Petition for Writ of Certiorari — FCC v. WNCN Listeners Guild

Page

Opinions below ................------------ iedisemiliaens 1

Jurisdiction ies lnieaieaioapsilaaiesiitaicasaaanahianaiieh 2

I I snes sts secsec a nssitnitneraens 2

I TN ictisitscsesntsicinceeccnanesiensconcatincenenennininns 2

RIS Sin sasseiovaidcecsv ots siigpiontin tieshaaaeaninnelalalaninsdaadails 2

Reasons for granting the petition ...................... 13

Conclusion . -_ sinaiesililibniaideiisiaibiiccis 26

POI FR iciesietctensccrcicennceestinineoecesieninnieatcomnatninins la

TE TD secincesictistnettssansntetningsinsiieninveniccibiamaaineitin 57a

TIS | sesesicncnicsticrnianuiteniessicenciliiaeiintaiinuiiiigii 60a

Ie serv nivicinnninivcninnimmciunisliiciaihiipiaiians 117a

Appendix E .................- 176a

TI eciictisccssinccsteacctniiintscenamnadamtinatials 197a

CITATIONS

Cases:

Citizens Committee (Atlanta) v. FCC,

Bee IE tetesanpntinseenisticiaatiatntamiagii 3, 14

Citizens Committee to Keep Progressive

Rock v. FCC, 478 F.2d 926 ...................- 3,15

Citizens Committee to Save WEFM vy.

FCC, 506 F.2d 246 .:.................... 3, 4, 15, 16, 23

Columbia Broadcasting System, Inc. v.

Democratic National Committee, 412

NERS UID coneeecicicetpelsadenetanssicenceiniineimacuuia 16, 17, 18, 24

FCC v. Columbia Broadcasting System of

California, Inc., 311 U.S. 182 ................ 3

li

Cases—-Continued Page

FCC v. Midwest Video Corp., No. 77-1575

LE RR ra Oe 17

FCC v. National Citizens Committee for

Broadcasting, 436 U.S. 775 ...............- 11, 14,18

FCC v. Pacifica Foundation, 438 U.S. 726.. 19

FCC v. Pottsville Broadcasting Co., 309

iS Rh Rea cnaee uae OUR Oe a 19

FCC v. Sanders Bros. Radio Station, 309

Se TEE caticnsideini icicle 5, 6, 18, 17

Hartford Communications Committee v.

rg ee BE I he shictseesseeniesodicsciceenee 3

Lakewood Broadcasting Service, Inc. v.

Pry Ue te CI a vestneicccsencernis 3, 15

National Broadcasting Co. v. United

8 eae 15, 16

Red Lion Broadcasting Co. v. FCC, 395

TE MN eee 18

Vermont Yankee Nuclear Power Corp. v.

Natural Resources Defense Councii, 435

| FRO Tien ee ee 14

United States Constitution, First Amend-

RIE shiibinshietiscaniccitelaiashadaiaetegsid ties 2, 5, 9, 18, 23, 25

Constitution and statutes:

Communications Act of 1934, 47 U.S.C.

151 et seq.:

Section 3(h), 47 U.S.C. 153(h)......17, 197a,

Section 301, 47 U.S.C. 301 2.02... 19

Section 303, 47 U.S.C. 303 2000. 16, 19

Section 303(g), 47 U.S.C. 303(g) ...... 15-16,

197a

Section 309(a), 47 U.S.C. 309(a) .... 15, 19,

197a

Il

Constitution and statutes—Continued Page

Section 310(d), 47 U.S.C. 310(d),

formerly Section 310(b), 47 U.S.C.

(1970 ed.) 310(b) -..............-.. 15, 19, 198a

Section 326, 47 U.S.C. 326 .............. 18, 198a

Section 402(b), 47 U.S.C. 402(b) ... 3,14,

199a

Miscellaneous:

Polsby, FCC v. National Citizens Com-

mittee for Broadcasting and the Judi-

cious Uses of Administrative Discre-

tion, 1978 Sup. Ct. Rev. 1 ...................... 14

In the Supreme Court of the United States

OCTOBER TERM, 1979

No.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA, PETITIONERS

Vv.

WNCN LISTENERS GUILD, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

The Solicitor General, on behalf of the Federal

Communications Commission and the United States,

petitions for a writ of certiorari to review the judg-

ment of the United States Court of Appeals for the

District of Columbia Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App. A, in-

fra, la-56a), is not yet reported. The Notice of

Inquiry and orders of the Federal Communications

Commission (Apps. C, D and E, imfra, 60a-116a,

117a-175a, 176a-196a) are reported at 57 F.C.C.2d

580, 60 F.C.C.2d 858, and 66 F.C.C.2d 78.

(1)

2

JURISDICTION

The judgment of the court of appeals was entered

on June 29, 1979 (App. B, infra, 57a-59a). On Sep-

tember 14, 1979, the Chief Justice granted an ex-

tension of time within which to file a petition for a

writ of certiorari to and including November 26,

1979. The jurisdiction of this Court is invoked un-

der 28 U.S.C. 1254(1) and 2350(a).

QUESTION PRESENTED

Whether the Communications Act of 1934, read in

the light of the First Amendment, grants to the

Federal Communications Commission the discretion

to follow a policy of declining to review entertain-

ment program format changes when a radio broad-

cast license is renewed or transferred.'

STATUTES INVOLVED

The relevant portions of the Communications Act

of 1934, as amended, 47 U.S.C. 151, et seq. are set

forth in Appendix F, infra, 197a-199a.

STATEMENT

1. This litigation results from a continuing dis-

agreement between the Federal Communications

Commission and the court of appeals over the ap-

propriate role of the Commission in supervising the

' Although the decision of the court of appeals criticizes

the Commission for not disclosing a staff analysis paper prior

to issuing its Policy Statement (App. A, infra, 14a-15a), we do

not understand this to be a ground for the court’s ruling

(see id. at 17a note 24). In the event this Court concluded

otherwise, however, we would wish to preserve for review the

question whether the court of appeals erred in concluding

that the Commission was required to make disclosure of the

staff analysis paper prior to issuing its Policy Statement.

3

selection of entertainment programming broadcast by

radio stations. The decision below reaffirmed what

has come to be known as the “format doctrine” (App.

A, infra, 30a note 47), which was developed by the

court of appeals in a series of decisions reviewing

Commission orders granting applications to assign

radio station licenses.* In those decisions, the court

of appeals rejected the Commission’s determination of

the policy that would best serve the public interest in

this area. The court held that when the Commission

considers an application to renew or transfer the

license of a radio station with a unique, financially

viable entertainment format, the Commission must

conside whether granting the application will involve

a change in that format. If such a change in pro-

2 See Citizens Committee to Save WEFM Vv. FCC, 506 F.2d

246 (D.C. Cir. 1974) (en banc) ; Citizens Committee to Keep

Progressive Rock v. FCC, 478 F.2d 926 (D.C. Cir. 1973) ;

Lakewood Broadcasting Service, Inc. V. FCC, 478 F.2d 919

(D.C. Cir. 1973) ; Citizens Committee (Atlanta) v. FCC, 436

F.2d 263 (D.C. Cir. 1970). See also Hariford Communications

Committee v. FCC, 467 F.2d 408 (D.C. Cir. 1972). Section

402(b) of the Communications Act, 47 U.S.C. 402(b), vests

exclusive jurisdiction in the United States Court of Appeals

for the District of Columbia Circuit to hear appeals from

Commission radio licensing decisions. See FCC V. Columbia

Broadcasting System of California, Inc., 311 U.S. 182, 133-134

(1940).

2 Most radio stations now broadcast a specialized type or

“format” of entertainment programming, e.y., classical music,

country music, all news, etc. This trend toward specialized

programming evolved as a result of a number of factors, in-

cluding the need for radio stations to provide a competitive

alternative to television and the increase in the number of

radio stations from approximately 600 in 1935 to the current

total of approximately 8,500.

4

gramming format is involved, the decisions of the

court of appeals require the Commission to determine

whether the change would be in the public interest

before acting on the application.

In Citizens Committee to Save WEFM vy. FCC,

supra, 506 F.2d at 262 (“WEFM”’), the court of

appeals summarized the teaching of its decisions as

follows:

When faced with a proposed license assignment

encompassing a format change, the FCC is

obliged to determine whether the format to be

lost is unique or otherwise serves a specialized

audience that would feel its loss. If the en-

dangered format is cf this variety, then the

FCC must affirmatively consider whether the

public interest would be served by approving the

proposed assignment, which may * * * necessi-

tate conducting a public hearing in order to re-

solve the factual issues or assist the Commission

in discerning the public interest. Finally, it is

not sufficient justification for approving the ap-

plication that the assignor has asserted financial

losses in providing the special format; those

losses must be attributable to the furmat itself

in order logically to support an assignment that

occasions a loss of the format.

2. The “format doctrine” was developed by the

court of appeals on review of FCC decisions grant-

ing individual applications to assign radio station

licenses. As a result of the Commission’s concern

that the broader implications of the format doctrine

had not received adequate consideration either by

5

the court or the agency during the course of this ad

hoc litigation, the Commission issued a Notice of

inquiry instituting administrative proceedings on the

question (App. C, infra).

The Commission solicited comments from interested

parties on the appropriateness and feasibility of its

supervision of the selection of entertainment pro-

gramming. 57 F.C.C.2d at 584-585. It also sought

comments on the First Amendment implications of

such regulation. Jd. at 585.‘

4When the Notice of Inquiry was issued, Commissioner

Robinson summarized his views on the “vexing problem” fac-

ing the agency in regulating entertainment program for-

mats. 57 F.C.C.2d at 594-595. He concluded that the teaching

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

that the Commission should not interfere with competition

among broadcasters, continued to reflect wise public policy.

He also pointed out what he perceived as acute practical prob-

lems in implementing the regulatory standards mandated by

the court of appeais: :

The standard for “uniqueness” or “diversity’”—the di-

versity that the public wants enough so as to cause it to

grumble when it is diminished—is obviously idiosyncratic

and subjective. Quite aside from the constitutional ob-

jections * * * this subjective element presents intractable

difficulties in administration. What makes one format

unique makes all formats unique. If subjectivity is to be

an important determinant of what makes a format

“unique” (or, in other terms, what makes it a net con-

tributor to diversity), how are we to avoid the fact that

even with respect to formats which objectively seem

identical, people—radio listeners—can and do make dis-

tinctions. * * * [B]y the subjective standards that the

Court seems to embrace, any format is unique; from

6

Following public notice and comment, the Com-

mission issued a Policy Statement. The Statement

concluded that format regulation of the kind required

by the court of appeals’ WEFYM decision was incon-

Bress, presented intractable problems of administra-

tion, and was unlikely to provide any significant in-

cision in FCC y. Sanders Bros. Radio Station, 309

U.S. 470, 474-475 (1940), which emphasized that

broadcasters are not common carriers and are

not to be dealt with as such. Thus the [Com-

munications] Act recognizes that the field of

broadcasting is one of free Competition, * * *

trically with Other broadcasters to survive or

succumb according to his ability to make his

programs attractive to the public.

which it follows, all must be preserved. At that thought

the mind Swims and the heart sinks.

Commissioner Robinson also emphasized the constitutional

Problems arising from the “format doctrine.” He noted that

the Commission “will have ‘to oversee far more of the day-

to-day operations of broadcasters’ conduct’ than even would

have been the case with mandatory access editorial] adver-

tising, a reason of apparently constitutional Stature ia the

Supreme Court's holding in ¢ “olumbia Broadcasting System,

Inc. Vv. Dy mocratice National Committee, 412 USS. 94, 126

(1973)." 57 F.C.C.2d at 600.

7

The Commission added that, if “broadcasters are to

compete with one another, * * * they must neces-

sarily do so in the domain of program formats,

because there is virtually no other form that competi-

tion among broadcasters can take.” 60 F.C.C.2d at

860.

The Commission’s Policy Statement noted that

publicly available data confirmed that competition

provides a statutorily sufficient amount of diversity

in radio entertainment programming. 60 F.C.C.2d

at 863. The Commission explained that market

forces are superior to government regulation in se-

lecting types of entertainment programming that

listeners actually prefer, and provide ‘a precious

element of flexibility which no system of regulatory

supervision could possibly approximate.” Jd. at 864.

The Commission also analyzed the practical diffi-

culties presented by the holding of the court of ap-

peals, which would require the Commission to de-

termine: “(1) what the station’s existing format is;

(2) whether there are any reasonable substitutes for

that format in the station’s market; [and] (3) if

there are not, whether the benefits accruing to the

public from the format change outweigh the public

detriment which the format abandonment would en-

tail.” 60 F.C.C.2d at 862. The Commission observed

that where both the old and new formats were unique,

it would be faced with the additional problem of de-

termining which format better served the public in-

terest. The Commission expressed serious doubt

about its capacity to determine whether a format is

8

“unique,” and whether reasonable substitutes were

available.° With regard to the question whether the

public would be “better served” by one popular for-

mat rather than another, the Commission found that

it had no principled basis for making the required

determination. Jd. at 864.

Finally, the Commission’s Policy Statement ex-

plained that regulation of entertainment formats

raised serious constitutional difficulties. The threat

of a hearing that might result from an effort to

modify a program format would make the risk “of

undertaking innovative or novel programming alto-

gether unacceptable.” The Commission found that

the practical “obligation to continue service [im-

posed on broadcasters with a unique format] * * *

deprives the public of the best efforts of the broadcast

industry and results in an inhibition of constitu-

tionally protected forms of communication with no

5 The Commission pointed out that the court of appeals had

previously held that this problem could not be avoided by de-

fining formats broadly. The Commission noted that the court

had required the Commission to “distinguish progressive

rock music from the other species of the rock genre, Citi-

zens Committee to Keep Progressive Rock v. FCC, 478 F.2d

926 (D.C. Cir. 1973) * * * [and] to distinguish between

19th Century and 20th Century classical music, [WEFM}

506 F.2d at 264 n.28 * * *.” 60 F.C.C.2d at 862. The Com-

mission also emphasized that “‘[w]hat makes one format

unique makes all formats unique. * * * Questions of pacing

and style, the personalities of on-the-air talent (both in-

dividually and in combination with one another) all con-

tribute to those fugitive values that radio people call a sta-

tion’s “sound” and that citizens’ groups (and alas, appellate

judges) call format.’”’ Ibid.

9

off-setting justifications, either in terms of specific

First Amendment or diversity-related values or in

broader public interest terms.” 60 F.C.C.2d at 865.

Such a scheme of regulation, the Commission con-

cluded, would have a “chilling effect * * * on pro-

gram innovation * * * [that] would be injurious

to the public interest.” /d. at 864. The Commission

added that format regulation would necessarily re-

sult in “entanglement in matters that Congress meant

to leave to private discretion,” and would infringe

First Amendment freedoms “because ‘a comprehen-

sive, discriminating, and continuing state surveillance

will inevitably be required to ensure that these re-

strictions are obeyed.’” Jbid.

3. The court of appeals, sitting en banc, set aside

the Commission’s Policy Statement. The court re-

affirmed the rule previously articulated in WEFM

and rejected the Commission’s conclusion that WEFM

embodied unwise public policy that could not mean-

ingfully increase program diversity.

The court restated the basic premise of its “format

doctrine’—“that the Communications Act’s ‘public

intere:t, convenience, and necessity’ standard includes

a concern for diverse entertainment programming.”

App. A, infra, 4a. The court added that Con-

gress has “set aside the radio spectrum” to benefit

‘all the people’ of our richly pluralistic society,”

not simply “those in the cultural mainstream.” Id.

at 5a. Accordingly, the court concluded that Con-

gress intended in adopting the general “public in-

terest, convenience and necessity” standard of the

10

Communications Act, that “ ‘all major aspects of con-

temporary culture * * * be accommodated by the

commonly-owned public resources whenever that is

technically and economically feasible.’” Jbid.

In an effort to defend the administrative feasibility

of its “format doctrine,” the court of appeals as-

serted that the Commission would not be required to

conduct hearings in all cases involving license trans-

fers or renewals. The court noted that it would not

be necessary to make a “public interest” determina-

tion if (App. A, infra, 24a-25a) :

(1) there is an adequate substitute in the serv-

ice area for the format being abandoned, (2)

there is no substantial support for the endanger-

ed format as evidenced by an outcry of public

protest, (3) the devotees of the endangered for-

mat are too few to be served by the available

frequencies, or (4) the format is not financially

viable.

The court also stated that the Cemmission has discre-

tion to set standards which would minimize adminis-

trative difficulties. It indicated that the Commission

could establish “rigorous standards” as to when a

prima facie case had been made by opponents of the

format change, or establish broad format categories

rather than narrower ones, thus reducing the likeli-

hood that an abandoned format could be proven

“unique” (App. A, infra, 29a-30a). The court added

that the Commission could be even more “innovative”’

by basing its decision as to whether the public interest

was implicated by a station’s change of programming

on “the existence of significant and bona fide listener

protest.” Id. at 30a.

11

Judge Bazelon concurred in the court’s decision to

set aside the Policy Statement, concluding that the

Commission had failed to make disclosure of a staff

analysis paper prior to issuing the Statement (App.

A, infra, 41a). However, Judge Bazelon specific-

ally noted his disapproval of the majority’s “unwill-

ingness to give appropriate deference to the Com-

mission’s judgment” on the substantive questions be-

fore the court. Jbid. He asserted that the majority

opinion had “virtually confine[d] the FCC to a spec-

tator’s role in formulating policies that will pro-

mote and preserve diversity while minimizing the

hazards of government intrusion into the content

of broadcasting” (id. at 41a-42a), contrary to this

Court’s decision in FCC v. National Citizens Commit-

tee for Broadcasting, 436 U.S. 775 (1978) (App. A,

infra, 41a note 4). Judge Bazelon added that “the

Commission’s accommodation [in its Policy State-

ment] of the conflicting policy interests is neither

irrational nor wholly contrary to the purposes of the

Communications Act,” and noted that the court should

not lightly dismiss the FCC’s decision “to cast its

lot with the marketplace.” He also stressed ‘‘the

‘sensitive First Amendment implications’ of govern-

ment oversight of format choice” and criticized the

majority for “fail[ing] to grapple seriously with the

constitutional implications of its decision.” Jd. at

42a note 4.

Judges Tamm and MacKinnon dissented, conclud-

ing that the majority opinion ‘‘usurps the proper role

of the [Commission] in the formulation of communi-

12

cations policy” (App. A, infra, 46a). The dis-

senting judges concluded that the majority had

mount[ed] untested assumption upon untested

assumption to create a theory of regulation that

may bear little resemblance to the actual func-

tioning of the broadcast market. Only the Com-

mission, equipped with investigatory tools and

a well of experience, may predict in the first

instance the behavior of listeners and broadcast-

ers. The majority has simply substituted its

views for the Commission’s.

Id. at 55a.

The dissent criticized the format doctrine, as

articulated by the majority, as a “novel doctrine that

calculates the public interest without necessary ref-

erence to the aural desires of the greatest number

of listeners.” Jd. at 50a. The dissent concluded that

the majority opinion had failed to rebut the Com-

mission’s showing that it could not do a better job

than the marketplace in furthering diversity in en-

tertainment programming:

The majority has not explained how to decide

whether a specific format is unique, how to

measure the number of listeners who favor a

change in format, or how to compare the in-

tensity of preference between listeners who de-

sire retention of a unique format and those who

prefer a variation of a pre-existing format.

Finally, the majority has failed to identify the

principle within the Communications Act that

mandates regulation favoring the interest of

fewer listeners over the interests of more lis-

teners.

Id. at 53a.

13

REASONS FOR GRANTING THE PETITION

1. This case presents important questions regard-

ing the proper role of the Federal Communications

Commission in overseeing radio broadcasters’ selec-

tion of entertainment programming. The decision be-

low deals with the recurring situation in which a

renewal or transfer applicant intends to abandon an

allegedly unique, financially viable entertainment

format, despite “public grumbling” from devotees of

that format. The court of appeals directs the Com-

mission in such a situation to consider conditioning

renewal or transfer on the retention of the particular

entertainment format, even though it is no longer

wanted by the broadcaster. This is such a departure

from the congressionally conceived plan of maximiz-

ing listener satisfaction in radio entertainment

through “free competition” among broadcasters

(FCC v. Sanders Bros. Radio Station, 309 U.S. 470,

474-475 (1940)) as to warrant this Court’s review.

The court of appeals has substituted its own un-

tested factual premises and policy conclusions for the

Commission’s judgment that regulation of entertain-

ment formats is unnecessary, injurious to the best

interests of listeners, and not susceptible to prin-

cipled decision-making." This arrogation of the agen-

* One commentator’s analysis of the court of appeals’ earlier

format decisions is equally applicable to this decision:

The cases are extraordinary illustrations of a court

willing to expand its own function at the expense of

the agency’s discretion, to make remote inferences of

policy from amorphous and general statutory language,

14

cy’s “public interest” polic making function conflicts

in principle with this Court’s recent decision in FCC

v. National Citizens Committee for Broadcasting, 436

U.S. 775 (1978).’

2. The decision below holds that the Communica-

tions Act itself requires Commission adherence to the

court of appeals’ “format doctrine.” * Yet, the deci-

sion is bereft of statutory analysis that would sup-

port this conclusion. Instead, the court relies on its

earlier “format doctrine” holdings (App. A, infra,

4a-8a). But those precedents are likewise lacking

in any substantial statutory analysis.

In Citizens Committee (Atlanta) v. FCC, 436 F.2d

263, 269 (D.C. Cir. 1970), the first format doctrine

and to go beyond mere oversight of the agency’s work

product to an extended collaborative dialogue with the

Commission over what its substantive policies ought to

be.

Polsby, FCC v. National Citizens Committee for Broadcasting

and the Judicious Uses of Administrative Discretion, 1978

Sup. Ct. Rev. 1, 17.

7 In departing from the ordinary rule of judicial deference,

the court of appeals referred to the fact that the agency did

not publish for pre-decisional comment a staff paper com-

piling certain publicly available data (App. A, infra, 15a, 34a-

35a). However, neither the Due Process Clause nor the Ad-

ministrative Procedure Act requires pre-decision disclosure in

a rulemaking proceeding of staff memoranda of this kind.

See generally Vermont Yankee Nuclear Power Corp. Vv. Nat-

ural Resources Defense Council, 435 U.S. 519 (1978).

*The court below has exclusive appellate jurisdiction in

broadcast licensing matters (47 U.S.C. 402(b)), thus elimi-

nating the possibility of future conflicts between the cir-

cuits, a circumstance which, in other contexts, might justify

declining review by this Court at this time.

15

case, the court of appeals’ only attempt to undertake

statutory analysis is the bare assertion that “it is

surely in the public interest * * * for all major

aspects of contemporary culture to be accommodated

by the commonly-owned public resources whenever

that is technically and economically feasible.” But

Sections 309(a) and 310(d) (then (b)) of the Com-

munications Act, 47 U.S.C. 309a and 310(d),

which contain the general “public interest, conveni-

ence, and necessity” standard to which the court re-

ferred, do not on their face or by necesary impli-

cation require the Commission to compel retention of

“technically and economically feasible” entertainment

formats.’*

In Citizens Committee to Save WEFM vy. FCC,

506 F.2d 246 (D.C. Cir. 1974), the court of appeals

extracted several sentences from this Court’s opinion

in National Broadcasting Co. v. United States, 319

U.S. 190 (1943), to buttress the format doctrine

previously announced in Atlu.:ta. One such passage

merely reminded that “[t]he ‘public interest’ to be

served under the Communications Act is * * * the

interest of the listening public in ‘the larger and more

effective use of radio.’ § 303(g).” 506 F.2d at 267.

But nothing in that sentence or the hortatory lan-

*The court of appeals offered no additional statutory

analysis in its subsequent format doctrine cases. See Citizens

Ceimmittee to Keep Progressive Rock v. FCC, 478 F.2d 926

(D.C. Cir. 1973); Lakewood Broadcasting Service, Inc. V.

FCC, 478 F.2d 919 (D.C. Cir. 1973).

16

guage of Section 303(g) of the Act suggests that

“the larger and more effective use of radio” must be

achieved through Commission regulation of entertain-

ment formats. Nor is the court of appeals’ conclusion

supported by the observation in National Broadcast-

ing Co. that “[t]he avowed aim of the Communica-

tions Act of 1934 was to secure the maximum benefits

of radio to all the people of the United States.” 506

F.2d at 267, quoting 319 U.S. at 217. That general

statement does not purport to limit the means the

Commission may employ to further the desired statu-

tory objective. And it offers no justification for the

court’s rejection of the Commission’s reasoned view

that competition, rather than additional regulation, is

best adapted to achieve diversity.

3. The Commission does not, of course, dispute that

program diversity is an important “public interest”

objective. To the contrary, the Commission’s Policy

Statement explained that a competitive approach to

format changes “is the best available means of pro-

ducing the diversity to which the public is entitled.”

60 F.C.C.2d at 863.'' Prior to reaching that conclu-

47 U.S.C. 303 provides in pertinent part (emphasis

supplied) :

Except as otherwise provided in this Act, the Com-

mission from time to time, as public convenience, inter-

est, or necessity requires, shall—

a s . os a

(g) Study new uses for radio, provide for experimen-

tal uses of frequencies, and generally encourage the

larger and more effective use of radio in the public

interest.

‘' The Commission's analysis heeds this Court's repeated

admonition (see, e.g., CBS v. Democratic National Committee,

412 U.S. 94 (1973)) that radio broadcasting content is gen-

17

sion, the Commission received extensive comments

from all segments of the industry and public. 60

F.C.C.2d at 886-872. The Commission thoroughly

explored all aspects of the issue of statutory inter-

pretation, while fully informing itself of the constitu-

tional dimensions of the issue. 60 F.C.C.2d at 859-

861, 865, 866-871; 66 F.C.C.2d at 78-80.

This evaluation led the Commission to conclude

that abridgment of licensee discretion to select en-

tertainment formats was not required by the Com-

munications Act and was, in fact, “inconsistent”

with the statute’s purpose. 60 F.C.C.2d at 865. In

particular, the Commission pointed to Section 3(h)

of the Act, 47 U.S.C. 153(h), which provides that

a broadcaster may not “be deemed a common carrier.”

See FCC v. Sanders Bros. Radio Station, 309 US.

470, 474 (1940); CBS v. Democratic National Com-

mittee, 412 U.S. 94, 105-109 (1973); see also FCC

vy. Midwest Video Corp., No. 77-1575 (Apr. 2,

1979), slip op. 11-19. Conditioning the grant

of a valuable license renewal on the perpetuation of

a particular form of programming, no longer desired

by the broadcaster, imposes burdens on the broad-

caster that are similar to those of common carriers.

60 F.C.C.2d at 860."

erally to be governed by free competit.on and journalistic

discretion rather than regulatory constraints.

12 As a practical matter, a broadcaster faced with the

choice of continuing an unwanted format or surrendering

his license normally will choose to continue the existing pro-

gram service.

18

Under familiar principles, the Commission’s in-

terpretation of its own statute is entitled to sub-

stantial judicial deference. CBS v. Democratic Na-

tional Committee, supra, 412 U.S. at 121; Red Lion

Broadcasting Co. v. FCC, 395 U.S. 367, 381 (1969).

When First Amendment considerations are relevant

in determining the scope of a Statute, the agency’s

views on constitutional implications are also deserving

of “great weight.” '* CBS yv. Democratic National

Committee, supra, 412 U.S. at 122. Moreover, as this

Court has recently emphasized, the proper accom-

modation of diversity and other values inherent in

the “public interest” standard presents a delicate

question requiring agency expertise. Where, as here,

that question is addressed by the agency in a “ra-

tional” manner, the agency’s determination should be

affirmed. FCC v. Nativnal Citizens Committee for

Broadcasting, supra, 436 U.S. at 814-815."

8 Section 326 of the Communications Act, 47 U.S.C. 326,

provides that ‘no regulation or condition shall be promul-

gated or fixed by the Commission which shall interfere with

the right of free speech by means of radio communication.”

This provision reinforces the view that Congress intended

the “public interest” standard to be interpreted with the

greatest respect for First Amendment values.

'* The Commission's Policy Statement did not, of course,

conclude that the Commission is without authority to review

radio programming under all circumstances. This Court has

recognized that there are circumstances in which the Com-

mission must go beyond technical considerations in order to

discharge its licensing function. See, ¢.9., National Broad-

casting Co. V. United States, supra. Moreover, there are situa-

tions in which the “public interest” in broadcasting demands

that the Commission require the broadcasting of certain

19

4. The Communications Act of 1934 charges the

Commission with regulating broadcasting to serve the

“public interest, convenience, and necessity.” 47

U.S.C. 301, 303, 309(a), 310(d). This Court has

interpreted that mandate as “a supple instrument for

the exercise of discretion by the expert body which

Congress has charged to carry out its legislative

policy.” FCC v. Pottsville Broadcasting Co., 309 U.S.

134, 138 (1940). In exercising that discretion here,

the Commission concluded that leaving the selection of

entertainment program formats to the judgment of

hroadcasters, subject to the economic discipline of

market forces, was the best method of achieving the

necessary level of program diversity.” The contrary

decision of the court of appeals not only supplants

a reasonable administrative interpretation; it also

confronts the agency with intractable administrative

problems wholly unintended by Congress.

limited types of programs and forbid the broadcasting of

other types. See e.g., Red Lion Broadcasting Co. v. FCC,

supra; FCC v. Pacifica Foundation, 438 U.S. 726 (1978).

However, the Commission’s reasoned determination here was

that intrusive regulation was not necessary to achieve the

statutory objective of program diversity, and that the public

interest would better be served by the free functioning of

competition than by government fiat.

1S The decision below implies that the Commission ignored

the rights of the listening public in reaching its conclusion

(App. A, infra, 37a-39a). However, the Commission is of the

view that it must take as much interest in the rights of

listeners who would be deprived of the benefits of proposed

new formats as of those who would lose existing formats.

Unlike the court below (id. at 37a), the Commission was not

20

The difficulties of defining entertainment formats

and determining whether other stations provide ade-

quate “‘substitute” formats are substantial. More-

over, determining the actual program preferences of

listeners presents formidable difficulties because there

is no feasible method to measure the intensity of

listener preferences for particular types of program-

ming." In addition, the Commission properly char-

acterized the court of appeals’ requirement that it

determine whether a format might have been finan-

cially viable, rather than whether the station in fact

was financially successful, as an “almost fantastically

speculative” task. 60 F.C.C.2d at 863 n.5.

willing to justify governmental intervention on the basis of

its own subjective or “common sense” view of how listeners

are likely to react to format changes.

‘* Both expert testimony adduced at the Commission hear-

ing énd a study prepared by the Commission’s staff demon-

strated that efforts to maximize diversity in entertainment

programming through a regulatory scheme such as the “for-

mat doctrine” could produce results contrary to the public

interest (60 F.C.C.2d at 864, 872-875). That is true because

“[t]here is no way to determine the relative values of two

different types of programming in the abstract. This is a prac-

tical, empirical question, whose answer turns on the intensity

of demand for each format” (id. at 864). Moreover, “there ex-

ists no acceptable, reliable way of measuring” the intensity of

listener preferences for a particular format because con-

sumers are not required to pay to listen to radio (id. at 873).

Because of the inability of the Commission to obtain this

information, it concluded that it would have no rational basis

to determine whether the public interest would better be

served by continuation of the station’s existing format or

by an entirely new format (60 F.C.C.2d at 864).

21

The decision of the court of appeals fails to take

account of the practical problems implicit in its rul-

ing. While reaffirming the Commission’s obligation to

determine the uniqueness of endangered formats, the

a\zi'ability of alternative programming, and the fi-

nancial viability of particular formats, the court of

appeals asserts that the Commission “need not con-

sider the public interest implications of format aban-

donment” when those questions are not present (App.

A, infra, 5a). That, of course, ignores the Com-

mission’s obligation to render a decision when those

questions do arise. Moreover, it is no answer to as-

sert that “‘no public interest issue arises if there is

an adequate substitute for the endangered format

within the service area” (App. A, infra, 6a). This

disclaimer begs the difficult question, inherent in

the format doctrine, of determining when an “ade-

quate substitute’’ may properly be said to exist.

The court’s asserted willingness to defer to Com-

mission discretion in adopting procedures to reduce

administrative difficulties offers little comfort. It is

clear, for example, that the court will continue to

demand that the Commission maintain ‘“administra-

tive means * * * [that are] capable of identifying

and rectifying those infreouent situations in which

market allocation has failed and in which the public

interest would not be served by granting the appli-

cation.” App. A, infra, 31a. The Commission is

thus required to continue to make determinations re-

garding uniqueness, availability of alternative pro-

gramming, and financial viability, which it has con-

22

cluded it cannot render in a principled and rational

manner,"?

Finally, the court of appeals refused to come to

grips with the most fundamental administrative dif-

ficulty inherent in the “format doctrine”—what is

' The court Suggested two ways of minimizing the Com-

mission's problem of format classification. The court first said

the Commission “could arrive by rulemaking at a format

taxonomy which, even if imprecise at the margins, would be

Sustainable so long as not irrational,” App. A, infra, 29a,

But it is in those cases “at the margins” where outcome

of any format classification rule in marginal cases,

The court's alternative Suggestion was to “dispens[e] al-

together with the need for classifying formats by simply

taking the existence of significant and bena fide listener

Protest as sufficient evidence that the Station's endangered

programming has certain unique features for which there

are no ready substitutes in the service area.” App. A, infra,

30a note 47. Aside from the obvious difficulty of defining

what isa “significant” protest in the particular cizcumstances,

the court’s suggestion is of help only in turning back hearing

requests; it is of no assistance once the case goes to hearing

or decision. At that stage, the Commission must attempt to

evaluate the proffered evidence of uniqueness and substituta-

bility. Moreover, the court’s vague Suggestion that the Com-

mission might “require a relatively high leye] of public grum-

bling” (id. at 30a) ignores the difficulties the Commission

Would face jn tailoring such a requirement to markets of

different sizes and in ensuring that the “grumbling” reflects

a decided preference of listeners for existing formats rather

than proposed formats.

Significantly, the court had no Sugvestion for reducing the

complexity of the financial Viability question or minimizing

the likelihood that that question Would have to be resolved

ina hearing.

23

the Commission’s obligation when it determines, con-

sistent with the court’s rulings, that the public inter-

est will not be served by the broadcaster’s proposed

change of program format? While the court stated

that the Commission “has no authority * * * to inter-

fere with licensee programming choices,” it failed to

explain why denial of an application to renew or

transfer a license would not result in the forbidden

“interference.” If the court’s format doctrine has any

meaning at all, it must necessarily require that, in

some instances, the Commission will “interfere” with

the broadeaster’s selection because the public interest

would better be served by alternative programming.”

5. The failure of the court of appeals to give ade-

quate consideration to the constitutional implications

of its holding is an additional ground for review by

this Court. The Commission correctly identified the

First Amendment values that are threatened by the

unnecessarily intrusive regimen of format regulation.

See 57 F.C.C.2d at 585; 60 F.C.C.2d at 865; 66 F.C.C.

2d at 82-83. The risk of losing a license or an oppor-

tunity to transfer a license due to changes in pro-

gram format (whether or not a hearing is in fact

required) will substantially “chill” a broadcaster’s

'* The court’s prior decision in WEFM makes this point ex-

plicitly (506 F.2d at 268):

We think it axiomatic that preservation of a format

[which] would otherwise disappear, although econom-

ically and technologically viable and preferred by a sig-

nificant number of listeners, is generally in the public

interest.

24

willingness to abandon present formats and deter

experimentation in new formats.’® In addition to

these “chilling” effects, the court of appeals’ format

doctrine would inevitably place the Commission in the

position of deciding, at least in some cases, the rela-

tive “public interest” benefits of different types of

entertainment programming.

In CBS v. Democratic National Committee, supra,

412 U.S. at 126-127, this Court held that the Com-

mission could reasonably conclude that the price to

be paid in the form of increased government inter-

ference with the freedom of broadcasters was too

high to justify marginal benefits of broadcast diver-

sity. In this case, similarly, the Commission deter-

mined that even if diversity gains could be derived

from regulation of program formats, those benefits

were far outweighed by the disadvantages of govern-

ment intervention in programming decisions—mat-

ters Congress intended to leave to private discretion.

60 F.C.C.2d at 865.

1° The court’s suggestion that the Commission might “ex-

empt from the hearing requirement formats adopted experi-

mentally and sought to be abandoned after a very short

period of time” (App. A, infra, 31a) hardly eliminates the

First Amendment problem. It simply adds another layer of

government regulation. Apparently, the court would have the

Commission determine (presumably in advance) what is a

realistic but “very short” experimentation period for partic-

ular format types. Implementation of this proposal would be

well beyond the ken of the Commission, given wide variations

from community to community in entertainment tastes, mix

of existing formats, market structure, and competitive re-

sponses.

25

As Judge Bazelon explained, “regulation of enter-

tainment formats is not content neutral. The regu-

lator is inevitably led to favor some forms of expres-

sion over others” (App. A, infra, 42a). So long as

the Commission is obligated to determine whether a

broadcaster’s proposed abandonment of one type of

programming in favor of another “better serves” the

public interest, the agency inevitably will face situa-

tions in which it must find that new formats selected

by broadcasters must be rejected. In those cases the

Commission would be required to override the broad-

caster’s discretion (and the First Amendment inter-

ests of its listeners) by refusing to renew its license

or by denying transfer of that license unless the

proposed new programming is abandoned.

The court of appeals shrugged off these consti-

tutional difficulties with the statement that it “found

no constitutional impediment,” and by denying that

its format doctrine requires the Commission “to in-

terfere with licensee programming choices” (App.

A, infra, 25a, 33a). Yet it is plain that an obliga-

tion to pass judgment on the public interest value of

new entertainment formats proposed by radio sta-

tions to take the place of unique formats previously

employed is the clearest consequence of the court’s

decision. If, as the Commission found, the statutory

goal of program diversity can be achieved without

this substantial abridgment of programming discre-

tion, the decision of the court of appeals poses an un-

necessary threat to First Amendment freedoms that

ought to be avoided.

26

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

WADE H. McCREE, Jr.

Solicitor General

Louis F. CLAIBORNE

Deputy Solicitor General

STEPHEN M. SHAPIRO

Assistant to the Solicitor General

DAVID J. SAYLOR

Deputy General Counsel

DANIEL M. ARMSTRONG

Associate General Counsel

C. GREY PASH, JR.

Attorney

Federal Communications Commission

NOVEMBER 1979

la

APPENDIX A

United States Court of Appeals

FORK THE DISTRICT OF COLUMBIA CIRCUIT

No. 76-1692

WNCN LISTENERS GUILD AND CITIZENS

COMMUNICATIONS CENTER, PETITIONERS

V.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA, RESPONDENTS

AMERICAN BROADCASTING COMPANIES, INC.

NATIONAL ASSOCIATION OF BROADCASTERS, INTERVENORS

No. 76-1793

CLASSICAL RADIO FOR CONNECTICUT, INC., AND

COMMITTEE FCR COMMUNITY ACCESS, PETITIONERS

Vv.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA, RESPONDENTS

NATIONAL ASSOCIATION OF BROADCASTERS

CORNHUSKER TELEVISION CORP., ET AL., INTERVENORS

2a

No. 77-1951

THE OFFICE OF COMMUNICATION OF THE

UNITED CHURCH OF CHRIST, ET AL., PETITIONERS

Ve

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA, RESPONDENTS

METROMEDIA, INC.,

NATIONAL RADIO BROADCASTERS ASSOCIATION,

NATIONAL BROADCASTING COMPANY, INC.,

CBS, JINC., INTERVENORS

Petitions for Review of Orders of

the Federal Communications Commission

Argued February 7, 197%

Decided June 29, 1979

Before WRIGHT, Chief Judge, and BAZELON, MCGOWAN,

TAMM, LEVENTHAL, ROBINSON, MACKINNON, Ross, and

WILKEY, Circuit Judges.

Opinion for the court, concurred in by Chief Judge

Wricut. and Circuit Judges LEVENTHAL,. ROBINSON,

Rope, and WILKEY, filed by Circuit Judge MCGOWAN.

Concurring opinions filed by Circuit Judges BAZELON

and LEVENTHAL.

Dissenting opinion filed by Cireuit Judge TAMM. Cir-

cuit Judge MACKINNON joins in Circuit Judge TAMM'’s

dissenting opinion.

8a

McGowan, Circuit Judge: In cases culminating with

Citizens Committee to Save WEFM v, FCC, 506 F.2d

246 (D.C. Cir. 1974) (en banc), this court, always in

the context of the Federal Communications Commission’s

statutory responsibility to pass upon voluntary assign-

ments of radio licenses, construed that responsibility as

comprehending the issue of whether the proposed aban-

donment of a distinctive programing format was in the

public interest. In particular, we said that, where a

significant sector of the listening community, in opposi-

tion to the assignment, protests the loss of such a format

by substantial factual allegations that it is both unique

and financially viable, the statute requires that the Com-

mission hold a hearing.

Thereafter the Commission, after notice and comment

proceedings, issued a “policy statement” disagreeing with

WEFM, arguing that the public interest in diversity of

entertainment formats is best served by unregulated com-

petition among licensees, and urging this court to repudi-

ate the approach it has taken. Memorandum Opinion and

Order, 60 F.C.C, 2d 858 (1976) [Policy Statement] ;

66 F.C.C, 2d 78 (1977) [Denial of Reconsideration).

Citizens groups interested in fostering and preserving

distinctive entertainment formats petitioned this -court

for review.* We set the case for hearing en banc be-

* Petitioners in this consolidated review proceeding are

WNCN Listeners Guild and Citizens Communications Center

(No. 76-1692); Classical Radio for Connecticut, Inc. and

Committee for Community Access (No. 76-1793) ; and Office

of Communication of the United Church of Christ, Mexican

American Legal Defense and Education Fund, National

Latino Media Coalition, National Council of La Raza, Bilin-

gual Bicultural Coalition on Mass Media, American G.I.

Forum, and Public Communication, Inc. (No. 77-1951).

Amici in support of petitioners are Classical Music Sup-

porters, Inc., Committee for Open Media, Consumer Federa-

da

cause no panel of the court could overrule our en banc

holding in WEFM as the Commission requested.' Unper-

suaded that our reading of the Act is wrong, we decline

the Commission's invitation to announce vur abandon-

ment of it.

I

A.

The basic premise of our format cases* is that the

Communications Act’s “public interest, convenience, and

necessity’ * standard inciudes a concern for diverse en-

tion of America, Friends of WONO, Inc., and Louisiana

Center for the Public Interest.

Intervenors on respondents’ behalf are American Broad-

casting Companies, Inc., CBS, Inc., Cornhusker Television

Corporation, Covenant Broadcasting Corporation, Covenant

Broadcasting Corporation of Louisiana, Inc., Covenant Radio

of Oklahoma, Inc., Fetzer Broadcasting Company, Fetzer Tele-

vision Corporation, KOOL Radio-Television, Inc., KTOK

Radio, Inc., McClatchy Newspapers, Medallion Broadcasters,

Inc., Metromedia, Inc., National Association of Broadcasters,

National Broadcasting Company, Inc., National Radio Broad-

casters Association, Newhouse Broadcasting Corporation,

Palmer Broadcasting Company, Plough Broadcasting Com-

pany, Inc., Radiohio, Incorporated, Rusk Corporation, and

WBNS-TV, Inc.

' See Home Box Office, Inc. v. FCC, 567 F.2d 9, 32 (D.C.

Cir. 1977), cert. denied, 434 U.S. 829 (1977) (Policy State-

ment constitutes “request to this court to reconsider its posi-

tion in WEFM.”)

2? Citizens Comm. to Save WEFM vy. FCC, 506 F.2d 246

(D.C. Cir. 1974) (en banc); Citizens to Keep Progressive

Rock v. FCC, 478 F.2d 926 (D.C. Cir. 1973); Lakewood

Broadcasting Serv., Inc. v. FCC, 478 F.2d 919 (D.C. Cir.

1973); Citizens Comm. to Preserve the Voice of Arts in

Atlanta v. FCC, 436 F.2d 263 (D.C. Cir. 1970). See also

Hartford Communications Comm. v. FCC, 467 F.2d 408 (D.C.

Cir. 1972).

*Communications Act §§309(a); 310(b), 47 U.S.C.

§§ 309(a); 310(b).

5a

tertainment programing. Congress set aside the radio

spectrum as a public resource and acted to secure its

benefits, not only to those in the cultural mainstream, but

to “all the people’ * of our richly pluralistic society. It

“is surely in the public interest,” therefore, “as that was

conceived of by a Congress representative of all the peo-

ple, for all major aspects of contemporary culture to be

accommodated by the commonly-owned public resources

whenever that is technically and economically feasible.”

Citizens Committee to Preserve the Voice of Arts in

Atlanta v. FCC, 486 F.2d 268, 269 (D.C. Cir. 1970).

Congress delegated to the Commission the task of

ensuring that the license grants are used in the public

interest. In particular, the Commission must sometimes

consider the loss of diversity (together with other factors

bearing on the public interest) when deciding assignment

applications involving abandonment of existing formats.

It must take a “hard look” at the salient problems, in-

cluding loss of diversity, when making this public inter-

est determination. Greater Boston Television Corp. v.

FCC, 444 F.2d 841, 851 (D.C. Cir. 1970), cert. denied,

403 U.S. 923 (1971).

The Commission need not consider the public interest

implications of format abandonment, however, when there

are compelling indications that the loss in diversity is not

serious or that the assignment is otherwise clearly in the

public interest. For example, if notice of the change does

not precipitate an outpouring of protest,’ the Commission

may properly assume that the proposed format is ac-

‘ National Broadcasting Co. v. United States 319 U.S. 190,

216-17 (1943) (emphasis added).

"See WEFM, supra, 506 F.2d at 254 (over 1,000 protest

letters to the Commission) ; Progressive Rock, supra, 478 F.2d

at 928 (11,000 signatures); Atlanta, supra, 436 F.2d at 265

(over 2,000 signatures on protest letters and petitions).

6a

ceptable." Similarly, even if a committed and vocal

minority engages in significant public grumbling, no

public interest issue is raised if their preferred format

is the choice of a population segment too small to be ac-

commodated by the available frequencies.’ Finally, no

public interest issue arises if there is an adequate sub-

stitute for the endangered format within the service

area.” In these situations the evidence is strong that the

assignment will not result in a troublesome diminution

of format diversity. Further, if the format itself is

shown to be economically unfeasible in the particular

market—i.e., if even an efficiently managed station would

have no realistic prospect of economic viability—then

abandonment of the existing format does not contravene

the public interest and the Commission need not pursue

by hearing the alleged loss of diversity.’

If the record presents substantial questions of fact

material to the public interest, including the public

interest in diversity, the Commission must hold an evi-

dentiary hearing.'’ However, no hearing is required

*See WEFM, supra, 506 F.2d at 262 n.21; Progressive

Rock, supra, 478 F.2d at 934; Lakewood, supra, 478 F.2d

at 924 n.9.

7 In Atlanta, for example, a public interest issue was raised

when 16% of the listeners in an area served by 20 radio chan-

nels preferred the “classical” format available in only one of

such channels. On the other hand, we noted that a switch to

the format preferred by the majority would make perfect

sense if there were only one available channel. 436 F.2d at

269.

*WEFM, supra, 506 F.2d at 262-265; Progressive Rock,

supra, 478 F.2d at 929 n.6, 932; Lakewood, supra, 478 F.2d

924 n.10; Atlanta, supra, 436 F.2d at 271-72.

*WEFM, supra, 506 F.2d at 262; Progressive Rock, supra,

478 F.2d at 931; aee Atlanta, supra, 436 F.2d at 270.

Under § 309(a) of the Act, 47 U.S.C. § 309(a), the Com-

mission must determine, with respect to a license application,

Ta

when the record presents no substantial questions of

material fact. If the only issues of substance are the

inferences and legal conclusions to be drawn from known

facts, the Commission is free to make the public interest

determination and decide the application before it.’'

Even when the record otherwise presents substantial fact

issues, a hearing is unnecessary if undisputed facts

whether the public interest, convenience and necessity would

be served thereby and, if it so determines, must yrant the

application. Assignment or transfer applications are subject

to the same standards and treated in the same manner, 47

U.S.C. §310(d); see id. §§ 308, 309(a). Section 309(d) (1),

47 U.S.C. § 309(d) (1), provides that any party in interest

may petition the Commission to deny the application, and that

such petition “shall contain specific allegations of fact suffi-

cient to show... that a grant of the application would be

prima facie inconsistent with [the public interest, convenience

and necessity].” Section 309(d) (2), 47 U.S.C. § 309(d) (2),

provides:

If the Commission finds on the basis of the application,

the pleadings filed, or other matters which it may officially

notice that there are no substantial and material ques-

tions of fact and that a grant of the application would

be consistent with [the public interest, convenience, and

necessity], it shall make the grant, deny the petition, and

issue a concise statement of the reasons for denying the

petition, which statement shall dispose of all substantial

issues raised by the petition. If a substantial and material

question of fact is presented or if the Commission for any

reason is unable to find that grant of the application

would be consistent with [the public interest, conven-

ience, and necessity], it shall proceed as provided in sub-

section (e) of this section.

Subsection (e) governs the procedures for setting the appli-

ca‘ion down for a hearing and notifying interested parties,

and, in the case of issues presented by a petition to deny,

authorizes the Commission to assign the burden of going for-

ward ana the burden of proof.

' Progressive Rock, supra, 478 F.2d at 930-931; Lakewood,

supra, 478 F.2d at 924.

8a

establish any one of those situations discussed above in

which no public interest issue arises. Thus, a hearing

will rarely be needed to determine that (1) there has

been no out-pouring of public protest to the format

change, (2) the endangered format’s devotees are too

few to be accommodated by the available frequencies,

(3) there is an adequate substitute in the service area,’

or (4) the format itself is financially unviable.'*

B.

In response to our WEFM decision, the Commission on

January 19, 1976 proposed to reexamine the format

question. Development of Policy Re: Changes in the

Entertainment Formats of Proadcast Stations, 57 F.C.C.

2d 580 (1976) [Notice of Inquiry]. It expressed “deep| ]

concern(|” that WEFM threatened “serious adverse con-

sequences for the public interest,” id. at 582, and doubted

that “a system of pervasive governmental regulation,”

id., could do a better job than concededly imperfect

market forces. The “quagmire” of administratively dis-

tinguishing among formats militated against regulation,

as did the possibility that broadcasters, to avoid being

locked in to an unprofitable format, would cease experi-

menting with unusual programing approaches. /d. at

582-84. The “policy,” as the Commission chose to char-

acterize it, imposed by this court also raised questions

under the First Amendment warranting “prompt and

thorough review.” Jd. at 585. The Commission, in short,

was “concerned that the course charted by the Court may

lead only to expense, delay and stagnation, with no as-

surance that a decision finally reached by the Commission

would be in any sense superior to ‘or more in the public

12 Lakewood, supra, 478 F.2d at 924 n.10; compare Pre

gressive Rock, supra, 478 F.2d at 932.

'3 Lakewood, supra, 478 F.2d at 921-22 n.2, 924 n.11.

9a

interest than) that favored by the marketplace.” Jd. at

584.

