in the use of the medium. Without a court ruling on this or the plaintiffs other claims, the case settled in favor of the plaintiffs The second possibility is that the First Amendment restricts the governments power to purposefully promote media concentration. 8 The claim could be that such a pro-concentration policy restricts the first amendment rights of those who do not then own a media outlet or who are not granted the monopoly. In contrast, the government can assert authority to conclude that sometimes a monopoly or a more concentrated ownership regime would lead to more efficient use of resources and a better overall communications order. For some portions of the communications order, such government authority historically has been assumed-that is, in relation to telephone operating even though current government policy wholeheartedly takes the opposite policy position f trying to promote competition. Missouri Knights of the Ku Klux Klan v. Kansas City, 723 F Supp. 1347, 1350, 1353(refusing to dismiss this or other more traditional claims made by the plaintiffs ) I should disclose that I suggested including this claim in the complaint 18 European cases presenting the claim that a public broadcasting monopoly was unconstitutional might be seen to raise a similar claim. The context is different, though, since national public broadcasting systems in Europe was typically required, often constitutionally, to provide for diversity-a policy designed to accomplish at least arguably the key goal of a rule requiring the prevention of monopolies. In any event, with the exception of Italy, where the Constitutional Court found that a public broadcasting monopoly was impermissible at least at the local level, the European courts routinely rejected these claims. Barendt, supra note 10, at 56-58 Baker-11/06/02
Baker - 11/06/02 - 9 - in the use of the medium. Without a court ruling on this or the plaintiffs’ other claims, the case settled in favor of the plaintiffs.17 The second possibility is that the First Amendment restricts the government’s power to purposefully promote media concentration.18 The claim could be that such a pro-concentration policy restricts the First Amendment rights of those who do not then own a media outlet or who are not granted the monopoly. In contrast, the government can assert authority to conclude that sometimes a monopoly or a more concentrated ownership regime would lead to more efficient use of resources – and a better overall communications order. For some portions of the communications order, such government authority historically has been assumed – that is, in relation to telephone operating companies – even though current government policy wholeheartedly takes the opposite policy position of trying to promote competition. 17 Missouri Knights of the Ku Klux Klan v. Kansas City, 723 F.Supp. 1347, 1350, 1353 (refusing to dismiss this or other more traditional claims made by the plaintiffs). I should disclose that I suggested including this claim in the complaint. 18 European cases presenting the claim that a public broadcasting monopoly was unconstitutional might be seen to raise a similar claim. The context is different, though, since national public broadcasting systems in Europe was typically required, often constitutionally, to provide for diversity – a policy designed to accomplish at least arguably the key goal of a rule requiring the prevention of monopolies. In any event, with the exception of Italy, where the Constitutional Court found that a public broadcasting monopoly was impermissible at least at the local level, the European courts routinely rejected these claims. Barendt, supra note 10, at 56-58
The governments theoretical premise is that it should be able to engage in structural regulation to improve the quality of communications realm and under some circumstances concentration could have this effect. Thus, a lower court once upheld fCc authority to deny a license to an available slot in the broadcast spectrum space if the agency concluded that the additional broadcast licensee would undermine the economic viability or quality of broadcast service provided in a given geographical area. The reasoning was that the geographic area covered by the license might not provide adequate (advertising)revenue to support qual ity broadcasting by the larger number of stations. A license grant would result in"ruinous competition. Although the FCC eventually dropped the policy behind this case, the "Carroll doctrine, " courts never rejected the policy impermissible on constitutional grounds More recently, potential competitors challenged government grants of cable franchise monopolies. The government never clearly articulated its policy rationale for granting an exclusive license. a possible explanation is that a monopoly provider, using a single cable wire, would require less economic(and physical) resources to provide a given geographical area with cable service Additional cable franchisees may not offer substantially different communication content but would 19 Carroll Broadcasting Co. v FCC, 258 F 2d 440(D. C Cir. 1958) Policies Regarding Detrimental Effects of Proposed New broadcasting Station on Existing Broadcasting Stations, 3 FCC Red. 638(1988)(eliminating Carroll doctrine). Since the doctrine authorized restraint of speech -on broadcast licenses -on grounds obviously unrelated to physical scarcity, it is interesting that the doctrine was noted, specifically without either approval or disapproval by the Supreme Court in red Lion broadcasting v FCC, 395 U.S. 367, 401 n28 (1969) Baker-11/06/02
