Opposition — Federal Communications Commission v. Home Box Office, Inc.

Supreme Court brief1977

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Supreme Court of the States

Octroner Term, 1976

—_ -—_—

Nos. 76-1724, 76-1841, 76-1842

FeperaL COMMUNICATIONS COMMISSION, AMERICAN

Broapcastinc ComMPpantes, Inc., and NATIONAL

ASSOCIATION OF Broapcasters, Petitioners,

Home Box Orrice, INc., et al., Respondents.

On Petitions for Writs of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

BRIEF IN OPPOSITION TO PETITIONS FOR WRITS

OF CERTIORARI ON BEHALF OF RESPONDENTS

HOME BOX OFFICE, INC., AMERICAN TELEVI-

SION AND COMMUNICATIONS CORPORATION,

MANHATTAN CABLE TELEVISION, INC., TELE-

PROMPTER CORPORATION, UA-COLUMBIA

CABLEVISION., INC., VIACOM INTERNATIONAL

INC. and WARNER CABLE CORP.

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Smwon H. Rirxrnp

Srvart Rospinow1tz

Susan P. Carr

Moses SILveERMAN

auL, Werss, Rrrexinp ;

P . ’ 345 Park Avenue

Wrarton & Garrison New York, New York 10022

Of Counsel Harry M. ProtKin

Arent, Fox, Kixtwer, Georce H. Srapiro

Protxin & Kann 1815 H Street, N.W.

Of Counsel Washington, D.C. 20006

July 23, 1977

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Press of Brnow S. Adams Paintina, Inc., Waswrnorton, D.C.

SUBJECT INDEX

Page

I <a ss cvctibiksceueteesevbetcesec 2

CounTEeR-STATEMENT OF THE CASE .................. 3

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EE 5.4, vuvdue bec cnenéscadentinnl 6

i cic ce ceive seiadVenbendeues var 7

ED SAAD cok co sehen sdsadandateenbisedess 9

eS aes ee deeuseoudees 9

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eS kiss oc cauen bbb eeseeeiaeet 11

EY EE vo dan dcddccdccdesdssseveses 11

Ne i et tie Soke a ehaes habeus ds 11

Reasons ror Not Grantine CERTIORARI .............. 12

I. Tae Rematninc Procram Restraints, Like THE

Repupiutep Rures, Are InvaLip For THE MULTI-

TUDE OF INDEPENDENT SuBsTANTIVE Reasons GIvEN

OF FE ob the bads hbbbacdewbeséccebetese<s

The rules exceed the FCC’s ‘‘ancillary juris-

diction’’ over cable television ..............

The rules violate the First Amendment .....

The Commission disregarded relevant anti-

CERES GHEE voce cc ccccccanvenvscess

The rules are arbitrary and capricious and not

based on evidence or reasoned analysis ....

II. ProcepuraL Iprecuarities, Basep on Ex Parte

Contacts, Do Nor Warpant CERTIORARI ........

Ill. Tue Peririons or ABC anv NAB Do Nor Raise

Any Issue Wortuy or CERTIORARI ..............

I Ceca

TABLE OF AUTHORITIES

Cases: Page

Action for Children’s Television v. FCC, No. 74-2006

(D.C. Cir. July 1, 1977), petition for rehearing

NE kbs deck oie hikhcinaheketinbvestedese. 20, 27

Bigelow v. Virginia, 421 U.S. 809 (1975) ...........

Black Hills Video Corp. v. PCO, 399 Fad 65" (ih

. Cir. Pond kab bin eee RG ee 4e68 tie 6 od bub eae os 19

arey v. Population Services International, 45 U.S.

we = oS EE Gok ka wadhbens soe oe 18

whizens to Preserve Overton Park, Inc. v. Volpe,

Se £ 2 ee eer ¢ — 26

City of Chicago v. FPC, 458 F.2d 731 (D.C. Cir.), cert.

denied, 405 U.S. 1074 (1972) ...............4.. 24

Columbia Broadcasting System, Inc. v. Democratic Na-

tional Committee, 412 U.S. 94 (1973) ........... 20

FCC v. RCA Communications, Inc. 346 U.S. 86 (1953) 24

FCC v. Sanders Brothers Radio Station, 309 U.S. 470

an noe AE SEs ayy sptebrrase creas 16, 20, 22

ernatt arvester Co. v. Ruckelshaus, 478 F.

ae $18 (D.0. Cir. 1978) is ckbisseseveekss rebsigtiat wy “24

mmark Associates, Inc. v. Township of Willingboro,

_ 45 U.S.L.W. 4441 (May 2, 1977) . " ve : nae te . ae

Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241

DE: neenheditdatinacehied’é Ka diks ie conkanees'¢ 17

National Association of Regulatory Utility C. is-

stoners v. FCC, 533 F.2d 601 (D.C. Cir, 1976) 19

National Association of Theatre Owners v. FCC, 420

F.2d 194 (D.C. Cir. 1969), cert. denied, 397 U.S.

ee ED ‘Kxanhssisied debe cba dun becebanes das 21

Portland Cement Association v. Ruckelshaus, 486 F.2d

mr ae Cir. 1973), cert. denied, 417 U.S. 921

sNdodownceenstecsccesscecavessnvschcnns 2

Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969) .

16, 17, 20

Sangamon Valley Television Corp. v. Unit 28,

4 358 US, 49 (1958) ......... seal ace haat 26

angamon ey Television Corp. v. United Stat

269 F.2d 221 (D.C. Cir. 1959) ....... se Dies "36, 27

i ne 7

Table of Authorities Continued iii

Page

TelePrompTer Corp. v. Columbia Broadcasting Sys-

tem, Inc., 415 U.S. 394 (1974) ........-. 0c seen 19

Titusville Cable TV, Inc. v. United States, 404 F.2d

BOGT (BE Cle. 16GB)... cccccccccccccecsccccess 19

United States v. Midwest Video Corp., 406 U.S. 649

Pr rryrrrrrrrrr rr ere 12, 14, 15

United States v. O’Brien, 391 U.S. 367 (1968) ...... 17

United States v. Radio Corp. of America, 358 U.S. 334

EE dda chicas vin cdsespeashecoresesisaxreses 22

United States v. Southwestern Cable Co., 392 U.S. 157

DEE Adcddadetenetestshevbevctenencsecs’ 12, 14,15

Virginia State Board of Pharmacy v. Virginia Citt-

zens Consumer Council, Inc., 425 U.S. 748 (1976) 18

Weaver v. Jordan, 64 Cal.2d 235, 411 P.2d 289, cert.

denied, 385 U.S. 844 (1966) .........-..eeeee, 16

Wisniewski v. United States, 353 U.S. 901 (1957) ..... 27

STATUTES:

Act of September 14, 1973, Pub. L. No. 93-107, 87 Stat.

350, 1973 U.S. Code Cong. & Adm. News 402 .... 23

Communications Act of 1934, 47 U.S.C. § 151, et seq.

passim

ADMINISTRATIVE RULINGS:

Children’s Television Report and Policy Statement,

50 F.C.C.2d 1 (1974), aff’d sub nom. Action for

Children’s Television v. FCC, No. 74-2006 (D.C.

