# Amicus Curiae Brief — Cablevision Systems Corp. v. Federal Communications Commission

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_1541%3A7

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2010
- **Citation:** 560 U.S. 918

## Text

Supteme Court, U.S.
"*eO

FEB 26 2010
No. 09-901
OFFICE Me Tuc CLERK |

In the
Supreme Court of the United States

CABLEVISION SYSTEMS CORPORATION,

Petitioner
Vv.

FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
Respondents

On Petition for a Writ of Certiorari to
The United States Court of Appeals
For the Second Circuit

BRIEF OF AMICUS CURIAE
NATIONAL CABLE &
TELECOMMUNICATIONS ASSOCIATION
IN SUPPORT OF PETITIONER

NEAL M. GOLDBERG CHRISTOPHER J. WRIGHT

MICHAEL 8S. SCHOOLER Counsel of Record

DIANE B. BURSTEIN TIMOTHY J. SIMEONE

NATIONAL CABLE & MARK D. DAVIS
TELECOMMUNICATIONS WILTSHIRE & GRANNIS LLP
ASSOCIATION 1200 18 Street, N.W.

25 Massachusetts Washington, D.C. 20036
Avenue, N.W. (202) 730-1300

Washington, D.C. 20001 cwright@wiltshiregrannis.com

l

TABLE OF CONTENTS

Page
Fr IE FE boss tkdcsccdsscstocevesseencacocnenes li
INTEREST OF AMICUS CURIAE................... 1
INTRODUCTION AND SUMMARY ......................... 2
REASONS FOR GRANTING THE PETITION......... 5

CHANGES IN THE VIDEO PROGRAMMING
MARKETPLACE AND IN TECHNOLOGY
HAVE UNDERMINED THE BASES ON
WHICH THE MUST-CARRY PROVISIONS
OF THE STATUTE WERE UPHELD. ................. 6

ST iiss cadisisersdaaitipaccehessaésseececvdiesssdesiokaeis 13

11

TABLE OF AUTHORITIES

CASES: Page
Comcast Corp. v. FCC, 579 F.3d 1 (D.C. Cir.

Sit in aerate cea ugeat dias aecantrsa tte tineses 2,4, 7, 8,9
Time Warner Entm't Co., L.P. v. United States,

JiR ek Pek Fil Ree a Ae: | | | ne 9
Time Warner Entm't Co., L.P. v. FCC, 240

ee Bie Tid oe ee |) nee Lair g
Turner Broadcasting System, Inc. v. FCC, 512

ee ne eee ae passim
Turner Broadcasting System, Inc. v. FCC, 520

ee ec se paiuenieenseul passim
STATUTES AND REGULATIONS:
ee eee Be) ey ee eet RRP EER I
Er ee i cnc csesivaiectccn uasasiens Ft PIO OLE 7
OTHER:

Annual Assessment of the Status of
Competition in the Market for the Delivery
of Video Programming, Thirteenth Annual
Report, 24 FCC Red 542 (2009)................... 7,6, 3

Annual Assessment of the Status of
Competition in the Market for the Delivery
of Video Programming, Comments of the
National Cable & Telecommunications
Association, FCC MB Docket No. 07-269
ee cs veloute 8

Data Sought on Uses of Spectrum, Public
Notice, 24 FCC Red 14275 (Dec. 21, 2009)......... 12

INTEREST OF AMICUS CURIAE!

The National Cable & Telecommunications
Association (“NCTA”) is the principal trade
association representing the cable television industry
in the United States. Its members include cable
operators serving more than 90% of the nation’s
cable television subscribers, as well as more than 200
cable programming networks and services. NCTA’s
members also include suppliers of equipment and
services to the cable industry.

NCTA fully supports Cablevision’s petition for a
writ of certiorar: and submits this amicus bricf to
endorse Cablevision’s arguments that changes in the
video programming marketplace since this Court’s
decisions in Turner Broadcasting System, Inc. v.
FCC, 512 U.S. 622 (1994) (Turner I’), and Turner
Broadcasting System, Inc. v. FCC, 520 U.S. 180
(14997) (Turner If’), significantly undermine the
continued viability and constitutionality of “must
carry’ requirements,

As this Court recognized in the Turner decisions,
the must carry provisions at issue in this case
directly and_ significantly restrict the protected
speech of NCTA’s members — both its cable operator
members, who are compelled to set aside capacity on
their systems for broadcast signals that they would

.——— rr

1 Counsel for all parties have consented to the filing of this
bref, and their consents have been filed with the Clerk of this
Court. No counsel for a party authored this brief in whole or in
part and no counsel or party made a monetary contribution
intended to fund the preparation or submission of this brief. No
person other than amicus curiae or its counsel made a
monetary contribution to its preparation or submission.

not otherwise choose to carry, and its cable-program-
network members, who must compete for carriage on
cable systems and for desirable channel placement
without any such guaranteed carriage rights.

