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07-5553-ag Cablevision Systems Corporation v. FCC 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 4 August Term 2007 5 (Argued:April 7, 2008 Decided: June 22, 2009) 6 Docket No. 07-5553-ag 7 -----------------------------------------------------x 8 CABLEVISION SYSTEMS CORPORATION, 9 10 Petitioner, 11 12 -- v. -- 13 14 FEDERAL COMMUNICATIONS COMMISSION, UNITED STATES OF 15AMERICA, 16 17 Respondents, 18 19WRNN LICENSE COMPANY, LLC, 20 21 Intervenor. 22 23 -----------------------------------------------------x 24 25 B e f o r e :WALKER, CABRANES, and RAGGI, Circuit Judges. 26 27 Petition for review of an order of the Federal 28 Communications Commission directing petitioner Cablevision to 29 carry the signal of television station WRNN pursuant to 47 U.S.C. 30 § 534(a)-(b) & (h)(1)(C). Cablevision argues that the 31 Commission’s decision contravenes the text and purpose of the 32 statute, and that the statute, as applied, violated Cablevision’s 33 First and Fifth Amendment rights. 34 PETITION DENIED.2 1 HENK BRANDS (Allan J. Arffa and J. 2 Adam Skaggs, on the brief), Paul, 3 Weiss, Rifkind, Wharton & Garrison 4 LLP, Washington, D.C., and Howard 5 J. Symons and Tara M. Corvo (on the 6 brief), Mintz, Levin, Cohn, Ferris, 7 Glovsky and Popeo, P.C., 8 Washington, D.C., for Petitioner. 9 10 JACOB M. LEWIS (Matthew B. Berry, 11 Joseph R. Palmore, and Nicholas A. 12 Degani, Federal Communications 13 Commission, and Thomas O. Barnett, 14 John J. O’Connell, Jr., Catherine 15 G. O’Sullivan, and Robert J. 16 Wiggers, U. S. Department of 17 Justice, on the brief), Federal 18 Communications Commission, 19 Washington, D.C., for Respondent. 20 21 ANDREW G. MCBRIDE (Todd M. 22 Stansbury and William S. Consovoy, 23 on the brief), Wiley Rein LLP, 24 Washington, D.C., for Intervenor. 25 26 Jane E. Mago, Marsha J. MacBride, 27 and Erin L. Dozier (on the brief), 28 National Association of 29 Broadcasters, Washington, D.C., for 30 Amicus Curiae National Association 31 of Broadcasters. 32 33 JOHN M. WALKER, JR., Circuit Judge: 34 The must-carry provisions of the Cable Television Consumer 35 Protection and Competition Act (“1992 Cable Act” or “Cable Act”) 36 require cable operators to transmit, over their cable systems, 37 the signals of certain broadcast stations operating in the same 38market. The statute also gives the Federal Communications 39 Commission (“FCC” or “the Commission”) authority to modify a 40 given broadcast station’s market, thus potentially changing the 41 universe of cable operators required to carry that station. In3 1 this case, Cablevision, a cable systems operator, petitions for 2 review of the FCC’s decision to include certain Long Island 3 communities in the market of WRNN, a station broadcasting from 4 upstate New York, and the resulting order directing Cablevision 5 to carry WRNN on its Long Island cable systems. Because we find 6 no constitutional or legal error in the FCC’s decision, we DENY 7 the petition. 8 BACKGROUND 9 I.The 1992 Cable Act and Its Must-Carry Provisions 10 The must-carry provisions of the 1992 Cable Act require 11 “cable operators,” such as Cablevision, to carry the signals of a 12 number of “local commercial television stations.” 47 U.S.C. § 13 534(a). The statute caps the number of such stations that a 14 cable operator must carry at “up to one-third of the aggregate 15 number of usable activated channels” on that operator’s system. 16 Id. § 534(b)(1)(B). For our purposes, a “local commercial 17 television station” is a broadcast station (i.e., a station that 18 transmits its signal over the airwaves) that, “with respect to a 19particular cable system, is within the same television market as 20 the cable system.” Id. § 534(h)(1)(A). 21 A broadcast station’s market “shall be determined by the 22 Commission by regulation or order using, where available, 23 commercial publications which delineate television markets based 24 on viewing patterns.” Id. § 534(h)(1)(C)(i). Currently, the4 1 Commission relies on the commercial publications of Nielsen Media 2 Research that divide the nation into a series of coterminous 3 geographic “Designated Market Areas” (“DMAs”) based on viewership 4 patterns. 