Baker - 11/06/02 - 10 - The government’s theoretical premise is that it should be able to engage in structural regulation to improve the quality of communications realm and under some circumstances concentration could have this effect. Thus, a lower court once upheld FCC authority to deny a license to an available slot in the broadcast spectrum space if the agency concluded that the additional broadcast licensee would undermine the economic viability or quality of broadcast service provided in a given geographical area.19 The reasoning was that the geographic area covered by the license might not provide adequate (advertising) revenue to support quality broadcasting by the larger number of stations. A license grant would result in “ruinous competition.” Although the FCC eventually dropped the policy behind this case, the “Carroll doctrine,” courts never rejected the policy impermissible on constitutional grounds.20 More recently, potential competitors challenged government grants of cable franchise monopolies. The government never clearly articulated its policy rationale for granting an exclusive license. A possible explanation is that a monopoly provider, using a single cable wire, would require less economic (and physical) resources to provide a given geographical area with cable service. Additional cable franchisees may not offer substantially different communication content but would 19 Carroll Broadcasting Co. v. FCC, 258 F.2d 440 (D.C.Cir. 1958) 20 Policies Regarding Detrimental Effects of Proposed New Broadcasting Station on Existing Broadcasting Stations, 3 FCC Rcd. 638 (1988) (eliminating Carroll doctrine). Since the doctrine authorized restraint of speech – on broadcast licenses – on grounds obviously unrelated to physical scarcity, it is interesting that the doctrine was noted, specifically without either approval or disapproval, by the Supreme Court in Red Lion Broadcasting v. FCC, 395 U.S. 367, 401 n28 (1969)
require large expenditures on"duplicative" facilities for which someone, ultimately the residential users, would have to pay -again, a form of the"ruinous "or wasteful competition argument. The monopoly grant might increase people's communicative opportunities if the government combined the monopoly grant with regulations that direct(some)potential monopoly profits be spent on various communication-oriented public benefits-for example, public access, educational, or governmental (PEG channels and maybe facilities and personal to support these channels, or an obligation to provide cable service to the entire community(even unprofitable areas). In addition, the government could try to control monopoly profits through rate regulation-a structural policy significantly limiting the cable operator's freedom. Essentially the policy goal would be to avoid waste of resources and to direct that saving go to providing broader or better communications content or less costly service If achievable, these benefits, which the market(whether or not competitive) would not provide, provide a media specific justification for a monopoly franchise at least in some circumstances A Supreme Court decision, Los Angeles v. Preferred Communications, is widely interpreted as finding such monopoly franchises to be unconstitutional. This interpretation, however, probably over-reads the decision. The Court issued an emphatically narrow decision. In rejecting I Under the economic conditions hypothesized here, there would be insufficient revenue to get good results from imposing these costly requirements on multiple competing systems 22 This power has been upheld against constitutional attack. See, e.g, Time Warner Entertainment Co v FCC, 56 F 3d 151(D.C Cir. 1995) 3476US.488(1986) Baker-11/06/02
Baker - 11/06/02 - 11 - require large expenditures on “duplicative” facilities for which someone, ultimately the residential users, would have to pay – again, a form of the “ruinous” or wasteful competition argument. The monopoly grant might increase people’s communicative opportunities if the government combined the monopoly grant with regulations that direct (some) potential monopoly profits be spent on various communication-oriented public benefits – for example, public access, educational, or governmental (PEG) channels and maybe facilities and personal to support these channels, or an obligation to provide cable service to the entire community (even unprofitable areas).21 In addition, the government could try to control monopoly profits through rate regulation – a structural policy significantly limiting the cable operator’s freedom.22 Essentially the policy goal would be to avoid waste of resources and to direct that saving go to providing broader or better communications content or less costly service. If achievable, these benefits, which the market (whether or not competitive) would not provide, provide a media specific justification for a monopoly franchise at least in some circumstances. A Supreme Court decision, Los Angeles v. Preferred Communications,23 is widely interpreted as finding such monopoly franchises to be unconstitutional. This interpretation, however, probably over-reads the decision. The Court issued an emphatically narrow decision. In rejecting 21 Under the economic conditions hypothesized here, there would be insufficient revenue to get good results from imposing these costly requirements on multiple competing systems. 22 This power has been upheld against constitutional attack. See, e.g., Time Warner Entertainment Co. v. FCC, 56 F.3d 151 (D.C.Cir. 1995). 23 476 U.S. 488 (1986)
