Cablevision Systems Corporation v. FCC, No. 07-5553 (2d Cir. 2009)

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07-5553-ag Cablevision Systems Corporation v. FCC 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 4 5 August Term 2007 (Argued: April 7, 2008 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Decided: June 22, 2009) Docket No. 07-5553-ag -----------------------------------------------------x CABLEVISION SYSTEMS CORPORATION, Petitioner, -- v. -FEDERAL COMMUNICATIONS COMMISSION, UNITED STATES OF AMERICA, Respondents, WRNN LICENSE COMPANY, LLC, Intervenor. -----------------------------------------------------x B e f o r e : WALKER, CABRANES, and RAGGI, Circuit Judges. Petition for review of an order of the Federal 28 Communications Commission directing petitioner Cablevision to 29 carry the signal of television station WRNN pursuant to 47 U.S.C. 30 § 534(a)-(b) & (h)(1)(C). 31 Commission s decision contravenes the text and purpose of the 32 statute, and that the statute, as applied, violated Cablevision s 33 First and Fifth Amendment rights. 34 Cablevision argues that the PETITION DENIED. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 HENK BRANDS (Allan J. Arffa and J. Adam Skaggs, on the brief), Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington, D.C., and Howard J. Symons and Tara M. Corvo (on the brief), Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Washington, D.C., for Petitioner. JACOB M. LEWIS (Matthew B. Berry, Joseph R. Palmore, and Nicholas A. Degani, Federal Communications Commission, and Thomas O. Barnett, John J. O Connell, Jr., Catherine G. O Sullivan, and Robert J. Wiggers, U. S. Department of Justice, on the brief), Federal Communications Commission, Washington, D.C., for Respondent. ANDREW G. MCBRIDE (Todd M. Stansbury and William S. Consovoy, on the brief), Wiley Rein LLP, Washington, D.C., for Intervenor. Jane E. Mago, Marsha J. MacBride, and Erin L. Dozier (on the brief), National Association of Broadcasters, Washington, D.C., for Amicus Curiae National Association of Broadcasters. JOHN M. WALKER, JR., Circuit Judge: The must-carry provisions of the Cable Television Consumer 35 Protection and Competition Act ( 1992 Cable Act or Cable Act ) 36 require cable operators to transmit, over their cable systems, 37 the signals of certain broadcast stations operating in the same 38 market. 39 Commission ( FCC or the Commission ) authority to modify a 40 given broadcast station s market, thus potentially changing the 41 universe of cable operators required to carry that station. The statute also gives the Federal Communications 2 In 1 this case, Cablevision, a cable systems operator, petitions for 2 review of the FCC s decision to include certain Long Island 3 communities in the market of WRNN, a station broadcasting from 4 upstate New York, and the resulting order directing Cablevision 5 to carry WRNN on its Long Island cable systems. 6 no constitutional or legal error in the FCC s decision, we DENY 7 the petition. BACKGROUND 8 9 Because we find I. The 1992 Cable Act and Its Must-Carry Provisions 10 The must-carry provisions of the 1992 Cable Act require 11 cable operators, such as Cablevision, to carry the signals of a 12 number of local commercial television stations. 13 534(a). 14 cable operator must carry at up to one-third of the aggregate 15 number of usable activated channels on that operator s system. 16 Id. § 534(b)(1)(B). 17 television station is a broadcast station (i.e., a station that 18 transmits its signal over the airwaves) that, with respect to a 19 particular cable system, is within the same television market as 20 the cable system. 21 47 U.S.C. § The statute caps the number of such stations that a For our purposes, a local commercial Id. § 534(h)(1)(A). A broadcast station s market shall be determined by the 22 Commission by regulation or order using, where available, 23 commercial publications which delineate television markets based 24 on viewing patterns. Id. § 534(h)(1)(C)(i). 3 Currently, the 1 Commission relies on the commercial publications of Nielsen Media 2 Research that divide the nation into a series of coterminous 3 geographic Designated Market Areas ( DMAs ) based on viewership 4 patterns. 5 City DMA contains not only the five boroughs of the city, but 6 also neighboring areas of Long Island, Connecticut, New Jersey, 7 and upstate New York, as well as limited areas of Pennsylvania, 8 because people in those areas, in the aggregate, watch the same 9 television channels. 10 47 C.F.R. § 76.55(e)(2). For example, the New York The upshot of the must-carry provisions is that, in general, 11 each cable operator is required to carry the signal of every 12 broadcast station in its DMA, until it has dedicated one-third 13 of the aggregate number of usable activated channels on its 14 system to such channels. 47 U.S.C. § 534(b)(1)(B); see also id. 15 § 534(a)-(b), (h)(1)(C). Both Cablevision and WRNN are located 16 within the New York City DMA, and Cablevision currently has fewer 17 than one-third of its channels dedicated to must-carry stations. 18 The only relevant exception to this must-carry rule occurs 19 under the statute s market modification provision. 20 this provision, the FCC may, on written request, add certain 21 communities to, or exclude certain communities from, a given 22 broadcast station s market to better effectuate the purposes of 23 the statute. 24 excluded from a station s market, cable operators in that 25 community are no longer required to carry that station. § 534(h)(1)(C)(i). Pursuant to If a given community is 4 If a 1 given community is added, cable operators in that community must 2 commence carriage of that station s signal unless they already 3 devote one-third of their channels to local broadcast stations. 4 See id. 5 6 In considering market modification requests, the statute instructs the FCC to 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 47 U.S.C. § 534(h)(1)(C)(ii)(I)-(IV). 28 and application of this provision lies at the heart of this 29 dispute. 30 II. 31 afford particular attention to the value of localism by taking into account such factors as-(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; [the historical carriage factor ] (II) whether the television station provides coverage or other local service to such community; [the local service factor ] (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 news coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; [the other stations factor ] and (IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community [the viewing patterns factor ]. The FCC s interpretation The Turner Litigation Shortly after the passage of the 1992 Cable Act, several 32 cable operators mounted a First Amendment challenge to the 33 legislation by claiming that the statute, on its face, 34 impermissibly burdened the rights both of cable programmers, who 35 produce television shows exclusively for cable distribution 5 1 (e.g., HBO, TNT), and of cable operators, who actually transmit 2 the programming to consumers via coaxial cable (e.g., 3 Cablevision). 4 ( Turner I ), 512 U.S. 622 (1994), the Supreme Court held that 5 the statute s requirements were content neutral, and therefore 6 subject to intermediate scrutiny. 7 announced that, at least in the abstract, the statute served 8 three important, interrelated interests articulated by Congress 9 in the statute s findings: (1) preserving the benefits of free, In Turner Broadcasting System, Inc. v. FCC The Court s majority opinion 10 over-the-air local broadcast television, (2) promoting the 11 widespread dissemination of information from a multiplicity of 12 sources, and (3) promoting fair competition in the market for 13 television programming. 14 concluded that deficienc[ies] in the record prevented it from 15 determining whether the statute was sufficiently tailored to 16 further those interests without substantially burdening protected 17 speech and remanded for further proceedings. 18 Id. at 662. The majority, however, Id. at 667-68. Significantly, the majority noted that the district court 19 had not addressed whether the language of the market modification 20 provision, with its references to the value of localism and to 21 stations provid[ing] news coverage of issues of concern to such 22 community, altered the content-neutrality of the statute. 23 at 643 n.6 (quoting 47 U.S.C. § 534(h)(1)(C)(ii)). 24 not address this point. 25 justices, Justice O Connor, relying in part on the language of Id. Id. The Court did In a dissent joined by three other 6 1 the market modification provision, wrote that the must-carry 2 regulation was content-based, and thus subject to strict 3 scrutiny, such that it could only be justified by a compelling 4 governmental interest and would have to be narrowly tailored to 5 achieve its intended purpose. 6 Id. at 680. In 1997, with a more fully developed record before it, the 7 Supreme Court held that the must-carry provisions further 8 important governmental interests and that the provisions did not 9 violate the First Amendment because they did not burden 10 substantially more speech than necessary to further those 11 interests. 12 U.S. 180, 185 (1997). 13 specifically mentioned or cited the market modification 14 provision. 15 III. Market Modification Decisions in the New York City DMA 16 Turner Broad. Sys., Inc. v. FCC ( Turner II ), 520 None of the opinions in Turner II In 1996, Cablevision petitioned the FCC to exclude a number 17 of communities from the markets of several local broadcast 18 stations, including WRNN, a station licensed in Kingston, New 19 York that transmitted its signal from Overlook Mountain in 20 Woodstock, New York. 21 Bureau ) granted Cablevision s request in part and denied it in 22 part, excluding communities in Long Island s Nassau and Suffolk 23 counties from WRNN s market, but declining to exclude communities 24 elsewhere, such as New York s Westchester County and The FCC s Cable Services Bureau (the 7 1 Connecticut s Fairfield County. Cablevision Sys. Corp. ( 1996 2 CSB Order ), 11 F.C.C.R. 6453 (1996). 3 the Bureau noted that, in the New York DMA, reliance on the four 4 enumerated factors alone would not allow it to take into account 5 the particular difficulties faced by these stations in light of 6 the purposes of the carriage rule. 7 Accordingly, the Bureau also considered the station s Grade B 8 contour, i.e., the area within which viewers can receive its 9 broadcast signal over the air, and the geography and terrain In making both decisions, Id. at 6475 ¶ 50. 