47 C.F.R. § 76.55(e)(2). For example, the New York 5 City DMA contains not only the five boroughs of the city, but 6 also neighboring areas of Long Island, Connecticut, New Jersey, 7 and upstate New York, as well as limited areas of Pennsylvania, 8 because people in those areas, in the aggregate, watch the same 9 television channels. 10 The upshot of the must-carry provisions is that, in general, 11 each cable operator is required to carry the signal of every 12 broadcast station in its DMA, until it has dedicated “one-third 13 of the aggregate number of usable activated channels” on its 14 system to such channels. 47 U.S.C. § 534(b)(1)(B); see also id. 15 § 534(a)-(b), (h)(1)(C). Both Cablevision and WRNN are located 16within the New York City DMA, and Cablevision currently has fewer 17 than one-third of its channels dedicated to must-carry stations. 18 The only relevant exception to this must-carry rule occurs 19 under the statute’s market modification provision. Pursuant to 20 this provision, the FCC may, on written request, add certain 21 communities to, or exclude certain communities from, a given 22 broadcast station’s market “to better effectuate the purposes” of 23 the statute. § 534(h)(1)(C)(i). If a given community is 24 excluded from a station’s market, cable operators in that 25 community are no longer required to carry that station. If a5 1 given community is added, cable operators in that community must 2 commence carriage of that station’s signal unless they already 3 devote one-third of their channels to local broadcast stations. 4 See id. 5 In considering market modification requests, the statute 6 instructs the FCC to 7 afford particular attention to the value of localism by 8 taking into account such factors as-- 9 (I) whether the station, or other stations located in the 10 same area, have been historically carried on the cable 11 system or systems within such community; [the “historical 12 carriage factor”] 13 (II) whether the television station provides coverage or 14 other local service to such community; [the “local service 15 factor”] 16 (III) whether any other television station that is eligible 17 to be carried by a cable system in such community in 18 fulfillment of the requirements of this section provides 19 news coverage of issues of concern to such community or 20 provides carriage or coverage of sporting and other events 21 of interest to the community; [the “other stations factor”] 22 and 23 (IV) evidence of viewing patterns in cable and noncable 24 households within the areas served by the cable system or 25 systems in such community [the “viewing patterns factor”]. 26 27 47 U.S.C. § 534(h)(1)(C)(ii)(I)-(IV). The FCC’s interpretation 28 and application of this provision lies at the heart of this 29 dispute. 30 II.The Turner Litigation 31 Shortly after the passage of the 1992 Cable Act, several 32 cable operators mounted a First Amendment challenge to the 33 legislation by claiming that the statute, on its face, 34 impermissibly burdened the rights both of cable programmers, who 35produce television shows exclusively for cable distribution6 1 (e.g., HBO, TNT), and of cable operators, who actually transmit 2 the programming to consumers via coaxial cable (e.g., 3 Cablevision). In Turner Broadcasting System, Inc. v. FCC 4 (“Turner I”), 512 U.S. 622 (1994), the Supreme Court held that 5 the statute’s requirements were content neutral, and therefore 6 subject to intermediate scrutiny. The Court’s majority opinion 7 announced that, at least in the abstract, the statute served 8 three “important,” interrelated interests articulated by Congress 9 in the statute’s findings: “(1) preserving the benefits of free, 10 over-the-air local broadcast television, (2) promoting the 11 widespread dissemination of information from a multiplicity of 12 sources, and (3) promoting fair competition in the market for 13 television programming.” Id. at 662. The majority, however, 14 concluded that “deficienc[ies]” in the record prevented it from 15 determining whether the statute was sufficiently tailored to 16 further those interests without substantially burdening protected 17 speech and remanded for further proceedings. Id. at 667-68. 