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Appeals Court Rejects Cablevision’s Challenge To Market Modification Decision

June 29, 2009
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The Second Circuit Court of Appeals has rejected Cablevision’s challenge to an FCC order modifying the must-carry market of broadcast station WRNN in several Long Island communities. In the order, the FCC applied the statutory factors to add the communities to WRNN’s market for must-carry purposes. Cablevision appealed the FCC order on several legal and constitutional grounds.

The history between Cablevision and WRNN is long. In response to a market modification filed by Cablevision in 1996, the FCC’s Cable Services Bureau removed Nassau County, NY and western Suffolk County, NY franchise areas from WRNN’s market, while declining to remove other communities in Westchester County, NY and Fairfield County, CT. After the decision was affirmed by the full Commission, WRNN challenged that decision in the Second Circuit, which affirmed the FCC in 1998. In 2006, WRNN filed its own market modification petition to reinstate the excluded communities to its market after it moved its transmitter some 50 miles closer to Long Island, launched a digital-only signal reaching Long Island and added Long Island targeted local programming. Later in 2006, the Media Bureau denied WRNN’s request, and the station appealed to the full Commission. In 2007, the FCC reversed the Media Bureau and granted WRNN’s request.

Cablevision challenged the 2007 order on various legal and constitutional grounds, including that the application of the market modification rules violated its rights under the First Amendment and Fifth Amendment. In rejecting the challenge, the court first held that the FCC properly applied the four factors laid out in the statute regarding market modifications, and further held that it did so consistent with the general purposes of the must carry statute. Rejecting Cablevision’s First Amendment argument, the court stated that “[t]he burden imposed by the order - the loss of control over one channel - is no greater than necessary to further the government’s interest in preserving a single broadcast channel it found serves the local community.” The court similarly rejected the Fifth Amendment takings argument, saying that Cablevision had not met the regulatory takings standard of showing that the decision would have had “an economic impact that interfered with distinct investment-backed expectations.” The court also said it did not conclude that the station’s occupation of a channel slot on Cablevision’s system was the equivalent of “a physical occupation of Cablevision’s equipment or property.”

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