Opinion — United States v. Midwest Video Corp.

Syllabus -

UNITED STATES er at. v MIDWEST VIDEO CORP.

| CERTIORARI "TO THE UNITED STATES COURT OF APPEALS FOR

: THE EIGHTH i aa

No. 71-806. Argued April 19, 1972—Decided June 7, 1972

f

’ The neil Conumvuniestions Commission (FCC) promulgated a

carry the signal of any television broadcast station unless the sys-

tem also operates to a significant extent as a local outlet by

cablecasting [i. e., originating programs] and has available facilities

° for local production and presentation of programs other than auto-

mated services.” Upon challenge of respondent, an operator’ of

“CATV: systems subject to the new requirement, the Court of

Appeals set aside the regulation on the ground that the FCC had

no authority to issue it. Held: The judgment is reversed. Pp.

659-676. :

441 F. 2d 1322, reversed. >

Mr. Justice BRENNAN, joined by Mr: Justice Wuite, Mr.

Justice MarsHALL, and Mr. Justice BLackMuN, concluded that:

‘1, The rule is within the FCC’s statutory authority to regulate

_ CATV at least to the extent “reasonably ancillary to the effective

_ performance of the Commission’ S various responsibilities for the

western Cable Co., 392 U.S., 157, 178. Pp. 659-670.

2. In the light of the record-in this case, there is substantial

evidence that the’: Tule, with its 3,500 standard and as it is applied

under FCC guidelines for waiver on a showing of financial hard-

a ship, will. promote the public interest within the meaning of the

. Communications Act of 1934. Pp. 671-675.

Tite Curer Justice concluded that. until Congress acts to deal

with the problems brought about ‘by the emergence of CATV, the

FCC should be allowed se latitude. Pp. 675-676.

BRENNAN, J., iontuigeed the Court’ 8 judgment and delivered an

Dovcuas, J., filed a dissenting opinion, in which Srewarr, PowELL,

and Reunquut, JJ., , joined, post, p. aU. .

UNITED STATES v. MIDWEST VIDEO CORP. 649

rule that “no CATV system having 3,500 or more subscribers shalt

regulation of television broadcasting,” United States. v. South-

| opinion {in which Wuite, MarsHALL, and Biackmon, JJ., joined. -

Burger, C. J., filed an opinion concurring in the result, post; p. 675.

aoe ee

»

650. - OCTOBER TERM, i971

Opinion of BRENNAN, J. ° 406 U. S.

Dene ‘Salieitor General Wallace argued the cause for ._

the United States et al. With him on the briefs were -

Solicitor General Griswold, Richard. B. Stone, John W.

Pettit, and Edward J. ‘Kuhlmann.

Harry M. Plotkin argued the cause for respondent.

With him on the brief were Wayne W. Owen, Cay H.

Shapiro, and David Tillotson.. - »

Briefs of amici curiae urging affrmance were filed by |

William. J. Scott, Attorney General, Peter A. Fdsseas,

Special Assistant Attorney General, and Roland S. Ho-

met, Jr., for the’ State of Illinois; by Paul Rodgers for

the National Association of Regulatory. Utility "Com.

-missioners; and by Melvin L. Wulf for the American. Civil

Liberties Union. | .

Mr. Justice BRENNAN announced the judgment of the

Court.and an opinion in which Mr. Justice WHITE, Mr.

Justice MarsHatu, and Mr. Justice BLACKMUN join.

Community anterina television (CATV) was developed

long after the en&ctment of the Communications Act of

1934, 48 Stat. 1064, as amended, 47 U.S. C. § 151 et seq.,

as an auxiliary to broadcasting through the retransmission

by wire of intercepted radio signals to viewers otherwise

paaanes to receive them because of distance or local ter-

rain. In United States v. Southwestern Cable Co., 392

*ULS. se (1968), where we —— the mains of

a “CATV ‘aaa: receive the signals of television aces Gus

_ stations, amplify them, transmit them by cable or microwave, and

ultimately distribute them by wire to the receivers of -their sub-

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

161 (1968). They “performseither or both ‘of two functions.' First,

_ they may supplement broadcasting by facilitating satisfactory recep-

tion of local stations in adjacent areas in which such reception ,

‘would not otherwise be possible; and second, they may transmit to

subscribers the signals of distant stations entirely beyond the range

of local antennae. ” Id., at 163.

UNITED STATES v. MIDWEST VIDEO CORP. 651 -

649 | ‘ Opinion of BrENNaN, J.

_ the Federal Communications Commission to regulate the

new industry, at least to the extent “reasonably ancillary -

to the éffective performance of-the Commission’s various ©

responsibilities for the regulation of television broadcasts

ing,” id., at-178, we observed that the-growth of*CATV

~ since‘ the establishment of the first. commercial system in

_ 1950 has been nothing less than “‘explosive.”.” Id., at

.163.?. The potential of the new industry to augment

communication services now available is equally phe-

nomenal.* As we said -in ‘Southwestern, id., at 164,

CATV “[promises] for the future to provide a national

-. communications system, in which signals from selected

broadcasting centers would be transmitted to metropol-

itan areas throughout the country.” Moreover, as the

Commission has ‘noted, “the expanding multichannel

capacity of cable systems could be utilized to provide a

‘variety of new communications services to homes and

businesses within a community,” such as facsimilé repro-

duction of documents, electronic mail delivery, and infor-

mation retrieval. Notice of Proposed Rulemaking and

Notice of Inquiry, 15 F. C. C, 2d 417, 419-420 (1968).

Perhaps more important, CATV systems can themselves.

originate programs, ‘or “cablecast”—which means, the

‘Commission has found; that CATV can “[increase] the

number of local outlets for comimunity ‘self-expression .

and [augment] the public’s choice of programs and

‘types of service, without use of broad¢ast spectrum oan

Id., at 421. oo

_ 2 There are now 2,678 CATV systems in operation, 1,916 CATV

franchises outstanding for systems not yet-in current operation, and .

2,804 franchise applications pending. Weekly CATV Activity Ad-

denda, 12 Television Digest 9 (Feb. 28, 1972). \

. 3 For this reason: the Commission has recently adopted the term °

“eable television” in place of CATV. See Report and ‘Order on

-Cable Television’ Service ; Cable. Television Relay Service, 37 Fed.

Reg. 3252 n. 9 (1972) . (hereinafter cited as Report and Order on

Cable Television Service). =. 2

FE RTT NL ANT HL LIN

62. |, OCTOBER TERM, 1971

“Opinion of BRENNAN, J. - 406 U.S.

Recognizing this potential, the Commission, shortly

after our decision in Southwestern, initiated a general

inquiry “to explore the. broad question of how best td’

obtain, consistent’ with the public interest standard of

the Communications Act, the full benefits of developing

communications technology ‘for the public, with par-

ticular immediate reference to CATV technology . .. .”

Id., at 417. In particular, the Commission tentatively .

~ Soncluded, as part of a more expansive program for the -

-regulation of CATV: “that, for now and in general,

CATV program origination is in-the: public interest,” id., .

at 421, and sought comments on a proposal “to condition

the carriage of television broadcast signals (local or dis-

tant) upon @ requirement that the CATV system also

operate to a significant extent as a local outlet by origi-

4The early regulatory history of CATV, canvassed in South-

western, need not be repeated here, other than to note that in-

1966 the Commission adopted rules,- applicable to both microwave

and: non-microwave CATV systems, to regulate the carriage of

local signals, the duplication’ of local programing, and the importa-

tion of distant signals into the 100 largest television markets. See

- infra, at 659. The Commission’s 1968 notice of, proposed rulemaking

_ addressed, in addition. to the program origination requirement at

-jssue here, whether advertising should be permitted on cablecasts

and whether the broadcast doctrines of “equal time,” “fairness,” and

sponsorship identification should apply to them.” Other areas of

inquiry included the use. of CATV facilities to provide common

carrier service; federal licensing and local regulation of CATV;

cross-ownership of television stations and CATV systems; report-

ing and technical standards; and importation of ‘distant. signals into

major markets. The notice offered concrete proposals in some of

these’ areas, which were acted. on in the Commission’s First Report

and Order, 20 F. C. C. 2d 201 .(1969)- (hereinafter/cited as First

Report and. Order), and Report and Order on. Cable Television

Service. See also Memorandum Opinion and Order, 23 F. C. C.

