567 F.2d 9 | D.C. Cir. | 1977
Lead Opinion
In these 15 eases, consolidated for purposes of argument and decision, petitioners challenge various facets of four orders of the Federal Communications Commission which, taken together, regulate and limit the program fare “cablecasters”
I. THE FACTUAL BACKGROUND
At the heart of these cases are the Commission’s “pay cable” rules, set out in the margin for convenience.
The first application to establish a subscription broadcast television service was
For present purposes, the relevant limitations included restrictions on feature films, sports events, and series programs that could be shown for a fee, and prohibited commercial advertising during subscription operations.
The cable television industry has a similarly lengthy technical and regulatory history. Starting in the 1940’s as community antenna television systems (CATV) designed to bring better or more distant broadcast signals into the home, cable sys-
The Commission’s regulation of cable television reflects its technological development. At first the Commission eschewed regulation altogether.
Nine months later the Commission reversed its course and applied the rules developed in the subscription broadcast field to cable television. See Memorandum Opinion and Order, 23 FCC2d 825 (1970). The reasons for such a quick reversal are not clear in the Order and a number of the petitioners here filed petitions to reconsider imposition of the subscription broadcast rules on the ground that the Commission’s abrupt change of course was arbitrary and not adequately explained. See Notice of Proposed Rule Making and Memorandum Opinion and Order, 35 FCC2d 893, 894 n. 5 (1972), JA 2. These petitions for reconsideration were denied. See id. at 899, JA 7. In this same order Docket 19554, which spawned the orders reviewed here, was established.
To understand the postulated “siphoning” phenomenon and its potential harm, it is useful to consider the structure of the television industry today. In 1975 there were 70.1 million American homes with television sets, of which 9.8 million had access to some cable system.
Similarly, access of all Americans to cable seems foreclosed by the cost of cable service. Cable service charges are generally separated into two distinct fees, one basic fee entitling the viewer to receive only broadcast signals, the other entitling the viewer to see cablecast programs as well. The basic fee is approximately $5-$6 monthly.
Siphoning is said to occur when an event or program currently shown on conventional free television is purchased by a cable operator for showing on a subscription cable channel. If such a transfer occurs, the Commission believes, the program or event will become unavailable for showing on the free television system or its showing on free television will be delayed (since the commercial appeal of the cable showing is the assurance of earlier access to program material, an assurance that might itself be brought about by agreement between the seller of the program or event and the subscription cablecaster).
Whether such a siphoning scenario is in fact likely to occur and, if so, whether the result of siphoning would be to lower the quality of free television programming available to certain areas of the country or to certain economic strata of the population are matters of great dispute among the Commission and the various petitioners and' intervenors seeking review of the Commission’s regulations in this case. Other petitioners both here and before the Commission argue that the rules which ostensibly place cable in a subordinate role in order to increase program diversity — a goal which has been basic to a number of Commission regulations
II. PAY CABLE RULES
A. Statutory Authority
In determining the Commission’s authority to promulgate the pay cable rules, we by no means write on a clean slate. This court has recognized that the Commu
1. The Standard for Determining Statutory Authority
Midwest Video Corp. and Southwestern Cable Co. hold that the Commission may only exercise authority over cable television to the extent “reasonably ancillary” to the Commission’s jurisdiction over broadcast television. United States v. Southwestern Cable Co., supra, 392 U.S. at 178, 88 S.Ct. 1994; United States v. Midwest Video Corp., supra, 406 U.S. at 670, 92 S.Ct. 1860. See generally National Ass’n of Regulatory Utility Comm’rs v. FCC, 174 U.S.App.D.C. 374, 379-380, 394-395, 401-406, 533 F.2d 601, 606-607, 621-622, 628-633 (1976). This standard was first enunciated in Southwestern Cable Co., in which the Supreme Court was asked to pass on the Commission’s authority to promulgate rules prohibiting importation of “distant signals”
In finding that the Commission was authorized to promulgate the challenged rules, the Southwestern Court first held that cable television was an instrument of “interstate and foreign communication by wire or radio” within the meaning of Section 2(a) of the Communications Act of 1934, 47 U.S.C. § 152(a) (1970). 392 U.S. at 167-169, 88 S.Ct. 1994. For this reason the Commission
In United States v. Midwest Video Corp., supra, a decision which affirmed the Commission’s jurisdiction by a narrow margin, a four-judge plurality of the Supreme Court again applied the “reasonably ancillary” standard to determine the scope of the Commission’s jurisdiction over cable television operations. Upholding the Commission’s rules requiring operators of large cable systems to cablecast programs on some channels, the plurality reiterated that Section 2(a) conferred regulatory power on the Commission, but that “§ 2(a) does not in and of itself prescribe any objectives for which the Commission’s regulatory power over [cable television] might properly be exercised.” 406 U.S. at 661, 92 S.Ct. at 1867. The plurality then stated that the test for determining whether a rule reflected a proper objective was whether it would “ ‘further the achievement of long-established regulatory goals in the field of television broadcasting.’ ” Id. at 667-668, 92 S.Ct. at 1870, quoting United States v. Southwestern Cable Co., supra, 392 U.S. at 654, 88 S.Ct. 1994. Under this standard the Commission was held to be authorized to require cable program origination since such a requirement furthered Commission policies with respect to both enhancement of local service and diversification of control of available television and cable programming. See 406 U.S. at 668-670, 92 S.Ct. 1860.
The deciding vote in Midwest Video Corp. was cast by Chief Justice Burger, who wrote:
Candor requires acknowledgment, for me at least, that the Commission’s position strains the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts. * * *
406 U.S. at 676, 92 S.Ct. at 1874. Nonetheless, the Chief Justice was willing to uphold the challenged regulations on the ground that “when [cable system operators] interrupt the signal and put it to their own use for profit, they take on burdens, one of which is regulation by the Commission.” Id.
The Supreme Court’s opinions in Southwestern Cable Co. and Midwest Video Corp. thus look in two directions. First, they recognize an expansive jurisdiction for the Commission based on Section 2(a) of the Communications Act and the need to give the Commission sufficient latitude to cope with technological developments in a rapidly changing field. But the opinions are also
2. Applying the Jurisdictional Standard
The purpose of the Commission’s pay cable rules is to prevent “siphoning” of feature film and sports material from conventional broadcast television to pay cable.
Insofar as the Commission places reliance on such conclusory phrases as “enhance the integrity of broadcast signals,” we think it has crossed “the line from the tolerably terse to the intolerably mute.” Greater Boston Television Corp. v. FCC, supra, 143 U.S.App.D.C. at 394, 444 F.2d at 852. Beneath such generalities, however, the Commission seems to be making two more specific arguments which relate the public interest to retention of the conventional television structure. First, the Commission appears to take the position that it has both the obligation and the authority to regulate program format content to maintain present levels of public enjoyment. For
The question of the Commission’s obligation or authority to regulate television to maintain public enjoyment is one whose analysis takes us into a thicket of disagreement between this court and the Commission. See Citizens Committee to Save WEFM v. FCC, 165 U.S.App.D.C. 185, 191-207, 506 F.2d 246, 252-268 (1974) (en banc). Although this controversy has taken place in the context of the Commission’s obligation to regulate changes in radio broadcast formats, much of what has been said is directly relevant here.
It would be a simple matter for the Commission to dictate to each licensee of the 62 stations in the Chicago area which entertainment format each should use. Such an approach might maximize — at least in the short run — the diversity of formats and types of programming available to the public. But it would not be the approach contemplated by Congress when it created the Commission in 1934. Broadcast stations are, of course, licensed to serve the public interest, but as the Supreme Court observed back in 1940, the Communications Act also “recognizes that the field of broadcasting is one of free competition.” In short, “[t]he regulatory responsibility of the Commission in the broadcast field essentially involves the maintenance of a balance between the preservation of a free competitive broadcast system, on the one hand, and the reasonable restriction of that freedom inherent in the public interest standard provided in the Communications Act, on the other.”
The Commission has struck this balance by requiring licensees to conduct formal surveys to ascertain the need for certain types of non-entertainment programming, while allowing licensees wide discretion in the area of entertainment programming. Thus with respect to the provision of news, public affairs, and other informational services to the community, we have required that broadcasters conduct thorough surveys designed to assure familiarity with community problems and then develop programming responsive to those identified needs. In contrast, we have generally left entertainment programming decisions to the licensee or applicant’s judgment and competitive marketplace forces. As the Commission stated in its Programming Policy Statement, 25 Fed.Reg. 7293 (1960), “[o]ur view has been that the station’s [entertainment]*30 program format is a matter best left to the discretion of the licensee or applicants, since as a matter of public acceptance and of economic necessity he will tend to program to meet the preferences of his area and fill whatever void is left by the programming of other stations.”
Zenith Radio Corp., 40 FCC2d 223, 230 (1973) (footnotes omitted).
In WEFM this court en banc rejected the laissez faire approach of the Commission, holding:
There is a public interest in a diversity of broadcast entertainment formats. The disappearance of a distinctive format may deprive a significant segment of the public of the benefits of radio, at least at their first-preference level. When faced with a proposed license assignment encompassing a format change, the FCC is obliged to determine whether the format to be lóst is unique or otherwise serves a specialized audience that would feel its loss. If the endangered format is of this variety, then the FCC must affirmatively consider whether the public interest would be served by approving the proposed assignment, which may, if there are substantial questions of fact or inadequate data in the application or other officially noticeable materials, necessitate conducting a public hearing in order to resolve the factual issues or assist the Commission in discerning the public interest. Finally, it is not sufficient justification for approving the application that the assignor has asserted financial losses in providing the special format; those losses must be attributable to the format itself in order logically to support an assignment that occasions a loss of the format.
165 U.S.App.D.C. at 201, 506 F.2d at 262. Our position is thus unmistakable: The Communications Act not only allows, but in some instances requires, the Commission to consider the preferences of the public, and the Commission in discharging this authority must regulate the entertainment programming which station owners can present whenever a significant segment of the public is threatened with the loss of a preferred broadcast format.
If the Commission’s own recently announced standards are applied to the rules challenged here, it seems clear that the rules cannot stand. The very essence of the feature film and sports rules is to require the permission of the Commission “to commence * * * programming, including program format services, offered to the public.” However, it has been the consistent position of the Commission itself that cablecasters, like broadcasters, are not to be regulated as common carriers, a view sustained by a number of courts. See, e. g., American Civil Liberties Union v. FCC, supra, 523 F.2d at 1344; Philadelphia Television Broadcasting Co. v. FCC, 123 U.S.App.D.C. 298, 359 F.2d 282 (1966). Moreover, given the similarities between cablecasting operations and broadcasting, we seriously doubt that the Communications Act could be construed to give the Commission “regulatory tools” over cablecasting that it did not have over broadcasting. See 185 U.S. App.D.C. at----, 567 F.2d at 27-28, supra. Thus, even if the siphoning rules might in some sense increase the public good, this consideration alone cannot justify the Commission’s regulations. See generally Hampton v. Mow Sun Wong, supra.
In addition, the record before us is devoid of any “reference to the actual preferences of real people.” While we would be willing to concede that certain formats, such as the World Series, are sufficiently unique and popular that a factual inquiry into actual preferences might not be required, this would not seem to be the case with either
In analyzing the feature film and sports rules under the standards announced by the Commission in its broadcast format change proceeding, we do not wish to imply that we have reconsidered the position of this court in WEFM.
Before reaching a conclusion on whether remand is necessary, however, we must consider the Commission’s second theory of jurisdiction.
[Section 1 has] been relied on in support of an argument to the effect that the Act did not contemplate or permit, and in fact bars authorization by the Commission of a program service, by broadcast stations, which would be available only to such members of the public as were able and willing to pay a charge. We believe, however, that such a construction cannot reasonably be made of these excerpts. Section 1 states the general purposes of the Act in broad terms. The reference to “all the people of the United States” does not, for example, preclude licensing the-use of radio frequencies for the safety and special radio services. Frequencies so allocated are not available to all the people of the United States. While the words “at reasonable charges” evidently refer to the Commission’s regulation of rates charged by common carriers for message communications, and does not, presumably, refer to charges for programs disseminated over broadcast stations, it may be noted that this express reference to charges is unaccompanied by any prohibitive language concerning charges for programs transmitted by broadcast stations.
Id. at 538. In NATO this court, after reviewing the legislative history of the Communications Act, 136 U.S.App.D.C. at 358-360, 420 F.2d at 200-202, agreed, finding that the Act did not prohibit licensing of subscription television services, but was indeed “designed to foster diversity in the financial organization and modus operandi of broadcasting stations as well as in the content of programs * * 136 U.S.App.D.C. at 360, 420 F.2d at 202. Thus, as interpreted by both this court and the Commission, Section 1 does not itself compel the Commission to protect-conventional advertiser-supported television broadcasting.
However, counsel for the Commission at oral argument appeared to be making a second argument about the meaning of Section 1. Stressing that Section 1 also mentions that the Commission is to foster “Nation-wide” service,
Finally, none of the suggested bases for Commission jurisdiction justifies imposition of the no-advertising
Although we hold today that the Commission has not established its jurisdiction on the record evidence before it, we think it important to note the limits of our holding. We do not hold that the Commission must find express statutory authority for its cable television regulations. Such a holding would be inconsistent with the nature of the FCC’s organic Act and the flexibility needed to regulate a rapidly changing industry. However, we do require that at a minimum the Commission, in developing its cable television regulations, demonstrate that the objectives to be achieved by regulating cable television are also objectives for which the Commission could legitimately regulate the broadcast media. Where the First Amendment is involved, more will be required. See Part III infra. Further, we require that the Commission state clearly the harm which its regulations seek to remedy and its reasons for supposing that this harm exists. Because our holding is so limited, it is possible that the Commission will, after remand, be able to satisfy the jurisdictional prerequisites for regulating pay cable television. In order to avoid multiple remands, therefore, we will now consider other objections raised against these rules.
