Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-01153/USCOURTS-caDC-01-01153-0/pdf.json

Parties Involved:
Costa de Oro Television, Inc.
Petitioner
CoxCom, Inc.
Intervenor
Federal Communications Commission
Respondent
United States of America
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 18, 2002 Decided June 28, 2002

No. 01-1153

Costa de Oro Television, Inc.,

Petitioner

v.

Federal Communications Commission and

United States of America,

Respondents

CoxCom, Inc.,

Intervenor

On Petition for Review of Orders of the

Federal Communications Commission

Barry A. Friedman argued the cause for the petitioner.

Joel Marcus, Counsel, Federal Communications Commission, argued the cause for the respondents. Jane E. Mago,

General Counsel, Daniel M. Armstrong, Associate General

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Counsel, Federal Communications Commission, and Catherine G. O'Sullivan and Andrea Limmer, Attorneys, United

States Department of Justice, were on brief.

Peter H. Feinberg and Scott Dailard were on brief for the

intervenor.

Before: Ginsburg, Chief Judge, Henderson and Tatel,

Circuit Judges.

Opinion for the court filed by Circuit Judge Henderson.

Karen LeCraft Henderson, Circuit Judge: This case involves a dispute over the procedures the Federal Communications Commission (FCC or Commission) uses to determine

local television market designations pursuant to the cable

television mandatory carriage rules. In particular, Costa de

Oro Television, Inc. (Costa) petitions for review of two FCC

orders that sustain earlier market modification rulings but, at

the same time, change the market definition mechanism.

Costa also seeks review of the FCC decision promoting the

use of certain data (the Longley-Rice signal strength prediction methodology maps) in market modification proceedings.

Because we conclude that the Commission "articulated a

rational explanation" for its decisions, Eagle-Picher Indus.,

Inc. v. EPA, 759 F.2d 905, 921 (D.C. Cir. 1985), we deny

Costa's petition.

I. Background

A. Statutory and Regulatory Background

Concerned that local television broadcast stations were no

longer able to compete with the growing cable industry,1 the

Congress passed the Cable Television Consumer Protection

and Competition Act of 1992 (Cable Act), 47 U.S.C. ss 521 et

seq. The Cable Act includes "must-carry" provisions that

require "[e]ach cable operator" to carry the signals of a

specific number of "local commercial television stations." 47

__________

1 See Congressional Findings and Policy: Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385,

s 2(a), 106 Stat. 1460 (1992), reprinted in 47 U.S.C.A. s 521 note.

U.S.C. s 534(a).2 A "local commercial television station" is

defined as "any full power television broadcast station ...

that, with respect to a particular cable system, is within the

same television market as the cable system." 47 U.S.C.

s 534(h)(1)(A). A local commercial television station that

exercises its statutory must-carry right is entitled to cable

carriage in its local market but it does not receive compensation therefor from the cable operator. The Cable Act also

gives a broadcaster the option of cable carriage under a

retransmission consent provision that permits the broadcaster

and the cable operator to negotiate cable carriage arrangements and the broadcast station to receive compensation in

return. Id. s 325(b). Every three years, the broadcaster is

required to make an election between the must-carry and the

retransmission consent options. See id. s 325(b)(3)(B). The

first three-year cycle began in June 1993. 47 C.F.R.

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s 76.64(f)(1). A broadcast station's "market" is "determined

by the Commission by regulation or order using, where

available, commercial publications which delineate television

markets based on viewing patterns." 47 U.S.C.

s 534(h)(1)(C)(i). In 1992, the year the Cable Act was enacted, the Commission's rules, now codified at 47 C.F.R.

s 76.55(e)(2), defined a station's market by reference to the

Area of Dominant Influence (ADI) data produced by Arbitron, an audience research organization. Id. s 76.55(e)(1).

