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FEDERAL COMMUNICATIONS COMMISSION v. NATIONAL CITIZENS COMMITTEE FOR BROADCASTING ET AL.

decided*fn*: June 12, 1978.

FEDERAL COMMUNICATIONS COMMISSION
v.
NATIONAL CITIZENS COMMITTEE FOR BROADCASTING ET AL.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT.

Marshall, J., delivered the opinion of the Court, in which all other Members joined except Brennan, J., who took no part in the consideration or decision of the cases.

Author: Marshall

[ 436 U.S. Page 779]

 MR. JUSTICE MARSHALL delivered the opinion of the Court.

At issue in these cases are Federal Communications Commission regulations governing the permissibility of common ownership of a radio or television broadcast station and a daily newspaper located in the same community. Rules Relating to Multiple Ownership of Standard, FM, and Television Broadcast Stations, Second Report and Order, 50 F. C. C. 2d 1046 (1975) (hereinafter cited as Order), as amended upon reconsideration, 53 F. C. C. 2d 589 (1975), codified in 47 CFR §§ 73.35, 73.240, 73.636 (1976). The regulations, adopted after a lengthy rulemaking proceeding, prospectively bar formation or transfer of co-located newspaper-broadcast combinations. Existing combinations are generally permitted to continue in operation. However, in communities in which there is common ownership of the only daily newspaper and the only broadcast station, or (where there is more than one broadcast station) of the only daily newspaper and the only television station, divestiture of either the newspaper or the broadcast station is required within five years, unless grounds for waiver are demonstrated.

The questions for decision are whether these regulations either exceed the Commission's authority under the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U. S. C. § 151 et seq. (1970 ed. and Supp. V), or violate the First or Fifth Amendment rights of newspaper owners; and whether the lines drawn by the Commission between new and existing newspaper-broadcast combinations, and between existing combinations subject to divestiture and those allowed to continue in operation, are arbitrary or capricious within the meaning of § 10 (e) of the Administrative Procedure Act, 5 U. S. C. § 706 (2)(A) (1976 ed.). For the reasons set forth below, we sustain the regulations in their entirety.

[ 436 U.S. Page 780]

     I

A

Under the regulatory scheme established by the Radio Act of 1927, 44 Stat. 1162, and continued in the Communications Act of 1934, no television or radio broadcast station may operate without a license granted by the Federal Communications Commission. 47 U. S. C. § 301. Licensees who wish to continue broadcasting must apply for renewal of their licenses every three years, and the Commission may grant an initial license or a renewal only if it finds that the public interest, convenience, and necessity will be served thereby. §§ 307 (a), (d), 308 (a), 309 (a), (d).

In setting its licensing policies, the Commission has long acted on the theory that diversification of mass media ownership serves the public interest by promoting diversity of program and service viewpoints, as well as by preventing undue concentration of economic power. See, e. g., Multiple Ownership of Standard, FM and Television Broadcast Stations, 45 F. C. C. 1476, 1476-1477 (1964). This perception of the public interest has been implemented over the years by a series of regulations imposing increasingly stringent restrictions on multiple ownership of broadcast stations. In the early 1940's, the Commission promulgated rules prohibiting ownership or control of more than one station in the same broadcast service (AM radio, FM radio, or television) in the same community.*fn1

[ 436 U.S. Page 781]

     In 1953, limitations were placed on the total number of stations in each service a person or entity may own or control.*fn2 And in 1970, the Commission adopted regulations prohibiting, on a prospective basis, common ownership of a VHF television station and any radio station serving the same market.*fn3

More generally, "[diversification] of control of the media of mass communications" has been viewed by the Commission as "a factor of primary significance" in determining who, among competing applicants in a comparative proceeding, should receive the initial license for a particular broadcast facility. Policy Statement on Comparative Broadcast Hearings, 1 F. C. C. 2d 393, 394-395 (1965) (italics omitted). Thus, prior to adoption of the regulations at issue here, the fact that an applicant for an initial license published a newspaper in the community to be served by the broadcast station was taken into account on a case-by-case basis, and resulted in some instances in awards of licenses to competing applicants.*fn4

[ 436 U.S. Page 782]