2d 825 (1970) (hereinafter cited as Memorandum Opinion and

Order). None of these regulations, aside from the cablecasting

requirement, is now. before “us, see n. 14,. infra, and we, of course,

intimate no view on their validity. a se

UNITED’ STATES v. MIDWEST VIDEO CORP. 653

649 72 Opinion of BRENNAN, J.

nating.” Id., at 422. As for its authority to impose

such a requirement, the Commissior stated that its “con-

cern: with CATV carriage of broadc&st signals is not just

a matter of avoidance of adverse effects, but extends also

to requiring CATV affirmatively to. further statutory

policies.” Ibid. .

On the basis of comments: received, the Commingon

‘on October 24, 1969, adopted a rule providing that “no

CATV system having 3,500 or more subscribers shall

carry the signal of any television broadcast station unless

the system also operates: to a significant extent"! as: a

local outlet by cablecasting ‘) and has available facilities

for local production and presentation of programs other

5 “By significant extent [the Commission indicated! we mean -some-

thing more than the origination of automated services (such as _

time and weather, news. ticker, stock ticker, ete.) and aural services

(such as musi¢ and announcements). Since one of the purposes of -

. the origination-requirement is to insure that cablecasting equipment

will be. available for use by others originating on common carrier

channels, ‘operation to a significant -extent as a local outlet’ in

essence necessitates that the CATV operator have some.kind of .—

‘video cablecasting. system for the production of .local live and de-

layed programing (e. g., a camera and a video tape recorder, etc.).”

First Report and Order 214, ae |

6 “Cablecasting” was defined as “programing distributed on a

CATV system which has been originated by the CATV operator:

_ gr by another entity, exclusive of broadcast signals’ carried on the

system.” 47 CFR §74.1101 (j). As this definition makes clear,

cablecasting may: include not only programs produced by the. ~

CATV operator, but “films ‘and tapes produced by others, and

CATV network programing.” First Report and Order 214. See

- also id., at 203. The definition has been altered to conform to

changes in the Tegulation, see n. 7, infra,,and now appears at-

47 CFR §765 (w). See Report and Order on Cable Television

Service 3279. Although the definition now refers to programing

“subject to the exclusive control of “the cable operator,” this is

apparently not meant to effect a change in substance or to preclude

the operator from aici programs produced by others. ‘Sée

id., at 3271.° ,

64 —=~~S~S~S.:s« OCTOBER TERM, 1971

Opinion of BRENNAN, J. - Wy Sai <0 Wes ot.

than automated services.” -47 CFR § 74,1111 (a).’ In

a report accompanying this regulation, the Commission

‘stated that the tentative conclusions of its earlier notice |

of proposed rulemaking: - ;

“recognize the great potential of the cable technology

to further the achievement of long-established regu-

*Jatory goals in the field of television broadcasting

by increasing the number of outlets for community

self-expression. and augmenting the publie’s choice

of programs and types of services...... They also—

“reflect our view that a multi-purpose CATV opera- .

tion combining carriage of broadcast signals with

program origination and.common carrier services,'*)

might. best exploit cable channel capacity to the

advantage of the public and promote the basic pur-

_pose for which this Commission was created: ‘regu-

lating interstate and foreign commerce in ¢com-

™This requirement, applicable to both mi¢rowave and non-'_

microwave CATV systems without any “grandfathering” provision, _

was originally scheduled to go into effect on January 1, 1971. See

’ First Report and Order 223. On petitions for reconsideration, ~

however, the effective date was delayed until April 1, 1971, see

. Memoranduni Opinion, and Order 827, 830, and ‘then, after the ~~

Court -of Appeals decision below, suspended pending-final judgment. —

here. See 36 Fed. Reg. 10876 (1971). Meanwhile, the regulation

has been revised and now appears at 47 CFR. § 76.201 (a)... ‘The

revision has no significance for this case. See Memorandun? Opin- .

jon and Order 827, 830 (revision effective Aug. 14, 1970); Report

and Order on Cable Television Service 3271, 3277, 3287 (revision

effective Mar. 34, 1972). > &. .

8 Although the Commission did not impose common-carngPobliga-

tions on CATW systems in its 1969-report, it did note that “the

origination requirement will help. ensure that origination facilities

are available for use by others originating on leased channels.”

First Report and Order.209. Public access requirements were intro-

duced in’ the Commission’s Report and Order on Cable Television

_ Service, although not directly under the heading of common-carrier

service. See Report and Order on Cable Television Service 3277.

UNITED STATES v. MIDWEST VIDEO CORP. 655

649 3 Opinion of Brennan, J.

munication by wire and radio so as to make

available; so far as possible, to all people of the

United States a rapid, efficient, nationwide, and

( worldwide wire and radio communication service

_ with adequate facilities at reasonable charges . . .’

(see. 1 of the. Communications Act).°! After full

consideration of the comments filed by the parties,

we adhere to the view that program origination on

CATV is in the public interest.” *° First, Report

and Order, 20 F. C. C. 2d-201, 202 (1969).

°Section 1 of the Act, 48 Stat. 1064, as amended, 47 is. c :

§ 151, states:

“For the purpose of regilatins interstate and foreign commerce

_ in communication by- wire and radio so as to make ay ailable, so far -

as possible, to all the people of the United States a kapid, efficient,

Nation-wide; and world-wide wire and radio communication service

~2.with adequate facilities at reasonable charges, for the purpose of:

the national defense, for the purpose of promoting safety of life

and property through the use of w ire and radio communication,-and

for the purpose of securing a more effective execution of this

policy by centralizing autherity heretofore granted by law to several .

agencies and by granting additional. authority with respect te~inter-

state and foreign commerce. in wire and radio communication, there _

is created a commission to be known as the ‘Federal Commtni-

cations Commission,” which shall be constituted as hereinafter pro-

vided, and which shall execute and enforce the provisions: of this

chapter.”

_ 10.Tn so’ concluding, the or rejected the contention that a

prohibition on CATV originations was “necessary to prevent poten’

tial fractionalization of the audience for broadcast services and a

siphoning off of program material and adv ertising revenue now

available to the broadcast service.”. First Report and Order 202.

“[BJroadcasters and: CATV originators +,” the ‘Commission

reasoned, “stand on the. same footing in: acquiring the program

material’ with. which they compete.” Jd., at 203. Moreover, “a

‘loss of audience or advertising revenue to a television station is not

in itself a matter of moment to the public interest unless the result is

a net loss of television service,” ibid—an impact that the.Commis-

_sion found had na support in the record and that, in any event, it’

656 =: +. - . OCTOBER TERM, 1971

Opinion of Brenan, J. 406U.S:

Phe Commission fugther stated, if., at 208-209:

“The use of broadcast signals has enabled CATV:

to finance the construction of high ‘capacity cable

facilities. - In requiringf i in return. for these uses_of

radio that CATV dévote a portion of the facilities

to ‘providing needed origination service, we are fur-

thering our statutory responsibility to “encourage the

" larger and more effective use of radio in the public

interest’ (sec: 303 (g)}.°" The requirement will also:

facilitate the more effective performance of the -

Commission’s duty ‘to provide a fair, efficient, and

equitable distribution ‘of television—service to each

of the several States and. communities (sec. 307

(b)),"#} in areas where we have been unable to

accomplish this through: broadcast media. a

would, undertake to prevent sho ld the need arise. See id., at

203-204, See also Memorandum Opinion and. Order 826 n. 3,

828-829.

11 Section 303 (g), 48 Stat. woe @ U. S.-C. § 303, states that.

“[e]xcept as otherwise provided in \this chapter, the Commission’

‘from time to time, as public convenience, interest, or necessity re---

quires, shall” “(g) [s]tudy.new uses for radio, provide for experi-

mental uses of frequencies, and generally encourage the larger and

more effective use of radio in the public interest... . .”

12 Section 307 (b), 48 Stat. 1084, as amended, 47 U.S.C. $707 (b),

states: 4

_ “In considering applications. for licenses. (for tre transmission

of energy, . communications, or signals by radio], and modifica- -

tions and renewals thereof, when and insofar as there-is demand

‘~~for the same, the Commission shall make, such distribution of

licenses, frequencies, hours of operation, and of power among

the several States and communities as_to” proy ide. a fair, em,

‘and: equitable distribution of. radio service to each of the same.”

