HBO v. Federal Communications Commission

United States Court of Appeals for the District of Columbia Circuit · 1977 · Administrative Law

Administrative LawFCCcable televisionsubscription broadcast televisionanti-siphoning rulesinformal rulemakingAPAarbitrary and capricious review

Facts

The FCC adopted rules restricting pay cable and subscription broadcast television from showing many feature films and sports events, prohibiting advertising on subscription channels, and limiting movie-and-sports programming to 90 percent of total subscription programming. The Commission said the rules were needed to prevent "siphoning" of desirable programming away from free television to services available only to viewers who could pay. The record showed limited pay cable penetration, uncertainty about whether siphoning would occur, and no clear evidence that free television would lose programming or suffer economic collapse. During the rulemaking, numerous undisclosed ex parte contacts occurred between interested parties and commissioners or staff, including after the record should have been closed.

Issue

Whether the FCC lawfully and constitutionally could impose anti-siphoning and related restrictions on pay cable television, and whether the rulemaking process was invalid because of inadequate evidentiary support and undisclosed ex parte communications. The court also considered whether substantially similar rules could remain in force for subscription broadcast television.

Rule

FCC regulation of cable television is permissible only when it is reasonably ancillary to broadcast regulation and aimed at objectives for which the Commission could legitimately regulate broadcasting; the Commission must clearly identify the harm to be remedied and support its action with record evidence and reasoned explanation. In informal rulemaking, the agency must disclose the basis of its action, respond to significant comments, and maintain a reviewable public record; after notice of proposed rulemaking, officials involved in the decisional process must avoid ex parte contacts on the subject matter, or at minimum place their substance in a public file. Where cable regulation affects speech, the proper First Amendment standard is O'Brien, requiring a substantial interest unrelated to suppression of expression and restraints no greater than essential.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

The Federal Communications Commission adopts a rule barring subscription cable channels in Denver from charging separately for live comedy specials. The agency explains only that preserving "free television as Americans know it" is in the public interest, and it does not identify any established broadcast-regulatory policy that would justify imposing the same restriction on broadcasters.

A cable operator challenges the rule as beyond the agency's statutory authority. What is the best answer?

Explanation. The majority held that cable regulation is not a carte blanche. Even though the agency has some authority over cable, it must show that the regulation is reasonably ancillary to broadcast regulation and aimed at an objective for which broadcasting could legitimately be regulated. Conclusory appeals to the public interest are not enough.