Time Warner Entertainment Co., L.P. v. F.C.C.

Decision Date07 February 1997
Docket Number93-5349,93-1384,Nos. 93-1266,93-5350 and 93-5351,s. 93-1266
Citation105 F.3d 723
PartiesTIME WARNER ENTERTAINMENT CO., L.P., Appellee, v. FEDERAL COMMUNICATIONS COMMISSION, Appellant. Association of America's Public Television Stations, et al., Intervenors.
CourtU.S. Court of Appeals — District of Columbia Circuit




The Suggestions for Rehearing In Banc and the response thereto have been circulated to the full court. The taking of a vote was requested. Thereafter, a majority of the judges of the court in regular active service did not vote in favor of the suggestions. Upon consideration of the foregoing, it is

ORDERED that the suggestions be denied.

Circuit Judges WALD and HENDERSON did not participate in this matter.

A dissenting statement of Circuit Judge WILLIAMS, with whom Chief Judge EDWARDS, and Circuit Judges SILBERMAN, GINSBURG and SENTELLE concur, is attached.

WILLIAMS, Circuit Judge, with whom Chief Judge EDWARDS, Judge SILBERMAN, Judge GINSBURG and Judge SENTELLE concur, dissenting from the denial of rehearing in banc:

Although I dissent from the denial of the suggestion for rehearing in banc, I do so with genuine uncertainty about the correct outcome. But I believe there were fatal defects in the panel's legal theory for upholding the 1992 Cable Act's requirement that direct broadcast satellite ("DBS") providers set aside several channels for noncommercial programming of an educational or informational nature. Time Warner v. FCC, 93 F.3d 957, 973-77 (D.C.Cir.1996). DBS is not subject to anything remotely approaching the "scarcity" that the Court found in conventional broadcast in 1969 and used to justify a peculiarly relaxed First Amendment regime for such broadcast. Red Lion Broadcasting v. FCC, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969). Accordingly Red Lion should not be extended to this medium.

If the 1992 Act's content rules for DBS can be sustained at all, in my view it would only be on the theory that the government is entitled to more leeway in setting the terms on which it supplies "property" to private parties for speech purposes (or for purposes that include speech). See, e.g., Rust v. Sullivan, 500 U.S. 173, 193, 111 S.Ct. 1759, 1772, 114 L.Ed.2d 233 (1991).

1. Red Lion

The panel concluded that DBS is more like broadcasting than like cable, and that therefore Red Lion applied. Time Warner, 93 F.3d at 975-77. As the Red Lion doctrine relies on an idea of extreme physical scarcity, 1 I disagree. The new DBS technology already offers more channel capacity than the cable industry, and far more than traditional broadcasting. 2

DBS is more than an order of magnitude less scarce than traditional broadcasting. Over 50% of the conventional broadcast markets receive fewer than five commercial broadcast channels (including UHF channels), and only 20% receive seven or more. Programming Practices of Broadcast Television Networks and Affiliates, 10 FCC Rcd 11951, 11977 (1995). While this number of channels is greater than those available in 1969 when Red Lion was decided, see Syracuse Peace Council v. FCC, 867 F.2d 654, 684 (D.C.Cir.1989) (Starr, J., concurring), it pales in comparison to cable or DBS. Cable operators currently offer about fifty channels, but compression techniques and new technology may eventually lead to 500 channels or more. See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, 11 FCC Rcd 2060, 2162 (1995); Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992, 9 FCC Rcd 4119, 4247 (1994).

DBS has even greater channel capacity. The three orbital slots that permit broadcast throughout the continental United States can accommodate at least 120 video channels each, using existing compression technology, for a total of 360 channels. This does not include the other five orbital slots (4 usable for west coast broadcasting and 1 for east coast broadcasting), Revision of Rules and Policies for the Direct Broadcast Satellite Service, 11 FCC Rcd 1297, 1299 (1995); Continental Satellite Corp., 4 FCC Rcd 6292, 6293 (1989), which raise the number of channels available to 480 (4 X 120) for the east coast, and 840 (7 X 120) for the west coast. DBS compression is expected to increase the number of channels fivefold by the year 2000. 11 FCC Rcd at 1299. Currently, there are four DBS providers, each providing between 45 and 75 video channels and up to 30 music channels. "TV's Changing Picture," Consumer Reports 10, 14-15 (December 1996). Thus, even in its nascent state, DBS provides a given market with four times as many channels as cable, which (even without predicted increases in compression) offers about 10 times as many channels as broadcast.

