United States v. Midwest Video Corporation 8212 506

• Decision Date: 07 June 1972
• Docket Number: No. 71,71
• Citation: 92 S.Ct. 1860,32 L.Ed.2d 390,406 U.S. 649
• Parties: UNITED STATES et al., Petitioners, v. MIDWEST VIDEO CORPORATION. —506
• Court: U.S. Supreme Court

406 U.S. 649

92 S.Ct. 1860

32 L.Ed.2d 390

UNITED STATES et al., Petitioners,

v MIDWEST VIDEO CORPORATION.

No. 71—506.

Argued April 19, 1972.

Decided June 7, 1972.

Rehearing Denied Oct. 10, 1972.

See 93 S.Ct. 95.

Syllabus

The Federal Communications Commission (FCC) promulgated a rule that 'no CATV system having 3,500 or more subscribers shall carry the signal of any television broadcast station unless the system also operates to a significant extent as a local outlet by cablecasting (i.e., originating programs) and has available facilities for local production and presentation of programs other than automated services.' Upon challenge of respondent, an operator of CATV systems subject to the new requirement, the Court of Appeals set aside the regulation on the ground that the FCC had no authority to issue it. Held: The judgment is reversed. Pp. 659 675.

441 F.2d 1322, reversed.

Mr. Justice BRENNAN, joined by Mr. Justice WHITE, Mr. Justice MARSHALL, and Mr. Justice BLACKMUN, concluded that:

1. The rule is within the FCC's statutory authority to regulate CATV at least to the extent 'reasonably ancillary to the effective performance of the Commission's various responsibilities for the regulation of television broadcasting,' United States v. Southwestern Cable Co., 392 U.S. 157, 178, 88 S.Ct. 1994, 2005, 20 L.Ed.2d 1001. Pp. 659—670.

2. In the light of the record in this case, there is substantial evidence that the rule, with its 3,500 standard and as it is applied under FCC guidelines for waiver on a showing of financial hardship, will promote the public interest within the meaning of the Communications Act of 1934. Pp. 671—675.

THE CHIEF JUSTICE concluded that until Congress acts to deal with the problems brought about by the emergence of CATV, the FCC should be allowed wide latitude. Pp. 675—676.

Lawrence G. Wallace, Washington, D.C., for petitioners.

Harry M. Plotkin, Washington, D.C., for respondent.

Mr. Justice BRENNAN announced the judgment of the Court, and an opinion in which Mr. Justice WHITE, Mr. Justice MARSHALL, and Mr. Justice BLACKMUN join.

Community antenna television (CATV) was developed long after the enactment of the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U.S.C. § 151 et seq., as an auxiliary to broadcasting through the retransmission by wire of intercepted television signals to viewers otherwise unable to receive them because of distance or local terrain.¹ In United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968), where we sustained the jurisdiction of the Federal Communications Commission to regulate the new industry, at least to the extent 'reasonably ancillary to the effective performance of the Commission's various responsibilities for the regulation of television broadcasting,' id., at 178, 88 S.Ct., at 2005, we observed that the growth of CATV since the establishment of the first commercial system in 1950 has been nothing less than "explosive." Id., at 163, 88 S.Ct., at 1998.² The potential of the new industry to augment communication services now available is equally phenomenal.³ As we said in Southwestern, id., at 164, 88 S.Ct., at 1998, CATV '(promises) for the future to provide a national communications system, in which signals from selected broadcasting centers would be transmitted to metropolitan areas throughout the country.' Moreover, as the Commission has noted, 'the expanding multichannel capacity of cable systems could be utilized to provide a variety of new communications services to homes and businesses within a community,' such as facsimile reproduction of documents, electronic mail delivery, and information retrieval. Notice of Proposed Rulemaking and Notice of Inquiry, 15 F.C.C.2d 417, 419 420 (1968). Perhaps more important, CATV systems can themselves originate programs, or 'cablecast'—which means, the Commission has found, that CATV can '(increase) the number of local outlets for community self-expression and (augment) the public's choice of programs and types of services without use of broadcast spectrum . . ..' Id., at 421.