18 The Commission added: “[I]n authorizing the receipt, forward~

_ ing, and delivery of broadcast signals, the Commission isin effect

authorizing CATV to engage in radio communication, and may

condition this ‘authorization upon reasonable requirements govern-

ing activities:which are closély related to such radio communication

and facilities.” Fi irst. ane and Order 209 (citing, inter alia,

7

UNITED STATES v. MIDWEST VIDEO CORP. 687 _

649 Opinion of Brennan, J.

Upon the challenge. of respondent . Midwest Video

Corp., an operator of CATV systems subject to the

new cablecasting requirement, the United States Court

of Appeals for the Eighth Circuit set aside the regula-

tion on the ground that the~Commission-“is without

authority to impose” itz 441 F. 2d 1322, 1328 (1971),™

“The Commission’s power {over CATV]... ,” the-court

explained, “must be based on the Commission’s right to

adopt rules that are redsoyably ancillary to its responsi-s

§ 301 of the Communications Act, 48 Stat. 1081, 47.U. 8. C. § 301

(generally requiring licenses for the use or operation of any appa-

ratus, for the interstate ‘or foreign transmission of energy, communi- —

‘ cations,» or signals by- radio)). Since, as we hold, infra, the

authority of the Commission recognized .in Southwestern is sufficient

to sustain the cablecasting requirement: at issue here, we need not,.

and do not, pass upon the.extent of the Commission’s jurisdiction

over CATV under § 301. See, e. g., FCC v. Pottsville Broadcast-

ing Co., 309 U. S. 134, 138 (1940); General Telephon Co. of. Cal.

v. FCC, 134 U.S. App. D. C. J16, 130-131, 413 F. 2d 390, 404-405

‘(1969) ; Philadelphia Television’ Broadcasting Co. v. FCC,.123.U. 8.

App. D. C. 298, -300,-359 F. 2d 382, 284 (1966):

“In a statutory scheme in which Congress has given an agency

various bases of ——— and various tools with which to protect

the public interest, tHe agency is entitled to some leeway in choosing

which jurisdictional base and which regulatory tools will be most

. effective in advancing the Congressional objectiye.”

* Although this holding was specifically limited to “existing cable

television operators,” the court’s Teasoning extended more broadly

to all CATV systems, and, indeed, its judgment set aside the regu-

fagion in all its applications. See 441 F. 2d, at 1328.

_ Respondent also challenged other regulations, promulgated in the

-Commissijon’s First Report and Order and Memorandum’ Opinién

and Order, dealing with advertising, “equa] time,” “fairness,” sponsor-

ship identification, and per-prog or per-channel charges on-cable-

casts. The Court of Lae however, did not “[pass] on the,

- + power of the FCC . . .. to/prescribe reasonable rules for such CATV

operators: who voluntarily choose to originate programs,” id.,’ at

1326, since respondent acknowledged that it did not want to cable-

cast and hence lacked standing to’ attack those rules. See id., at

~

658: «OCTOBER TERM,"1971

\ Pon .. 2 _ ; Z : Opinion of BRENNAN, J. ° "40s v. Ss.

: A * » bilities in the hrondeenting field, a id., ad 1326—a stand- .

/. (ard that the court thought the Commission’s regulation

Pa 8 “goes. far beyond.’ ” Fd., at 1327." The court’s opinion

Nw __ , may also be ynderstood té-hold-the regulation invalid —

: “ as not supported by substantial evidence that it would ©

mr - serve the’ public interest. “The Commission report it-

: -. self shows,” the .court said,. “that upon the batis of. thé

|=. > record “made, -it is highly speculative “whether there is

ee, = sufficient expertise or information’ available to support a

. finding that the-origination rule will further the public ~

“~- <interest.” Id., at 1328. “Entering into the program

: origination ‘field involves very ‘substantial: expenditureg;”

id., at 1327, and “[al, high probability exists that cable-

casting, will: not be self-supporting,” that there will be a.

“substantial increasé” in CATV. subscription. fees, and

. that “qn some instances” CATV. ‘operators. will be driven |

a Out, of business. Ibid.’ We granted. certiorari. 404

et U. 8. 1014 ore : We reverse.

~ 15 The: court “held, in addition, that the Commission may: not ,

-require. CATV: operators ‘ ‘as a condition. to [their] right to use .

-* captured [broadcast] signals in’ their existing franchise. epeeation

wi » . toengage in the entirely new and different business of originating *

; programs.” Td., at 1327. This holding presents“tio separate ques- |

tion: from. the ‘ ‘reasonably ancillary” issue thet need be considered .

here. See n. 22; infra. - ° iy 8 a

* x incurring in the. result in a aeilar vein, Judge Gibson con-

sided that although “the F CC has authority over CATV systems,”

. “the order under review is -confiscatory and hence’ arbitrary,” 441 -

‘. «© B.. 2d, at 1328, for the regulation “would. be extremely burdensome

-and perhaps. remove from the ‘CATV field many entreprencurs w ho

do not have the resources, talent. and ability . to enter. the broad-

; casting ” field.” Id., at’ 1329. If this is to suggest, that the regula-

‘tion is “invalid | “merely because it burdeis CATV operators or may .

“even force some of them out. of: business, the argument is plainly ~

he. incorrect. Ste n. 31, infra. ‘The question would still remain-whether

ee . the Commission reasonably found on substantial evidence\that the .

i . Tegulation on balance would promote polity objectives committed

'. to its jurisdiction urtder ‘the Communications Act, whieh, for the ,

reasons il: eatiad we, a that it did.

/*

De aitinesye oes Seo ce xy \v . . \tos vot

___ UNITED STATES v. MIDWEST VIDEO CORP. — 659

“649. —* Opinion of BRENNAN, J.

— -In 1966 the Commission promulgated regulations that,

‘in -general, required CATV: systems (1) to carry, upon

Tequest and in a specified’ order of priority .within the .

cS limits of. their channel capacity, the signals of broadcast.

stations into whose. sérvice atea they btought competing »

signals; (2) to. avoid, upon request, the duplication on

the same day of. local station programing; and (3) to

refrain from bringing new distant signals into the 100

largest television markets except..upon a prior showing |

_ that that. service would be consistent with the public in-

' terest. -See Second Report and Order, 2 F. C. C..2d' 725

(1966). In assessing the Commission’s jurisdiction over -

, CATV against the backdrop of these. regulations,’’, we

focused in Southwestern chiefly on § 2 (a) of the Com-

munications Act, 48 Stat. 1064, as amended, 47 U. §. Cc.

§ 152 (a), which provides: in pertinent part: “The, pro-

visions. of this [Act]. shall apply ‘to all interstate and

foreign communication by wire oi. radio -. .-, Which

originates-and/or is received within the United States, and

to all persons‘engaged within the United States in such

communication .. . .”

of “communication by wire” and “communication: by

. Tadio,” * the interstate character of CATV services,’

. 1? Southwestern review a but did ‘not specifically pass upon the -—

Validity of, the regulations. See 392 U. S., at 167. Theit validity

was, however; subsequently and correctly upheld by courts of appeals

as within the guidelines of that decision. See, e. ‘9. Black. Hills

Video Corp. v: FCC, 399 F. 2d 65 (CA8 1968). ne

*® Sections 3 (a), (b), 48 Stat. 1065, 47°U. S. C. §§ 153 (a), (b),

define these’ terms to mean “the transmission” “of. Writing, ’ signs,

’ signals, .pictures, and sounds of all kinds,” whether by cable or ;

radio, “including all instrumentalities, facilities, apparatus, and serv-

ices. (among othér things, the receipt, forwarding, and delivery of:

communications) incidental to. such transmission.”

_ “Nor can we doubt that CATV systems are engaged in inter- .

state communication, even where . . . the intercepted signals ema-

\

In view.of the Act’s definitions:

660 . OCTOBER TERM, 1971

Opinion of BRENNAN, J. 406 U.S.

and the evidence of congressional intent that “[t]he:

hoa sco was expected to serve as the ‘single Govern- |

agency’ with ‘unified jurisdiction’ and ‘regulatory

_ . power over all forms of electrical communication, whether. |

. by telephone, telegraph, cable, or radio,’” 392 U.S., at |

167-168 (footnotes omitted), we held that § 2 (a) amply

-" eovers CATV systems and operations. We also held

‘that § 2 (a) is itself a grant of regulatory power and not

9.

