Turner Broadcasting System v. FCC - Oral Argument

Argument of H. Bartow Farr, III

Chief Justice Rehnquist: We'll hear argument now in Number 95-992, the Turner Broadcasting System v. The Federal Communications Commission.

Mr. Farr.

Mr. Farr: Thank you, Mr. Chief Justice, and may it please the Court:

At the outset, if I may, I would like to explain briefly why we think that neither of the interests now asserted by the Government to support the must-carry law justifies the burdens that it imposes on speech.

The first argument, that the law merely regulates anticompetitive conduct, fails for two reasons.

First, just as the Government can't ban all fund-raising on the ground that some of it might be fraudulent, here the Government can't forbid the sort of protected activity at issue, choosing what speech to offer, unless it shows at a minimum that those decisions are generally anticompetitive acts and thus fall outside the scope of the First Amendment, otherwise, the law is reaching too far into protected activity in an effort to get at unprotected activity.

The record, however, shows that cable operators voluntarily carry the vast majority of broadcast stations, those accounting for some 98 percent of actual viewing, and it is wholly implausible to presume that, were it not for some sort of anticompetitive bias, the cable systems would carry every broadcast station regardless of how minimal the viewership, in preference to the 150 or so other programmers that are also seeking access.

Unknown Speaker: Well, at some point during the argument... maybe now if it's convenient... would you just explain this to me, Mr. Farr.

I've always had this difficulty with the case.

The cable operators say, this is so terribly burdensome.

We have to cancel out programmers whom we'd rather have.

And then on the other hand it says in its brief, well, we're not really cancelling the broadcasters.

All this is unnecessary.

It seems to me you can't have it both ways.

Mr. Farr: Well, I think there are two different questions that are involved.

First of all, there can be a burden on rights that is substantial, even though as a mathematical matter the burden on speech itself is not particularly substantial, but I don't even think that is the case here.

I mean, there are across the country not only stations that in the past have been dropped and were restored by must-carry, but many stations that are locked in, and as the record shows now in the case, two out of every three subscribers is served by a system that is channel-blocked, that is, it has no available channels at all for programming, and the other third of subscribers are served by systems that will be channel-blocked at some point.

The Government's expert concedes that no cable system actually builds in excess capacity for permanent use.

Unknown Speaker: Well, can we conclude from your argument that if you prevail on this case a large number of broadcasters will be dropped?

Mr. Farr: Well, I guess it depends on what the term large number of broadcasters means.

What the record shows, and I think this is consistent with essentially the Government's interpretation of it as well, is that the cable operators in the past, without must-carry, voluntarily carried virtually all network affiliates, they carried virtually all VHF independent stations, they carried a considerable majority of UHF stations, about 80 percent of educational stations, and even one out of three of every station that did not command even a measurable viewership.

Now, if one looks at that pattern, what that shows... and then groups that with stations community by community.

What that effectively shows is that in communities with relatively small numbers of stations, four, five, six, which tends to be more the norm, the cable system tends to carry... not always, but tends to carry all of the stations, or most of the stations.

Then as you get into markets where there are more and more stations, 10, 12, 14, those tend to be the stations that cable systems do not regularly carry.

The question then depends on whether those stations, even though they have very low viewership, tend to add something to the overall package that a cable operator is trying to provide to its subscribers, and many of those stations do.

That's why they're carried.

But the fact is, cable operators will not carry all of the very lightly viewed stations if they believe there is other programming that will provide a better fit in the package that it's offering to subscribers.

I don't think there's any way to put an exact number on that, but we know from the history that the number was not... in terms of must-carry ads was only 6,000 in the past, and I assume some of those would still be carried, and then of the 30,000, some number of those would not be carried even though they were before.

Unknown Speaker: How do you think we ought to assess the significance of the fact... I take it's a fact... that the brunt of the decisions not to carry tends to fall on the new stations?

I think the figures were that in the absence of must-carry about 50 percent of the new public broadcasting channels did not get carried, and something I think in the neighborhood of a third of the new nonpublic channels did not get carried, so the brunt of the decisions not to carry by the cable operators tends to fall on the new stations.

How do we assess the significance of that?

Mr. Farr: Well, I think first of all it very much would depend on what the programming of the new stations would be.

During the period without must-carry, Justice Souter, as the Court I think is aware from the record, there was a great increase in the overall number of broadcast stations, both commercial and noncommercial.

During the period from '85 to '92, there were 270 new stations, and from the period of 1980 to 1992, every market of the 209 ADI's in the country had either the same number of stations or a greater number, and most had a greater number.

So when there are proliferations of stations like that, the question of whether their programming is going to be of interest to the particular community, or the particular subscribers to a cable system, I think will depend very much on what kind of programming it is.

As your question indicates, obviously cable programmers do carry a substantial number of even those brand new stations, obviously because they find something in the programming that they feel will appeal generally to their subscribers, but I think there can't be any absolute question as to whether each one will be carried or each one will not be carried.

I think it depends on the circumstances.

Unknown Speaker: Do we know how many of those... in the period before the present must-carry rules, do we know how many of those 50 percent and 33-1/3 percent, or whatever it was, failed to survive when they were not picked up by the cable channels?

Mr. Farr: Well, the numbers on stations that do not survive suggest that the number is very low.

I don't know that the number is broken out by whether they were brand new stations or whether they were stations that had previously existed.

Of course, the bringing on, even if you had no cable whatsoever, the fact that you are increasing the number of stations within particular television markets will put pressure on the other broadcasting stations.

Unknown Speaker: Right.

We'd have to know the differential to make a... yeah, to make a--

Mr. Farr: That's right.

So I mean, that's simply a factor of numbers in competition, even without respect to cable.