B. The Evidence
1. Standard of Review
With the exception of the Commission’s ruling in In re Home Box Office, Inc.,
We have recently had occasion to review at length our obligation to set aside agency action which is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law * * 5 U.S.C. § 706(2)(A), see Ethyl Corp. v. EPA, supra, 176 U.S.App.D.C. at 405-409, 541 F.2d at 33-37, and for this reason we need not labor our analysis here. It is axiomatic that we may not substitute our judgment for that of the agency. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). Yet our review must be “searching and careful,” id., and we must ensure both that the Commission has adequately considered all relevant factors, see id., and that it has demonstrated a “rational connection between the facts found and the choice made,” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 246, 9 L.Ed.2d 207 (1962).
Equally important, an a-gency must comply with the procedures set out in Section 4 of the APA. Citizens to Preserve Overton Park, Inc. v. Volpe, supra, 401 U.S. at 417, 91 S.Ct. 814. The APA sets out three procedural requirements: notice of the proposed rulemaking, an opportunity for interested persons to comment, and “a concise general statement of [the] basis and purpose” of the rules ultimately adopted. 5 U.S.C. § 553(b)-(c). As interpreted by recent decisions of this court, these procedural requirements are intended to assist judicial review as well as to provide fair treatment for persons affected by a rule. See Portland Cement Ass’n v. Ruckelshaus, 158 U.S.App.D.C. 308, 326-327, 486 F.2d 375, 393-394 (1973), cert, denied, 417 U.S. 921 (1974); International Harvester Co. v. Ruckelshaus, 155 U.S.App.D.C. 411, 445, 478 F.2d 615, 649 (1973); Automotive Parts & Accessories Ass’n v. Boyd, 132 U.S.App.D.C. 200, 208, 407 F.2d 330, 338 (1968). See also Wright, supra, 59 Cornell L.Rev. at 380-381. To this end there must be an exchange of views, information, and criticism between interested persons and the agency. See Portland Cement Ass’n v. Ruckelshaus, supra, 158 U.S.App.D.C. at 326-327, 486 F.2d at 393-394; cf. National Nutritional Foods Ass’n v. Weinberger, 512 F.2d 688, 701 (2d Cir.), cert, denied, 423 U.S. 827, 96 S.Ct. 44, 46 L.Ed.2d 44 (1975). Consequently, the notice required by the APA, or information subsequently supplied to the public, must disclose in detail the thinking that has animated the form of a proposed rule and the data upon which that rule is based. Portland Cement Ass’n v. Ruckelshaus, supra, 158 U.S.App.D.C. at 325-327, 486 F.2d at 392-394; International Harvester Co. v. Ruckelshaus, supra, 155 U.S.App.D.C. at 445, 478 F.2d at 649. Moreover, a dialogue is a two-way street: the opportunity to comment is meaningless unless the agency responds to significant points
From this survey of the case law emerge two dominant principles. First, an agency proposing informal rulemaking has an obligation to make its views known to the public in a concrete and focused form so as to make criticism or formulation of alternatives possible. Second, the “concise and general” statement that must accompany the rules finally promulgated
must be accommodated to the realities of judicial scrutiny, which do not contemplate that the court itself will, by a laborious examination of the record, formulate in the first instance the significant issues faced by the agency and articulate the rationale of their resolution. * * * [The record must] enable us to see what major issues of policy were ventilated by the, informal proceedings and why the agency reacted to them as it did.
Automotive Parts & Accessories Ass’n v. Boyd, supra, 132 U.S.App.D.C. at 208, 407 F.2d at 338; accord, National Nutritional Foods Ass’n v. Weinberger, supra, 512 F.2d at 701; Pillai v. CAB, 158 U.S.App.D.C. 239, 244-252, 485 F.2d 1018, 1023-1031 (1973); National Air Carriers Ass’n v. CAB, 141 U.S.App.D.C. 31, 44-45, 436 F.2d 185, 198-199 (1970); cf. Camp v. Pitts, 411 U.S. 138, 142-143, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973); Citizens to Preserve Overton Park, Inc. v. Volpe, supra, 401 U.S. at 420, 91 S.Ct. 814.
2. Applying the Standard
(a) The Need for Regulation
At the outset, we must consider whether the Commission has made out a case for undertaking rulemaking at all since a “regulation perfectly reasonable and appropriate in the face of a given problem may be highly capricious if that problem
does not exist.” City of Chicago v. FPC, supra, 147 U.S.App.D.C. at 323, 458 F.2d at 742. Here the Commission has framed the problem it is addressing as
how cablecasting can best be regulated to provide a beneficial supplement to over-the-air broadcasting without at the same time undermining the continued operation of that “free” television service.
Notice of Proposed Rule Making and Memorandum Opinion and Order, supra, 35 FCC 2d at 898, JA 6. To state the problem this way, however, is to gloss over the fact that the Commission has in no way justified its position that cable television must be a supplement to, rather than an equal of, broadcast television. Such an artificial narrowing of the scope of the regulatory problem is itself arbitrary and capricious and is ground for reversal. See Pillai v. CAB, supra, 158 U.S.App.D.C. at 248, 485 F.2d at 1027. Moreover, by narrowing its discussion in this way the Commission has failed to crystallize what is in fact harmful about “siphoning.” Sometimes the harm is characterized as selective bidding away of programming from conventional television, see First Report and Order, supra, 52 FCC 2d at 49, JA 73, sometimes delay, see id. at 50, JA 74, and sometimes (perhaps) the financial collapse of conventional broadcasting, compare id. at 45, JA 69, with Second Report and Order, supra,-FCC 2d at-, 35 P & F Radio Reg.2d at 772, JA 136. As a result, informed criticism has been precluded and formulation of alternatives stymied.
The meaning of the various mathematical demonstrations is even less certain. Petitioner American Broadcasting Companies, Inc., for example, has proposed the following technique for estimating the relative income available to cable and conventional television:
30. The most comprehensive attempt to develop a methodology for making this comparison is contained in the reply comments of the American Broadcasting*38 Company. It there developed a formula for estimating the pay cable dollars available for the purchase of any particular program. The formula, in somewhat simplified terms, is as follows:
(Total households) X (percent of households with tv sets) X (percent of households with tv sets that are cable tv subscribers) X (percent of cable tv subscribers that have pay cable option available) X (percent of subscribers with pay option that are pay subscribers) X (percent of pay subscribers that view program in question) X (charge to subscriber for program) X (percent of subscription charge passed through to program supplier) = (total national pay cable dollars available for the purchase of program in question).
ABC’s own assumptions as to the state of the pay cable television industry in 1980 are as follows:
Total household_______________ 75,400,000
TV set penetration___percent___ 97
CATV penetration______do_____■ 35
CATV penetration with pay TV potential_________do_____ 80
Pay subscriber penetration of systems with pay potential____________do_____ 15
Percent of pay subscribers viewing program_____do_____ 50
Charge to subscriber for program-----------dollars___ 2.25
Percent of pay fee collected passed on to program producers----percent___ 35
In the circumstance posited by ABC, slightly more than 1.5 million homes would pay $2.25 each for a particular program making available slightly more tha[n] $1.2 million dollars to the pay cable industry for the purchase of the program in question. This, ABC suggests, compares with the $1.5 million dollars a network might pay for two showings of a “blockbuster” feature film like Love Story during a five-year period, and with the $1 million dollars that might be paid for a movie of somewhat less appeal.
First Report and Order, supra, 52 FCC 2d at 9-10, JA 33-34. From this demonstration American Broadcasting Companies and other petitioners who presented similar mathematical models would draw the conclusion that
[p]ay cable operations will have more money than television stations or television networks to purchase programming and, being creatures of a competitive economic system, will inevitably purchase much of the best programming now broadcast on free television and leave free television only with what is left over.
Id. at 10, JA 34.
Even conceding the accuracy of the figures used (a concession which finds no support in the record, however), we think the proponents of the mathematical models have not proved their case. The problem is the incommensurability of the ultimate figures compared: nationwide income of pay cablecasters in 1980 on the one hand, and recent, but historical,
We have similar difficulties with the second cardinal assumption of the Commission, i. e., that “siphoning” would lead to loss of film and sports programming for audiences not served by cable systems or too poor to subscribe to pay cable. See Transcript of Oral Argument at 61-62; br. for respondent FCC at 53-54. To reach such a conclusion the Commission must assume that cable firms, once having purchased exhibition rights to a program, will not respond to market demand to sell the rights for viewing in those areas that cable firms do not reach. We find no discussion in the record supporting such an assumption. Indeed, a contrary assumption would be more consistent with economic theory since it would prima facie be to the advantage of cable operators to sell broadcast rights to conventional television stations in regions of the country where no cable service existed. Moreover, the greater the area not covered by cable, the greater the demand would tend to be for broadcast rights, and the more likely it would be that, through a combination of cable and broadcast, nationwide coverage would be achieved.
We find the Commission’s argument that “siphoning” could lead to loss of programming for those too poor to purchase cable television more plausible. Here again, however, we find that the Commission has not documented its case that the poor would be deprived of adequate television service and, worse, that the Commission, by prohibiting advertising in connection with subscription operations, has virtually ensured that the price of pay cable will never be within reach of the poor. There- is little disagreement at the theoretical level about the mechanism through which the poor would be deprived of broadcast service in markets served by cable television. Cable operators, to be able to sell a show, would require exclusive exhibition rights in the markets they served, with the result that events purchased by cable operators for subscription presentation would be unavailable to broadcasters, or would be available only after a delay. What follows from this scenario, even assuming that cable operators would have the financial strength to outbid broadcasters, is by no means clear. There is uncontradicted evidence in the record, for example, that the popularity of film material does not decline with an increase in the interval between first theater exhibition and first television broadcast. See Comments of Program Suppliers in Docket No. 19554, at 21, JA 386 (Nov. 1, 1972). At least as to movies, therefore, “siphoning” may not harm the poor very much.
(b) Consideration of Anticompetitive Effects
Many petitioners, while not conceding the need for regulation, press a series of additional objections to the rules which collectively represent a charge that the Commission has failed to consider anticompeti-tive effects of the regulatory strategy it has adopted. For analytic purposes the various theories of petitioners can be treated as two: first, a contention that the Commission has inadequately resolved traditional antitrust objections to the strengthening of broadcasters’ monopsony power over the feature film and sports broadcasting industries; and, second, that the Commission has similarly been oblivious to the rules’ negative impact on its otherwise long-standing policy favoring diversification of control of programming choices. We will treat these arguments seriatim.
Although much attention has been paid in brief to the question whether the Commission was obliged to consider traditional antitrust issues in formulating rules to be issued under its “public interest, convenience, or necessity”
We cannot fathom how the Commission reached the conclusion that the balance here should be struck in favor of regulation. Paragraph 150 of the First Report and Order, which contains the only discussion purporting to be an explanation, is obviously flawed and is completely irrelevant to most of the antitrust issues raised.
Even had the Southwestern Cable Co. Court approved the Commission’s “unfair competition” argument, application of that argument to cablecasting rather than retransmission of broadcast signals is unsupportable. What was considered unfair by the Commission in the distant signal cases was that cable was competing with local broadcasters by bringing into the local area identical programming plucked out of the air from distant stations. Because local broadcasters had to pay copyright royalties for this material and cable did not, cable
We further agree with the Justice Department that the issue of the reasonableness of the balance struck between regulatory and competitive goals, where these diverge, is a matter to be tested on the basis of material in the rulemaking record, not on the basis of legal precedent. Because of this, we think it odd that the Department has not presented factual data to the Commission which would allow it to assess the likely effect of its rules on various fields of competition. The Department’s arguments are basically speculative:
Petitioners’ second argument — that the pay cable rules consolidate network control over program production and selection and are, therefore, inconsistent with other Commission policy and, perhaps, the First Amendment — had more force prior to repeal of the series restrictions in the Second Report and Order, supra. We agree with petitioners that the series rule would have restricted the market for independently produced entertainment programming, thereby creating an effect directly contrary to that sought to be achieved in the Prime Time Access Rules proceedings.
III. FIRST AMENDMENT
More stringent, but substantially similar, rules to those adopted in the dockets under review here were upheld by this court in NATO v. FCC, supra, and it is wholly because of this precedent that the Commission believes the instant rules to be consistent with the First Amendment. See First Report and Order, supra, 52 FCC 2d at 44 (¶ 148), JA 68. Although we today reaffirm our holding in NATO, see Part V infra, wp decline to extend NATO to Commission regulation of cable television since we find important differences between cable and broadcast television and “differences in the characteristics of new media justify differences in the First Amendment standards applied to them.” Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 386, 89 S.Ct. 1794, 1805, 23 L.Ed.2d 371 (1969).
Despite the novelty and complexity of the antisiphoning rules challenged in NATO, the constitutional question decided there was straightforward: whether a grant of a broadcast license could be conditioned on terms which made reference to “the kind and content of programs being offered to the public.” 136 U.S.App.D.C. at 365, 420 F.2d at 207. Phrased this way, the issue could be readily resolved on the basis of time-tested and well-known theories of the First Amendment. “With everybody on the air,” wrote Justice Frankfurter over 30 years ago, “nobody could be heard. * * * [T]he radio spectrum simply is not large enough to accommodate everybody. There is a fixed natural limitation upon the num
The First Amendment theory espoused in National Broadcasting Co. and reaffirmed in Red Lion Broadcasting Co. cannot be
The absence in cable television of the physical restraints of the electromagnetic spectrum does not, however, automatically lead to the conclusion that no regulation of cable television is valid.
Similarly, the First Amendment does not bar regulation of the “collateral consequences”
Applying O’Brien here, we cannot say that the pay cable rules were intended to suppress free expression. The narrow purpose espoused by the Commission — protecting the viewing rights of those not served by cable or too poor to pay for cable — is neutral. Indeed, it is not unlike a regulation quieting hecklers or enforcing order on the radio spectrum. As in those situations, the conduct regulated would otherwise blot out transmission of a message, regardless of its content, to at least a segment of its potential audience. Also like those cases, both those whose conduct is restrained by the regulation and those who benefit by it have First Amendment rights, .although here the right is one to receive,
The speech of cablecasters, while undoubtedly inhibited, is similarly free from restrictions abridging freedom of expression. The rules clearly have no effect on traditional broadcast modes of persuasive speech such as news broadcasts or editorials. Nor do they affect films which the cablecaster has himself produced. Moreover, they do not even affect the cablecast-er’s ability to exhibit the work of others so long as no per-channel or per-program fee is charged. The sole effect of the rules is to prohibit the cablecaster from exhibiting for a separate fee the artistic work of others. Finally, no claim is made here that this narrow exclusion prevents the cablecaster from making an effective presentation of his views, nor for that matter is any claim made that cablecaster “endorsement” of the views of a particular film adds importantly to the message of the filmmaker.