Cir. July 1, 1977), petition for rehearing pending 20

First Report and Order in Docket 18397, 20 F.C.C.2d

BOL (19GB) ..ncccccccccccccccccccccccccscccess 5

First Report and Order in Docket 19554, 52 F.C.C.2d

1, reconsideration denied, 54 F.C.C.2d 797 (1975) |

passim

Further Notice of Proposed Rule Making in Docket

19554, 48 F.C.C.2d 453 (1974) .....6--- eee eeeee

Memorandum Opinion and Order in Docket 18397, 23

F.C.C.2d 825 (1970) ........eeeceeeeeeeveeeees 5

iv Table of Authorities Continued

Page

Memorandum Opinion and Order in Docket 20682, 60

FE ee CEE ors sotanernocs ven bevekbanes 20

Memorandum Opinion and Order in RM-2652, 60 F.C.C.

Se See SEE a oaxeuben sheer aeseestanstharckse 20

Notice of Proposed Rule Making in Docket 21311, 42

Fed. Reg. 34341 (July 5, 1977) ..............05. 8

Report and Order in Docket 20203, 61 F.C.C.2d 946

SE UV streaks vhs pbcecendawasinesiess ecdenth 20

OrTHERs:

errr 24

Cabinet Committee on Cable Communications, Report

to the President (1974) ......cccccccccccees 3, 4, 16

Cable Television: Promise Versus Regulatory Per-

formance, prepared by the Staff for the Subcom-

mittee on Communications of the Committee on

Interstate and Foreign Commerce, 94th Cong., 2d

Sess. (Subcommittee Print) (January 1976) .... 4

Committee for Economic Development, Broadcasting

and Cable Television: Policies for Diversity and

ee SEE: 0 c0Gs Koneadeved os bdncckddpeccess 4

Hagelin, The First Amendment Stake in New Technol-

ogy: The Broadcast-Cable Controversy, 44 U. Cin.

By As OE 6 earwknddenn dein bsceress:<ee 3,4

Hoffer, The Power of the FCC to Regulate Cable Pay-

TV: Jurisdictional and Constitutional Limita-

tions, 53 Denver L.J. 477 (1976) ........0.0 0 eee 4,16

House Report No. 94-800-Part IT, 1976 U.S. Code Cong.

Kahn, Cable, ree and the Commission, 24

Catholic U.L. Rev. 854 (1975) .............00e- 4

P. MacAvoy, ed., Deregulation of Cable Television

err rrrror rrr rer Tre Tr 4

WT. Tinae, Fab. GB TOG oc ccccccccccccccescescsess 24

EE? <5 1530 cs sh uc Nobsachaareaumnnhs 24

a TT ti

Table of Authorities Continued v

Page

R. Noll, M. Peck and J. McGowan, Economic Aspects

of Television Regulation (The Brookings Institu-

Sb kids hoses dbgeeeeWe aes 666066406 3, 4, 6

Note, Cable Television and Content Regulation: The

FCC, the First Amendment and the Electronic

Newspaper, 51 N.Y.U.L. Rev. 133 (1976) ....... 4,16

Note, Cable Television and the First Amendment, 71

Se, Gk SO ED CEUED coccescucsccvescess 16

Sloan Commission, On the Cable: The Television of

cf RRR re ee er ree 16

R. Smith, The Wired Nation (1972) ................ 4

Statement of Richard E. Wiley, FCC Chairman, at

Hearings Before the Subcommittee on Communi-

cations of the Senate Committee on Commerce,

Science and Transportation, Oversight Hearings

on Cable Television, June 6, 1977 .............. 8

Television Digest, March 14, 1977 .............. teen ae

Testimony of President of CBS at Hearings Before

the Subcommittee on Antitrust and Monopoly of

the Senate Committee on the Judiciary on the Pay-

Cable Television Industry, July 8, 1975 ........ 7

Testimony of Vincent Wasilewski, NAB President, at

Hearings Before the Subcommittee on Communi-

cations of the Senate Committee on Commerce,

Science and Transportation, Oversight Hearings on

Television Broadcast Policy, May 10, 1977 ...... 24

Testimony of Richard E. Wiley, FCC Chairman, at

Hearings Before the Subcommittee on Communi-

cations of the Senate Committee on Commerce,

Science and Transportation, Oversight Hearings

on Cable Television, June 6, 1977 .............. 11

IN THE

Supreme Court of the United States

OcToBER TERM, 1976

Nos. 76-1724, 76-1841, 76-1842

FEDERAL COMMUNICATIONS COMMISSION, AMERICAN

BROADCASTING COMPANIES, INc., and NATIONAL

ASSOCIATION OF Broapcasvers, Petitioners,

Vv.

Home Box Orrice, INc., et al., Respondents.

On Petitions for Writs of Certiorari to the United Siates

Court of Appeals for the District of Columbia Circuit

BRIEF IN OPPOSITION TO PETITIONS FOR WRITS

OF CERTIORARI ON BEHALF OF RESPONDENTS

HOME BOX OFFICE, INC., AMERICAN TELEVI-

SION AND COMMUNICATIONS CORPORATION,

MANHATTAN CABLE TELEVISION, INC., TELE-

PROMPTER CORPORATION, UA-COLUMBIA

CABLEVISION, INC., VIACOM INTERNATIONAL

INC. and WARNER CABLE CORP.

This brief is submitted by respondent cable televi-

sion companies in opposition to petitions for writs of

certiorari filed by the Federal Communications Com-

mission (‘‘FCC’’), the National Association of Broad-

casters (“‘NAB’’), and American Broadcasting Com-

panies, Inc. (‘‘ABC’’),

QUESTIONS PRESENTED

The FCC originally banned from the new medium

of pay cable (1) all series-type programs, (2) most

motion pictures and (3) thousands of sports events.

But, under judicial challenge, the FCC abandoned the

heart of its regulatory scheme: it repealed the series

ban and renounced the motion picture rule. All that

remains are the sports rules and two subsidiary regu-

lations that received scant FCC attention (a ban on

advertising and a limitation of the time eligible for

movies and sports combined). The court below unani-

mously invalidated all of the rules, concluding that

they exceeded the FCC’s jurisdiction, violated the

First Amendment, were grossly overbroad, ignored

relevant antitrust considerations, were arbitrary, and

lacked any record support. The court also found a

procedural error—namely, ex parte contacts which

shaped the rules to insulate broadcasters against po-

tential competition from a new technology.

In these circumstances, the petitions raise the fol-

lowing questions:

1. Since the FCC has now repudiated the major

part of its regulatory scheme, should this Court grant

certiorari to review the remaining sports and other

rules which are just as illegal and arbitrary as the

abandoned series and feature film rules?

2. Since all the rules are invalid on the merits for

numerous substantive reasons, should this Court grant

certiorari to review the procedural ex parte question,

particularly since the FCC’s challenge is focused on

dictum in the opinion below which is currently the sub-

ject of further consideration by the lower court in an-

other pending case?

3. Since the FCC repudiated the feature film

rule, should this Court grant NAB’s and ABC’s peti-

tions which appear to seek review as to that abandoned

rule?