The ADI describes a particular geographic television market

based on measured viewing patterns. See Report and Order

and Further Notice of Proposed Rulemaking, Definition of

Markets for Purposes of the Cable Television Broadcast

__________

2 These provisions are found in section 4 of the Cable Act, adding

new sections 614 and 615 to the Communications Act of 1934

(Communications Act), 47 U.S.C. ss 151 et seq. In upholding the

constitutionality of the must-carry provisions, the United States

Supreme Court noted, "Congress sought to preserve the existing

structure of the Nation's broadcast television medium while permitting the concomitant expansion and development of cable television,

and, in particular, to ensure that broadcast television remains

available as a source of video programming for those without cable."

Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 652 (1994).

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Signal Carriage Rules, 11 FCC Rcd 6201, 6203 p 4 (1996),

(First Order). In general, every American county is assigned

to a discrete market according to those local-market stations

with a preponderance of total viewing hours in the county.

Id.

In December 1995, shortly after the first three-year election cycle ended, Arbitron discontinued its television ratings

business and ceased publishing updated ADI data. In response and after notice and comment rulemaking, the FCC

determined to continue to use the ADI market list for the

1996 election and to substitute Nielsen Media Research's

television ratings service beginning with the 1999 election.

See First Order, 11 FCC Rcd at 6206-07 p 14. Nielsen uses a

market designation called the "designated market area"

(DMA). Both the ADI and the DMA use audience survey

information from cable and noncable households to determine

the assignment of counties to local television markets based

on local stations' respective viewer shares. Id. at 6207-08

p 16. Nonetheless, because of differences in methodology as

well as sampling and statistical variation, the switch to the

DMA-based market resulted in the reassignment of some

counties. Id. Differences between the 1991-1992 ADI market list and the 1995-1996 DMA market list manifested a

change in 126 markets with approximately 79 markets gaining

counties and 83 markets losing counties. Id. at 6208-09 p 18.

While a broadcast station's market is generally based on

the ADI (now DMA) data, section 614(h) directs the Commission to consider an individual request for a change in market

designation. The FCC may "with respect to a particular

television broadcast station, include additional communities

within its television market or exclude communities from such

station's television market to better effectuate the purposes of

this section." 47 U.S.C. s 534(h)(1)(C)(i). In considering

such requests, the Commission "shall afford particular attention to the value of localism" by taking into account the

following factors, among others:

(I) whether the station, or other stations located in the

same area, have been historically carried on the cable

system or systems within such community;

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(II) whether the television station provides coverage

or other local service to such community;

(III) whether any other television station that is eligible to be carried by a cable system in such community in

fulfillment of the requirements of this section provides

new coverage of issues of concern to such community or

provides carriage or coverage of sporting and other

events of interest to the community;

(IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable

system or systems in such community.

Id. s 534(h)(1)(C)(ii)(I)-(IV). Typically, a request is made

either by a broadcast station wanting to be included as part of

a cable system in a market outside its DMA designation or by

a cable operator attempting to exclude a broadcast station

from the cable operator's market. The Cable Act's legislative

history recites as a rationale of the 614(h) market modification procedure that:

where the presumption in favor of ADI [now DMA]

carriage would result in cable subscribers losing access

to local stations because they are outside the ADI in

which a local cable system operates, the FCC may make

an adjustment to include or exclude particular communities from a television station's market consistent with

Congress' objective to ensure that television stations be

carried in the areas which they serve and which form

their economic market.

H.R. Rep. No. 102-628, at 97 (1992). During the period

Arbitron's ADI market areas were in use, the Commission

ruled on numerous market modification requests filed pursuant to section 614(h). See, e.g., In re Complaints of Costa de

Oro Television, Inc., 10 FCC Rcd 9468 (1995), aff'd on

recons., 12 FCC Rcd 22, 464 (1997), pet. for review denied,

Costa de Oro Television, Inc. v. FCC, 172 F.3d 919 (D.C. Cir.

1998). The interplay between the FCC's earlier market

modification decisions under the ADI regime and its move to

a DMA-based market definition is the focus of Costa's appeal.

