Amicus Brief for the United States — Capital Cities Cable, Inc. v. Crisp

No. 82-1795

Inu the Supreme Court of the United

OCTOBER TERM, 1982

CAPITAL CITIES CABLE, INC., ET AL., PETITIONERS

Vv.

RICHARD A. Crisp, DIRECTOR, OKLAHOMA ALCOHOLIC

BEVERAGE CONTROL BOARD

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE TENTH CIRCUIT

MEMORANDUM OF THE FEDERAL COMMUNICATIONS

COMMISSION AS AMICUS CURIAE

Rex E. LEE

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

Bruce E. FEIN

General Counsel

DANIEL M. ARMSTRONG

Associate General Counsel

LINDA L. OLIVER

Counsel

Federal Communications Commission

Washington, D.C. 20554

TABLE OF CONTENTS

Page

Interest of the Federal Communications

SI ogc rk cc hk wee sa ae l

ik ak ee ccc en cease bess ss 2

RO is ic ee ee ee ek eee ks 9

Mn ook ve en ee os acc 14

TABLE OF AUTHORITIES

Cases:

Arlington Telecommunications Corp.,

70 F.C.C.2d 2291, appeal dismissed

sub nom. Committee to Balance the

Impact Gaff & Make ARTEC Constitutional,

No. 79-1903 (D.C. Cir. Feb. 5, 9982) .... 4,5, 11

Arlington Telecommunications Corp.,

73 F.C.C.2d 766, appeal dismissed

sub nom. Committee to Balance the

Impact Gaff & to Make ARTEC Constitutional

v. FCC, No. 79-1303 (D.C. Cir.

je Ag 2) 4 UM a Se |

Associated Press v. United States,

WO es chan a ns cease keen 12

Black Hills Video Corp. v. FCC,

gh a RC 2 oe eee es 11

Brookhaven Cable TV, Inc. v. Kelly,

573 F.2d 765, cert. denied, 441 U.S. 904 ....... 3

Buckeye Cablevision, Inc. v. FCC,

Sg ge ey ee |

Cable-Com General, Inc. v. Crisp,

No. CIV-81-290-W (W.D. Okla. Feb. 10,

FUME hk e ke presi ce leks cence beet ane vasaw es 8

I]

Page

Cases—Continued:

Cable Television Report & Order (Docket

Nos. 18397, et al.), 36 F.C.C. 2d 143.

aff'd sub nom. American Civil Liberties

Jdmon v. FCC. SIA mises... 4,6, 10, 12

Cable Television Syndicated Program Exclusivity

Rules, 79 F.C.C. 2d 663, aff'd sub nom.

Malrite T.V. v. FCC, 652 F.2d 1140.

cont. Cen S000) S 1163... 5, 11-12

Central Hudson Gas & Electric C orp. V.

Public Service Commission, 447 U.S. 557 ..... 8

Clarification of the Cable Television Rules.

WP ee wet a. 3

FCC v. Allentown Broadcasting Co..,

ieee. Oe 2

FCC v. Midwest Video Corp.,

seins ic tush PT Pe © OPO ann 12

First Report & Order in Docket Nos. 14895,

et al., 38 F.C.C. 683, aff'd sub nom.

Black Hills Video Corp. v. FCC,

re. 4,5

First Report & Order (CATV), Docket No.

18397, 20 F.C.C. 2d 201, aff'd sub nom.

United States v. Midwest Video Corp..,

eee ee. LL 12

Great Falls Community TV Cable Co. v. F cc.

SOT Pe oie I]

III

Page

Cases—Continued:

Inquiry into the Economic Relationship between

Television Broadcasting & Cable Television,

Oe Oe ee, 4

marae TV ¥. PCC. G37 F 2d ide .... 1... 12

Oklahoma Alcoholic Beverage Control Board v.

Heublein Wines, Int'l, 566 P.2d 1158 ......... 7

Queensgate Investment Co. v. Liquor Control

Commission, No. 81-2174 (Oct. 2, 1982) ... 8, 12

Queensgate Investment Co. v. Liquor Control

Commission, 69 Ohio 2d 361, 433 N.E. 2d

Le OU EN eas eee alae 8

Report & Order in Docket No. 19988.

WPT AO fe. 12

Report & Order in Docket No. 20272,

mer OA 200 oo. bie 3

Second Report & Order in Docket Nos. 14895,

et al., 2 F.C.C. 2d 725, aff'd sub nom.

Black Hills Video Corp. v. FCC,

See MO 6c oc. sc, ASG

Sixth Report & Order in Docket Nos. 8736,

oa sree te ........ 2...) 2

Titusville Cable TV, Inc. v. United States.

Mee me tte? |... cit. 1]

Tulsa Cable Television, 74 F.C.C. 2d 382........ 1]

United States v. Midwest Video Corp.,

mots ............... . 5, 16, i2

United States v. O’Brien, 391 U.S. 367 ........ 1]

United States v. Southwestern Cable.

Weel BOF cic. 2-3

IV

Page

Constitutions, statutes and regulations:

U.S. Const. :

Amend. I (Commerce

ho ee > 7.8, 10. 71. 4

Amend. VI (Supremacy Clause) ........... 8

Amend. XIV (Equal Protection (Tome) ...:. 8

re ees EL OS. 7

Communications Act of 1934, 47 U.S.C. 15]

céthoiee, Se OT aL ar ao 2

Weeeee ee 1,9

pe ee i.2

oligo 2

WOR ksi... 12

oe wee .................. 2

ort oe... 2.3,9

Copyright Act of 1976, 17 U.S.C. (& Supp. V)

101 et seg. :

17 U.S.C. (Supp. V) anf) 2) ee 5-6

vor ce Villig.............. 6

FY Vee Coes V) PiGd)-........... 6

Oklahoma Beverage Control Act, Okla. Stat.

Ann. tit.37, § 516 (West Cum. Supp.

cite fom, OE 7

47 C.F.R. :

wen see Oe) dj... 5

Se iy i ee 10

comma yi. oS ee 6

—— ae ls 5

Page

Miscellaneous:

H.R. Rep. No. 94-1476, 94th Cong., 2d Sess.

RUPee eg ae. 6

Op. Okla. Att’y Gen. No. 79-334

(eh a2 eR OS Ce ae 7

Television Factbook: Stations Volume

10

Pa a ee

In the Supreme Court of the Hnited States

OCTOBER TERM, 1982

No. 82-1795

CAPITAL CITIES CABLE, INC., ET AL., PETITIONERS

V.

RICHARD A. CRISP, DIRECTOR, OKLAHOMA ALCOHOLIC

BEVERAGE CONTROL BOARD

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE TENTH CIRCUIT

MEMORANDUM OF THE FEDERAL COMMUNICATIONS

COMMISSION AS AMICUS CURIAE

INTEREST OF THE FEDERAL COMMUNICATIONS

COMMISSION

The Federal Communications Commission has authority

Over all interstate and foreign communication by wire and

radio, including cable television systems, for the purpose of

making available “to all the people of the United States a

rapid, efficient, Nation-wide, and world-wide wire and

radio communication service.” 47 U.S.C. 151, 152(a). The

Oklahoma law req uiring state cable systems to delete liquor

advertisements broadcast by out-of-state television stations

has a significant impact upon the regulatory interests of the

Commission. The advertising ban, if enforced, will substan-

tially interfere with the ability of cable broadcasters to

comply with valid Commission regulations and will impose

a serious loss of television service on Oklahoma viewers. In

(1)

2

particular, some cable systems will have to cease carrying

out-of-state programming that is required to be carried

under the FCC’s mandatory signal carriage rules. The court

of appeals’ decision, moreover, will hinder the provision of

television service to rural and other underserved areas in

Oklahoma and undermine the federal policy favoring com-

petition and diversity in television programming.