COUNTER-STATEMENT OF THE CASE

Cable television, unlike over-the-air television, has

multi-channel capability and is basically supported by

subscribers rather than advertisers. It is generally rec-

ognized that cable possesses great potential as a na-

tional broadband communications system and as an

antidote to broadcasting spectrum-scarcity and net-

work dominance.’ Pay cable uses one or more of the

eable channels not devoted to the retransmission of

over-the-air television signals to offer subscribers

greater diversity—namely, an opportunity to see fea-

ture films (unedited, uncut and uninterrupted), live

sports events not available on commercial television,

and other special programs—all in the comfort of the

viewer’s home, at a fraction of regular box-office prices,

and at more frequent and convenient times than pro-

grams offered by commercial television. Pay cable,

which began several years ago, now reaches only about

1 See, e.g., Cabinet Committee on Cable Communications, Report

to the President 9-10, 14-16 (1974); R. Noll, M. Peck & J.

McGowan, Economic Aspects of Television Regulation vii, 183-94

(The Brookings Institution, 1973) (hereinafter ‘‘Noll, Peck &

McGowan’’) ; Hagelin, The First Amendment Stake in New Tech-

nology: The Broadcast-Cable Controversy, 44 U. Cin. L. Rev. 427,

524 (1975).

1% of the more than 70,000,000 homes covered by com-

mercial television.

Nevertheless, the FCC—responding to broadcaster

pressures—sought to hobble this fledgling medium at

birth by highly restrictive program limitations (A 72,

117). The Justice Department, other government

agencies, numerous commentators and public-interest

groups, the cable industry and others strongly objected

to the FCC’s protectionist policies (A 136-43, 147-57,

159-64).* The FCC was urged to allow this embryonic

medium a chance to develop in a free-market environ-

ment in order to permit the public to register its pref-

erences and to gather empirical data upon which to

make informed judgments; if problems should eventu-

ally arise, there would be ample time to respond to them

in an appropriate and legal manner. But instead, the

FCC opted for premature and illegal regulations

* References preceded by ‘‘A’’ are to the FCC’s appendix ac-

companying its petition.

* See also, e.g., Cabinet Committee on Cable Communications,

Report to the President 34-39 (1974); Cable Television: Promise

Versus Regulatory Performance, prepared by the Staff for the Sub-

committee on Communications of the Committee on Interstate and

Foreign Commerce, 94th Cong., 2nd Sess. (Subcommittee Print)

61-70 (January 1976); Noll, Peck & McGowan, supra note 1, at

vii; Committee for Economic Development, Broadcasting and Cable

Television: Policies for Diversity and Change, 60-69, 72-76 (1975) ;

P. MacAvoy, ed., Deregulation of Cable Television 8-9, 90-91

(1977) ; R. Smith, The Wired Nation 30-32, 45-46 (1972) ; Hagelin,

The First Amendment Stake in New Technology: The Broadcast-

Cable Controversy, 44 U. Cin. L. Rev. 427, 524 (1975) ; Hoffer, The

Power of the FCC to Regulate Cable Pay-TV: oy oy and

Constitutional Limitations, 53 Denver LJ. 477 (1976); Kahn,

Cable, Competition, and the Commission, 24 Catholic U.L. Rev. 854

(1975) ; Note, Cable Television and Content Regulation: The FCC,

the First Amendment and the Electronic Newspaper, 51 N.Y.U.L.

Rev. 133, 138-47 (1976).

which the Justice Department described as an example

of the ‘‘dismal swamp of protectionism.’’ ‘

Prior Proceedings

In 1969, the FCC ordered cable systems to originate

programs on certain channels not used for the carriage

of broadcast signals in order to increase diversity for

viewers. The FCC also authorized pay cablecasting on

non-broadeast channels and rejected proposals for

program restrictions which broadcasters claimed were

necessary to prevent this nascent medium from ‘“‘si-

phoning’’ programs from commercial television in the

future. Such restraints, the FCC concluded, would be

improper ‘‘unless and until experience gives some in-

dication of a trend calling for action in the public

interest.’’* But eight months later, as a result of broad-

easter pressures, the FCC inexplicably reversed its

position although pay cable was not even in existence

at the time.’ Thus, the FCC banned from pay cable all

series programs most motion pictures, thousands of

sports events and all advertising; and it also prohib-

ited pay cable from devoting more than 90% of its

time to sports and movies combined.’

The Justice Department and others sought imme-

diate reconsideration of this unexplained switch in

* Reply Comments, Oct. 1974, at 10. (All references to Comments

and Reply Comments herein are to filings in FCC Docket 19554.)

* First Report and Order in Docket 18397, 20 F.C.C.2d 201, 204

(1969) (emphasis added).

* Memorandum Opinion and Order in Docket 18397, 23 F'.C.C.2d

825 (1970).

’ Similar restrictions had been imposed on over-the-air pay tele-

vision (STV) (A 27-28).

positions suppressing competition and sensitive First

Amendment rights.’ After a delay of five years, the

FCC issued its present Report and Order’® which con-

tinued the program restraints on pay cable with cer-

tain modifications. The FCC perpetuated its regula-

tory scheme even though it admitted that, after years

of deliberation, it still lacked ‘‘a clear picture”’ as to

pay cable’s future (A 171). Nevertheless, the FCC

theorized that it should act now to avert ‘‘potential

ill effects of siphoning before they are actually felt”’

(A 171). But the FCC made no findings that there

would be siphoning, now or even in the remote future.

Indeed, petitioner ABC now concedes that there is no

present prospect of siphoning (Pet. at 15). And CBS’

President recently conceded: ‘‘Right now, we don’t

see it [pay cable] as a major threat.’’ **° The Commis-

sion acted on what the court correctly described as

‘speculation and innuendo”’ (A 88-89).

Series Programs

The FCC banned series from pay cable if one epi-

sode had ever appeared on commercial television.

Shortly after the rule was attacked in court, the FCC

repealed the series rule, conceding that ‘‘the program

*The court below found no explanation for the FCC’s ‘‘quick

reversal’’ of position (A 30). The FCC now explains that it forgot

to ‘‘focus’’ on the issue originally (Pet. at 5).

* First Report and Order in Docket 19554, 52 F.C.C.2d 1 (A

123-204), reconsideration denied, 54 F.C.C.2d 797 (1975) (A 205-

18).

Department stated that ‘‘the factual record before the Commission

is barren of any credible evidence that siphoning has happened or

more importantly is going to happen.’’ Reply Comments, Oct. 1974,

at 6; cf. Noll, Peck & McGowan, supra note 1, at 148-49.

siphoning that we have sought to prevent is unlikely

to oecur’’ (A 224) and that pay cable operations do

not pose ‘‘the siphoning threat to series programs that

we once though they might’’ (A 226-27). Thus, after

years of suppressing massive amounts of free speech

and competition, the FCC suddenly confessed error.

Motion Pictures

The complex motion picture rules—highly restrictive

and capricious—were also jettisoned by the FCC. Un-

der the repudiated rules:

—Pay cable could offer motion pictures, with-

out bureaucratic restriction, only within 3 years

of theatrical release (A 173, 193)—an arbitrary

cut-off date that denied pay cable access to the

long-running theatrical ‘‘blockbusters’’ which the

FCC conceded were vital to this new medium’s

success."

—Movies 3-to-10 years old were ineligible for

pay cable unless they were under license to com-

mercial television (A 173-74, 193)—a ‘‘meaning-

less’? * exception because, as the FCC itself con-

ceded, broadcasters traditionally insist on exclu-

sivity against pay cable in film licenses (A 177-

178; see A 129, 135, 141-42).

11 Further Notice of Proposed Rule Making in Docket 19554, 48

F.C.C.2d 453, 457 (1974). Even films within three years of release

can be preempted by network ‘‘exclusivity’’ practices questioned

by the court on antitrust and diversity grounds (A 17-18 n. 4).

12 Testimony of President of CBS at Hearings Before the Sub-

committee on Antitrust and Monopoly of the Senate Committee on

the Judiciary on the Pay-Cable Television Industry, July 8, 1975,

at 160-61.

—Post 10-year-old films—despite repeated tele-

vision exposure—were nevertheless banned from

pay cable unless they had not been telecast by com-

mercial television for the prior three years be-

cause, the FCC reasoned, if such old films had not

been telecast for three years then they must be

‘“‘undesirable’’ (A 175-76, 193, 211).

The court below struck down all of these arbitrary

and protectionist restrictions on numerous substan-

tive grounds. The FCC acquiesced in this holding. It

publicly announced that it would not seek review of the

motion picture rules (A 247) * and explicitly excluded

this issue from its current petition (Pet. at 7 n. 5, 8 n.

10). Indeed, after the opinion below, the FCC’s Chair-

man told a Congressional Committee that the movie

rules were not ‘‘necessary”’ after all.* He added: ‘‘I

believe the Commission might well have arrived at the

same conclusion about the film rules, even without the

Home Box Office case, but could not act so long as the

case remained undecided.’’* Thus, after years of sup-

pressing massive amounts of free speech and competi-

tion, the FCC now cavalierly says it was all a mistake.

*8 Also see FCC Motion For Partial Stay of Mandate, April 18,

1977, at 3; FCC Response to National Subscription Television Mo-

tions for Leave to Intervene and Suggestion for Rehearing En

Banc, April 22, 1977, at 2; Notice of Proposed Rule Making in

Docket 21311, 42 Fed. Reg. 34341 (July 5, 1977).

%* Statement of Richard E. Wiley, FCC Chairman, at Hearings

Before the Subcommittee on Communications of the Senate Com-

mittee on Commerce, Science and Transportation, Oversight Hear-

ings on Cable Television, June 6, 1977, at 26.

Ibid.

Sports

The remaining sports rules, as the court below con-

cluded, are just as illegal and capricious as the repudi-

ated motion picture and series rules. If anything, the

sports rules are even more illogical and arbitrary.

Specific Events: Specific events (such as a PGA

golf tournament) are banned from pay cable if they

have been telecast during any one of the prior five

years (A 181-82, 193). Accordingly, if a specific event is

dropped by commercial television, home viewers would

have to wait five years to see that event on pay cable.

In the meantime, there would be a total blackout on all

media.

Non-Specific Events: Such sports events are divided

into four categories: regular season home games, regu-

lar season away games, pre-season home games and

pre-season away games. The eligibility of such events

for pay cable depends on whether 25% or fewer of

such events in a particular category were broadcast

over commercial television in any one of the past five

seasons. If fewer than 25% of the events in a category

were telecast in each of the past five years, then the

number of games available to pay cable is the number

not telecast in the ‘“‘high-water mark season’’ (i.e.,

that season in the past five when the most games were

telecast)—even though fewer or no games at all are

currently available on commercial television (A 184,

193). On the other hand, if 25% or more of the events

in a category were telecast in any one of the prior five

years, then pay cable has access to only half the num-

ber of remainder games not telecast in the high-water

mark season—regardless of the number of games cur-

rently being shown on commercial television (A 184,

193-94). Moreover, the arbitrary 50% remainder limi-

tation is subject to a still further arbitrary reduction

—if the number of games telecast in the current sea-

son is fewer than the number telecast in the high-water

mark season, then there must be a pro rata reduction

in pay cable’s use (A 184, 194).

These arbitrary rules go far beyond any concern

about possible siphoning. The FCC, in effect, concedes

that it wishes to create an exclusive warehouse of

sports events for commercial television in the event

that broadcasters may want games tomorrow which

they have rejected today (A 185). These rules, as noted

by the court (A 91), produce the anomalous result that

as fewer events are available to viewers on commercial

television, fewer events are available to viewers on pay

cable.”

The FCC significantly failed to explain the arbi-

trary criteria for the maze of sports rules. Similarly,

the present petitions carefully avoid any description of

these highly capricious rules. Indeed, the FCC’s Chair-

** The bizarre impact of the sports rules is illustrated by a con-

erete example involving the New York Yankees. The Yankees’ 81

away games, according to the record below, have the following

telecast history : 1970—45; 1971—49; 1972—35; 1973—32; 1974—

37; 1975—30. Thus, after an atypical high of 49 games in 1971,

the Yankees stabilized at an average of 33 telecasts; Under the

basic rule, pay cable would have access to only 16 away games (81

total away games minus the high-water mark of 49 = 32 games:

50% of 3216). But this would then have to be reduced further

because Yankee away games in 1975 were 40% below the atypical

1971 high-water mark season. That would give pay cable access to

only 10 away games. Thus, although commercial television sup-

perted only 30 of the 81 Yankee away games in 1975, pay sub-

scribers would be limited to only 10 games. As a result of FCC

regulations, 41 away games—more than 50% of the Yankee away

games—would be unavailable to television viewers on any medium.

man recently told a Congressional Committee: ‘‘I am

not tied to the current sports rules.’’”’

Ban on Advertising

In a cryptic paragraph (A 188), the FCC banned

all advertising on pay cable. The only reason given by

the FCC was that this rule ‘‘ produced little dissent’’

(A 188). This rule—which the Justice Department

noted had the effect of protecting television from pos-

sible competition for advertising “—is now relegated

to a cursory footnote in the FCC’s petition (n. 16).

Ninety Percent Rule

The FCC, in another cryptic paragraph (A 188),

ruled that pay cable could not devote more than 90%,

of its time to motion pictures and sports combined

(A 188). The FCC’s rationale, unrelated to alleged

siphoning, was that this quota might encourage pro-

gram diversity. The 90% rule is now also relegated to

a cursory footnote in the FCC’s petition (n. 16).

OPINION BELOW

The pay cable rules were challenged by numerous

parties, including the Justice Department even though

it was a statutory respondent. The Court of Appeals,

in a unanimous opinion (A 1-113), invalidated all of

the rules on numerous independent grounds—any one

1" Testimony of Richard E. Wiley, FCC Chairman, at Hearings

Before the Subcommittee on Communications of the Senate Com-

mittee on Commerce, Science and Transportation, Oversight Hear-

ings on Cable Television, June 6, 1977, at 39.

%* Brief of the Justice Department in the Court of Appeals,

February 1976, at 15 n. 9.

of which would have been dispositive standing alone.