Unknown Speaker: --Following up Justice Kennedy's question, from the cable operator's side, is this a diminishing problem to the extent that there is a problem with must-carry as cable, as the channel capacity expands, this becomes less and less of a problem?

Mr. Farr: Well, unfortunately, it has not become less and less of a problem to date.

I think anyone who is familiar with the cable industry at the moment knows that channel space is greatly at a premium within the industry as a whole.

One of the reasons for that, of course, is that there are many new cable programmers as well as additional broadcast stations that are seeking access to these cable systems.

Now, it is true that in general the capacity of cable systems is expanding, but it is not expanding at a pace that is outstripping the expansion of programmers who are trying to reach the audiences that cable operators serve.

Unknown Speaker: Mr. Farr, when you use the term, programmer... I want to be sure I understand... are you referring to a company that presents a full line, 7 days a week, 24 hours a day, or however much they're on the air, or do you also include within that term companies that might produce individual programs they try to sell, like the Civil War documentary or something like that?

Mr. Farr: I'm using it I think as it's been in use throughout this case to mean the first of those two.

Unknown Speaker: Just the first.

Mr. Farr: Essentially a network of some sort.

Unknown Speaker: We're not here concerned with the impact on people who try to sell individual programs?

Mr. Farr: Well, I don't think they're specifically plaintiffs in this particular case.

Obviously, to the extent, for example, that those... there's a market for those programs, particularly for whatever reason within cable programmers, to the extent those cable programmers can't get onto the stations because the broadcasters are required to be carried, it may... it would have a derivative effect on them, but that's not the specific claim that's at issue here.

The claim here is that the programming network itself, which wants to be carried within an area--

Unknown Speaker: And that's the... that's what you're referring to on that 150 figure you used, is that full-line programmers?

Mr. Farr: --That's correct.

Those are essentially--

Unknown Speaker: And how many of those are affiliated and how many are unaffiliated?

Mr. Farr: --If you're talking about affiliated with cable operators--

Unknown Speaker: Right.

Mr. Farr: --I don't have a particular number.

I can perhaps work backwards a little bit from the other side.

If you look at the cable operators themselves, TCI, which is the largest cable operator, has an interest in something like 20 cable programmers.

Time Warner, after its merger with Turner, is somewhere around a dozen.

The others are all... there may be four or five that have interests in about four or five programmers, and the rest the cable operators typically have no interest.

Unknown Speaker: Mr. Farr, may I go back to the subject of Justice Ginsburg's question?

My recollection is that the figure in the record was that when must-carry came in, about, I think it was 6 percent of cable operators had to drop at least one program in order to comply with must-carry.

The suggestion was that that figure perhaps is not wholly representative of the significance of must-carry because there was evidence that the cable operators were sort of on their good behavior before that, but in any case we got a figure of about 6 percent.

Is that figure still, so far as the record shows, the best measure that we have of the, at least the quantified significance of must-carry on the operators?

Mr. Farr: Well, to begin with I don't think it is for two reasons.

First of all, having to add a channel as a result of must-carry doesn't reflect the limitation on cable operators who may at the time have been carrying a broadcast station but now in a different world of programming might choose not to carry that particular station.

As I said--

Unknown Speaker: It's true, but do we have anything but a speculative basis to assess that latter significance?

Mr. Farr: --In terms--

Unknown Speaker: I mean, we'll assume it exists, but I don't know how we... I don't know that we have any measurement of it.

Mr. Farr: --Well, I don't think there is any particular way to measure it, because obviously must-carry has been in place since 1992, or since it was implemented, so there isn't a way to test particularly what cable operators will do given the program selections right now.

I would point out, though, that I... the Government, it seems to me, in its argument tries to essentially... excuse me... make a balancing argument here saying, well, this will help broadcast stations to have carriage, and we think that the impact on cable operators and cable programmers won't really be all that significant, and therefore I think their argument is that we really needn't be concerned about what impact there is.

I do think, I should say, I think that's a false equation.

I don't think that the First Amendment is essentially a quantitative balancing test in which the Government can say, we will try to benefit these speakers at the expense of these other speakers as long as we balance out the harms in a way that we think is in the public interest.

I think the First Amendment is a qualitative standard that in fact puts a barrier to what Government can do unless it is pursuing substantial interests, and it has properly tailored what the law is to those interests.

Unknown Speaker: Well then, why do... your implication is that there is not a substantial interest here because the beneficial impact under the three headings that Turner I spoke of is insufficiently significant.

Is that a fair statement of what's implicit in your argument?

Mr. Farr: It is implicit in this sense, I think, Justice Souter, if I understand the question.

At the beginning of my argument I indicated that I... the reasons that I thought that the anticompetitive rationale for this law would not stand up, that the law is simply way to broad for any demonstrated anticompetitive behavior, and in addition, although I didn't get a chance to say it, there is the tailoring problem specifically addressed by Judge Williams, that the law in fact imposes discrimination.

It just doesn't relieve the burdens of any bias that the Government presumes to be there.

So I think if one takes that interest out, as I think properly the Court should, then the question is, can the Government use the means of forcing access onto the private media in order to serve their goal of promoting broadcasting for over-the-air viewers?

I think that's a straight, fundamental question about the power of Government, and I don't think the answer to that question depends primarily on some balancing between--

Unknown Speaker: Well, Mr.--

Mr. Farr: --the amount of benefit to the broadcasters and harm to the programmers.

Unknown Speaker: --Mr. Farr, you say that the First Amendment doesn't require... it doesn't usually import any balancing, but when you're talking about, is there a substantial Government interest here under the O'Brien test, that itself is a form of balancing, isn't it?

Mr. Farr: Well, that's correct, Mr. Chief Justice, there certainly has to be a weighing, if that is a proper term, of the governmental interest, but I don't think that can be divorced from the question of the means by which the Government is pursuing it.