> .

merely a prescription of the forms of communication to

which the Act’s other prqvisions governing common car-

riers and broadcasters apply: |

“We cannot [we said] construe the Act so re-.

strietively. \Nothing in the language of § [2 (a)],

in the surrounding language, or in the Act’s.:his-

tory or purposes limits the Commission’s authority

to those activities and forms of communication that

are specifically described by the Act’s other pro-

visions. . -. Certainly Congress could not in 1934

have’ foreseen the eedocee t of community an-

tenna television systems, but ‘it seems ‘to us that

it was pregisely because Congress wished ‘to main-

tain, through appropriate administrative control, a

grip on the dynamic aspects of radio transmission,’

F. C. C. v. Pottsville Broadcasting Co., [309.U. S.],

pate from stations located within the same State in which the CATV

system operates. We may take notice that television broadcasting

consists in very large part of programming devised for, and distrib-

uted to, national’ audiences; [CATV operators] thus are ordinarily’

employed in the simultaneous retransmission of communications that

-“have very often originated in other States. The stream of commu-

“nication i is. pened uninterrupted and properly indivisible. To

character of the television industry, and serve merely to prevent

the national regulation that ‘is not only appropriate but essential

to the-efficient use of radio facilities.’ Federal Radio Comm'n v.

Nelson Bros. Co., 289 U. S. 266, 279. ” 392 U.S., at 168-169,

.

| ™ UNITED STATES v. MIDWEST VIDEO CORP. 661

649° Opinion of BRENNAN, J. .

at 138, that it conferred upon the Commission a

‘unified jurisdiction’ and ‘broad authority.’ Thus,

‘{ujnderlying the whole [Communications Act] is:

recognition of the rapidly fluctuating factors char-

acteristic of the evolution of broadcasting and of

the corresponding requirement that the administra-

tive process possess sufficient flexibility to adjust

itself to these factors.’ [Ibid.] Congress in 1934 —

acted in‘a field that was demonstrably ‘both new and

dynamic,’ and it therefore gave the Commission ‘a ~

comprehensive mandate,’ with ‘not niggardly but

“expansive ‘powers.’ National Broadcasting Co. v.

United States, 319,U. S.-190, 219. We have found

no reason to believe that § [2] does not, as its terms °

suggest, confer regulatory authority over ‘all inter-

state ... . communication by wire or radio.”” Td.,

at 172-173 (footnotes omitted). .

This conclusion, however, did not end the: analysis,

for §2(a) does not in and of ‘itself prescribe any ob-

jectives ‘for which the Commission’s regulatory power

over CATV might properly be-exercised. We accordingly

went on to evaluate the reasons for which the Com-

‘mission had asserted jurisdiction and found that “the

Commission has reasonably concluded that regulatory -

authority over CATV is imperative if it is ‘to perform

with appropriate 'effectivertess certain of its other: re-

sponsibilities.” Jd., at, 173. In- particular, we found

- that. the Commission had, reasonably determined that

“the unregulated explosive growth of CATV,” espe-

Cially through “its importation of distant signals into the -

"Service areas-of local statidns” and the resulting division

of audiences and revenues, threatened to “deprive the

public of the various benefits of [the] system of local ‘

broadcasting stations” that the Commission was charged

with: developing and Overseeing under § 307 (b) of the:

«

*

662 | OCTOBER TERM, 1971 °

Opinion of BRENNAN, J. 406 U.S.

Act.” Id., at 175.. We therefore concluded, without.

expressing any view .“as, to the Commission’s authority,

if any, to regulate CATV under any other circumstances

or for any other purposes,” that the Commission does

° ‘have jurisdiction over CATV “reasonably ancillary to the

- effective performance of [its] various responsibilities

for the ‘regulation of television broadcasting

[and] may, for these purposes, - issue ‘such .rules and -

“regulations and prescribe such restrictions and condi-

tions, not inconsistent with law,’ as ‘public convenience,

“ interest, or necessity requires.” Jd., at 178 (quoting

§ 303 (r) of the Act, 50 Stat. 191,47 U.S. C.§ 3038 ©)

The parties now before us do not dispute that in

of Southwestern CATV transmissions are pw ree

Commission’s jurisdiction as ‘interstate . . . communica-

tion by wire or radio” within the meaning of § 2 (a)

even insofar as they: are local cablecasts.” The contro-

20 See n. 12,. supra. See also '§8 303. (f), (h),. 48 Stat. 1082, 47

U. S. C. §§ 303 (f), (h) (authorizing the Commission to prevent

interference among stations and to establish areas to be served by

them. respectively). “In particulaf; the ‘Commission feared that

CATV might... . significantly magnify the characteristically serious

financial difficulties of UHF and edutational televi ision broadeasters.”

392 U.S., at 175-176.

21 This, ‘however, is contested by ‘the State of Tlinois as amicus

curiae. It is, nevertheless, clear that cablecasts constitute com-

munication by wire (or radio if microwave transmission is involv ed),

as well’ as interstate communication if the transmission itself has

moved interstate, as the Commission. has authorized and encouraged.

See First Report ‘and. ‘Order 207-208 (regional and natjonal inter-

‘onnections) and n. 6, supra. The capacity for interstate non-,

broadcast programing may in. itself be sufficient. to bring cable-

‘easts within the compass of §2(a). In Southwestern we declined

to carve CATV: broadcast transmissions, for the purpdse of .de- -

i termining the: extent of the Commission’s regulatory authority,

into interstate and intrastate components. See n. 19,.supra. ‘This

result was justified by the extent of interstate broadcatt, program-

ing, the. interdependencies between. the two components, and the ’

need to preserve the “ “unified and comprehensive regulatory § system

»

@.

_. UNITED STATES v. MIDWEST VIDEO CORP. 663

649 Opinion of BRENNAN, i

versy, instead, centers on whether the Comrhission’s pro-

gram-originatién rule is “reasonably ancillary to the

effective. performance of [its] various responsibilities for

_ the regulation of television broadcasting.” *? We hold

that it is. — ’

for the [broadcasting] industry.’” 392 -U. ‘S., at -168 (quoting .

FCC v. Pottsville Broadcasting Co., n. 13, supra, at 137). A-similar-

rationale may apply here, despite the lesser, “interstate content”

. of cablecasts at present.

But we need not now decide that question because, in any event,

CATV operators have, by virtue of ; their, carriage of broadcast

signals, necessarily subjected themselves to the Commission’s com-

prehensive jurisdiction. As Mr. Cuter Justice (then Judge)-. -

Burcer has stated: in a related context: _

“The Petitio s_ [telephone companies providing CATV channel |

distribution’ facilities] have, by choice, inserted themselves as links-

in this indivisible stream and have become an integral part of

interstate broadcast transmission. They cannot have the economic.

benefits of such carriage as they perform and be free of the neces-

sarily pervasive jurisdiction. of the Cémmission.” General Tele-

phone Co. of Cal. v. FCC, n. 13, supra, at 127, 413 F. 2d, at 401.

The devotion of CATV systems to broadcast transmission—together

with the interdependencies' between that service and cablecasts, and °

_the necessity for unified regilation— plainly. suffices to bring cable-

casts within the Commission’s §2 (a) jurisdiction. Sce enerally °

4

Barnett, State, Federal, and Local Regulation of Cable Television,

47 Notre Dame Law. 685, 721-723, 726-734 (1972). ;

2 Sirice “[t}he function of CATV systems has jittle in common

with the function of broadcasters,” Fortnightly Corp. .v. United

Artists Television, 392 U. S.°390, 400 (1968), and since “[tThe -

. fact that .. . property is devoted to a public use on certain terms

does. not justify ... . the imposition of restrictions that are not

reasonably concerned with the proper conduct of the business ac;

. cording to the undertaking which the [owner] has expressly or im-

Ppliedly assumed,” Northern Pacific R.«Co. v. North Dakota, 236

U. S. 585, 595 (1915), respondent also argues that CATV operators

may not- be required: to cableeast as a condition for their customary

, Service of carrying broadcast signals. This conclusion might follow

only if the program-origination requirement is not reasonably

“ancillary to the Commission’s jurisdiction over broadeasting: For.

as we held in Southwestern, CATV operators are, af least to that

MT RET ROTTS I

664 _ OCTOBER TERM, 1971

_ Opinion of BRENNAN, J. 406 U. S..

At the outecr ve must note that the Commission’ s.

legitimate concern in the regulation of CATV is not

limited to controlling the competitive impact CATV may: .

have on broadcast services. Southwestern refers to the

- Commission’s, “various responsibilities for the regulation

of television broadeasting.” | These are considerably more

’ numerous than simply assuring that broadeast stations

Operating in the public interest do not go out of business.