The court concluded that: (1) the FCC far exceeded

its ‘ancillary jurisdiction’’ over cable television by

dictating the programs it could not offer and banning

advertising; (2) the rules all violate fundamental First

Amendment rights of viewers, pay cablecasters and

program suppliers and, moreover, are “‘grossly’’ over-

broad; (3) the FTC failed even to consider the anti-

competitive considerations which it conceded were crit-

ical to discharge its public-interest mandate; (4) the

rules were all arbitrary and there was no evidence or

reasoned analysis, but merely ‘‘conjecture and innuen-

do’’, to support the FCC’s professed concern about

the possibility of “‘siphoning’’ in the distant future;

and (5) there was a procedural irregularity because

ex parte contacts during the crucial decision making

stage appeared to have shaped the FCC’s protectionist

policy.

REASONS FOR NOT GRANTING CERTIORARI

There is no issue worthy of certiorari. The vestiges

of the pay cable rules—like the repudiated rules as to

motion pictures and series—are not defensible. They

were struck down on the basis of well-established legal

principles long approved by this Court. Nor is there

any conflict among the Circuits.

(1) Petitioners’ claim that the FCC can use the

‘tancillary jurisdiction’”’ rubric to dictate pay cable’s

programs and ban advertising defies this Court’s land-

mark opinions in Southwestern” and Midwest” and

1° United States v. Southwestern Cable Co., 392 U.S. 157 (1968).

20 United States v. Midwest Video Corp., 406 U.S. 649 (1972).

the Communications Act’s basic goals of diversity,

free speech and competition.

(2) Petitioners do not refute the court’s holding

that the program rules and advertising ban all violate

fundamental First Amendment principles tradition-

ally protected by this Court. Instead of addressing

this Constitutional issue squarely, petitioners resort

to academic arguments about the First Amendment

status of CATV’s carriage of scarce broadcast signals

—a matter not germane to the suppression of free

speech when cable originates its own programs on non-

broadcast channels. Moreover, petitioners are all sig-

nificantly silent as to the court’s additional holding

that the rules are ‘‘grossly overbroad”’ under the First

Amendment.

(3) Petitioners are also significantly silent as to

the court’s holding that the pay cable rules ignore the

very antitrust considerations which the FCC re-

peatedly recognized were essential to resolve in dis-

charging its public interest mandate.

(4) Nor do petitioners refute the court’s holding

that the FCC acted on the basis of ‘‘conjecture and

innuendo”’ rather than evidence or reasoned analysis.

Instead, petitioners suggest that the FCC should have

carte blanche to act on the basis of sheer guesses as to

the remote future—even though basic First Amend-

ment rights are at stake and even though the FCC now

confesses error as to its past predictions and admits

that it still lacks a ‘‘clear picture”’.

(5) Finally, petitioners do not dispute the court’s

conclusion that ex parte contacts during the crucial

decision-making process shaped the protectionist rules

and violated basic principles of fairness and due pro-

cess. Instead the FCC basically questions the effect of

dictum in the opinion on other rule-making proceed-

ings—dictum, moreover, which is now the subject of

further consideration by the lower court in another

pending appeal.

THE REMAINING PROGRAM RESTRAINTS, LIKE THE RE-

PUDIATED RULES, ARE INVALID FOR THE MULTITUDE OF

INDEPENDENT SUBSTANTIVE REASONS GIVEN BY THE

COURT

The rules exceed the FCC's “ancillary jurisdiction”

over cable television

This Court held in Southwestern and Midwest that

the FCC’s jurisdiction over cable television ‘‘is re-

stricted to that reasonably ancillary to the effective

performance of the Commission’s various responsibili-

ties for the regulation of television broadcasting’’ (392

U.S. at 178; 406 U.S. at 651). Relying on Southwest-

ern and Midwest, the court below correctly concluded

that the program rules and advertising ban exceeded

the FCC’s ‘‘ancillary jurisdiction’’ over cable televi-

sion—particularly because of the FCC’s contrary poli-

cies as to broadcast entertainment programs; the ad-

verse impact of the rules on First Amendment inter-

ests; and the lack of any record support or a cogent

public interest rationale for the rules (A 37-56).

In Southwestern, while upholding the Commission’s

authority to limit CATV’s importation of distant

broadcast signals into a local community to protect new

media like UHF and educational stations in conform-

ity with Congressional policies, this Court cautioned:

‘*We express no views as to the Commission’s author-

ity, if any, to regulate CATV in other circumstances

or for any other purposes’”’ (392 U.S. at 178). In con-

trast to Southwestern, the FCC here is acting to im-

pede a new medium, and is doing so without ‘‘substan-

tial evidence”’ of any public interest reason warranting

such drastic action (see 392 U.S. at 177).

In Midwest—particularly germane here because it

dealt with cable’s origination of programs on non-

broadcast channels—this Court upheld rules requiring

cable systems to originate programs in order to pro-

vide viewers with new outlets of expression for diverse

programs (406 U.S. at 667-70). But in this 5-to-4 de-

cision, the Chief Justice’s decisive concurring opinion

warned :

‘‘Candor requires acknowledgement, for me at

least, that the Commission’s position strains the

outer limits of even the open-ended and pervasive

jurisdiction that has evolved by the decisions of

the Commission and the courts’’ (406 U.S. at 676).

If directing cable systems to originate programs

‘strains the outer limits’’ of ancillary jurisdiction,

those limits are surely exceeded by dictating what pro-

grams not to originate, by imposing quotas on sports

and movies, and by banning all advertising. Moreover,

the program restrictions here defeat the very goals

stressed in Midwest—namely, the stimulation of new

outlets of expression and the widest diversity of pro-

grams from different sources.

The rules frustrate the basic goals of the Communi-

cations Act which the Commission is charged with im-

plementing—including free speech, pro-competition

and diversity policies. As this Court has long recog-

nized, the FCC’s plenary jurisdiction over broadcast-

ing does not give the Commission the power to ban

programs or advertisements on broadcast television

(see Red Lion Broadcasting Co. v. FCC, 395 U.S. 367,

396 (1969); FCC v. Sanders Brothers Radio Station,

309 U.S. 470, 475 (1940)), or to deny entry to new

broadeasters because they might compete with en-

trenched broadcasters for programs or advertisers

(FCC v. Sanders Brothers Radio Station, 473-75

(1940)). Thus, the FCC clearly does not have ‘‘ancil-

lary jurisdiction’’ to impose the present regulations on

cable television.

Instead of dealing with these specific issues relevant

to the scope of ‘‘ancillary jurisdiction’’, petitioners

resort to rhetoric about television programming in gen-

eral and doomsday predictions that the infant pay

cable may someday threaten powerful commerci:'! tele-

vision. But those far-fetched claims were specifically

rejected by the FCC’s own opinions (A 44, 225).