Certainly, the Government can pursue the interest of benefiting individual broadcast stations, for example, by granting them subsidies, or by providing other forms of benefit to encourage their development.

Unknown Speaker: Do you say it can't, then, simply promote broadcast television in general because it's free to the listener?

Mr. Farr: I'm not saying that they can't promote it in general.

In fact, I agree that they can promote it in general.

What I'm saying is, though, that when they come to the question of means, how they are doing it, when they say the means by which we are going to promote it are to limit the speech rights of others, then they're running up against a barrier that the First Amendment imposes.

Unknown Speaker: Mr. Farr, suppose... this is not a hypothetical.

It comes from Justice O'Connor's opinion last time around... the Government simply said, to the extent that you have unused channels, just to that extent, you must carry, so you can't leave any channels idle, but if you fill them up with cable programmers, whatever, that's okay.

Mr. Farr: Obviously, that would be a less restrictive alternative, there's no question about that.

I think in fairness I should make two points, though.

First of all, it doesn't mean that it wouldn't have any impact, because the relationship between cable operators and their subscribers is essentially the coin of the realm for cable operators, and for them to put programming on and take it off does introduce some irritation.

The second point is that I'm not sure it really serves the Government interest to have a broadcast station on for a month or two and then take it off, but if the Government felt that that... and could demonstrate that that did substantially advance its interest, that would be a less restrictive alternative.

Unknown Speaker: Less restrictive; why?

Because... I mean, the First Amendment is certainly violated when you are compelled to say something, whether or not you had intended to say something else.

Mr. Farr: It's less restrictive because it only has one of the two constitutional flaws of the must-carry statute, because in that particular case it is not excluding a programmer at that moment that the operator has decided it would otherwise carry.

Unknown Speaker: Which is to say that the one both compels you to say what you don't want to and prevents you from saying what you were about to say.

Mr. Farr: The must-carry law has both of those effects, that's correct.

Unknown Speaker: May I ask you if you think that section 4 and section 5 are equally bad, or equally good, whichever way we go?

Mr. Farr: I do believe that they are equally bad, Justice Stevens.

The fact is that... for the same reason that I mentioned a moment ago, that I do think the First Amendment puts a limitation on the means Government can use to advance speech.

I don't think that particularly changes with the content of the speech and, indeed, if the Court were to rely on the content of the speech to make that determination, I think it would call into some question the use of the intermediate standard.

I should point out that with respect to the interest in preventing anticompetitive behavior, the argument with respect to the public TV stations really is an even weaker argument than it is with respect to the commercial TV stations.

They are obviously not competitors in the advertising market along with the cable systems, and therefore at least one of the linchpins--

Unknown Speaker: They get some donations, don't they?

I mean, you see, you know, this is sponsored by Mobil in connection with public television.

Mr. Farr: --I don't think, though, typically, that someone who is choosing to donate to a public television station is choosing between that and running a local ad on the cable system.

There may be some instances of that, but I think generally the advertising market that one is talking about is the actual commercial advertising market.

Unknown Speaker: Well, but they... but they do choose to make the endorsement or not based on a projection of the size of the audience, surely?

Mr. Farr: Oh, I think that is true.

I'm not saying... what I'm saying is that that would not, I don't think, be a reason that a cable system would not run a public broadcast station, in the hopes that it would draw off what would otherwise be donated to the broadcast station and to add it to its own advertising revenues.

Whether it had an effect on the public TV station is a separate question.

I would like to return to a point that came up a few minutes ago, though, about the ownership relationship between owners and programmers.

As I said, it is limited to a certain number of operators, and even those, most of them have a relatively small number of interests in programmers, but I should say something which I think has not really received enough attention in this case in the lower courts as well, that I think vertical integration is essentially a red herring here, and I think that for a couple of reasons.

I think Judge Williams is perfectly correct that if you look at vertical integration the statute is not at all tailored to it.

It applies to operators who aren't vertically integrated.

It applies to decisions between nonintegrated programmers and broadcast stations.

But more importantly than that, there is a specific provision in the Communications Act that deals with vertical integration.

In fact, there are several of them, and the... one of the provisions authorizes the commission to set limits on the number of integrated programmers that an operator can carry, which has been set basically at 40 percent, but another one of them has a specific nondiscrimination provision barring cable operators from discriminating on the basis of affiliation, so the idea that the must-carry law itself, that part of the act was intended to remedy a problem of vertical integration it seems to me is belied by the other purposes... excuse me, by the other provisions of the act itself.

Now, I'd just like to make one point about the anticompetitive argument, because I think it's critical in thinking about what the Government calls structural regulation, but keep in mind two things about structural regulation.

First of all, just calling something structural regulation doesn't seem to me to indicate much about where... how it should be analyzed under the First Amendment.

First of all, the question is what does it regulate, and what the structural regulation here is regulating is who can speak on a cable system.

The second thing is that structural regulation is by its nature prophylactic, and prophylactic regulation is, as this Court has often said, disfavored under the First Amendment.

So I would submit that just because the Government characterizes something as economic regulation or structural regulation, even under O'Brien, the Court has to look carefully at the assumptions that the Government makes to justify a broad prophylactic law and, furthermore, has to look at the remedy that's imposed to see if the remedy is consistent with the types of remedies that are imposed in other industries not involving speech, because if it's not, if the remedy that is used, as it is here, is broader than what would be used in another comparable situation, then the Government it seems to me has a strong burden of answering why the other remedy is not a suitable, less restrictive--

Unknown Speaker: Is the term structural borrowed from some body of the law?

Mr. Farr: --Not that I know of.

It... I believe it's just a... something which is being used to describe in a loose fashion regulation that does aim at a particular industry but is not specifically aimed at the content of speech.