18 Significantly, the majority noted that the district court 19 had not addressed whether the language of the market modification 20 provision, with its references to “the value of localism” and to 21 stations “provid[ing] news coverage of issues of concern to such 22 community,” altered the content-neutrality of the statute. Id. 23 at 643 n.6 (quoting 47 U.S.C. § 534(h)(1)(C)(ii)). The Court did 24 not address this point. Id. In a dissent joined by three other 25 justices, Justice O’Connor, relying in part on the language of7 1 the market modification provision, wrote that the must-carry 2 regulation was content-based, and thus subject to strict 3 scrutiny, such that it could only be justified by a compelling 4 governmental interest and would have to be narrowly tailored to 5 achieve its intended purpose. Id. at 680. 6 In 1997, with a more fully developed record before it, the 7 Supreme Court held that “the must-carry provisions further 8 important governmental interests” and that the provisions did not 9violate the First Amendment because they did “not burden 10 substantially more speech than necessary to further those 11 interests.” Turner Broad. Sys., Inc. v. FCC (“Turner II”), 520 12 U.S. 180, 185 (1997). None of the opinions in Turner II 13 specifically mentioned or cited the market modification 14 provision. 15 III.Market Modification Decisions in the New York City DMA 16 In 1996, Cablevision petitioned the FCC to exclude a number 17 of communities from the markets of several local broadcast 18 stations, including WRNN, a station licensed in Kingston, New 19 York that transmitted its signal from Overlook Mountain in 20 Woodstock, New York.The FCC’s Cable Services Bureau (the 21 “Bureau”) granted Cablevision’s request in part and denied it in 22 part, excluding communities in Long Island’s Nassau and Suffolk 23 counties from WRNN’s market, but declining to exclude communities 24 elsewhere, such as New York’s Westchester County and1 “Area of dominant influence” (“ADI”) is the pre-2001 1 2 equivalent of the term “Designated Market Area” (“DMA”). 8 1 Connecticut’s Fairfield County. Cablevision Sys. Corp. (“1996 2 CSB Order”), 11 F.C.C.R. 6453 (1996). In making both decisions, 3 the Bureau noted that, in the New York DMA, reliance on the four 4 enumerated factors alone would not allow it to “take into account 5 the particular difficulties faced by these stations in light of 6 the purposes of the carriage rule.” Id. at 6475 ¶ 50. 7Accordingly, the Bureau also considered the station’s “Grade B 8 contour,” i.e., the area within which viewers can receive its 9broadcast signal over the air, and the “geography and terrain” 10 separating the target communities from the broadcasting station. 11 Id. at 6480-81 ¶ 67. In 1997, the FCC affirmed the Bureau’s 12 decision, noting that 13 Grade B contour coverage, in the absence of other 14 determinative market facts (i.e. where the four statutory 15 factors by themselves define the market, where there is no 16 clear proof that the contour fails to reflect actual 17 coverage, or where there is a terrain obstacle such as a 18 mountain range or a significant body of water) is an 19 efficient tool to adjust market boundaries because it is a 20 sound indicator of the economic reach of a particular 21 television station’s signal. 22 23Market Modifications and the New York Area of Dominant Influence 24 (“1997 FCC Order”),12 F.C.C.R. 12262, 12271 ¶ 17 (1997) 1 25 (footnote omitted). 26When WRNN and several other stations petitioned for review, 27 this court endorsed the agency’s reliance on Grade B contour in 28 particular and factors not enumerated in the statute in general.9 1 We approved of the view that “the four factors [enumerated in the 2 statute] are not exclusive,” and we held that “[t]he FCC and the 3 Cable Services Bureau, experts in the area of regulation of the 4 television industry, carefully and properly analyzed the 5particular facts of the various petitions under the four factors 6 listed in the statute and under non-statutory factors.” WLNY-TV, 7 Inc. v. FCC, 163 F.3d 137, 141-42 (2d Cir. 1998). 