinois hereinafter designated the Illinois towns.⁶ The Commission, assertedly acting pursuant to the authority of 47 C.F.R. § 74.1109 (1968), granted these applicants for CATV systems waivers of the evidentiary hearing requirement of 47 C.F. R. § 74.1107 (1968), which ordinarily would have been applicable since the applications were made by systems which were to be operated in a major or top-100 market and which proposed to extend distant television signals beyond their Grade B contour.⁷

Were this court to take a strict view of the Commission's performance of its function in administering the Communications Act, the Commission on this record arguably could not be affirmed. We are compelled to recognize, however, that the Commission seems to be making serious efforts to keep up with a technology producing advances so fast that innovations, unthought of yesterday, are rendered obsolete today, and bid fair to be trivial in comparison to what will be developed tomorrow.⁸ Simultaneously, the Commission has been seeking the aid of Congress in the formulation of policy with respect to the interrelationship of CATV and the other aspects of the broadcasting industry. Congress, however, has been silent and the Commission, through circumstance and not by choice, has thus far been called upon to shoulder an increasingly difficult burden alone. These considerations provide justification for this court's employing a more flexible standard of judicial review than it might ordinarily be called upon to use in assessing Commission actions in that transition period when new information is constantly emerging, when the comparative relationship between CATV and the rest of the industry is in a state of flux, and, as a result, when the Commission is constantly being called upon to change its policies in response to changing conditions.

Seen in this light, the Second Report and Order, with all its flaws and imponderables, was a commendable effort. That the Commission was not then prepared to announce definitive standards determining the extent of CATV activity to be permitted in the top-100 markets may be unfortunate, but it is hard to see, given the state of the art at the time, what it could have done other than what it did do, namely, to say that it would hold hearings which would gather further specific information useful to determine what the impact of CATV would be in those markets where applications were filed.⁹ On the other hand, it also seems reasonable in retrospect, that the Commission chose to provide a waiver route, in order to avoid what would inevitably be a prolonged hearing procedure in those situations where it could assess impact without a hearing and where it deemed the applications in the public interest.

In this case, see also, e.g., Channel 9 Syracuse, Inc. v. FCC, 128 U.S.App.D. C. 187, 385 F.2d 969 (1967); cf. Pikes Peak Broadcasting Co. v. FCC, Nos. 22,023-24 (March 24, 1969), cert. denied 395 U.S. 979, 89 S.Ct. 2134, 23 L.Ed.2d 767 (June 23, 1969), the Commission has not seen fit to explicate in detail why it has opted for the granting of waivers. But this fault is not so serious as to warrant a reversal and remand here¹⁰ where the court, after prolonged investigation, has within the confines of its limited expertise determined that the CATVs, under the Commission's own standards, do indeed appear to be in the public interest.

II

The Second Report and Order was divided into two parts. In Part I, the Commission extended its jurisdiction over CATV systems to include nonmicrowave systems as well as the microwave systems over which it had asserted jurisdiction in the First Report and Order. It also made applicable to nonmicrowave systems, with the exception of certain modifications also adopted in the Second Report, carriage and nonduplication provisions identical to those which had theretofore been applied to microwave systems. It was thought that these provisions, which guaranteed to network-affiliated stations that their programs would be carried by CATVs located within their grade B contours and which afforded them protection against the CATVs' duplicating programs within one day of the time when the stations had transmitted them over the air, would be sufficient to protect them from unwarranted or unfair competition from CATV. So long as all CATV systems were to be required to broadcast network programs sent out by local network-affiliates, the Commission felt that these stations had enough of an economic guarantee of stability that the added competition which the broadcasting of distant nonnetwork and nonduplicative programs would bring would not seriously affect the viability of these enterprises.¹¹

In Part II of the Second Report, however, the Commission's concern shifted from the protection of existing, economically viable network-affiliated facilities to more complex considerations involved in assessing the comparative merits of CATV and UHF development. The Commission recognized that in many markets and competitive situations these two types of television service could not coexist, and that permitting development of CATV in certain situations would effectively bar, or at...