Document ID: A:\HBO.TXT HOME BOX OFFICE, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, PROFESSIONAL BASEBALL, et al., INTERVENORS; METROMEDIA, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS PROFESSIONAL BASEBALL, et al., INTERVENORS; HOME BOX OFFICE, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS AMERICAN BROADCASTING COMPANIES, INC., et al., INTERVENORS; HOME BOX OFFICE, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS CBS, INC., et al., INTERVENORS; COLUMBIA PICTURES INDUSTRIES, INC., et al., PETITIONERS v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS PROFESSIONAL BASEBALL, et al., INTERVENORS; UNITED ARTISTS CORPORATION AND METRO-GOLDWYN-MAYER INC., PETITIONERS v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS PROFESSIONAL BASEBALL, et al., INTERVENORS; MOTION PICTURE ASSOCIATION OF AMERICA, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS AMERICAN BROADCASTING COMPANIES, INC, et al., INTERVENORS; NATIONAL ASSOCIATION OF BROADCASTERS, PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS AMERICAN BROADCASTING COMPANIES, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS; CBS INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS NATIONAL CITIZENS COMMITTEE FOR BROADCASTING, INTERVENOR; NATIONAL BROADCASTING COMPANY, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS; CBS INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS; AMERICAN BROADCASTING COMPANIES, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS; NATIONAL ASSOCIATION OF BROADCASTERS, PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS NATIONAL BROADCASTING COMPANY, INC., PETITIONER v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS Nos. 75-1280 75-1284, 75-1342, 75-1358, 75-1430, 75-1496, 75-1555, 75-1785, 75-1788, 75-1807, 75-1869, 75-2129, 75-2130, 75-2131, 75-2172 UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT 567 F.2d 9; 2 Media L. Rep. 1561; 2 Media L. Rep. 1957 April 20, 1976, Argued March 25, 1977, DecidedSUBSEQUENT HISTORY: As Amended April 4 PRIOR HISTORY: Petitions for Review of Orders of the Federal Communications Commission. SYLLABUS: SYLLABUS BY THE COURT These 15 consolidated cases challenge four orders of the Federal Communications Commiss per-program or per-channel basis. Acting under its rulemaking authority, the Commission Series) shown on broadcast television within the previous five years; (3) more than the mi umber; and (4) all series programs (i.e., programs with interconnected plot or substantial d the overall number of hours of pay operation which could be devoted to sports and featur emoved and recordkeeping requirements were imposed on feature film programming. The stated have to pay a fee to see the same material. Such competitive bidding, or "siphoning," is to the same material. For this reason, even a relatively small number of pay viewers coul 1. Review of the rulemaking record indicates that the pay cable television regulations mulgating the pay cable rules and because there is no evidence to support the need for reg a. The Communications Act of 1934, 47 U.S.C. @ 151 et seq., contains no provision expre U.S.C. @ 152(a), but only where the ends to be achieved were "long established" in the fi 72); United States v. Southwestern Cable Co., 392 U.S. 157, 173-176, 20 L. Ed. 2d 1001, 88 over pay cable television is whether the ends proposed to be achieved by Commission regul S. at 667-668; cf. Greater Boston Television Corp. v. FCC, 143 U.S.App.D.C. 383, 394, 444 S. Ct. 1895 (1976). Slip op. at 30-34. b. Under the standard set out above, the Commission has exceeded its jurisdiction and i c. Even if the Commission had jurisdiction to promulgate its anti-siphoning rules, ther n the face of a given problem [is] highly capricious if that problem does not exist." City d. Moreover, although the Commission properly recognized the need to balance the benefi e Co., supra, does not sanction regulation of cable television to prevent "unfair competit e resolved on the basis of legal precedent, but by a considered decision upon the record i 2. The cable television rules are inconsistent with the First Amendment. Even though su 0 F.2d 194 (1969), cert. denied, 397 U.S. 922, 25 L. Ed. 2d 102, 90 S. Ct. 914 (1970), tha dcasting Co. v. FCC, 395 U.S. 367, 386, 23 L. Ed. 2d 371, 89 S. Ct. 1794 (1969). Slip op. a. The constitutional question in NATO was straightforward: whether a grant of a broadc dentical to that resolved in the affirmative over 25 years before NATO in National Broadca was no need for it to break new First Amendment ground and a reading of NATO shows that it from cable television, however. For this reason, the conventional justification for Commis b. The absence in cable television of the physical limitations of the electromagnetic s * * does not embrace a right to snuff out the free speech of others," Red Lion Broadcasti ience. In determining whether such regulations comport with the First Amendment, the prope c. Analysis of the Commission's stated reasons for promulgating the anti-siphoning rule ppression of free expression as required by O'Brien. Nonetheless, the rules are invalid be than necessary to further any legitimate government interest, and this overbreadth is not in Freedman v. Maryland, 380 U.S. 51, 13 L. Ed. 2d 649, 85 S. Ct. 734 (1965). Slip op. at 3. During the pendency of the rulemaking proceeding before the Commission, and even aft and various commissioners and Commission employees. Although this court sua sponte ordere such communications on the integrity of the rulemaking. As a result, the elaborate public full administrative record" that was presumably before an agency when it exercised its di been frequent ex parte contacts, it is simply not possible to know the contents of the "f tates, 106 U.S.App.D.C. 30, 269 F.2d 221 (1959). For these reasons, it is imperative that rulemaking issues until a final decision in the proceeding. If ex parte contacts nonethel 4. Rules substantially similar to the subscription broadcast television rules were affi perations of a subscription broadcast station at Hartford, Connecticut. It appears that fe s that reviewed in NATO, which has not been called into question in the instant rulemaking elevision, subject, however, to further review upon completion of additional hearings rega Remanded. COUNSEL: Simon H. Rifkind, of the bar of the Court of Appeals of New York, pro hac vice, b oses Silverman were on the brief, for Petitioner in Nos. 75-1280, 75-1342, and 75-1358. Robert W. Coll, with whom James A. McKenna, Jr. and Steven A. Lerman were on the brief, d 75-1358; also argued for all broadcasters. Arthur Scheiner, with whom Richard A. Solomon, Robert D. Hadl, and Richard A. Moore wer Gerald Meyer, of the bar of the Court of Appeals of New York, pro hac vice, by special Barry Grossman, Attorney, Deparment of Justice, with whom Samuel R. Simon, Attorney, D ondent United States of America in No. 75-1785. Lee I. Weintraub, Attorney, Department of spondent United States of America. Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission, with re on the brief, for Respondent Federal Communications Commission. Joseph A. Marino, Assoc n. Curtis T. White, with whom Frank W. Lloyd, III was on the brief, for Intervenor Nationa Thomas J. Dougherty and Preston R. Padden were on the brief, for Petitioner in No. 75-1 John B. Summers and James J. Popham were on the brief, for Petitioner in Nos. 75-1785 a Sidney Schreiber and James Bouras were on the brief, for Petitioner in No. 75-1555. Joel Rosenbloom, Peter D. Bewley, Stephen A. Weiswasser, and Lowell B. Miller were on t Petitioner in No. 75-1807. Bernard G. Segal, Corydon B. Dunham, and Howard Monderer were on the brief, for Petitio Henry Geller filed a brief as Amicus Curiae urging reversal in Nos. 75-1280, 75-1284, 7 Kenneth A. Cox, William J. Byrnes, and Raymond C. Fay filed a brief on behalf of Americ James F. Fitzpatrick and Frank G. Washington were on the brief, for Intervenor Professi James A. McKenna, Jr., Robert W. Coll, and Steven A. Lerman entered appearances for Int Arthur Scheiner entered an appearance for Intervenor Twentieth Century-Fox Film Corpora JUDGES: Wright and MacKinnon, Circuit Judges, and Weigel, * District Judge. Weigel, Distri * Of the United States District Court for the Northern District of California, sitting OPINIONBY: PER CURIAM OPINION: [*17] In these 15 cases, consolidated for purposes of argument and decision, " n2 and "subscription broadcast television stations" n3 may offer to the public for a fee y has not gone [*18] unnoticed by those petitioners who attack only the amendments to the opposing view that any regulation exceeds the authority of the Commission. n7 We acce capricious, and unauthorized by law in all other respects. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n2 "Cablecasting" refers to the origination of programming on a cable television system )-(x) (1975). The rules challenged here apply to both "access" cablecasters, who lease (or s challenged here apply only to cablecasting on systems which also carry broadcast signals al basis for this distinction. See First Report and Order, 52 F.C.C.2d 1, 47-48 (1975), JA n3 Subscription broadcast television stations are those with the technical capability t n4 Jurisdiction over these petitions for review is based on 47 U.S.C. @ 402 (1970) and In addition to the four orders promulgating, modifying, or refusing to waive the "anti- rogram exclusivity" refers to an alleged broadcast network practice of obtaining exclusive making at that time. See Notice of Proposed Rule Making, 27 F.C.C.2d 13 (1971) (Docket 181 ided in the First Report and Order, supra note 2. Instead, a "Notice of Inquiry" was issue notice and over a year since the close of the comment period. Yet we are unaware that any ce of Proposed Rule Making and Order for Oral Argument, 48 FCC 2d 453, 462 n.16 (1974), JA ources of information, we think the Commission should by now have terminated its deliberat n5 In FCC Docket 18397 rules originally developed for application to subscription broad arties here. See Notice of Proposed Rule Making and Memorandum Opinion and Order, 35 FCC 2 y cablecasting under new Docket 19554. In In re Home Box Office, Inc., 51 F.C.C.2d 317 (19 nd would not be waived. See 51 FCC 2d at 321, JA 145. We disagree with this interpretation The subscription broadcast television rules were adopted by the Commission in Docket 11 352, 420 F.2d 194 (1969), cert. denied, 397 U.S. 922, 25 L. Ed. 2d 102, 90 S. Ct. 914 (1 d Rule Making, 35 FED.REG. 11040 (1970) (Docket 18893). One order was entered in this dock onsideration of these petitions was granted and consolidated with the further consideratio gated in the First Report and Order, supra note 2, constitute the Commission's decision on er, the Commission issued its Second Report and Order in Docket 19554, FCC 2d , 35 cription broadcast television section of its regulations, 47 C.F.R. @ 73.643(g), as well. y was terminated and the Second Further Notice of Proposed Rule Making, 52 FCC 2d 83 (1975 iven the similarity of the issues and parties involved, this was harmless error. See 5 U.S n6 This group includes the major broadcast networks, the National Association of Broadc n7 This view is taken by the Justice Department, the cable television interests, produc - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - I. THE FACTUAL BACKGROUND At the heart of these cases are the Commission's "pay cable" rules, set out in the marg te program or channel charge is made for this material. In addition, the rules prohibit ca on cable channels on which programs are presented for a direct charge to the viewer. n9 V s. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n8 Cable television system operators or channel lessees engaging in origination or acce ecast by a cable television system subject to the mandatory signal carriage requirements o (1) A feature film may be cablecast if - (i) The film has been in general release in theaters anywhere in the United States for (ii) A conventional television broadcast station licensed in the market of the cable te ll be deemed to hold a present contractual right to exhibit a film if the network to which (iii) The film has been in general release in theaters anywhere in the United States fo ion for three (3) years prior to its proposed cablecast. Once a film has been cablecast in ithout regard to its subsequent exhibition over conventional television; (iv) The film is in a foreign language; (2) Feature films otherwise excluded by this paragraph may be cablecast upon a convinci f the broadcast rights to the films, even absent the existence of subscription television, (3) Every cable television system operator or channel lessee engaging in origination or ich it was cablecast and the provision of this paragraph pursuant to which it was cablecas ht to exhibit the film shall be specified. These files shall be retained for a period of t (b) Sports events shall not be cablecast live by a cable television system subject to t (1) A specific event may be cablecast if the event has not been broadcast live over con vent takes place at intervals of more than one year (e.g., summer Olympic games), the even st. (2) New specific sports events that result from the restructuring of existing sports sh (3) The number of non-specific events which may be cablecast in any given season shall (i) If less than twenty-five (25) percent of the events in a category of non-specific e ast, the number of events in the category cablecast shall not exceed the number of events (ii) If twenty-five (25) percent or more of the events in a category of non-specific ev ecast, the number of events in the category cablecast shall not exceed fifty (50) percent dcast. However, if the number of events in the category to be broadcast in the current sea adcast, the number of events in the category which may be cablecast pursuant to this subpa (c) Not more than ninety (90) percent of the total cablecast programming hours shall co uch programming hours may not exceed ninety-five (95) percent of the total cablecast progr (d) No commercial advertising announcements shall be carried on subscription channels d 47 C.F.R. @ 76.225 (1975), as amended by Second Report and Order, supra note 5. n9 Commercial advertising on cablecast channels not used for subscription cablecasting n10 Subscription television broadcast programming shall comply with the following requi (a) Feature films shall not be broadcast except as provided in this paragraph. (1) A feature film may be broadcast if - (i) The film has been in general release in theaters anywhere in the United States for (ii) A conventional television broadcast station licensed in the market of the subscrip evision network will be deemed to hold a present contractual right to exhibit a film if th (iii) The film has been in general release in theaters anywhere in the United States fo ption television broadcast station for three (3) years prior to its proposed subscription may thereafter be broadcast on a subscription basis in the market without regard to its su (iv) The film is in a foreign language; (2) Feature films otherwise excluded by this paragraph may be broadcast upon a convinci lms, even absent the existence of subscription television, would not make the films availa (3) Every subscription television broadcast station over which a feature film is broadc s paragraph pursuant to which it was broadcast. When a feature film is broadcast pursuant These files shall be retained for a period of two years. (b) Sports events shall not be broadcast live except as provided in this paragraph. (1) A specific event may be broadcast if the event has not been broadcast live over con ast. If a regularly recurring event takes place at intervals of more than one year (e.g., ription television broadcast station during any one of the ten (10) years preceding the pr (2) New specific sports events that result from the restructuring of existing sports sh (b)(1) of this section. (3) The number of non-specific events which may be broadcast on a subscription basis in (i) If less than twenty-five (25) percent of the events in a category of non-specific e he proposed subscription broadcast, the number of events in the category broadcast on a su est number of events in the category were broadcast over conventional television. (ii) If twenty-five (25) percent or more of the events in a category of non-specific ev the proposed subscription broadcast, the number of events in the category broadcast on a the largest number of events in the category were broadcast over conventional television. st in that season among the preceding five (5) seasons when the largest number of events i proportion to the reduction in events broadcast over conventional television. (c) No commercial advertising announcements shall be carried during subscription televi (d) Not more than 90 percent of the total subscription programming hours shall consist rogramming hours may not exceed 90 percent of the total subscription programming hours in (e) Any television broadcast station licensee or permittee authorized to broadcast subs (f) Except as they may be otherwise waived by the Commission in authorizations issued h 47 C.F.R. @ 73.643 (1975), as amended by Second Report and Order, supra note 5. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The first application to establish a subscription broadcast television service was [* would license a number of trial systems in order to gather information about the technical eved in the Hartford, Connecticut trial system and concluded that permanent subscription o - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n11 See 20 FED.REG. 988 n.1 (1955). n12 See generally NATO v. FCC, supra note 5, 136 U.S.App.D.C. at 354, 420 F.2d at 196. n13 Third Report, 26 F.C.C. 265 (1959), aff'd. Connecticut Committee Against Pay TV v. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - For present purposes, the relevant limitations included restrictions on feature films, itations was twofold. First, the Commission had agonized over both its authority to dedica tion television had argued that they should be used for conventional programming which wou Ass'n of Theatre Owners (NATO) v. FCC, 136 U.S.App.D.C. 352, 420 F.2d 194 (1969), cert. d that on conventional advertiser-supported television. n17 As a result, the Commission plac mmercial advertising in an effort to remove any economic pressure to appeal to a mass audi s, and series programs that could be shown on subscription television was the Commission's us reducing the quality of conventional television. n19 By limiting the subscription opera ferings on broadcast television as a whole. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n14 See 15 FCC 2d at 597-598. n15 See generally Fourth Report and Order, supra note 5, 15 FCC 2d at 466-488. n16 See First Report, 23 FCC 532, 536-540 (1957). n17 See Fourth Report, supra note 5, 15 FCC 2d at 483-488. n18 See id. at 474-488, 564-566. See also First Report and Order, supra note 2, 52 FCC n19 See Fourth Report, supra note 5, 15 FCC 2d at 554-573. n20 In these proceedings the Commission has changed its vocabulary from the pejorative - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The cable television industry has a similarly lengthy technical and regulatory history. ] developed through the 1960's into media with enough channels to accommodate both retra blecasting their own programs on channels not used for retransmission services, and the ab - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n21 See CABINET COMM. ON CABLE COMMUNICATIONS, REPORT TO THE PRESIDENT 10-11 (1974). n22 See Transcript of Oral Argument at 43; br. for petitioner Home Box Office at 9. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The Commission's regulation of cable television reflects its technological development. le operations to prevent fragmentation of audiences and revenues between local broadcaster into the uses to which cable television might be put in the national communications networ es, to set aside "access channels" on which members of the public could rent time to produ or cable television similar to those adopted for subscription broadcast television. See Fi netrate any television market to the extent needed to "siphon" programming, see id. at 20 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n23 See CABINET COMM. ON CABLE COMMUNICATIONS, supra note 21, at 10. n24 See generally United States v. Southwestern Cable Co., 392 U.S. 157, 161-168, 20 L. n25 Notice of Proposed Rulemaking and Notice of Inquiry, 15 F.C.C.2d 417 (1968). n26 First Report and Order, 20 FCC 2d 201, 223-225 (1969). The Commission also extended - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Nine months later the Commission reversed its course and applied the rules developed in in the Order and a number of the petitioners here filed petitions to reconsider imposition ule Making and Memorandum Opinion and Order, 35 FCC2d 893, 894 n. 5 (1972), JA 2. These pe irst Report and Order [*23] in this docket, 52 FCC2d 1 (1975), JA 25, the Commission r o the extent that some petitioners sought to establish reporting requirements designed to osed Rule Making, 52 FCC2d 83 (1975), JA 107, eliciting additional information on the rule nd Order, FCC2d , 35 Rad. Reg. 2d (P & F) 767 (1975), JA 131. n29 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n27 Many parties to this proceeding, see, e. g., br. for respondent United States; br. propriate for this court to review the validity of the pay cablecasting rules de novo, alt alidity of the relaxation of prior Commission rules is before this court. No party has add ulgated in its Memorandum Opinion and Order in Docket 18397, 23 F.C.C.2d 825 (1970), are f The critical question is the effect of the Commission's Notice of Proposed Rule Making it (some of which were addressed to procedural infirmities and others to the substance of 8. * * * In view of the importance of the issue as against the paucity of prior comment t we may hear from all parties concerned and to reconsider the rules. * * * * 10. In light of our decision to allow for further comment on the pay-cablecasting rules 35 FCC2d at 896, 897-898, JA 4, 5-6 (emphasis added). Nonetheless, the Commission, "in acc We think such a disposition is fundamentally at odds with the purpose of reconsideratio of the Communications Act provides in relevant part: * * * The filing of a petition for rehearing shall not be a condition precedent to judi r, decision, report, or action, or (2) relies on questions of fact or law upon which the C tion for rehearing or granting such petition, in whole or in part, and ordering such furth The obvious purpose of @ 405 is to afford the Commission an opportunity to consider and pa p.D.C. 379, 380, 240 F.2d 410, 411 (1957); see Saginaw Broadcasting Co. v. FCC, 68 App.D.C its order is needed but that the order is nonetheless final for purposes of judicial revi Order, supra, this court would in all likelihood have deferred consideration of that appe v. FCC, 101 U.S.App.D.C. 324, 327, 248 F.2d 646, 649 (1957). Finally, the "concise statem issues that we think the rules need to be reconsidered." Surely, denial on these grounds i We need not rely on @ 405 alone, however, because the Commission's own procedural rules ion in only three ways. First, it may deny the petitions. 47 C.F.R. @ 1.106(j) (1975). Se until after further proceedings. Id. @ 1.106(k)(2). Here, however, the Commission has tak , in the same Notice of Proposed Rule Making and Memorandum Opinion and Order the Commissi procedure here too would have been that set out in @ 1.106(k)(2), and we therefore hold t hold that the orders entered in Docket 19554 are the rulings on the merits of the petition Although we would normally be hesitant to decide the merits of an appeal where the brie judicial to any of the parties before us. Although we do not have the benefit of a record nted on the "paucity" of information in that record. See 35 FCC2d at 896, JA 7. Moreover, reconsideration. Furthermore, the Commission itself adequately represented those who would For all foregoing reasons, we hold that the effect of our ruling today is to remove in n28 Series programs are those "with interconnected plot or substantially the same cast n29 See also note 5 supra. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - To unde million American homes with television sets, of which 9.8 million had access to some cabl h only 224 of approximately 3,405 systems having more than 10,000 subscribers. n32 The num evision markets, with the exception of the New York City area and parts of California. n34 which lives in rural areas would by any estimate be extremely expensive, perhaps requirin eem possible in the immediate future. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n30 STAFF OF SUBCOMM. ON COMMUNICATIONS OF HOUSE COMM. ON INTERSTATE AND FOREIGN COMMER n31 Id. at 19. n32 Id. at 17. n33 Transcript of Oral Argument at 4, 27. n34 Id. at 77. n35 Id. at 26. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Similarly, access of all Americans to cable seems foreclosed by the cost of cable servi he viewer to see cablecast programs as well. The basic fee is approximately $5-$6 monthly. fee of $5-$7 monthly, in addition to the basic fee, is charged for access to the cablecast keting [*25] television features in much the same way that movies are marketed in thea - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n36 PROMISE VERSUS PERFORMANCE, supra note 30, at 17. n37 First Report and Order, supra note 2, 52 FCC 2d at 2, JA 26. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Siphoning is said to occur when an event or program currently shown on conventional fre ill become unavailable for showing on the free television system or its showing on free te brought about by agreement between the seller of the program or event and the subscription d receive delayed access to the program or could be denied access altogether. The ability o see certain types of features than are advertisers to spread their messages by attaching e of viewing a recent feature film, while advertisers are willing to pay only three cents - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n38 The position of the Commission is not clear. The concern in the subscription televi 5, 15 FCC 2d at 494-509. Here, at least with regard to feature films, the Commission seem . 162) JA 73-74. n39 First Report and Order, supra note 5, 52 FCC 2d at 77 (dissenting opinion), JA 101. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Whether such a siphoning scenario is in fact likely to occur and, if so, whether the re ion are matters of great dispute among the Commission and the various petitioners and inte e cable in a subordinate role in order to increase program diversity - a goal which has be ikely to be the financial backbone of a successful cable operation. As a result, it is cla ers argue that the subscription broadcast television rules had the effect of killing that medium in its infancy by denying it access to necessary programming d urge us not to let the Commission similarly snuff out pay cable. Finally, other petition rvice. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n40 E.g., 47 C.F.R. @ 76.201 (1974) (origination requirements), removed, 39 FED. REG. 4 - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - II. PAY CABLE RULES A. Statutory Authority In determining the Commission's authority to promulgate the pay cable rules, we by no m rcumstances to allow the Commission to regulate cable television system operations. See Ca Inc. v. FCC, 128 U.S.App.D.C. 262, 387 F.2d 220 (1967). This view has been adopted by oth Midwest Video Corp., 406 U.S. 649, 32 L. Ed. 2d 390, 92 S. Ct. 1860 (1972); United States unications Act narrowly would be to defeat the purpose of Congress "'to maintain, through 138, 84 L. Ed. 656, 60 S. Ct. 437 (1940). Yet, despite the latitude which must be given t sons which are properly the concern of [the Commission]," Hampton v. Mow Sun Wong, 426 U.S 1. The Standard for Determining Statutory Authority Midwest Video Corp. and Southwestern Cable Co. hold that the Commission may only exerci le Co., supra, 392 U.S. at 178; United States v. Midwest Video Corp., supra, 406 U.S. at 6 ). This standard was first enunciated in Southwestern Cable Co., in which the Supreme Cour at 159-160. The purpose of these rules was to prevent division of audiences and revenues unprofitable, thereby frustrating the Commission's long-standing n42 and congressionally a - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n41 Distant signals are those which a viewer would not ordinarily be able to receive wi n42 See United States v. Southwestern Cable Co., supra note 24, 392 U.S. at 174-176 & n n43 The Southwestern Court referred a number of times to instances of congressional app o congressional support for the Commission's policy of encouraging UHF development, and re ission's restrictions on cable. See 392 U.S. at 175 & nn.41 & 42. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - In finding that the Commission was authorized to promulgate the challenged rules, the S the Communications Act of 1934, 47 U.S.C. @ 152(a) (1970). 392 U.S. at 167-169. For this imits of the Commission's authority to regulate [cable television]" under Section 2(a). Id , 780, 20 L. Ed. 2d 312, 88 S. Ct. 1344 (1968), the Court noted that the rules were "reaso ry out such responsibilities the Commission could "issue 'such rules and regulations and p 0). In United States v. Midwest Video Corp., supra, a decision which affirmed the Commissio ission's jurisdiction over cable television operations. Upholding the Commission's rules r sion, but that "@ 2(a) does not in and of itself prescribe any objectives for which the Co rule reflected a proper objective was whether it would "'further the achievement of long-e this standard the Commission was held to be authorized to require cable program originati d cable programming. See 406 U.S. at 668-670. The deciding vote in Midwest Video Corp. was cast by Chief Justice Burger, who wrote: Candor requires acknowledgment, for me at least, that the Commission's position strains 406 U.S. at 676. Nonetheless, the Chief Justice was willing to uphold the challenged regul n by the Commission." Id. n44 Justice Douglas, writing for four dissenting Justices, took t to uphold the regulations challenged in Midwest would "make the Commission's authority o - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n44 Were one to accept the Chief Justice's theory of jurisdiction, the Commission's rul in this record that these independent entrepreneurs are in any way subsidized by cable sys - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The Supreme Court's opinions in Southwestern Cable Co. and Midwest Video Corp. thus lo mission sufficient latitude to cope with technological developments in a rapidly changing ly for ends for which it could also regulate broadcast television. Indeed, even this stan television in areas impinging on the First Amendment is broader than its authority over c timate purposes." That these cases establish an outer boundary to the Commission's authori ABLE TELEVISION: PROMISE VERSUS REGULATORY PERFORMANCE 80-83 (1976) (Subcomm. Print), and s in the language of the Communications Act or at least be able to ground them in a well-u . 383, 394, 444 F.2d 841, 852 (1970), cert. denied, 403 U.S. 923, 29 L. Ed. 2d 701, 91 S. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - * Judge MacKinnon is of the view that the FCC's jurisdiction to regulate cablecasting to unfair competition. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - 2. Applying the Jurisdictional Standard The purpose of the Commission's pay cable rules is to prevent "siphoning" of feature fi thrust is to prevent any competition by pay cable entrepreneurs for film or sports materi t is not clear. The Commission states only that its "mandate to act in the public interest direct cost," First Report and Order, supra, 52 FCC 2d at 43, JA 67, and that its action " id. at 45, JA 69. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n45 As promulgated in the First Report and Order, supra note 2, the rules also applied f the rules here. n46 See, e.g., First Report and Order, supra note 2, 52 FCC 2d at 51-55, JA 75-79. This Waivers will be granted upon a convincing showing to the Commission that a film desired fo ription television, would not make the film available to conventional television. Id. at 55, JA 79. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Insofar as the Commission places reliance on such conclusory phrases as "enhance the in 3 U.S.App.D.C. at 394, 444 F.2d at 852. Beneath such generalities, however, the Commission to take the position that it has both the obligation and the authority to regulate progra public enjoyment of television entertainment would be reduced if films or sports events w and closely related, is the argument pressed here by counsel for the Commission that Sect the near future provide a nationwide communications service. See Transcript of Oral Argum will divide audiences and revenues available to broadcast stations in such a manner as to Order, supra, FCC 2d at , 35 P & F RADIO REG. 2D at 772, JA 136 ("we possess no evi Report and Order, 20 FCC 2d 201, 216-217 (1969). The Supreme Court's opinion in Southweste The question of the Commission's obligation or authority to regulate television to main , 165 U.S.App.D.C. 185, 191-207, 506 F.2d 246, 252-268 (1974) (en banc). Although this con t here. n47 The traditional view of the Commission is well summarized by its then chairman It would be a simple matter for the Commission to dictate to each licensee of the 62 st es of programming available to the public. But it would not be the approach contemplated b n 1940, the Communications Act also "recognizes that the field of broadcasting is one of f servation of a free competitive broadcast system, on the one hand, and the reasonable rest The Commission has struck this balance by requiring licensees to conduct formal surveys th respect to the provision of news, public affairs, and other informational services to t ive to those identified needs. In contrast, we have generally left entertainment programmi 293 (1960), "our view has been that the station's [entertainment] [*30] program format eet the preferences of his area and fill whatever void is left by the programming of other Zenith Radio Corp., 40 F.C.C.2d 223, 230 (1973) (footnotes omitted). n48 In addition, in 970), strip it of any authority to require or to prohibit broadcast of any particular mate rike for Peace, 6 Rad. Reg. 2d (P & F) 307, 308 (1965). As we understand the traditional p for reasons inapposite here. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n47 The Communications Act does not expressly regulate television. Title III of the Act ude transmission of pictures. n48 These views were not those of the Commission as a whole, but of only six commission - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - In WEFM this court en banc rejected the laissez faire approach of the Commission, holdi There is a public interest in a diversity of broadcast entertainment formats. The disappea roposed license assignment encompassing a format change, the FCC is obliged to determine w must affirmatively consider whether the public interest would be served by approving the e conducting a public hearing in order to resolve the factual issues or assist the Commiss roviding the special format; those losses must be attributable to the format itself in ord 165 U.S.App.D.C. at 201, 506 F.2d at 262. Our position is thus unmistakable: The Communica must regulate the entertainment programming which station owners can present whenever a s could promulgate the anti-siphoning rules under the theory of jurisdiction recognized by justify regulation of the broadcast media. n49 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - * Judge MacKinnon is of the view that Citizens Committee to Save WEFM v. FCC, 165 U.S. ssued. 165 U.S.App.D.C. at 224, 506 F.2d at 285. n49 While WEFM offers some support for the Commission's authority to promulgate anti-si larly appropriate case for Commission intervention. At stake was a classical music format WEFM was already supplied in whole or in part by 13 of the Chicago area's 61 radio broadca of their favored formats and the proposed format change would only have added to an appare first preferences of viewers) or had WEFM proposed to offer another format in scarce supp In addition, even if WEFM did provide statutory authority to the Commission to act as i - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*31] Stations." See Notice of Inquiry, 57 F.C.C.2d 580 (1976); Memorandum Opinion and Order, 6 ictate entertainment formats. Format regulation, it is argued, is analogous to imposing co ategory of "common carriers," "Congress intentionally refrained from extending the full ra . In particular, "Congress did not enact [a] requirement that broadcasters receive Commiss mission's view, by Columbia Broadcasting System, Inc. v. Democratic National Committee, 41 0-861. A second point relevant here is the Commission's professed inability to determine t ular format is 'unique' or, indeed, assuming that it is, whether it has been deviated from reference to the actual preferences of real people." Id. at 864. If the Commission's own recently announced standards are applied to the rules challenge * * * programming, including program format services, offered to the public." However, it mber of courts. See, e.g., American Civil Liberties Union v. FCC, supra, 523 F.2d at 1344; adcasting, we seriously doubt that the Communications Act could be construed to give the C some sense increase the public good, this consideration alone cannot justify the Commissio In addition, the record before us is devoid of any "reference to the actual preferences o actual preferences might not be required, this would not seem to be the case with either t be "siphoned" to cable television. Without such a comparative inquiry, we do not underst mmission, which has stated that it has no criteria by which to distinguish among formats, ing made-for-television movies - for which "siphoning" is not a problem since the broadcas ission has drawn its categories too narrowly and that a feature film rule may not really b he Commission has done here, without discussion. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n50 Non-specific sports events are essentially those that occur during regular season p - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - In analyzing the feature film and sports rules under the standards announced by the Com rtaking this analysis is to demonstrate that the Commission has, in this proceeding, seemi e Commission's definition of current quantity and quality levels of films and sports event sent material presently on conventional television. See br. for respondent United States a ncy policy would require us to set aside the Commission's rules and remand the case to the Television Corp. v. FCC, supra, 143 U.S.App.D.C. at 394, 444 F.2d at 852; accord, New Cas e understand the Commission's Memorandum Opinion and Order in the format change proceeding tent with the Commission's best thinking in a closely analogous area, we think we should n - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n51 As we have already indicated, see note 49 supra, WEFM only lends support to Commiss nto the cable television context since the Commission itself has argued that WEFM should b - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Before reaching a conclusion on whether remand is necessary, however, we must consider ications [*33] Act, n53 as interpreted by this court in NATO v. FCC, supra, requires r the Commission's subscription television rules which permitted subscription television by pay for the privilege of receiving broadcast signals. See First Report, 23 FCC 532, 536-54 [Section 1 has] been relied on in support of an argument to the effect that the Act did rs of the public as were able and willing to pay a charge. We believe, however, that such United States" does not, for example, preclude licensing the use of radio frequencies for dently refer to the Commission's regulation of rates charged by common carriers for messag s is unaccompanied by any prohibitive language concerning charges for programs transmitted Id. at 538. In NATO this court, after reviewing the legislative history of the Communic deed "designed to foster diversity in the financial organization and modus operandi of bro , Section 1 does not itself compel the Commission to protect conventional advertiser-suppo - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n52 In large part this argument appears to be a post hoc rationalization of counsel whi S. Ct. 239 (1962). n53 Section 1 provides in relevant part: For the purpose of regulating interstate and foreign commerce in communication by wire ation service with adequate facilities at reasonable charges, * * * there is created a com 47 U.S.C. @ 151 (1970). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - However, counsel for the Commission at oral argument appeared to be making a second arg uld not be a nationwide service in the reasonably foreseeable future and that "siphoning" Oral Argument at 57-58. We need not consider whether Section 1 can be so construed since c ch could result in loss of broadcast television service to regions not served by cable. No ast of this material in such markets could not reduce the potential cable audience and bec eculative to support jurisdiction. See City of Chicago v. FPC, 147 U.S.App.D.C. 312, 323, - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n54 See note 53 supra. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Finally, none of the suggested bases for Commission jurisdiction justifies imposition o and Order, supra, 15 FCC 2d at 484, and were retained here apparently because they raised g are not applicable here, however. In the subscription proceeding the Commission determin on offered services distinct from conventional advertiser-supported broadcasting. See 15 F nd feature films - which were already available on conventional television - was limited t s. See NATO v. FCC, supra, 136 U.S.App.D.C. at 365-366, 420 F.2d at 207-208. Such an alloc governmental, educational, and public access channels on every cable system carrying broa xplanation of the functions these rules are meant to serve, we cannot affirm the Commissio - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n55 No commercial advertising announcements shall be carried on subscription channels d 47 C.F.R. @ 76.225(e) (1975), as amended by Second Report and Order, FCC 2d , 35 Ra n56 Not more than ninety (90) percent of the total cablecast programming hours shall co 47 C.F.R. @ 76.225(d) (1975), as amended by Second Report and Order, FCC 2d , 35 Ra n57 47 C.F.R. @@ 76.251, 76.253 (1975). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Although we hold today that the Commission has not established its jurisdiction on the cable television regulations. Such a holding would be inconsistent with the nature of the ble television regulations, demonstrate that the objectives to be achieved by regulating c uired. See Part III infra. Further, we require that the Commission state clearly the harm , after remand, be able to satisfy the jurisdictional prerequisites for regulating pay cab B. The Evidence 1. Standard of Review With the exception of the Commission's ruling in In re Home Box Office, Inc., [*35] 5 ecause the statute does not otherwise indicate, this rulemaking is also informal rulemakin EPA, 176 U.S. App. D.C. 373, 541 F.2d 1, 33-34 (1976) (en banc), and the appropriate stand nal Ass'n of Food Chains, Inc. v. ICC, 175 U.S.App.D.C. 346, 535 F.2d 1308, 1313-1314 (197 iew, 59 CORNELL L. REV. 375 (1974). We have recently had occasion to review at length our obligation to set aside agency ac 6 U.S.App.D.C. 373, 541 F.2d at 33-37, and for this reason we need not labor our analysis 2d 136, 91 S. Ct. 814 (1971). Yet our review must be "searching and careful," id., and we ound and the choice made," Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 16 Equally important, an agency must comply with the procedures set out in Section 4 of th n opportunity for interested persons to comment, and "a concise general statement of [the] ded to assist judicial review as well as to provide fair treatment for persons affected by t. 2628 (1974); International Harvester Co. v. Ruckelshaus, 155 U.S.App.D.C. 411, 445, 478 at 380-381. To this end there must be an exchange of views, information, and criticism bet oods Ass'n v. Weinberger, 512 F.2d 688, 701 (2d Cir.), cert. denied, 423 U.S. 827, 46 L. E that has animated the form of a proposed rule and the data upon which that rule is based. at 445, 478 F.2d at 649. Moreover, a dialogue is a two-way street: the opportunity to comm at 326-327, 486 F.2d at 393-394. A response is also mandated by Overton Park, which requi 1186, 1196 (3d Cir. 1975), vacated on other grounds, U.S., 427 U.S. 902, 96 S. Ct. 3185, - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n58 In determining what points are significant, the "arbitrary and capricious" standard n agency's proposed rule cast doubt on the reasonableness of a position taken by the agenc ome basis for thinking a position taken in opposition to the agency is true. See Portland - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - From this survey of the case law emerge two dominant principles. First, an agency propo s possible. Second, the "concise and general" statement that must accompany the rules fina must be accommodated to the realities of judicial scrutiny, which do not contemplate that ale of their resolution. * * * [The record must] enable us to see what major issues of pol Automotive Parts & Accessories Ass'n v. Boyd, supra, 132 U.S.App.D.C. at 208, 407 F.2d at ational Air Carrier Ass'n v. CAB, 141 U.S.App.D.C. 31, 44-45, 436 F.2d 185, 198-199 (1970) 2. Applying the Standard (a) The Need for Regulation At the outset, we must consider whether the Commission has made out a case for undertak ." City of Chicago v. FPC, supra, 147 U.S.App.D.C. at 323, 458 F.2d at 742. Here the Commi how cablecasting can best be regulated to provide a beneficial supplement to over-the-air Notice of Proposed Rule Making and Memorandum Opinion and Order, supra, 35 FCC 2d at 898, lement to, rather than an equal of, broadcast television. Such an artificial narrowing of 7. Moreover, by narrowing its discussion in this way the Commission has failed to crystall eport and Order, supra, 52 FCC 2d at 49, JA 73, sometimes delay, see id. at 50, JA 74, and RADIO REG.2D at 772, JA 136. As a result, informed criticism has been precluded and formul - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n59 This deficiency was brought to the attention of the Commission by, among others, th Before the question posed [as to the existence of alternatives] can be answered, the Commi restrictive" means of serving the public interest. To date, the Commission has not demonst Comments of the Department of Justice in Docket No. 19554, at 26, JA 251 (Nov. 1, 1972) (e - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*37] Setting aside the question whether siphoning is harmful to the public interest, , 52 FCC 2d at 50, JA 74. We find little comfort in this assurance, however, because the C it had was self-admittedly insufficient to give it a "clear picture as to the effects of ts that, if there is any evidentiary support at all, it is indeed scanty. As to the potent ision in theaters and that Evel Knievel chose to televise his jet-cycled dive into the Sna Docket 18397) (reliance on mathematical demonstration). While the former may be directly r g to pay how much to see feature films and nonspecific sports events on pay cable. n61 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n60 The could be generated that could form a predicate for informed agency action. This decision w 13, JA 280 (Oct. 4, 1974); Comments of Walter S. Baer, Henry Geller, and Leland L. Johnson ded at a "'time when it involves no disruption of existing patterns.'" First Report and Or opposite of that the Commission took in its First Report and Order in Docket 18397, 20 F.C ience in this area." Id. at 204. In particular, the Commission noted that there was no "tr sion has not called our attention to any data which would fill the gaps in its experience In this state of affairs, where there is no evidence of any urgent need for preventive isionmaking, we are disinclined to give the Commission the "benefit of the doubt" which it n61 Specific sports events are defined in the First Report and Order, supra note 2, 52 scanty but that available data indicate "that there has been no interference with establi - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The meaning of the various mathematical demonstrations is even less certain. Petitioner vision: 30. The most comprehensive attempt to develop a methodology for making this comparison purchase of any particular program. The formula, in somewhat simplified terms, is as follo (Total households) X (percent of households with tv sets) X (percent of households with tv subscribers) X (percent of pay subscribers that view program in question) X (charge to sub in question). ABC's own assumptions as to the state of the pay cable television industry in 1980 are as Total household 75,400,000 TV set penetration percent 97 CATV penetration do 35CATV penetration wit TV potential do 80Pay subscriber penet of systems with pay potential do 15Percent of pay subsc viewing program do 50Charge to subscriber program dollars 2.25Percent of pay fee c passed on to program producers percent 35 In the circumstance posited by ABC, slightly more than 1.5 million homes would pay $2.25 e C suggests, compares with the $1.5 million dollars a network might pay for two showings of First Report and Order, supra, 52 FCC 2d at 9-10, JA 33-34. From this demonstration Americ pay cable operations will have more money than television stations or television networks and leave free television only with what is left over. * * * Id. at 10, JA 34. Even conceding the accuracy of the figures used (a concession which finds no support in ompared: nationwide income of pay cablecasters in 1980 on the one hand, and recent, but hi . More important is the potential for distortion introduced into the comparison by using i y is highly concentrated and is, therefore, likely to enjoy substantial monopoly and monop nt of Justice in [*39] Docket No. 19554, at 15-16, JA 194-195 (Sept. 5, 1969). Evidenc n sales in 1969 versus eight percent for all manufacturing industry n64 and suggest that t stries, and had the Commission evaluated and rejected the arguments of the Justice Departm e for feature film and sports material than at present without pushing their profits below asters, faced with competition, would increase their expenditures by reducing alleged mono from this evidence would be arbitrary. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n62 The precise date of network expenditure data is not clear. American Broadcasting Co 974). In general, data contemporaneous with the date of comment submission seem to have be n63 The deficiencies noted here were pointed out to the Commission in Comments of Optic n64 R. NOLL, M. PECK & J. McGOWAN, supra note 42, at 16. The National Association of Br n65 R. NOLL, M. PECK & J. McGOWAN, supra note 42, at 17. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - We have similar difficulties with the second cardinal assumption of the Commission, i.e of Oral Argument at 61-62; br. for respondent FCC at 53-54. To reach such a conclusion t those areas that cable firms do not reach. We find no discussion in the record supporting sell broadcast rights to conventional television stations in regions of the country where would be that, through a combination of cable and broadcast, nationwide coverage would be We find the Commission's argument that "siphoning" could lead to loss of programming fo rived of adequate television service and, worse, that the Commission, by prohibiting adver ment at the theoretical level about the mechanism through which the poor would be deprived y served, with the result that events purchased by cable operators for subscription presen the financial strength to outbid broadcasters, is by no means clear. There is uncontradic first television broadcast. See Comments of Program Suppliers in Docket No. 19554, at 21, [*40] Equally important, the pay cable rules taken as a whole scarcely demonstrate a le firms from offering advertising in connection with subscription operations. See note 55 to the poor, giving them access to the diverse programming cable may potentially bring. As and it has been retained here, not because of its intrinsic merit, but only because no on ous about its rules, it cannot really be relying on harm to the poor. Whatever may be the (b) Consideration of Anticompetitive Effects Many petitioners, while not conceding the need for regulation, press a series of additi as adopted. For analytic purposes the various theories of petitioners can be treated as tw feature film and sports broadcasting industries; and, second, that the Commission has simi ese arguments seriatim. Although much attention has been paid in brief to the question whether the Commission w think this precise issue is before us at this time. Throughout this proceeding the Commiss and Memorandum Opinion and Order, supra, 35 FCC 2d at 898 (para. 12(b)), JA 6. The Commis nterest considerations which underlie [*41] the rules outweigh the public interest con levant to discharge of its public interest obligation, n68 the only issue properly before omotive Parts & Accessories Ass'n v. Boyd, supra, 132 U.S.App.D.C. at 208, 407 F.2d at 338 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n66 47 U.S.C. @ 303(r) (1970). n67 We do not agree with the suggestion of some petitioners that the Commission must de ent and antitrust considerations coincide, it is necessary to make such a showing. See sli rolling and requires rejection of a least restrictive alternative approach. In that case t hich expressly incorporates anticompetitive effect as one of six factors to be considered Anticompetitive factors are also only one of a number of factors to be considered under th Inc., 346 U.S. 86, 94, 97 L. Ed. 1470, 73 S. Ct. 998 (1953); United States v. Radio Corp. tandard of review here. n68 There can be no question that the Commission can properly consider antitrust issues tates v. Radio Corp. of America, supra note 67, 358 U.S. at 351; General Telephone Co. of - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - We cannot fathom how the Commission reached the conclusion that the balance here should ed and is completely irrelevant to most of the antitrust issues raised. n69 The Commission gnal rules reviewed there did not implicate questions of anticompetitive impacts on filmma power over those industries. Nor did these rules address situations of alleged selective s ot at issue here, as the Commission itself recognizes. See Memorandum Opinion and Order, s in Southwestern Cable Co. would show that the Court did not, contrary to the assertion of etition" and consequently regulation was needed "to ameliorate the risk that the burgeonin mitted regulation because it would further the congressionally approved goals of "signific s now reserved for educational purposes." 392 U.S. at 174-175, quoting H.R. Rep. No. 163 ection of broadcast television. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n69 The Commission's own excellent summary of the antitrust and diversity issues presen - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Even had the Southwestern Cable Co. Court approved the Commission's "unfair competition on in the distant signal cases was that cable was competing with local broadcasters by bri erial and cable did not, cable [*42] was thought to have an unfair advantage. n70 Here e's broadcast retransmission function. Even if there were such evidence, reliance on the " would raise the costs of cable services which must be paid by home viewers, an effect that , we do not perceive any public benefit to be achieved by hobbling cable television to cor of compensation paid to copyright holders, Teleprompter Corp. v. Columbia Broadcasting Sys d public availability of literature, music, and the other arts," Twentieth Century Music C - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n70 Under the recently amended Copyright Act cable operators will have to pay royalties n71 For this reason any Commission solicitude for the broadcast networks would be mispl (1958). Moreover, the network petitioners have shown no economic injury to them arising fr 412, 39 L. Ed. 2d 415, 94 S. Ct. 1129 (1974) (fee broadcasters can charge is increased by - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - We further agree with the Justice Department that the issue of the reasonableness of th e basis of legal precedent. Because of this, we think it odd that the Department has not p e basically speculative: n72 they are premised on the unverified assumption that enhanceme dard on the Commission. n74 Indeed, the only argument [*43] presented that rises above d unlawful per se. Br. of respondent United States at 19. Thus while we appreciate and sal repository of antitrust expertise in the federal government, would work with the Commissio - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n72 In this respect the Department's arguments fall short of the standard of significan n73 Serious questions would be raised if the Commission sought to justify its rules sol relevant factor, reversed the Commission because it had not shown that "competition would litate or constitute an antitrust violation. See United States v. Radio Corp. of America, erest unless it has examined the consequences of competition for the interests of listener n74 We do not adopt the suggestion of the Justice Department and other petitioners that in support of this proposition all involved agency adjudication or formal rulemaking in w such proceedings are not generally required in informal rulemaking, and we see no need to - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Petitioners' second argument - that the pay cable rules consolidate network control ove f the series restrictions in the Second Report and Order, supra. We agree with petitioners ght to be achieved in the Prime Time Access Rules proceedings. n75 As a result the series County Airport Comm'n v. CAB, supra, 125 U.S.App.D.C. at 270, 371 F.2d at 735. The related ducing diversity, is plausible, but we cannot say on this record that the postulated effec e to Save WEFM v. FCC, supra. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n75 See Report and Order, 23 FCC 2d 382, 384-395 (1970), modified, 25 F.C.C.2d 318 (197 of quality product. The series programming restriction, by working against this policy, th has nonetheless invoked in support of its rulemaking authority here. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - III. FIRST AMENDMENT More stringent, but substantially similar, rules to those adopted in the dockets under nt with the First Amendment. See First Report and Order, supra, 52 FCC 2d at 44 (para. 48) tant differences between cable and broadcast television and "differences in the characteri . Ct. 1794 (1969). Despite the novelty and complexity of the antisiphoning rules challenged in NATO, the c content of programs being offered to the public." 136 U.S.App.D.C. at 365, 420 F.2d at 207 e Justice Frankfurter over 30 years ago, "nobody could be heard. * * * The radio spectrum with one another. Regulation of radio was therefore * * * vital to its development * * *." spectrum into discrete segments and subsequent allocation of those segments does not neces d for government control of the allocation process - the National Broadcasting Co. Court r . Instead, the Court held it constitutionally permissible to allocate channels to "'render carcity of broadcast facilities, this necessarily allowed "comparative considerations as t Gross v. FCC, 480 F.2d 1288, 1291-1292 (2d Cir. 1973); Carter Mountain Transmission Corp. urpose of the subscription broadcast television inquiry and the pilot subscription televis was no need for NATO to break new First Amendment ground, and a reading of the NATO opini - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n76 See also Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 386-388, 23 L. Ed. 2d 371, and Television Regulation, 52 MINN. L. REV. 67, 85-86 (1967). But see Kalven, Broadcastin n77 See, e.g., Kalven, supra note 76, 10 J. LAW & ECON. at 30-32. n78 See generally Fourth Report and Order, supra note 5. n79 The NATO court did not itself rely on National Broadcasting Co., although the opini theless, the First Amendment discussion in NATO does recognize the scarcity rationale and ed on tests developed in Banzhaf v. FCC, 132 U.S.App.D.C. 14, 33-35, 405 F.2d 1082, 1101-1 tting cigarette commercials. See 136 U.S.App.D.C. at 366, 420 F.2d at 408. The First Amend 600, 95 S. Ct. 2222 (1975), and Virginia State Board of Pharmacy v. Virginia Citizens Cons ming. On the other hand, Banzhaf's requirements that ideas not be affected and that on bal sting Co., see 319 U.S. at 226-227, and Red Lion Broadcasting Co., see 395 U.S. at 393. Th TO's conclusion that the subscription broadcast television rules would increase diversity today and not on the basis of legal precedent. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The First Amendment theory espoused in National Broadcasting Co. and reaffirmed in Red quiring an umpiring role for government - is absent. n80 Interference among speakers on a each channel and for how long. Nor is there any apparent physical scarcity of channels re ogy is now available that would increase capacity to 80 channels, and in the future channe dment and the Electronic Newspaper, 51 N.Y.U.L.REV. 133, 135 (1976). And even though there there is no readily apparent barrier of physical or electrical interference to operation limited government intrusion into the First Amendment rights of the conventional press, se constitutional distinction between cable television and newspapers on this point. n82 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n80 The Commission in brief has argued that, regardless of the applicability of NATO, d ay cable rules against a First Amendment attack. We think the Commission's reliance is mis e.g., United States v. Midwest Video Corp., 406 U.S. 649, 32 L. Ed. 2d 390, 92 S. Ct. 1860 t of these cable cases, Carter Mountain Transmission Corp. v. FCC, 116 U.S.App.D.C. 93, 32 mission could deny a microwave license to a cable system operator for use in retransmittin s serving the same area. This principle is uncontroversial, see FCC v. Sanders Bros. Radi d at 364. A similar fact situation was presented in Idaho Microwave, Inc. v. FCC, 122 U.S. mmission rules to a cable system that did not use microwave broadcast facilities. The issu 1 (1975)) violated cable operators' First Amendment rights. In holding that the rules wer he scarcity and allocation rationale. See 128 U.S.App.D.C. at 267 n.23, 387 F.2d at 225 n. e from broadcasting: The Commission's [rules] regulating CATVs have the same constitutional status under the Fi * * *. * * * Black Hills Video Corp. v. FCC, 399 F.2d 65, 69 (8th Cir. 1968). Other cases cited by the ases provide no independent support for the constitutionality of the pay cable rules. To the extent that Black Hills Video stands for the proposition that the Commission in blic forums," and yet it is beyond argument that use of such property by the public cannot ago v. Mosley, 408 U.S. 92, 97-98, 33 L. Ed. 2d 212, 92 S. Ct. 2286 (1972); T. EMERSON, su vities, cf. Teleprompter Corp. v. Columbia Broadcasting System, Inc., supra note 71, 415 U the point as justification for control of the cablecast function. Further, as we have alr We express no opinion here on the question whether Commission control of microwave radi n81 See CABINET COMM. ON CABLE COMMUNICATIONS, supra note 21, at 10; First Report and O cable television's operations have developed on a noncompetitive, monopolistic basis in th n82 The Supreme Court in Miami Herald further found that the statute at issue would hav overall diminution of diversity. Whether rules seeking to reduce private control of scarce in channels to common carrier use might avoid such an infirmity and two courts, without re upra note 80; American Civil Liberties Union v. FCC, 523 F.2d 1344, 1351 (9th Cir. 1975). Alternatively, local government involvement in the franchise and regulation of cable te ndment scrutiny. Cf. Public Utilities Comm'n v. Pollak, 343 U.S. 451, 462, 96 L. Ed. 1068, uestion cannot be resolved on the record before us. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The absence in cable television of the physical restraints of the electromagnetic spect see A. MEIKLEJOHN, POLITICAL FREEDOM 24-48 (1960), rules restricting speech do not necess onsistent with the First Amendment since "the point of ultimate interest is not the words ra, 395 U.S. at 387-388. Further, because "the right of free speech * * * does not embrace ernment may adopt reasonable regulations separating speakers competing and interfering wit mit speech "because it is on one side of the issue rather than another," A. MEIKLEJOHN, s or because it is thought unwise, unfair, false, or dangerous, see, e. g., Police Departmen .J. 1001, 1005-1010 (1976). Certainly this is the broader teaching of National Broadcastin 576, 85 L. Ed. 1049, 61 S. Ct. 762 (1941) (government may regulate conflicting parades); - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n83 The existence of an alternative First Amendment theory justifying cable regulation h Burstyn, Inc. v. Wilson, 343 U.S. 495, 96 L. Ed. 1098, 72 S. Ct. 777 (1952). Consequentl 1 S. Ct. 391 (1961), is presumptively invalid, Bantam Books, Inc. v. Sullivan, 372 U.S. 5 n any event, invalid because the rules do not afford the procedural safeguards required by this case. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Similarly, the First Amendment does not bar regulation of the "collateral consequences" n86 is subject to reasonable restraints intended to ameliorate traffic congestion, n87 re of analysis in terms of "speech" versus "conduct" or "pure speech" versus "speech plus." B cords. As the Supreme Court appears to have recognized (especially in cases dealing with s of an expressive event can provide no very certain guide to judicial decision. n91 Inste il expression - either directly by banning speech because of a harm thought to stem from i 974); Cohen v. California, 403 U.S. 15, 29 L. Ed. 2d 284, 91 S. Ct. 1780 (1971); United St ndirectly by favoring certain classes of speakers over others, see Madison Joint School Di ; Police Department of Chicago v. Mosely, supra, 408 U.S. at 97-98; Grayned v. City of Roc or "clear and present danger." See Ely, Flag Desecration: A Case Study in the Roles of Cat ppression of free expression * * *," United States v. O'Brien, supra, 391 U.S. at 377, are eged First Amendment freedoms is no greater than is essential to the furtherance of that i - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n84 Kalven, The Concept of the Public Forum: Cox v. Louisiana, 1965 SUP. CT.REV. 1, 23. n85 Brennan, The Supreme Court and the Meiklejohn Interpretation of the First Amendment n86 See, e. g., Police Department of Chicago v. Mosley, supra note 80; Grayned v. City n87 See, e. g., Cox v. New Hampshire, 312 U.S. 569, 85 L. Ed. 1049, 61 S. Ct. 762 (1941 n88 See Grayned v. City of Rockford, supra note 86, 408 U.S. at 114-121; Kovacs v. Coop n89 See, e. g., Lehman v. City of Shaker Heights, supra note 82. n90 See, e. g., Spence v. Washington, 418 U.S. 405, 41 L. Ed. 2d 842, 94 S. Ct. 2727 (1 also Procunier v. Martinez, 416 U.S. 396, 40 L. Ed. 2d 224, 94 S. Ct. 1800 (1974) (applyi n91 See Ely, Flag Desecration: A Case Study in the Roles of Categorization and Balancin Buckley v. Valeo, 171 U.S.App.D.C. 172, 191-195, 519 F.2d 821, 840-844 (1975) (en banc), a n92 Although O'Brien was a case involving draft card burning, it has not been limited t 516 F.2d 717 (1975) (public gatherings at the White House). See also Young v. American Min - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Applying O'Brien here, we cannot say that the pay cable rules were intended to suppress l. Indeed, it is not unlike a regulation quieting hecklers or enforcing order on the radio potential audience. Also like those cases, both those whose conduct is restrained by the r heckler the person able to pay for cable television does not interrupt transmission of a ience benefits from the pay cable rules does not, however, at least in this case, require the range of ideas that are presented to either group. n94 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n93 See Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., s t. 2576 (1972); Red Lion Broadcasting Co. v. FCC, supra note 76, 395 U.S. at 390. n94 Consequently, the pay cable rules, while equalizing access to the media for rich an ition in Buckley with the following flatly contradictory language in Columbia Broadcasting The * * * public interest in providing access to the marketplace of "ideas and experien See also NATO v. FCC, supra note 5, 136 U.S.App.D.C. at 365, 420 F.2d at 207. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*49] The Commission seeks only to channel movie and sports material to its intended ver provisions n95 achieved no more than this - a proposition which will be examined in de rved by pay cable would surely be served by broadcast television as well and, therefore, w speech of movie and sports producers would not be affected because the regulations would - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n95 The provision relating to movies is set out at note 46 supra. The waiver provisions may seek a waiver of the non-specific sports rules if they can demonstrate that a reductio 62, JA 86. n96 A number of petitioners take the position that the rules reduce the overall profita be the case in the absence of the rules. We do not think the record demonstrates such a c rise to the level of a First Amendment violation. Such a result would prove too much. It ess v. United States, 326 U.S. 1, 89 L. Ed. 2013, 65 S. Ct. 1416 (1945). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The speech of cablecasters, while undoubtedly inhibited, is similarly free from restric r do they affect films which the cablecaster has himself produced. Moreover, they do not e it the cablecaster from exhibiting for a separate fee the artistic work of others. Finally that cablecaster "endorsement" of the views of a particular film adds importantly to the - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n97 That cablecasters might lose some profits by adopting these alternative modes of sp problem. See note 96 supra. See also the statement of the Supreme Court in rejecting the The main contest is over the cream of the exhibition business - that of the first-run thea der the existing system the public will be denied access to none. * * * The central proble nly remotely, if at all, on any question of freedom of the press, save only as timeliness United States v. Paramount Pictures, Inc., 334 U.S. 131, 166-167, 92 L. Ed. 1260, 68 S. Ct - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Despite our conclusion that content regulations are not at issue here, we nonetheless h rst Amendment. The no-advertising n98 [*50] and 90-percent n99 rules clearly violate O'B this record. n100 The sports and features films rules fare no better. We have already conc by cable. n101 Instead, the Commission has indulged in speculation and innuendo. O'Brien hat convincingly shows a problem to exist and that relates the proffered solution to the s oadcasts could be shown to be important or substantial on any record. n102 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n98 See note 55 supra. n99 See note 56 supra. n100 See slip op. at pages 46-47 supra. n101 See slip op. at pages 52-60 supra. n102 The only evidence in the record before us relating to the effect of delay on the p . 19554, at 21, JA 386 (Nov. 1, 1972). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Finally, we think the strategy the Commission has pursued in implementing its interest t quantity and quality levels of broadcast television has not been to set such levels dire , and has left broadcasters free to choose from among the former without any competition f trategy is to be used, the rules must be closely tailored to the end to be achieved so tha ose served by cable and willing to pay for it, with a consequent loss of diversity and unn In assessing whether the rules are sufficiently discriminating in dividing available ma mission is on record that it will not freely grant waivers. See In re Home Box Office, Inc Ed. 2d 649, 85 S. Ct. 734 (1965). We do not today hold that all the requirements of Freedm applicable here. n103 See Blount v. Rizzi, 400 U.S. 410, 27 L. Ed. 2d 498, 91 S. Ct. 423 ( (Bazelon, C. J., statement supporting rehearing en banc). See generally Monaghan, First Am he Commission or the courts of whether a film may be shown on cable. In the only case we k nal 19 months. It further appears that the minimum time in which a waiver could be decided These time periods equal or exceed those which the Supreme Court has found unacceptable in d. v. Conrad, 420 U.S. 546, 43 L. Ed. 2d 448, 95 S. Ct. 1239 (1975) (five-month delay afte - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n103 This seems especially the case since the Commission tells us that delay is detrime - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Turning finally to the rules themselves, we agree with numerous petitioners that the ru ir limited appeal, their sophisticated subject matter, or their repeated releases to theat ome circumstances the sports rules have the anomalous effect of reducing the number of non y justified on the ground that it is too difficult to monitor the reasons broadcasters cut epresent siphoning any more than they represent editorial or commercial judgment. Where th , supra, 380 U.S. at 58. Other examples could be cited, but this would only belabor points the Commission that prior restraints on speech are heavily disfavored and can be sustained - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n104 See First Report and Order, supra note 2, 52 FCC 2d at 62, JA 86. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - IV. EX PARTE CONTACTS During the pendency of this proceeding Mr. Henry Geller, a participant before the Commi amicus curiae of Henry Geller at 1 (hereinafter Geller br.). In this petition amicus Gelle in Sangamon Valley Television Corp. v. United States, 106 U.S.App.D.C. 30, 269 F.2d 221 (1 in their promulgation. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n105 Amicus urged the Commission to set out the essence of any oral ex parte communicat osed on an expedited basis, i.e., within a three-week period. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - It is apparently uncontested that a number of participants before the Commission sought e Commission itself solicited such communications in its notices of proposed [*52] rul e amicus' petition was untimely, because amicus is estopped from complaining about a cours the Commission to provide "a list of all of the ex parte presentations, together with the ent over 60 pages long which revealed, albeit imprecisely, n108 widespread ex parte commun - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n106 See Notice of Proposed Rule Making and Memorandum Opinion and Order, supra note 5, n107 The Commission has devoted only one footnote to this issue in its brief. Br. for r the clear import of amicus' statements that ex parte contacts shaped the ultimate form of The reasons urged by the Commission against reaching the ex parte contact issue are fri if such they be, present no bar. Second, Mr. Geller sought a delay of only three weeks in e of the Commission's First Report and Order, and at a time when the Commission was still after the fact' request." Br. for respondent FCC at 50 n.55. Finally, we hold that Sangam n108 Because many Commission officials kept no accurate records on contacts, the list i n109 Ex Parte communications were also originated by many persons not party here, inclu - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Unfortunately, the document filed with this court does not allow an assessment of what quote at length from the brief of amicus Geller: [Ex parte] presentations have in fact been made at crucial stages of the proceeding. Thus, existing rules "with 'wildcard' rights for 'blockbuster' movies," n111 American Broadcast nal crucial [*53] decisional period, the tentative course to be taken by the Commission he trade journals state that "word of last week's changes . . . got out during the week, a on Friday . . ." to oppose the changes. n114 The following week, the trade press again rep staff members met with [FCC] Broadcast Bureau staffers to present data backing up [an] a Geller br. at 3-4 (footnotes edited and renumbered). It is important to note that many con e rulemaking record should have been closed while the Commission was deciding what rules t nnel, cable interests some nine times, motion picture and sports interests five times each - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n110 See Television Digest, March 4, 1974, at 1-2; Broadcasting, March 4, 1974, at 6; T n111 Television Digest, March 4, 1974, at 2. n112 Id. (Senators' "action * * * was prompted by Hill visit by ABC Chairman Leonard Go Erlich, Senior Vice President and General Counsel, ABC, before the ABC Television Network As most of you know, the FCC just prior to Chairman Burch's sudden departure was on the ve o 18 pictures a year which would have exempted entirely the most popular features from the ey did not expect the Commission to act on such a far-reaching policy matter without guida n113 Television Digest, March 10, 1975, at 2; see Broadcasting, March 10, 1975, at 6. n114 See id. n115 Television Digest, March 17, 1975, at 3. n116 Broadcasting, March 17, 1975, at 10. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Although it is impossible to draw any firm conclusions about the effect of ex parte pre proceedings, and we are particularly concerned that the final shaping of the rules we are munications Act vests in individual commissioners. Cf. National Ass'n of Independent Telev court which states that in December 1974 broadcast representatives "described the kind of t would suggest, and, further, if the Commission relied on these apparently more candid pr - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n117 A similar note was struck by Chairman Wiley in a speech to the Federal Communicati There is one other lobbying technique which disturbs me although I would acknowledge th practice wherever possible. When the Commission holds an oral argument on some rulemaking on possible to make a tentative decision on the merits. Typically, however, such a decisio ividual Commissioner and staff offices. I simply do not think that this is a good practice ossibility of any further seriatim presentations. * * * Compromises, fall-back positions, and the so-called "real facts" are often reserv FCC Mimeo. 21343 at 4 (April 30, 1970). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Even the possibility that there is here one administrative record for the public and th cit in the decision to treat the promulgation of rules as a "final" event in an ongoing pr - documents, comments, transcripts, and statements in various forms declaring agency exper ] at the time he made his decision," Citizens to Preserve Overton Park, Inc. v. Volpe, sup 415-416; pages 48-52 supra. Yet here agency secrecy stands between us and fulfillment of information supporting or refuting those representations may be brought to the attention o agency itself does not disclose the information presented. Moreover, where, as here, an a resented to it, a reviewing court cannot presume that the agency has acted properly, Citiz t the agency's justifications as a fictional account of the actual decisionmaking process F.2d 417 (1976). - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n118 The legislative history of the Administrative Procedure Act has been read to imply OCEDURE ACT 31 (1947) ("section 4(b) does not require the formulation of rules upon the ex Section 553's notice-and-comment provisions were [originally] conceived of as instruments g was to develop a record by which a reviewing court could test the validity of the rule w Apparently, an underlying assumption of the APA draftsmen was that any factual issues w oceedings or in suits to enjoin enforcement. * * * Nathanson, Probing the Mind of the Administrator: Hearing Variations and Standards of Judi ith these views, relied on the Commission's own rules, which defined the administrative re ed States on remand from the Supreme Court at 5-10, Sangamon Valley Television Corp. v. Un n119 The precise content of this record is still a matter of some dispute. Compare Reco 48-52 (1974), with Pederson, Formal Records and Informal Rulemaking, 85 YALE L. J. 38, 64 - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The failure of the public record in this proceeding to disclose all the information mad te, it would still be difficult to judge the truth of what the Commission asserted it knew functioning of the agency decisionmaking and judicial review processes is evident in our c isclosed to the parties for adversarial comment. Similarly, we have required agencies to s the public may be apprised of what the agency thinks it knows in its capacity as a reposit t generated internally in an agency: each may be biased, inaccurate, or incomplete - faili uable privilege," Sangamon Valley Television Corp. v. United States, supra, 106 U.S.App.D. aking procedures adopted by the Commission to be inconsistent with these views since those nd baffling is why the Commission, which apparently recognizes that ready availability of - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n120 See slip op. at pages 48-52 supra. n121 For an example of agency disclosure of expertise in a notice of proposed rulemakin n122 The Commission's rules provide in relevant part: @ 1.415 Comments and replies. (a) After notice of proposed rule making is issued, the Commission will afford interest t the same orally in any manner. (b) A reasonable time will be provided for submission of comments in support of or in o (c) A reasonable time will be provided for filing comments in reply to the original com (d) No additional comments may be filed unless specifically requested or authorized by (e) For time limits for filing motions for extension of time for filing comments or rep 47 C.F.R. @ 1.415 (1975). Substantially similar rules were construed in Sangamon Valley Te practical matter, constituted additional comments for which no specific authority had bee at 34, 269 F.2d at 225, for approval of a request to submit additional comments. In the a ce that the Commission has violated its own rules is less easy to draw from the rather obv ractice of announcing a relaxation in its comment and reply-comment rules through the cryp nly inconsistent with the spirit of the policy disclosure requirements of the Freedom of I tices would be hard put to understand that the foregoing phrase effectively repealed 47 C. r General Counsel of the Commission. In these circumstances, we do not think the Commissio closed policy statements), and we therefore hold that the Commission violated its own rule n123 It seems to me that [a procedure prohibiting ex parte contacts] will also have a s c]. Many oral presentations are not only repetitious * * * but also, if I may say so, fair ssion offices. Under my proposed procedures, if you decide to hard-line it, you had better be convinci f oral argument to avoid needless repetition, to perhaps zero in on a particularly importa adopted. Remarks of Richard E. Wiley, Chairman, FCC, FCC Mimeo. 21343 (April 30, 1974). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Equally important is the inconsistency of secrecy with fundamental notions of fairness in Sangamon, and we would have thought that the principles announced there so clearly gov ted has been removed by recent congressional and presidential actions. n124 In the Governm ion regarding the decisionmaking processes of the Federal Government," Pub. L. No. 94-409, utive Order [*57] 11920, 12 WEEKLY COMP. OF PRESIDENTIAL DOCUMENTS 1040 (1976) which p tions are before the President for his approval. n126 The President's actions under Sectio fficial action allocating valuable privileges among competing private parties. Thus this i utive Order 11920 (June 10, 1976), and consequently we have no hesitation in concluding wi - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n124 For this reason, we do not think our opinion in Courtaulds (Alabama) Inc. v. Dixon ed ex parte communications in formulating its final rules defining rayon. 