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B. History of Costa's License

Costa is the licensee of television station KJLA3 located in

Ventura, California. Ventura is in Ventura County. Although Arbitron included Ventura County in the ADI market

for greater Los Angeles, it assigned KJLA to the Santa

Barbara-Santa Maria-San Luis Obispo ADI market. Nielson, however, has always placed KJLA in the Los Angeles

DMA. The change in market designation results in a corresponding change in KJLA's must carry right because a

broadcast station generally has a right to carriage within its

"market" only. While the Commission ordered carriage of

KJLA throughout the Los Angeles market once the station

was assigned to that DMA, it continued to exclude certain

communities that were the subject of earlier 614(h) market

modification rulings. See Costa de Oro Television, Inc., 15

FCC Rcd 15,069 (2000); Costa de Oro Television, Inc., 15

FCC Rcd 12,637 (2000).

As part of the ADI-to-DMA change, the Commission considered, and sought comment on, the continuing validity of its

earlier 614(h) market modification rulings made using ADI

data. Costa requested the Commission to reconsider de novo

any prior section 614(h) ruling based on ADI data if, as in

KJLA's case, the ADI-to-DMA change resulted in the reassignment of a station to a new market. In the Second Report

and Order on Definition of Markets for Purposes of the Cable

Television Broadcast Signal Carriage Rates, 14 FCC Rcd

8366 (1999), (Second Order), the Commission rejected Costa's

request. It also decided to continue using ADI data to

process any market modification request filed before the

effective date of the change to DMA, that is, before January

1, 2000. In its Second Order, however, the FCC noted that,

"[i]n cases in which the conversion to DMAs will have a direct

consequence, we will take the future DMA assignment into

__________

3 The station was formerly known by the call letters KSTV-TV.

The call letters were changed to KJLA(TV) on July 20, 1998. See

Call Sign Report No. 336, located at http://www.fcc.gov/Burea

us/Mass_Media/Public_Notices/Call_Sign_Changes/pnmm8110.txt.

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account." Second Order p 42. With respect to prior market

modification rulings, then, "where the Commission has previously decided to delete a community from a station's ADI

market, that deletion will remain in effect after the conversion to DMAs." Second Order p 43. Costa petitioned for

reconsideration and the FCC denied the petition, stating that

"we continue to believe that the reasoned determinations

reached in market modification proceedings should not be

upset as a result of the conversion to the DMA standard."

Order on Reconsideration on Definition of Markets for Purposes of the Cable Television Broadcast Signal Carriage

Rules, 16 FCC Rcd 5022 (2001), (Reconsideration Order)

p 17.

In the First Order, the Commission sought comment on

measures to expedite the modification process by establishing

more "focused and standardized evidentiary specifications."

First Order, 11 FCC Rcd at 6225. It subsequently issued a

list of information required to be included in each modification request. Second Order, 14 FCC Rcd at 8385-86 p 44.

Significant here, the Second Order also encouraged a petitioner to provide "a more specific technical coverage showing,

through the submission of service contour prediction maps

that take terrain into account, particularly maps using the

Longley-Rice prediction methodology." Id. at 8388 p 50.

Costa's petition for reconsideration challenged the use of the

Longley-Rice method as contrary to the intent of the Cable

Act because it allegedly imposed an unreasonable financial

burden by reintroducing the "UHF handicap." See Costa's

Pet. for Recons. at 7; see also Reconsideration Order, 16

FCC Rcd at 5026 p 11 n.28 ("UHF handicap" refers to "the

difficulty that UHF stations had in accessing all of their

potential audience over the air because of the inferior signal

propagation characteristic of the UHF band"). Without

questioning the accuracy of the Longley-Rice maps, Costa's

concern was that a cable company using Longley-Rice had

"yet another quiver in [its] bow with which to avoid mustcarry obligations." Id. In the Reconsideration Order, the

Commission emphasized with regard to Longley-Rice that "it

is frequently important in the market modification process to

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find as precisely as possible the contours formed by a station's signal." Reconsideration Order, 16 FCC Rcd at 5027

p 13-14.

Costa petitions for review of portions of both the Second

Order and the Reconsideration Order.

II. Analysis

We review the Commission's orders "under the deferential

standard mandated by section 706 of the Administrative

Procedure Act, which provides that a court must uphold the

Commission's decision unless 'arbitrary, capricious, an abuse

of discretion, or otherwise not in accordance with the law.' "

Achernar Broad Co. v. FCC, 62 F.3d 1441, 1445 (D.C. Cir.