Your Honor, if I may, I'd like to reserve the rest of my time.

Unknown Speaker: Very well, Mr. Farr.

General Dellinger, we'll hear from you.

Argument of Walter E. Dellinger, III

Mr. Dellinger: Mr. Chief Justice, and may it please the Court:

Many of the discussions that you've had so far this morning with Mr. Farr related to his discussion of what the Government interest may be, and efforts that they've made in oral argument earlier and in their brief to cabinet and denigrate that interest.

I want to be clear that the Government interest in this case is important, substantial, content-neutral, unrelated to the suppression of free expression, and solidly grounded in reasonable inferences that are based upon substantial evidence.

In spite of the talk about the anticompetitive market foreclosure effects, there is, as Justice Kennedy's opinion recognized in Turner I, a very clear principal goal of the must-carry law, and that is to preserve a healthy multiplicity of broadcast sources for the 40 percent of American homes that do not have cable, homes that rely upon free, over-the-air broadcasting as the entire source of their television programming.

When cable systems deny carriage to local broadcast stations, and thereby foreclose those stations from reaching the 60-percent of households, often more affluent, that rely upon cable, those local broadcast stations lose revenue and suffer financially.

Unknown Speaker: Mr. Dellinger, I... General Dellinger, I'm sorry... I suppose it can be said that whenever you save a single station that would otherwise go out of business you're preserving the diversity, in a sense, but I thought that what our earlier opinion meant was that, did you not save this broadcaster, or the ones that are saved by this legislation, there would not be any diversity, period.

In other words, it was a matter of the system as a whole not having multiple voices, not merely whether you would lose a few voices.

Of course you would.

I think everybody concedes that.

Mr. Dellinger: Justice Scalia, I think to the extent it is conceded that

"a few voices would be lost. "

it is conceded that the Government should prevail in this case, that it's a perfectly consti--

Unknown Speaker: Is that conceded?

You think that the other side thinks--

Mr. Dellinger: --I believe--

Unknown Speaker: --is asserting that no voices would be lost if this legislation were not--

Mr. Dellinger: --They spend a considerable amount of time in their brief suggesting that the Government needed to prove that the entire national broadcast industry, or the local broadcasting industry would collapse in the absence of must-carry, but I want to explain why I think the loss of some over-the-air broadcast stations is a matter of critical importance to the Government.

I think the record on remand amply shows that exclusion from cable will harm local broadcasters so excluded, and they will be unable to provide the kind of sort of robust array of quality programming that they could if they had the revenues from cable access.

Unknown Speaker: --But--

--Can you quantify that, Mr.... General Dellinger?

You say it shows that over-the-air broadcasters will suffer.

You know, how many and to what extent?

Mr. Dellinger: I think Congress had an ample basis for--

Unknown Speaker: I mean, on the basis of the... assuming that Congress made the appropriate finding, I think the prevailing opinion last time said something more was required to show the rationality of Congress' choice.

Now, what is shown in the subsequent proceedings after the opinion 3 years ago?

Mr. Dellinger: --I think what is shown by the evidence on remand, Mr. Chief Justice, is that the problem is even worse than Congress initially supposed.

We... there was much debate about whether, as a predictive matter from economic theory, stations would be dropped in the absence of must-carry, broadcast stations would be dropped.

In fact, we now know that it happened.

It happened nearly 8,000 times.

Unknown Speaker: Eight thousand?

Mr. Dellinger: Eight thousand times, broadcast stations were dropped from one or more cable systems.

Unknown Speaker: Out of how large a universe?

Mr. Dellinger: How large a universe?

There are about 1,500 broadcast stations in this country.

There are 12,000 cable systems.

There are... those 12,000 cable systems have about 500,000 total channels available.

The dropping of 7,945 stations for more than a year, between '85 and '92 as the... page 621 of the Joint Appendix will show was... showed that in the years before must-carry the typical cable system denied carriage to somewhere between one-quarter and one-third of the broadcast stations.

Unknown Speaker: General Dellinger, was there any offset?

Were broadcast stations added?

You recited the number that were dropped.

How many were added?

Mr. Dellinger: There would be during that period broadcast stations added.

I don't have the exact figure, Justice Ginsburg.

It would have been far fewer than the number that were dropped.

Unknown Speaker: Where they were dropped, how many were left?

That's what goes to my question.

How many communities were deprived of diversity in over-the-air broadcasting because... you know, to drop one over-the-air station from New York City, is no big deal, and I would not be very sympathetic to the Government's claim that this is necessary to "preserve diversity".

Mr. Dellinger: Well, the total number of broadcast stations that were carried were 35,000 Nationwide, so there's a lot.

But let me address the question you've raised twice now... let me come back to it... of whether the dropping of a few stations is something about which Congress can legitimately be concerned, that would support must-carry.

I think that's a critical part of Mr. Farr's argument as well.

If you take a community that has six or seven stations, and seven local over-the-air broadcast stations is about the national average, if you take a community and between one-quarter and one-third of those stations are denied carriage on cable, you're weakening, substantially weakening two out of six, two out of six local broadcast stations.

Perhaps it's three out of nine in other communities.

Unknown Speaker: Most communities have only one newspaper.

Now, could the Government, in order to foster diversity, require the newspaper to carry competitors?

Mr. Dellinger: Well, it is clear that Congress has, I think, since the Radio Act in 1927 and the Communications Act, treated communications differently.

They could not do that with newspapers, but then newspapers do not have the critical throat-hold that cable operators have over access to those--

Unknown Speaker: The radio spectrum, is that what the cable operators have that newspapers don't?

Mr. Dellinger: --No.

What cable operators have is a gate-keeping function over the wire that goes into the homes of 60 percent of those in the community.