Despite our conclusion that content regulations are not at issue here, we nonetheless hold that the rules as promulgated and as put into effect by the Commission cannot be squared with O’Brien’s other requirements and, consequently, they violate the First Amendment. The no-advertising
Finally, we think the strategy the Commission has pursued in implementing its interest in preventing siphoning creates a restriction “greater than is essential to the furtherance of that interest.” Id. The Commission’s approach to preserving the present quantity and quality levels of broadcast television has not been to set such levels directly. Instead, the Commission has sought to divide film and sports material into that suitable for broadcasting and that which can be shown, if at all, only on cable, and has left broadcasters free to choose from among the former without any competition from cable television. Even assuming that such a scheme is reasonable, a position contested by a number of petitioners, it is nonetheless very clear that, if such a strategy is to be used, the rules must be closely tailored to the end to be achieved so that material not broadcast (because it is unsuitable or unsalable) is readily available to cablecasters. Otherwise the rules will curtail the flow of programming to those served by cable and willing to pay for it, with a consequent loss of diversity and unnecessary restriction of the First Amendment rights of producers, cablecasters, and viewers.
In assessing whether the rules are sufficiently discriminating in dividing available material into that which may be cablecast and that which may not, the rules must be assessed without reference to the waiver provisions for two reasons. First, the Commission is on record that it will not freely grant waivers. See In re Home Box Office, Inc., supra, 51 FCC 2d at 322, JA 146. Second, the waiver procedures are fundamentally at odds with the procedures outlined in Freedman v. Maryland, 380 U.S. 51, 85 S.Ct. 734, 13 L.Ed.2d 649 (1965). We do not today hold that all the requirements of Freedman must be met, but certainly its central concern — that judicial proceedings be available for rapid removal of unwarranted prior restraints, 380 U.S. at 58-59, 85 S.Ct. 734 — is applicable here.
Turning finally to the rules themselves, we agree with numerous petitioners that the rules are grossly overbroad. Examples of this are legion. It is undisputed, for example, that many films will never be suitable for broadcast television because of their limited appeal, their sophisticated subject matter, or their repeated releases to theaters. Yet, after a film is three years old its exhibition on cable television is restricted regardless of whether it was ever suitable for broadcast. Similarly, in some circumstances the sports rules have the anomalous effect of reducing the number of non-specific games that can be shown on cable television at the same time that broadcasters are reducing the number of games they will show. This provision is apparently justified on the ground that it is too difficult to monitor the reasons broadcasters cut back their game schedules and that at least some cutbacks might be caused by cable competition.
IV. EX PARTE CONTACTS
During the pendency of this proceeding Mr. Henry Geller, a participant before the Commission and an amicus here, filed with the Commission a “Petition for Revision of Procedures or for Issuance of Notice of Inquiry or Proposed Rule Making.”
It is apparently uncontested that a number of participants before the Commission sought out individual commissioners or Commission employees for the purpose of discussing ex parte and in confidence the merits of the rules under review here. In fact, the Commission itself solicited such communications in its notices of proposed
Unfortunately, the document filed with this court does not allow an assessment of what was said to the Commission by the various persons who engaged in ex parte contacts. To give a flavor of the effect of these contacts, however, we think it useful to quote at length from the brief of amicus Geller:
[Ex parte] presentations have in fact been made at crucial stages of the proceeding. Thus, in early 1974, then-Chairman Burch sought to complete action in this proceeding.[110] Because the Commission was “leaning” in its deliberations towards relaxing the existing rules “with ‘wildcard’ rights for ‘blockbuster’ movies,”[111] American Broadcasting Company’s representatives contacted “key members of Congress,” who in turn successfully pressured the Commission not to take such action.[112] Further, in the final cru*53 cial decisional period, the tentative course to be taken by the Commission would leak after each non-public meeting, and industry representatives would rush to make ex parte presentations to the Commissioners and staff. On March 10,1975, the trade journals state that “word of last week’s changes . . . ■ got out during the week, and both broadcast and cable lobbyists rushed to the Commission, unhappy with some facets”[113] — that broadcast representatives “. were calling on commissioners on Friday . ” to oppose the changes.[114] The following week, the trade press again reported that “various [industry] groups lobbied the Commission, pressing for changes in the tentative decision”[115] —that National Association of Broadcasters “ . . . staff members met with [FCC] Broadcast Bureau staffers to present data backing up [an] asserted need for [a more restrictive] standard.”[116]
Geller br. at 3-4 (footnotes edited and renumbered). It is important to note that many contacts occurred in the crucial period between the close of oral argument on October 25, 1974 and the adoption of the First Report and Order on March 20, 1975, when the rulemaking record should have been closed while the Commission was deciding what rules to promulgate. The information submitted to this court by the Commission indicates that during this period broadcast interests met some 18 times with Commission personnel, cable interests some nine times, motion picture and sports interests five times each, and “public interest” inter-venors not at all.
Although it is impossible to draw any firm conclusions about the effect of ex parte presentations upon the ultimate shape of the pay cable rules, the evidence is certainly consistent with often-voiced claims of undue industry influence over Commission proceedings, and we are particularly concerned that the final shaping of the rules we are reviewing here may have been by compromise among the contending industry forces, rather than by exercise of the independent discretion in the public interest the Communications Act vests in individual commissioners. Cf. National Ass'n of Independent Television Producers & Distributors v. FCC, 502 F.2d 249, 257-258 (2d Cir. 1974). Our concern is heightened by the submission of the Commission’s Broadcast Bureau to this court which states that in December 1974 broadcast representatives “described the kind of pay cable regulation that, in their view, broadcasters ‘could live with.’ ”
Even the possibility that there is here one administrative record for the public and this court and another for the Commission and those “in the know” is intolerable. Whatever the law may have been in the past,
The failure of the public record in this proceeding to disclose all the information made available to the Commission is not the only inadequacy we find here. Even if the Commission had disclosed to this court the substance of what was said to it ex parte, it would still be difficult to judge the truth of what the Commission asserted it knew about the television industry because we would not have the benefit of an adversarial discussion among the parties. The importance of such discussion to the proper functioning of the agency decisionmaking and judicial review processes is evident in our cases.
Equally important is the inconsistency of secrecy with fundamental notions of fairness implicit in due process and with the ideal of reasoned decisionmaking on the merits which undergirds all of our administrative law. This inconsistency was recognized in Sangamon, and we would have thought that the principles announced there so clearly governed the instant proceeding that there could be no question of the impropriety of ex parte contacts here. Certainly any ambiguity in how Sangamon should be interpreted has been removed by recent congressional and presidential actions.
From what has been said above, it should be clear that information gathered ex parte from the public which becomes relevant to a rulemaking will have to be disclosed at some time. On the other hand, we recognize that informal contacts between agencies and the public are the “bread and butter” of the process of administration and are completely appropriate so long as they do not frustrate judicial review or raise serious questions of fairness. Reconciliation of these considerations in a manner which will reduce procedural uncertainty leads us to conclude that communications which are received prior to issuance of a formal notice of rulemaking do not, in general, have to be put in a public file. Of course, if the information contained in such a communication forms the basis for agency action, then, under well established principles,
V. SUBSCRIPTION BROADCAST TELEVISION
Over six years ago this court rendered its decision in NATO v. FCC, supra, affirming in all respects subscription broadcast television rules promulgated in the Commission’s Fourth Report and Order.
The differences between the rules passed on in NATO and the present subscription broadcast rules can be quickly summarized. The no-advertising and 90-percent rules remain unchanged. The feature film rules allow an additional year of unrestricted subscription broadcasting after general release and generally relax requirements for subscription broadcasting of films over ten years old.
We turn first to the feature film rules. There is ample evidence in the record supporting the Commission’s conclusion that “[f]ew films are televised before they are three years old, and most are four years or older before their first telecast.” First Report and Order, supra, 52 FCC 2d at 51, JA 75. In particular, we note the extensive surveys of the program suppliers which suggest that the average age of films shown on broadcast television is over five years.
We also affirm the Commission’s deletion of the series programming rule. The Commission’s discussion in its Second Report and Order, - FCC 2d -, 35 P & F Radio Reg.2d 767 (1975), JA 181, concludes that conditions now existing in the program production industry are adequate to supply series programming for both cable and conventional broadcast use, a conclusion which we agree is amply supported by public comments.
Although the public record amply supports the subscription broadcast television rule amendments, these amendments cannot be finally approved until this court has had the benefit of the further proceedings set out in Part IV supra. Nonetheless, as we have said in Part IV, it seems unlikely that ex parte information will require vacation of the subscription broadcast television amendments, and we therefore hold that the amendments may remain in effect pending our final order in this segment of the case.
VI. CONCLUSION
Our resolution of the various issues discussed in Parts I through V of this opinion require the following dispositions:
(1) The regulations adopted in the First Report and Order, 52 FCC 2d 1 (1975), and the regulations adopted in the Memorandum Opinion and Order, 23 FCC 2d 825 (1970), are set aside insofar as they apply to cable television.
(2) The regulations adopted in the Memorandum Opinion and Order, 54 FCC 2d 797 (1975), are set aside.
(3) The repeal of regulations announced in the Second Report and Order,-FCC 2d-, 35 P & F Radio Reg.2d 767 (1975), is affirmed in all respects.
(4) The petitions for review of the Commission’s refusal to waive its pay cable feature film rules, announced in In re Home Box Office, Inc., 51 FCC 2d 317 (1975), are dismissed as moot.
(5) The rules adopted in the First Report and Order, supra, are affirmed insofar as they apply to subscription broadcast television subject to the further proceedings ordered in Part IV supra.
(6) The Commission is hereby ordered to undertake the additional proceedings set out in Part IV supra.
(7) The Commission is hereby further ordered to terminate its proceedings in Docket 20402 (concerning program exclusivity)
So ordered.
. The opinion in this case is issued as a per curiam, not because it has received less than full consideration by the court, but because the complexity of the issues raised on appeal made it useful to share the effort required to draft this opinion among the members of the panel.
. “Cablecasting” refers to the origination of programming on a cable television system, in contradistinction to the retransmission of signals that have been received over the air from conventional broadcast television stations. See 47 C.F.R. §§ 76.5(v)-(x) (1975). The rules challenged here apply to both “access” cablecast-ers, who lease (or are given) channel time from cable system operators, id. § 76.5(x), and “origination” cablecasters, who are system operators, id. § 76.5(w). Id. § 76.225. The rules challenged here apply only to cablecasting on systems which also carry broadcast signals. See id. §§ 76.5(a), 76.225. Although some petitioners have argued that the rules should be extended to all cablecasters, we think the Commission has given a rational basis for this distinction. See First Report and Order, 52 FCC 2d 1, 47-48 (1975), JA 71-72.
. Subscription broadcast television stations are those with the technical capability to broadcast programs “intended to be received in intelligible form by members of the public only for a fee or charge.” 47 C.F.R. § 73.641(b) (1975).
. Jurisdiction over these petitions for review is based on 47 U.S.C. § 402 (1970) and 28 U.S.C. § 2342 (1970).
In addition to the four orders promulgating, modifying, or refusing to waive the “anti-siphoning” rules, petitioner Home Box Office, Inc. and amicus Henry Geller request that we order the Commission to complete its “program exclusivity” proceedings. “Program exclusivity” refers to an alleged broadcast network practice of obtaining exclusive exhibition rights against cablecasters. This problem was apparently first brought to the attention of the Commission in 1971 and it issued a notice of proposed rulemaking at that time. See Notice of Proposed Rule Making, 27 FCC 2d 13 (1971) (Docket 18179). No further action appears to have been taken in this docket. The issue was raised again in the proceeding here under review, Docket 19554. The issue was not decided in the First Report and Order, supra note 2. Instead, a “Notice of Inquiry” was issued, 52 FCC 2d 87 (1975), JA 111, establishing Docket 20402, a proceeding in which the issue was to be resolved. Almost 18 months have passed since issuance of this notice and over a year since the close of the comment period. Yet we are unaware that any action has been taken by the Commission. We agree with the Commission in Docket 19554 that the use of exclusivity clauses “raise[s] anti-trust questions,” Further Notice of Proposed Rule Making and Order for Oral Argument, 48 FCC 2d 453, 462 n.16 (1974), JA 18. In view of this, and in view of the potentially deleterious effect of exclusivity on the interest of viewers in having the greatest possible access to diverse sources of information, we think the Commission should by now have terminated its deliberations. Therefore, we today enter an order “compelling] agency action * * * unreasonably delayed.” 5 U.S.C. § 706(1) (1970).
. In FCC Docket 18397 rules originally developed for application to subscription broadcast television were applied to pay cablecasting. 20 FCC 2d 201 (1969). Petitions for reconsideration of this order were filed with the Commission by many of the parties here. See Notice of Proposed Rule Making and Memorandum Opinion and Order, 35 FCC 2d 893, 894 n.5 (1972), JA 2. These petitions were denied. Id. at 899, JA 7. At the same time, however, the Commission instituted further rulemaking with regard to pay cablecasting under new Docket 19554. In In re Home Box Office, Inc., 51 FCC 2d 317 (1975), JA 141, which is also on review here, the Commission took the view that the rules adopted as a result of the rulemaking in Docket 18397 were final and binding and would not be waived. See 51 FCC 2d at 321, JA 145. We disagree with this interpretation, however. See note 27 infra.
The subscription broadcast television rules were adopted by the Commission in Docket 11279, see Fourth Report and Order, 15 FCC 2d 466 (1968). These rules were affirmed by this court in National Ass’n of Theatre Owners (NATO) v. FCC, 136 U.S.App.D.C. 352, 420
. This group includes the major broadcast networks, the National Association of Broadcasters, and one group of amici.