Moreover, we must agree with the Commission that its

“concern with CATV carriage of broadcast signals is not

just a matter of avoidance of adverse effects, but extends

also to requiring CATV affirmatively to further statutory

policies.” Supra, at 653. Since the avoidance of adverse

effects is itself the furtherance of statutory policies; no

sensible distinction even in theory can be drawn along

those lines. More important, CATV systems, no less

than broadcast stations; see, e. g., Federal Radio Comm’n -

-v. Nelson Bros. Co., 289 'U. S. 266 (1933) (deletion of a

station), may enhance as well as impair the appropriaté —

os

extent, engaged in a business subject to the Commission’s regula-

_, tion. Our holding: on the “reasonably ancillary” issue: is therefore

dispositive of respondent's additional claim. See infra; at 669-670.

It should be added that Fortnightly Corp. vy. United Artists

Television, supra, has no bearing on the “reasonably: ancillary”

question. That case merely held that CATV operators who re-

transmit, but do not themselves originate copyrighted works do not .

“perform” them within the meaning of the Copyright Act, 61

Stat. 652, as amehded, 17 U. S. C. §1, since “[e]ssentially, -[that

kind of] a CATV system no more than enhances the viewer’s

capacity to receive the broadcaster’s signals : ....” 392.U. S.,

at .399. The analogy thus drawn between CATV operations and

broadcast viewing for copyright purposes obviously does not dictate

the extent of the Commission’s authority to regulate CATV under

the Communications Act. Indeed, Southwestern, handed down

- only a week-before Fortnightly, expressly held that CATV systems

are not merely.receivers, but transmitters of interstate communica-

‘tion subject to the Commission’s en under that Act. See —

892 | ee at 168: °

4

"UNITED STATES v. MIDWEST VIDEO CORP. - 665

649 . Opinion of BRENNAN, J;

provision of broadcast services. Consequently, to define

the Commission’s power. in terms of the protection, as

opposed to the advancement, of broadcasting objectives

would artificially constrict the Commission in the achieve-

ment of its statutory purposes and be inconsistent with

our recognition in Southwestern “that it was precisely

because Congress wished ‘to maigtain; through appro- .

‘priate administrative control, a grip’ on :the dynamic

aspects of radio transmission,’ .*. . that it conferred upon:

the Commission a ‘unified jurisdiction’ and ‘broad au-.

thority.’” Supra, at 660-66 1.2"

The very regulations that formed. the backdrop for our

decision in Southwestern demonstrate this point. Those

. regulations were, of course, avowedly designed to guard

broadcast services from being undermined by: unregulated

CATV growth. At the’ same time, the Commission -

_ Tecognized that “CATV systems ». . . have arisen in

response to public need and demand for improved tele-’

Vision service and perform. valuable public services in.

this respect.” Second Report and Order, 2 F. C. C. 2d

725, 745 (1966). Accordingly, the Commission’s ex-

press purpose was -not: .

“to deprive the public of these importafit behefits or

to restrict the enriched programing éelection which

- 23 See also General Telephone Co. of Cal: vy. FCC, n. 13, supra,

at 124, 413 F. 2d, at 398: ; ,;

“CATV .. . has-made a significant contribution to meeting the

_ public demand for television service in areas.too small in popula-

0

666. _. OCTOBER Te

Opinion of BRENNAN, J. 406°U. 8.

CATV makes available. Rather, our goal here is to

integrate the CATV service into the national. tele-

vision structure it such a way as fo promote max-

imum television service to all people of the United:

States (secs..1 and 303 (g) of the act ’[nn. 9 and 11,

-supra]), both those who are cable viewers and those

dependent on off-the-air service. The new rules. ..

are the minimum measures we believe to be es-

sential to insure that CATV. continues to perform

its valuable supplementary role without unduly.

damaging or impeding the growth of television broad- -

cast. service.” Id., at’745-746.*° |

In implementation of this approach CATV systems were

_ required to carry local broadcast station signals to en-

courage diversified programing suitable to the com-

munity’s needs as well as to prevent a diversion of audi-

ences and advertising revenues.” The duplitation of —

tion to support a local station, or too remote in distance or isolated

by terrain ‘to receive regular or good off-the-air reception. It has

also contributed to meeting the public’s demand for good reception

of multiple program choices, particularly the three full network

_ services. In thus contributing to the realization of some of the most

important goals’ which have governed our allocations planning,

CATV has clearly served the public interest ‘in the larger.and more

effective use of radio.’ And, even in the major market, where

there may be no dearth of service ..., CATV may... . increase |

viewing opportunities, either by bringing in programing not other-

wise available or, what-is more likely, bringing in programing locally

available but at times different from those~ “presented by the local

stations.” Second. Report and Order,- 2 <. C.: 2d 125, - 781.

(1966). See also id., at 745.

25 This statement, made with reference only to the local carriage

and non-duplication requirements, was no less true of the distant

importation rule. See id., at ‘781-782.

26 The regulation, for example, retained the prov Sion ’ of” the

Commission’s earlier rule governing. CATV microwave systems under

/ Which a local signal was not: required to be carried “if (1) it-sub-

stantially duplicates the network programing of a signal of a higher

grade, and (2) carrying it would—because of limited channel capac-

€ .

649 Opinion of Brennan, J.

UNITED STATES ». MIDWEST VIDEO CORP. 667

°

local station programing. was also forbidden for the latter ‘

purpose, but only on the same day as the local broadcast

so as. “to preserve, to the extent practicable, the valuable

publie contribution of CATV in providing wider access

to nationwide programing and a wider sélection of ‘pro- °

grams on any particular day,” Id., at 747, Finally,

the distant-importation rule was adopted to‘enable the

Commission to reach ‘a _public-interest determination:

weighing the’ advantages and disadvantages of the pro-

posed service on the facts of each individual case. _See =

id., at 776, 781-782, In short, the regulatory authority

asserted by’ the Commission in 1966 and generally sus-

tained by this Court in Southwestern was authority to.

Tegulate CATV with a view not merely to protect but

“to promote the objectives for which the Commission had

been assigned jurisdiction over broadcasting.

_ In thif light the critical question in this case is whether

the Commission has reasonably determined that its origi-

nation rule will “further the achievement of long-estab-

ity—prevent the system from carrying a nonnetwork signal; which

would contribute to the diversity of its service.” First Report

and Order, 38 F. C. C. 683, 717 (1965). See Second Report and

Order, n. 24, supra, at 752-753. Moreover, CATV operators were

warned that, in reviewing their discretionary choice of stations to

- CaTry among -those of- equal priority in certain circumstances,’ the

ommission would “give particular consideration to 1y allegation

that the station: not- carried is one with closer’ comi unity. ties.”

Second Report. and Order, supra; at 755. In acktitipn, operators

were required té carry the signals of local satellite stations: even’

- if they also carried. the si nals of the satellites’ arents; otherwise, <’

; & : Pp

“the satellite [might] lose audience for which it may be. originating

some local programing and [find] its incentive to originate programs

[reduced].” Jd. at 755-756, F inally, the Commission indicated

_ that, fn considering waivers of the regulation, it would “ [accord] sub-

stantial weight” to such considerations as whether “the. programing

of stations located within the State would be. of greater interest’ -

than those of nearer, but out-of-State stations [otherwise required - .

to be given priority in carriage ]—e. g., coverage of political elections

: and: other public affairs of statewide concern.” Jd., at’ 753.

.

r "

668 3 * OCTOBER TERM, 1971

- Opinion of BRENNAN, J. — 406 U.S.

lished regulatory goals in the field of siipivelioe broad-

casting by i increasing the number of outlets for community

self-expression and augmenting the pubjic’s choice of .

programs.and types of services ... . .” Supra, at 654.

We find that it has.

The gels. specified are plainly Bon the Commis- \

sion’s mandate for the regulation of television broad-

casting.”” In Natzonal. Broadcasting Co. v. United States,

319 U: S. 190 (1943), for example, we sustained Com-

missioh regulations governing relations between broad-

cast stations and network organizations for the purpose

of preserving the stations’ ability to serve ‘the public ©

interest through their programing. Noting that “[t]he

facilities of radio are not large enough, to accommodate all

‘ who wish to use them,” zd., at 216, we held that the

Communications “Act does not restrict the Commission

merely to supervision of [radio] traffic:” It puts upon

the Commission the burden of determining the compo-—

sition of that traffic.” Jd., at 215-216. We then up-

held the Commission’s judgment that:

«“ ‘(w]ith the number: of ‘radio channels limited by .

_ natural factors, the public interest. demands that

those who are entrusted with the available channels

shall make the fullest and - most effective use of

them.’ ” Id., at 218.