1995) (quoting 5 U.S.C. s 706). In this task, we do not

substitute our judgment for that of the agency but rather

look to see whether its decision is based on a "consideration

of the relevant factors and whether there has been a clear

error of judgment." Damsky v. FCC, 199 F.3d 527, 533 (D.C.

Cir. 2000) (citations omitted); see Motor Vehicle Mfrs. Ass'n

v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42-44 (1983).

Applying this standard, we conclude that the Commission did

not act arbitrarily in deciding not to reconsider its prior

market modification rulings.

Costa argues that with respect to a station that, like KJLA,

has changed markets, any prior market modification ruling

made under the ADI standard is obsolete. The FCC responds that market modification decisions turn on factspecific assessments of the four section 614(h) factors, see

supra pp. 4-5, irrespective of the initial ADI or DMA market

designation, and, therefore, a change in market assignment

does not change the Commission's assessment of a station's

"true market." Nonetheless, Costa asserts, initial market

designations "exert broad influence over market modification

proceedings by determining the presumption of carriage and

the allocation of burden of proof," see Reply Br. at 5. Because the prior market modification rulings could not have

considered a station's DMA market designation and conseUSCA Case #01-1153 Document #686227 Filed: 06/28/2002 Page 8 of 12
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quent "carriage" presumption, Costa urges, the FCC acted

arbitrarily in not reconsidering them.

Both sides agree that generally a broadcast station has a

presumptive must-carry right in the ADI/DMA market in

which it is located. Costa, however, overstates the continued

importance of the initial designation once a broadcaster or

cable operator requests a section 614(h) market modification

ruling. Based on the statute's plain language, the FCC

modifies a market with "particular attention to the value of

localism" by applying the factors listed in section

614(h)(1)(C)(ii) to the specific circumstances of the station

and community. In contrast, a station's ADI/DMA market

designation is merely the initial empirical assessment of the

station's market. In its Implementation of the Cable Television Consumer Protection and Competition Act of 1992, the

Commission stated:

Section 614(h)(1)(C) of the 1992 Act permits the Commission to add to or subtract communities from a station's

television market to better reflect the marketplace conditions following a written request. The Commission also

may determine that particular communities are part of

more than one television market. The procedures recognize that ADI markets may not always accurately reflect

the area in which a particular television station should be

entitled to cable carriage, and will help ensure that

disruption to subscribers over the broadcast signals they

receive is minimized.

8 FCC Rcd 2965, 2976 p 42 (1993). In response to a section

614(h) request, the Commission assesses the initial ADI (now

DMA) market assignment using the statutory factors, including whether the station provides coverage or other local

service to the community. To be sure, because a broadcast

station enjoys a presumption of carriage in the ADI or DMA

in which it is located, the initial market designation may

dictate which party has the burden of seeking modification.

For example, a cable operator in the Los Angeles market

must make a section 614(h) request indicating that Costa does

not serve the community (within the Los Angeles market) in

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order to exclude Costa from the cable system's channel lineup

for that community. Once the cable operator comes forward,

the FCC must evaluate whether the "value of localism"

(within the meaning of section 614(h)) is met by permitting

the cable operator to exclude Costa from that community

notwithstanding Costa's DMA assignment to the Los Angeles

market.4 There is no evidence that any prior market modification ruling was based solely on the initial market designation nor can Costa demonstrate that the cable operator must

shoulder anything more than the burden of production. Because the ADI modification rulings turned on the statutory

factors rather than on KJLA's Santa Barbara or Los Angeles

initial market designation, we conclude that the Commission

acted reasonably in rejecting Costa's invitation to revisit the

same factors.

Moreover, even if the initial market designation does "color

the entire tenor of the modification process" in some respect,

Costa Br. at 14, the Commission, beginning with its First

Order, has pledged to consider a station's current DMA

assignment as part of any future section 614(h) proceeding.