. This view is taken by the Justice Department, the cable television interests, producers of programs suitable for showing on either cable or broadcast television, and a group of amici.
. Cable television system operators or channel lessees engaging in origination or access cablecasting operations for which a per-program or per channel [sic] charge is made shall comply with the following requirements:
(a) Feature films shall not be cablecast by a cable television system subject to the mandatory signal carriage requirements of Sub-part D of this Part 76, except as provided in this paragraph.
(1) A feature film may be cablecast if—
(1) The film has been in general release in theaters anywhere in the United States for three (3) years or less prior to its proposed cablecast;
(ii) A conventional television broadcast station licensed in the market of the cable television system holds a present contractual right to exhibit the film. For purposes of this subdivision, a television station affiliated with a television network will be deemed to hold a present contractual right to exhibit a film if the network to which it is affiliated holds such a right;
(iii) The film has been in general release in theaters anywhere in the United States for more than ten (10) years prior to its proposed cablecast and the film has not been exhibited in the market of the cable television system over conventional television for three (3) years prior to its proposed cablecast. Once a film has been cablecast in the market pursuant to this subdivision, or broadcast on a subscription basis pursuant to § 73.-643(a)(l)(iii), such film may thereafter be cablecast in the market without regard to its subsequent exhibition over conventional television;
(iv) The film is in a foreign language;
(2) Feature films otherwise excluded by this parag[r]aph may be cablecast upon a convincing showing to the Commission that they are not desired for exhibition over conventional television in the market of the cable television system, or that the owners of the broadcast rights to the films, even absent the existence of subscription television, would not make the films available to conventional television.
(3) Every cable television system operator or channel lessee engaging in origination or access cablecasting pursuant to this paragraph shall maintain, or cause to be maintained, for public inspection a file listing the*19 title of the film, the date on which it was cablecast and the provision of this paragraph pursuant to which it was cablecast. When a feature film is cablecast pursuant to paragraph (a)(l)(ii) of this section, the station or network serving the market and holding a present contractual right to exhibit the film shall be specified. These files shall be retained for a period of two years.
(b) Sports events shall not be cablecast live by a cable television system subject to the mandatory signal carriage requirements of Subpart D of Part 76, except as provided in this paragraph.
(1) A specific event may be cablecast if the event has not been broadcast live over conventional television in the market of the cable television system during any one of the five (5) seasons preceding the proposed cablecast. If a regularly recurring event takes place at intervals of more than one year (e. g., summer Olympic games), the event shall not be cablecast if it has been broadcast live over conventional television in the market during any one of the ten (10) years preceding the proposed cablecast.
(2) New specific sports events that result from the restructuring of existing sports shall not be cablecast until five (5) seasons after their first occurrence. Thereafter, subscription cablecasts shall be governed by paragraph (b)(1) of this section.
(3) The number of non-specific events which may be cablecast in any given season shall be determined as follows:
(i) If less than twenty-five (25) percent of the events in a category of non-specific events were broadcast live over conventional television in the market of the cable television system during each of the five (5) seasons preceding the proposed cablecast, the number of events in the category cablecast shall not exceed the number of events in the category not broadcast in that season among the preceding five (5) seasons when the largest number of events in the category were broadcast.
(ii) If twenty-five (25) percent or more of the events in a category of non-specific events were broadcast live over conventional television in the market of the cable television system during any one of the five (5) seasons preceding the proposed cablecast, the number of events in the category cablecast shall not exceed fifty (50) percent of the number of events in the category not broadcast in that season among the preceding five (5) seasons when the largest number of events in the category were broadcast. However, if the number of events in the category to be broadcast in the current season is a reduction from the number of events broadcast in that season among the preceding five (5) seasons when the largest number of events in the category were broadcast, the number of events in the category which may be cablecast pursuant to this subparagraph shall be reduced in proportion to the reduction in events broadcast.
(c) Not more than ninety (90) percent of the total cablecast programming hours shall consist of feature films and sports events combined. The percentage calculations may be made on a yearly basis, but absent a showing of good cause, the percentage of such programming hours may not exceed ninety-five (95) percent of the total cablecast programming hours in any calendar month.
(d) No commercial advertising announcements shall be carried on subscription channels during such operations except before and after such programs for promotion of other programs for which a per-program or per-channel charge is made.
47 C.F.R. § 76.225 (1975), as amended by Second Report and Order, supra note 5.
Commercial advertising on cablecast channels not used for subscription cablecasting was also, at one time, restricted by the Commission. See 47 C.F.R. § 74.1117 (1969), deleted, 39 Fed.Reg. 43310 (1974).
. Subscription television broadcast programming shall comply with the following requirements:
(a) Feature films shall not be broadcast except as provided in this paragraph.
(1) A feature film may be broadcast if—
(i) The film has been in general release in theaters anywhere in the United States for three (3) years or less prior to its proposed broadcast;
(ii) A conventional television broadcast station licensed in the market of the subscription television broadcast station holds a present contractual right to exhibit the film. For purposes of this subdivision, a television station affiliated with a television network will be deemed to hold a present contractual right to exhibit a film if the network to which it is affiliated holds such a right;
(iii) The film has been in general release in theaters anywhere in the United States for*20 more than ten (10) years prior to its proposed subscription broadcast and the film has not been exhibited over conventional television in the market of the subscription television broadcast station for three (3) years prior to its proposed subscription broadcast. Once a film has been broadcast in the market pursuant to this subdivision or cablecast on a subscription basis pursuant to § 76.225(a)(l)(iii), such film may thereafter be broadcast on a subscription basis in the market without regard to its subsequent exhibition over conventional television;
(iv) The film is in a foreign language;
(2) Feature films otherwise excluded by this paragraph may be broadcast upon a convincing showing to the Commission that they are not desired for exhibition over conventional television in the market or that the owners of the broadcast rights to the films, even absent the existence of subscription television, would not make the films available to conventional television.
(3) Every subscription television broadcast station over which a feature film is broadcast pursuant to this paragraph shall maintain for public inspection a file listing the title of the film, the date on which it was broadcast and the provision of this paragraph pursuant to which it was broadcast. When a feature film is broadcast pursuant to subparagraph (l)(ii) of this paragraph, the station or network, serving the market and holding a present contractual right to exhibit the film shall be specified. These files shall be retained for a period of two years.
(b) Sports events shall not be broadcast live except as provided in this paragraph.
(1) A specific event may be broadcast if the event has not been broadcast live over conventional television in the market of the subscription television broadcast station during any one of the five (5) seasons preceding the proposed subscription broadcast. If a regularly recurring event takes place at intervals of more than one year (e. g., summer Olympic games), the event' shall not be broadcast on a subscription basis if it has been broadcast live over conventional television in the market of the subscription television broadcast station during any one of the ten (10) years preceding the proposed subscription broadcast.
(2) New specific sports events that result from the restructuring of existing sports shall not be broadcast on a subscription basis until five (5) seasons after their first occurrence. Thereafter, subscription broadcasts shall be governed by paragraph (b)(1) of this section.
(3) The number of non-specific events which may be broadcast on a subscription basis in any given season shall be determined as follows:
(i) If less than twenty-five (25) percent of the events in a category of non-specific events were broadcast live over conventional television in the market of the subscription television broadcast station during each of the five (5) seasons preceding the proposed subscription broadcast, the number of events in the category broadcast on a subscription basis shall not exceed the number of events in the category not conventionally broadcast in that season among the preceding five (5) seasons when the largest number of events in the category were broadcast over conventional television.
(ii) If twenty-five (25) percent or more of the events in a category of non-specific events were broadcast live over conventional television in the market of the subscription television broadcast station during any one of the five (5) seasons preceding the proposed subscription broadcast, the number of events in the category broadcast on a subscription basis shall not exceed fifty (50) percent of the number of events in the category not broadcast in that season among the preceding five (5) seasons when the largest number of events in the category were broadcast over conventional television. However, if the number of events in the category to be broadcast over conventional television in the current season is a reduction from the number of events broadcast in that season among the preceding five (5) seasons when the largest number of events in the category were broadcast, the number of events in the category which may be broadcast on a subscription basis pursuant to this subparagraph shall be reduced in proportion to the reduction in events broadcast over conventional television.
(c) No commercial advertising announcements shall be carried during subscription television operations except for promotion of subscription television broadcast programs before and after such programs.
(d) Not more than 90 percent of the total subscription programming hours shall consist of feature films and sports events combined. The percentage calculations may be made on a yearly basis, but, absent a showing of good cause, the percentage of such programming hours may not exceed 90 percent of the total subscription programming hours in any calendar month.
(e) Any television broadcast station licensee or permittee authorized to broadcast subscription programs shall broadcast in addition to its subscription broadcasts, at least the minimum hours of nonsubscription programming required by § 73.651.
(f) Except as they may be otherwise waived by the Commission in authorizations*21 issued hereunder, the rules and policies applicable to regular television broadcast stations are applicable to subscription television operations.
47 C.F.R. § 73.643 (1975), as amended by Second Report and Order, supra note 5.
. See 20 Fed.Reg. 988 n.’l (1955).
. See generally NATO v. FCC, supra note 5, 136 U.S.App.D.C. at 354, 420 F.2d at 196.
. Third Report, 26 FCC 265 (1959), aff’d. Connecticut Committee Against Pay TV v. FCC, 112 U.S.App.D.C. 248, 301 F.2d 835, cert, denied, 371 U.S. 816, 83 S.Ct. 28, 9 L.Ed.2d 57 (1962).
. See 15 FCC 2d at 597-598.
. See generally Fourth Report and Order, supra note 5, 15 FCC 2d at 466-488.
. See First Report, 23 FCC 532, 536-540 (1957).
. See Fourth Report, supra note 5, 15 FCC 2d at 483-488.
. See id. at 474-488, 564-566. See also First Report and Order, supra note 2, 52 FCC 2d at 43, JA 67; Report and Order, 23 FCC 2d 382, 391-392 (1970) (Docket 12782).
. See Fourth Report, supra note 5, 15 FCC 2d at 554-573
. In these proceedings the Commission has changed its vocabulary from the pejorative “siphoning” to the more neutral term “migration.” See Transcript of Oral Argument at 56, 57, 59.
. See Cabinet Comm, on Cable Communications, Report to the President 10-11 (1974).
. See Transcript of Oral Argument at 43; br. for petitioner Home Box Office at 9.
. See Cabinet Comm, on Cable Communications, supra note 21, at 10.
. See generally United States v. Southwestern Cable Co., 392 U.S. 157, 161-168, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968).
. Notice of Proposed Rulemaking and Notice of Inquiry, 15 FCC 2d 417 (1968).
. First Report and Order, 20 FCC 2d 201, 223-225 (1969). The Commission also extended the equal time, sponsorship identification, and fairness doctrines to cable television in this Order.
. Many parties to this proceeding, see e. g., br. for respondent United States; br. for petitioner Home Box Office, Inc., including the Commission itself, see br. for respondent FCC, have presented arguments predicated on an assumption that it is appropriate for this court to review the validity of the pay cablecasting rules de novo, although other parties, see, e. g., br. of petitioner American Broadcasting Companies, Inc., appear to take the position that only the rather limited question of the validity of the relaxation of prior Commission rules is before this court. No party has addressed this problem expressly, although the Commission, in In re Home Box Office, Inc., supra note 5, 51 FCC2d at 321, JA 145, takes the position that the rules promulgated in its Memorandum
The critical question is the effect of the Commission’s Notice of Proposed Rule Making and Memorandum Opinion and Order, 35 FCC2d 893 (1972), JA 1. In that Order the Commission, after surveying points raised by the petitions for reconsideration before it (some of which were addressed to procedural infirmities and others to the substance of the Memorandum Opinion and Order in Docket 18397, supra), stated:
8. * * * [I]n view of the importance of the issue as against the paucity of prior comment and the indication that additional opportunity for comment will elicit useful new material, we have decided to issue a further Notice of Proposed Rule Making so that we may hear from all parties concerned and to reconsider the rules.
s(s # # sfí jfc Jfi
10. In light of our decision to allow for further comment on the pay-cablecasting rules, we think it unnecessary to comment at length on the [substantive] issues raised in the reconsideration pleadings. * * *
35 FCC2d at 896, 897-898, JA 4, 5-6 (emphasis added). Nonetheless, the Commission, “[i]n accordance with” the above quoted paragraphs, denied the petitions for reconsideration of its Memorandum Opinion and Order in Docket 18397. Id. at 899, JA 7.
We think such a disposition is fundamentally at odds with the purpose of reconsideration as envisioned by § 405 of the Communications Act, 47 U.S.C. § 405 (1970), and is also contrary to the Commission’s own rules, 47 C.F.R. § 1.106 (1975). Section 405 of the Communications Act provides in relevant part:
* * * The filing of a petition for rehearing shall not be a condition precedent to judicial review of any * * * order, decision, report, or action, except where the party seeking such review (1) was not a party to the proceedings resulting in such order, decision, report, or action, or (2) relies on questions of fact or law upon which the Commission * * * has been afforded no opportunity to pass. The Commission * * * shall enter an order, with a concise statement of the reasons therefor, denying a petition for rehearing or granting such petition, in whole or in part, and ordering such further proceedings as may be appropriate. * * *
The obvious purpose of § 405 is to afford the Commission an opportunity to consider and pass upon matters prior to their presentation to the court. Joseph v. FCC, 131 U.S.App.D.C. 207, 210, 404 F.2d 207, 210 (1968); Gerico Investment Co. v. FCC, 99 U.S.App.D.C. 379, 380, 240 F.2d 410, 411 (1957); see Saginaw Broadcasting Co. v. FCC, 68 App.D.C. 282, 286, 96 F.2d 554, 558, cert, denied, 305 U.S. 613, 59 S.Ct. 72, 83 L.Ed. 391 (1938). To hold, as the Commission has done here, that further consideration of its order is needed but that the order is nonetheless final for purposes of judicial review is to thwart this fundamental purpose of § 405. Moreover, had a party taken an immediate appeal from the Notice of Proposed Rule Making and Memorandum Opinion and Order, supra, this court would in all likelihood have deferred consideration of that appeal until the Commission had finished its reconsideration of the rules in order to have the benefit of the further proceedings. See Wrather-Alvarez Broadcasting, Inc. v. FCC, 101 U.S.App.D.C. 324, 327, 248 F.2d 646, 649 (1957). Finally, the “concise statement of reasons” given by the Commission here is tantamount to the statement: “We have denied your petitions for reconsideration because you have raised such serious issues that we think the rules need to be reconsidered.” Surely, denial on these grounds is arbitrary, capricious, and in clear contravention of the purposes of § 405.