In light of these misgivings, the Commission proposed

to reconsider whether it “should play any role in dictat-

ing the selection of entertainment formats.” Jd. It so-

licited public comments on the statutory and constitu-

tional considerations described above. It also invited

“(plarties who favor some degree of government in-

volvement” to address a number of questions‘ bearing

14 (a) When should the Commission become involved in

format changes—i.e., in all cases or only those where

there is a significant public outcry? See Citizens Com-

mittee to Keep Progressive Rock, supra at 934. Also, how

do you determine significant public outcry?

(b) Should the Commission attempt to categorize en

tertainment formats and, if so, on what basis?

(c) Other than a general objection to a proposed

change in entertainment format, what burdens should

be placed on members of the public to demonstrate that a

unique format is being abandoned?

(d) If an applicant proposes to change from an alleged

unique format, what showing is necessary to justify the

proposed change? Also, if financial hardship is alleged,

what showing should be submitted by an applicant justi

fying the losses?

(e) In cases of an alleged unique format, what con-

sideration should be given to factors such as: (i) the

similarity of other formats in the market; (ii) the popu-

lation and areas served by broadcast facilities; (iii) the

audience of the respective stations; (iv) the hours of

operation, type of service (e.g., AM, FM, educational),

and the like? Further, in hearing cases involving alleged

unique formats, what should be the burdens of the re-

spective parties?

(f) If an applicant proposes to change from one

unique format to another, should a hearing be held to

determine which will better serve the public interest?

[Continued]

léa

on the practical implementation of WEFM."

'* [Continued]

(g) Should the Commission consider a change from an

alleged unique format only when the station is being sold,

at license renewal time, or at other times?

(h) Is the maximization of program diversity neces-

sarily in the public interest? That is, does the maximi-

zation of entertainment formats necessarily result in the

maximization of consumer satisfaction?

57 F.C.C. 2d at 584-85.

‘S Chairman Wiley wrote a separate statement emphasiz-

ing the subjectivity of classifying formats and criticizing

WEFM for erecting barriers to entry to successful entertain-

ment formats. Commissioner Robinson contributed a concur-

ring statement expanding on the Notice of Inquiry and

criticizing WEFM, in addition, for placing the entire weight

of the obligation to promote diversity on the licensee planning

to abandon a “unique” format.

Commissioner Hooks, in a separate concurring statement,

stressed the difficulties minority audiences experience in re-

ceiving their preferred programing. In his view, WEF M

did not demand “format allocation on a grand scale and a

system of intimate monitoring.” /d. at 589. Believing that the

Commission's energies were better spent “devising tenable

standards to apply rather thar battling speculative aber-

rations,” he suggested a “common sense” reading:

To determine whether a format is unique in the com-

munity, I would use only a threshold test of conspicuous

generic equivalence .... To determine whether there is

significant grumbling” about a proposed format change,

I would compare the magnitude of the protest to the

magnitude of the service area using a zone of reasonable-

ness concept. I would interpret economic feasibility as

consistent with a profit comparable to the average sta-

tion in the market (or like market) since ! don't believe

the court expects anybody to labor for less than fair

recompense.

Id.

lla

Comments were filed, and on July 30, 1976, the Com-

mission repudiated the WEFM decision on four principal

grounds. First, WEFM misread the Communications

Act because it imposed “common carrier-like” obligations

in violation of congressional intent that broadcasters com-

pete freely’ and not function as common carriers."

Policy Statement, supra, 60 F.C.C. 2d at 859-61. Second,

the administrative record—in particular a Commission

staff study appended to the Policy Statement—demon-

strated that competition was highly effective in producing

format diversity. Competition, in the Commission’s view,

has resulted in an “almost bewildering array” of formats

in major markets, id. at 863, and has facilitated listener

choice among stations broadcasting the same format, id.

at 863-64; conversely, regulation under WEFM would

probably deter innovative programing. Jd. at 865. Third,

administering WEFM would pose vexing administrative

problems: formats are difficult to categorize and the costs

of a hearing would be enormous, particularly since the

doctrine applies logically in license renewals as well as

in assignment applications. Jd. at 861-63, 864-65. Final-

ly, WEFM improperly invaded First Amendment inter-

ests by chilling broadcasters’ programing choices and

by imposing an obligation to continue service. In short,

WEFM would impose “comprehensive, discriminating,

and continuing state surveillance,” '* which the Commis-

sion believed

1®The Commission quoted FTC v. Sanders Bros. Radio

Station, 309 U.S. 470, 475 (1940):

Congress intended to leave competition in the business

of broadcasting where it found it, to permit a licensee

who was not interfering electrically with other broad-

casters to survive or succumb according to his ability

to make his programs attractive to the public.

17160 F.C.C. 2d at 859-60, citing §3(h) of the Act, 47

U.S.C. § 153(h), set forth at note 36 infra.

1860 F.C.C. 2d at 865, citing Lemon v. Kurtzman, 403 U.S.

602, 619 (1971).

12a

would be flatly inconsistent with our understanding

of congressional policy as manifested in the Com-

munications Act, contraproductive in terms of maxi-

mizing the welfare of the radio-listening public,

administratively a fearful and comprehensive night-

mare, and unconstitutional as impermissibly chilling

innovation and experimentation in radio program-

ming.

Id. at 865-66.

The Policy Statement concluded with a comment on the

“partnership” between the Commission and the Court of

Appeals. Id. at 865, citing Greater Boston Television

Corp. v. FCC, 444 F.2d 841, 851-52 (D.C. Cir. 1970),

cert. denied, 403 U.S. 923 (1971). In the Commission’s

view, “when such ‘partners’ come to a point of funda-

mental disagreement, it is incumbent upon us to take a

step back and rethink our entire position if this relation-

ship is to be creative rather than destructive.” 60 F.C.C.

2d at 865. The Commission contended that in the present

docket it had engaged in such a reconsideration; by im-

plication, it requested this court also to take a step back

and rethink our WEFM decision. However, the Com-

mission vowed to implement fully WEFM’s specific man-

date that a hearing be held in that case. Further, it

stayed implementation of its “new policy” until the com-

pletion of judicial review thereof. Jd. at 866."°

18 Commissioner Robinson wrote a separate statement en-

dorsing the majority opinion and reiterating his view that

WEFM imposed unfair burdens on the licensee proposing

to abandon a unique format. He also added a word about the

proper roles of court and agency:

Just as the Court doubtless does not intend by this or

any other expression to suggest that it has the responsi-

bility for original formulation of communications policy

or de novo review of Commission actions . . . so it should

not be understood by our action here that we construe this

partnership notion to give us the right to overrule the

=

l3a

The Commission attached two appendices to its Policy

Statement. Appendix A was a summary of the com-

ments pro and con on the various issues raised by the

Notice of Inquiry. Appendix B was a staff document,

prepared after the close of the comment period, which

argued on theoretical and empirical grounds that WEFM

was not superior to the free market and that competition

among licensees had resulted in a high degree of format

diversity. Using statistical techniques to test the hypo-

thesis that format type has no effect on audience ratings

—i.e., roughly, that the degree of variation in audience

share among stations programing the same format was

as great as the variation among stations programing dif-

ferent formats—the staff concluded that, although format

type did have a statistically significant impact on audi-

ence share, the magnitude of that impact was small. In

the staff’s view, this study demonstrated WEFM’s “de-

cisive flaw” in assuming that duplication of stations

within a format is wasteful in terms of listener satis-

faction. Jd. at 873.

Court’s mandate. While we draw on this partnership con-

cept to support our firm expression of independent views

on this matter contrary to those of the Court of Appeals,

I trust all will recognize that we do so in the respectful

posture of a junior partner who knows how to march

once the marching orders have been authoritatively pro-

nounced—one and for all.

60 F.C.C. 2d at 883.

Commissioner Hooks dissented because “‘the majority does

not provide a mechanism to ensure service to significant

minority tastes and needs if market forces do not.” Jd. at 882.

He believed it incumbent on the Commission to make an

especially searching examination of license assignment pro-

posals involving loss of unique formats, and reiterated his

belief that the Commission could adopt an approach to im-

plementing the WEFM decision that minimized its intrusive

features.

l4a

On August 25, 1977, the Commission refused to recon-

sider the Policy Statement. Denial of Reconsideration,

supra.”°

II

Although the Commission claims to have taken a “step

back” and impartially reexamined the issue, its treatment

of the format decisions, and of citizens groups seeking to

enforce them, has been such as to cast serious doubt on

the rationality and impartiality of its action. Two facets

of the Policy Statement stand out in this connection: the

Commission’s reliance on a previously undisclosed staff

study, and its contention that enforcing WEFM would

be an “administrative nightmare”.

A.

Even a brief perusal of the Policy Statement reveals

that the staff study, which was issued as Appendix B

thereto, had a major influence on the decision. The Com-

mission cited it in the body of the Policy Statement as

showing “decisively . . . how effective the tool of com-

petition has been in carrying out Congress’ plan for en-

tertainment programming”;* as supporting the con-

clusion that ‘the marketplace is the best way to allocate

entertainment formats in radio”; ** and as strongly indi-

cating that listeners carefully discriminate among sta-

tions programing the same format.** In view of the

study’s importance, we might have expected that, before

2° Commissioner Fogarty, a recent appointee, concurred “to

the extent [the Denial] respectfully seeks further judicial

guidance,” 66 F.C.C. 2d at 86, but expressed “basic agree-

ment” with the thrust of WEFM. Commissioner Hooks dis-

sented without opinion.

2! Policy Statement, supra, 60 F.C.C. 2d at 861.

22 Id. at 863.

23 Id.

lia

reaching a decision, the Commission would release it for

adversarial testing of its data base, methodology, and

conclusions. See generally United States v. Nova Scotia

Food Products Corp., 568 F.2d 240, 251-52 (2d Cir.

1977; Portland Cement Ass’n v. Ruckelshaus, 486 F.2d

375, 392-94 (D.C. Cir. 1973), cert. denied, 417 U.S. 921

(1974) ; International Harvester Co. v. Ruckelshaus, 478

F.2d 615, 631-33 (D.C. Cir. 1973). Yet it appears that,

prior to the issuance of the Policy Statement, only the

Commission itself knew of the study’s existence.

The Commission’s failure to disclose this important

technical document for public comment not only dimin-

ishes the assurance that its decision is substantively

accurate, but also raises questions of procedural fairness

to the parties opposed thereto. Aggravating the pro-

cedural aspect in the present case are certain state-

ments made by the Commission in response to in-

quiries from citizens groups. Several times during

the comment period, for example, petitioners requested

the Commission to contract for an independent study of

format diversity, J.A. at 145, 153; id. at 160, 161; id. at

237, 238. Petitioners argued that the Notice of Inquiry

lacked a sufficient data base, that tne industry-commis-

sioned studies filed during the comment period were

biased, and that petitioners did not have the resources

to fund their own studies. The Commission denied these

requests on February 19, 1976, and May 24, 1976, J.A.

at 164, 169; td. at 247, 248. On March 29, 1976—four

months before the issuance of the Policy Statement—the

Commission’s Broadcast Bureau responded to a Freedom

of Information Act request for “all data, reports and

memoranda utilized or proposed to be utilized by the

Commission in this proceeding .. .,” J.A. at 48, without

indicating that it planned to use a staff study in deciding

the /nquiry. Although perhaps accurate when made,

these statements created the somewhat misleading im-

l6a

pression, which the Commission could usefully have cor-

rected, that no studies would be undertaken.

The Commission argues that the parties had an ade-

quate opportunity to comment on the study on petition

for reconsideration. The heavy burden on any petitioner

for reconsideration, however, surely makes the oppor-

tunity to comment at this stage a less than adequate

substitute for the chance to influence the Commission’s

initial decision. That the Commission was not open-

minded at this stage is evident from the record. It ap-

parently required a Freedom of Information Act request

for petitioner Citizens Communications Center to obtain

a description of the methodology used in preparing the

study. J.A. at 68-87. This description was provided on

September 15, 1976, two weeks after the expiration on

the time period for reconsideration petitions.

Even if we accepted at face value the Commission’s

representation that it would have considered a request

for reconsideration filed out of time if based on newly-

disclosed material, our misgivings would not be fully

assuaged. The Commission's Freedom of Information

Act response contained computer worksheets which were

obscure if not incomprehensible to readers lacking a key

to the meaning of the figures. Citizens Communications

Center requested such a key in a letter to the Commission

dated March 22, 1977. J.A. at 100-100A. The Commis-

sien’s response, which contained such a key, see J.A. at

573-75, was apparently sent only to the Citizens Com-

munications Center and not to other petitioners as might

have been expected had the Commission acted out of a

good faith desire to obtain comments on the study. Some

petitioners claim that the first they knew of this key

was when the Commission designated it for inclusion in

the Joint Appendix filed in this court. In short, it is open

‘o serious question whether even after issuance of the

Policy Statement the petitioners were given information

17a

about the study’s design and data base sufficient to allow

meaningful comment thereon, and whether, if such com-

ment had been feasible, the Commission would have re-

ceived it with an open mind.**

B.

One of the Commission’s principal grounds for repudi-

ating the format decisions was the contention that im-

plementing them would be an “administrative night-

mare”’, imposing “enormous costs on the participants and

the Commission alike.” ** The hearing on remand from

the WEFM decision, which was said to be “fairly typical”

of format abandonment proceedings, involved the fol-

lowing:

{A]n administrative law judge held two prehearing

conferences in Washington, D.C.; his preparation

time was an additional eight hours. In addition the

Broadcast Bureau trial staff spent above two hun-

dred man-hours of preparation time. Subsequently,

hearings were held on nine separate dates in Wash-

ington, D.C., and on nine different dates in Chicago,

from which a transcrip of 3120 pages was compiled.

Following the hearings, the Broadcast Bureau spent

two hundred and forty hours preparing proposed

findings of fact and the administrative law judge

will have spent approximately two hundred and

eighty hours preparing his initial decision.**

*4 Petitioners urge this defect as an independent ground

for overturning the Commission. We agree that the study

does raise serious questions about the overall rationality

and fairness of the Commission’s decision. However, be-

cause certain broader defects, of which the study is symp-

tomatic, are fatal to the Commission's action, we need not

decide whether the failure to obtain public comment on the

study is itself of sufficient gravity to warrant rejection of

the Policy Statement.

2° 60 F.C.C. 2d at 865, 864.

24 Id. at 864-65.

18a

The Commission was particularly concerned with the

burden of such hearings because, in its view, they would

also be required when a licensee that had changed its

format mid-term ‘without transferring the license) ap-

plied to the Commission for license renewal.*’

While we do not wish to minimize the burdens of a

format abandonment hearing, the truth is that in the

sunlight of the facts the Commission's ‘administrative

nightmare” turns out to be little more than a dream.

The Commission professes that it has sought in good

faith to administer format changes ever since the Atlanta

decision in 1970. An examination of the actual burdens

imposed on the Commission by the cases that have reach-

ed this court during that period—all involving license

assignment applications—is highly instructive.

In Affenta, this court reversed the Commission's ap-

proval without a hearing of a license assignment involv-

ing a change from classical music to “a blend of popular

favorites, Broadway hits, musical standards, and light

classics,” 436 F.2d at 265, and remanded the case for an

evidentiary hearing on the alleged unprofitability of the

existing operation, the accuracy with which views of

prominent citizens were represented, and the degree to

which listeners were provided with classical music from

other broadcast sources. However, no hearing was held

on remand because the parties settled the matter among

themselves. In Progressive Rock we remanded a case

involving a proposed shift from “progressive rock’ to

“middle of the read” for a hearing on the issues of

financial viab‘lity and alternative sources of the format.

Again the parties apparently settled the dispute and no

hearing was held. In Lakewood, a case involving a pro-

posed switch from “all-news” to “country and western,”

we found no substantial dispute over the issues of finan-

cial viability and alternative sources of the format, and

2 Jd. at 861.

ne

19a

hence upheld the Commission’s approval of the applica-

tion without a hearing.

Finally, in WEFM, we remanded a case involving a

switch from classical to rock music for a hearing on (he

questions of financial viability, accuracy of community

leader surveys, and availability of alternative sources.

A hearing was held, and the Administrative Law Judge

issued an initial decision proposing to grant the appli-

cation. Zenith Radio Corp., F.C.C. 76D-47 (1976), 76D-

46 (1977). Subsequently, however, the parties agreed to

a settlement in which the petitioner to deny agreed to

withdraw its objection in exchange for certain actions

designed to strengthen alternative sources of classical

music in the listening area. The Commission approved

the settlement. Zenith Radio Corp., F.C.C. 78-102, 42

Pike & Fischer Radio Reg. 2d 472 (1978).

In light of this history, the Commission’s fears appear

somewhat less than realistic. In nearly ten years, a mere

haneful of format change cases have reached this court.

Of these, one—Lak+ wood—resulted in the Commission’s

being affirmed on grounds indicating that in many cases

no hearing would be required. Two—Atlanta and Pro-

agressive Rock—were remanded but were settled before a

hearing could be held. In the entire history of the format

cases, only one case—WEFM—has resulted in a hearing:

and even this was settled prior to administrative appel-

lute procedures, The hearing that did occur, although by

no means inconsequential in scope, was nevertheless less

extensive than the typical comparative renewal proceed-

ing." Nor does the burden promise to be significantly

yvreater in the future. At oral argument, the Commis-

sion’s counsel, upon inquiry from the bench, estimated

that “perhaps half a dozen” petitions to deny based on

“* See Note, Judicial Review of FCC Program Diversity

tegulation, 75 CoLuM. L. Rev. 401, 406 n.33 (1975).

20a

format changes were then pending. If past experience is

a guide, few, if any, of these will eventuate in a hearing.

The Commission also argues that the administrative

burden is excessive because format hearings will be re-

quired in the renewal! as well as the transfer context.

We do agree that the format cases logically apply to

renewal applications.**” But we do not believe that renew-

als will open the flood gates to the administrative hear-

ing room, because the safeguards against excessive num-

bers of hearings are as present in the renewal context

as in the assignment context. No hearing will be required

on a renewal application if the abandoned format is

financiai!y unviable, if it is not unique in the listening

area, or if there has been an insufficient outpouring of

public protest against the change.

Apparently recognizing its untenability, the Commis-

sion’s counsel, at oral argument before us, conceded that

the “administrative nightmare” characterization was an

“exaggeration” and personally assured the court that the

argument was not “very significant at all” to the Com-

mission’s decision. Yet this concession does not retro-

actively make rational the Commission's _ ill-advised

reliance on the issue. And we cannot but view with

considerable suspicion an administrative agency's deci-

sion that lays such stress—to the point of almost frenzied

rhetorical excess—on an argument which, in light of the

actual facts, appears so lacking in merit.”

* By the same logic, however, WEFM does not apply to for-

mat changes made mid-term by the licensee, except insofar as

such changes are placed in issue at renewal! time.

” The “administrative nightmare” argument calls to mind

an earlier controversy in which similar contentions were

made. See Office of Communication of United Church of Christ

v. FCC, 359 F.2d 994 (D.C. Cir. 1966) ; Office of Communica-

tion of United Church of Christ v. FCC, 425 F.2d 543 (D.C.

Cir. 1969) ; text at pp. 48-49 infra.

2la

III

The staff study and administrative nightmare issues are

merely the most striking examples of certain more per-

vasive problems. Throughout the format controversy, the

Commission has displayed a deep-seated aversion to the

decisions of this court (and to the advocates of those

decisions) while at the same time misinterpreting and

exaggerating their meaning. Perhaps as a result of these

interrelated defects, the Commission failed to take af-

firmative steps to minimize what it perceived as the intru-

sive features of the format decisions while preserving

their essence.

A.

It has been evident from the start that the Commis-

sion’s response to the format decisions would be some-

thing less than enthusiastic cooperation. Professing time

and again that entertainment programing is very broadly,

if not wholly, committed to licensee discretion,’ the Com-

"In the administrative decisions and briefing to this court

in the Aflanta case, the Commission argued repeatedly that if

the proposed format serves a significant audience segment

then a determination to use that format is a judgment for

the broadcaster to make, not the Commission. Atlanta, supra,

436 F.2d at 269; Glenkaren Assocs., Inc., 14 Pike & Fischer

Radio Rey. 2d 104, 105-106 (1968) (initial decision): 19

F.C.C. 2d 13, 15 (1969) (denial of reconsideration). We

rejected this argument in Atlanta, 436 F.2d at 272.

Our Aflanta decision, however, did not deter the Commis-

sion from pressing its belief in licensee discretion in later

cases, See Charles A. Haskell, 36 F.C.C. 2d 78, 87 (1972),

aff'd on other grounds, Lakewood, supra (public interest

“best served by not hampering a licensee's flexibility in choos-

ing or changing formats”); Twin States Broadcasting, Inc.,

35 F.C.C. 2d 969, 971 (1972), rev'd, Progressive Rock, supra

(format choice “primarily in the discretion of the licensee and

unless it is shown or appears to the Commission that the

format choice is not reasonably attuned to the tastes and

general interests of the community of license, we shall not

22a

mission has never initiated a hearing in a format change

case and has repeatedly urged this court to reverse or

drastically curtail the decisions.** And it instituted the

present proceeding in the nature of rulemaking with the

apparent purpose of overruling the WEFM case. What-

ever its power generally to proceed by rulemaking rather

than adjudication, we think it a somewhat different mat-

ter when the seeming purpose of the rulemaking is the

circumvention of a recent court decision reached in an

adjudicatory context.

These misgivings are not allayed by the record of the

present proceeding. It hardly requires a literary critic

to discern that the Notice of Inquiry’s “questions” about

WEFM were for the most part rhetorical. Those favor-

question the licensee's judgment in these matters”) ; id. at 974

(Commis.ioner Johnson, dissenting) (majority decision is

“clear and direct violation of the law as interpreted by the

Court of Appeals”). Similarly, in Zenith Radio Corp., 40

F.C.C. 2d 223, 230 (1973) (Additional Views of Chairman

Burch), rev'd, WEFM, supra, six of the seven Commissioners

joined in the view that a station’s entertainment program

format “is a matter best left to the discretion of the licensee

or applicants.” Although the Commissioners did promise to

take an “extra hard look” at proposals depriving communities

of unique formats, 40 F.C.C. 2d at 231, this was repudiated in

the Policy Statement here under review. 60 F.C.C. 2d at 866

n.8&.

See, e.g... WEFM, supra, 506 F.2d at 260.17; Progressive

Rock, supra, A478 F.2d at 930 (“[i]t is our distinct impression

.. based on the briefs and oral arguments ... that the Com-

mission desires as limiting an interpretation as is possible.

We suspect, not altogether facetiously, that the Commission

would be more than willing to limit the precedential effect of

'Atlanta) to cases involving Atlanta classical music sta-

tions’): Zenith Radio Corp., 38 F.C.C. 2d 838, 845-46 (1972),

reconsideration denied, 49 F.C.C. 2d 223 (1973), rev'd

WEFM. supra (“extention of [the Atlanta] holding beyond

the limited confines of the facts and circumstances therein

would be most unwise”).

23a

ing WEFM could not have been heartened to read of the

Commission’s “deep[] concern[]” that WEFM “may lead

only to expense, delay and stagnation, with no assurance

that a decision finally reached by the Commission would

be in any sense superior to that favored by the market-

place,” and that the decision might cause “serious ad-

verse consequences for the public interest.” 57 F.C.C. 2d

at 582, 584, 582. The indications in the Notice of Inquiry

that the Commission would not give pro-WEFM com-

ments due consideration were borne out by later events.

Its Policy Statement, as we have noted at length, relied

heavily on a staff study which had not been placed in the

record for public comment. Moreover, the Commission

ignored completely comments, which it had solicited, see

note 14 supra, concerning how WEFM could effectively

be administered.*

B.

Closely related to the Commission’s innate aversion

to our format decistons is its sometimes drastic misread-

ing of those cases. It analyzed the problem in stark

terms: formats are to be chosen either by market forces

or by “the alternative to the imperfect system of free

competition . . . a system of broadcast programming by

government decree.” Denial of Reconsideration, supra,

66 F.C.C. 2d at 81. WEFM, in the Commission’s view, is

the antithesis of the free market: it mandates a “system

of pervasive governmental regulation,” Notice of Inquiry,

supra, 57 F.C.C. 2d at 582, requiring “comprehensive,

discriminating, and.continuing state surveillance.” Policy

Statement, supra, F.C.C. 2d at 865, citing Lemon °.

Kurtzman, 403 U.S. 602, 619 (1971).

Having framed its analysis in Manichaean terms, it is

not surprising that the Commission found numerous

“See J.A. at 206-225 (Comments of WNCN Listeners

Guild): see also id. at 338-341 (Petition for Reconsideration

of Office of Communication of United Church of Christ et al.).

24a

flaws in our format cases. There would no doubt be

severe statutory and constitutional difficulties with any

system that required intrusive governmental surveillance,

dictated programing choices, forced broad access obliga-

tions, or imposed an obligation to continue in service

under any and all circumstances. Moreover, any system

of pervasive regulation of the type envisaged by the

Commission would indeed be an “administrative night-

mare,” a “quagmire” that the agency would be well-

advised to avoid.

The truth is that the actual features of WEFM are

searcely visible in this highly-colored portrait. As we

have emphasized before and repeat today, WEFM was

not intended as an alternative to format allocation by

market forces. We fully recognized that market forces

do generally provide diversification of formats. The li-

censee’s discretion over programing matters is therefore

very broad while the Commission’s role is correspondingly

narrow’ However, we also recognized—as does the Com-

mission—that the radio market is an imperfect reflection

of listener preferences. Because broadcasters earn their

revenues from advertising, they tend to serve young

adults with large discretionary incomes in preference to

demographically less desirable groups like children, the

elderly, or the poor. See WEFM, supra, 506 F.2d at 268.

Further, as is clear from our earlier cases, the Com-

mission’s obligation to consider format issues arises only

when there is strong prima facie evidence that the mar-

ket has in fact broken down. No public interest issue is

raised if ‘1) there is an adequate substitute in the

“ See Progressive Rock, supra, 478 F.2d at 929 (most

format changes do not substantially diminish diversity and

thus may appropriately be left “to the give and take of each

market environment and the business judgment of the

licensee”); Atlanta, supra, 436 F.2d at 272 (licensee has

“considerable latitude in the matter of programming’’).

25a

service area for the format being abandoned, (2) there

is no substantial support for the endangered format as

evidenced by an outcry of public protest, (3) the devotees

of the endangered format are too few to be served by the

available frequencies, or (4) the format is not financially

viable. See text accompanying notes 5-9 supra. One or

another of these factors is surely present is most format

changes. And generally the existence vel non of these

factors can be determined without the need for a hear-

ing. The small remainder of cases are simply those in

which the evidence strongly indicates that market mecha-

nisms have not satisfied the Communications Act’s man-

date that radio serve the needs of all the people.

As we have observed in Part II supra, the Commis-

sion’s administrative nightmare argument is seen to have

little merit when it is remembered that only one of the

handful of format cases reaching this court has resulted

in a hearing. Aiso unpersuasive, in this regard, is the

Commission’s contention that WEFM mandates an un-

constitutional, or at least statutorily proscribed, intrusion

on licensee programing discretion. The Commission laid

particular stress on the argument that licensees will be

deterred from experimenting with unusual formats out

of a fear of being locked in. But it has provided little

or no evidence that WEFM has in fact deterred licensees’

format choices; quite to the contrary, the Commission’s

staff study concluded that under the WEFM regime

licensees have been aggressive in developing diverse en-

tertainment formats.

Finally, we must emphasize the narrowness of the

Commission’s remedial powers. It merely has the power

to take a station’s format into consideration in deciding

whether to grant certain applications. It has no authority

under WEFM to interfere with licensee programing

choices: it cannot restrain the broadcasting of any pro-

gram, dictate adoption of a new format, force retention

26a

of an existing format, or command provision of access to

non-licensees. To say that it is empowered to impose

censorship * or common carrier ** obligations is to stretch

WEFM virtually beyond recognition.

85 See Communications Act § 326, 47 U.S.C. § 326:

Nothing in this chapter shall be understood or con-

strued to give the Commission the power of censorship

over the radio communications or signals transmitted

by any radio station, and no regulation or condition shall

be promulgated or fixed by the Commission which shall

interfere with the right of free speech by means of radio

communication.

This prohibition “has never been construed to deny the Com-

mission the power to review the content of completed broad-

casts in the performance of its regulatory duties.” FCC v.

Pacifica Foundation, 98 S.Ct. 3026, 3033 (1978).

%* See Communications Act §3(h), 47 U.S.C. § 153(h),

which provides in pertinent part that “‘a person engaged in

radio broadcasting shall not, insofar as such person is so

engaged, be deemed a common carrier.”

The central distinguishing characteristic of broadcast com-

mon carriers is that they must provide non-discriminatory

public access to their facilities. FCC v. Midwest Video Corp.,

47 U.S.L.W. 4335, 4338-4340 (Apr. 3, 1979) ; Columbia Broad-

casting Sys., Inc. v. Democratic Nat’l] Comm., 412 U.S. 94,

105-109 (1973). Nothing remotely resembling public access

obligations is involved in the present case. Nor do we find

persuasive the other asserted resemblances between WEFM

and common carrier regulation: it neither obligates broad-

casters to “continue in service,” regulates the rates charged

to advertisers, or prohibits unnecessary duplication of facili-

ties.

* It is also argued by commercial broadcasters that WEFM

contravenes § 310(d) of the Act, 47 U.S.C. §310(d), which

provides, in pertinent part, that in acting on transfer or

assignment applications “the Commission may not consider

whether the public interest, convenience, and necessity might

be served by the transfer, assignment, or disposal of the

permit or license to a person other than the proposed trans-

feree or assignee.” WEFM is said to violate this provision by

27a

C.

The Commission would likely have been less concerned

had it read our format cases more accurately; conversely,

it would probably have better interpreted those cases

had it viewed them more sympathetically. The flaws in

its approach are intimately connected. They intersect in

the Commission’s failure to implement the cases so as to

minimize their drawbacks while preserving their essence.

Had it attempted to develop administrative standards in-

stead of simply abdicating, it might well have discovered

that many perceived “flaws” could be lessened or elimi-

nated altogether.

The impetus for developing such standards must come,

in the first instance, from the Commission. Only it, and

not this court, has the expertise to formulate rules well-

tailored to the intricacies of radio broadcasting, and the

flexibility to adjust those rules to changing conditions.

Only it has the opportunity to develop standards of gen-

eral applicability outside an ad hoc adjudicatory context.

And only it has the power to determine how to perform

its regulatory function within the substantive and pro-

cedural bounds of applicable law.

requiring the Commission to compare the qualifications and

operations of the assignor with those of the assignee.

This argument was not, however, relied on by the Com-

mission in either of its actions reviewed herein. In any event,

£310(d) by its literal terms would not appear to forbid

assignor-assignee comparisons because the license is not

“transfer[red], assign[ed], or dispos[ed] of” when it is

retained by the existing licensee. This is the position taken

by the Commission itself. Wichita-Hutchinson Co., 20 F.C.C.

2d 584, 586 (1969) (“[t]he comparison prohibited by

[§310(d)] is sot between the transferor and the proposed

transferee but between the proposed transferee and some

third person other than the transferee proposed in the appli-

cation.”)

28a

The Commission has not suffered from the want of

suggestions along these lines. Scholars have noted that

it could develop acceptable guidelines.** This court has

emphasized the Commission’s discretion to develop ad-

ministrative standards, and stressed that judicial re-

view thereof will be limited and deferential.*? The Com-

mission itself has recognized the need for standard-

setting. Commissioner Hooks, concurring in the Notice

of Inquiry, suggested standards for the sympathetic im-

plementation of WEFM;“ and the Commission majority,

in the same document, requested comments on administer-

ing the decision.“ It is regrettable, from the present

perspective, that rather than pursuing this approach the

Commission chose simply to throw »p its hands. While

we cannot, of course, dictate what, if any, standards the

Commission should adopt, the following suggests ways in

which development of appropriate guidelines could satis-

fy many of its objectives.

38 See D. Ginsburg, Regulation of Broadcasting 316 (1979) ;

Note, supra note 28, at 436-37.

3° WEFM, supra, 516 F.2d at 268 n.35; id. at 269 n.4

(Bazelon, C.J., concurring in the result); Lakewood, supra,

478 F.2d at 925 n.14 (‘‘we have never attempted to set out

specific guidelines for achieving the market-place ideal. The

first, tentative steps into this complex area of regulation must

be taken by the Commission”). Cf. Office of Communication

of United Church of Christ v. FCC, 359 F.2d 994, 1005 (D.C.

Cir. 1966) (suggesting that Commission can avoid adminis-

trative burdens of public intervention by formulating appro-

priate regulations by rulemaking).

* Progressive Rock, supra, 478 F.2d at 934: Lakewood,

supra, 478 F.2d at 922. Cf. Office of Communication of United

Church of Christ v. FCC, 359 F.2d 994, 1005-06 (D.C. Cir.

1966) (broad discretion to formulate rules governing public

intervention).

*' See note 15 supra.

*2 See note 14 supra.

29a

One difficulty noted by the Commission and intervening

commercial broadcasters is the alleged impossibility of

classifying radio formats. They point to our statement

that “we know [a format] when [we hear] it,”* as

being overly subjective, and to some of the distinctions

we have drawn between formats as being nice to the

point of administrative infeasibility.“* Yet these were the

judgments of a court forced to decide the case before it

by reference to the language of the Communications Act

and the Congressional purpose informing it. The Com-

mission, with its greater expertise and broad overview of

the subject matter, could arrive by rulemaking at a

format taxonomy which, even if imprecise at the margins,

would be sustainable so long as not irrational.*® The

Commission “retains a discretion commensurate with its

expertise to make reasonable categorical determinations,”

WEFM, supra, 506 F.2d at 265. Had it developed a

rational classification schema in the first instance, this

court would surely nave given it great credence even if

the results reached thereunder differed from those ob-

tained by application of our own unguided analysis.**

*3 Atlanta, supra, 436 F.2d at 265 n.1, quoting Jacobellis v.

Ohio, 378 U.S. 184, 197 (1964) (Stewart, J., concurring).

** See WEFM, supra, 506 F.2d at 265 n.28, 264-65 (suggest-

ing distinctions between twentieth century and other ciassical

music and between “fine arts” and “classical”) ; Progressive

Rock, supra, 478 F.2d at 932 (‘ progressive rock” distinguished

from “top forty”).

*s Cf. Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1053-

1060 (D.C. Cir. 1978) (upholding EPA's classification of

paper mills into sixteen categories for purpose cf setting

effluent limitations).

**©Cf. Nationa: Ass'n of Indep. Television Producers and

Distribs. v. FCC, 516 F.2d 526 (2d Cir. 1975) (upholding

Commission's classification of television programs into “public

affairs”, “documentary” and “children’s” as part of prime

time access rule).

30a

Indeed, the Commission used a format classification in

its staff study to demonstrate the existence of broad

diversity in major radio markets. There is a marked

inconsistency in its endorsing the validity of a study

largely premised on classifications it claims are im-

possible to make. In any case, the schema used in the

staff study follows accepted industry usage and would

appear facially rational. It is likely that the perceived

administrative difficulties would be greatly reduced if

the Commission were to adopt a similar approach."

With regard to WEFM’s perceived intrusiveness, the

Commission could set rigorous standards as to when peti-

tioners tu deny have established a prima facie case. It

could, for example, require a relatively high level of

public grumbling, could classify formats into broader

rather than narrower categories, and could place the

burden of demonstrating “uniqueness” on the petition-

* Furthermore, the Commission is not precluded from ex-

perimenting with more innovative approaches. It might con-

sider, for example, dispensing altogether with the need for

classifying formats by simply taking the existence of signifi-

cant and bona fide listener protest as sufficient evidence that

the station's endangered programing has certain unique fea-

tures for which there are no ready substitutes in the service

area. In other words, the Commission could dispense with

the requirement that the endangered format be demonstrably

“unique”. This approach would obviate the need for “subjec-

tive’ distinctions among formats and would respond, also, to

the objection that listeners perceive important differences

among stations programing the “same” format. And by con-

centrating on the existence of listener unrest, this approach

would focus attention on the essentials of the format doctrine,

namely, that when a significant sector of the populace i-

agvrieved by a planned programing change, this fact raises a

leyitimaty question as to whether the proposed change is in

the public interest.

3la

ers.** To deal with the “lock in” problem it could exempt

from the hearing requirement formats adopted experi-

mentally and sought to be abandoned after a very short

period of time.

In the analogous context of the fairness dcctrine, the

Commission has adopted stringent prima facie case re-

quirements that weed out, at the outset, the great ma-

jority of complaints. We recently upheld, en banc, the

Commission’s dismissal of a fairness doctrine complaint

based on those rigorous standards. American Security

Council Education Foundation v. FCC, No. 77-1443 (D.C.

Cir. 19791. We noted that the prima facie evidence re-

quirement served to protect delicate First Amendment

values by ensuring that robust, wide-open debate would

not be deterred. Like the fairness doctrine, the format

cases involve the Commission in an area charged with

sensitive First Amendment implications. The Commis-

sion could surely use a similar technique in the format

context for accommodating First Amendment values to

the fact that broadcasters, under the scheme of the

Communications Act, are public trustees obligated to

serve the public interest.‘

None of this is to imply, however, that the Commis-

sion is free to “administer” the format cases as a dead

letter.””. Whatever administrative means the Commis-

sion adopts must be capable of identifying and rectifying

those infrequent situations in which market allocation

has failed and in which the public interest would not be

**Cf. J.A. at 220 (comments of WNCN Listeners Guild)

(sugyesting that petitioning groups should have the burden

of making out a prima facie case of uniqueness, although

licensee should have burden of proof on the issue).

** See D. Ginsburg, supra note 38, at 316.

“Cf. Office of Communication of United Church of Christ

v. FCC, 425 F.2d 543 (D.C. Cir. 1969) (right of public to

intervene in Commission proceedings cannot be vitiated by

Commission's hostile attitude towards intervenors).

32a

served by granting the assignment application. That is

the basic message of our format change cases as to what

Congress has willed in these situations, and it is one we

reaffirm today.

IV

A.

Because the Commission devoted considerable energy

to justifying its view of the proper relationship between

court and agency, a few words on the subject are in order

here. The Commission repeatedly referred to WEFM

as representing the “policy” of the Court of Appeals, and

contrasted it unfavorably with the “policy” of the Com-

mission. It called upon this court, as its so-called “part-

ner” in the regulatory process, to step back and recognize

that its “policy” is superior to our own.

We should have thought that WEFM represents, not a

policy, but rather the /aw of the land as enacted by

Congress and interpreted by the Court of Appeals, and

as it is to be administered by the Commission. This

court has neither the expertise nor the constitutional

authority to make “policy” as that word is commonly

understood. See National Broadcasting Co. v. United

States, 319 U.S. 190, 224 (1943); Action for Children’s

Television v. FCC, 564 F.2d 458, 481-82 «D.C. Cir.

1977): WEFM, svpra, 506 F.2d at 267-68. That role

is reserved to the Congress, and, within the bounds of

delegated authority, to the Commission. But in matters

of interpreting the “law” the final say is constitutionally

committed to the judiciary. See International Brother-

hood of Teamsters v. Daniel, 99 S.Ct. 790, 800 & n.20

(1979); SEC rv. Sloan, 436 U.S. 103, 118-19 (1978). Al-

though the distinction between law and policy is never

clearcut, it is nonetheless a touchstone of the proper

relation between court and agency that we ignore at our

peril.

33a

WEFM was an interpretation of a statute applicable

to an adjudicatory proceeding and, to this extent, was a

decision in which the judicial word is final. That decision

was based on an interpretation of the Communications

Act. Moreover, although we did not explicitly address

the constitutional implications of our decision, the con-

stitutional issue was commented upon extensively by

Chief Judge Bazelon in his opinion concurring in the re-

sult. Suffice it to say that we found no constitutional

impediment to the decision as we understood it. As to

these constitutional and statutory issues, it was the

Commission's obligation to accept and carry out in good

faitn its legal duties as interpreted by this court.”

‘1 The Commission’s reliance on cases beginning with

Banzhaf v. FCC, 405 F.2d 1082 (D.C. Cir. 1968), cert. denied,

396 U.S. 842 (1969), is misplaced. In Banzhaf we affirmed

the Commission’s determination that cigarette commercials

raised controversial issues of public importance and thus

gave rise to fairness doctrine obligations for broadcasters who

ran them. In subsequent cases this court followed the Banzhaf

holding with respect to other types of product advertising.

Retail Store Employees Union v. FCC, 436 F.2d 248 (D.C.

Cir. 1970) ; Friends of the Earth v. FCC, 449 F.2d 1164 (D.C.

Cir. 1971). The Commission then instituted a general reex-

amination of the fairness doctrine and concluded that it would

no longer apply it to product advertising. Fairness Report,

48 F.C.C. 2d 1, 24 (1970). We affirmed the change of policy.

National Citizens Comm. for Broadcasting v. FCC, 567 F.2d

1095 (D.C. Cir. 1977), cert. denied, 98 S.Ct. 2820 (1978).

The Commission argues that we should also permit it to

change its mind in the present case and cease enforcing the

format decisions.

There is, however, an important difference between when

(1) we uphold an agency's interpretation of its governing

statute and then review its contrary interpretation; and (2)

we reject an agency's interpretation of its governing statute

and then review its reaffirmation of its original interpretation.

Because of the deference owed the Commission's construction

of the Communications Act, Columbia Broadcasting Sys., Inc.

v. Democratic Nat'l Comm., 412 U.S. 94, 121-22 (1973): Red

34a

B.

Our legal judgments in the earlier cases, however, were

grounded in certain factual premises, namely, that there

is, in the traditional sense, no free market in radio

broadcasting and that in certain circumstances, when

there are persuasive indications that market allocation

has broken down, the Commission had been given a use-

ful role by Congress to play in ensuring that the benefits

of radio accrue to all the people, not simply those favored

by advertisers. The Commission, in its staff study ap-

pended to the Policy Statement, challenged those em-

pirical assumptions. To the extent that the Commission

Was not questioning this court’s legal judgment, but was

attempting to demonstrate that faulty factual premises

underlay that judgment, we agree that it was within its

competence as an agency better equipped to develop

legislative-type facts than is this court.

As we have noted, however, the Commission's use of the

staff study was infected with the serious flaw that it

Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381 (1969),

there is a fairly wide range of interpretations we would up-

hold on judicial review. In the product commercial cases,

both the Commission's positions fell within this range and we

were therefore able to uphold both. In the format cases, by

contrast, we found from the start that the Commission's in-

terpretation of the Act could not be sustained even when all

due deference was given that construction. There is no rea-

son for us to pay any greater deference to the Commission

when it makes the same arguments in a subsequent pro-

ceeding.

Perhaps recognizing the force of this objection, the Com-

mission attempts to place itself in the first category described

above rather than the second: it implies that it originally

agreed with the holdings of the format cases and only later

determined to change its mind. This argument, however, is

belied by the Commission's history of at least passive resist-

ance to the format decisions in the name of licensee freedom

See notes 31-32 and accompanying text svpre.

35a

never even divulged the existence of the study, much

less gave the participants the opportunity to comment

thereon, before issuing its Policy Statement. This pro-

cedural unfairness, coupled with the substantive uncer-

tainty flowing from the lack of adequate adversarial

testing during the comment period, is enough to make

us view skeptically the Commissions use of the study.

But even if we were to accept the study on its own

terms, we would not be persuaded.

The study consisted of two parts. In the first. the

Commission staff compiled a chart showing which of 18

format types were available in the 25 largest radio mar-

kets. From this, the Commission argued that an adequate

degree of diversity was currently being achieved by mar-

ket forces. Second, the staff performed a statistical analy-

sis of the relationship between the format type pro-

grammed by a station and its audience share as a rough

meusure of the degree to which stations programming the

“same” format are considered by consumers to be close

substitutes for one another. The staff found that the

variation of audience shares within a given format was

nearly as great as the variation among formats, and

concluded that stations programing the same format were

not necessarily close substitutes for one another. From

this the Commission argued that it was not true, as we

had supposed in WEFM, that abandonment of a unique

format in favor of a format already present in the

service area strongly indicated a loss in overall diversity.

The first part of the study, in our view, is completely

consistent with WEFM. That case recognized that market

allocation is generally an adequate guarantor of format

diversity: it requires the Commission to step in only

when there are persuasive indications that market alloca-

tion has failed in a particular case. WEFM, we repeat,

was aimed not at the probable majority of cases in which

the market operates adequately, but at those perhaps

36a

infrequent cases in which it has not done the job. The

study does not show that the market functions adequately

in every instance.** Indeed, the Commission admits that

market allocation is an imperfect reflection of audience

preferences.

The second part of the staff study challenged the propo-

sition that the Commission can—ard must if it is to be

faithful to the Act it administers—sometimes do a hetter

job than the imperfect market. The Commission, as we

have noted, viewed WEFM as mandating a system of

pervasive governmental format allocation antithetical to

the free market. If this were the meaning of WEFM, we

would certainly agree that it could not improve on mar-

ket allocation. But when it is recognized that WEFM

contemplates governmental action as a supplement, not a

substitute, for the market, and when attention is focused

on cases of prima facie market breakdown, as in the

52 It could be argued, in fact, that by examining only the

nation’s 25 largest radio markets (which presumably display

the greatest degree of diversity) the staff presented a dis-

torted picture of the extent of diversity in the country as a

whole. We might also note that even in these major markets

important formats are shown as unavailable in the listening

area. For example, apparently no classical music service is

provided in 7 of the 25 markets. See 60 F.C.C. 2d at 875-79.

Conversely, the study shows a high degree of format duplica-

tion in the markets studied.

It is a useful corrective to focus, not on the broad range of

cases in which the market functions accurately, but on those

infrequent cases in which it appears that it has failed to pro-

mote diversity and that the Commission could remedy the

defect. One need only think of the Atlanta case. Although

16°> of the listeners preferred classical music, what was

allegedly the only classical format was being abandoned in

favor of music which was already programed by several of

the 20 stations in the service area. In such a situation, it is

evident that market forces may not be serving the public

interest.

37a

Atlante case, it seems far more likely that the Commis-

sion could usefully play a limited corrective role.

Nor are we ccenvinced by the study’s statistical analy-

sis. It is not surprising that one station, by dint of

stronger signal, more pleasing announcers, better tempo,

superior technical quality or other factors, should gain a

much greater market share than another station pro-

graming the same format in the service area. What

would be surprising, however, is if listeners, deprived

of their favorite station, were indifferent as to whether

they switched to another station programing the same

format or to a different format altogether. The common

sense of it is that most lovers of disco will switch to

another disco station in preference to classical, all-news,

country and western or the like. When a unique format

is abandoned, those loyal to that format have no ade-

quate substitute in the service area; when a non-unique

format is eliminated, its listeners will generally have an

adequate substitute in other stations programing the same

format.** For this reason abandonment of a unique en-

tertainment format raises the special public inter’ t issue

treated by our format cases.

Once again the court confronts a problem deriving, in

the last analysis, from the common and undivided owner-

ship of the airwaves by all of the people. In Office of

Communication of United Church of Christ v. FCC, 359

F.2d 994 ‘D.C. Cir. 1966) and Office of Communication

of United Church of Christ v. FCC, 425 F.2d 543 ‘D.C.

Cir. 1969), this court, in two vigorous opinions by Judge

‘now Chief Justice! Burger, dealt with a Commiszion

reading of the Act that denied standing to oppose license

*’ We have also suggested, in note 47 supra, that the Com-

mission could experiment with regulatory approaches respon-

sive to the argument that listeners perceive important differ-

ences among stations programing the same format.

38a

renewal to all except competing licensees claiming either

electrical or economic interference. The first such opin-

ion, at the instance of members of the listening public

who wished to be heard on the asserted inadequacies of

the licensee’s programing, demolished that incredibly re-

strictive interpretation of the Act’s “public interest, con-

venience, and necessity” standard. The second opinion

overturned a rejection of the petition to deny after a

hearing and decision on remand which it characterized as

positively hostile to the complainants.

In United Church of Christ, as here, the Commission

asserted all manner of difficulties with the interpretation

of the statute pressed upon it by the protestants, includ-

ing notably severe administrative burdens hampering the

discharge of its regulatory responsibilities, if objections

to format abandonment were required to be entertained

and, where substantial, explored in evidentiary hearings.

The Commission’s Policy Statement in issue here is

strongly reminiscent of the attitude displayed by it in

United Church of Christ. The Commission, despite its

parade of horribles in that case, has obviously survived.

In WEFM the court was at considerable pains to make

clear that it was speaking solely in the context of the

current regulatory scheme laid down by Congress. The

result reached, we said,”

cannot be otherwise when it is remembered that the

radio channels are priceless properties in limited

supply, owned by all of the people but for the use

of which the licensees pay nothing. If the market-

place alone is to determine programming format,

then different tastes among the totality of the own-

ers may go ungratified. Congress, having made the

essential decision to license at no charge for private

operation as distinct from putting the channels up

* WEFM, supra, 506 F.2d at 268 n.34.

39a

for bids, can hardly be thought to have had so lim-

ited a concept of the aims of regulation. In any

event, the language of the Act, by its terms and as

read by the Supreme Court, is to the contrary.

There is much talk at the moment of deregulation in

the communications field, particularly with respect to

radio. Bills of varying sweep to this end are pending

in the Congress,®* and the enactment of at least one of

them in its present form would appear largely to elimi-

nate for the future the problem presented in the case

before us.*® But the movement towards regulation by the

55 See H.R. 3333, 96th Cong., Ist Sess. (1979); S. 611, 96th

Cong., Ist Sess. (1979) ; S. 622, 96th Cong., Ist Sess. (1979).

°° The bill presently given the best change of passage,

H.R. 3333, supra note 55, could well be read to make the

present controversy moot. This would grant radio licenses for

an indefinite period (i.e., in perpetuity), id. §471(a), and

would allocate new or revoked radio licenses among competing

applicants by a lottery system, id. §415(d). It would still

be necessary to make application for license assignment to

the Commission, which must find that “the purposes of this

Act will be served” thereby, id. § 421; the purposes of the bill,

however, are stated to be that “the public interest is best

served [by] marketplace forces, rather than government: reg-

ulation . . . except that, where it has been determined that

marketplace forces are deficient, the Congress finds that

government regulation in the public interest is necessary and

appropriate.” Jd. § 411.

S. 622, supra note 55, also promises to alter the statutory

scheme so as to reduce or eliminate the present controversy.

Like H.R. 3333, it would make radio license terms indefinite,

id. § 332(a), and would allocate new licenses by lot, id. § 331.

It recites a congressional finding that “marketplace competi-

tion can be the most efficient regulator of the provision of

telecommunications services,” id. § 2(a) (2), and would pro-

hibit the Commission from requiring radio broadcasters to

“adhere to a particular programing format,” id. § 333(a) (1).

S. 611, supra note 54, adopts a more limited approach. It

would grant radio licenses for an indefinite term, id. § 301 (a),

40a

marketplace appears to be accompanied by the exaction

for the first time of charges for the use by licensees of

the publicly-owned channels, and the benefits thereof

would accrue equally to all members of the owning pub-

lic.” This would be a vast and significant departure

from the present system by reference to which we decide

the question presently before us.

Looking to the Act in its present form, we hold the

Policy Statement under review to be unavailing and of

no force and effect.

It is so ordered.

but provides for annual Commission review of randomly

selected stations to determine if their operations are consist-

ent with the public interest, convenience and necessity, id.

§ 301(b).