10 separating the target communities from the broadcasting station. 11 Id. at 6480-81 ¶ 67. 12 decision, noting that In 1997, the FCC affirmed the Bureau s 13 14 15 16 17 18 19 20 21 22 23 Grade B contour coverage, in the absence of other determinative market facts (i.e. where the four statutory factors by themselves define the market, where there is no clear proof that the contour fails to reflect actual coverage, or where there is a terrain obstacle such as a mountain range or a significant body of water) is an efficient tool to adjust market boundaries because it is a sound indicator of the economic reach of a particular television station s signal. Market Modifications and the New York Area of Dominant Influence 24 ( 1997 FCC Order ),1 12 F.C.C.R. 12262, 12271 ¶ 17 (1997) 25 (footnote omitted). 26 When WRNN and several other stations petitioned for review, 27 this court endorsed the agency s reliance on Grade B contour in 28 particular and factors not enumerated in the statute in general. 1 2 1 Area of dominant influence ( ADI ) is the pre-2001 equivalent of the term Designated Market Area ( DMA ). 8 1 We approved of the view that the four factors [enumerated in the 2 statute] are not exclusive, and we held that [t]he FCC and the 3 Cable Services Bureau, experts in the area of regulation of the 4 television industry, carefully and properly analyzed the 5 particular facts of the various petitions under the four factors 6 listed in the statute and under non-statutory factors. 7 Inc. v. FCC, 163 F.3d 137, 141-42 (2d Cir. 1998). 8 IV. 9 WLNY-TV, The Current Proceedings Subsequent to the outcome of the 1996-98 proceedings, WRNN 10 moved its transmitter to Beacon Mountain, New York, some 50 miles 11 closer to Manhattan, and commenced digital-only broadcast 12 operations. 13 the communities in the New York City DMA in its market so that 14 Time Warner Cable, which served the relevant communities, would 15 have to carry WRNN on its system. 16 contour and local programming, the FCC s Media Bureau (the 17 successor to the Cable Services Bureau) granted WRNN s request. 18 WRNN License Co., 20 F.C.C.R. 7904, 7911 ¶¶ 15, 16 (2005). 19 Warner Cable did not appeal the decision to the full Commission. 20 In 2005, it petitioned the FCC to add back some of Relying primarily on Grade B Time In 2006, relevant to the present review, WRNN petitioned for 21 re-inclusion of several communities, this time served by 22 Cablevision, in Long Island s Nassau and Suffolk Counties. 23 Bureau denied the request as to a number of the Suffolk County 24 communities based on WRNN s failure to comply with standardized 25 evidentiary requirements. WRNN License Co. ( 2006 Bureau 9 The 1 Order ), 21 F.C.C.R. 5952, 5956 ¶ 9 (2006). WRNN does not seek 2 review of the Bureau s decision as to these communities. 3 the remaining Nassau and Suffolk communities, which we will refer 4 to as the Long Island communities, the Bureau noted that the 5 enumerated market modification factors did not offer strong 6 support for WRNN s position. 7 amount of Long Island-specific programming WRNN offered, and the 8 Bureau ultimately concluded that the local service factor weighed 9 against carriage. As to The parties vigorously disputed the As to the historical carriage factor, the 10 Bureau found it insignificant that both cable systems in 11 neighboring communities and digital broadcast satellite operators 12 in the Long Island communities carried WRNN. 13 little weight to the fact that Verizon was scheduled to begin 14 carrying WRNN on its FiOS system, which delivers television 15 programming to subscribers over fiber optic phone lines, thus 16 competing directly with cable television service. 17 the Bureau granted WRNN s request to include the remaining Long 18 Island communities, noting that Commission precedent instructs 19 us to give little weight to the level of viewership [that] 20 station[s] like WRNN achieve and to treat Grade B contour as a 21 very relevant factor when the other [enumerated] factors would 22 not add significantly to the analysis of a station s market. 23 Id. at 5957 ¶ 10. 24 decisively in WRNN s favor. It also accorded Nonetheless, In the Bureau s view, Grade B contour weighed 10 1 On appeal, the FCC affirmed the Bureau s order. 2 License Co. ( 2007 FCC Order ), 22 F.C.C.R. 21054 (2007). 3 disagreed with the Bureau s analysis of the local service and 4 historical carriage factors, finding that those factors lent 5 additional support to the Bureau s decision to include the Long 6 Island communities in WRNN s market. 7 The FCC also rejected Cablevision s claims that the Bureau s 8 application of the market modification provision violated the 9 First Amendment and the takings clause of the Fifth Amendment. 10 Id. at 21057-59 ¶¶ 7-10. 11 WRNN It Id. at 21056 ¶ 4 & n.15. review in this court. 12 Cablevision filed a timely petition for DISCUSSION 13 In general, we will overturn an agency decision only if it 14 was arbitrary, capricious, an abuse of discretion, or otherwise 15 not in accordance with law. 16 205 F.3d 82, 89 (2d Cir. 2000) (quoting 5 U.S.C. § 706(2)(A)). 17 An agency s factual findings must be supported by substantial 18 evidence, which means such relevant evidence as a reasonable 19 mind might accept as adequate to support a conclusion. 20 (internal quotation marks omitted). 21 disposition of constitutional issues de novo. 22 Coal. v. FCC, 838 F.2d 1307, 1313 (D.C. Cir. 1988). 23 24 Cellular Phone Taskforce v. FCC, Id. We review an agency s See Rural Tel. In its petition for review, Cablevision argues that the FCC s order improperly analyzed the statutory factors, that its 11 1 decision contravened the purpose of the must-carry statute, and 2 that requiring Cablevision to carry WRNN violates the First and 3 Fifth Amendments. 4 I. We address each of these arguments in turn. The FCC s Analysis of the Section 534(h)(1)(C) Factors 5 A. The Local Service Factor 6 Cablevision claims that the FCC failed to adequately explain 7 its finding that WRNN provided significant programming targeted 8 to the Long Island communities. 9 a minimum, the FCC was required to explain why Cablevision s By insisting, however, that at 10 arguments and evidence to the contrary were unpersuasive, 11 Cablevision Br. at 35, Cablevision overstates an agency s duty to 12 account for its actions. 13 An administrative agency has a duty to explain its ultimate 14 action. See Motor Vehicle Mfrs. Ass n v. State Farm Mut. Auto. 15 Ins. Co., 463 U.S. 29, 43 (1983) ( [T]he agency must examine the 16 relevant data and articulate a satisfactory explanation for its 17 action. ). 18 leading to this decision; it is enough if the agency s path may 19 reasonably be discerned. 20 omitted). 21 Media Bureau s order is perfectly clear: it agreed with the 22 reasoning of the Bureau in most respects and disagreed in certain 23 others, but only in ways that strengthened the validity of the 24 Bureau s decision. However, it need not explain each and every step Id. at 43 (internal quotation marks Here, the reason for the FCC s decision to affirm the In such circumstances, we will not require 12 1 the FCC to sift through each piece of evidence offered by a party 2 and explain why it is more or less compelling than the counter- 3 evidence put forth by an opponent. 4 The fact that we review agency fact-finding for substantial 5 evidence supports our conclusion that the FCC s explanation was 6 adequate. 7 finding, we need ask only whether a reasonable mind might accept 8 [it] as adequate support. 9 89 (internal quotation marks omitted). To determine whether substantial evidence supports a Cellular Phone Taskforce, 205 F.3d at Here, the agency found 10 WRNN s evidence that it had significant Long Island-targeted 11 programming to be more persuasive than Cablevision s evidence to 12 the contrary. 13 order to conclude that it was reasonable for the agency to so 14 find. 15 reasonableness inquiry, it is not indispensable. 16 We need not know the agency s precise rationale in While such an explanation might have aided our Both sides offered evidence regarding WRNN s programming 17 content. According to Cablevision, its evidence showed that WRNN 18 broadcast less than an hour of programming covering Long Island 19 issues in a representative week. 20 pointed to evidence that it had aired over 4000 Long Island- 21 related items between June and November 2005. 22 reasonable for the agency to resolve this conflicting evidence in 23 favor of WRNN and to conclude (as it obviously did) that 24 Cablevision failed to include some programming that should 13 Cablevision Br. at 33. WRNN It would be 1 properly be considered as local to Long Island, or that its 2 sample week was not actually representative. 3 evidence supports the FCC s finding on this factor. 4 Thus, substantial We note that the Bureau, on its initial consideration of 5 this petition, made a contrary finding as to this factor. This 6 fact, however, does not alter our assessment of the FCC s 7 ultimate determination. 8 by substantial evidence even though a plausible alternative 9 interpretation of the evidence would support a contrary view. An agency conclusion may be supported 10 Robinson v. Nat l Transp. Safety Bd., 28 F.3d 210, 215 (D.C. Cir. 11 1994) (internal quotation marks omitted). 12 our task on review is not to displace [the agency s final] 13 choice between two fairly conflicting views. 14 Corp. v. NLRB, 340 U.S. 474, 488 (1951). On questions of fact, Universal Camera 15 B. The Historical Carriage Factor 16 After the Bureau issued its 2006 Order, but before the FCC 17 affirmed it, Verizon began carrying WRNN on its FiOS system to 18 areas of Nassau and Suffolk Counties. 19 F.C.C.R. at 21056 ¶ 4 & n.15. 20 overlapping carriage provides support for WRNN-DT with respect 21 to the historic carriage factor. 22 paragraph in its brief, Cablevision argues that this analysis is 23 contrary to clear statutory language because [c]arriage 24 initiated in the past few months does not constitute historical 2007 FCC Order, 22 The FCC concluded that this 14 Id. at ¶ 4 n.15. In a single 1 2 carriage. Cablevision Br. at 36-37. Cablevision, however, fails to supply a contrary, correct 3 definition of historically carried, and does not discuss 4 whether we should defer to the Bureau s interpretation of the 5 term, in accordance with Chevron U.S.A., Inc. v. Natural 6 Resources Defense Council, Inc., 467 U.S. 837 (1984), as we did 7 with the must-carry statute generally in WLNY-TV, Inc. v. FCC, 8 163 F.3d at 142. 