Split D.C. Circuit panel sidesteps First Amendment argument, upholds FCC prohibition . . . THIS time

The U.S. Court of Appeals for the D.C. Circuit has affirmed the 2007 extension of the Commission’s prohibition against exclusivity arrangements between cable operators and cable-affiliated programming networks. But the likelihood of that prohibition staying on the shelves beyond its current sell-by date (i.e., 2012) is dubious.

For more than 15 years the FCC has prohibited exclusive contracts between cable operators and cable-affiliated programming networks. The prohibition was triggered by the Cable Act of 1992, which reflected Congressional concern about cable’s monopolistic position in the realm of multichannel video programming distributors (MVPDs). But Congress was not inclined to let the FCC engrave the prohibition in stone. Au contraire, Congress included a sunset provision essentially causing the ban to go away automatically in 10 years unless the FCC made an affirmative finding that the prohibition continued to be necessary to protect competition and diversity. In 2002 the Commission made such a finding, leaving the prohibition on the books for another five years. And in 2007, when that extension ran out, the Commission renewed it for another five years.

That’s when Cablevision and Comcast, two of the biggest MVPDs, asked the Circuit to review the ban. In their view, the increasingly competitive MVPD market – now populated by such nouveaux arrivés as satellite TV providers DirecTV and Dish, not to mention telephone companies using their networks to deliver more than phone service – undercut the concerns that gave rise to the ban back in the days of the first President Bush.

By a 2-1 decision, the Circuit panel upheld the FCC. But in so doing, it gave the cable petitioners reason to believe that the prohibition won’t be around a whole lot longer.

The majority opinion, written by Judge David Sentelle (with Judge Thomas Griffith joining him), relied on a standard statutory analysis of the FCC’s decision, an approach in which the Court accords a boatload of deference to the agency. As usually happens when the Court takes that deferential tack, the FCC got the benefit of the doubt: the majority held that the Commission was not unreasonable in its conclusion that the prohibition is still justified, even though a different panel of the Court had held, in an unrelated case decided last August, that “[c]able operators [ . . . ] no longer have the bottleneck power over programming that concerned the Congress in 1992.” (We blogged about that case, which involves the FCC’s ownership caps, here.)

But the victory may not comfort the Commission (or others supporting the prohibition) much.  The majority wrapped up its opinion by observing that “[w]e expect that if the [MVPD] market continues to evolve at such a rapid pace, the Commission will soon be able to conclude that the exclusivity prohibition is no longer necessary to preserve and protect competition and diversity in the distribution of video programming.”  In other words, while the Court was willing to give the FCC a pass this time around, the Commission shouldn’t necessarily count on similar treatment the next time around.

An interesting aspect of the majority opinion is that it rejected the cable petitioners’ claims that, rather than the lenient, deferential statutory standard of review invoked by the majority, a more rigorous, less-agency-friendly First Amendment standard should apply because the cable operators’ First Amendment rights were (according to the petitioners, at least) at stake. The majority declined to consider any First Amendment arguments because, according to Sentelle, the cable guys didn’t raise them. 

That was news to Judge Brett Kavanaugh, whose 29-page dissent – not quite twice as long as the majority opinion – relied heavily on First Amendment analysis to reach the conclusion that the FCC’s prohibition is unconstitutional.  In the majority’s view, the cable petitioners never squarely argued that theirs was a First Amendment attack, and (according to the majority) the Court should not be in the business of deciding issues of constitutionality which the petitioner did not “set forth as an issue in the case and to which it refers only obliquely.”  [Important practice tip: If you plan to argue a constitutional issue, be sure to refer to the Constitution in your Statement of Issues.]  In fairness, while Kavanaugh makes a big effort to “tease out” (in Sentelle’s words) enough constitutional references in the petitioner’s briefs to cobble together an argument, it does appear that the cable guys declined to present the constitutional issue as such.

For their part, while the cable petitioners may take considerable comfort from Judge Kavanaugh’s  constitutional analysis, even he had to acknowledge that “the First Amendment rights of a Cablevision or ESPN do not tug at the free speech heartstrings in the same way as the iconic political protester who lies at the core of the First Amendment.”  Ouch.

Next stop? The ball is in Cablevision/Comcast’s court. They could sit back and wait for the current extension to expire (in 2012) and see what the FCC does. Or they could continue their litigation by seeking either: (a) reconsideration by the Sentelle/Griffith/Kavanaugh panel; or (b) rehearing en banc by the full D.C. Circuit; or (c) review by the Supreme Court. 

The odds of success in pursuing any of those options tend to be long against the guy seeking review. However, consider these facts. First, the cable petitioners have the advantage of a very thoughtful dissent on their side, reflecting at least one judge’s approval of their First Amendment arguments.  That might be helpful in persuading Kavanuagh’s colleagues that those arguments have merit.  Second, another panel of the Circuit did issue that decision on the cable ownership caps just last August, containing language that could easily be viewed as inconsistent with (or at least in strong tension with) the more recent ruling.  The full Circuit might be inclined to look at that aspect to confirm that the Court’s rulings are not heading in opposite directions.  And if cable’s goal is really to get the Supreme Court to revisit the issue of cable’s First Amendment rights – an issue last decided  there more than a decade ago, by a slim 5-4 vote – Cablevision and/or Comcast may figure that the Supremes might want to take a look (particularly in view of Judge Kavanaugh’s dissent).

Even if the cable petitioners pursue their litigation successfully, though, it’s possible that that litigation won’t be resolved until 2011 or even 2012. And at that point, the prohibition against exclusivity will be expiring anyway . . . unless the Commission decides otherwise. 

[Department of Credit-where-credit-is-due: FHH’s own Paul Feldman represented the Broadband Service Providers Association as an amicus on the FCC’s side before the Circuit in this case.]