If you don't get a... there is no one that has the authority... no newspaper has the authority to exclude others from reaching the potential audience in the way that the cable system does.

Unknown Speaker: What you're saying is that cable is a natural monopoly because nobody else is going to put in a piece of copper.

It's the same with newspapers.

It has been shown economically that in any market it will tend to come down to one newspaper, because advertising only pays for the newspaper that... I really don't see the difference, but the point I'm driving at here is, why is it so horrible to have only four over-the-air television stations when our country resigns itself to the fact that most communities have only one local newspaper?

Mr. Dellinger: The answer to that question I think is that... is that local over-the-air broadcasting is probably the... now the cheapest and most accessible form of sources of information in this country.

I... you can buy... some years back I bought a black and white television set from a repair shop for $15.

It lasted for more than a decade.

Even if the price is $50 or $100 for the bottom line television set at a discount house, the longevity of those sets means that you're talking a few dollars a year.

For a few dollars a year, those who don't have cable... it's 90 million Americans... can rely upon that simple fact.

The whole community benefits from having a source of information, and one wants to have on that source of information as many stations as the economy of the local community and its market area will support, what this Court has called a broad array of diverse and antagonistic sources of information, is quite good.

When you drop a station, one or two stations, you may be dropping the station that is most critical to a language minority, it may be the--

Unknown Speaker: But the over-the-air... the question that I have... I'm only thinking of the section 4.

I think maybe the section 5 is different, but you say there were 35,000 stations, 8,000 were dropped, but am I right in thinking that of the 8,000 that were dropped, all but 31 remained on the air broadcasting to the over-the-air people, and... so that's the problem that's bothering me.

If 7,700 of the 8,000 are still there broadcasting to the people you said were trying to help, namely those who don't have cable, then how were those people hurt?

Mr. Dellinger: --Justice Breyer, I think that there is ample evidence that even in the absence of loss of survival... I mean, Justice Souter asked the same question.

Survival is not the only issue.

There is... both... our common sense tells us that when you lose revenues, you lose the ability to put on quality programming.

To have the same number of stations and have them show the test pattern, or, to use a more realistic example, to have the same number of stations but have them sufficiently depleted of resources by not being on cable, if you put some fellow up there with costume jewelry and a telephone to take home shopping inquiries is not going to be... is not going to provide that source of... if you look at--

Unknown Speaker: So it's the prosperity of programmers that the Government is now concerned about, not just their continued existence.

It's--

Mr. Dellinger: --No.

Unknown Speaker: --This is the overwhelming interest, that they must prosper?

Mr. Dellinger: It is very important that the prosperity of programmers is only an intermediate step, not the final goal, as Mr. Farr has suggested or as your question would posit.

It is only an intermediate step towards the actual goal of assuming that there is some vibrancy and health to those small, local broadcast--

Unknown Speaker: But is there evidence in the record on that, for the reason that, of course, I sought evidence in the record of economists who said, if you have less money, you will put on less expensive programming, while at the same time the station, while having less money, will then direct its attention to the minority, namely those who don't have cable.

So the programs will be less expensive, but they may be aimed more directly at the audience, and therefore I didn't know... I looked for evidence, and is there any evidence in the record that tells us that that minority that doesn't have cable actually has programming that it finds less desirable?

I saw a theory, but I didn't see evidence.

Mr. Dellinger: --Yes.

I mean, you save me the effort of going through the 25 hundred volumes it cited.

I mean, we did have David Schutz, Roger Knowles, other experts--

Unknown Speaker: Roger Knowles said that--

Mr. Dellinger: --He said--

Unknown Speaker: --you have less money, you will spend less on programming.

I didn't see anything in his statement.

Mr. Dellinger: --Well, he said it's an important factor in determining the quality of a station's programs.

Now, there certainly is, let me say admittedly, anecdotal evidence, but anecdotal evidence that supports our common sense viewpoint.

For example--

Unknown Speaker: Is the common sense viewpoint that the quality will be better, is that what you mean?

Mr. Dellinger: --Yes.

Yes.

That's--

Unknown Speaker: Well, when you start talking about quality, you're walking your way in, aren't you, into a content-based justification?

You're saying, we will compare the programming, and it will be better programming, I presume, by some governmental judgment.

You're turning this into a content-based justification, aren't you?

Mr. Dellinger: --One of the virtues of the must-carry system as compared to what the cable industry suggests as an alternative, that is, of Government subsidies, is the Government doesn't have to make those content-based decisions.

Unknown Speaker: Well, it doesn't make them on a specific case-by-case basis, but I think the tendency of your answer to Justice Breyer is, when you talk about vibrancy and quality, you are talking about some kind of a content-based standard, and I think what you're... I think what you're saying is that overall, not on a program-by-program basis, but overall, the content is going to be better.

Isn't that what you're saying?

Mr. Dellinger: It seems to me that one can say that providing this kind... that these over-the-air broadcast channels are not starved financially in the hopes that they're available to the community for the quality programming that is chosen by--

Unknown Speaker: The quality program, yes--

Mr. Dellinger: --those local programmers and not by the Government.

Unknown Speaker: --But you say, Mr. Dellinger, you want quality programming, and yet you also say that the 60 percent of the people who don't have cable, or 40 percent, whatever, are perhaps people in lower income brackets and that sort of thing.

Maybe the people in the lower income brackets don't necessarily want the history channel or something like that.

Mr. Dellinger: Well, it's... these are stations that often appeal to communities.

Take an example.

KCEC was a Spanish language station, over-the-air broadcast station.

Once it got on the cable, it had the resources to institute its first local news program in the Spanish language that served the Hispanic population.

A lot of these... there's a new fourth network made up of channels that used to be located in the nether regions of broadcasting.