8 IV.The Current Proceedings 9 Subsequent to the outcome of the 1996-98 proceedings, WRNN 10moved its transmitter to Beacon Mountain, New York, some 50 miles 11 closer to Manhattan, and commenced digital-only broadcast 12 operations. In 2005, it petitioned the FCC to add back some of 13 the communities in the New York City DMA in its market so that 14 Time Warner Cable, which served the relevant communities, would 15 have to carry WRNN on its system. Relying primarily on Grade B 16 contour and local programming, the FCC’s Media Bureau (the 17 successor to the Cable Services Bureau) granted WRNN’s request. 18 WRNN License Co., 20 F.C.C.R. 7904, 7911 ¶¶ 15, 16 (2005). Time 19Warner Cable did not appeal the decision to the full Commission. 20 In 2006, relevant to the present review, WRNN petitioned for 21 re-inclusion of several communities, this time served by 22 Cablevision, in Long Island’s Nassau and Suffolk Counties. The 23 Bureau denied the request as to a number of the Suffolk County 24 communities based on WRNN’s failure to comply with “standardized 25 evidentiary requirements.” WRNN License Co. (“2006 Bureau10 1 Order”), 21 F.C.C.R. 5952, 5956 ¶ 9 (2006). WRNN does not seek 2 review of the Bureau’s decision as to these communities. As to 3 the remaining Nassau and Suffolk communities, which we will refer 4 to as the “Long Island communities,” the Bureau noted that the 5 enumerated market modification factors did not offer strong 6 support for WRNN’s position. The parties vigorously disputed the 7 amount of Long Island-specific programming WRNN offered, and the 8 Bureau ultimately concluded that the local service factor weighed 9 against carriage. As to the historical carriage factor, the 10 Bureau found it insignificant that both cable systems in 11 neighboring communities and digital broadcast satellite operators 12 in the Long Island communities carried WRNN. It also accorded 13 little weight to the fact that Verizon was scheduled to begin 14 carrying WRNN on its FiOS system, which delivers television 15programming to subscribers over fiber optic phone lines, thus 16 competing directly with cable television service. Nonetheless, 17 the Bureau granted WRNN’s request to include the remaining Long 18 Island communities, noting that Commission precedent “instructs 19 us to give little weight to the level of viewership [that] 20 station[s] like WRNN achieve” and to treat Grade B contour as a 21 “very relevant factor” when “the other [enumerated] factors would 22 not add significantly to the analysis of a station’s market.” 23 Id. at 5957 ¶ 10. In the Bureau’s view, Grade B contour weighed 24 decisively in WRNN’s favor.11 1 On appeal, the FCC affirmed the Bureau’s order. WRNN 2 License Co. (“2007 FCC Order”),22 F.C.C.R. 21054 (2007). It 3 disagreed with the Bureau’s analysis of the local service and 4 historical carriage factors, finding that those factors lent 5 additional support to the Bureau’s decision to include the Long 6 Island communities in WRNN’s market. Id. at 21056 ¶ 4 & n.15. 7 The FCC also rejected Cablevision’s claims that the Bureau’s 8 application of the market modification provision violated the 9 First Amendment and the takings clause of the Fifth Amendment. 10 Id. at 21057-59 ¶¶ 7-10. Cablevision filed a timely petition for 11 review in this court. 12 DISCUSSION 13 In general, we will overturn an agency decision “only if it 14 was ‘arbitrary, capricious, an abuse of discretion, or otherwise 15 not in accordance with law.’” Cellular Phone Taskforce v. FCC, 16 205 F.3d 82, 89 (2d Cir. 2000) (quoting 5 U.S.C. § 706(2)(A)). 17 “An agency’s factual findings must be supported by substantial 18 evidence,” which means “such relevant evidence as a reasonable 19mind might accept as adequate to support a conclusion.” Id. 20 (internal quotation marks omitted). We review an agency’s 21 disposition of constitutional issues de novo. See Rural Tel. 22 Coal. v. FCC, 838 F.2d 1307, 1313 (D.C. Cir. 1988). 