We need not rely on § 405 alone, however, because the Commission’s own procedural rules disallow the disposition of the petitions for reconsideration made here. As we read § 1.106 of those rules, the Commission may dispose of petitions for reconsideration in only three ways. First, it may deny the petitions. 47 C.F.R. § 1.106(j) (1975). Second, it may grant a petition and make a ruling on its merits in the same order. Id. § 1.106(k)(l). Third, it may grant a petition but defer its ruling on the merits until after further proceedings. Id. § 1.106(k)(2). Here, however, the Commission has taken a fourth course — instituting further proceedings in order to rule on the merits of the petitions for reconsideration, but also denying the petitions. In contrast, in the same Notice of Proposed Rule Making and Memorandum Opinion and Order the Commission adopted the procedure set out in § 1.106(k)(2) with regard to its proceedings on subscription broadcast television. See 35 FCC2d at 899, JA 7. We think the proper procedure here too would have been that set out in § 1.106(k)(2), and we therefore hold that the Commission’s order with respect to pay cablecasting must be read to be consistent with that section. In accordance with § l,106(k)(2), therefore, we further hold that the orders entered in Docket 19554 are the rulings on the merits of the petitions for reconsideration.
Although we would normally be hesitant to decide the merits of an appeal where the briefs of the parties indicate a fundamental confusion over the issues open on appeal, we do not think that our disposition of the procedural posture
For all foregoing reasons, we hold that the effect of our ruling today is to remove in toto all regulations of the Commission — now codified at 47 C.F.R. § 76.225 (1975) — regulating program formats on pay cable television.
. Series programs are those “with interconnected plot or substantially the same cast of principal characters.” 47 C.F.R. § 76.225(c), deleted by Second Report and Order, supra note 5.
. See also note 5 supra.
. Staff of Subcomm. on Communications of House Comm, on Interstate and Foreign Commerce, Cable Television: Promise Versus Regulatory Performance 11 (1976) (Subcomm. Print) (hereinafter cited as Promise Versus Performance).
. Id. at 19.
. Id. at 17.
. Transcript of Oral Argument at 4, 27.
. Id. at 77.
. Id. at 26.
. Promise Versus Performance, supra note 30, at 17.
. First Report and Order, supra note 2, 52 FCC2d at 2, JA 26.
. The position of the Commission is not clear. The concern in the subscription television proceeding was that material shown on subscription television would simply become unavailable for conventional viewing. See Fourth Report and Order, supra note 5, 15 FCC2d at 494-509. Here, at least with regard to feature films, the Commission seems to have identified the evil to be avoided as delay in showing a film on conventional television. See First Report and Order, supra note 5, 52 FCC2d at 49-50 (¶ 162) JA 73-74.
. First Report and Order, supra note 5, 52 FCC2d at 77 (dissenting opinion), JA 101.
. E. g., 47 C.F.R. § 76.201 (1974) (origination requirements), removed, 39 Fed.Reg. 43310 (1974); 47 C.F.R. § 73.658 (prime time access regulations).
. Distant signals are those which a viewer would not ordinarily be able to receive without the assistance of a community antenna television system.
. See United States v. Southwestern Cable Co., supra note 24, 392 U.S. at 174-176 & n. 43, 88 S.Ct. 1994. See generally R. Noll, M. Peck & J. McGowan, Economic Aspects of Television Regulation 99-108 (1973).
. The Southwestern Court referred a number of times to instances of congressional approval of the Commission’s policy of local control of broadcasting. See 392 U.S. at 173 & n. 38, 88 S.Ct. 1994; id. at 174 & n. 39, 88 S.Ct. 1994; cf. id. at 175-176 n. 43, 88 S.Ct. 1994. The Court also referred to congressional support for the Commission’s policy of encouraging UHF development, and read legislation requiring television receivers shipped in interstate commerce to have UHF capability, Pub.L.No. 87-529, 76 Stat. 150 (1962), as support for the Commission’s restrictions on cable. See 392 U.S. at 175 & nn.41 & 42, 88 S.Ct. 1994.
. Were one to accept the Chief Justice’s theory of jurisdiction, the Commission’s rules would have to be set aside with respect to access cablecasters, see note 2 supra, who rent time from those who “interrupt the signal,” since there is no evidence in this record that these independent entrepreneurs are in any way subsidized by cable system owners who are the only legal entities offering retransmission services.
Judge MacKinnon is of the view that the FCC’s jurisdiction to regulate cablecasting in the interests of the broadcasting industry is restricted to instances where the cable stations substantially rely on broadcast signals or their activities amount to unfair competition.
. As promulgated in the First Report and Order, supra note 2, the rules also applied to series programming. Since the rules have subsequently been amended to delete series programming restrictions, see note 28 supra, we do not deal with this aspect of the rules here.
. See, e. g., First Report and Order, supra note 2, 52 FCC2d at 51-55, JA 75-79. This position is most clearly expressed in the Commission’s standard for waiving its film rules:
[Wjaivers will be granted upon a convincing showing to the Commission that a film desired for subscription exhibition is not desired for exhibition over conventional television in the market, or that the owner of the film, even absent the existence of subscription television, would not make the film available to conventional television.
Id. at 55, JA 79.
. The Communications Act does not expressly regulate television. Title III of the Act, which covers radio broadcasting, has been construed to cover television because § 3(b) of the Act, 47 U.S.C. § 153(b) (1970), defines “radio communication” to include transmission of pictures.
. These views were not those of the Commission as a whole, but of only six commissioners. Nonetheless, the Commission as a whole has cited approvingly the argument quoted in text. See Notice of Inquiry, 57 FCC2d 580, 580-581 (1976).
Judge MacKinnon is of the view that Citizens Committee to Save WEFM v. FCC, 165 U.S.App.D.C. 185, 506 F.2d 246 (1974), constitutes a binding decision of this court, but he continues to adhere to the views he expressed in dissent when that decision issued. 165 U.S.App.D.C. at 224, 506 F.2d at 285.
. While WEFM offers some support for the Commission’s authority to promulgate anti-siphoning rules, the application of WEFM to cable television requires thought and argument going beyond anything said in that case. The facts of WEFM made it a particularly appropriate case for Commission intervention. At stake was a classical music format provided by only one other station in WEFM’s service area. 165 Ü.S.App.D.C. at 193, 506 F.2d at 254. On the other hand, the “contemporary music” format proposed for WEFM was already supplied in whole or in part by 13 of the Chicago area’s 61 radio broadcast stations. Id. at 193
In addition, even if WEFM did provide statutory authority to the Commission to act as it has here, the constitutionality of the jurisdiction thus conferred is a wholly separate issue, to be analyzed under the principles set out in Part III infra.
. Non-specific sports events are essentially those that occur during regular season play. See First Report and Order, supra note 2, 52 FCC2d at 59, JA 33.
. As we have already indicated, see note 49 ' supra, WEFM only lends support to Commission jurisdiction and does not control it. Accordingly, there is no need for us to reconsider WEFM. Moreover, we decline to consider whether WEFM should be extended into the cable television context since the Commission itself has argued that WEFM should be confined rather than extended.
. In large part this argument appears to be a post hoc rationalization of counsel which, of course, could not provide a basis for sustaining the Commission. See Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168-169, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962).
. Section 1 provides in relevant part:
For the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges, * * there is created a commission to be known as the “Federal Communications Commission” * * *
47 U.S.C. § 151 (1970).
. See note 53 supra.
. No commercial advertising announcements shall be carried on subscription channels during such operations except before and after such programs for promotion of other programs for which a per-program or per-channel charge is made.
47 C.F.R. § 76.225(e) (1975), as amended by Second Report and Order, —- FCC2d-, 35 P & F Radio Reg.2d 767 (1975).
. Not more than ninety (90) percent of the total cablecast programming hours shall consist of feature films and sports events combined. * * *
47 C.F.R. § 76.225(d) (1975), as amended by Second Report and Order,-FCC2d —, 35 P & F Radio Reg.2d 767 (1975).
. 47 C.F.R. §§ 76.251, 76.253 (1975).
. In determining what points are significant, the “arbitrary and capricious” standard of review must be kept in mind. Thus only comments which, if true, raise points relevant to the agency’s decision and which, if adopted, would require a change in an agency’s proposed rule cast doubt on the reasonableness of a position taken by the agency. Moreover, comments which themselves are purely speculative and do not disclose the factual or policy basis on which they rest require no response. There must be some basis for thinking a posi
. This deficiency was brought to the attention of the Commission by, among others, the Justice Department:
[B]efore the question posed [as to the existence of alternatives] can be answered, the Commission must define exactly what public interests it seeks to protect. Until such a*37 determination is made, the Commission cannot conclude whether there exists a “less restrictive” means of serving the public interest. To date, the Commission has not demonstrated exactly what public interest it advances by retarding pay cablecasting.
Comments of the Department of Justice in Docket No. 19554, at 26, JA 251 (Nov. 1, 1972) (emphasis in original).
. The Commission’s lack of a clear picture is directly attributable to its own choice to regulate rather than allow a period of unregulated experimentation in which data could be generated that could form a predicate for informed agency action. This decision was taken over the objections of a number of parties to this proceeding. See, e.g., Reply Comments of the United States Department of Justice in Docket No. 19554, at 13, JA 280 (Oct. 4, 1974); Comments of Walter S. Baer, Henry Geller, and Leland L. Johnson in Docket No. 19554, at 11-14, JA 293-296 (Sept. 20, 1974). The sole basis for the Commission’s choice to go forward is the conclusory statement that action was needed at a “ ‘time when it involves no disruption of existing patterns.’ ” First Report and Order, supra note 2, 52 FCC 2d at 49, JA 73, quoting Memorandum Opinion and Order, 23 FCC 2d 825, 828 (1970) (Docket 18397). However, this position is precisely the opposite of that the Commission took in its First Report and Order in Docket 18397, 20 FCC 2d 201 (1969), see notes 5 & 27 supra. There the Commission expressly refused to impose regulations like those challenged here until it gained “some further experience in this area.” Id. at 204. In particular, the Commission noted that there was no “trend calling for action in the public interest,” id., and that the data developed in the subscription broadcast television proceeding was not apposite, id. The Commission has not called our attention to any data which would fill the gaps in its experience identified in 1969, and we can find none in the record.
In this state of affairs, where there is no evidence of any urgent need for preventive action and where approval of the Commission’s position would foreclose the possibility that data could be generated in the future that would allow fully informed decisionmaking, we are disinclined to give the Commission the “benefit of the doubt” which it argues it should have. See br. for respondent FCC at 52-53.
. Specific sports events are defined in the First Report and Order, supra note 2, 52 FCC 2d at 59-60, JA 83-84, and in 47 C.F.R. §§ 76.225(b)(l)-(b)(2) (1975). The record reveals that evidence relating to the siphoning of nonspecific sports events is scanty but that available data indicate “that there has been no interference with established over-the-air broadcasting patterns.” Comments of Professional Baseball in Docket 19554, at 28, JA 1069 (Sept. 20, 1974).
. The precise date of network expenditure data is not clear. American Broadcasting Companies’ presentation to the Commission used 1972 data. See Further Comments of American Broadcasting Companies, Inc. in Docket No. 19554, at 14, JA 698 (Sept. 20, 1974). In general, data contemporaneous with the date of comment submission seem to have been used.
. The deficiencies noted here were pointed out to the Commission in Comments of Optical Systems Corp. in Docket No. 19554, at 22, JA 1002 (Sept. 20, 1974).
. R. Noll, M. Peck & J. McGowan, supra note 42, at 16. The National Association of Broadcasters has'' estimated that 1975 profit margins will average 18.9 percent. See Broadcasting, July 26, 1976, at 19.
. R. Noll, M. Peck & J. McGowan, supra note 42, at 17.
. 47 U.S.C. § 303(r) (1970).
. We do not agree with the suggestion of some petitioners that the Commission must demonstrate that the means it has chosen have the least impact on competition consistent with achievement of the Commission’s purposes. To the extent that First Amendment and antitrust considerations coincide, it is necessary to make such a showing. See 185 U.S.App.D.C. at -, 567 F.2d at 48, infra. Otherwise, we think our recent decision in United States v. CAB, 167 U.S.App.D.C. 313, 318-320, 511 F.2d 1315, 1320-1322 (1975), is controlling and requires rejection of a least restrictive alternative approach. In that case the Justice Department, advocating a least restrictive alternative approach, challenged CAB action under § 102 of the Federal Aviation Act, 49 U.S.C. § 1302 (1970), which expressly incorporates anticom-petitive effect as one of six factors to be considered in assessing the “public convenience and necessity.” The Department’s argument was rebuffed in favor of a balancing approach on the basis of a number of precedents. Anti-competitive factors are also only one of a number of factors to be considered under the Communications Act, see, e. g., National Broadcasting Co. v. United States, 319 U.S. 190, 222-224, 63 S.Ct. 997, 87 L.Ed. 1344 (1943); FCC v. RCA Communications, Inc., 346 U.S. 86, 94, 73 S.Ct. 998, 97 L.Ed. 1470 (1953); United States v. Radio Corp. of America, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed.2d 354 (1959). Because of the similarity in statutory schemes, we think United States v. CAB, supra, controls our standard of review here.
. There can be no question that the Commission can properly consider antitrust issues. See, e. g., National Broadcasting Co. v. United States, supra note 67, 319 U.S. at 222-224, 63 S.Ct. 997; FCC v. RCA Communications, Inc., supra note 67, 346 U.S. at 94, 73 S.Ct. 998; United States v. Radio Corp. of America, supra note 67, 358 U.S. at 351, 79 S.Ct. 457; General Telephone Co. of Southwest v. United States, 449 F.2d 846 (5th Cir. 1971); Nat’l Ass’n of Independent Television Producers & Distributors v. FCC, 502 F.2d 249, 256 (2d Cir. 1974).