STATEMENT

|. Inthe Communications Act of 1934, 47 U.S.C. 151 et

seq., Congress assigned the FCC the task of regulating the

field of broadcasting in the “public convenience, interest, or

necessity * * *." 47 U.S.C. 307(a). The Act provides that

broadcast licenses must be distributed “among the several

States and communities [so] as to provide a fair, efficient,

and equitable distribution of radio service to each of the

same.” 47 U.S.C. 307(b). Pursuant to this mandate, the

Commission has created a system of locally oriented televi-

sion broadcasting by carefully allocating broadcast stations

to communities throughout the nation and by requiring

broadcast licensees to serve those communities. See FCC v.

Allentown Broadcasting Co., 349 U.S. 358, 362 (1955):

Sixth Report & Order in Docket Nos. 8736, et al.,41 F.C.C.

148 (1952).

The Commission is authorized to regulate cable televi-

sion to the extent that such regulation is “reasonably ancil-

lary to the effective performance of the Commission’s var-

ious responsibilities for the regulation of television broad-

casting.” United States v. Southwestern Cable, 392 US.

157, 178 (1968) (“Southwestern Cable”).' This authority has

been exercised both for the purpose of protecting the “sys-

tem of local television broadcasting,” Southwestern Cable,

'The Communications Act has been held to apply to cable television,

even though that technology did not exist at the time of passage of the

Act. United States v. Southwestern Cable, supra, 392 U.S. at 167-169:

47 U.S.C. 152(a), 153(a).

3

supra, 392 U.S. at 177, and in order “to promote the objec-

tives for which the Commission had been assigned jurisdic-

tion over broadcasting.” United States v. Midwest Video

Corp., 406 U.S. 649, 667 (1972) (plurality opinion).?

Although state and local governments are free to regulate

certain aspects of cable television, the FCC has preempted

State regulation in a number of respects, including cable

system carriage of broadcast signals. Report & Order in

Docket No. 20272, 54 F.C.C. 2d 855, 863 (1975); Clarifica-

tion of the Cable Television Rules, 46 F.C.C. 2d 175, 178

(1975).3

The Commission has long recognized the important pub-

lic benefits that cable television provides. For example,

cable television “has made a significant contribution to

meeting the public demand for television service in areas

too small in population to support a local station or too

remote in distance or isolated by terrain to receive regular

or good off-the-air reception.” Second Report & Order in

Docket Nos. 14895, et al.,2 F.C.C. 2d 725, 781 (1966), aff'd

sub nom. Black Hills Video Corp. v. FCC, 399 F.2d 65 (8th

Cir. 1968). The record in this case, moreover, indicates that

*Although cable systems usually serve an area contained within the

borders of a single state, cable communications are deemed interstate in

nature even when they consist of broadcast signals emanating from

stations in the same state. Southwestern Cable, supra, 392 US. at

168-169, 172-173.

‘The Commission has also asserted exclusive jurisdiction over “pay

cable, leased channel regulations, technical standards, access, and sev-

eral aspects of franchise responsibility.” Report & Order in Docket No.

20272, supra, $4 F.C.C. 2d at 863. State and local authorities in turn

may regulate “the non-operational aspects of cable franchising includ-

ing bonding agreements, maintenance of rights-of-way, franchise selec-

tion and conditions of occupancy and construction * * *." /bid. See

Brookhaven Cable TV, Inc. v. Kelly, §73 F.2d 765 (2d Cir. 1978), cert

denied, 441 U.S. 904 (1979) (upholding the preemptive effect on state

and Iacal ragulaturafthe Cammimie $s water ior vu iCBUIaLe ait»

for pay cable television programming).

4

in some towns in Oklahoma. the only available television

signals are those of out-of-state stations imported by cable

operators. See Pet. 6.