Recognizing this potential, the Commission, shortly after our decision in Southwestern, initiated a general inquiry 'to explore the broad question of how best to obtain, consistent with the public interest standard of the Communications Act, the full benefits of developing communications technology for the public, with particular immediate reference to CATV technology . . ..' Id., at 417. In particular, the Commission tentatively concluded, as part of a more expansive program for the regulation of CATV,⁴ 'that, for now and in general, CATV program origination is in the public interest,' Id., at 421, and sought comments on a proposal 'to condition the carriage of television broadcast signals (local or distant) upon a requirement that the CATV system also operate to a significant extent as a local outlet by origi- nating.' Id., at 422. As for its authority to impose such a requirement, the Commission stated that its 'concern with CATV carriage of broadcast signals is not just a matter of avoidance of adverse effects, but extends also to requiring CATV affirmatively to further statutory policies.' Ibid.

On the basis of comments received, the Commission on October 24, 1969, adopted a rule providing that 'no CATV system having 3,500 or more subscribers shall carry the signal of any television broadcast station unless the system also operates to a significant extent⁵ as a local outlet by cablecasting⁶ and has available facilities for local production and presentation of programs other than automated services.' 47 CFR § 74.1111(a).⁷ In a report accompanying this regulation, the Commission stated that the tentative conclusions of its earlier notice of proposed rulemaking.

'recognize the great potential of the cable technology to further the achievement of long-established regulatory goals in the field of television broadcasting by increasing the number of outlets for community self-expression and augmenting the public's choice of programs and types of services . . . They also reflect our view that a multipurpose CATV operation combining carriage of broadcast signals with program origination and common carrier services,⁸ might best exploit cable channel capacity to the advantage of the public and promote the basic purpose for which this Commission was created: 'regulating interstate and foreign commerce in com-

^7. This requirement, applicable to both microwave and non-microwave CATV systems without any 'grandfathering' provision, was originally scheduled to go into effect on January 1, 1971. See First Report and Order 223. On petitions for reconsideration, however, the effective date was delayed until April 1, 1971, see Memorandum Opinion and Order 827, 830, and then, after the Court of Appeals decision below, suspended pending final judgment here. See 36 Fed.Reg. 10876 (1971). Meanwhile, the regulation has been revised and now appears at 47 CFR § 76.201(a). The revision has no significance for this case. See Memorandum Opinion and Order 827, 830 (revision effective Aug. 14, 1970); Report and Order on Cable Television Service, 3271, 3277, 3287 (revision effective Mar. 31, 1972).

^8. Although the Commission did not impose common-carrier obligations on CATV systems in its 1969 report, it did note that 'the origination requirement will help ensure that origination facilities are available for use by others originating on leased channels.' First Report and Order 209. Public access requirements were introduced in the Commission's Report and Order on Cable Television Service, although not directly under the heading of common-carrier service. See id., at 3277 munication by wire and radio so as to make available, so far as possible, to all people of the United States a rapid, efficient, nation-wide, and worldwide wire and radio communication service with adequate facilities at reasonable charges . . .' (sec. 1 of the Communications Act).⁹ After full consideration of the comments filed by the parties, we adhere to the view that program origination on CATV is in the public interest.'¹⁰ First Report and Order, 20 F.C.C.2d 201, 202 (1969).

The Commission further stated, id., at 208—209:

'The use of broadcast signals has enabled CATV to finance the construction of high capacity cable facilities. In requiring in return for these uses of radio that CATV devote a portion of the facilities to providing needed origination service, we are furthering our statutory responsibility to 'encourage the larger and more effective use of radio in the public interest' (sec. 303(g)). ¹¹ The requirement will also facilitate the more effective performance of the Commission's duty to provide a fair, efficient, and equitable distribution of television service to each of the several States and communities (sec. 307(b)),¹² in areas where we have been unable to accomplish this through broadcast media.'¹³

Upon the challenge of respondent Midwest Video Corp., an operator of CATV systems subject to the new cablecasting requirement, the United States Court of Appeals for the Eighth Circuit set aside the regulation on the ground that the Commission 'is without authority to impose' it. 441 F.2d 1322, 1328 (1971). ¹⁴ 'The Commission's power (over CATV) . . .,' the court explained, 'must be based on the Commission's right to adopt rules that are reasonably ancillary to its responsi- bilities in the broadcasting field,' id., at 1326—a standard that the court thought the Commission's regulation 'goes far beyond.' Id., at 1327.¹⁵ The court's opinion may also be understood to hold the regulation invalid as not supported by substantial evidence that it would serve the public interest. 'The Commission report itself shows,' the court said, 'that upon the basis of the record made, it is highly speculative whether there is sufficient expertise or information available to support a finding that the origination rule will further...