Fundamental changes in the marketplace since
Congress adopted the must-carry statute in 1992
have substantially eroded the bases on which this
Court upheld the constitutionality of such forced
carriage. In particular, the development of “ever
increasing competition among video providers,”
Comcast Corp. v. FCC, 579 F.3d 1, 8 (D.C. Cir. 2009),
and technological changes have eliminated the
“bottleneck control” on which the Court relied in
declining to apply strict scrutiny — the standard
normally warranted in cases involving forced speech
— and in finding that the must carry provisions
survived intermediate scrutiny. In addition, far
fewer households now rely on over-the-air reception,
which also decreases any governmental interest
served by the must carry rules.

Finally, NCTA also supports Cablevision's
petition for a writ of certiorari: because this case
provides a much-needed opportunity for the Court to
consider an as-applied challenge to the must-carry
rules.

INTRODUCTION AND SUMMARY

Although this Court rejected the facial challenge
to the must-carry provisions of the 1992 Cable Act in
its Turner decisions, all the Justices recognized that
the statute infringes free-speech values. ‘The
plurality acknowledged that the must-carry
provisions both “restrain cable operators’ editorial
discretion in creating programming packages by

‘reducing the number of channels over which [they]
exercise unfettered control” and “render it more
difficult for cable programmers to compete for
carriage on the limited channels remaining.” Turner
IT, 520 U.S. at 214, quoting Turner I, 512 U.S. at 637.
In casting the deciding vote, Justice Breyer similarly
recognized that the must-carry provision “extracts a
serious First Amendment price.” Turner II, 520 U.S.
at 226. And the dissenters concluded that it was
unconstitutional on its face for Congress to
“commandeer'] up to one third of each cable system’s
channel capacity for the benefit of local
broadcasters.” Jd. at 251.

Today, the must-carry rules continue to impose a
substantial burden on the free-speech rights of cable
programmers and cable operetors. But much has
changed in the market for television programming
since the must-carry statute was adopted in 1992.
Significantly, these changes tn the marketplace call
into question many of the considerations underlying
this Court’s rulings in the Turner cases.

In particular, regulations that require a medium
of communications to transmit speech that it does
not choose to carry are presumptively
unconstitutional and generally subject to strict
scrutiny. In Turner J, however, the Court held that
the must-carry provisions were subject only to
intermediate scrutiny. 512 U.S. at 661. The Court
explained that “special characteristics of the cable

medium” — in_- particular, cable operators’
“bottleneck control” over the programming available
to cable customers — not only justified this

departure from “application of the most exacting
level of First Amendment scrutiny,” id., but also gave

4

rise to a real threat of anticompetitive harm that
justified the must carry rules under intermediate
scrutiny.

In adopting the 1992 Act, Congress feared that
cable operators’ “bottleneck” control would allow
them to decline to carry small broadcasters in order
to capture the broadcasters’ advertising revenue.
Today, however, any potential concern about a cable
“bottleneck” has been eviscerated. Satellite operators
DirecTV and the EchoStar are now the second and
third largest providers of multichannel video
programming and the FiOS and U-verse offerings of
telephone companies Verizon and AT&T are growing
fast. As a result, as the D.C. Circuit recently held in
Comcast Corp. v. FCC, “[cl]able operators ... no longer
have the bottleneck power over programming that
concerned the Congress in 1992.” 579 F.3d at 8.

Both Congress and the Turner J Court also noted
another facet of the “bottleneck” that it found to have
existed in 1992: Once viewers connected their sets to
cable, they were essentially foreclosed from obtaining
video programming not carried by the cable system.
Again, however, these concerns are greatly
attenuated today. Because virtually all television
sets now include multiple video inputs, attachment
of a particular source of programming no longer
inherently closes off access to other sources.