See Second Order, 14 FCC Rcd at 8384 p 42 ("In cases in

which the conversion to DMAs will have a direct consequence,

we will take the future DMA assignment into account, as we

have done since the First Order was released."). To the

extent Costa disputes whether the FCC will adequately weigh

its current DMA assignment in a future modification ruling,

that ruling will be subject to review by this Court at the

appropriate time with the benefit of the facts of record.5

__________

4 The Los Angeles market is geographically large, stretching

approximately 300 miles north to south and 250 miles east to west.

FCC Br. at 7 (citing Media One of Los Angeles, Inc., 15 FCC Rcd

at 19,393). Ventura County, where KJLA's transmitters are located, lies in the northwestern part of the market separated from most

of the market by several moutain ranges.

5 Costa points to a prior market modification ruling to demonstrate the importance of the initial market designation. See In re

Petition of Costa de Oro Television, Inc. for Modification of

Market, 13 FCC Rcd 4360 (1998). There, the FCC stated that it

generally uses an "extra measure of caution" when a "station from

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Furthermore, the Commission's desire "to avoid disturbing

settled expectations," Reconsideration Order, 16 FCC Rcd

5028 p 17, further convinces this court that the Commission's

decision to let the prior modification rulings stand does not

constitute a "clear error of judgment." Motor Vehicle Mfrs.

Ass'n, 463 U.S. at 43 (citations omitted).

Finally, Costa's challenge to the Commission's decision to

encourage use of Longley-Rice maps misses the mark. At

oral argument, Costa appeared to maintain that the Commission must rely on Grade B contour maps (even if LongleyRice maps more accurately assess a station's signal) simply

because a cable operator may use Longley-Rice maps to

exclude broadcast stations. A Grade B contour map shows

the area in which 50 per cent of television sets receive a

viewable signal via antenna 50 per cent of the time. See 47

C.F.R. s 73.684 (1997). The Grade B contour map, however,

indicates only "the approximate extent of coverage over average terrain in the absence of interference from other television stations." See id. s 73.683(a) (2002); see also ACLU v.

FCC, 823 F.2d 1554, 1560-61 n.8 (D.C. Cir. 1987) (Grade B

contour "is based on general engineering principles, and does

not take into account site-specific factors that could affect the

actual broadcast signal strength in a community"). In contrast, the Longley-Rice model "provides a more accurate

representation of a station's technical coverage area because

it takes into account such factors as mountains and valleys

that are not specifically reflected in a traditional Grade B

contour analysis." Second Order, 14 FCC Rcd at 8388 p 52.

In determining whether a television station in fact provides

"coverage or other local service" to a community, the

Longley-Rice model enables the Commission to assess this

section 614(h) factor with the best available evidence. The

Commission has plainly provided "more than [the] modicum

__________

one market is proposing to obtain mandatory carriage rights in the

core of another market." Id. at 4374 p 29. It then concluded,

however, that "this concern" has "less significance here than it

might in other cases," id., acknowledging the fact that Costa's

prospective DMA assignment to the Los Angeles market would

moot the issue.

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of reasoned analysis" required to affirm its decision to promote the use of Longley-Rice maps in market modification

proceedings. Hispanic Info. & Telecomms. Network, Inc. v.

FCC, 865 F.3d 1289, 1297-98 (D.C. Cir. 1989). Moreover, the

Commission's conclusion that Longley-Rice maps are more

accurate than Grade B contours is "precisely the type of

technical issue on which we defer to the Commission's expertise." Keller Communications v. FCC, 130 F.3d 1073, 1077

(D.C. Cir. 1997) (citing MCI Cellular Tel. Co. v. FCC, 738

F.2d 1322, 1333 (D.C.Cir.1984)). Regarding Costa's concern

that in some instances the Grade B contour maps may give

more accurate assessments of a station's coverage, we find

the Commission's response in its Reconsideration Order sufficient: "The Second Report and Order encourages parties to

provide maps using the Longley-Rice methodology. They

are not required to do so. Parties may submit traditional

Grade B contour maps in addition to, or instead of, LongleyRice maps and may explain why they believe Grade B analysis is more relevant." Reconsideration Order, 16 FCC Rcd

at 5027 p 50 (emphasis added).

For the foregoing reasons, Costa's petition for review is

Denied.

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