Getting them on cable leads to more sources.

I do not think--

Unknown Speaker: But to argue that it's better for people to have more news programs certainly reinforces the notion that it is a content-based interest here that's being urged, and I wonder, General Dellinger, the broadcast stations and the stations that aren't on cable are still out there on the air for a viewer to receive if they switch off of cable, aren't they?

I mean, there are switches.

I can plug in a TV set and pull in these other stations, can't I?

Mr. Dellinger: --Let me respond to your first question first, which is that I do think it's important that having a legitimate congressional concern that local broadcasters are not depleted of revenue so that those local broadcasters can make their own decisions and have the resources--

Unknown Speaker: Well then, why not give them subsidies?

That's very narrowly tailored.

You don't have to commandeer all the channels.

If the Government is concerned about prosperity of the station, give them a subsidy.

Mr. Dellinger: --I think both the subsidy and the A/B switch are unsatisfactory and not less restrictive alternatives, but it is important to me that we understand that one is not touching a third rail of content skewing by the Government for the Government to think that local broadcasters ought not be starved of resources so they can choose, but on these two alternatives, the problem of Government subsidies--

Unknown Speaker: You at least... the Government at least thinks that expensive programming is better programming.

Mr. Dellinger: --The Government--

Unknown Speaker: And there may be those that think that, you know, talking heads are better than blowing up buildings or things like that, but the Government has made that decision--

Mr. Dellinger: --Yes.

Unknown Speaker: --at any rate.

Expensive programming is better programming, right?

Mr. Dellinger: Congress believes that there are... that the harm suffered to local broadcasters when they're not carried by local systems includes reduction in a whole range of services, of content, that they could offer.

That's... Government is not choosing content, but wants there to be some robustness in local program, or the ability of them to choose that.

Now, the--

Unknown Speaker: General Dellinger, may I ask you on that point, at least with respect to the public stations, am I... and I'm talking about section 5.

I thought that the record showed that no station went dark in the mustcarry period, that the number of stations, the number of stations in fact increased, and that even membership revenue increased, so was there even... the case that you're making, even for what was available, was even that made out with respect to the public television?

Mr. Dellinger: --Justice Ginsburg, during the period in the mid-eighties to 1992, it was of course a period of great economic growth, so statistics generally are good, but in the joint record before Congress there are many instances of public stations where the... particularly the secondary... second or third public broadcast stations, ones that might be serving a community college, is being repositioned, losing its channel place in the middle of a community college course, and there's also the additional interest that Congress has always had in promoting educational television and making sure the cable homes have access to educational programs.

I mean, it's important as we debate these issues to remember that the question is not whether on these factual disputes Mr. Farr is right or I'm right, or even whether Congress was right.

The question you put in Turner I was whether the obligation to exercise independent judgment when First Amendment rights were implicated, you said, there is not a license to reweigh the evidence de novo.

Unknown Speaker: No, but we indicated, General Dellinger, that we wanted evidence that there was a significant... a significant effect, beneficial effect that must-carry had, and you at the very first said well, even if just a few stations are dropped, that's significant.

I'm not sure that that's the correct interpretation of the opinion, and this goes back to the very first question the Chief Justice asked, and the whole colloquy we've been having since.

Is there evidence in this record that shows that there is a significant effect--

Mr. Dellinger: Yes.

Unknown Speaker: --that must-carry produces insofar as the number of stations dropped or not dropped are concerned?

Mr. Dellinger: The evidence was more than substantial, and the averments were more than reasonable that the loss of 8,000 local broadcast stations being kept off of cable systems during that period, coupled with, just in the printed appendix, 2,511 pages of substantial evidence to support Congress' judgment that they were going to suffer financially, have less resources to provide programming, and those 90 million homes that depend upon local broadcast television would have a less diverse, broad, and healthy source of broadcast information.

Unknown Speaker: Thank you, General Dellinger.

Mr. Ennis, we'll hear from you.

Argument of Bruce J. Ennis, Jr.

Mr. Ennis: Mr. Chief Justice, and may it please the Court:

I would like to make two interrelated points.

The first is, is that Congress reasonably predicted that in the absence of must-carry there would be significant injury to broadcast stations which would threaten the Government interest in preserving a multiplicity of broadcast sources, and the second point is that the presence of must-carry has actually caused very modest and decreasing injury to cable operators and cable programs.

First, on the injury to broadcast stations, Congress did not predict that the entire broadcast system would disappear without must-carry, but it did specifically predict in its findings that without must-carry, quote, additional local broadcast signals will be deleted, repositioned, or not carried, and that would threaten the multiplicity of broadcast sources which was the Government interest.

That prediction turned out to be absolutely correct.

Unknown Speaker: Excuse me, the Government's interest is in unending multiplicity, no matter how many?

If you have 97, the Government has an interest, a significant interest in 100?

Mr. Ennis: Justice Scalia--

Unknown Speaker: I think that's what you just said.

Mr. Ennis: --No, that's not what I just said, Justice Scalia.

The Government's interest, described in the House report, the conference report, and the text of the act, is, serving the goals of section 307(b), which is a fair, efficient, and equitable distribution of broadcast resources.

That has always meant the system of allocation, which means that each local community should have at least one broadcast outlet, and that each local community should be able to receive as many diverse broadcast sources as the economic conditions and size of that community dictate.

That's not unlimited.

Unknown Speaker: I read that as saying, at least one, is what the Government--

Mr. Ennis: Well, Justice Scalia--

Unknown Speaker: --considers an irreducible minimum.

Mr. Ennis: --If I could--

Unknown Speaker: And the rest is whatever the market will give it.

Mr. Ennis: --Let me just respectfully refer you, Justice Scalia, to the House report and the conference report, which make clear what the Government interest is.

Unknown Speaker: Look, Mr. Ennis, there's no question... I guess there's no question in anybody's mind about there being a significant repositioning as a result of must-carry, but isn't the ultimate measure of the value of that repositioning, or its absence, the 31-station measure?

In other words, as I understand the evidence, out of over 40,00 broadcast stations and, indeed, out of 8,000 that were directly affected by must-carry, only 31 went under as a result of the repositioning in the absence of must-carry.

Isn't that the relevant figure that we ought to look at to determine the substantiality of the interest and of the threat?

Mr. Ennis: Justice Souter, let me respond first by saying that Congress was not making a snapshot about a frozen historical past.

It quite explicitly said, we are attempting to make a predictive judgment about ongoing trends and what will happen in the future to broadcast if we do not enact must-carry.

Here's what Congress knew in the non-must-carry period, the trends.

They knew that the growth rate in broadcast stations had greatly declined from 5 percent to less than 2 percent.

They knew that the number of vacant channels had greatly increased.

In fact, the number of vacant channels had increased as much as the number of new stations, because many broadcast stations had given up, and were simply turning in their construction permits.

They knew that broadcast advertising revenues, the lifeblood of broadcasting, had declined in real dollars 11 percent during the non-must-carry period, and that by 1991, broadcast revenues were lower than they were in 1984.

Unknown Speaker: How does that refute what seems to be the message of the... there were only 31 stations, that none of that had much effect on the great, great majority of broadcast stations?

Mr. Ennis: Well, Your Honor, it did have effect on the great majority of broadcast stations.

Unknown Speaker: How do you answer the fact that only 31 broadcasting stations actually departed this world, so to speak?

Mr. Ennis: Because, Your Honor, Congress made the predictive judgment that there was incremental weakening of the broadcast system.

Unknown Speaker: But in the first opinion in this case we said that because there's intermediate scrutiny we didn't accept as final Congress' judgment on that score.

Mr. Ennis: That's correct, Your Honor, and I'm not suggesting you should accept it as final without evidence, but there is evidence.

The evidence in this record overwhelmingly showed, and in fact--

Unknown Speaker: How do you respond to the apparently conceded fact that only 31 stations out of the great, great number actually went under?

What's your response to that?

Mr. Ennis: --The response is, there was hundreds of pages of testimony before Congress and in the additional evidence showing the actual impact on broadcast stations of being denied carriage.

Unknown Speaker: Well, what was the--

Mr. Ennis: It meant they had to cut back on their programming.

Many of them had to convert to home shopping formats, which they did not want to use, because they didn't have enough money to continue their other news operations.

There was serious injury to broadcast stations.

Appellants--

Unknown Speaker: --Are we now, then, back into content?

Mr. Ennis: --No.

No, we're not.

Unknown Speaker: Why not?

Mr. Ennis: Because Congress expressly found in the act, another one of the policy objectives, that they wanted to rely on market forces to the maximum extent possible to decide which broadcast stations would survive and which would not.

Congress was not saying--

Unknown Speaker: But the justification, as I understand your argument, or your argument on behalf of Congress, the justification for that is that in fact there will be a higher quality of programming if there is this greater choice as a result of greater advertising revenue, and so on, and doesn't that, then, bring us to a content-based congressional choice?

Mr. Ennis: --Your Honor, I don't think it's a judgment about a higher quality of programming.

I think it is a judgment that the programming, if the market could operate, would be more responsive programming to the local needs of a local community.

Congress found that there was a structural impediment to fair competition, the cable bottleneck monopoly.

It wanted to remove that structural impediment and then let the market determine, based on market needs, which stations would survive and which would not.

Congress didn't dictate we want this station to survive and that not, which is why a subsidy would be inconsistent with that specific policy objective, and would also risk entangling the Government in very specific content-based judgments.

The Government would have to decide, if this station is not doing well in the market because it has poor programming, we have to tell the station to start putting on news, or getting involved in really content-based judgments.

Unknown Speaker: Well, you're just assuming that all the money the station gets will be spent on better programming.

That seems to me a very unreasonable assumption, unless you're talking about exclusively nonprofit stations.

But I would think the normal assumption is, you know, any additional money will go right into the owner's pockets, except to the extent that spending it on better programming will produce yet more money, and I don't know that that's ever been--

Mr. Ennis: Your Honor, Justice Scalia, in terms of the owner's pockets, Congress knew that in 1990 and 1991, 50 percent of all independent stations, and that's approximately 500, 800 stations, lost money, and 25 percent of them lost over $1.26 million in those 2 years.

Unknown Speaker: --Even less likely that it will be spent on programming.

It will be spent to cover the loss.

[Laughter]

Mr. Ennis: We're not talking about money to put in the owner's pockets, Your Honor.

We're talking about a broadcast system that was in precarious financial condition.

They needed must-carry simply to survive.

Unknown Speaker: It might be that if I no longer broadcast to the 8,000 people who have cable, and I can only broadcast to the 2,000 people who don't, my programming will be aimed more at what those 2,000 want, not less.

These are empirical questions.

Mr. Ennis: Justice Breyer--

Unknown Speaker: And so I just don't... I look for evidence, and I can't find empirical evidence.

Mr. Ennis: --Let me give you some evidence, Justice Breyer.

First of all, the cable industry itself did not dispute before Congress that lack of carriage would cripple the broadcast industry and, in fact, in this case we produced in discovery their own documents in which they studied this very problem that you're asking, and they concluded that carriage is critical to broadcast stations.

If you look at the Joint Appendix at pages 2147 and 2158, those are cable documents which are sealed, because the cable industry insisted that they remain sealed, but those documents themselves conclude that carriage is critical to the survival of a broadcast station.

It may be that the broadcast station would be forced to pay more attention to the local market, but its advertising revenues would shrink by at least 60 percent, and without the advertising revenues lost to the cable audience it wouldn't have the revenue to produce the programming that would be responsive to the over-the-air audience.

That's what Congress reasonably concluded.

Let me simply say that, with respect to the injury to cable, that's modest indeed.

Only 1 percent of the channel capacity in this Nation is occupied by new, must-carry stations cable operators were forced to add.

This Court also asked how much channel capacity, previously unused channel capacity could be devoted to the carriage of must-carry stations, and the answer, as the evidence shows, is that 87 percent of the time when a cable operator was forced to add a must-carry station, it did so with previously unused channel capacity.

Unknown Speaker: Thank you, Mr. Ennis.

Mr. Ennis: Thank you, Your Honor.

Unknown Speaker: Mr. Farr, you have 5 minutes remaining.

Rebuttal of H. Bartow Farr, III

Mr. Farr: Thank you, Mr. Chief Justice.

One of the difficulties, I think, in addressing the Government's interest here is that it is still difficult to pin down.

The specific finding by Congress made in the act is that as a result of the economic incentive that cable systems have to delete its set of local broadcast systems, coupled with the absence of must-carry, the economic viability of free local broadcast television and its ability to originate quality local programming will be seriously jeopardized.

That is the finding by Congress itself, not arguments made by the executive branch.

Then, however, it seems that the argument had turned at some point to survival of broadcasters, that in fact the existence of cable itself would harm individual broadcasters, which in our view at least is itself a less significant interest than some broad... broader interest indicating that a multiplicity of voices in a significant number of communities would be lost.

In fact, this Court has recognized, and Congress has said before, that it is typically not concerned with the fate of individual broadcast stations, but rather with the system as a whole.

Unknown Speaker: Mr. Farr, can I ask you kind of a basic question that the colloquy has developed?

Assume that the Government's objective was to get better program through diversity, quality, public, and so forth and so on, but not to support any particular viewpoint, but it is therefore fairly characterized as a content-based justification... that's... would you say that was impermissible?

Mr. Farr: Yes.

I would say so for several reasons.

Unknown Speaker: So therefore section 5 is unconstitutional on its face.

Mr. Farr: I'm... well--

Unknown Speaker: And I suppose a comparable provision of the 1934 act is unconstitutional, too.

Mr. Farr: --Well, again, it depends what the justifications are.

What we have said--

Unknown Speaker: The justification is, diversity and better programming.

Mr. Farr: --If that is the sole justification that is offered, and the means by which that is being obtained is to say to cable operators that you have to carry this program--

Unknown Speaker: No, forget the means.

I'm just asking you, assume the means, and well-tailored and all the rest, but that's the sole justification.

Mr. Farr: --Well, it's very hard to answer the question, to be honest, Justice Stevens, without thinking about means.

If you're saying, can Government subsidize that, of course it can.

Of course it can.

Unknown Speaker: Even though it's content-based, the justification.

Mr. Farr: Government provides funding for all sorts of things where content is an issue.

It funds the Corporation for Public Broadcasting.

Unknown Speaker: Well, then can we say that this colloquy about whether the justification is content-based or not really shouldn't affect our analysis?

Mr. Farr: Well, in my view the law should go down whether it's content-based or not, of course.

That's the position that we are fully prepared to argue, but--

Unknown Speaker: I thought it was also your position that it goes down a lot easier if it is content-based--

[Laughter]

--and affects First Amendment rights.

Mr. Farr: --Of course.

Unknown Speaker: If it's content-based but doesn't affect First Amendment rights, no problem.

Mr. Farr: Of course.

Of course.

Unknown Speaker: How can it be content-based and not affect First Amendment rights?

Mr. Farr: Because the Government can say, we are going to subsidize something with a particular content, and if it does... if those are the means by which it's choosing to do it, that is one thing.

When it says, we are going to subsidize essentially by means of using you, by using your channels and shutting out other programmers, that's our way of subsidizing it, that falls on the other side of the First Amendment line, and that seems to me, when you're talking about the quality of programming, that is where the interest has now shifted.

Survival is not particularly an issue.

I mean, a very small number of stations, as the Court has noted, even went dark, and many of them returned to the air.

I mean, these figures, as was pointed out in the briefs, include a station that was... whose transmitter was hit by a tornado, so what we're talking about, when we... but when you move from there on to talk about the question of the programming being maintained or enhanced at a certain level, that seems to me to open up a whole area of First Amendment objections that this Court has really never entered into before, I mean, that's in a sense the Pruneyard case unleashed, that says, when we want to encourage diversity, and we want to stimulate more of a particular kind of voice, of particular speakers, whether it's done by viewpoint or not, we can essentially take a business of speech, a private business, and use that as the means of doing it.

That is a line that I don't believe the Court has ever crossed, and I don't think should cross now.

Unknown Speaker: So the FCC's efforts to, in the fifties, sixties, seventies, to get the broadcasters to have news and public service, et cetera, also in your view are unconstitutional?

Mr. Farr: Well, if you're talking... I'm sorry, if... I--

Unknown Speaker: The NBC, ABC, you know, all the networks in the forties, fifties, sixties, and seventies, the FCC encouraged them in very strong ways to carry news and public service broadcasting.

In your view, was that also unconstitutional?

Mr. Farr: --When I said it crossed a First Amendment line that had not been crossed, it has been crossed partially in the broadcasting context, and the Court has looked at one or two specific examples of it, for example in Red Lion, and said it was tolerable.

In League of Women Voters, it said that was beyond the commission's power to interfere in content, so I'm not sure where the precise answer would be.

Chief Justice Rehnquist: Thank you, Mr. Farr.

The case is submitted.