The Commission has also expressed some concern that

the importation of distant television signals by cabla@feould

reduce the audiences and therefore the revenues o local

television stations, with the possible result that local pro-

gramming would diminish or the stations themselves cease

operations.* The Commission, therefore. adopted rules in

1965 that required microwave-served cable systems to carry

certain television signals that were available over-the-air

(the “must carry” rules), and to delete certain imported

network programming that duplicated local programs (the

“network nonduplication” rules). Firss Report & Order in

Docket Nos. 14895, et al., 38 F.C.C. 683 (1965), aff'd sub

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

1968). In 1966, the Commission extended these rules to all

cable sytems. In addition, it imposed substantial restric-

tions upon the importation of distant television signals by

cable systems (the “distant signal” rules). Second Report &

Order in Docket 14895, et al., 2 F.C.C. 2d 725 (1966), aff'd

sub nom. Black Hills Video C orp. Vv. FCC, 399 F.2d 65 (8th

Cir. 1968).5 These rules were designed to guarantee that

*Cable Television Report & Order ( Docket Nos. 18397, et al.), %

F.C.C. 2d 143, 164, 165 (1972), aff'd sub nom. American Civil Liberties

Union v. FCC, $23 F.2d 1344 (9th Cir. 1975); Second Report & Order

in Docket Nos. 14895, et al..2F.C.C. 24 725, 781 (1966), aff'd sub nom.

Black Hills Video Corp. v. FCC. 339 F.2d 65 (8th Cir. 1968); First

Report & Order in Docket Nos. 14895. et al., 38 F.C.C. 683, 700, 713

(1965). See Arlington Telecommunications C orp., 70 F.C.C. 2d 2291,

2298-2299 (1979), appeal dismissed sub nom. Committee to Balance the

Impact Gaff & Make ARTEC Constitutional, No. 79-1303 (D.C. Cir.

Feb. 5, 1982).

‘These restrictions were relaxed somewhat in subsequent Commis-

sion decisions. For a comprehensive description of the history of the

HOO S nguar'cal age rules, see Inguiry into the Economic Relationship

between Television Broadcasting & Cable Television, 71 F.C.C. 2d 632,

644-659 (1979).

5

cable subscribers would continue to receive all available

local signals, that the relative competitive positions of the

Stations in the area would be preserved, and that the system

of local broadcasting created by the Commission under

Section 307(b) of the Communications Act would not be

undermined by undue competition from cable systems.

Second Report & Order in Docket Nos. 14895. et al., supra,

2 F.C.C. 2d at 735-736: First Report & Order in Docket

Nos. 14895, et al., supra.

The “must-carry” and “network nonduplication™ rules

outlined above are still in effect today, although in some-

what modified form.* In 1980, however. the Commission

re-examined the “distant signal” rules and concluded that

these particular rules were no longer necessary to protect

the viability of broadcast stations and the sytem of local

broadcasting.’ In addition, the “distant signal” rules were

found to restrict competition and diversity in the provision

of television programming, to the detriment of the public.

Cable Television Syndicated Program Exclusivity Rules, 79

F.C.C. 2d 663, 813-814 (1980), aff'd sub nom. Malrite T. V.

v. FCC, 652 F.2d 1140 (2d Cir. 1981), cert. denied, 454 U.S.

1143 (1982).

The Copyright Act of 1976 establishes a compulsory

licensing system for the carriage of television Signals by

cable systems. Section 101(c)(3) of the Copyright Act, 17

* 47 C.F.R. 76.51-61 (1980) (must-carry); 47 C.F_R. 76.92-99 (net-

work nonduplication). The only other present restriction on cable

system signal carriage is the requirement that certain sporting events

not be broadcast if the events are not available over-the-air. 47 C_F_R.

76.67.

"Even before the repeal of the distant signal rules in 1980, the Com-

mission had relaxed its policy regarding waiver of these rules, in large

part because of its belief that the First Amendment would not permit

“ADM EveteectotrulT auie system signal Carriage that was not necessary to

protect local broadcasters. Arlington Telecommunications Corp., 70

F.C.C. 2d 2291, 2300 (1979).

6

U.S.C. (Supp. V) 111(c)(3), requires cable systems, in order

to avail themselves of the benefits of the statutory scheme,’

to carry broadcast signals intact, without deleting any

material, including advertisements.? This requirement is

designed to protect the advertiser, and thus the copyright

holder, since the latter’s compensation “is directly related to

the size of the audience that the advertiser’s message is

calculated to reach.” H.R. Rep. No. 94-1476, 94th Cong.,

2d Sess. 94 (1976). The statute also protects local broadcas-

ters, by preventing a cable system from inserting advertising

without having to bear the same program costs that broad-

casters must bear. /bid.