. The Commission’s own excellent summary of the antitrust and diversity issues presented can be found in the First Report and Order, supra note 2, 52 FCC 2d at 37-39, JA 61-63.
. Under the recently amended Copyright Act cable operators will have to pay royalties for use of broadcast signals. See Pub.L.No. 94-553, § 111, 90 Stat. 2550-2558 (1976).
. For this reason any Commission solicitude for the broadcast networks would be misplaced. See FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 60 S.Ct. 693, 84 L.Ed. 869 (1940); Carroll Broadcasting Co. v. FCC, 103 U.S.App.D.C. 346, 258 F.2d 440 (1958). Moreover, the network petitioners have shown no economic injury to them arising from cable’s free use of broadcast signals, and we doubt that such a showing could be made. See Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394, 412, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974) (fee broadcasters can charge is increased by the number of viewers added through cable retransmission).
. In this respect the Department’s arguments fall short of the standard of significance required to mandate a Commission rebuttal. See 185 U.S.App.D.C. at-& note 58, 567 F.2d at 35 & note 58, supra.
. Serious questions would be raised if the Commission sought to justify its rules solely on the basis of such a presumption. The Supreme Court in FCC v. RCA Communications, Inc., supra note 67, while recognizing that enhancement of competition was a relevant factor, reversed the Commission because it had not shown that “competition would serve some beneficial purpose.” 346 U.S. at 97, 73 S.Ct. at 1005. Similarly, the Court has held that the Commission may not deny a license solely on the ground that a grant would facilitate or constitute an antitrust violation. See United States v. Radio Corp. of America, supra note 67. These cases would seem to stand for the proposition that the Commission may not assume that enhancement of competition is beneficial to the public interest unless it has examined the consequences of competition for the interest of listeners and viewers. See also Citizens Committee to Save WEFM v. FCC, 165 U.S.App.D.C. 185, 206, 506 F.2d 246, 267 (1974) (en banc).
. We do not adopt the suggestion of the Justice Department and other petitioners that the Commission must make specific findings concerning anticompetitive effects and regulatory benefits before it can properly assess the anti- ■ trust issue. Cases cited in support of this proposition all involved agency adjudication or formal rulemaking in which a record is created
. See Report and Order, 23 FCC 2d 382, 384-395 (1970), modified, 25 FCC 2d 318 (1970), further modified, 44 FCC 2d 1081 (1974). Interestingly, the purpose of the Prime Time Access Rule was to help UHF television stations by increasing the supply of quality product. The series programming restriction, by working against this policy, therefore also worked against an outcome found vitally important by the Supreme Court in United States v. Southwestern Cable Co., supra note 24, a case the Commission has nonetheless invoked in support of its rulemaking authority here.
. See also Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 386-388, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969); T. Emerson, The System of Freedom of Expression 660-667 (1970); Robinson, The FCC and the First Amendment: Observations on 40 Years of Radio and Television Regulation, 52 Minn.L.Rev. 67, 85-86 (1967). But see Kalven, Broadcasting, Public Policy and the First Amendment, 10 J.Law & Econ. 15, 30-32 (1967).
. See, e. g., Kalven, supra note 76, 10 J.Law & Econ. at 30-32.
. See generally Fourth Report and Order, supra note 5.
. The NATO court did not itself rely on National Broadcasting Co., although the opinion as a whole is intended to be a response to the rather narrow question of the Commission’s authority to allocate television channels to subscription stations. Nonetheless, the First Amendment discussion in NATO does recognize the scarcity rationale and cite cases which in turn rely on National Broadcasting Co. See 136 U.S.App.D.C. at 365 & n.35, 420 F.2d at 407 & n.35. Ultimately, however, primary reliance was placed on tests developed in Ban-zhaf v. FCC, 132 U.S.App.D.C. 14, 33-35, 405 F.2d 1082, 1101-1103 (1968), cert, denied, 396 U.S. 842, 90 S.Ct. 50, 24 L.Ed.2d 93 (1969), a case which affirmed the Commission’s authority to order presentation of material rebutting cigarette commercials. See 136 U.S.App.D.C. at 366, 420 F.2d at 408. The First Amendment holding in Banzhaf, which relied on the commercial speech doctrine, has been limited by the subsequent cases of Bigelow v. Virginia, 421 U.S. 809, 95 S.Ct. 2222, 44 L.Ed.2d 600 (1975) , and Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976) , and would not in any case be directly applicable to suppression of film and sports programming. On the other hand, Banzhaf’s requirements that ideas not be affected and that on balance diversity of expression be increased by regulation, applied by the NATO court, see 136 U.S.App.D.C. at 366, 420 F.2d at 408, come directly from National Broadcasting Co., see 319 U.S. at 226 — 227, 63 S.Ct. 997, and Red Lion Broadcasting Co., see 395 U.S. at 393, 89 S.Ct. 1794. Thus, if NATO moves beyond National Broadcasting Co. at all, it is only to the extent that it imposes the additional requirement that regulation increase diversity. NATO’s conclusion that the subscription broadcast television rules would increase diversity is not, however, transferable to the pay cable rules since any assessment of First Amendment gains and losses must be made on the basis of the record in front of us today and not on the basis of legal precedent.
. The Commission in brief has argued that, regardless of the applicability of NATO, decisions affirming prior cable rules, including some applicable to cable systems that did not use broadcast signals, provide precedent for upholding the pay cable rules against a First Amendment attack. We think the Commission’s reliance is misplaced, as a review of the cited cases will show. In some cases the First Amendment issue was simply not mentioned and may not even have been raised on review. See, e. g., United States v. Midwest Video Corp., 406 U.S. 649, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972); United States v. Southwestern Cable Co., supra note 24. In others the rationale was the scarcity argument developed in National Broadcasting Co. The earliest of these cable cases, Carter Mountain Transmission Corp. v. FCC, 116 U.S.App.D.C. 93, 321 F.2d 359, cert, denied, 375 U.S. 951, 84 S.Ct. 442, 11 L.Ed.2d 312 (1963), did not in fact deal with regulation of cable television. It held simply that the Commission could deny a microwave license to a cable system operator for use in retransmitting broadcast signals in conjunction with cable television unless he agreed to use the licensed facility in a manner not endangering the economic health of broadcasters serving the same area. This principle is uncontroversial, see FCC v. Sanders Bros. Radio Station, supra note 71, 309 U.S. at 476, 60 S.Ct. 693, and was justified entirely on Justice Frankfurter’s logic in National Broadcasting Co. See 116 U.S.App.D.C. at 98, 321 F.2d at 364. A similar fact situation was presented in Idaho Microwave, Inc. v. FCC, 122 U.S.App.D.C. 253, 352 F.2d 729 (1965). The subsequent case of Buckeye Cablevision, Inc. v. FCC, 128 U.S.App.D.C. 262, 387 F.2d 220 (1967), did involve application of Commission rules to a cable system that did not use microwave broadcast facilities. The issue presented was whether Commission rules prohibiting cable transmission of signals imported from distant broadcast stations (now codified at 47 C.F.R. §§ 76.51-76.161 (1975)) violated cable operators’ First Amendment rights. In holding that the rules were constitutional the court, without discussion, cited National Broadcasting Co. and Carter Mountain, thus apparently incorrectly treating the case as one involving the scarcity and allocation rationale. See 128 U.S.App.D.C. at 267 n.23, 387 F.2d at 225 n.23. The Eighth Circuit, in passing on the same rules, cited National Broadcasting Co. and Buckeye Cablevision and similarly treated the issue as one indistinguishable from broadcasting:
The Commission’s [rules] regulating CATVs hafve] the same constitutional status under the First Amendment as regulation of the transmission of signals by the originating television stations. * * * The crucial consideration is that they do use radio signals * * *
Black Hills Video Corp. v. FCC, 399 F.2d 65, 69 (8th Cir. 1968). Other cases cited by the Commission rely on various combinations of National Broadcasting Co., Carter Mountain, Buckeye Cabievision, or Black Hills Video. In these circumstances, the cited cases provide no independent support for the constitutionality of the pay cable rules.
To the extent that Black Hills Video stands for the proposition that the Commission in some sense “owns” the broadcast spectrum and can condition use of broadcast signals accordingly, it must be rejected. The public owns parks, sidewalks, and other “public forums,” and yet it is beyond argument that use of such property by the public cannot be conditioned on whether the government agrees with or desires to allow or disallow the ideas which a speaker seeks to convey. See, e. g., Police Department of Chicago v. Mosley, 408 U.S. 92, 97-98, 92 S.Ct. 2286, 33 L.Ed.2d 212 (1972); T. Emerson, supra note 76, at 660. Moreover, on the record before us there is no evidence that cablecasting and signal retransmission are not completely separate and distinct activities, cf. Teleprompter Corp. v. Columbia Broadcasting System, Inc., supra note 71, 415 U.S. at 405, 94 S.Ct. 1129 (no “nexus” between broadcast and retransmission functions); consequently any constitutionally permissible public control over broadcast signals is beside the point as justification for control of the cablecast function. Further, as we have already indicated, see note 44 supra, Commission power over recipients of broadcast signals would not extend to access cablecasters.
We express no opinion here on the question whether Commission control of microwave radio links used by cablecast networks would extend the Commission’s constitutionally permitted authority over cable.
. See Cabinet Comm, on Cable Communications, supra note 21, at 10; First Report and Order, 20 FCC 2d 201, 222 n.27 (1969) (Docket No. 18397):
cable television’s operations have developed on a noncompetitive, monopolistic basis in the particular areas served with no instance, to our knowledge, where a member of the public subscribes to more than one cable television service.
. The Supreme Court in Miami Herald further found that the statute at issue would have had a. chilling effect on presentation of controversial material about public figures. See 418 U.S. at 256-258, 94 S.Ct. 2831. This suggests that the Court was concerned about an overall diminution of diversity. Whether rules seeking to reduce private control of scarce communications resources which did not have this effect would be valid thus appears to be an open question. A requirement that cable system operators dedicate certain channels to common carrier use might avoid such an infirmity and two courts, without reaching the First Amendment issue, have already indicated that the Commission could compel such sharing of cable channels. See United States v. Midwest Video Corp., supra note 80; American Civil Liberties Union v. FCC, 523 F.2d 1344, 1351 (9th Cir. 1975). Thus, on a proper record, Miami Herald might present no impediment to some types of Commission regulations.
Alternatively, local government involvement in the franchise and regulation of cable television, see Promise Versus Performance, supra note 30, at 20-23, might make cable owners “the state” for constitutional purposes, thus subjecting them to First Amendment scrutiny. Cf. Public Utilities Comm’n v. Pollak, 343 U.S. 451, 462, 72 S.Ct. 813, 96 L.Ed. 1068 (1952); Lehman v. City of Shaker Heights, 418 U.S. 298, 303, 94 S.Ct. 2714, 41 L.Ed.2d 770 (1974); T. Emerson, supra note 76, at 663. Again, this question cannot be resolved on the record before us.
. The existence of an alternative First Amendment theory justifying cable regulation is denied by many petitioners. Their argument, in summary, is that movies (and apparently sports events) are a form of speech protected by the First Amendment. Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495, 72 S.Ct. 777, 96 L.Ed. 1098 (1952). Consequently the rules constitute a prior restraint .on protected speech which, if not always impermissible, Times Film Corp. v. City of Chicago, 365 U.S. 43, 81 S.Ct. 391, 5 L.Ed.2d 403 (1961), is presumptively invalid, Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 70, 83 S.Ct. 631, 9 L.Ed.2d 584 (1963), and is here rebutted by no substantial purpose that could not be equally well served by less restrictive rules or is, in any event, invalid because the rules do not afford the procedural safeguards required by Freedman v. Maryland, 380 U.S. 51, 85 S.Ct. 734, 13 L.Ed.2d 649 (1965). This argument is not unpersuasive, but on reflection we do not think it fits the facts of this case.
. Kalven, The Concept of the Public Forum: Cox v. Louisiana, 1965 Sup.Ct.Rev. 1, 23.
. Brennan, The Supreme Court and the Meik-lejohn Interpretation of the First Amendment, 79 Harv.L.Rev. 1, 5 (1965).
. See, e. g., Police Department of Chicago v. Mosley, supra note 80; Grayned v. City of Rockford, 408 U.S. 104, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972). See generally Kalven, supra note 84.
. See, e. g., Cox v. New Hampshire, 312 U.S. 569, 61 S.Ct. 762, 85 L.Ed. 1049 (1941).
. See Grayned v. City of Rockford, supra note 86, 408 U.S. at 114-121, 92 S.Ct. 2294; Kovacs v. Cooper, 336 U.S. 77, 69 S.Ct. 448, 93 L.Ed. 513 (1949).
. See, e. g., Lehman v. City of Shaker Heights, supra note 82.
. See, e. g., Spence v. Washington, 418 U.S. 405, 94 S.Ct. 2727, 41 L.Ed.2d 842 (1974); Cohen v. California, 403 U.S. 15, 91 S.Ct. 1780, 29 L.Ed.2d 284 (1971); United States v. O’Brien, 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968). See also, Procunier v. Martinez, 416 U.S. 396, 94 S.Ct. 1800, 40 L.Ed.2d 224 (1974) (applying collateral consequences analysis to prisoner mail censorship).
. See Ely, Flag Desecration: A Case Study in the Roles of Categorization and Balancing in First Amendment Analysis, 88 Harv.L.Rev. 1482, 1493-1496 (1975). Compare, e. g., Buckley v. Valeo, 424 U.S. 1, 16, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976), with Buckley v. Valeo, 171 U.S.App.D.C. 172, 191-195, 519 F.2d 821, 840-844 (1975) (en banc), and Wright, Politics and the Constitution: Is Money Speech?, 85 Yale L.J. 1001 (1976).