** H.R. 3333, supra note 55, at § 414. S. 611, supra note 55,

at § 106, would impose a much more moderate fee on radio

broadcasters; and S. 622, supra note 55, at § 6, would charge

a fee based only on the Commission’s costs.

4la

BAZELON, Circuit Judge, concurring in vacating the

decision: I concur in vacating the decision of the FCC.

The Commission’s failure to make public the staff study

that proved so central to its final decision violates funda-

mental rulemaking principles.' As the majority opinion

documents,’ the FCC exhibited an almost cavalier disre-

gard for the public’s right to comment on the critical

data and methodology supporting the Commission’s find-

ing that “market forces had provided a significant even

if not perfect amount of diversity.” * This conclusion in

curn is a vital link in the Commission’s reasoning under-

lying its adoption of the Policy Statement. I believe

therefore that the record must be reopened to permit

meaningful public participation in the Commission’s

decision.

Because the Commission’s procedural unfairness re-

quires vacating the rule, I would not reach the merits of

the FCC’s interpretation of the public interest standard

as applied to the abandonment of a so-called distinctive

or unique format. But since the majority has precluded

the FCC from adopting a rule contrary to the decision in

WEFM, I feel compelled to note my agreement with

much of Judge Tamm’s thoughtful dissent. Implementing

the public interest standard calls for a strong dose of

policy judgment, a responsibility entrusted by Congress

to the FCC.‘ Yet the majority virtually confines the

1“It is not consonant with the purpose of a rulemaking

proceeding to promulgate rules on the basis of . . . data that,

{in] critical degree, is known only to the agency.”” Portland

Cement Ass’n v. Ruckelshaus, 486 F.2d 375, 393 (D.C.Cir.

1973), cert. denied, 417 U.S. 921 (1974).

2 Majority op. at 17-21.

2 FCC Br. at 18, see Memorandum Opinion and Order, 60

FCC 2d 858, 863 (1976).

*In National Citizens Committee for Broadcasting v. FCC,

555 F.2d 938 (D.C.Cir. 1977), rev’d 436 U.S. 775 (1978), a

42a

FCC to a spectator’s role in formulating policies that

will promote and preserve diversity while minimizing the

hazards of government intrusion into the content of

broadcasting.

Even apart from this unwillingness to give appropriate

deference to the Commission’s judgment, I would remain

troubled by the route taken by the majority. As I ex-

plained at some length in WEFM,' regulation of enter-

tainment formats is not content neutral. The regulator

is inevitably led to favor some forms of expression over

others.* The majority acknowledges the “sensitive First

Amendment implications”? of government oversight of

format choice, but fails to grapple seriously with the

constitutional implications of its decision.

I do not contend that there is a simple resolution to

the conflict between fostering diversity, on the one hand,

panel of this court reversed the FCC’s decision exempting

roughly 90% of existing co-located broadcast newspaper com-

binations from a rule banning such cross-ownership. We

concluded that, on the record developed by the FCC, the

Commission had acted arbitrarily and capriciously by limit-

ing divestiture to 16 “egregious” cases. The Supreme Court

reversed, suggesting that we had not given sufficient defer-

ence to the Commission’s judgment. See 436 U.S. at 810,

813-815. If we are directed to defer to the FCC’s decision in

NCCB, which seemed sharply at odds with the FCC’s man-

date, surely we should be hesitant to overturn the Commis-

sion’s judgment here, where the Commission’s accommodation

of the conflicting policy interests is neither irrational nor

wholly contrary to the purposes of the Communications Act.

‘Citizens Committee to Save WEFM v. FCC, 506 F.2d

246, 276-81 (D.C.Cir. 1974) (Bazelon, C.J. concurring).

*This problem is not confined to regulation of format

choices. See, e.g., Brandywine-Main Line Radio Inc. v. FCC.

473 F.2d 16, 63 (D.C.Cir. 1972) (Bazelon, C.J., dissenting),

cert. denied, 412 U.S. 922 (1973).

* Majority op. at 40.

43a

and protecting the media from chilling government inter-

ference on the other. The concerns I expressed in WEFM

continue to plague efforts to regulate the airwaves in the

public interest. Perhaps Congress will exercise its

prerogative to cut this Gordian knot and free the choice

of format from the bondage of government regulation.*

Alternatively, the dawning technological revolution may

eliminate this dilemma, by cpening up an unprecedented

number of accessible outlets for speech.’ For the time

being, however, the responsibility for reconciling these

interests is lodged with the FCC and, to a limited extent,

the courts. The record of fifty years of broadcast regula-

tion suggests that the FCC’s affirmative efforts to pro-

mote diversity have not only failed to achieve that goal,

but have entangled the Commission and the courts in

perilous government oversight of the content of expres-

sion. I cannot so easily reject the FCC’s decision to turn

away from this troubling experience and to cast its lot

with the marketplace.

* As the majority notes, legislation proposing deregulation

of radio is now pending before Congres. See majority op. at

56-51 & nn.54, 55.

*See generally Baer, Telecommunications Technology in

the 1980's, in COMMUNICATIONS FOR TOMORROW POLICY PER-

SPECTIVES FOR THE 1980’s 61 (G. Robinson ed. 1978).

44a

LEVENTHAL, Circuit Judge: I concur in Judge Mc-

Gowan’s excellent opinion for the court.

As sponsor of the court-agency partnership concept

and “hard iook” doctrine,’ I add a few words to under-

score his observation that this court does not view itself

as cast in the role of policymaker.

The court explicitly acknowledges its responsibility not

to tre-t the agency as “a hostile stranger,” * or “with a

hostile eye, like an ‘intruder’.”* In a working partner-

ship, there may be differences between partners, but there

is a mutuality of recognition and respect far removed

from the approach taken with any stranger or intruder.

The relationship of court and agency emerges from the

functions ass..ned by Congress to each. Congress has

delegated to the agency, here the FCC, the function of

making policy. It has given the court the role of review

to ensure that an agency decision stays within the intent

of the law, and satisfies the requirement of reasoned

decisionmaking delineated in Justice Harlan’s Permian

opinion.*

‘Greater Boston Television Corp. v. FCC, 143 U.S.App.

D.C. 383, 392-95, 444 F.2d 841, 850-53 (1970), cert. denied,

403 U.S. 923 (1971); see also, e.g., Niagara Mohawk Power

Corp. v. FPC, 126 U.S.App.D.C. 376, 383 n.24, 379 F.2d 153,

160 n.24 (1967); Public Serv. Comm'n of N.Y. v. FPC, 167

U.S.App.D.C. 100, 117, 511 F.2d 338, 355 (1975).

These opinions rely, inter alia, on United States v. Morgan,

307 U.S. 183, 191 (1939); United States v. Morgan, 313 U.S.

409, 422 (1941); Stone, The Common Law in the United

States, 50 Harv. L. Rev. 4, 16-18 (1936); L. JAFFE, JUDICIAL

CONTROL OF ADMINISTRATIVE ACTION vii (1965).

2(;reater Boaton, supra note 1, 143 U.S.App.D.C. at 394,

444 F.2d at 852.

’ Public Serv. Comm'n of N.Y. v. FPC, supra note 1, 167

U.S.App.D.C. at 117, 51! F.2d at 355.

‘Permian Basin Area Rate Cases, 390 U.S. 747, 791-92

(1968).

45a

If hostility to a result leads an agency systematically

to distort the testimony of witnesses on material matters,

a court could not conscientiously sustain the agency de-

cision.© That is not unlike what the Commission has

done in this case by distorting the meaning of our WEFM

opinion,® a matter Judge McGowan develops with some

care. The court-agency partnership depends on mutuality

of respect and understanding.

A court must review an agency’s action in terms of

what the agency says it has considered.” We cannot say

that what an agency says it relies on was really unim-

portant merely because its appellate counsel attempts

some repair carpentry.°

* Universal Camera Corp. v. NLRB, 340 U.S. 474, 492-97

(1951).

* Citizens Committee to Save WEFM v. FCC, 165 U.S.App.

D.C. 185, 506 F.2d 246 (1974) (en banc).

"SEC v. Chenery Corp. (Chenery I), 318 U.S. 80 (1943).

*FPC vy. Texaco, Inc., 417 U.S. 380, 397 (1974) ; Burlington

Truck Lines, Inc. v. United States, 371 U.S. 156, 168-169

(1962).

46a

TAMM, Circuit Judge, with whom MACKINNON, Cir-

cuit Judge, concurs, dissenting: I respectfully dissent.

The majority's decision, I fear, usurps the proper role of

the Federal Communications Commission (Commission)

in the formulation of communications policy. In my

view, the Commission’s determination that application of

Citizens Committee to Save WEFM v. FCC (WEFM),

506 F.2d 246 (D.C. Cir. 1974) (en banc), will not meas-

urably increase diversity of entertainment formats is

neither arbitrary nor capricious. Although I understand

the frustration of re-examining an issue purportedly re-

solved, I believe that the much touted agency-court part-

nership is well served by continuing dialogue between

administrator and judge. I am persuaded that the Com-

mission,, which Congress has entrusted with the duty to

regulate broadcasting in the public interest, has ad-

vanced a reasoned position which this court should up-

hold.

In WEFM, we decided that when an application to

transfer a radio license involves a change in format, the

Commission must determine whether the assignor’s for-

mat is unique and financially viable.’ If so, the Com-

mission, when faced with substantial questions of fact

and significant public opposition to the transfer, must

conduct a hearing to discern whether loss of the format

is in the public interest before acting upon the appli-

cation.-

' The court noted that an assignor’s asserted financial losses

will only justify a format change when “those losses [are}

attributable to the format itaelf.”” Citizens Comm. to Save

WEFM v. FCC, 596 F.2d 246, 262 (D.C. Cir. i974) (en banc).

747 U.S.C. §310(d) (1976) commands the Commission to

decide whether an application to transfer a license would be in

the public interest. See alao 47 U.S.C. § 309(a) & (d) (1976).

47a

The WEFM court based the hearing requirement on

the “public interest in a diversity of broadcast formats.” *

The court warned that format diversity would not neces-

sarily result from the unregulated play of market forces

because broadcgsters derive revenue from the sale of

time to advertisers, not from the sale of programming to

listeners. A station with a larger audience may sell more

advertising time, and at higher rates, than a station with

fewer listeners. A station with a smaller, but more

demographically attractive audience may, however, sell

as much or more time as the station with greater num-

bers of listeners. The court feared that the effect of

demographics on the radio market would allow listeners

with desirable demographic characteristics—typically

eighteen- to thirty-year-vids with discretionary income—

tu exercise a disproportionate influence upon broadcast

decisionmakers who choose formats. Because formats

preferred by fewer younger people might prove financial-

ly more attractive than formats preferred by a greater

number of older or lower income listeners, the court con-

cluded that regulation Was necessary to insure diversity.

The court’s reasoning implicitly suggests that regulation

is unnecessary if the radio market reflects the desires of

the greatest numbers of listeners.

The Commission responded to WEFM by instituting a

proceeding designed to develop methods for implementing

the court’s ruling.t After reviewing comments of both

broadcasters and public interest representatives, the Com-

mission concluded that use of the WEFM doctrine would

not demonstrably further the public interest.’

‘Citizens Comm. to Save WEFM v. FCC, 506 F.2d at 262.

* See Notice of Inquiry, Development of Policy re: Changes

in the Entertainment Formats of Broadcast Stations (Notice

of Inquiry), 57 F.C.C.2d 580 (1976).

" See Development of Policy re: Changes in Entertainment

Formats of Broadcast Stations (Policy Statement), 60 F.C.C.

2d 858, 863-66 (1976).

48a

The Commission did not premise its decision upon a

rejection of the court’s observation that the presence cf

demographic considerations might increase the influence

of certain listeners." Rather, the Commission first con-

tended that the radio market produces diversity of for-

mats. In support, the Commission presented a study of

formats aired in major cities demunstrating “fan almost

bewildering array of diversity.” *

Second, the Commission argued that administrative

intervention in the format selection process could not be

shown to further the public interest.*. The Commission

* Id. at 863.

*Id. The Commission also argued that marketplace alloca-

tion accommodates rapidly shifting tastes without the neces-

sity of governmental interference. /d. at 864.

*The Commission stated that determining whether a for-

mat change would serve the public interest involved three

inquiries: “(1) what the station's existing format is; (2)

whether there are any reasonable substitutes for that format

in the station's market; (3) if there are not, whether the

benefits accruing to the public from the format change out-

weigh the public detriment which the format abandonment

would entail.” /d. at 861-62. The Commission suggested that

definition of a unique format would present an “acute practi-

cal problem.” Jd. at 862; see text at 5-6 infra. Addressing

the third question, the Commission stated that it is impossible

to determine whether consumers would be better off if a new

format replaced a unique format. Policy Statement, 60 F.C.C.

2d at 862; see note 14 infra.

The Commission voiced two other notable concerns. First,

it suggested that the WEF M doctrine may decrease experimen-

tation in formats, because broadcasters would fear being

“locked” into a unique format. /d. at 865. Second, the Com-

mission thought that format regulation would chill broad-

caster’s first amendment rights. /d. Although I agree that

the first amendment concerns are substantial, see Citizens

Comm. to Save WEFM, 596 F.2d at 268 (Bazelon, C.J., con-

curring), I do not believe the issue need be reached to sustain

the Commission's judgment.

—— =e

49a

contended that stations within a given format are not

interchangeable to their respective audiences.’ Simply

stated, listeners of a particular station within a format

category may not be equally willing to listen to any

station within the same format category. The Commis-

sion’s assumption suggests that, for example, in a two

station market consisting of a top 40 format and a

classical format, a second top 40 station might command

a greater audience than the unique classical station.’

The majority does not dispute the possibility that more

listeners may prefer a second top 40 station to a unique

classical format. Rather, it suggests that retention of

the classical format might be in the public interest be-

cause the desires of those preferring the second top 40

station can be easily satisfied by the first top 40 station.

Classical tastes, to the contrary, would be less likely

satisfied by a top 40 format. The majority explains:

When a unique format is abandoned, those loyal to

that format have no adequate substitute in the

service area; when a non-unique format is elimi-

nated, its listeners will generally have an adequate

substitute in other stations programing the same

format. For this reason abandonment of a unique

entertainment format raises the special public in-

terest issue by our format cases.”

* The Commission documented this reasonable assumption,

see text at 5-6 infra, with a study of audience ratings for

major radio markets showing that listener preferences are

almost as varied within formats as among formats. The

Commission concludes that formats of the same type are,

therefore, not close substitutes for each other. Policy State-

ment, 60 F.C.C.2d at 863-64, 873-75.

© According to the majority opinion, the Commission may

be called upon to review such a change in format when it

considers applications either to transfer or to renew a license.

See WNCN Listeners Guild v. FCC, No. 76-1692, slip op. at 22

(D.C. Cir. June 29, 1979) (en banc).

'! Jd. at 39 (footnote omitted).

50a

Thus, the majority introduces a novel doctrine that calcu-

lates the public interest without necessary reference to

the aural desires of the greatest number of listeners. The

majority’s approach is fraught with difficulties.

First, WEFM does not require use of the “substitu-

tion” theory. The WEFM court noted that the accuracy

of listener preferences in the radio marketplace might be

distorted by advertisers’ quests for demographically de-

sirable audiences. Any demographic effect on the market,

however, is cured if the Commission can ascertain the

numbers of people that desire different formats. I harbor

serious doubts that regulation based on direct listener

“votes” is practicable; but even if it is, the majority, in

an effort to justify regulation that may preserve a format

favored by fewer listeners than would prefer a changed

format, advances the “substitution” principle. Although

this theory marks a substantial departure from the rea-

soning of WEFM, the majority offers no independent

support for the principle.

Second, use of the “substitution” theory assumes that

“unique” formats can be adequately distinguished from

“non-unique” formats. Former Commissioner Glen O.

Robinson, in his concurring statement in Notice of In-

quiry, 57 F.C.C.2d at 594-95, emphasized the enormity

of this task:

What makes one format unique makes all formats

unique. If subjectivity is to be an important deter-

minent of what makes a format “unique” (or, in

other terms, what makes it a net contributor to

diversity', how are we to avoid the fact that even

with respect to formats which objectively seem iden-

tical, people—radio listeners—can and do make dis-

tinctions. For example, in most large markets there

are a number of middle-of-the-road formats which

seem identical on any objective or quantifiable basis;

yet they are far from interchangeable to their re-

spective audiences. Indeed, if people did not distin-

5la

guish among these stations, there would be no rea-

son for them to co-exist—and little economic likeli-

hood that they would. Questions of pacing and style,

the personalities of on-the-air talent (both individ-

ually and in combination with one another) all con-

tribute to those fugitive values that radio people call

a station’s “sound” and that citizens’ groups (and,

alas, appellate judges) call format. It follows, there-

fore, that by the subjective standards that the Court

seems to embrace, any format is unique; from which

it follows, all must be preserved. At that thought

the mind swims and the heart sinks. (Footnotes

omitted).

The majority does not explicitly concede the difficulty

of classifying formats according to listener preference.

Nevertheless, it suggests that the Commission may dis-

pense with the requirement that an endangered format

be demonstrably “unique” for purposes of ordering a

hearing.’? Although the majority’s concession neatly

sidesteps the difficulty of defining a “unique’ format at

the pre-hearing stage, it does nothing to ease the Com-

mission’s task once a hearing is held.