     Diversification of ownership has not been the sole consideration thought relevant to the public interest, however. The Commission's other, and sometimes conflicting, goal has been to ensure "the best practicable service to the public." Id., at 394. To achieve this goal, the Commission has weighed factors such as the anticipated contribution of the owner to station operations, the proposed program service, and the past broadcast record of the applicant -- in addition to diversification of ownership -- in making initial comparative licensing decisions. See id., at 395-400. Moreover, the Commission has given considerable weight to a policy of avoiding undue disruption of existing service.*fn5 As a result, newspaper owners

[ 436 U.S. Page 783]

     in many instances have been able to acquire broadcast licenses for stations serving the same communities as their newspapers, and the Commission has repeatedly renewed such licenses on findings that continuation of the service offered by the common owner would serve the public interest. See Order, at 1066-1067, 1074-1075.

B

Against this background, the Commission began the instant rulemaking proceeding in 1970 to consider the need for a more restrictive policy toward newspaper ownership of radio and television broadcast stations. Further Notice of Proposed Rulemaking (Docket No. 18110), 22 F. C. C. 2d 339 (1970).*fn6 Citing studies showing the dominant role of television stations and daily newspapers as sources of local news and other information, id., at 346; see id., at 344-346,*fn7 the notice of

[ 436 U.S. Page 784]

     rulemaking proposed adoption of regulations that would eliminate all newspaper-broadcast combinations serving the same market, by prospectively banning formation or transfer of such combinations and requiring dissolution of all existing combinations within five years, id., at 346. The Commission suggested that the proposed regulations would serve "the purpose of promoting competition among the mass media involved, and maximizing diversification of service sources and viewpoints." Ibid. At the same time, however, the Commission expressed "substantial concern" about the disruption of service that might result from divestiture of existing combinations. Id., at 348. Comments were invited on all aspects of the proposed rules.

The notice of rulemaking generated a considerable response. Nearly 200 parties, including the Antitrust Division of the Justice Department, various broadcast and newspaper interests, public interest groups, and academic and research entities, filed comments on the proposed rules. In addition, a number of studies were submitted, dealing with the effects of newspaper-broadcast cross-ownership on competition and station performance, the economic consequences of divestiture, and the degree of diversity present in the mass media. In March 1974, the Commission requested further comments directed primarily to the core problem of newspaper-television station cross-ownership, Memorandum Opinion and Order (Docket No. 18110), 47 F. C. C. 2d 97 (1974), and close to 50 sets of additional comments were filed. In July 1974, the Commission held three days of oral argument, at which all parties who requested time were allowed to speak.

The regulations at issue here were promulgated and explained in a lengthy report and order released by the Commission on January 31, 1975. The Commission concluded, first, that it had statutory authority to issue the regulations under the Communications Act, Order, at 1048, citing 47 U. S. C. §§ 2 (a), 4 (i), 4 (j), 301, 303, 309 (a), and that the

[ 436 U.S. Page 785]

     regulations were valid under the First and Fifth Amendments to the Constitution, Order, at 1050-1051. It observed that "[the] term public interest encompasses many factors including 'the widest possible dissemination of information from diverse and antagonistic sources.'" Order, at 1048, quoting Associated Press v. United States, 326 U.S. 1, 20 (1945), and that "ownership carries with it the power to select, to edit, and to choose the methods, manner and emphasis of presentation," Order, at 1050. The Order further explained that the prospective ban on creation of co-located newspaper-broadcast combinations was grounded primarily in First Amendment concerns, while the divestiture regulations were based on both First Amendment and antitrust policies. Id., at 1049. In addition, the Commission rejected the suggestion that it lacked the power to order divestiture, reasoning that the statutory requirement of license renewal every three years necessarily implied authority to order divestiture over a five-year period. Id ., at 1052.