“*A station licensee must retain nlite freedom

of action to supply. the program ... needs of the

local community. Local program service is a vital

part of community life. - A station should be ready, ©

\* ‘As the Commission stated, “it has long nein 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.’ Associated Press .v. United States,

326 U. S. 1, 20; Red Lion Broadcasting Co., Inc. v. Federal Com-

_ munications Commission, 395 U. 8. 367... .” First Report and

Order 205. - : :

>

___ UNITED STATES v. MIDWEST VIDEO. CORP. 669

®

649 . + Opinion of -Brennan,-J. —*

able, and willing to serve the needs of the local com-

‘ munity by broadcasting such outstanding local events |

asecommunity concerts, civic meetings, local sports

_«- events, and other programs -of local consumer and

- social interest.’” Id., at 203. i

. Equally plainly the broadcasting’ polices the Commis-'

, sion has specified are served by the program-origination *

rule under réview.‘ To be sure, the cablecasts required

may be transmitted without, use’ of the broadcast spec-

trum. But the regulation is not the less, for that reason,

reasonably ancillary to the Commission’s jurisdiction over

_ broadcast services. The effect of the regulation, after

all, is to assure that in the retransmission of broadcast

signals viewers are provided suitably diversified program-

ing—the same objective underlying regulations sustained.

in National Broadcasting Co. v. United States, supra, as

well as the lécal-carriage rule reviewed in Southwestern

and subsequently upheld. See supra, at 666 and nn. 17

and 26, supra. In essence the regulation is no differént .

from. Commission rules governing the technological qual- |

ity of CATV broadcast carriage. In the -one case, of. :

course, the concern is with the strength of the picture ¢

and voice received by the subscriber, while ‘in the

other it is with the content of the programing offered.

But in -both cases the rules serve the policies of §§1

and 303 (g) of the Communiéations. Act on which

. instead ‘that §§ 1 and 303 (g) merely state objectives without grant-_

_ ing power for their implementation. See Brief for Midwest Videé

the cablecasting regulation is Specifically. premised, see

supra, at 654-656,” ‘and also, in the Commission’s words, ;

Bs

%

28 Respondent apparently does not dispute’ this, but contends §

_ Corp. 24. The cablecasting requirement, however, is- founded on

those provisions. for the policies they state and not for any regulatory ,

power they might confer. The . regulatory power itself. may be .

found, as, in Southwestern, see supra, at 660, 662, in 47 u.6.C. ->

§§ 152 (a), 303 (r).

em OCTOBER’ TERM, 1971 we

> Opinion, of Brey Z. - 406 U.S.

_ facilitate the moré effective ssilhimaniaes of its} duty

to: provide a fir, efficient, and equitable distribution of

television Se ore: the. several States and com-

munities” under § 307 ‘Supra, at 656.2° In sum, the .

%, regulation preserves and enhances the integrity of broad-

—* east signals and. therefore is “reasonably aneillary to the fy

effective performance of the. Commission’s various respon=__

sibilities for the regulation of television’ brdadeasting.”

Respondent, nevertheless, maintains that - just-as*the |

_Commission ~is, powerless to requite the provision of

television broadcast ° services wheré “there” are no appli-

cants for. station -licenses no matter how important

require CATY operators unwillingly to engage in cable*

‘between entry. into broadcasting and entry into éable-

va ‘casting. is: “‘misconceived. The Commission is not at-

_tempting..to compel wire service where there has been

whom the cablecagting r rule applies have voluntarily en-

community needs within the context of.their undertaking.

nized. in Southwestern. Beige was ®2

[origination] requirement . .*.,can be said to aid the Commission

-ifi_ preserving the availability of broadcast stations to the ‘Several

spondent- ignores*that the provision of additional programing outlets

by .CATV ‘necessarily pifects the fairness, efficiency, and equity of

the distribution of television services. We have no. basis; it-may be

_ added, “for overturning the Commission’s judgment that the effect

- in this regard will be fav vorable. Bor supra, at 654-655 and n. 10.

‘or desirable those. services may -be, .so, ‘too, it cannot -

- casting. In our view, the analogy respondent thus draws .

« ho commitment to undertake it. CATV operators to |

gaged themselves if providing that service, and. the Com-

* missign seeks: only | to ensure that ‘it satisfactorily meets.

For: these reasons we conclude that the program-origi- |

-nation Tule is within. the Commission’s, authority rene:

"ee Respondent asserts thet “it } is difficult to: see how a a oe .

- - states and communities.” - Brief for Midwest Video Corp. 24. Re: ~

?

_UNITED STATES ». MIDWEST VIDEO CORP: 671

‘ = ; atte Gad

649 + Opinion of Brennan, J, a

ee . ee cal

‘ _¢@ ~

IT =

The question remains whether the regulation +is sup-

o

ported. by substantial evidenée that. it will promote the - |

public intere We read the opinion -of the Court of

Appeals as holding’ that - substaritial ‘evidence to that

effect is lacking ‘because the fesulation creates the risk

that the added burden. of cab eeasting will result in in-

creased subscription rates and even the termination of

CATV services. That holding is patently intorrect in

light of the record. -

In first proposing the cabletasting. requirement, the.

Commission noted that “[t]heré may... be practical

limitations [for ‘compliance] ste

some CATV systems” and a¢cordii

“as to a reasonable cutoff point [for-application of the

regulation] in light - of the cost of the equipment and

personnel minimally necessary for lo originations. *

Notice of Proposed. Rulemaking and Notice of Inquiry,

ing from the size of -

ly sought comments

15 F. G. C. 2d 417, 422 (1968). The comméfits filed in:

response to this request included detailed data indicat-

ing, for example, that a basic monochroine system for

cablecasfing could be obtained and operated for less’ than

an annual c@t of $21,000. and a eolor system, for less:

than $56,000. See First Report and Order, 20 F. C. C.

2d 201, 210 (1969). This information, however, provided -

only a sampling of the experience of the CATV systems ©

already engaged in — ia maaan .Consequently,

PP Conjmission: :

“decided not to. preseribe a perm pen minimum

“cutoff point for required origination’ on the basis of.

the record now before us. The Commission intends

to obtain more information from originating systems:

-" about their experience, equipment, and the. nature

of the origination effort.... In the meantime, we

¢

°. O72 ts - OCTOBER a, 3 : ) aa .

-_o- a 2 : Opinion of. BRENNAN, J” | - 406 U.S. :

will prescribe a very liberal standard for required ~ e

* origination, with a*view toward lowering this floor ™ -

in . . . further*proceedings, should the data obtained

in, such,, proceedings -establish the -appropriateness |

and desirability of such action.” Jd., at 213.

Or this basis the Commission chose to apply the regu-

lation to systems. with 3,500 or more ‘subscribers, ef-

fective January 1, 1971:" 2 |

“This standard [the Commission: explained]- appears « .

more than reasonable in light of the [data filed], ©

7 decision - to permit -advertising at..-natural -

... . breaks . . . , and the l-year grace period. . More-

- over, it appears that approximately 70 percent of -

. the systems now originating have fewer #han 3,500 °

> - ‘subscribers; indeed, about half of the systems now

originating have fewer than 2,000 suscribers. : . .

[T]he 3,500 standard will encompass only a very.

small percentage of existing systems at. present sub- ,

scriber levels, less than 10 percent.” Ibid.

Qn petitions for reconsideration-the Commission observed ,

that.it had “been given no data tending to demonstrate ~~

that systems with 3,500: subscribers cannot cablecast .

- without impairing their financial stability, raising rates .

or reducing the quality of sérvice.”. Memorandum Opin-

ion and Order, 23°F. C. ©. 2d 825, 826 (1970). The .

‘ Commission repeated that “[t]he rule adopted is minimal ¢

in the light of the potentials of cablecasting,” * but,

__nonetheless, on its own motion. postponed the effective

date of the regulation to April-1,.1971, “to afford addi-

tional preparation time.” Jd., at 827. rer

- This was-still not the Commission’s.final effort to tailor.

the regulation to the financial capacity of CATV oper- —

30 Commissioner Bactley, however; dissented on the’ ground that . .

the regulation should apply only. to systems with over 7,500 sub- ‘

scribers. Memorandum Opinion and Order 831. ~~ so at

“A

_ UNITED STATES v. MIDWEST VIDEO CORP. - 673)

6449 - .Opinion of BRENNAN; J.

