Second Circuit Appeals Court Rejects Cablevision's Must-Carry ChallengeCourt takes expansive view of benefits of must-carry rule 6/24/2009 03:51:49 PM Eastern
The Second Circuit Court of Appeals has rejected a must-carry challenge and gave a shout-out to the rule as meant to help TV stations do more than just survive.
The court this week rejected Cablevision's challenge to an FCC order requiring carriage of WRNN New York in some Long Island communities under the market-modification provisions of must-carry.
In the process, it took an expansive view of the benefits of the must-carry rule, citing the Supreme Court's Turner decision and concluding that it did not mean to limit must-carry to the minimum of replicating a DMA.
The FCC had added the communities to WRNN's market for must-carry purposes. Cablevision balked, saying the station was shopping for beachfront property, and took the decision to court. Oral argument was held in April 2008 in what was just the latest in an ongoing tug-of-war between the station and Cablevision over carriage.
During oral argument, WRNN-TV told the court it faced financial ruin without carriage on Cablevision Systems in New York City's Long Island suburbs. Cablevision had countered that the case was "about cynical gamesmanship by an upstate New York television station in pursuit of cable carriage on Long Island, where it has never had a viewing audience."
The court rejected the Cablevision challenge to the decision Monday and instructed Cablevision to initiate carriage, lifting stay on the FCC's decision that had been in place since March 2008.
"We obviously disagree with the decision and are reviewing our options," said Cablevision spokesman Jim Maiella.
WRNN is based in Kingston, in upstate New York, but is still in the DMA that includes Cablevision's Long Island systems.
It was Cablevision that first sought market modification--the FCC can either add or subtract from a market's relevant must-carry footprint if it concludes that furthers the must-carry mandate. The FCC in 1996 granted Cablevision's request to remove Nassau County and western Suffolk County franchise areas, while declining to remove others in Westchester and Fairfield, Conn.
WRNN challenged that decision in the Second Circuit (which is in New York) and the court rejected its challenge.
But WRNN went back to the FCC in 2006 to reinstate those Nassau County and western Suffolk County areas under the market modification rule after it moved its transmitter some 50 miles closer to Manhattan and launched a digital-only signal reaching Long Island. It also said it had added local Long Island programming. The FCC granted WRNN's request, which launched the
Cablevision had challenged the FCC order on various grounds, including that it was a violation of the Fifth Amendment because it was a violation of the takings clause that prevents the government from taking private property for public use without just compensation. Cablevision said it violated the First Amendment because it reduced the number of channels over which it had
editorial control, and made it harder for Cablevision's owned channels to compete for viewers.
Both are arguments the cable industry has long made against must-carry.
The court rejected the takings argument, saying that Cablevision had not met the regulatory takings standard of showing that the decision would have had "an economic impact that interfered with "distinct investment-backed expectations."
The court also said it did not conclude that the mandatory carriage was the equivalent of "a physical occupation of Cablevision's equipment of property."
As to the First Amendment challenge, the court conceded that it might be possible to find another case in which a market modification was not content-neutral and thus could be challenged on First Amendment grounds, but it concluded this was not that case.
It held that the order was content-neutral--it said WRNN's added local programming was an "inconsequential factor" in the FCC's decision--and thus only required intermediate scrutiny. Under that test, the court said, it had no trouble concluding that the order advanced substantial government interests that did not implicate speech, and that it did not burden that speech "substantially more" than was necessary. Strict scrutiny would have required a finding that it was the most narrowly tailored solution possible.
"The burden imposed by the order - the loss of control over one channel - is no greater than necessary to further the government's interest in preserving a single broadcast channel it found serves the local community," said the court.
And in language that should buoy broadcasters, the court also said that must-carry was meant to help stations prosper, not just survive. Cablevision had argued that must-carry was meant "to restore stations to the audience that they had in a world without cable - not to make them better off." The Second Circuit disagreed.
"The purpose of the statute....is not to 'preserve' a group of broadcast stations, or a particular conception of a station's market," the court said, "but, inter alia, to 'preserv[e] the benefits of free, over-the-air television," and "promote] the widespread dissemination of information from a multiplicity of sources.' [a quote from the Supreme Court's decision upholding must-carry]. "We do not think that these purposes are served only by granting broadcasters the minimum must-carry coverage necessary for survival; or that these purposes are frustrated by actions which
result in a station's greater prosperity."