A prohibition against the deletion of advertisements

from retransmitted signals is also contained in the Commis-

sion’s rules. 47 C.F.R. 76.55(b); Second Report & Order in

Docket Nos. 14895, et al., supra, 2 F.C.C. 2d 725, 756. The

FCC rule “is designed to prevent a loss of revenues to local

broadcasters sufficient to result in reduced service to the

public.” Garland B. Pugh, 68 F.C.C. 2d 997, 999 (1978). 10

‘Cable operators are permitted under the Copyright Act's “compul-

sory license” scheme to retransmit any broadcast signal without making

individual arrangements with the broadcast licensee. 17 U.S.C. (Supp.

V) I11(c). Instead, cable sytems make payments toa royalty pool which

is then divided among broadcasters. 17 U.S.C. (Supp. V) 11 1(d). The

compulsory license system was created in order to enable cable systems

to carry the signals permitted by the FCC without having to negotiate

with every copyright owner whose work the cable operator retransmit-

ted. H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 89 (1976).

*The Act contains a minor exception, not applicable here, for “those

engaged in television commercial advertising market research.” 17

U.S.C. (Supp. V) 111(c)(3).

‘°At one time, the Commission conducted an inquiry to determine the

technical feasibility of permitting cable systems to substitute advertising

from local stations in place of the advertisements of distant signals, but

rejected the proposal as unworkable. Cable Television Report & Order

(Docket Nos. 18397, et al.), supra, 36 F.C.C. 2d at 165.

7

2. The State of Oklahoma prohibits the advertising of

alcoholic beverages, even though sale and consumption of

alcohol is lawful in Oklahoma.!! Oklahoma Alcoholic Bev-

erage Control Act, Okla. Stat. Ann. tit. 37, § 516 (West

Cum. Supp. 1982-1983); Okla. Const. Art. XXVII, §5. Fora

number of years the ban has been enforced against televi-

sion stations in Oklahoma that retransmit national network

programs containing wine advertisements. !2 Notwithstand-

ing the apparent breadth of the advertising ban, the Okla-

homa Attorney General has ruled that the law does not

apply to out-of-state print media sold in Oklahoma, and

until 1980 the law was not enforced against cable television

systems retransmitting out-of-state broadcast signals (Pet.

App. 4a, 5a, 23a-24a). In March 1980, however, the Attor-

ney General issued an opinion stating that retransmission of

wine conimercials by cable television systems violated

Oklahoma law.!} Cable operators were thereafter notified

that they would be criminally prosecuted if such advertising

is carried over their systems (Pet. App. 4a, 41a).

In March 1981, petitioners, several Oklahoma cable SYS-

tems, filed suit in the United States District Court for the

Western District of Oklahoma seeking declaratory and

injunctive relief against Richard Crisp, Director of Okla-

homa’s Alcoholic Beverage Control Board. They argued

-

''Oklahoma law does permit liquor stores to advertise using “strictly

regulated on-premises signs” (Pet. App. 3a).

‘The Oklahoma Supreme Court has found enforcement of the law

against television stations to be consistent with the Commerce Clause of

the United States Constitution. Oklahoma Alcoholic Beverage Control

Board v. Heublein Wines, Intl, $66 P.2d 1158 (Okla. 1977).

Op. Okla. Att'y Gen. No. 79-334 (Mar. 19, 1980). Because beer

containing less than 3.2% alcohol may be advertised, and because beer

may sometimes contain less than 3.2% alcohol, beer commercials

need not be deleted (Pet. App. Ja). At the time this case was brought.

hard liquor generally was not advertised on television.

8

that application of the ban to cable carriage of out-of-state

broadcast signals violated the Commerce and Supremacy

Clauses, their free speech rights under the First and Four-

teenth Amendments, and the Equal Protection Clause of

the Fourteenth Amendment. On cross-motions for sum-

mary judgment, the district court, after applying the test set

forth in Central Hudson Gas & Electric Corp. v. Public

Service Commission, 447 U.S. 557 ( 1980), issued a perma-

nent injunction barring enforcement of the Oklahoma law

against petitioners, holding that the ban on liquor advertis-

ing was an unconstitutional restriction on the cable opera-

tors’ First and Fourteenth Amendment right to engage in

protected commercial speech. Cable-Com General, Inc. v.