The rules violate the First Amendment

The court, like all the commentators, correctly rec-

ognized that cable television with its multi-channel

capacity is entitled to full First Amendment protee-

tion like newspapers (A 77-80).” In this connection,

the court distinguished cable from broadcasting which

™ This is the unanimous view of those who have considered this

issue. Weaver v. Jordan, 64 Cal. 2d 235, 411 P.2d 289, cert. denied,

385 U.S. 844 (1966); Cabinet Committee on Cable Communica-

tions, Report to the President 15 (1974); Sloan Commission, On

the Cable: The Television of Abundance 43 (1971); Hoffer, The

Power of the FCC to Regulate Cable Pay-TV: Jurisdictional and

Constitutional Limitations, 53 Denver L.J. 477 (1976) ; Note, Cable

Television and Content Regulation: The FCC, The First Amend-

ment and the Electronic Newspaper, 51 N.Y.U.L. Rev. 133 (1976) ;

Note, Cable Television and the First Amendment, 71 Colum. L. Rev.

1008 (1971).

uses public airwaves and suffers from spectrum scar-

city and problems of physical interference—unique

factors which subject broadcasting to special First

Amendment rules. Compare Red Lion Broadcasting

Co. v. FCC, 395 U.S. 367 (1969), with Miami Herald

Publishing Co. v. Tornillo, 418 U.S. 241 (1974).

The court concluded that al] the program rules vio-

lated the First Amendment (a) because there was no

over-riding public interest reason warranting any in-

terference with free speech and (b) because the rules,

in any event, were grossly overbroad in terms of their

professed objective (A 75-91). Thus, the court de-

clared :

“‘The no-advertising and 90-percent rules clearly

violate O’Brien’s ® first criterion. Not only do they

serve no ‘important or substantial . . . interest,’

391 U.S. at 377, they serve no purpose which will

withstand serutiny on this record. The sports and

feature films rules fare no better. We have already

concluded that the Commission has not put itself

in a position to know whether the alleged siphon-

ing phenomenon is a real or merely a fanciful

threat to those not served by cable. Instead, the

Commission has indulged in speculation and in-

nuendo. O’Brien requires that ‘an important or

substantial governmental interest’ be demonstated,

however—a requirement which translates in the

rulemaking context into a record that convinc-

inglv shows a problem to exist and that relates the

proferred solution to the statutory mandate of the

agency. The record before us fails on both scores’’

(A 88-89; footnotes omitted).

The court, in addition, concluded that the “rules are

grossly overbroad’’ and that ‘‘[e]xamples of this are

*2 United States v. O’Brien, 391 U.S. 367 (1968).

legion’ (A 91). The court declared that the rules were

not “‘closely tailored to the end to be achieved”’ and

thus would cause a “‘loss of diversity and unnecessary

restriction of the First Amendment rights of produc-

ers, cablecasters and viewers’’ (A 89). With respect to

the sports rules at issue, the court stated:

‘‘(I]n some circumstances the sports rules have

the anomalous effect of reducing the number of

non-specific games that can be shown on cable tele-

vision at the same time that broadcasters are re-

ducing the number of games they will show. This

provision is apparently justified on the ground

that it is too diffienlt to monitor the reasons broad-

casters cut back their game schedules and at least

some cutbacks might be caused by cable competi-

tion. However, this record reveals no reason to

think that cutbacks represent siphoning anv more

than thev represent editorial or commercial judg-

ment. Where the First Amendment is concerned,

creation of such a rebuttable presumption of si-

phoning without clear record support is simply

impermissible. Cf. Freedman v. Maryland, supra,

380 U.S. at 58. Other examples could be cited, but

this would only belabor points already extensivelv

presented to the Commission’? (A 91; footnote

omitted ).

The FCC’s total ban on commercials, moreover, spe-

cifically violates this Court’s recent opinions recogniz-

ing that the First Amendment protects advertise-

ments.”

** Bates v. State Bar of Arizona, 45 U.S.L.W. 4895 (June 27,

1977) ; Carey v. Population Services Int’l, 45 U.S.L.W. 4601, 4606-

07 (June 9, 1977) ; Linmark Associates, Inc. v. Township of Wil-

lingboro, 45 U.S.L.W. 4441 (May 2, 1977); Virginia State Board

of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S.

748 (1976) ; Bigelow v. Virginia, 421 U.S. 809 (1975).

Petitioners do not squarely address the basic First

Amendment holding and they totally ignore the ques-

tion of overbreadth. Instead, they argue that Black

Hills* and several other lower ccurt opinions create

a conflict as to whether cable television has greater

First Amendment rights than broadcasters. But those

cases all dealt with CATV’s carriage of scarce broad-

cast signals and not with cable’s origination of its own

programs on its multiple non-broadcast channels.” Ig-

noring that critical distinction, petitioners try to lump

together cable’s retransmission and origination func-

tions—an illogical approach flatly rejected by this

Court in TelePrompTer Corp. v. Columbia Broadcast-

ing System, Inc., 415 U.S. 394, 405 (1974) (‘‘the re-

ception service’’ of cable television and its ‘‘origina-

tion service’’ are “separate and different opera-

tions’’).”

Moreover, although cablecasting is entitled to full

First Amendment protection like newspapers, the pro-

gram rules and advertising ban would be unconstitu-

tional even under this Court’s opinions as to the spe-

cial First Amendment standards applicable to spec-

* Black Hills Video Corp. v. FCC, 399 F.2d 65 (8th Cir. 1968).

* Virtually all of petitioners’ citations, moreover, concerned the

FCC's rule prohibiting cable from importing distant broadcast

signals carrying the identical programs being offered to viewers by

local broadcasters. Those cases thus did not uphold rules decreasing

diversity of programs for viewers or restrictions on origination of

non-broadeast programs. Indeed, Titusville Cable TV, Inc. v. United

States, 404 F.2d 1187 (3d Cir. 1968)—cited by the FCC (Pet. at

17 n. 21) and ABC (Pet. at 15 n. 28)—stressed that there were ‘‘no

direct restrictions in the Commission’s regulations which would

a a oe

2d at 1189.

_ % Accord, National Association of Regulatory Utility Commis-

sioners v. FCC, 533 F.2d 601, 613 (D.C. Cir. 1976).

trum-searce broadcasting. Thus, while the FCC may

pass limited regulations indirectly affecting the pro-

gramming of broadcasters in certain discrete situa-

tions, it surely cannot pass blunderbuss rules banning

entertainment programs or advertising or setting arbi-

trary quotas. Columbia Broadcasting System, Inc. v.

Democratic National Committee, 412 U.S. 94, 110-11,

116, 120, 127 (1973): td. at 146 (Stewart, J., concur-

ring); Red Lion Broadcasting Co. v. FCC, 395 U.S.

367, 396 (1969); FCC v. Sanders Brothers Radio

Station, 309 U.S. 470, 475 (1940).” Broadeasters’

freedom is abridgeable in only very limited cases (such

as fairness in the debate of public issues) in order to

promote diversity of viewpoints because of channel

scarcity. No such considerations are involved here in

connection with broadside rules suppressing massive

amounts of entertainment programming on a new me-

dium of multi-channel capability.

** Contrary to its position in this case, the FCC has recently

stated :

‘‘The power to regulate the type and quality of program-

ming is clearly beyond the authority of this Commission. The

First Amendment and Section 326 of the Communications Act

of 1934 would prevent governmental intrusion into such

areas.”’