9 the sense that the Verizon carriage was not historical, they 10 have failed to show why such error would warrant vacatur given 11 that (1) Cablevision does not contest the propriety of 12 considering Verizon s carriage as an unenumerated, non-statutory 13 factor, and (2) the Bureau decided to order carriage despite its 14 belief that WRNN had not been historically carried in the 15 relevant communities. 16 FCC s order based on this asserted error in the FCC s analysis of 17 the historical carriage factor. Even if Cablevision could demonstrate error in Accordingly, we decline to vacate the 18 C. Grade B Contour 19 In its 1997 FCC Order involving Cablevision and WRNN, the 20 Commission stated that Grade B contour coverage, in the absence 21 of other determinative market facts (i.e.[,] . . . a terrain 22 obstacle such as a mountain range or a significant body of 23 water), is an efficient tool to adjust market boundaries. 24 FCC Order, 12 F.C.C.R. at 12271 ¶ 17. 15 1997 Cablevision contends that 1 the Hudson River, the Long Island Sound, and the skyline of New 2 York City constitute such terrain obstacles, and it was 3 therefore inconsistent with the 1997 FCC Order for the FCC and 4 the Bureau to weigh Grade B contour in WRNN s favor here. 5 Cablevision Br. at 38. 6 rejects this reasoning, because it explicitly endorses the use of 7 Grade B contour as proof of market in the New York City DMA the 8 same context in which Cablevision now contends that relying on 9 Grade B contour is inappropriate. The 1997 FCC Order itself forcefully Because the 1997 FCC Order 10 establishes, rather than refutes, the relevance of Grade B 11 contour in market modifications within the New York City DMA, the 12 FCC s decision here is consistent with its precedent. 13 D. The Other Stations and Viewing Patterns Factors 14 Cablevision also alleges error in the FCC s treatment of the 15 two remaining statutory factors. 16 stated that Congress did not intend the coverage by other 17 qualified stations factor to bar a request for extending a 18 station s market when other stations could be shown to serve the 19 communities at issue. 20 4. 21 In the instant order, the FCC 2007 FCC Order, 22 F.C.C.R. at 21055-56 ¶ In essence, then, the FCC decided to give the factor 22 significant weight when a lack of coverage by other stations 23 favored including a community in a station s market, but to 24 discount its importance when the existence of coverage arguably 16 1 cut against inclusion. Cablevision argues that this decision is 2 directly contrary to . . . the statutory text. 3 at 40. 4 directs the agency to consider a number of factors, and it is 5 clear from the opinion that both the FCC and the Bureau did 6 consider this factor. 7 depart from its normal policy, which is to discount the other 8 stations coverage factor when it tends to cut against 9 inclusion. This argument is unavailing. Cablevision Br. The text of the statute Upon doing so, the FCC saw no reason to Unsurprisingly, Cablevision cites no decision of this 10 court vacating a decision because we disagree with an agency s 11 weighing of a statutory factor. 12 interpreting another provision of the 1992 Cable Act that directs 13 the FCC to undertake a factoral analysis, the D.C. Circuit 14 concluded that giving little or no weight to a statutory factor, 15 as long as the factor is expressly considered, does not violate 16 the statute: The law is to the contrary. In 17 18 19 20 21 22 23 24 25 26 Time Warner Entm t Co. v. FCC, 56 F.3d 151, 175 (D.C. Cir. 1995) 27 (internal quotation marks and citations omitted). 28 reasoning is equally applicable here. 29 [T]he statute by its terms merely requires the Commission to consider the . . . factors . . . . That means only that it must reach an express and considered conclusion about the bearing of a factor, but is not required to give any specific weight to it. Therefore, when the Commission, after expressly considering the potential role of the . . . factor, ultimately concluded that it should not be given any weight, it did not violate the statute. This sound Cablevision also argues that the FCC improperly weighed the 17 1 evidence with respect to the viewership patterns factor. 2 argument fails for the same reasons. 3 II. This The FCC s Consideration of the Purposes of the Must-Carry 4 Statute 5 The market modification provision of the must-carry statute 6 provides that the FCC may add or remove communities from a local 7 broadcast station s market to better effectuate the purposes of 8 this section. 9 that the FCC s inclusion of the Long Island communities in WRNN s 47 U.S.C. § 534(h)(1)(C)(i). Cablevision argues 10 market contravened the purposes of must-carry in two ways. 11 First, expanding WRNN s market in fact frustrates the goal of 12 localism by necessarily decreasing programming relevant to the 13 community WRNN has traditionally served (the Kingston community). 14 And second, rewarding WRNN s actions with broader must-carry 15 rights encourages gamesmanship which frustrates the purpose of 16 must-carry, which is to preserve, but not expand, a broadcast 17 station s market. 18 incorrectly presumes that WRNN cannot increase Long Island- 19 targeted programming without decreasing Kingston-targeted 20 programming. 