The fact that cable can no longer credibly be
found to possess bottleneck control over video
programming suggests that forced carriage of
programming by cable systems may deserve the
same strict scrutiny that applies to forced carriage of
material by newspapers. But even under
intermediate scrutiny, the absence of bottleneck

control means that the burden of must-carry
requirements can no longer be justified as necessary
to promote a real, non-conjectural threat.

In addition, the fact that the number of over-the-
air viewers 18S now much smaller supports the
conclusion that forced carriage is no_ longer
warranted.

REASONS FOR GRANTING THE PETITION

In its Turner decisions, this Court upheld the
must-carry regime after applying intermediate
scrutiny even though it is typically appropriate to
apply strict scrutiny to statutes in which the
government compels speech, as here. The Court
based that decision largely on its finding that cable
operators have bottleneck control over what viewers
can watch. But changes in the competitive
marketplace as well as changes in technology have
undermined this finding. And the interest served by
the must-carry requirement has decreased in force as
the number of over-the-air viewers has decreased.
The Court should therefore grant certiorari to re-
examine whether compelling carriage of broadcast
stations that a cable operator would otherwise choose
not to carry can still survive First Amendment
scrutiny.

ee ee 7 —

? This case also squarely presents an important issue reserved
by the Court in Turner 1. Specifically, the Court there declined
to address the question whether FCC consideration of
programming content during market-modification proceedings
would require application of the strict scrutiny standard. /d. at
643 n.6. In this case, the FCC granted the market modification
sought by WRNN based in part on consideration of its
programming content, so the question whether strict scrutiny
apphies cannot be avoided.

6

CHANGES IN THE VIDEO PROGRAMMING
MARKETPLACE AND IN TECHNOLOGY
HAVE UNDERMINED THE BASES ON
WHICH THE MUST-CARRY PROVISIONS
OF THE STATUTE WERE UPHELD.

The Court rejected the facial challenge to the
must-carry statute in large part on the ground that
cable operators controlled a bottleneck. The finding
that cable had bottleneck control over access to video
programming was a significant basis for the Court's
decision to apply intermediate rather than strict
scrutiny. And it was a significant basis for its
determi. ation that, under intermediate scrutiny, the
must-carry rules addressed an _ important
governmental concern that was real and not merely
conjectural. But the development of vibrant
competition in the video programming marketplace,
as well as the ubiquity of multiple video inputs on
television sets have eliminated the bottleneck that
the Court had found to exist.

In Turner II, the Court emphasized that “[o]nly
one percent of communities are served by more than
one cable system [and] [e]ven in communities with
two or more cable systems, in the typical case each
system has a local monopoly over its subscribers.”
520 U.S. at 197. This finding of market power was
essential to the Court’s decision that the must-carry
rules were justified. The absence of competition, the
Court reasoned, permitted “cable industry favoritism
for integrated programmers.” Id. at 200. Accordingly,
the must-carry rules were justified as “regulation{s}
designed ‘to prevent cable operators from exploiting
their economic power to the detriment of

broadcasters.” Id. at 186, quoting Turner I, 512 U.S.
at 649.

In his short opinion concurring in part, Justice
Breyer agreed that “a cable system ... at present
(perhaps less in the future) typically faces little
competition,” and went on in the same sentence to
conclude that the resulting control of “the range of
viewer choice” justified “some degree — at least a
limited degree — of governmental intervention.”
Turner II, 520 U.S. at 227. Thus, all five justices
voting to uphold the must-carry statute against the
facial challenge in the Turner cases explicitly
recognized that the must-carry rules were premised
on the lack of competition. Even then, Justice Breyer
emphasized that only a lmited degree of
governmental intervention was warranted and noted
that the future development of competition might
eliminate the need for any such intervention. Id. at
227-28.