, ¢

ators: In denying respondent’ s motion for a stay of the

' effective date of the rule, the Commission reiterated that

. “there has been no showing made to support the view

that compliance . . would be an unsustainable burden.”*

Memorandum ‘Ctiaion and. Order, 27'F. C. C. 2d 778,

779 (1971). On the other hand, the Commission : TéCog-

= that new information suggested that CATV sys-

» of 10,000 ultimate. subscribers would operate ‘at a

pee for at least four years if required to cablecast. That

information, however, was-based on capital expenditure

and annual operating cost figures “appreciably higher”.

than those. first projected by the Commission. Ibid.

- The Commission, concluded :

ae

- “While we do not consider. that an adequate show-

_ ing hasdeen made to justify general change, we see

- no public benefit in risking injury to CATV ‘systems

in providing local origination. _ Accordingly, if

CATV operators with fewer than. 10,000 subscribers

request ad hoc waiver of [the regulation], they will

not be required to originate pending action on their 7

waiver requests. . . . «Systems of more than J0,000_ -

«7's

m4

subscribers may also request waivers, but they will

_not be excused from compliance unless the Com-

‘Mission grants a requested waiver . : [The].

benefit [of cablecasting] to the public would be de-

_ + layed if the . . . stay [requested by responden}] is

granted, and the stay would, therefore, do injury

_f. to the, public’s interest.” Ibid.

This history speaks for itself. -The vablacasting re-

quirement thus applied-is plainly supported by sub-

stantial evidence that it' will promote the public in-|

terest. . Indeed, Tespondent does not. , appear to argue

*t Nor is the regulation infirm for its. failure to grant ated

father” rights, see n. 7, supra, as the Commission warned would

pe the case iti its Notice of Proposed Rehmaking and Notice of ;

aA

S

a _of course, beyond the eompetence of the Court of Ap-

o™

674 o OCTOBER TERM, 1971 i

“es.

Opinion of Basan, ae: 406 U. S.

“to the weber: ‘See Tr. of Oral Arg. 43-44. It. was,

-peals itself to assess the relative risks and benefits of

cablecasting. As we'said ‘in National ee ee Co.

v. United States, 319 U. S., at 224:

~ “Our duty i is at an‘end when we find that the action

_\of the Commission was based upon findings

‘ported by evidence, and was ‘made pursuant to au-

thority grahted by Congress. It is not for us to

°. x a

Inquiry, \15 F..C. C. 2d 417 424 (1968). See, ‘¢. g., Federal Radio

“Comm'n v. Nelson Bros. Co., 289 U. 8. 266, 282 (1933) (“the

. power of Congress in the regulation of interstate commerce is not ©.“

fettered by. the necessity: of. maintaining existing arrangements which .

-would conflict with the execution of its policy”). Judge Tuttle has.

- - elaborated, Generql Telephone Co. of Southwest v. nln States,

449 F: 2d 846, 863-864 (CAS 1971): .

“In a complex and dynamic industry such as the communications

_ field, it cannot be expected that ‘the agency charged with its regu-’

lation will have perfect cldirvoy ance. Indeed as Justice Cardozo

once said, ‘Hardship must at times’ result from postponement of,

the rule of action till a time when. action is ; complete, It_is sone ——

—of the consequences of the limitations o the human intellect and -—

of the-denial to legislators and judges of infinite prev ision.’ Cardozo,

The Nature of the Judicial Process 145 (1921).” The Comuhission,

thus, must be afforded some leeway in developing policies and rules

, to fit the exigencies of the ‘burgeoning CATV industry. Where the |

" on-rushing course of events [has] outpaced the regulatory. process,

-the Commission should be enabled’ ‘to remedy the {problém] . . by

‘retroactive adjustments, provided they are reasonable. CGs

-“Admittedly the rule here at issue has ca i ——

‘embarked upon prior to: the issuance—eft ission’s Final °

~ Order and Report. “ Nonetheless the announcement of a new policy

will inevitably have retroactive consequences. . . . The ‘property

of regulated industries is held- subject to such limitations as may

reasonably be imposed upon it ’in the public _ interest and the

ape coal nmid recognised that new rules may abotish or

' modify pr ing interests.”

ith regard to. federal infringement of franchise nents see ad

Barnett, n. 21, supra, at 703-705 and n. 116. .

649 - Burcer, C. J - concurring in result

-

UNITED STATES v. MIDWEST VIDEO CORP.” 675.

- say, that the ‘public: interest? will [in fact] be fur-

. thered or. retarded by the... . [regulation].”.

\*

321 U. §. 192, 203 (1956) ; General Telephone Co. of

_ Southwest v. United State

“863 (CA5 1971). —. | “34

eo Te Reversed.

of

‘e

Mr. Cuter Justice Burcer, concurring in the result.

_ and sensitivity in the communications field, as the opin-

ions of the divided ‘Court of Appeals and our own di-

<

Congress could not anticipate the advent of CATV when

Yet that statutory scheme plainly anticipated the need

.for comprehensive ‘regulation as feervasive as the reach

\

Ln

of the instrumentalities of broadcasting...

sion to meet the expansion and development of broad-

the advent of CATV, as indicated. in the plurality opin-

Jon. CATV is dependent totally on broadcast. signals

and is a significant link in the-system as a whole. and

s, 449 F. 2d 846, 858-859, 862—

it enatted« the regulatory scheme nearly 40 years ago..

In the four deeades spanning the life of the Communi- :

"Cations Act, the courts have consistently construed . the

Act as granting pervasive jurisdiction to the Commis-_

See also, e. g., United States. v. Storer Broadcasting Co.,

- This case presents questions of extfaordinary difficulty

visions reflect. As Mr. Justice BRENNAN -has nofed,;

casting. That .aproach Was broad enough to embrace _

|. therefore € seen as within the jurisdiction of the ”

= Act. . ‘ , vo _ .

:; Concededly, the Communications Act did not explicitly.

contemplate ‘either CATV or the jurisdiction the Com-

Mission has now asserted. . However Congress was. well

aware in the 1930’s that broadcasting was a dynamic. in-

strumentality, that. its future could not be predicted, .

' ” that.scientifie developments would inevitably enlarge the

role and scope of broadcasting, and’ that in consequence .

¢

ie. e >< : F es

676 =. = OCTOBER TERM, 1971 *

-Burcer, c. J.,-coneurring in result 406 U. S.

>.

‘af

%,

regulatory schemes must be. flexible and virtually open-

/ ended.

Candor TOppires ° acknowledgment, for me at léast, -

that the Co) ission’s position strains the outer limits

of even the open-ended and pervasive jurisdiction that. ‘

« has evolved by decisions of the Commission and the

courts. The almost explosive development of CATV .

suggests ‘the need of a: comprehensive re-examination of

.. the statutory scheme as it: relates to this: new “develop- ,

ment,.so that the basic i¢ policies are considered by Con-

Bbaine and_not. left" entirely to the Commission and the |

urts. _

I agree ‘with the plurality’ Ss rejection of any ivanttngtut

analogy between: requiring CATV operators to dévelop

programing and the concept. of commandeering someone

ing broadcast signals for private commercial surface trans-

the signal and put it to their own use for profit, they take

on\ urdens, one of which is regulation by the Commission.

IN not fully persuaded that the Comimission has -

made the correct decision in this case and the thoughtful -

“to engage in broadcasting. These who exploit the exist--

ie misgion by CAT¥=to which they make no contribution— -_

_ are ‘not exactly’ strangers ‘to the stream of broadcasting.

‘The essence of. the’ matter is that when they. interrupt

epinions in’ the ‘Court. of Appeals and the dissenting ;

‘opinion here reflect some of my reservations. Butethe |

scépe of our review is lirnited: and does not permit me to

resolve this issue as perhaps I would were I a member

..of the Federa al Communications Commission. That I

- Inight take a

different ‘position as a member of the Com-

mission. gives me no license to do so here. Congress has

created its instrifmentality to regulate broadcasting, has

given it pervasive powers, and- the Commission has

| generations of experience and , “feel” %or the problem.

I therefore conclude that until Congress acts, the Com-

mission should be allowed wide: latitude and I thetsfore

concur in the refult reached by this Court.

° . _° . .

e . . A .

. .

. ..

. a: 7

. .

z

s.

Nae 7 im 2s

UNITED STATES v."MIDWEST VIDEO GORP. *677.

649 "5S, Déveras, J. dissenting y

. . e . . . P

Mr: Justice Dove.as, with whom Mr. J Justicé Srew-

_” art, Mr. Justice Powe, and je Reanguist

-concur, di nting> : a

_——

The policies refleetéd in the plurality opinion may

be. wise _ones>~ But whether CATV systems should be-’

een, to originate. -programs is a decision that we cer- -

~ tainly are not competent, to make and in my judgment |

the Commission. i is not, authorized to make. Congress ‘is

_ the agency to Inake the decision . and Congress has not.