21 conception of the statute s purpose that is overly narrow, 22 unsupported by precedent, and contrary to the language of the 23 statute. We reject the first argument because it We reject the second because it rests on a 18 1 According to Cablevision, the FCC s decision defeats the 2 purposes of the must-carry statute because [a]ny targeting of 3 other spokes [i.e., communities that are remote from a DMA s 4 metropolitan center ] necessarily comes at the expense of the 5 station s community of license. 6 argument rests on the false premise that WRNN s programming 7 consists entirely of either Kingston-specific programming or Long 8 Island-specific programming. 9 elsewhere, however, a great deal of WRNN s content is home- 10 shopping programming that targets neither Kingston nor Long 11 Island specifically. 12 78% of WRNN programming in a representative week consisted of 13 home shopping and infomercials ). 14 Cablevision does not suggest otherwise, that WRNN could increase 15 its Long Island-targeted programming by decreasing its home- 16 shopping programming, leaving its Kingston-targeted programming 17 unaffected. 18 prefer certain home-shopping programming to programming 19 concerning Long Island, we do not see how frustrating that 20 preference undermines localism. 21 Cablevision Br. at 43. This As Cablevision reminds us See Cablevision Br. at 33 (claiming that It is entirely possible, and And to the extent that a Kingston viewer might Essentially, Cablevision s claim is that, as a matter of 22 law, a cable company in a community that is outside a DMA s 23 metropolitan center, such as Long Island, should not be required 19 1 to carry a station based in a different community that is also 2 remote from the center, such as Kingston: in Cablevision s 3 parlance, a spoke cable company should not be required to carry 4 a station based in a different spoke. 5 share that view, and, as the FCC points out, the default rule is 6 that WRNN must be carried by cable operators throughout the New 7 York City DMA. 8 9 Congress, however, did not See 47 U.S.C. § 534(a)-(b), (h)(1)(C). Cablevision also contends that the FCC s decision rewards gamesmanship because WRNN moved its transmitter and changed its 10 programming simply to obtain must-carry privileges in other 11 communities. 12 suggest that the FCC cannot award WRNN a regulatory benefit if 13 WRNN has changed its conduct in an attempt to receive that 14 benefit. 15 central premise of the regulatory scheme that a regulated entity 16 will change its conduct in socially desirable ways to achieve a 17 regulatory benefit. 18 Cablevision Br. at 46. In other words, they This rule, applied universally, would run counter to a Accordingly, we reject it. Cablevision also argues that any decision that increases a 19 station s market is contrary to the purpose of the statute, 20 because the purpose is to return broadcasters to their natural 21 market, Cablevision Br. at 47; thus, any FCC action which 22 augments a broadcaster s market contravenes this purpose. 23 purpose of the statute, however, is not to preserve a group of 24 broadcast stations, or a particular conception of a station s 20 The 1 market, but, inter alia, to preserv[e] the benefits of free, 2 over-the-air television, and promot[e] the widespread 3 dissemination of information from a multiplicity of sources. 4 Turner I, 512 U.S. at 662. 5 are served only by granting broadcasters the minimum must-carry 6 coverage necessary for survival; or that these purposes are 7 frustrated by actions which result in a station s greater 8 prosperity. 9 violate the statutory admonition that market modifications should We do not think that these purposes Accordingly, we conclude that the FCC did not 10 be made to better effectuate the purposes of this section. 11 U.S.C. § 534(h)(1)(C)(i). 12 arguments on this point fail to persuade us otherwise. 13 III. Cablevision s First Amendment Challenge 14 47 The remainder of Cablevision s Cablevision argues that compelled carriage of WRNN on Long 15 Island violates the First Amendment on an as-applied basis. 16 Cablevision Br. at 51. 17 foreclose the possibility of a successful as-applied First 18 Amendment challenge to the 1992 Cable Act s market modification 19 provisions. 20 demonstrate that the FCC applied the market modification 21 provision unconstitutionally. 22 We think that the Turner cases do not In this case, however, Cablevision has failed to As a threshold matter, a party alleging violation of its 23 First Amendment rights must show that the challenged government 24 action actually regulates protected speech. 21 Thus, in Turner I, 1 the Court found it necessary to establish, as an initial 2 premise, that [c]able programmers and cable operators engage in 3 and transmit speech, and that the must-carry rules, in 4 general, regulate cable speech. 5 Cablevision here must articulate how the FCC s order interferes 6 with [its] speech rights. 7 1129. 8 9 512 U.S. at 636. Similarly, Time Warner Entm t Co., 240 F.3d at This threshold requirement serves two interrelated functions. Identifying the burden imposed by government action 10 enables a court to undertake heightened scrutiny analysis: 11 without understanding how a regulation burdens speech, a court 12 cannot decide whether that burden is no greater than is 13 essential to further the goals of the regulation in question. 