Third, the “substitution” theory assumes that: it is

possible for a federal regulatory agency to measure lis-

tener preferences in entertainment formats. I would

have thought that the best judge of the most desirable

entertainment formats is the listening audience itself.

When sufficient numbers of top 40 listeners switch chan-

nels to patronize another station which, for purposes of

federal regulation is also classified as top 40, they must

want to hear a “sound” not previously offered. If con-

sumers purchased radio programming, classical listeners

could express a greater intensity of preference simply

by paying more than top 40 listeners. Alternatively, if

the top 40 listeners intensely preferred a second top 40

12 Jd. at 32 n.47.

52a

station, they could respond by paying even more. Be-

cause radio broadcasting is a “zero price” good,'* how-

ever, consumers cannot register their intensity of pref-

erence though a price system. “Substitution” as used by

the majority is merely a crude device meant to measure

the intensity of listener preference.

The “substitution” theory runs afoul of the familiar

economic principle that it is either impossible or extreme-

ly difficult to compare the intensity of preference of

different persons.’ The range of audience preferences

‘3 See R. NOLL, M. Peck & J. McCowan, ECONOMIC ASPECTS

OF TELEVISION REGULATION 32-33 (1973).

‘* See R. POSNER, ECONOMIC ANALYSIS OF THE LAW 11 (2d

ed. 1977) ; L. RoBBINS, AN ESSAY ON THE NATURE & SIGNIFI-

CANCE OF ECONOMIC SCIENCE 138-41 (2d ed. 1940). The Com-

mission stated that no economically rational basis exists for

comparing intensity of preference among listeners:

In theory preference should be given to that format

which is of greater value to the consumers. Unfortu-

nately, the Commission will find it impossible to measure

the relative values of different formats because there

exists no litmus or a priori way of measuring how much

particular formats are worth to the audiences. All that

can be known is simply how many people listen to avail-

able programs.

Unfortunately, the size of a station’s audience is not

necessarily an appropriate measuring stick of the degree

of satisfaction which listeners derive from its program-

ming. That is, two different formats which attract audi-

ences of equal size may not be of equal value. Prefer-

ences expressed by the audience of one format may be

much stronger than preferences for the other, in which

case the former should be the more valuable. In order to

ascertain which format is the more valuable, one would

have to know the intensity of demand for each. Again,

there exists no acceptable, reliable way of measuring

aspects of these consumer preferences because consumers

53a

within the same format, for example, suggests that the

Commission would be hard pressed to determine how

much and how many listeners would prefer a variation

of a pre-existing format to a unique format. Given the

many aspects of a specific station’s “sound,” it is difficult

to measure the amount or the depth of audience accept-

ance of a changed format without allowing broadcast of

the new format—a solution which eradicates the con-

troversy.

Finally, the majority’s “substitution” theory assumes

that the Commission will be able to balance number of

listeners against intensity of format preference. Con-

sider the top 40/classical format hypothetical. [f twenty

percent of the listening audience would mildiy prefer a

second top 40 format and five percent would vigorously

prefer retention of the classical format, does the size of

one audience outweigh the intensity of preference of the

other? The majority opinion offers no clue.

In sum, the majority’s opinion presents an unjustified

rebuttal to the Commission’s conclusion that the public

interest may not be discernibly furthered by implemen-

tation of the WEFM doctrine. The majority has not

explained how to decide whether a specific format is

unique, how to measure the number of listeners who

favor a changed format, or how to compare the intensity

of preference between listeners who desire retention of a

unique format and those who prefer a variation of a pre-

existing format. Finally, the majority has failed to

identify the principle within the Communications Act

are not required to pay for the opportunity to listen to

radio.

Policy Statement, 60 F.C.C.2d at 873; see Bruce M. Owens,

“Radio Station Format Changes, Diversity and Consumer

Welfare,” Appendix to Brief for National Association of

Broadcasters.

54a

that mandates regulation favoring the interests of fewer

listeners over the interests of more listeners.

I am also troubled by another aspect of the majority

opinion. The majority notes that petitioners allege that

they did not have an adequate opportunity to comment

on two studies relied upon by the Commission. The

majority explicitly declines to “decide whether the failure

to obtain public comment on the study is itself of suffi-

cient gravity to warrant rejection of the Policy State-

ment,” '® although it says that this “procedural unfair-

ness, coupled with the substantive uncertainty flowing

from the lack of adequate adversarial testing during the

comment period, is enough to make us view skeptically the

Commission’s use of the study.” '* On the assumption that

the former statement clearly asserts that the majority

opinion does not rest upon a procedural ground, I have

directed the thrust of these dissenting remarks to the

substantive validity of the Commission’s decision.

I note in passing, however, that the two statements

taken together may be read as suggesting that the alleged

procedural unfairness was not serious enough to require

a remand to the agency, yet was serious enough to allow

the majority to subject the agency to unusually strict

scrutiny. In my view, if the majority believes that the

Commission has committed procedural error sufficient to

alter the normal standard of review of administrative

decisions, then a remand to the Commission is proper.”

'S WNCN Listeners Guild v. FCC, No. 76-1692, slip op. at

19 n.24.

'8 {d. at 37.

‘7 See Portland Cement Ass'n v. Ruckelshaus, 486 F.2d

375, 393-94 (D.C. Cir. 1973), cert. denied, 417 U.S. 921

(1974); see also South Prairie Constr. Co. v. Operating

Eng’rs, 425 U.S. 800, 805-06 (1976); NLRB v. Food Store

Employees, 417 U.S. 1, 9-10 (1974); FPC v. Idaho Power

Co., 344 U.S. 17, 22 (1952).

55a

A remand would afford the petitioners greater oppor-

tunity to comment upon the studies, offer the Commission

the opportunity to build a better record for review, and

allow this court to meet the Commission’s contentions

head on.

More important than the specifics of the current de-

bate, is the lack of deference the majority accords the

Commission’s assessment of market conditions. Although

the majority acknowledges the expertise of the Commis-

sion to challenge the factual premises that underly the

WEFM decision,’* it mounts untested assumption upon

untested assumption to create a theory of regulation thet i

may bear little resemblance to the actual functioning of

the broadcast market. Only the Commission, equipped

with investigatory tools and a well of experience, may

predict in the first instance the behavior of listeners and

broadcasters. The majority has simply substituted its

views for the Commission’s.

The Supreme Court has often reminded this court of

the appropriate relationship between administrative

agency and reviewing court. Only last year, the Court,

reversing our finding that the Commission had acted

improperly in “grandfathering” certain newspaper-

broadcast station combinations, noted that the Commis-

sion’s decision to adopt a general policy of prospective

divestiture was primarily judgmental or predictive. “In

such circumstances, complete factual support in the rec-

ord for the Commissicn’s judgment or prediction is not

possible or required; ‘a forecast of the direction in which

future public interest lies necessarily involves deductions

based on the expert knowledge of the agency.’” FCC v.

National Citizens Committee for Broadcasting, 436 U.S.

775, 814 (1978) ‘quoting FPC v. Transcontinental Gas

‘*WNCN Listeners Guild v. FCC, No. 76-1692, slip op.

at 36.

56a

Pipe Line Corp., 365 U.S. 1, 29 (1961)). In the present

case, the majority disregards the Commission’s expert

knowledge and, in so doing, violates the mandate of FCC v.

National Citizens Committee for Broadcasting.

The majority has lost sight of our role as a reviewing

court whose proper function is to uphold an agency’s rea-

sonable judgment. The Commission’s determination that

use of the WEFM doctrine wili not further the public

interest is well within the parameters of reason. Faced

with a conflict between judicial and administrative poli-

cies,’* I believe we are obliged to uphold the Commission.

The court’s decision today, a reversal based on unverified

factual assumptions about listener preferences and be-

havior, extends judicial review of administrative policy-

making processes beyond its permissible bounds.’

‘* The majority argues vigorously that WEFM is “law” and

not “policy.” See id. at 34. Of course, it is both. The Com-

mission has not asserted that it is free to disregard the man-

date of WEFM, it simply suggests that the definition of the

public interest put forth in that decision is neither the only

possible nor the preferable formulation. The majority con-

cedes, as it must, that the public interest standard may sub-

sume different, even opposing, policies. /d. at 35 n.51. Compare

National Citizens Comm. for Broadcasting v. FCC, 567 F.2d

1095 (D.C. Cir. 1977), cert. denied, 436 U.S. 926 (1978)

with Banzhaf v. FCC, 405 F.2d 1082 (D.C. Cir. 1968), cert.

denied, 396 U.S. 842 (1969). Although the Commission's

proposal closely tracks an interpretation we have previously

rejected, the agency has now presented more persuasive rea-

sons why its view should be upheld. For what purpose is the

agency-court partnership if we cannot maintain an open

mind?

2 See Polsby, F.C.C. v. National Citizens Committee for

Broadcasting and the Judicious Uses of Administrative Dis-

cretion, THE Sup. CT. REv. 1, 17-22 (1979).

57a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1978

[Filed Jun. 29, 1979]

No. 76-1692

WNCN LISTENERS GUILD and CITIZENS

COMMUNICAT.JN CENTER, PETITIONERS

Vv.

FEDERAL COMMUNICATIONS COMMISSION and

UNITED STATES OF AMERICA, RESPONDENTS

AMERICAN BROADCASTING COMPANIES, INC.,

NATIONAL ASSOCIATION OF BROADCASTERS,

INTERVENORS

No. 76-1793

CLASSICAL RADIO FOR CONNECTICUT, INC., and

COMMITTEE FOR COMMUNITY ACCESS, PETITIONERS

Vv.

FEDERAL COMMUNICATICNS COMMISSION and

UNITED STATES OF AME..iCA, RESPONDENTS

NATIONAL ASSOCIATION OF BROADCASTERS,

CORNHUSKER TELEVISION CORP., ET AL.,

INTERVENORS

58a

No. 77-1951

THE OFFICE OF COMMUNICATION OF THE UNITED

CHURCH OF CHRIST, ET AL., PETITIONERS

v.

FEDERAL COMMUNICATIONS COMMISSION and

UNITED STATES OF AMERICA, RESPONDENTS

METROMEDIA, INC.,

NATIONAL RADIO BROADCASTERS ASSOCIATION,

NATIONAL BROADCASTING COMPANY, INC.,

CBS, INc., INTERVENORS

PETITIONS FOR REVIEW OF ORDERS OF THE

FEDERAL COMMUNICATIONS COMMISSION

BEFORE: Wright, Chief Judge; Bazelon, McGowan,

Tamm, Leventhal, Robinson, MacKinnon,

Robb, and Wilkey, Circuit Judges

JUDGMENT

This cause came on to be heard on petitions for

review of orders of the Federal Communications

Commission; briefs were filed by the parties; and the

case was argued before the Court sitting en bane.

On consideration thereof, it is

ORDERED AND ADJUDGED, by the Court, en

banc, that the Memorandum Opinion and Order of

the Federal Communications Commission en review

o

59a

herein (60 F.C.C. 2d 858) is vacated, in accordance

with the Opinion for the Court filed herein this date.

Per Curiam

FOR THE COURT:

/s/ George A. Fisher

GEORGE A. FISHER

Clerk

Date: June 29, 1979

Opinion for the Court, concurred in by Chief Judge

Wright, and Circuit Judges Leventhal, Robinson, Robb,

and Wilkey, filed by Circuit Judge McGowan.

Concurring opinions filed by Circuit Judges Baze-

lon and Leventhal.

Dissenting opinion filed by Circuit Judge Tamm.

Cireuit Judge MacKinnon joins in Circuit Judge

Tamm’s dissenting opinion.

60a

APPENDIX C

BEFORE THE

FEDERAL COMMUNICATIONS COMMISSION

WASHINGTON, D.C. 20554

Docket No. 20682

IN THE MATTER OF

DEVELOPMENT OF POLICY RE: CHANGES IN THE

ENTERTAINMENT FORMATS OF BROADCAST STATIONS

NOTICE OF INQUIRY

(Adopted: December 22, 1975;

Released: January 19, 1976)

By THE COMMISSION: CHAIRMAN WILEY ISSUING A

STATEMENT; COMMISSIONERS HOOKS AND ROBINSON

CONCURRING AND ISSUING STATEMENTS.

1. The Commission has under consideration its

policies and practices with respect to changes in the

entertainment formats of broadcast stations.

2. The need for this proceeding arises in view of

the rulings in several recent entertainment format

change cases, including Citizens Committee To Save

WEFM, Inc. v. Federal Communications Commission,

506 F.2d 246 (1974). This case arose out of an appli-

cation by Zenith Radio Corporation, licensee of Sta-

tion WEFM, Chicago, Illinois, to assign its broadcast

license to GCC Communications of Chicago, Inc.

[hereinafter GCC] pursuant to 47 U.S.C. 310(d),

6la

and the accompanying proposal by GCC to change the

format of the station from classical music to popular,

or rock and roll.

3. in response to a petition to deny the applica-

tion, filed pursuant to Section 309(d) of the Com-

munications Act of 1934, as amended, 47 U.S.C. 309

(d), the Commission found that since there were two

other stations serving the Chicago area with a classi-

cal music program format, the public interest in di-

versity of broadcast entertainment formats was not

sufficient to override the legitimate protections ac-

corded broadcast licensees by the Communications

Act and the First Amendment from Government in-

trusions into their program content judgments.

Zenith Radio Corporation, 38 FCC 2d 838, reconsid-

eration denied 40 FCC 2d 223 (1973). Appended to

Commission’s decision on reconsideration approving

the assignment applications was a separate opinion,

entitled “Additional Views of Chairman Burch,”

which was joined by all but one Commisioner. These

‘Additional Views” explained the underlying analysis

on which the Commission’s decision was based.

4. Specifically, the six Commissioners pointed to

the Supreme Court’s decision in Federal Commuica-

tions Commision v. Sanders Brothers Radio Station,

309 U.S. 470, 474 (1940), that “[t]he regulatory re-

sponsibility of the Commission in the broadcast field

essentially involves the maintenance of a balance be-

tween the preservation of a free competitive broad-

cast system, on the one hand, and the reasonable re-

striction of that freedom inherent in the public in-

62a

terest standard provided in the Communications Act,

on the other.” The Commissioners went on:

-

o.

The Commission has struck this balance by re-

quiring licensees to conduct formal surveys to

ascertain the need for certain types of non-en-

tertainment programming, while allowing li-

censees wide discretion in the area of entertain-

ment programming. Thus with respect to the

provision of news, public affairs and other in-

formational services to the community, we have

required that broadcasters conduct thorough sur-

veys designed to assure familiarity with commu-

nity problems and then develop programming

responsive to those identified needs. [footnote

omitted] In contrast, we have generally left en-

tertainment programming decisions to the licer-

see or applicant’s judgment and competitive

marketplace forces. As the Commission stated

in its Programming Policy Statement, 25 Fed.

Reg. 7293 (1960), “[o]ur view has been that the

station’s entertainment format is a matter best

left to the discretion of the licensee or applicants,

since as a matter of public acceptance and of

economi> necessity he will tend to program to

meet the preference of his area and fill whatever

void is left by the programming of other sta-

tions.”

The Commissioners also stated that this discre-

tion allowed broadcasters by the Commission’s policy

permitted experimentation in program formats that

would be seriously inhibited by a policy of further

Government intrusion into programming judgments

which would have the undesirable effect of “locking”

60a

broadcasters to the present formats. “[I]nhibiting

licensee discretion to change or modify unsuccessful

program formats appealing to minority tastes will

have... the effect of lessening the likelihood that

such programming will be attempted in the first

place.” However, it was emphasized by the Com-

mission that the discretion accorded broadcasters was

not “unbridled,” but must be exercised in a manner

consistent with the licensee’s public obligations. The

Conimission therefore resolved to take an “extra

hard look at the reasonableness of any proposal which

would deprive a community of its only source of a

particular type of programming.” It was further

explained that whenever facts “indicate that the [pro-

posed new] format is not reasonably attuned to com-

munity tastes or that the format change will elimin-

ate a service to the public not otherwise available, a

survey of entertainment tastes or a hearing may be

required.” .

6. In applying this considered policy to the pro-

posed change of WEFM’s format, the Commission

found that since there was no substantial dispute as

to either the existence of classical music program-

ming on other stations serving the area, or that the

proposed new format would be reasonably attuned to

community tastes, a hearing would serve no useful

purpose and that grant of the application to assign

the station’s license would serve the public interest.

The Court of Appeals en banc, however, set aside the

Commission’s orders.

64a

7, The court, after reviewing the cases, begin-

ning in 1970, in which it had considered format

changes,’ summarized the teaching of these earlier

decisions as follows:

There is a public interest in a diversity of broad-

cast entertainment formats. The disappearance

of a distinctive format may deprive a significant

segment of the public of the benefits of radio, at

least at their first-preference level. When faced

with a proposed license assignment encompass-

ing a format change, the FCC is obliged to de-

termine whether the format to be lost is unique

or otherwise serves a specialized audience that

would feel its loss. If the endangered format is

of this variety, then the FCC must affirmatively

consider whether the public interest would be

served by approving the assignment, which may,

if there are substantial questions of fact or in-

adequate data in the application or other offi-

cially noticeable materials, necessitate conduct-

ing a public hearing in order to resolve the

factual issues or assist the Commission in dis-

cerning the public interest. Finally, it is not

suffici

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