After reviewing the comments and studies submitted by the various parties during the course of the proceeding, the Commission then turned to an explanation of the regulations and the justifications for their adoption. The prospective rules, barring formation of new broadcast-newspaper combinations in the same market, as well as transfers of existing combinations to new owners, were adopted without change from the proposal set forth in the notice of rulemaking.*fn8 While recognizing

[ 436 U.S. Page 786]

     the pioneering contributions of newspaper owners to the broadcast industry, the Commission concluded that changed circumstances made it possible, and necessary, for all new licensing of broadcast stations to "be expected to add to local diversity." Id., at 1075.*fn9 In reaching this conclusion, the Commission did not find that existing co-located newspaper-broadcast combinations had not served the public interest, or that such combinations necessarily "[speak] with one voice" or are harmful to competition. Id., at 1085, 1089. In the Commission's view, the conflicting studies submitted by the parties concerning the effects of newspaper ownership on competition and station performance were inconclusive, and no pattern of specific abuses by existing cross-owners was demonstrated. See id., at 1072-1073, 1085, 1089. The prospective rules were justified, instead, by reference to the Commission's policy of promoting diversification of ownership: Increases in diversification of ownership would possibly result in enhanced diversity of viewpoints, and, given the absence of persuasive countervailing considerations, "even a small gain in diversity" was "worth pursuing." Id., at 1076, 1080 n. 30.

With respect to the proposed across-the-board divestiture requirement, however, the Commission concluded that "a mere hoped-for gain in diversity" was not a sufficient justification. Id., at 1078. Characterizing the divestiture issues as "the most difficult" presented in the proceeding, the Order explained that the proposed rules, while correctly recognizing the central importance of diversity considerations, "may have

[ 436 U.S. Page 787]

     given too little weight to the consequences which could be expected to attend a focus on the abstract goal alone." Ibid. Forced dissolution would promote diversity, but it would also cause "disruption for the industry and hardship for individual owners," "resulting in losses or diminution of service to the public." Id., at 1078, 1080.

The Commission concluded that in light of these countervailing considerations divestiture was warranted only in "the most egregious cases," which it identified as those in which a newspaper-broadcast combination has an "effective monopoly" in the local "marketplace of ideas as well as economically." Id., at 1080-1081. The Commission recognized that any standards for defining which combinations fell within that category would necessarily be arbitrary to some degree, but "[a] choice had to be made." Id., at 1080. It thus decided to require divestiture only where there was common ownership of the sole daily newspaper published in a community and either (1) the sole broadcast station providing that entire community with a clear signal, or (2) the sole television station encompassing the entire community with a clear signal. Id., at 1080-1084.*fn10

[ 436 U.S. Page 788]

     The Order identified 8 television-newspaper and 10 radio-newspaper combinations meeting the divestiture criteria. Id., at 1085, 1098. Waivers of the divestiture requirement were granted sua sponte to 1 television and 1 radio combination, leaving a total of 16 stations subject to divestiture. The Commission explained that waiver requests would be entertained in the latter cases,*fn11 but, absent waiver, either the newspaper or the broadcast station would have to be divested by January 1, 1980. Id., at 1084-1086.*fn12

[ 436 U.S. Page 789]

     On petitions for reconsideration, the Commission reaffirmed the rules in all material respects. Memorandum Opinion and Order (Docket No. 18110), 53 F. C. C. 2d 589 (1975).

C

Various parties -- including the National Citizens Committee for Broadcasting (NCCB), the National Association of Broadcasters (NAB), the American Newspaper Publishers Association (ANPA), and several broadcast licensees subject to the divestiture requirement -- petitioned for review of the regulations in the United States Court of Appeals for the District of Columbia Circuit, pursuant to 47 U. S. C. § 402 (a) and 28 U. S. C. §§ 2342 (1), 2343 (1970 ed. and Supp. V). Numerous other parties intervened, and the United States -- represented by the Justice Department -- was made a respondent pursuant to 28 U. S. C. §§ 2344, 2348. NAB, ANPA, and the broadcast licensees subject to divestiture argued that the regulations went too far in restricting cross-ownership of newspapers and broadcast stations; NCCB and the Justice Department contended that the regulations did not go far enough and that the Commission inadequately justified its decision not to order divestiture on a more widespread basis.

Agreeing substantially with NCCB and the Justice Department, the Court of Appeals affirmed the prospective ban on new licensing of co-located newspaper-broadcast combinations, but vacated the limited divestiture rules, and ordered the Commission to adopt regulations requiring dissolution of all existing combinations that did not qualify for a waiver under the procedure outlined in the Order. 181 U. S. App. D.C. 1, 555 F.2d 938 ...


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