14 See United States v. O Brien, 391 U.S. 367, 377 (1968). 15 failure to identify the burden has an even more fundamental 16 consequence: without a plausible allegation that the offensive 17 conduct interferes with First Amendment rights or, put 18 differently, that the interaction between government and citizen 19 bring[s] into play the First Amendment, id. at 376, a reviewing 20 court has neither a reason nor the ability to subject the conduct 21 of the governmental actor to heightened scrutiny. And the 22 The Turner I and Turner II Courts considered the First 23 Amendment implications of the must-carry provisions taken as a 24 whole, as distinguished from the market modification provisions 22 1 at issue here, and found that they posed two potential burdens on 2 speech rights: 3 4 5 6 7 8 9 First, the [must-carry] provisions restrain cable operators editorial discretion in creating programming packages by reducing the number of cable channels over which they exercise unfettered control. Second, the rules render it more difficult for cable programmers to compete for carriage on the limited channels remaining. Turner II, 520 U.S. at 214 (citation, alterations, and internal 10 quotation marks omitted); accord Turner I, 512 U.S. at 637. 11 Cablevision raises a similar, but not identical, First 12 Amendment challenge to that raised in Turner I and Turner II. 13 Cablevision presents an as-applied First Amendment challenge to 14 the FCC s order modifying the market of WRNN, pursuant to the 15 provision of the must-carry statute on market determinations, 47 16 U.S.C. § 534(h)(1)(C)(ii). 17 First Amendment interest of Cablevision in a similar manner to 18 that described in Turner I and Turner II. 19 number of channels over which Cablevision exercises editorial 20 control by forcing it to carry WRNN, see Turner II, 520 U.S. at 21 213, and it also makes it more difficult for the cable 22 programming arm of Cablevision to compete for carriage on the 23 remaining channels, id. 24 The challenged order threatens the The order reduces the In order to apply the appropriate level of scrutiny, we must 25 first determine whether the order is content based or content 26 neutral. 27 concluded that the burdens imposed on cable operators as well as Turner I, 512 U.S. at 642. 23 In Turner I, the Court 1 the benefits conferred on broadcast channels were content 2 neutral. 3 with cable operators editorial discretion by compelling them to 4 offer carriage to a certain minimum number of broadcast stations, 5 the extent of the interference does not depend upon the content 6 of the cable operators programming. 7 obligations upon all operators, save those with fewer than 300 8 subscribers, regardless of the programs or stations they now 9 offer or have offered in the past. ); id. at 645 (noting that the 10 selection of broadcast channels that must be carried on the cable 11 systems was also unrelated to content ). 12 See id. at 643-44 ( Although the provisions interfere The rules impose The Turner I Court explicitly rejected the argument that 13 the must-carry regulations are content based because Congress 14 purpose in enacting them was to promote speech of a favored 15 content. 16 system is required to make room for a broadcast station, nothing 17 would stop a cable operator from displacing a cable station that 18 provides all local- or education-oriented programming with a 19 broadcaster that provides very little. 20 separate from the must-carry provisions general requirements, 21 the Turner I Court expressly declined to decide whether a market 22 modification order motivated by a concern for localism would be 23 content based or content neutral. 24 suggested that such an order might confer special benefits on 25 the basis of content. Id. at 646. Indeed, as the Court noted, when a cable Id. 24 Id. at 648. See id. at 644 n.6. However, The Court 1 However, we think the order before us now is content 2 neutral. WRNN s presumptive DMA would have included Nassau and 3 Suffolk counties. 4 market modification provision to exclude these counties from 5 WRNN s market. 6 that WRNN lacked a Grade B contour reaching Long Island. 7 WRNN, after expanding its Grade B contour, returned to the FCC 8 seeking restoration of its presumptive DMA, Cablevision argued 9 that the station had failed to demonstrate that the various It was Cablevision that first invoked the It succeeded based on the FCC s concern, in part, When 10 factors outlined in the market modification provision, including 11 the local programming factor, weighed in WRNN s favor. 12 Bureau and the FCC reached different conclusions on this factor, 13 yet both agreed that the totality of circumstances no longer 14 justified excluding Long Island communities from WRNN s 15 presumptive DMA. 16 programming provided by WRNN only in this context, i.e., in 17 assessing the continued need to restrict a presumptive market 18 defined solely by geography. 19 was an inconsequential factor in the FCC s ultimate decision. 20 Additionally, Cablevision has not alleged, much less proven, that 21 the restoration of the Long Island communities to WRNN s market 22 under these circumstances was based on some illicit content-based 23 motive. 