the suit's dismissal, the Court postponed deciding whether there would be a First Amendment violation if the City"refus(ed to issue a franchise to more than one cable television company when there was sufficient excess physical and economic capacity to accommodate more than one Although subsequent discussion focused mostly on physical capacity, the Courts formulation obviously leaves open to interpretation the issue of sufficient excess . economic capacity. "Is there sufficient capacity whenever more than one system could survive in a competitive market? Or alternatively, is there sufficient economic capacity only when an additional system would not undermine provision of the level or quality of service that the City desired and would deliver it at the lowest possible cost to the members of the public? These matters have not been resolved The choice between third and fourth possibilities-leaving the government generally free to engage in structural regulation or limiting such authority -has dominated recent debates. It is here that recent lower court cases have evidenced a shift, made without justification or self-conscious explanat Restricting this government power to limit concentration should seem implausible. Such a reading could, for example, protect(to some degree)corporate attempts to amass monopolistic or otherwise vast communications empires, a result that could undermine a diverse, pluralist marketplace Id at 492 (emphasis added). The Court remanded in order to provide an opportunity to develop a factual record. Lower courts then held the monopoly franchise to be unconstitutional at least in Los Angeles. Preferred Communications v. Los Angeles, 13 F 3d 1327(9 Cir. 1994) Baker-11/06/02
Baker - 11/06/02 - 12 - the suit’s dismissal, the Court postponed deciding whether there would be a First Amendment violation if the City “refus[ed] to issue a franchise to more than one cable television company when there was sufficient excess physical and economic capacity to accommodate more than one.”24 Although subsequent discussion focused mostly on physical capacity, the Court’s formulation obviously leaves open to interpretation the issue of “sufficient excess ... economic capacity.” Is there sufficient capacity whenever more than one system could survive in a competitive market? Or, alternatively, is there sufficient economic capacity only when an additional system would not undermine provision of the level or quality of service that the City desired and would deliver it at the lowest possible cost to the members of the public? These matters have not been resolved. The choice between third and fourth possibilities – leaving the government generally free to engage in structural regulation or limiting such authority – has dominated recent debates. It is here that recent lower court cases have evidenced a shift, made without justification or self-conscious explanation. Restricting this government power to limit concentration should seem implausible. Such a reading could, for example, protect (to some degree) corporate attempts to amass monopolistic or otherwise vast communications empires, a result that could undermine a diverse, pluralist marketplace 24 Id. at 492 (emphasis added). The Court remanded in order to provide an opportunity to develop a factual record. Lower courts then held the monopoly franchise to be unconstitutional at least in Los Angeles. Preferred Communications v. Los Angeles, 13 F.3d 1327 (9th Cir. 1994)
of ideas. Thus, although some corporate media have favored restrictions on this government power, their position has consistently lost in the Supreme Court The issue first clearly came before the Court in 1945. The Associated Press, an association of newspapers, argued that the First Amendment exempted them from government antitrust regulation. The Supreme Court forcibly rejected the assertion. Justice Black wrote for the Court Surely a command that the government itself shall not impede the free flow of ideas does not afford non- governmental combinations a refuge if they impose restraints upon that constitutionally guaranteed freedom.. Freedom of the press from governmental interference does not sanction repression of that freedom by private interests. The government was allowed to intervene structurally to promote Although the issue was slightly different, earlier in 1943, a broadcast network challenged rules designed to prevent broadcast networks contractual control of affiliate local stations-in effect an anti-concentration measure since the rules were designed to limit concentrated network power and protect independent decision making authority of local broadcasters. The Court unanimously rejecte the industry's First Amendment claim. 26 And it has never since backed away from this position.For example, in rejecting corporate First Amendment claims, the Court in 1978 unanimously upheld limitations on a newspaper owning broadcast stations in the locale in which the newspaper company Associated Press v United States, 326 U.S. 1, 20(1945) National Broadcasting Co. v. United States, 319 U.S. 190(1943) Baker-11/06/02
Baker - 11/06/02 - 13 - of ideas. Thus, although some corporate media have favored restrictions on this government power, their position has consistently lost in the Supreme Court. The issue first clearly came before the Court in 1945. The Associated Press, an association of newspapers, argued that the First Amendment exempted them from government antitrust regulation. The Supreme Court forcibly rejected the assertion. Justice Black wrote for the Court: “Surely a command that the government itself shall not impede the free flow of ideas does not afford nongovernmental combinations a refuge if they impose restraints upon that constitutionally guaranteed freedom.... Freedom of the press from governmental interference ... does not sanction repression of that freedom by private interests.”25 The government was allowed to intervene structurally to promote freedom! Although the issue was slightly different, earlier in 1943, a broadcast network challenged rules designed to prevent broadcast network’s contractual control of affiliate local stations – in effect an anti-concentration measure since the rules were designed to limit concentrated network power and protect independent decision making authority of local broadcasters. The Court unanimously rejected the industry’s First Amendment claim. 26 And it has never since backed away from this position. For example, in rejecting corporate First Amendment claims, the Court in 1978 unanimously upheld limitations on a newspaper owning broadcast stations in the locale in which the newspaper company 25 Associated Press v. United States, 326 U.S. 1, 20 (1945). 26 National Broadcasting Co. v. United States, 319 U.S. 190 (1943)