. Although O’Brien was a case involving draft card burning, it has not been limited to that sort of symbolic speech situation. See, e. g., Procunier v. Martinez, supra note 90 (prisoners’ mail); A Quacker Action Group v. Morton, 170 U.S.App.D.C. 124, 516 F.2d 717 (1975) (public gatherings at the White House). See also Young v. American Mini Theatres, Inc., 427 U.S. 50, 78-82, 96 S.Ct. 2440, 49 L.Ed.2d 310 (1976) (Powell, J., concurring) (obscenity zoning).
. See Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., supra note 79, 425 U.S. at 756-757, 96 S.Ct. 1817; Procunier v. Martinez, supra note 90, 416 U.S. at 408-409, 94 S.Ct. 1800; Kleindienst v. Mandel, 408 U.S. 753, 762-763, 92 S.Ct. 2576, 33 L.Ed.2d 683 (1972); Red Lion Broadcasting Co. v. FCC, supra note 76, 395 U.S. at 390, 89 S.Ct. 1794.
. Consequently, the pay cable rules, while equalizing access to the media for rich and poor, are not intended to have the effect proscribed in Buckley v. Valeo. See 424 U.S. at 17, 96 S.Ct. 612. For this reason we need not consider how to reconcile the Court’s position in Buckley with the following flatly contradictory language in Columbia Broadcasting System, Inc. v. Democratic National Committee, 412 U.S. 94, 123, 93 S.Ct. 2080, 2096, 36 L.Ed.2d 772 (1974):
The * * * public interest in providing access to the marketplace of “ideas and experiences” would scarcely be served by a system * * * heavily weighted in favor of the financially affluent, or those with access to wealth. * * *
See also NATO v. FCC, supra note 5, 136 U.S. App.D.C. at 365, 420 F.2d at 207.
. The provision relating to movies is set out at note 46 supra. The waiver provisions for sports programming are less clear. The Commission makes no mention of any waiver policy with respect to specific sports events. On the other hand, cablecasters may seek a waiver of the non-specific sports rules if they can demonstrate that a reduction in broadcast presentation of such events has been caused by “reasons completely unrelated to program siphoning.” First Report and Order, supra note 2, 52 FCC 2d at 62, JA 86.
. A number of petitioners take the position that the rules reduce the overall profitability of feature films by restricting their commercial exploitation on both cable and broadcast television, with the result that fewer films are produced than would be the case in the absence of the rules. We do not think the record demonstrates such a causal connection between the rules and the overall health of the movie industry. But even if the rules did reduce the number of films produced, that effect would not rise to the level of a First Amendment violation. Such a result would prove too much. It would require invalidation of any general law which affected the profitability of the movie industry; this, however, is clearly not the law. See, e. g., Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945).
. That cablecasters might lose some profits by adopting these alternative modes of speaking is doubtless true. But in the absence of a showing of economic harm bordering on censorship, a diminution of profits does not itself present a First Amendment problem. See note 96 supra. See also the statement of the Supreme Court in rejecting the claim that motion picture “clearances” constituted violations of some theater owners’ First Amendment rights:
The main contest is over the cream of the exhibition business — that of the first-run the-atres. * * * [This] shows * * * that the question here is not what the public will see or if the public will be permitted to see certain features. It is clear that under the existing system the public will be denied access to none. * * * The central problem presented by these cases is which exhibitors get the highly profitable first-run business. That problem has important aspects under the' Sherman Act. But it bears only remotely, if at ail, on any question of freedom of the press, save only as timeliness of release may be a factor of importance in specific situations.
United States v. Paramount Pictures, Inc., 334 U.S. 131, 166-167, 68 S.Ct. 915, 933, 92 L.Ed. 1260 (1948) (last emphasis added).
. See note 55 supra.
. See note 56 supra.
. See 185 U.S.App.D.C. at-, 567 F.2d at 34 supra.
. See 185 U.S.App.D.C. at---, 567 F.2d 36-40 supra.
. The only evidence in the record before us relating to the effect of delay on the public interest is uncontradicted evidence showing that delay has no effect on the popularity of feature film material. See Comments of Program Suppliers in Docket No. 19554, at 21, JA 386 (Nov. 1, 1972).
. This seems especially the case since the Commission tells us that delay is detrimental to the public interest. We are unaware of any evidence to support this proposition, however. See note 102 supra.
. See First Report and Order, supra note 2, 52 FCC 2d at 62, JA 86.
. Amicus urged the Commission to set out the essence of any oral ex parte communications and place written presentations in the public file. In addition amicus urged that interested parties be allowed an opportunity to comment on the material disclosed on an expedited basis, i. e., within a three-week period.
. See Notice of Proposed Rule Making and Memorandum Opinion and Order, supra note 5, 35 FCC 2d at 899, JA 7; Further Notice of Proposed Rule Making and Order for Oral Argument, 48 FCC 2d 453, 463 (1974), JA 19.
. The Commission has devoted only one footnote to this issue in its brief. Br. for respondent FCC at 50 n.55. This footnote does not challenge the accuracy of amicus Geller’s statements and, indeed, offers us no facts at all that would tend to rebut the clear import of amicus’ statements that ex parte contacts shaped the ultimate form of the pay cable rules. See text accompanying notes 110 to 116 infra.
The reasons urged by the Commission against reaching the ex parte contact issue are frivolous. There can be no waiver or estoppel raised here against our consideration of an issue vital to the public as a whole. Therefore, Mr. Geller’s “dirty hands,” if such they be, present no bar. Second, Mr. Geller sought a delay of only three weeks in which the public could comment on the information he urged be disclosed. Since he brought this matter to the attention of the Commission three months before issuance of the Commission’s First Report and Order, and at a time when the Commission was still entertaining private communications, we find it incredible that the Commission would even suggest “the difficulty, if not the impossibility, of complying with this ‘after the fact’ request.” Br. for respondent FCC at 50 n. 55. Finally, we hold that Sangamon, properly construed, does apply to this proceeding. See text at note 124 infra.
. Because many Commission officials kept no accurate records on contacts, the list is incomplete and the dates of various contacts often uncertain or estimated.
. Ex parte communications were also originated by many persons not party here, including members of Congress, members of the trade press, and representatives of various performing arts groups.
110. See Television Digest, March 4, 1974, at 1-2; Broadcasting, March 4, 1974, at 6; Television Digest, Feb. 18, 1974, at 1-2; Broadcasting, March 11, 1974, at 5.
111. Television Digest, March 4, 1974, at 2.
112. Id. (Senators’ “action * * * was prompted by Hill visit by ABC Chairman Leonard Goldenson and President Elton Rule, whose only goal was to put halter on relaxation of pay-cable rules”); Broadcasting, March 4, 1974, at 6; see remarks by Everett H. Erlich, Senior Vice President and General Counsel, ABC, before the ABC Television Network Affiliates, Los Angeles, May 10, 1974, at. 1:
As most of you know, the- FCC just prior to Chairman Burch’s sudden departure was on the verge of modifying Pay-TV rules applicable to movies by loosening the 2 and 10-years limitations. They were also considering a so-called “wild card” exception for 12 to 18 pictures a year which would have exempted entirely the most popular features from the application of any rule. We took the leadership in opposing these proposals with the result that key members of Congress made it*53 known in no uncertain terms that they did not expect the Commission to act on such a far-reaching policy matter without guidance. The Commission got the message and has postponed for several months reconsideration of this particular issue * * *.
113. Television Digest, March 10, 1975, at 2; see Broadcasting, March 10, 1975, at 6.
114. See id.
115. Television Digest, March 17, 1975, at 3.
116. Broadcasting, March 17, 1975, at 10.
. A similar note was struck by Chairman Wiley in a speech to the Federal Communications Bar Association:
There is one other lobbying technique which disturbs me although I would acknowledge that it is largely due to a somewhat unfortunate practice on the part of the FCC. . I mention it today because I want to put you on notice of my intention to change this practice wherever possible. When the Commission holds an oral argument on some rulemaking matter, we carefully divvy up the advocacy time available among various parties. When the argument is completed, the Commissioners should then be in the best position possible to make a tentative decision on the merits. Typically, however, such a decision is not made until long after the conclusion of the formal argument. During the delay until decision, oral argument often continues informally in the privacy of individual Commissioner and staff offices. I simply do not think that this is a good practice and, accordingly, and to the extent practicable, I hope to have the Commission making tentative judgments very quickly following oral argument, thus obviating the possibility of any further seriatim presentations.
* * * Compromises, fail-back positions, and the so-called “real facts” are often reserved for supplemental filings and, perhaps, subsequent visits to Commission offices.
FCC Mimeo. 21343 at 4 (April 30, 1970).
. The legislative history of the Administrative Procedure Act has been read to imply that there is no such thing as an administrative record in informal rulemaking. See, e. g., U.S. Dept, of Justice, Attorney General’s Manual on the Administrative Procedure Act 31 (1947) (“section 4(b) does not require the formulation of rules upon the exclusive basis of any ‘record’ made in informal rulemaking proceedings”). Professor Nathanson has similarly concluded;
Section 553’s notice-and-comment provisions were [originally] conceived of as instruments for the education of the administrator, especially on questions of policy; there is not the slightest indication that the purpose of the notice-and-comment proceeding was to develop a record by which a reviewing court could test the validity of the rule which the Administrator finally adopted.
Apparently, an underlying assumption of the APA draftsmen was that any factual issues which became pertinent in a challenge to the validity of a section 553 rule would be resolved in the first instance in judicial proceedings — either in enforcement proceedings or in suits to enjoin enforcement. * * * Nathanson, Probing the Mind of the Administrator: Hearing Variations and Standards of Judicial Review Under the Administrative Procedure Act and Other Federal Statutes, 75 Colum.L.Rev. 721, 754-755 (1975). The Department of Justice, in apparent accord with these views, relied on the Commission’s own rules, which defined the administrative record to be comments and reply comments, and not the Administrative Procedure Act, in arguing that the ex parte contacts in Sangamon were invalid. See br. of the United States on remand from the Supreme Court at 5-10, Sangamon Valley Television Corp. v. United States, 106 U.S.App.D.C. 30, 269 F.2d 221 (1959). See also Verkuil, Judicial Review of Informal Rulemak-ing, 60 Va.L.Rev. 185, 202-205 (1974).
. The precise content of this record is still a matter of some dispute. Compare Recommendation 74-4 of the Administrative Conference of the United States, printed in 3 Recommendations and Reports of the Administrative Conference of the United States 48-52 (1974), with Pederson, Formal Records and Informal Rule-making, 85 Yale L.J. 38, 64-65 (1975).
. See 185 U.S.App.D.C. at---, 567 F.2d at 34-36 supra.
. For an example of agency disclosure of expertise in a notice of proposed rulemaking, see Environmental Defense Fund, Inc. v. EPA, 179 U.S.App.D.C. 43, 52, 548 F.2d 998, 1007 (1976).
. The Commission’s rules provide in relevant part:
§ 1.415 Comments and replies.
(a) After notice of proposed rule making is issued, the Commission will afford interested persons an opportunity to participate in the rule making proceeding through submission of written data, views, or arguments, with or without opportunity to present the same orally in any manner.
(b) A reasonable time will be’ provided for submission of comments in súpport of or in opposition to proposed rules, and the time provided will be specified in the notice of proposed rule making.
(c) A reasonable time will be provided for filing comments in reply to the original comments, and the time provided will be specified in the notice of proposed rule making.
(d) No additional comments may be filed unless specifically requested or authorized by the Commission.
(e) For time limits for filing motions for extension of time for filing comments or reply comments, see § 146(b).
47 C.F.R. § 1.415 (1975). Substantially similar rules were construed in Sangamon Valley Television Corp. v. United States, supra note 118, 106 U.S.App.D.C. at 33-34, 269 F.2d at 224-225, to prohibit ex parte communications since such communications, as a practical matter, constituted additional comments for which no specific authority had been granted. See 47 C.F.R. § 1.415(d) (1975). At the time of Sanga-mon, however, the Commission’s rules and practice required “a showing of good cause,” 106 U.S.App.D.C. at 34, 269 F.2d at 225, for approval of a request to submit additional comments. In the absence of this language, and given the apparent long-standing Commission interpretation of its own rules to allow ex parte contacts, see Geller br. at 7, the inference that the Commission has violated its own rules is less easy to draw from the rather obvious inconsistency between the published rules’ strict timetable for comment and the actual practice of allowing comment at any time. Nonetheless, the Commission’s practice of announcing a relaxation in its comment and reply-comment rules through the cryptic phrase, “[i]n reaching a decision in this matter, the Commission may take into account any other relevant information before it,” 35 FCC 2d at 899, JA 7, is certainly inconsistent with the spirit of the poli
. I[t] seems to me that [a procedure prohibiting ex parte contacts] will also have a salutary effect on the level of advocacy during arguments before the Commission. I have often felt that we don’t learn as much during oral proceedings as we would [sic]. Many oral presentations are not only repetitious * * * but also, if I may say so, fairly “hard-line”. Compromises, fall-back positions, and the so-called “real facts” are often reserved for supplemental filings and, perhaps, subsequent visits to Commission offices.
Under my proposed procedures, if you decide to hard-line it, you had better be convincing — otherwise, you might just find that we decided to adopt your opponent’s equally hard-line position. Hopefully, however, you can better utilize the opportunity of oral argument to avoid needless repetition, to perhaps zero in on a particularly important aspect of the case and, finally, to provide the Commission with some alternative solutions assuming, just assuming, that your proposed recommendation is not fully adopted.
Remarks of Richard E. Wiley, Chairman, FCC, FCC Mimeo. 21343 (April 30, 1974).