24 is content neutral and deserving of intermediate scrutiny. The The FCC considered the amount of local See id. at 652. Moreover, WRNN s local programming We conclude, therefore, that the order 25 1 We have no trouble in concluding that the order advances 2 important governmental interests unrelated to the suppression of 3 free speech and does not burden substantially more speech than 4 necessary to further these interests. Turner II, 520 U.S. at 5 189 (citing O Brien, 391 U.S. at 377). The burden imposed by the 6 order - the loss of control over one channel - is no greater than 7 necessary to further the government s interest in preserving a 8 single broadcast channel it found serves the local community. 9 In sum, we conclude that the application of the market 10 modification provision in this case does not violate the First 11 Amendment. 12 FCC s order might interfere with speech rights in other ways, 13 Cablevision has presented neither factual support nor even a 14 theory of any such additional infringement. 15 IV. 16 While we cannot rule out the possibility that the Cablevision s Fifth Amendment Challenge Finally, Cablevision asserts that by ordering it to carry 17 WRNN, the FCC effected a per se taking under Loretto v. 18 Telepromter Manhattan CATV Corp., 458 U.S. 419, 426 (1982). 19 sine qua non of the takings analysis in Loretto, however, is 20 permanent physical occupation. 21 se takings rule is very narrow, id. at 441, and its touchstone 22 is required acquiescence to the occupation of the property by 23 an uninvited stranger or an interloper with a government 24 license. Id. (emphasis added). The This per FCC v. Fla. Power Corp., 480 U.S. 245, 252-53 (1987); 26 1 see also Buffalo Teachers Fed n v. Tobe, 464 F.3d 362, 374 (2d 2 Cir. 2006) ( Physical takings (or physical invasion or 3 appropriation cases) occur when the government physically takes 4 possession of an interest in property for some public purpose. ). 5 Our own test for whether a regulation constitutes a permanent 6 physical occupation, set forth in Southview Associates, Ltd. v. 7 Bongartz, 980 F.2d 85 (2d Cir. 1992), looks to (1) the permanency 8 of the invasion, and (2) whether the invasion is an absolute, 9 exclusive physical occupation. Id. at 94-95. In turn, we must 10 examine the nature of the interference with the bundle of rights 11 that constitute ownership, id. at 95, such as the right to 12 possess and exclude, the right to control the use of the 13 property, and the right to sell the property. 14 The initial determination - whether the invasion is physical 15 - is primarily factual. Cf. John R. Sand & Gravel Co. v. United 16 States, 457 F.3d 1345, 1357 (Fed. Cir. 2006) ( [T]he 17 determination of whether government occupancy is permanent is 18 highly fact-specific. ). 19 first instance, whether any physical assets are involved. 20 e.g., Qwest Corp. v. United States, 48 Fed. Cl. 672, 689 (2001) 21 ( In determining whether plaintiff's property has been subject to 22 a physical taking, our initial inquiry must focus on the nature 23 of the property at issue. 24 involved? ). The fact finder must determine, in the See, What are the physical assets The FCC found that the transmission of WRNN over 27 1 the Cablevision system did not require installation of any 2 equipment at Cablevision s facilities. 3 stream is transmitted in bits of data over cable bandwidth 4 through electrons or photons at the speed of light. 5 Order, 22 F.C.C.R. at 21058 ¶ 8. 6 Cablevision retains complete control over its property. 7 We see no reason to disturb these findings or the conclusion that 8 the transmission of WRNN s signal does not involve a physical 9 occupation of Cablevision s equipment or property. Rather, a programming 2007 FCC It further found that Id. And 10 Cablevision effectively conceded that this physicality is absent 11 here when it argued in its reply brief that [t]he result [under 12 Loretto] should be no different when the occupation is not of a 13 physical pipeline but of an electronic one. 14 Br. at 25. Cablevision Reply 15 The amorphous nature of the alleged taking suggests that 16 the takings claim here fits more comfortably within the Supreme 17 Court s regulatory taking analytical framework. 18 Cent. Trans. Co. v. City of New York, 438 U.S. 104 (1978). 19 order to establish a regulatory taking, Cablevision was required 20 to show that the regulation had an economic impact that 21 interfered with distinct investment-backed expectations. 22 at 124. 23 heavy burden on this issue, Tobe, 464 F.3d at 375, and any 24 regulatory taking theory must therefore fail. See Penn. In Id. Cablevision has presented no such evidence despite its 28 1 CONCLUSION 2 Because we find no abuse of discretion or constitutional 3 violation in the FCC s decision to include the relevant Long 4 Island communities in WRNN s market for must-carry purposes, we 5 DENY the petition for review. 6 March 14, 2008, the stay of the FCC order pending judicial review 7 is vacated, and the applicable deadline for Cablevision s 8 compliance is one week from the issuance of the mandate in this 9 case. In accordance with our order of 29

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