Of course, substantial competition has developed;
indeed there is “ever increasing competition among
video providers.” Comcast, 579 F.3d at 8. The FCC’s
most recent annual report to Congress on the state of
video markets required by 47 U.S.C. § 548(g)
documents this increase. That report shows that in
2006 DirecTV was the second-largest provider of
multichannel video programming services’ and
EchoStar was the third-largest. Annual Assessment
of the Status of Competition in the Market for the
Delivery of Video Programming, Thirteenth Annual
Report, 24 FCC Red 542, 581 76 (2009) (“2006
Competition Report’). DirecTV and EchoStar both
provide satellite service and hence compete with
cable systems on a nationwide basis, giving most

American households a choice of three providers.
Satellite operators initially Jacked — sufficient
spectrum to provide local broadcast channels, but by
2006 at least one of the two satellite providers
offered local broadcast channels in “approximately
175 of 210 television markets ..., which represent 97
percent of all U.S. television households.” Jd. at 584
484. The 2006 Competition Report noted that Verizon
had just entered the multichannel video market with
“FiOS” and AT&T had just begun to offer “U-verse.”
Id. at 548 914. Only about 14 percent of American
households did not subscribe to a multichannel
service in 2006. Jd. at 594-95 4108.

NCTA’s recent submission providing the FCC
updated information on the _ video-programming
market confirms that competition has continued to
develop. DirecTV and EchoStar remain the second
and third largest multichannel service providers, and
DirecTV has grown especially rapidly on account of
its aggressive advertising campaign focusing on its
high-definition programming. Annual Assessment of
the Status of Competition in the Market for the
Delivery of Video Programming, Comments of the
National Cable & Telecommunications Association at
9-11, FCC MB Docket No. 07-269 (May 20, 2009).
Verizon's FiOS network is now available to 17
million households in 14 states, and Verizon reported
that it gained approximately 300,000 new
subscribers in the first quarter of 2009. Jd. at 12.
AT&T's U-verse service gained almost as many new
subscribers in that quarter, and AT&T plans to
extend its service to 93 markets in 19 states. Id.

The D.C. Circuit’s recent Comcast decision
provided the exclamation point regarding the

ongoing increase in competition among video
programming providers. The Comcast court
addressed the 30-percent subscriber limit established
by the FCC under 47 U.S.C. § 533(f)(2)(A), vacating
that provision because the FCC had failed to
adequately consider the effects of the development of
competition. The subscriber-limit provision was
adopted in the same 1992 legislation that required
must carry, and the purpose of the subscriber limit,
in the words of the statute, is to ensure that cable
operators do not “unfairly impede ... the flow of video
programming’ by refusing to carry disfavored cable
channels. Shortly after its adoption, the D.C. Circuit
rejected a facial attack on the constitutionality of the
subscriber limit provision, but in 2001 held that the
FCC had not adequately justified the 30-percent
subscriber limit it adopted. Time Warner Entm't Co.,
L.P. v. United States, 211 F.3d 1313, 1315 (D.C. Cir.
2000) (rejecting facial challenge); Time Warner
Entm't Co., L.P. v. FCC, 240 F.3d 1126, 1136 (D.C.
Cir. 2001) (invalidating 30-percent ownership
requirement). The recent decision reviewed the
FCC’s repromulgation of the 30-percent subscriber
limit under a modified rationale. The D.C. Circuit
stated that the basis for the subscriber limit is that
cable operators once possessed “bottleneck monopoly
power.” Comcast, 579 F.3d at 6, quoting Turner 1,
512 U.S. at 661. Again, however, the court concluded
that “[clable operators ... no longer have the
bottleneck power over programming that concerned
the Congress in 1992,” Comcast, 579 F.3d at 8, and
held that the 30-percent subscriber limit could not
stand in hght of the development of competition.

This significant increase in competition similarly
undermines the principal basis on which the must-

10

carry requirements survived intermediate scrutiny.
Cable operators no longer control a bottleneck and
there is little reason to be concerned about abuse of a
bottleneck that does not exist, whether the potential
victim is a cable programmer, as with the subscriber
limits, or a broadcaster, as with the must-carry
rules. On account of vigorous competition, cable
operators must be especially vigilant to offer
programming preferred by viewers lest their
subscribers switch to a satellite provider or a
telephone company. This effect of the development of
competition — explicitly anticipated by Justice
Breyer, Turner IT, 320 U.S. at 227 — erodes the basis
for determining that must-carry requirements are
necessary to prevent a real, not merely conjectural,
threat, just as the D.C. Circuit recognized that it
undermined the FCC’s subscriber limits.

Cable operators’ “bottleneck control” was not only
the basis on which must carry survived intermediate
scrutiny, but also an important ground for the
Court’s holding that must-carry rules — unlike
forced speech requirements generally — should be
subject to intermediate rather than strict scrutiny.
The Court noted that the technological
characteristics of cable systems gave them a degree
of physical “bottleneck control” that differentiated
them from newspapers, (which clearly could not be
compelled to carry speech not of their choosing).
Specifically, “the physical connection between the
television set and the cable network gives the cable
operator bottleneck, or gatekeeper, control over most
(if not all) of the television programming that is
channeled into the subscriber's home.” J'urner J, 512
U.S. at 656. But unlike in the early 1990s, when
cable was typically connected to the only video input

1]

of a subscriber's television set, virtually all television
sets today have multiple inputs, and viewers use
these inputs to switch seamlessly among a variety of
other devices that provide video content from other
sources, including gaming consoles and DVD players.
Therefore, any physical bottleneck that cable
operators once possessed — like any bottleneck
created by market power — no longer exists.

Along with the development of significantly
greater competition and technological improvements,
the number of Americans who depend on over-the-air
signals has declined sharply. When the Cable Act
was passed in 1992, 40 percent of Americans still
depended on over-the-air broadcasts, and the Court
reasoned that must carry was necessary “to preserve
access to free television programming” for those
Americans. Id. at 646. But since 1992, that number
has dropped sharply. As the FCC’s latest report on
competition in the video-programming industry
explains, only about 14 percent of U.S. households
now depend on_ over-the-air signals. 2006
Competition Report, 24 FCC Red at 549 916. And
even that number—which is based on 2006-2007
data—1is overstated because it does not account for
the large numbers of Americans who switched to
cable or satellite during the digital-television
transition. See Petition at 20 n.8.

This sharp decline changes the constitutional
analysis by diminishing the government's interest 1n
“protecting noncable households from loss of regular
television broadcasting service.” Turner I, 512 US.
at 647. In Turner IJ, this Court found that interest
to be sufficiently “important” to justify burdening the
First Amendment rights of cable operators because

12

“{florty percent of American households continue to
rely on over-the-air’ signals’ for television
programming” and_ because “broadcasting is
demonstrably a principal source of information and
entertainment for a great part of the Nation’s
population.” 520 U.S. at 190 (internal citation
omitted). But with fewer and fewer Americans
relying on broadcast signals as their source of news
and information, broadcasting is no longer the
“principal source” of information and entertainment
for “a great part” of the population, and the
government's interest is therefore no longer as
significant.

Even the FCC has recognized this point. In
December, the Commission initiated an inquiry to
determine whether spectrum currently allocated to
broadcast television should be reclaimed for more
productive use. See Data Sought on Uses of
Spectrum, Public Notice, 24 FCC Red 14275, 14277
"4B.5, D (Dec. 21, 2009) (requesting comments on
“the costs to replace over-the-air delivery to MVPDs
and consumers with other means (fiber, microwave)”
and asking “[w]hat market-based or other incentive
mechanisms should the Commission consider to
enable broadcasters to choose whether or not to
make any spectrum (excess or otherwise) available
for reallocation to wireless broadband use”). With
even the Commission suggesting that broadcast
spectrum should be put to better use, it is clear that
broadcast television no longer serves an “important”
government interest to the extent that it used to.

Thus, changed circumstances have drastically
shifted the balance between the government's
interest in the must-carry regime and the burden the

13

regime imposes on speech, a factor that this Court
found crucial in Jurner JJ. There, the Court
concluded that “the burden imposed by must-carry is
congruent to the benefits it affords.” Turner JJ, 520
U.S. at 215-16. But given the sharp decline in over-
the-air viewership, that conclusion is no longer true.

The Court should grant certiorari in this case to
determine how these. significant changes to factors
that were critical to the Court’s decisions in Turner
affect the constitutionality of the continued
application of must-carry requirements.

CONCLUSION

The Court should grant the petition for a writ of
certiorari.

Respectfully submitted

NEAL M. GOLDBERG CHRISTOPHER AY

MICHAEL S. SCHOOLER Counsel of Record

DIANE B. BURSTEIN TIMOTHY J. SIMEONE

NATIONAL CABLE & MARK D. DAVIS
TELECOMMUNICATIONS WILTSHIRE & GRANNIS LLP
ASSOCIATION 1200 18 Street, N.W.,

25 Massachusetts Washington, D.C. 20036
Avenue, N.W. (202) 730-1300

Washington, D.C. 20001 cwright@wiltshiregrannis.com

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_1541%3A7. Public record. Not legal advice.