Accordingly, Red Lion's factual predicate--scarcity of channels--is absent here. See, especially, 395 U.S. at 398 n.25, 89 S.Ct. at 1811 n.25 (supplying data for top 10, top 50 and top 100 broadcast TV markets). And the Red Lion Court implied that its result would have been different in the absence of such a predicate. Id. at 399 n.26, 89 S.Ct. at 1812 n.26 (upholding fairness doctrine despite absence of specific findings by FCC, because objecting broadcasters failed to make a record undermining congressional judgment of scarcity). Similarly, to the extent that Turner distinguishes Red Lion on grounds of lack of scarcity in cable, see Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 637, 114 S.Ct. 2445, 2456, 129 L.Ed.2d 497 (1994) (observing that "distinct approach to broadcast regulation rests upon the unique physical limitations of the broadcast medium"), DBS falls on the cable rather than the broadcast side of the line.

Turner, to be sure, appears in part to ground its distinction between cable and broadcast on technological characteristics independent of sheer numbers. "[I]f two broadcasters were to attempt to transmit over the same frequency in the same locale, they would interfere with one another's signals, so that neither could be heard at all." Id. But this can hardly be controlling. Alleviation of interference does not necessitate government content management; it requires, as do most problems of efficient use of resources, a system for allocation and protection of exclusive property rights. See, e.g., Richard B. Stewart, "Regulation in a Liberal State: The Role of Non-Commodity Values," 92 Yale L.J. 1537, 1546 n.34 (1983). A cable operator enjoys property rights in the cables in which he transmits his signal (as well, of course, as in the structures he uses to make the transmission). That is the reason would-be cable operators do not interfere with each other's "signals." If I were to burst into Time Warner's studio full of zest to run my program or attempt to transmit signals through wires owned by a cable operator, I would be guilty of trespass and Time Warner could have me ejected. There is no technological obstacle to applying this regime to the broadcast spectrum; indeed, under the current regime a licensee is subject to legal sanctions if he broadcasts outside the wavelengths covered by his license.

Accordingly, it seems to me more reasonable to understand Red Lion as limited to cases where the number of channels is genuinely low.

2. Validity of the DBS regulations as "content-neutral"?

The panel also justified its decision by analogizing the DBS provision to the must-carry rules, which the Supreme Court in Turner classified as content neutral. See Time Warner, 93 F.3d at 976 (citing Turner's reference to interest in public access to "a multiplicity of informational sources").

But whereas the must-carry provisions reviewed in Turner mandate access for particular stations regardless of their programming content, the DBS provision speaks directly to content, creating an obligation framed in terms of "noncommercial programming of an educational or informational nature." 47 U.S.C. § 335(b)(1). As a subject-matter specification, then, the DBS requirement would normally be "content-based" and subject to strict scrutiny if viewed as garden-variety government regulation of speech. See, e.g., Police Dept. of Chicago v. Mosley, 408 U.S. 92, 95, 92 S.Ct. 2286, 2289-90, 33 L.Ed.2d 212 (1972) (classifying as content-based regulations banning picketing except for labor disputes); see also Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 107 S.Ct. 1722, 95 L.Ed.2d 209 (1987) (invalidating as content-based receipts tax that was imposed on sales of tangible personal property including magazines but excepting "religious, professional, trade or sports" periodicals).

Turner hardly provides support for categorical programming requirements of this type, as the Court there took pains to distinguish the must-carry rules from such requirements. 512 U.S. at 648, 114 S.Ct. at 2462 ("[t]he operation of the Act further undermines the [challenging parties'] suggestion that Congress' purpose in enacting must-carry was to force programming of a 'local' or 'educational' content ...."); id. at 651, 114 S.Ct. at 2463 ("noncommercial licensees are not required by statute or regulation to carry any specific quantity of 'educational' programming ...."); cf. id. at 643-44 n. 6, 114 S.Ct. at 2460 n. 6 (observing, of rule requiring carriage of those low-power stations that FCC determines " 'address local news and informational needs which are not being adequately served,' " that it appears to "single out certain low-power broadcasters for special benefits on the basis of content."); see also Cass Sunstein, "The First Amendment in Cyberspace," 104 Yale L.J. 1757, 1803 (1995) ("Turner certainly does not stand for the proposition that [Congressional set asides of news media channels or mandate of preferential access for...

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