111 U.S.App.D.C. r gave to any interested party advantages not shared by all." 111 U.S.App.D.C. at 120-121, cret. Indeed, the Courtaulds court specifically noted that ex parte submissions were "canv mon on the ground that the rulemaking in Courtaulds did not decide competing private claim To the extent this same footnote also suggests that Sangamon did not involve rulemaking sts here, was Sangamon limited to "quasi-judicial" proceedings. n125 Of course, the Sunshine Act by its terms does not apply here. Its ex parte contac @ 553. Moreover, the Act was not in effect at the time of the events in question here. n126 Sec. 4. Individuals within the Executive Office of the President shall follow a po party, or an attorney or agent for any such party, prior to the President's decision, and of the Executive Office of the President. * * * Sec. 5. Departments and agencies outside of the Executive Office of the President which (a) establish public dockets for all written communications (other than those requiring commendations[.] Executive Order 11920, 12 WEEKLY COMP. OF PRESIDENTIAL DOCUMENTS 1040, 1041 (1976). n127 49 U.S.C. @ 1461 (Supp. V 1974). n128 For additional views favoring extension of the ex parte prohibition of the Sunshin mittee on Government Operations, 94th Cong., 1st Sess. 254-257 (1975), and Hearings on the - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - From what has been said above, it should be clear that information gathered ex parte fr and the public are the "bread and butter" of the process of administration and are complet l reduce procedural uncertainty leads us to conclude that communications which are receive tion forms the basis for agency action, then, under well established principles, n129 that ay reasonably be expected to be involved in the decisional process of the rulemaking proce y such party, prior to the [agency's] decision * * *," Executive Order 11920, @ 4, supra, shed for each rulemaking docket immediately after the communication is received so that in - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n129 See slip op. at pages 50-51 supra. n130 We do not think these reporting requirements will be unduly burdensome. The overal has stated are not burdensome. See Hearings, supra note 128, at 10-39 (statement of Richar ss. See id. at 58 (testimony of Dr. Alexander Schmidt, Commissioner of Food and Drugs); id red by the Sunshine Act for formal rulemaking, see 5 U.S.C. @ 557(d)(1)(C) as amended, or Conference of the United States which provides: 1. In the absence of a specific statutory requirement to the contrary, the following ar nt to informal procedures prescribed in 5 U.S.C. @ 553: (1) the notice of proposed rulemak urse of the rulemaking; (4) factual information not included in the foregoing that was con ; and (6) the agency's concise general statement or final order and any documents referred nces to the foregoing in the absence of a legislative intent to the contrary. The Conferen 3 RECOMMENDATIONS & REPORTS OF THE ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 49 (1974 Despite what has been said above, it is conceivable that trade secrets or information a d it will be time enough to determine the bounds of any exemption from disclosure when a p - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*58] For the foregoing reasons, we must consider what steps should be taken to cure deration de novo. This approach has two defects, however. First, it is not possible for us f future proceedings if steps are not now taken to put this information on the public reco ic record as it now stands. We further find no indication in the material already submitte t, therefore, to remain in effect pending clarification of what was said to the Commission for such an inquiry to be limited solely to contacts regarding subscription broadcast tele ese proceedings, we think the best resolution of the procedural problem we face is to adop cially appointed hearing examiner, an evidential hearing to determine the nature and sourc e dockets. 106 U.S.App.D.C. at 34, 269 F.2d at 225. "All parties to the former proceeding ssion which it may hold for the purpose of evaluating the report of the hearing examiner. concerning our disposition of the subscription broadcast television segment of this review V. SUBSCRIPTION BROADCAST TELEVISION Over six years ago this court rendered its decision in NATO v. FCC, supra, affirming in ules here under review, was based on elaborate data generated in a two-year trial of subsc asis, and consequently the best information available about the general effect of subscrip s to reopen now questions of the overall rationality of anti-siphoning rules as they perta dments to the subscription broadcast television rules announced in Dockets 18397 and 19554 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n131 15 F.C.C.2d 466 (1968); see slip op. at pages 18-20 supra. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The differences between the rules passed on in NATO and the present subscription broadc iption broadcasting after general release and generally relax requirements for subscriptio films three to ten years old has been modified to allow exhibition when a conventional br ed. The sports rules have also been modified; however, no one here challenges the sports r - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n132 Originally films could be freely shown only until two years after general release. either that they had been offered to broadcast television and refused or that they were u roadcast television, it is not clear how much practical difference there would be between n133 "No series type of program with interconnected plot or substantially the same cast - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - We turn first to the feature film rules. There is ample evidence in the record supporti port and Order, supra, 52 FCC 2d at 51, JA 75. In particular, we note the extensive survey lusion that the period of subscription viewing of feature films could be extended to three rpose would be served by restricting subscription exhibition of films which could not be s casting through its foreign language and after-ten-years rules. Even a challenger of these all fraction of the total available pool, a blanket prohibition of subscription use of the te that lines drawn, for example the ten-year age, are patently unreasonable, having no re - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n134 See JA 383, 555-562. n135 See First Report and Order, supra note 2, 52 FCC 2d at 12, JA 36. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - We also affirm the Commission's deletion of the series programming rule. The Commissio uction industry are adequate to supply series programming for both cable and conventional tions reflect a policy completely opposed to that adopted contemporaneously in the Prime T - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n136 See, e.g., Joint Comments of Columbia Pictures Industries, Inc., et al., in Docket n137 See also note 5 supra. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Although the public record amply supports the subscription broadcast television rule am ve said in Part IV, it seems unlikely that ex parte information will require vacation of t VI. CONCLUSION Our resolution of the various issues discussed in Parts I through V of this opinion req (1) The regulations adopted in the First Report and Order, 52 F.C.C.2d 1 (1975), and th - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n138 See note 27 supra. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - (2) The regulations adopted in the Memorandum Opinion and Order, 54 FCC 2d 797 (1975), (3) The repeal of regulations announced in the Second Report and Order, FCC 2d, 35 Rad. (4) The petitions for review of the Commission's refusal to waive its pay cable feature (5) The rules adopted in the First Report and Order, supra, are affirmed insofar as the (6) The Commission is hereby ordered to undertake the additional proceedings set out in (7) The Commission is hereby further ordered to terminate its proceedings in Docket 204 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n139 See note 4 supra. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - So ordered. CONCURBY: WEIGEL; MacKINNON CONCUR: Weigel, District Judge: In joining the court's opinion, I wish to emphasize the view that the Federal Communica ls received over the air from conventional television broadcasting nor transmission over t It seems to me that if there could be any governmental interest justifying this species for impingement upon First Amendment rights that it should not be sanctioned by implicatio The holdings in United States v. Southwestern Cable Co., 392 U.S. 157, 20 L. Ed. 2d 100 easured on the particular facts in each, seem to me to be consistent with the views here e Mr. Chief Justice Burger, concurring in the result in Midwest, upheld Commission action ry difficulty and sensitivity in the communications field" (406 U.S. at 675), the Chief Ju the Commission and the courts." (Id. at 676.) In my view, Commission control of program co Opinion Concurring Specially filed by Circuit Judge MACKINNON. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - MACKINNON, Circuit Judge, concurring specially: Belatedly, I file the following special concurrence. This particular rulemaking proceeding began with a number of petitions by broadcast int ng. The Commission responded with: Notice of Proposed Rule Making in Docket 19554 is hereby announced. All interested per aching a decision in this matter, the Commission may take into account any other relevant 35 F.C.C.2d 899, J.A. 7. This notice, including the provision that "the Commission may tak ing, under 5 U.S.C. @ 553(b). n1 Under [*62] informal rulemaking, the Commission would n where rules are required by statute to be made on the record, after opportunity for an age fter opportunity for an agency hearing (see section 554(b)). - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1 5 U. General notice of proposed rule making shall be published in the Federal Register, unle (1) a statement of the time, place, and nature of public rule making proceedings; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects Except when notice or hearing is required by statute, this subsection does not apply -- (A) to interpretative rules, general statements of policy, or rules of agency organizat (B) when the agency for good cause finds (and incorporates the finding and a brief stat - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Recently, in Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 28 L. Ed. ede administrative action and the specific findings had not been made, "the full administr To the extent that our Per Curiam opinion relies upon Overton Park to support its decis findings nor are the regulations limited to the full administrative record. And our opini Once a notice of proposed rulemaking has been issued, however, any agency official or empl disposition of a [rulemaking proceeding] with any interested private party, or an attorney hat any written document or a summary of any oral communication must be placed in the publ Slip op. at 97-98. I agree that this is the proper rule to apply in this case because the detriment of other competing business interests. The rule as issued was in effect an adjud opinion is limited, I would make it clear that that is all we are deciding. I would not ma the application of such a broad rule would be inappropriate that we should not paint with s of any agency: . . . So far as the orderly conduct of public business permits, an interested person may a interlocutory, summary, or otherwise, or in connection with any agency function. . . . 5 U.S.C. @ 555(b). Specifically, I would restate the opening clauses of the above quoted p [*64] Once a notice of proposed rulemaking has been issued that will involve competing p There are several other statements in this section of our opinion which are too broad and - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n2 Professor Kenneth Culp Davis in his Administrative Law Treatise (1958) points out so @ 6.02. Written Presentations, Consultations, and Conferences Informal written or oral consultation with affected parties or with advisory committees views, or arguments with or without opportunity to present the same orally in any manner. The consultative process may take many forms. The administrator or staff member may tal connection with fortuitous contacts occasioned by other business. To frame one set of rule hrough fifteen states to talk with representatives of motor carriers, members of state com e truck industry, and insurance associations. Sometimes consultation involves collaboratio nstruction of vessels. The Emergency Price Control Act provided that "before issuing any r When parties are too numerous and individuals may not be representative, some organization If a matter involving an aviation radio problem is under consideration, for example, the C ransportation lines. Whenever the Commission is considering the promulgation of regulatio ssioners . . . in most circumstances the Amateur Radio Relay League and the National Assoc ernors of the Federal Reserve System: "The practice of the Board . . . is especially notew ing process. Over a period of time the Federal Reserve System has developed a procedure of ting and a stenographic report of conferences is made. Frequently, the interchange of data rt agency to bear upon its rule-making problems, and fair. . . ." The Attorney General's Committee generalized concerning conferences: "The practice of h to those in attendance that their evidence and points of view are known and will be consid interested parties are sufficiently known and are not too numerous or too hostile to discu The superiority of the conference over the hearing has been convincingly described by a edent to regulation may be a God-given opportunity to avoid work and thought. He need only ties of detailed exploration of minor points and hidden corners which stirs the mind to ac 1 K. DAVIS ADMINISTRATIVE LAW TREATISE @ 6.02, pp. 363-365 (1958) (footnotes omitted). n3 See Sangamon Valley Television Corp. v. United States, 106 U.S.App.D.C. 30, 43, 269 - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -