FOR THE
Argued
No. 01-1153
Costa de Oro Television, Inc.,
Petitioner
v.
Federal
Communications Commission and
Respondents
CoxCom, Inc.,
Intervenor
On Petition for
Review of Orders of the
Federal
Communications Commission
Barry A. Friedman
argued the cause for the petitioner.
Joel Marcus,
Counsel, Federal Communications Commission, argued the cause for the respondents. Jane E. Mago, General Counsel, Daniel M.
Armstrong, Associate General Counsel, Federal Communications Commission, and
Catherine G. O'Sullivan and Andrea Limmer, Attorneys, United States Department
of Justice, were on brief.
Peter H. Feinberg
and Scott Dailard were on brief for the intervenor.
Before: Ginsburg, Chief Judge, Henderson and Tatel,
Circuit Judges.
Opinion for the
court filed by Circuit Judge Henderson.
Karen LeCraft
Henderson, Circuit Judge: This case involves
a dispute over the procedures the Federal Communications Commission (FCC or
Commission) uses to determine local television market designations pursuant to
the cable television mandatory carriage rules.
In particular, Costa de Oro Television, Inc. (Costa) petitions for
review of two FCC orders that sustain earlier market modification rulings but,
at the same time, change the market definition mechanism. Costa also seeks review of the FCC decision
promoting the use of certain data (the Longley-Rice signal strength prediction
methodology maps) in market modification proceedings. Because we conclude that the Commission
"articulated a rational explanation" for its decisions, Eagle-Picher
Indus., Inc. v. EPA, 759 F.2d 905, 921 (D.C. Cir. 1985), we deny Costa's petition.
I. Background
A. Statutory and
Regulatory Background
Concerned that
local television broadcast stations were no longer able to compete with the
growing cable industry,[1]
the Congress passed the Cable Television Consumer Protection and Competition
Act of 1992 (Cable Act), 47 U.S.C. §§ 521 et seq. The Cable Act includes "must-carry"
provisions that require "[e]ach cable operator" to carry the signals
of a specific number of "local commercial television stations." 47 U.S.C. § 534(a).[2] A "local commercial television
station" is defined as "any full power television broadcast station
... that, with respect to a particular cable system, is within the same
television market as the cable system."
47 U.S.C. § 534(h)(1)(A). A local
commercial television station that exercises its statutory must-carry right is
entitled to cable carriage in its local market but it does not receive compensation
therefor from the cable operator. The
Cable Act also gives a broadcaster the option of cable carriage under a
retransmission consent provision that permits the broadcaster and the cable
operator to negotiate cable carriage arrangements and the broadcast station to
receive compensation in return.
In December 1995,
shortly after the first three-year election cycle ended, Arbitron discontinued
its television ratings business and ceased publishing updated ADI data. In response and after notice and comment
rulemaking, the FCC determined to continue to use the ADI market list for the
1996 election and to substitute Nielsen Media Research's television ratings
service beginning with the 1999 election.
See First Order, 11 FCC Rcd at 6206-07 p 14. Nielsen uses a market designation called the
"designated market area" (DMA).
Both the ADI and the DMA use audience survey information from cable and
noncable households to determine the assignment of counties to local television
markets based on local stations' respective viewer shares.
While a broadcast
station's market is generally based on the ADI (now DMA) data, section 614(h)
directs the Commission to consider an individual request for a change in market
designation. The FCC may "with
respect to a particular television broadcast station, include additional
communities within its television market or exclude communities from such
station's television market to better effectuate the purposes of this
section." 47 U.S.C. § 534(h)(1)(C)(i). In considering such requests, the Commission
"shall afford particular attention to the value of localism" by
taking into account the following factors, among others:
(I) whether the
station, or other stations located in the same area, have been historically
carried on the cable system or systems within such community;
(II) whether the
television station provides coverage or other local service to such community;
(III) whether any
other television station that is eligible to be carried by a cable system in
such community in fulfillment of the requirements of this section provides new
coverage of issues of concern to such community or provides carriage or
coverage of sporting and other events of interest to the community;
(IV) evidence of
viewing patterns in cable and noncable households within the areas served by
the cable system or systems in such community.
where the presumption in favor of ADI [now DMA] carriage would
result in cable subscribers losing access to local stations because they are
outside the ADI in which a local cable system operates, the FCC may make an
adjustment to include or exclude particular communities from a television
station's market consistent with Congress' objective to ensure that television
stations be carried in the areas which they serve and which form their economic
market.
H.R. Rep. No. 102-628, at 97 (1992). During the period Arbitron's ADI market areas
were in use, the Commission ruled on numerous market modification requests
filed pursuant to section 614(h). See,
e.g., In re Complaints of Costa de Oro Television, Inc., 10 FCC Rcd 9468
(1995), aff'd on recons., 12 FCC Rcd 22, 464 (1997), pet. for review denied, Costa
de Oro Television, Inc. v. FCC, 172 F.3d 919 (D.C. Cir. 1998). The interplay between the FCC's earlier
market modification decisions under the ADI regime and its move to a DMA-based
market definition is the focus of Costa's appeal.
B. History of
Costa's License
Costa is the
licensee of television station KJLA[3]
located in
As part of the
ADI-to-DMA change, the Commission considered, and sought comment on, the
continuing validity of its earlier 614(h) market modification rulings made
using ADI data. Costa requested the
Commission to reconsider de novo any prior section 614(h) ruling based on ADI
data if, as in KJLA's case, the ADI-to-DMA change resulted in the reassignment
of a station to a new market. In the
Second Report and Order on Definition of Markets for Purposes of the Cable
Television Broadcast Signal Carriage Rates, 14 FCC Rcd 8366 (1999), (Second
Order), the Commission rejected Costa's request. It also decided to continue using ADI data to
process any market modification request filed before the effective date of the
change to DMA, that is, before
In the First
Order, the Commission sought comment on measures to expedite the modification
process by establishing more "focused and standardized evidentiary
specifications." First Order, 11 FCC Rcd at 6225. It subsequently issued a list of information
required to be included in each modification request. Second Order, 14 FCC Rcd at 8385-86 p
44. Significant here, the Second Order
also encouraged a petitioner to provide "a more specific technical coverage
showing, through the submission of service contour prediction maps that take
terrain into account, particularly maps using the Longley-Rice prediction
methodology."
Costa petitions
for review of portions of both the Second Order and the Reconsideration Order.
II. Analysis
We review the
Commission's orders "under the deferential standard mandated by section
706 of the Administrative Procedure Act, which provides that a court must
uphold the Commission's decision unless 'arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with the law.' " Achernar Broad Co. v. FCC, 62 F.3d 1441, 1445
(D.C. Cir. 1995) (quoting 5 U.S.C. § 706).
In this task, we do not substitute our judgment for that of the agency
but rather look to see whether its decision is based on a "consideration
of the relevant factors and whether there has been a clear error of
judgment." Damsky v. FCC, 199 F.3d
527, 533 (D.C. Cir. 2000) (citations omitted);
see Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463
Costa argues that
with respect to a station that, like KJLA, has changed markets, any prior
market modification ruling made under the ADI standard is obsolete. The FCC responds that market modification
decisions turn on fact-specific assessments of the four section 614(h) factors,
see supra pp. 4-5, irrespective of the initial ADI or DMA market designation,
and, therefore, a change in market assignment does not change the Commission's
assessment of a station's "true market." Nonetheless, Costa asserts, initial market
designations "exert broad influence over market modification proceedings
by determining the presumption of carriage and the allocation of burden of
proof," see Reply
Both sides agree
that generally a broadcast station has a presumptive must-carry right in the
ADI/DMA market in which it is located.
Costa, however, overstates the continued importance of the initial
designation once a broadcaster or cable operator requests a section 614(h)
market modification ruling. Based on the
statute's plain language, the FCC modifies a market with "particular
attention to the value of localism" by applying the factors listed in
section 614(h)(1)(C)(ii) to the specific circumstances of the station and
community. In contrast, a station's
ADI/DMA market designation is merely the initial empirical assessment of the
station's market. In its Implementation
of the Cable Television Consumer Protection and Competition Act of 1992, the
Commission stated:
Section 614(h)(1)(C) of the 1992 Act permits the Commission to
add to or subtract communities from a station's television market to better reflect
the marketplace conditions following a written request. The Commission also may determine that
particular communities are part of more than one television market. The procedures recognize that ADI markets may
not always accurately reflect the area in which a particular television station
should be entitled to cable carriage, and will help ensure that disruption to
subscribers over the broadcast signals they receive is minimized.
8 FCC Rcd 2965, 2976 p 42 (1993). In response to a section 614(h) request, the
Commission assesses the initial ADI (now DMA) market assignment using the
statutory factors, including whether the station provides coverage or other
local service to the community. To be
sure, because a broadcast station enjoys a presumption of carriage in the ADI
or DMA in which it is located, the initial market designation may dictate which
party has the burden of seeking modification.
For example, a cable operator in the Los Angeles market must make a
section 614(h) request indicating that Costa does not serve the community
(within the Los Angeles market) in order to exclude Costa from the cable
system's channel lineup for that community.