Crisp, No. CIV-81-290-W (W.D. Okla. Feb. 10, 1982) (Pet.

App. 33a-50a).'* The court of appeals reversed. holding that

although the advertising at issue here was protected by the

First Amendment, the Oklahoma ban was a valid restric-

tion on commercial speech (Pet. App. 20a, 24a).!5

'*The district court found that (1) cable Systems import broadcast

signals that originate outside Oklahoma and contain wine commercials;

(2) federal law prohibits cable operators from modifying those signals;

(3) cable operators “have no contractual relationship with the stations

whose signals they carry, pay no fee to the stations for said signals, and

have no voice inthe programming carried by such stations;” (4) there is

no feasible way for cable operators to delete advertising from imported

signals; and (5) inability to carry out-of-state signals containing wine

commercials “would probably cause a large but inherently immeasur-

able reduction in Plaintiffs’ subscriber revenue” (Pet. App. 40a-42a).

'SThe court of appeals viewed this Court's summary dismissal of the

appeal in Queensgate Investment Co. v. Liquor Control Commission,

No. 81-2174 (Oct. 2, 1982), as controlling the result in the instant

proceeding (Pet. App. 24a). In Queensgate, the Ohio Supreme Court

upheld as consistent with the First and Fourteenth Amendments a

partial ban on off-premises advertising of liquor prices by certain liquor

permit holders. Queensgate Investment Co. v. Liquor Control Com-

mission, 69 Ohio 2d 361, 433 N_E. 2d 138 (1982).

9

DISCUSSION

This case presents an important issue of federal law that

warrants this Court’s attention: whether, by regulating

liquor advertising, a state may effectively ban cable broad-

casters from carrying out-of-state programming. Although

Oklahoma purports to ban only advertisements, federal

copyright laws, FCC rules, and technical factors prohibit

the deletion of advertising from broadcast signals transmit-

ted by cable. Accordingly, Oklahoma’s ban on liquor adver-

tising will have the effect of preventing Oklahoma cable

systems from retransmitting out-of-state broadcast signals

to their subscribers, even if those signals originate in nearby

states and are required to be carried by applicable FCC

regulations. If allowed to stand, the court of appeals’ deci-

sion will interfere with the FCC’s regulatory authority and

will diminish the diversity of broadcast voices available in

Oklahoma, to the detriment of cable broadcasters and the

broad interests of the viewers of Oklahoma.

1. The FCC believes that cable television is a valuable

means of furthering the goals of the Communications Act.

Among these goals is the provision, “so far as possible, to all

the people of the United States [of] a rapid, efficient,

Nationwide, and world-wide wire and radio communica-

tions service * * *”(47 U.S.C. 151), and the distribution of

broadcast services “among the several States and communi-

ties [so] as to provide a fair, efficient, and €guitable distribu-

tion of radio service to each of the same” (47 U.S.C. 307(b)).

Because Oklahoma's advertising ban prohibits retransmis-

sion of any signal containing wine commercials, that ban

interferes with the “fair, efficient, and equitable distribu-

tion” of television broadcast services within the state. 47

U.S.C. 307(b).

The Commission's cable television signal Carriage rules

are designed to serve the varied interests of broadcasters

and television viewers. The rules, for example, assure that

10

rural areas and areas isolated by terrain can receive, via

cable, the signals of stations that, although located nearby,

may not provide good reception over-the-air. They also

protect local stations against loss of their over-the-air

audience. See pages 4-5, supra. The Oklahoma advertising

ban, however, conflicts with these interests because it forces

cable broadcasters to delete all out-of-state service that

includes wine advertising —whether or not that service is

available over-the-air or is required to be carried under the

FCC’s “must-carry” rules.'® Indeed, if the state ban is

upheld, approximately one-third of the land area of Okla-

homa will lose signals now required to be carried under the

FCC's “must-carry” rules (see 47 C.F.R. 76.51-65: Televi-

sion Factbook: Stations Volume (1982-1983 ed.)); certain

areas of the state, where over-the-air reception of Signals is

poor and Oklahoma signals are not available, will receive

no television service at all.!? Such results are inconsistent

with the underlying goals of a local broadcasting system —a

system that federal cable television regulation is intended

not merely to protect but actively to promote. See United

States v. Midwest Video Corp., 406 U.S. 649, 667 (1972)

(plurality opinion).