Report and Order in Docket 20203, 61 F.C.C.2d 946, 949 (1976)

(no regulation of re-run programs in prime time). Accord, Mem-

orandum Opinion and Order in Docket 20682, 60 F.C.C.2d 858,

859 (1976) (no regulation of entertainment formats in broadcast-

ing); Children’s Television Report and Policy Statement, 50

F.C.C.2d 1, 2-3 (1974), aff’d sub nom. Action for Children’s Tele-

vision v. FCC, No. 74-2006 (D.C. Cir. July 1, 1977), petition for

rehearing pending (no ban on advertising or program quotas in

connection with children’s programs) ; Memorandum Opinion and

Order in RM-2652, 60 F.C.C.2d 641, 643 (1976) (no prohibition of

multiple exposures c. more than one episode of the same program

in prime time access periods).

Finally, petitioners complain that the court below

upheld the FCC’s over-the-air pay television rules

(STV) in the NATO case™ and left them intact in

the current opinion. This is a red herring. In the in-

stant case, nobody directly challenged the STV rules; ”

and, after the opinion below, the FCC decided to con-

form the STV and pay cable rules.” Moreover, in the

NATO case, the STV service at issue ‘‘blacked-out”’

searce channels, whereas cable has a multi-channel

capability—a critical distinction emphasized by the

court (A 75)." In any event, the NATO appeal—

brought by theatre owners to kill STV and not to

defend anybody’s First Amendment rights—did not

deal with the factual basis for the STV rules or the

issue of overbreadth. As the court stressed here:

‘‘TA]ny assessment of First Amendment gains and

losses must be made on the basis of the record in front

of us today” (A 77 n. 79). The court below, fully aware

of the circumstances involved in NATO, correctly

distinguished its earlier opinion in that case.

% National Ass’n of Theatre Owners v. FCC, 420 F.2d 194 (D.C.

Cir. 1969), cert. denied, 397 U.S. 922 (1970).

* One STV aspirant filed, and then withdrew, a petition for re-

view of the STV rules.

*° FCC Motion for Partial Stay of Mandate, Apri! 18, 1977, at

9-10; FCC Response to National Subscription Television Motions

for Leave to Intervene and Suggestion for Rehearing En Banc,

April 22, 1977, at 2-3.

vision licenses’ and rested on ‘‘the scarcity rationale’’ (A 76, 77

n. 79).

The Commission disregarded relevant

antitrust considerations

Pro-competition policies of the antitrust laws are

an essential ingredient of the public interest standard

of the Communications Act. Here, as the court ob-

served, the FCC ‘‘throughout these proceedings found

the antitrust issue to be relevant to discharge of its

public interest obligation’? (A 69). The FCC, for ex-

ample, asked at the outset of its opinion (A 125-26):

‘‘Would not the development of a pay system

of program distribution help to cut back the net-

work domination of program production and dis-

semination ?’’

+ oa *

‘*Would the competition provided to conventional

television result in an upgrading of the program-

ming found on commercial television ?’’

But, as the court correctly concluded, the FCC totallv

ignored the antitrust issues which it admitted were

crucial to the discharge of its public interest obliga-

tions.” Instead, the FCC opted for ‘‘hobbling cable

television’’ by “‘highly restrictive’ rules in order to

insulate entrenched broadcasters with ‘‘monopsony

power’’ against possible future competition (A 65, 72,

117). Significantly, the petitions are all silent on the

critical antitrust issue.

32 Dnited States v. Radio Corp. of America, 358 U.S. 334, 351-52

(1959) ; FCC v. Sanders Bros. Radio Station, 309 U.S. 470 (1940).

58 The court noted that the FCC’s entire consideration of the anti-

trust issues was confined to a single cryptic paragraph which is

‘‘obviously flawed’’ and ‘‘completely irrelevant to most of the anti-

trust issues raised’’ (A 70). The court declared: ‘‘We cannot

fathom how the Commission reached the conclusion that the bal-

ance here should be struck in favor of regulation’’ rather than

competition (A 70).

The rules are arbitrary and capracious and

not based on evidence or reasoned analysis

The court below correctly found that there was no

record support or cogent rationale for the rules. There

is admittedly no present prospect of so-called siphon-

ing; and if siphoning should ever appear likely, there

would be ample time for any action which might be

legal and appropriate.* The court found that the

FCC’s professed concern about the possibility of si-

phoning in the remote future was based—not on facts,

probabilities or reasoned analysis—but on ‘‘specula-

tion and innuendo’”’ (A 88; also see A 60-68). Point-

ing to the FCC’s own admission that it lacked a ‘‘clear

picture”’ as to the future, the Court declared:

‘*The Commission’s lack of a clear picture is di-

rectly attributable to its own choice to regulate

rather than allow a period of unregulated experi-

mentation in which data could be generated that

could form a predicate for informed agency ac-

tion.

& * *

‘‘Tn this state of affairs, where there is no evi-

dence of any urgent need for preventive action and

where approval of the Commission’s position would

foreclose the possibility that data could be gen-

erated in the future that would allow fullv in-

formed decisionmaking, we are disinclined to give

the Commission the ‘benefit of the doubt’ which it

argues it should have’’ (A 61-62 n. 60).

The present petitions dc not dispute the lack of evi-

dence or reasoned analysis for the rules. On the con-

= Congress, for example, has shown considerable interest in as-

suring public access to televised sports in anti-blackout legislation.

Act of September 14, 1973, Pu '. No. 93-107, 87 Stat. 350, 1973

U.S. Code Cong. & Adm. News 4°.

trary, petitioner ABC concedes that pay cable now

lacks the ‘‘economie capacity to outbid free television

for much, if any, of its program attractions’”’ (Pet.

at 15).”

In the absense of facts or logic, the FCC in effect

urges that it should have carte blanche to forecast the

future even ‘‘where there is no concrete supporting

evidence’”’ (Pet. at 10, 19-20). But administrative agen-

cies cannot base rules ‘‘on pure fantasy, speculation

devoid of factual premise.’’** The FCC cannot formu-

late regulations premised on supposed clairvoyance

°° Similarly, NAB recently told Congress that it had no present

concern about the siphoning of national sports: ‘‘ [W]e are not talk-

ing about [losing] the World Series or the Super Bowl.’’ Testimony

of Vincent Wasilewski, NAB President, at Hearings Before the

Subcommittee on Communications of the Senate Committee on Com-

merce, Science, and Transportation, Oversight Hearings on Televi-

sion Broadcast Policy, May 10 1977, at 214-15. NAB’s concession is

understandable because, for example, ABC and NBC, respectively,

recently paid $118,000,000 and $80,000,000 for NCAA football

games and the next Olympic games. Broadcasting, June 20, 1977, at

44; N.Y. Times, Feb. 2, 1977, at 1, col. 2; N.Y. Times, Feb. 3, 1977,

at 67, col. 1. In this connection, the Justice Department stated he-

low: ‘‘In view of the relative financial resources of the television

and cable industries, and the fact that many television contracts to

show sporting events are on a multi-year basis, there does not ap-

pear to be any reasonable cause for concern over immediate and

large seale siphoning.’’ Brief of the Justice Department in the

Court of Appeals, February 1976, at 37-38.

3° American Airlines, Inc. v. CAB, 192 F.2d 417, 421 (D.C. Cir.

