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Louisiana State Univ.

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Wednesday, May 29, 2013

DC Circuit Finds In Favor of Comcast In Tennis Channel Dispute With FCC

A federal appellate court has ruled in favor of Comcast in a dispute between the company and the FCC over whether Comcast could bundle The Tennis Channel separately from other channels such as the Golf Channel, thus limiting The Tennis Channel's distribution. The FCC and an administrative law judge had ruled that Comcast's action was discriminatory, but the DC Circuit found that Comcast's decision was similar to judgment to that exercised by editors.  Said the court in part:

 

In some local geographic markets around the country, a video programming distributor may have market power. This case does not call upon us to consider how Section 616 would apply to discrimination against unaffiliated networks in such local markets.

There is some debate about how serious the statute's constitutional questions must be, and indeed whether the statute supports limiting Section 616 to cases of market power. Applying Section 616 to a video programming distributor that lacks market power would raise serious First Amendment questions under the Supreme Court's case law. Indeed, applying Section 616 to a video programming distributor that lacks market power would violate the First Amendment as it has been interpreted by the Supreme Court.

To begin with, the Supreme Court has squarely held that a video programming distributor such as Comcast both engages in and transmits speech, and is therefore protected by the First Amendment...Just as a newspaper exercises editorial discretion over which articles to run, a video programming distributor exercises editorial discretion over which video programming networks to carry and at what level of carriage.

It is true that, under the Supreme Court's precedents, Section 616's impact on a cable operator's editorial control is content-neutral and thus triggers only intermediate scrutiny rather than strict scrutiny. ...But the Supreme Court's case law applying intermediate scrutiny in this context provides that the Government may interfere with a video programming distributor's editorial discretion only when the video programming distributor possesses market power in the relevant market.

...
In its 1994 decision in Turner Broadcasting, the Supreme Court ruled that the Cable Act's must -carry provisions might satisfy intermediate First Amendment scrutiny, but the Court rested that conclusion on "special characteristics of the cable medium: the bottleneck monopoly power exercised by cable operators and the dangers this power poses to the viability of broadcast television." ... When a cable operator has bottleneck power, the Court explained, it can "silence the voice of competing speakers with a mere flick of the switch." ... In subsequently upholding the must-carry provisions, the Court reiterated that cable's bottleneck monopoly power was critical to the First Amendment calculus. ... The Court stated that "cable operators possess[ed] a local monopoly over cable households," with only one percent of communities being served by more than one cable operator. ...

In 1996, when this  Court upheld the Cable Act's exclusive-contract provisions against a First Amendment challenge, we likewise pointed to the "special characteristics" of the cable industry. ...
companies have in the cable market." Id. at 978 (internal quotation marks and citation omitted).

...

But in the 16 years since the last of those cases was decided, the video programming distribution market has changed dramatically, especially with the rapid growth of satellite and Internet providers. This Court has previously described the massive transformation, explaining that cable operators "no longer have the bottleneck power over programming that concerned the Congress in 1992." 

...


In today's highly competitive market, neither Comcast nor any other video programming distributor possesses market power in the national video programming distribution market. To be sure, beyond an interest in policing anticompetitive behavior, the FCC  may think it preferable simply as a communications policy matter to equalize or enhance the voices of various entertainment and sports networks such as the Tennis Channel. But as the Supreme Court stated in one of the most important sentences in First Amendment history, "the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment." ...

Therefore, under these circumstances, the FCC cannot tell Comcast how to exercise its editorial discretion about what networks to carry any more than the Government can tell Amazon or Politics and Prose or Barnes & Noble what books to sell; or tell the Wall Street Journal or Politico or the Drudge Report what columns to carry; or tell the MLB Network or ESPN or CBS what games to show; or tell SCOTUSblog or How Appealing or The Volokh Conspiracy what legal briefs to feature.

In light of the Supreme Court's precedents interpreting the First Amendment and the massive changes to the video programming distribution market over the last two decades, the FCC's interference with Comcast's editorial discretion cannot stand. In restricting the editorial discretion of video programming distributors, the FCC cannot continue to implement a regulatory model premised on a 1990s snapshot of the cable market.

 

 

More here from the National Law Journal, here from Reuters.

The case is Comcast Cable Communications, LLC v. Federal Communications Commission, U.S. Court of Appeals for the D.C. Circuit, No. 12-1337.

 

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