. For this reason, we do not think our opinion in Courtaulds (Alabama) Inc. v. Dixon, 111 U.S.App.D.C. 115, 294 F.2d 899 (1961), should be interpreted to narrow Sangamon. In Cour-taulds it was stipulated that the Federal Trade Commission had considered ex parte communications in formulating its final rules defining rayon. 111 U.S.App.D.C. at 120, 294 F.2d at 904. Nonetheless, in upholding the procedures used this court said, “We find no evidence that the Commission improperly did anything in secret or gave to any interested party advantages not shared by all.” 111 U.S.App.D.C. at 120-121, 294 F.2d at 904-905. This finding alone distinguishes Courtaulds from both Sangamon and the instant case, in both of which the substance of the contacts was kept secret. Indeed, the Courtaulds court specifically noted that ex parte submissions were “canvassed with the appellant, Government spokesmen and others * * 111 U.S.App.D.C. at 120, 294 F.2d at 904. Courtaulds also contained a footnote distinguishing Sangamon on the ground that the rulemaking in Courtaulds did not decide competing private claims to a valuable privilege. Ill U.S.App.D.C. at 120-121 n.16, 294 F.2d at 904-905 n.16.
To the extent this same footnote also suggests that Sangamon did not involve rulemak-ing, it is plainly in error. See Sangamon Valley Television Corp. v. United States, supra note 118, 106 U.S.App.D.C. at 33, 269 F.2d at 224. Nor, as the Commission suggests here, was Sangamon limited to “quasi-judicial” proceedings.
. Of course, the Sunshine Act by its terms does not apply here. Its ex parte contact provisions are couched as an amendment to 5 U.S.C. § 557, and as such the rules do not apply to rulemaking under § 4 of the Administrative Procedure Act, 5 U.S.C. § 553. Moreover, the Act was not in effect at the time of the events in question here.
. Sec.. 4. Individuals within the Executive Office of the President shall follow a policy of (a) refusing to discuss matters relating to the disposition of a case subject to the approval of the President under section 801 with any interested private party, or an attorney or agent for any such party, prior to the President’s decision, and (b) referring any written communication from an interested private party, or an attorney or agent for any such party, to the appropriate department or agency outside of the Executive Office of the President. * * *
Sec. 5. Departments and agencies outside of the Executive Office of the President which regularly make recommendations to the President in connection with the Presidential review pursuant to section 801 shall * * if!.
(a) establish public dockets for all written communications (other than those requiring confidential treatment for defense or foreign policy reasons) between their officers and employees and private parties in connection with the preparation of such recommendations!.]
Executive Order 11920, 12 Weekly Comp, of Presidential Documents 1040, 1041 (1976).
. 49 U.S.C. § 1461 (Supp. V 1974).
. For additional views favoring extension of the ex parte prohibition of the Sunshine Act to informal rulemaking, see Ass’n of the City of New York, Government in the Sunshine Act, reprinted in Hearings on H.R. 10315 & H.R. 9868 before the House Committee on Government Operations, 94th Cong., 1st Sess. 254-257 (1975), and Hearings on the Open Communications Act of 1975, S. 1289, before the Sub-comm. on Administrative Prac. & Proc. of the Senate Comm, on the Judiciary, 94th Cong., 1st Sess. (1976).
. See 185 U.S.App.D.C. at-, 567 F.2d 35-36, supra.
. We do not think these reporting requirements will be unduly burdensome. The overall
1. In the absence of a specific statutory requirement to the contrary, the following are the administrative materials that should be before a court for its use in evaluating, on preenforcement judicial review, the factual basis for rules adopted pursuant to informal procedures prescribed in 5 U.S.C. § 553: (1) the notice of proposed rulemaking and any documents referred to therein; (2) comments and other documents submitted by interested persons; (3) any transcripts of oral presentations made in the course of the rulemaking; (4) factual information not included in the foregoing that was considered by the authority responsible for promulgation of the rule or that is proffered by the agency as pertinent to the rule; (5) reports of any advisory committees; and (6) the agency’s concise general statement or final order and any documents referred to therein. References to the “record” or “whole record” in statutes pertaining to judicial review of rules adopted under Section 553 should be construed as references to the foregoing in the absence of a legislative intent to the contrary. The Conference does not assume that the reviewing court should invariably be confined to the foregoing materials in evaluating the factual basis for the rule.
3 Recommendations & Reports of the Administrative Conference of the United States 49 (1974) (emphasis added; footnote omitted).
Despite what has been said above, it is conceivable that trade secrets or information affecting national defense, if proffered as the basis for rulemaking, should be kept secret. Cf. 5 U.S.C. § 552. We do not think any such issue is before us today, and it will be time enough to determine the bounds of any exemption from disclosure when a proper case is presented.
. 15 FCC 2d 466 (1968); see 185 U.S.App.D.C. at-, 567 F.2d at 20-21, supra.
. Originally films could be freely shown only until two years after general release. Id. at 597. Films over ten years old could be shown once per month without consulting the Commission. Id. Other films could be shown if the Commission was convinced either that they had been offered to broadcast television and refused or that they were unsuitable for broadcast use. Id. Since the effect of the present rules is only to delineate certain classes of films as presumptively unsuitable for or unwanted by broadcast television, it is not clear how much practical difference there would be between the operational impacts of the two rules.
. “No series type of program with interconnected plot or substantially the same cast of principal characters shall be broadcast.” Id. at 598.
. See JA 383, 555-562.
. See First Report and Order, supra note 2, 52 FCC 2d at 12, JA 36.
. See, e. g., Joint Comments of Columbia Pictures Industries, Inc., et al., in Docket 19554, at 3-6 (May 23, 1975), JA 890-893; Transcript of Oral Argument before the Commission in Docket 19554, JA 1184-1187.
. See also note 5 supra.
. See note 27 supra.
. See note 4 supra.
Concurrence Opinion
concurring specially:
Belatedly, I file the following special concurrence.
This particular rulemaking proceeding began with a number of petitions by broadcast interests for reconsideration of earlier Docket orders and requested that certain existing rules of a highly restrictive nature be applied to all cablecasting programming. The Commission responded with:
Notice of Proposed Rule Making in Docket 19554 is hereby announced. All interested persons are invited to file written comments on the rule making proposals on or before September 15, 1972 and reply comment on or befpre September 29,1972. ... In reaching a decision in this matter, the Commission may take into account any other relevant information before it, in addition to the comments invited by this Notice.
35 FCC 2d 899, J.A. 7. This notice, including the provision that “the Commission may take into account any other relevant information ... in addition to the written comments,” constituted the initiation of what has come to be known as informal rulemaking, under 5 U.S.C. § 553(b).
Recently, in Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), a case dealing with informal rulemaking, the Supreme Court held that where there was a statutory requirement that certain findings precede administrative action and the specific findings had not been made, “the full administrative record that was before the Secretary at the time he made his decision,” 401 U.S. at 420, 91 S.Ct. at 824, had to be made available to the reviewing court.
To the extent that our Per Curiam opinion relies upon Overton Park to support its decision as to ex parte communications in this case, it is my view that it is exceeding the authority it cites because here there is no statutory requirement for specific findings nor are the regulations limited to the full administrative record. And our opinion follows up this excessive reliance on Over-ton Park by an overly broad statement of the rule. I refer particularly to the following:
Once a notice of proposed rulemaking has been issued, however, any agency official or employee who is or may reasonably be expected to be involved in the decisional process of the rulemaking proceeding, should “refus[e] to discuss matters relating to the disposition of a [rulemaking proceeding] with any interested private party, or an attorney or agent for any such party, prior to. the [agency’s] decision * * Executive Order 11920, § 4, supra, at 1041. If ex parte contacts nonetheless occur, we think that any written document or a summary of any oral communication must be placed in the public file established for each rulemak-ing docket immediately after the communication is received so that interested parties may comment thereon.
185 U.S.App.D.C. at -, 567 F.2d at 57. I agree that this is the proper rule to apply in this case because the rulemaking undeniably involved competitive interests of great monetary value and conferred preferential advantages on vast segments of the broadcast industry to the detriment of other competing business interests. The rule as issued was in effect an adjudication of the respective rights of the parties vis-a-vis each other. And since that is the nature of the case and controversy that we are deciding and to which our opinion is limited, I would make it clear that that is all we are deciding. I would not make an excessively broad statement to include dictum that could be interpreted to cover the entire universe of informal rulemaking. There are so many situations where the application of such a broad rule would be inappropriate that we should not paint with such a broad brush.
. So far as the orderly conduct of public business permits, an interested person may appear before an agency or its responsible employees for the presentation, adjustment, or determination of an issue, request, or controversy in a proceeding, whether interlocutory, summary, or otherwise, or in connection with any agency function. .
5 U.S.C. ■ § 555(b). Specifically, I would restate the opening clauses of the above quoted provision of our opinion to restrict it to the facts of the case before us, i. e., to read substantially as follows:
*64 Once a notice of proposed rulemaking has been issued that will involve competing private claims to a valuable privilege3 or selective treatment of competing business interests of great monetary value . etc.
There are several other statements in this section of our opinion which are too broad and should be similarly limited to the precise type of case currently before us.
. 5 U.S.C. § 553(b) (1970) provides:
General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include—
(1) a statement of the time, place, and nature of public rule making proceedings;
(2) reference to the legal authority under which the rule is proposed; and
(3) either the terms or substance of the proposed rule or a description of the subjects and issues involved.
Except when notice or hearing is required by statute, this subsection does not apply—
*62 (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or
(B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.
. Professor Kenneth Culp Davis in his Administrative Law Treatise (1958) points out some of the advantages of informal rulemaking and its wide scope:
§ 6.02. Written Presentations, Consultations, and Conferences
Informal written or oral consultation with affected parties or with advisory committees is the mainstay of rule-making procedure. The principal requirement of the APA is “opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity to present the same orally in any manner.” The Model State Act calls for “opportunity to submit data or views orally or in writing.”
The consultative process may take many forms. The administrator or staff member may talk over possible rules with selected*63 parties, by telephone or in person, singly or in groups, by systematically and formally arranged conferences or interviews or in connection with fortuitous contacts occasioned by other business. To frame one set of rules the ICC once conducted 89 informal conferences attended by 1,740 individuals representing 1,286 carriers; to frame another set the Commission sent an interviewer through fifteen states to talk with representatives of motor carriers, members of state commissions, executives of insurance companies, and insurance agents and brokers, and then later conferences were held with committees representing the bus industry, the truck industry, and insurance associations. Sometimes consultation involves collaboration in planning and drafting, as when technical representatives of shipping companies cooperate with technicians of the Customs Bureau in preparing rules concerning construction of vessels. The Emergency Price Control Act provided that “before issuing any regulation or order . . . the Administrator shall, so far as practicable, advise and consult with the representative members of the industry.
When parties are too numerous and individuals may not be representative, some organization often supplies what is needed. For instance, in the FCC “regular contacts are maintained with well-established trade associations and some licensees and carriers. If a matter involving an aviation radio problem is under consideration, for example, the Commission employee invariably communicates with a representative of Aeronautical Radio, Inc., a non-profit cooperative association whose members are the leading air transportation lines. Whenever the Commission is considering the promulgation of regulations dealing with common carriers, it always attempts to obtain the cooperation of State regulatory bodies and the National Association of Railroad and Utilities Commissioners . in most circumstances the Amateur Radio Relay League and the National Association of Broadcasters can effectively represent their membership.” The Attorney General’s Committee admiringly described the rule-making methods of the Board of Governors of the Federal Reserve System: “The practice of the Board ... is especially noteworthy because of the Board’s virtually complete reliance upon conferences rather than hearings as a means of enabling affected parties to participate in the rule-making process. Over a period of time the Federal Reserve System has developed a procedure of consultation and conference. . Outside views come from replies to letters which the Board sends out, and orally at conferences. Usually statements are put in writing and a stenographic report of conferences is made. Frequently, the interchange of data and views is facilitated by mimeographing them, both within and without the staff. The procedure is flexible, thorough, adapted to bringing the knowledge of an expert agency to bear upon its rule-making problems, and fair. . . . ”
The Attorney General’s Committee generalized concerning conferences: “The practice of holding conferences of interested parties in connection with rule-making introduces an element of give-and-take on the part of those present and affords an assurance to those in attendance that their evidence and points of view are known and will be considered. As a procedure for permitting private interests to participate in the rule-making process it is as definite and may be as adequate as a formal hearing. If the interested parties are sufficiently known and are not too numerous or too hostile to discuss the problems presented conferences have evident advantages over hearings in the development of knowledge and understanding.”
The superiority of the conference over the hearing has been convincingly described by a commentator: “Let it not be assumed too easily that hearings are a significant protection against bureaucratic absolutism. To a slothful administrator a hearing precedent to regulation may be a God-given opportunity to avoid work and thought. He need only listen with impassively judicial countenance and then forget all he has heard. It is the conference with its give and take ideas and information, with its possibilities of detailed exploration of minor points and hidden corners which stirs the mind to action. Moreover, there are demonstrably situations where hearings produce little if anything of value.”
1 K. Davis, Administrative Law Treatise § 6.02, pp. 363-365 (1958) (footnotes omitted).
. See Sangamon Valley Television Corp. v. United States, 106 U.S.App.D.C. 30, 43, 269 F.2d 211, 224 (1959).
Concurrence Opinion
concurring:
In joining the court’s opinion, I wish to emphasize the view that the Federal Communications Commission lacks the power to control the content of programs originating in the studios of cablecasters. Such programs involve neither retransmission of signals received over the air from conventional television broadcasting nor transmission over television broadcasting frequencies. They are offered to users of television sets on terms the users are free to accept or reject.
It seems to me that if there could be any governmental interest justifying this species of censorship, it is an interest which Congress has not empowered the Commission to assert. In relation to cablecasting, the power is so fraught with the potential for impingement upon First Amendment rights that it should not be sanctioned by implication.
The holdings in United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968), United States v. Midwest Video Corp., 406 U.S. 649, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972), and other cases in their line, when read and measured on the particular facts in each, seem to me to be consistent with the views here expressed.
Mr. Chief Justice Burger, concurring in the result in Midwest, upheld Commission action regulating CATV systems which made extensive use of television broadcasting signals. In his opinion, after noting that that “case presented] questions of extraordinary difficulty and sensitivity in the communications field” (406 U.S. at 675, 92 S.Ct. at 1874), the Chief Justice declared his view that the Commission’s position strained “the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts.” (Id. at 676, 92 S.Ct. at 1874.) In my view, Commission control of program content of cablecasting goes well beyond those outer limits.
Opinion Concurring Specially filed by Circuit Judge MacKINNON.