1951). Accord, FCC v. RCA Communications, Inc., 346 U.S. 86,

96-97 (1953); City of Chicago v. FPC, 458 F.2d 731, 742 (D.C.

Cir.), cert. denied, 405 U.S. 1074 (1972); Portland Cement Ass’n

v. Ruckelshaus, 486 F.2d 375, 391-92 (D.C. Cir. 1973), cert. denied,

417 U.S. 921 (1974); International Harvester Co. v. Ruckelshaus,

478 F.2d 615, 629 (D.C. Cir. 1973).

when (1) sensitive First Amendment rights are at

stake; (2) past FCC predictions in this area have

proven false and been renounced; (3) the FCC admits

that it still lacks a ‘‘clear picture’’; and (4) the Com-

mission fails to explain why it did not accept sugges-

tions by the Justice Department and others to allow

free-market operations in order to determine if any

rules were in fact necessary.”

PROCEDURAL IRREGULARITIES, BASED ON EX PARTE

CONTACTS, DO NOT WARRANT CERTIORARI

In addition to invalidating the pay cable rules on the

merits for a host of reasons, the court below found a

procedural error—namely, ex parte contacts which

shaped the protectionist rules (A 92-106). Such con-

tacts made the public proceedings a ‘‘sham’’; ‘‘con-

ferred preferential advantages on vast segments of the

broadcast industry to the detriment of other competing

business interests’’; and reflected the ‘‘often-voiced

claims of undue industry influence over Commission

proceedings’’ (A 96, 97, 119). The court held that these

** This was the approach followed by the FCC in repealing the

series ban: ‘‘We will monitor future events closely, and stand

ready to reimpose series program restrictions should subscription

operations threaten to reduce the quantity and quality of series

programs now available to the public over conventional television”’

(A 227).

** The court was especially critical of ex parte activities by peti-

tioners ABC and NAB (A 94-95), who avoid this issue in their

netitions.

*° The court observed that the FCC engaged in these secret dis-

cussions during its decision making deliberations despite its Chair-

man’s public condemnation of such practices (A 96 n. 117, 102 n.

123).

secret contacts not only deprived it of the full admini-

strative record for review,” but also violated basic

standards of due process and fairness under Sangamon

Valley Television Corp. v. United States, 269 F.2d 221

(D.C. Cir. 1959)—a landmark opinion which was de-

cided after this Court remanded the case to the Cireuit

Court when this Court learned of ex parte contacts in

an FCC informal rulemaking proceeding. 358 U.S. 49

(1958)."

The court in Sangamon declared that ‘‘whatever the

proceeding may be called it involved .. . [a] resolution

of conflicting private claims to a valuable privilege,

and ... basie fairness requires such a proceeding to

be carried on in the open’’ (269 F.2d at 224). The court

below, as in Sangamon, remanded for evidentiary hear-

ings to determine the nature of all ez parte contacts

(A 108, 112). But the remand was limited to the STV

rules because the pay cable rules were found to be in-

valid on the merits on numerous grounds (A 107-08,

112-13).

Significantly, petitioners do not question Sangamon,

or deny the impact of the criticized ex parte contacts

on the outcome, or challenge the court’s determination

that this case involved ‘‘conflicting private claims to a

valuable privilege.’’ Instead, the FCC attacks dictum

in the opinion which states that there should be no ez

parte contacts in any informal rulemaking proceed-

ing—even those which do not involve ‘‘conflicting pri-

* Citizens to Preserve Overton Park, Inc. v. Volpe, 401 US.

402, 419-20 (1971).

*' The continuing vitality of Sangamon’s rationale was recognized

in the House Report on the Sunshine Act. House Report No. 94-

800-Part II, 1976 U.S. Code Cong. & Adm. News 2212, 2228.

vate claims.’’ But the limits of the iquare holding in

this case, as opposed to the dictum chdlenged by the

FCC, were emphasized in Judge MacKinnw’s special

concurrence here (A 117-122) and in a subseqrent de-

cision by another panel of the United States Cowt of

Appeals for the District of Columbia Circuit. Actim

for Children’s Television (ACT) v. FCC, No. 74-2006

(D.C. Cir. July 1, 1977) (Slip. Op. at 29-38), petition

for rehearing pending. The ACT panel agreed with the

ex parte holding in HBO and that it followed Sanga-

mon. However, because ACT did not involve ‘‘conflict-

ing private claims to a valuable privilege” like Sanga-

mon and the present case, the ACT panel held that the

ex parte contacts were not improper in that proceeding.

In this connection, the ACT panel did question H BO’s

dictum that ex parte contacts should be prohibited in

all informal rulemaking proceedings. A petition for

rehearing, with a suggestion for en banc consideration.

has recently been filed in ACT.

Since the FCC’s arguments are directed at dictum

and, moreover, that dictum is currently under consid-

eration by the D.C. Circuit in ACT, the matter is surely

not appropriate for consideration by this Court.”

In any event, the procedural ex parte issue and

dictum are academic here because the program rules

as to pay cable have been struck down on the merits

and the FCC has indicated that it will conform the

STV rules to whatever requirements are applicable to

pay cable.

* See, ¢.g., Wisniewski v. United States, 353 U.S. 901, 902

(1957) : ‘‘It is primarily the task of the Court of Appeals to recon-

cile its internal difficulties.’’

THE PETITIONS OF ABC AND NAB DO NOT RAISE ANY

ISSUE WORTHY OF CERTIORARI

Although the FCC abandoned the motion picture

rule after the decision below and specifically excluded

that matter in its present petition (Pet. at 7 n. 5, 8 n.

10), the broadcast petitioners appear to seek a general

review of the opinion below and ABC, in particular,

complains that ‘‘the Commission [does] not contest

the Court’s ruling with respect to feature films’’ (Pet.

at 4). This is frivolous. After almost a decade, the FCC

was forced to drop the protectionist motion picture

rule. Since the administrative agency has now in effect

confessed error, the issue is moot.

CONCLUSION

The Commission’s massive prior restraints on pro-

grams—illegal and protectionist—have impeded a

struggling new communications medium and deprived

the American public of freedom of choice and an op-

portunity for greater diversity. A five-year regime of

such bureaucratic restraints in sensitive free-speech

areas is indefensible. The remaining pay cable rules—

like the repudiated ones—should be put to an end im-

mediately.

For all of the foregoing reasons, the petitions for

writs of certiorari should be denied.

Respectfully submitted,

Smon H. Rirxrinp

Stuart Rosrnow1Tz

Susan P. Carr

Moses SILvERMAN

Paut, Weiss, Rirxinp, 345 Park Avenue

Warton & Garrison New York, New York 10022

Of Counsel Harry M. PLoTKiIn

Arent, Fox, Kintwes, Georce H. Suaprro

Prorkin & Kann 1815 H Street, N.W.

Of Counsel Washington, D.C. 20006

Attorneys for Respondents

Home Box Office, Inc.,

American Television and

Communications Corpora-

tion, Manhattan Cable Tele-

vision, Inc., TelePrompTer

Corporation, UA-Columbia

Cableviison, Inc., Viacom

International Inc. and War-

ner Cable Corp.

July 23, 1977

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.