Concurring opinion raises questions about constitutionality of must-carry rules

The D.C. Circuit has given the FCC and the cable industry a belated Christmas present. It has rejected a challenge mounted by a number of broadcasters (including the NAB) to the FCC’s 2012 revision of its “viewability” rule. And one member of the three-judge panel went considerably further, suggesting that the entire cable must-carry regime is on extremely shaky constitutional footing.

The viewability rule, adopted in 2007, applied to “hybrid” cable companies. (“Hybrid” cable operators are those that opted, after the 2009 DTV transition, to provide an analog tier of programming – consisting of local TV signals and, in some cases some cable channels – so that subscribers with analog receivers would not require additional equipment.) The rule provided that such operators could either (1) provide the digital signal of all must-carry stations in analog format (in addition to any digital version carried) to all analog cable subscribers, or (2) transition to an all-digital system and carry the signal in digital format only, provided that all subscribers have the necessary equipment to view the broadcast content. 

The rule was scheduled to sunset in June, 2012 and, after a rulemaking proceeding, the Commission decided to let that happen (although the Commission did tack on an additional six months). While hybrid cable operators remain subject to a general “viewability” requirement, since December, 2012 they have had significantly greater flexibility in meeting that requirement.

Concerned that the sunsetting of the original viewability rule could threaten their ability to reach a significant number of viewers, several broadcasters challenged the FCC’s decision.

To no avail.

The D.C. Circuit was completely unpersuaded. The majority opinion (by Judge Edwards) easily rejected the petitioners’ Chevron I claim since Congress did not expressly mandate the retention of the rule. He also had no great difficulty in concluding that the FCC’s action was not arbitrary or capricious or inadequately telegraphed in the NPRM.

The more interesting aspect of the court’s decision is Judge Kavanaugh’s concurring opinion. He’s totally on board with all of Edwards’s points, but he wrote separately to suggest that both the viewability rule – and, more broadly, the entire cable must-carry regime – raise serious First Amendment questions. 

The Supreme Court has historically recognized those questions but has resolved them in favor of broadcasters. Now, however – at least according to Kavanaugh – the march of technology has shifted the balance in favor of cable operators. Essentially, Kavanaugh observes that, thanks to the incredible increase in competing media sources, “cable operators ‘no longer have the bottleneck power over programming that concerned the Congress in 1992.’” His bottomline message: “cable regulations adopted in the era of Cheers and The Cosby Show are ill-suited to a marketplace populated by Homeland and House of Cards.”

Kavanaugh’s opinion is a cable operator’s dream and a broadcaster’s nightmare. It reflects at least one judge’s very firm embrace of the First Amendment argument that the cable industry has repeatedly advanced against must-carry. And he squarely argues that the strength of that argument has increased with time and technological development.

Dating back to the 1994 Turner Broadcasting case, the Supremes, although not unsympathetic to cable operators’ First Amendment claims, have concluded that the interests of preserving over-the-air broadcasting are sufficiently hefty to outweigh the incursion on cable operators’ rights. But in Kavanaugh’s view, application of the Supremes’ Turner analysis leads to “an entirely different result” when applied “to today’s highly competitive video programming distribution marketplace”.

Kavanaugh’s opinion appears to be a not-very-subtle invitation to the cable industry to make another First Amendment run against must-carry. Because of that, it’s probably unlikely that the broadcast parties who took this case to the Circuit will be eager to seek Supreme Court review, since that could tee up the First Amendment issue sooner rather than later. Presumably, though, the cable industry will eventually be able to get the issue before the Supremes, which could lead to some fireworks in the video distribution industry.