2. The Oklahoma law also interferes with a cable opera-

tor’s freedom to select the programming it wishes to provide

to its subscribers. This interference raises serious First

Amendment concerns, to which the FCC has been sensitive

‘Cable systems complying with the ban are forced to delete all

out-of-state signals because federal copyright law and FCC rules pro-

hibit the deletion of advertising material from retransmitted signals. See

pages 5-6, supra. Even if such deletion were lawful. practical difficulties

would make it impossible for cable systems to carry distant commercial

television signals, virtually all of which on occasion contain commer-

cials for wine (Pet. App. 29a, 41a). See Cable Television Report &

Order (Docket Nos. 18397, et al.), supra, 36 F.C.C. 2d at 165: note 10.

supra.

'’Pet. 6; 2 Court of Appeals Record at 55.

I]

in its own regulation of cable television, and threatens to

dampen the diversity of broadcast voices that the Commis-

sion has recently endeavored to promote.

The FCC has recognized that restrictions on the signal

carriage decisions of cable television operators may “violate

the cable operator’s First Amendment right to speak or

publish.” Arlington Telecommunications C. orp., 73 F.C.C.2d

766, 773 (1979), appeal dismissed sub nom. Committee

to Balance the Impact Gaff & to Make ARTEC Constitu-

tional v. FCC, No. 79-1303 (D.C. Cir. Feb. 5, 1982); Tulsa

Cable Television, 74 F.C.C. 2d 382, 385 (1979). See also

Arlington Telecommunications Corp., 70 F.C.C. 2d 2291,

2300 (1979). The Commission, therefore, has regulated

cable television signal carriage only where such regulation is

believed to be necessary to protect local television service,

and even then has fashioned its rules in such a way as to

impose “the least possible restrictions on First Amendment

freedoms * * *.” Tulsa Cable Television, supra, 74 F.C.C.

2d at 385, citing United States v. O’Brien, 391 U.S. 367

(1968); Arlington Telecommunications Corp., supra, 70

F.C.C. 2d at 2299-2300. '8

It is in pursuit of these First Amendment interests that the

FCC found that its distant signal rules resulted ina substan-

tial loss in competition and diversity. Cable Television S 'yn-

dicated Program Exclusivity Rules, supra, 79 F.C.C. 2d at

'8Several circuits have upheld the FCC’s distant Signal carriage and

network nonduplication rules as consistent with the First Amendment.

E.g., Great Falls Community TV Cable Co. v. FCC, 416 F.2d 238, 242

(9th Cir. 1969) (nonduplication); Black Hills Video Corp. v. FCC, 399

F.2d 65, 67 (8th Cir. 1968) (must-carry, distant signal, and nonduplica-

tion); Titusville Cable TV, Inc. v. United States, 404 F.2d 1187, 1189-

1190 (3d Cir. 1968) (nonduplication); Buckeye Cablevision, Inc. v.

FCC, 387 F.2d 220, 225-226 (D.C: Cir. 1967) (distant signal). This

Court has never passed upon the validity of the distant signal rules

under the First Amendment.

12

813-814. See Malrite TV v. FCC, 652 F.2d 1140, 1151

(2d Cir. 1981). “[It] has long been a basic tenet of national

communications policy that ‘the widest possible dissemina-

tion of information from diverse and antagonistic sources is

essential to the welfare of the public.’ ” First Report &

Order (CATV), Docket No. 18397, 20 F.C.C. 2d 201, 205

(1969), aff'd sub nom. United States v. Midwest Video

Corp., 406 U.S. 649 (1972), quoting Associated Press v.

United States, 326 U.S. 1, 20 (1945) (other citations

omitted).!9 !