Once the cable operator comes forward, the FCC must evaluate whether the
"value of localism" (within the meaning of section 614(h)) is met by
permitting the cable operator to exclude Costa from that community
notwithstanding Costa's DMA assignment to the
Moreover, even if
the initial market designation does "color the entire tenor of the
modification process" in some respect, Costa Br. at 14, the Commission,
beginning with its First Order, has pledged to consider a station's current DMA
assignment as part of any future section 614(h) proceeding. See Second Order, 14 FCC Rcd at 8384 p 42
("In cases in which the conversion to DMAs will have a direct consequence,
we will take the future DMA assignment into account, as we have done since the
First Order was released."). To the
extent Costa disputes whether the FCC will adequately weigh its current DMA
assignment in a future modification ruling, that ruling will be subject to
review by this Court at the appropriate time with the benefit of the facts of
record.[5] Furthermore, the Commission's desire "to
avoid disturbing settled expectations," Reconsideration Order, 16 FCC Rcd
5028 p 17, further convinces this court that the Commission's decision to let
the prior modification rulings stand does not constitute a "clear error of
judgment." Motor Vehicle Mfrs.
Ass'n, 463
Finally, Costa's
challenge to the Commission's decision to encourage use of Longley-Rice maps
misses the mark. At oral argument, Costa
appeared to maintain that the Commission must rely on Grade B contour maps
(even if Longley-Rice maps more accurately assess a station's signal) simply
because a cable operator may use Longley-Rice maps to exclude broadcast
stations. A Grade B contour map shows
the area in which 50 per cent of television sets receive a viewable signal via
antenna 50 per cent of the time. See 47 C.F.R.
§ 73.684 (1997). The Grade B contour
map, however, indicates only "the approximate extent of coverage over average
terrain in the absence of interference from other television
stations." See id. § 73.683(a)
(2002); see also ACLU v. FCC, 823 F.2d 1554,
1560-61 n.8 (D.C. Cir. 1987) (Grade B contour "is based on general
engineering principles, and does not take into account site-specific factors
that could affect the actual broadcast signal strength in a
community"). In contrast, the
Longley-Rice model "provides a more accurate representation of a station's
technical coverage area because it takes into account such factors as mountains
and valleys that are not specifically reflected in a traditional Grade B
contour analysis." Second Order, 14
FCC Rcd at 8388 p 52. In determining
whether a television station in fact provides "coverage or other local
service" to a community, the Longley-Rice model enables the Commission to
assess this section 614(h) factor with the best available evidence. The Commission has plainly provided
"more than [the] modicum of reasoned analysis" required to affirm its
decision to promote the use of Longley-Rice maps in market modification
proceedings. Hispanic Info. &
Telecomms. Network, Inc. v. FCC, 865 F.3d 1289, 1297-98 (D.C. Cir. 1989). Moreover, the Commission's conclusion that
Longley-Rice maps are more accurate than Grade B contours is "precisely
the type of technical issue on which we defer to the Commission's expertise." Keller Communications v. FCC, 130 F.3d 1073,
1077 (D.C. Cir. 1997) (citing MCI Cellular Tel. Co. v. FCC, 738 F.2d 1322, 1333
(D.C.Cir.1984)). Regarding Costa's
concern that in some instances the Grade B contour maps may give more accurate
assessments of a station's coverage, we find the Commission's response in its
Reconsideration Order sufficient:
"The Second Report and Order encourages parties to provide maps
using the Longley-Rice methodology. They
are not required to do so. Parties may
submit traditional Grade B contour maps in addition to, or instead of,
Longley-Rice maps and may explain why they believe Grade B analysis is more
relevant." Reconsideration Order,
16 FCC Rcd at 5027 p 50 (emphasis added).
For the foregoing
reasons, Costa's petition for review is
Denied.
[1] See Congressional Findings and Policy: Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, § 2(a), 106 Stat. 1460 (1992), reprinted in 47 U.S.C.A. § 521 note.
[2] These
provisions are found in section 4 of the Cable Act, adding new sections 614 and
615 to the Communications Act of 1934 (Communications Act), 47 U.S.C. §§ 151 et
seq. In upholding the constitutionality
of the must-carry provisions, the United States Supreme Court noted,
"Congress sought to preserve the existing structure of the Nation's
broadcast television medium while permitting the concomitant expansion and
development of cable television, and, in particular, to ensure that broadcast
television remains available as a source of video programming for those without
cable." Turner Broad. Sys., Inc. v.
FCC, 512
[3] The
station was formerly known by the call letters KSTV-TV. The call letters were changed to KJLA(TV) on
[4] The
[5] Costa
points to a prior market modification ruling to demonstrate the importance of
the initial market designation. See In
re Petition of Costa de Oro Television, Inc. for Modification of Market, 13 FCC
Rcd 4360 (1998). There, the FCC stated
that it generally uses an "extra measure of caution" when a
"station from one market is proposing to obtain mandatory carriage rights
in the core of another market."