_acted. ~

CATV. captures TV and radio. signals, Converts the

signals, and carries them by microwave relay, transmission ©

_ or by coaxial cables into communities unable to receive

the sighals direétly. In United States v. Southwestern

Cable Co., 392' UZ S. 157, we upheld the power of the

Commission to egulate the transmission of signals. As ’

_ we said in that case:- :

“C V systems perform: either or. both a two

functions. First, they may supplemént broadcasting ma

by facilitating satisfactory reception of local stations

otherwise be -possiblé; and second, they may trans-

mit to subscribers. the signals of distant stations

‘entirely beyond the range of local antennae, As

the number. and size of CATV systems have in-

creased, their principal function has more frequently

163.

” CATV. evolved after. the Communications Act of. 1934,

48 Stat. 1064, was passed. But we held that the reach of

the Act, which extends “to all interstate and foreign, com-

' _ munication by. wire or radio,” 47 U.S. C. § 152 (a), yas

- not limited to the precise methods of comzhunication then

known. . 392 U. S.; at 173.

Compulsory. origination of programs is, lowered, a far

cry from the regulation of communications ePpryred 1 in

in adjacent areas in which such reception would not

become the urna of distant signals.” o at

ee OCTOBER TERM, 1971

Doveuas, J:, dissenting is tag "406 U. S.

Sentieetion Cable. Origination requires new, invest- 4

‘ment and new and different equipment, and af buitirely

different cast of personnel.1 See 20 F. C. C. 2d 201, 210-

‘211. We marked the difference between. communica-

‘tion and origination in Fortnightly Corp. v. United

.. Artists Televisign, 392 U. S..390, and made-clear how

foreign the origination , of programs is to CATYV’s. tradi- -

; tional transmission of signals. In that case, CATV was

sought. to be held liable for infringement of copyrights of

- movies licensed to broadcasters and carried by- CATY.

* We held-CATV not liable, saying: -

“Essentially, a CATV system no more thari en- ©

hances the viewer’s capacity to ‘receive the broad- ©

caster’s signals; it provides a well- located antenna ©

with an ‘efficient connection to the viewer ’s television

set. It is true that a CATV system plays an ‘active’

role: in making reception ‘possible in a. -given area,

but so do ordinary television sets, and antennas. |

CATV equipment. is powerful and sophisticated, but .-

’ the basic function the equipment serves is. little

- different from that’ served by the equipment. gener-

ally furnished by @ television viewer. If an in;

_: dividual erected an antenna on a hill; strung a.ca

~ to his house, and installed the necessary amplifying” .

equipment, he would not. be ‘performing’ the pro- —

grams he received on‘his television set. The result

would be no different if several people combined to ‘

erect a cooperative antenna. for the same purpose.

The only difference i in the case of CATV is that the

antenna system is erected and owned not by its users

but by. an entrepreneur.

_ -*In light of the striking ‘Avicsée ‘between stigiention and comi-

_ Mnunication, the suggestion that “the regulation is no different from

a Commission. Tules ‘governing the technological quality of CATV

broadcast carriage,” ’ ante, -at 6699 appears misconceived. -

=m

ee. : —_

’. UNITED STATES v. MIDWEST, VIDEO CORP. 679 -

-. 649 oe . > Dovahas, J.," dissenting a

“The function : of \ CATV ‘systems has little in -

common, withthe function. of broadcasters. CATV

systems do nof in fact ‘broadeast. or rebroadcast.

i Broadcasters:. selett “the. programs to be viewed’; ‘’

CATV systems simply carry, without editing, what-. °

pe

“ever programs ‘they receive. Broadvasters procure.

ee programs -and \propagate them to the publie;. CATV

systems receive programs that have been released

«

to the-public and’ carry them by private channels

_ to additional viewers. We hold that CATV op-

érators, like viewers and unlike. broadcasters, do

carry.” Id., at 399-401."

not perform the programs that they’ receive .and

The’ Act forbids any person, from’ 0} rating a broad- —’

cast station without first. obtaining icense. from the

.. Commission: 47 °U. S. C. § 301. Only qualified’ per-

sons may obtain licenses and they must operaté in. the

-. public interest. “47 U.S. C. §§ 308-300. But nowhere

in the Act is there the slightest suggestion that a person

¥ may be compelled to enter the broadcasting ‘or cable-.

casting field. Rather, the Act extends “tg all interstate

and foreign communication by wire’ or radio’. . . whieh

Originates and/or 4s received.within the United States.”

470.8. C28 152-( a) (emphasis added). When the Com-

‘mission jurisdiction is so-limited, it strains logic to. hold:

that this jurisdiction may be expanded. by_ requiring

eSomeone to “originate” or “fective.” — .

The Act, when dealing with broadcasters, speaks of

“applicants,” “applications: for licemses,” see 47 U. S. C.-.2

$§ 307-308, and “whether the public interest, conven-

ience,’ and necessity will be served by the granting of

such application.” 47°U. S.C. § 309 (a). The emphasis -

on the-Committee Reports was on “original applications”

and “application for the renewal “of a license.” “ H. R.

Rep. No. 1918, 73d Cong., 2d Sess., 48; S. Rep. No, 781,

73d Cong.,: 2d ‘Sess., 7, 9. The idea. that a* carrier -

. . o . ‘1°

; a wv 7. .

? ”

. ‘ . | 4 |

a

680 OCTOBER TERM, 1971 -

- Doveuas, I, diintating .° 406. U.S.

or any other person can be drafted against his will ve |

become a broadcaster is completely. foreign ta ase hf.

tory of the Act, as I read it.

paral is simply a carrier having no. more sinstrel

the message content than does a telephone com-

ma . A Carrier may, of course, seek a. broadcdster’s _

“Tieense; but. there is not the slightest suggestion in the”

- Act’ or in -its history that a carrier can he bludgeoned

‘into’ becoming a broadcaster while all. other broad-

casters. live under-.more. lenient rules. : There is not the

slighte&t-clue i in the Act that-CATV carriers can be com-

. pulsorily converted into broadcasters. | |

The. plurality opinion. performs the logerdemain by |

saying that the requirement of CATV origination i is “rea-

| sonably ancillary”.to the-Commission’s power to: regulate

television -broadcasting.?* That requires a- brand-new

‘amendment to the broadcasting provisions of the Act,

which only the Congress can éffect.. The Commission is

not given Parte*blanche to initiate broadcasting stations;

it cannot force’ people into the business. It cannot say

to one who applies for a broadcast outlet in city A

’ that the need is greater in city B and he will be licénsed

there. The fact’*that the Commission has authority

to. regulate origination of programs if CATV decides

to enter the field does not: mean that it-can compel

- CATV to originate programs. ‘The fact that the Act

directs the Commission to enegurage the larger and

moré effective use >of _Tadio in. the: publie. interests 47

2 The separate opinion - of THE — Justice reaches the same

result by saying “CATV is dependent totally on broadcast signals -

and is a significant link in the system ag a whole and therefore-must

_ ,be seen as within the jurisdiction of the Act.” “Ante, @ 675. The

difficulty is that this analysis . knows no pits short of complete.

_ domination of the field of. communicatioris by the Commission: This —

reasoning—divoreed as it‘is from any specific statutory basis-—could’

as well. apply to the manufacturers of radio and television bepad-

_ casting and receiving equipment. ;

N\

.

\

\: 0

“€

UNITED STATES v MIDWEST VIDEO CORP. — 681

\ 649 34 Dovetas, J, dissenting

USC § 303 (g), relates to the objectives of the Act .

and does not grant power to compeT people to become |

-.broadcastefs any moré than it grants the power to com- .

pel broadcasters to. becothe CATV operators.

-The upshot of today’s decision is to'make the Com- _

mission’s authority .over activities “ancillary” to its

. responsibilities ° greater than‘ its authority over any

broadcast licensee. «. Of course, the Commission can’ reg-

ulate a CATV that transmits broadcast signals. But

to entrust the Commission with the power ‘to force

some, a few or all CATV operators into the broadcast .

business is to give it a forbidding’ authority. ’ Congress

may decide to do so. But the step is a legislative meas-

ure so extreme that we-should not find it interstitially

authorized in the vague language of the Act.

I would affirm the Court of Appeals. -

« : oa