Although ostensibly aimed at limiting the consumption

of alcohol, the advertising prohibition at issue here has a

significantly broader impact.2? Whatever its influence on

———

'9In Docket No. 18397 the Commission promulgated rules requiring

cable systems to originate programming and to maintain facilities for

local production. This Court upheld the Commission's authority under

the Communications Act to adopt the rules. United States v. Midwest

Video Corp., 406 U.S. 649 (1972). In the plurality opinion, the Court

cited the Commission's recognition of “the great potential of the cable

technology to further the achievement of long-established regulatory

goals in the field of television broadcasting by increasing the number of

outlets for community self-expression and augmenting the public's

choice of programs and types of services * * *." /d. at 654, quoting First

Report & Order in Docket No. 18397, supra, 20 F.C.C. 2d at 202. The

Commission later deleted the mandatory origination rule, finding that

in view of the costs imposed on cable systems. origination should be

voluntary. Report & Order in Docket No. 19988, 49 F.C.C. 2d 1090.

1104-1106 (1974). The equipment availability rule was part of a package

of cable access channel rules that this Court invalidated in FCC v.

Midwest Video Corp., 440 U.S. 689(1979). There, the Court found that

Section 3(h) of the Communications Act, 47 U.S.C. 153(h), precluded

the FCC from treating cable operators as common carriers. 440 U.S. at

708-709.

0This factor alone serves to distinguish this case from Queensgate

Investment Co. v. Liquor Control Board, supra, so heavily relied upon

by the court of appeals (Pet. App. 7a-9a, 13a-14a). The regulation in

that case, as the court of appeals recognized, affected only the commer-

cial speech of “liquor permit holders” (Pet. App. I4a). Here, by con-

trast, the advertising ban broadly restricts the dissemination of non-

commercial speech by cable broadcasters.

13

liquor sales, the state ban on liquor advertising has the

inevitable effect of banning the carriage of out-of-state

broadcast signals by Oklahoma cable operators. Such a

result limits the ranges of broadcast voices available in the

state and thus undermines the national policy favoring the

dissemination of information from varied and diverse

sources.2!

3. For the reasons stated above, the Commission be-

lieves that the decision of the court below was erroneous. If

the decision is allowed to stand, certain cable broadcasters

in Oklahoma will be faced with the choice of complying

with state law or applicable FCC signal carriage rules;

compliance with both will, in some circumstances, be

impossible. The cable broadcaster cannot simply delete the

offending advertisements because of the proscriptions of

applicable FCC regulations and federal copyright law, nor

can it simply discontinue the out-of-state signal in all

instances because of the Commission’s “must-carry” rules.

The decision, as even the court below recognized, places

cable broadcasters “in a difficult position” (Pet. App. 23a).

More important, the decision below substantially interferes

with the existing federal regulatory framework established

to promote cable broadcasting.

?!Oklahoma cable subscribers, for example, will be deprived of the

Programming of distant out-of-state stations, including cable “super-

stations” whose programming has wide national appeal. Further,

because carriage of out-of-state broadcast signals is what attracts many

subscribers to cable, cable systems are likely to lose substantial revenues

as a result of the ban (Pet. App. 42a). If cable systems cease Operations,

the public will be denied access not just to retransmitted television

signals but also to other cable services. including special news, motion

picture, and sports cable channels. E.g., Cable News Network, Home

Box Office, and the Entertainment and Sports Programming Network.

The Oklahoma ban against wine commercials, therefore, threatens to

result in a substantial loss in Program availability and diversity for

residents of Oklahoma.

14

We believe that this case warrants the attention of this

Court. The questions presented by petitioners, however,

focus exclusively on First Amendment concerns. Should

the Court grant the petition in this case, it may wish to

consider directing the parties to brief and argue the question

whether the state’s regulation of liquor advertising, as app-

lied to out-of-state broadcast signals, is valid in light of

existing federal regulation of cable broadcasting.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.

Rex E. Lee

Solicitor General

Bruce E. FEIN

General Counsel

DANIEL M. ARMSTRONG

Associate General Counsel

LINDA L. OLIVER

Counsel

Federal Communications Commission

JUNE 1983

DO J-1983-06