23 In its petition for review, Cablevision argues that the 24 FCC’s order improperly analyzed the statutory factors, that its12 1 decision contravened the “purpose” of the must-carry statute, and 2 that requiring Cablevision to carry WRNN violates the First and 3 Fifth Amendments. We address each of these arguments in turn. 4 I.The FCC’s Analysis of the Section 534(h)(1)(C) Factors 5 A.The Local Service Factor 6 Cablevision claims that the FCC failed to adequately explain 7 its finding that WRNN provided significant programming targeted 8 to the Long Island communities. By insisting, however, that “at 9 a minimum, the FCC was required to explain” why Cablevision’s 10 arguments and evidence to the contrary were “unpersuasive,” 11 Cablevision Br. at 35, Cablevision overstates an agency’s duty to 12 account for its actions. 13 An administrative agency has a duty to explain its ultimate 14 action. See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. 15 Ins. Co., 463 U.S. 29, 43 (1983) (“[T]he agency must examine the 16 relevant data and articulate a satisfactory explanation for its 17 action.”). However, it need not explain each and every step 18 leading to this decision; it is enough “if the agency’s path may 19 reasonably be discerned.” Id. at 43 (internal quotation marks 20 omitted). Here, the reason for the FCC’s decision to affirm the 21Media Bureau’s order is perfectly clear: it agreed with the 22 reasoning of the Bureau in most respects and disagreed in certain 23 others, but only in ways that strengthened the validity of the 24 Bureau’s decision. In such circumstances, we will not require13 1 the FCC to sift through each piece of evidence offered by a party 2 and explain why it is more or less compelling than the counter3 evidence put forth by an opponent. 4 The fact that we review agency fact-finding for “substantial 5 evidence” supports our conclusion that the FCC’s explanation was 6 adequate. To determine whether substantial evidence supports a 7 finding, we need ask only whether “a reasonable mind might accept 8 [it] as adequate” support. Cellular Phone Taskforce, 205 F.3d at 9 89 (internal quotation marks omitted). Here, the agency found 10 WRNN’s evidence that it had significant Long Island-targeted 11 programming to be more persuasive than Cablevision’s evidence to 12 the contrary. We need not know the agency’s precise rationale in 13 order to conclude that it was reasonable for the agency to so 14 find. While such an explanation might have aided our 15 reasonableness inquiry, it is not indispensable. 16 Both sides offered evidence regarding WRNN’s programming 17 content. According to Cablevision, its evidence showed that WRNN 18 broadcast less than an hour of programming covering “Long Island 19 issues” in a “representative week.” Cablevision Br. at 33. WRNN 20 pointed to evidence that it had aired over 4000 Long Island21 related items between June and November 2005. It would be 22 reasonable for the agency to resolve this conflicting evidence in 23 favor of WRNN and to conclude (as it obviously did) that 24 Cablevision failed to include some programming that should14 1 properly be considered as local to Long Island, or that its 2 sample week was not actually representative. Thus, substantial 3 evidence supports the FCC’s finding on this factor. 4 We note that the Bureau, on its initial consideration of 5 this petition, made a contrary finding as to this factor. This 6 fact, however, does not alter our assessment of the FCC’s 7 ultimate determination. “An agency conclusion may be supported 8 by substantial evidence even though a plausible alternative 9 interpretation of the evidence would support a contrary view.” 10 Robinson v. Nat’l Transp. Safety Bd., 28 F.3d 210, 215 (D.C. Cir. 11 1994) (internal quotation marks omitted). On questions of fact, 12 our task on review is not to “displace [the agency’s final] 13 choice between two fairly conflicting views.” Universal Camera 14 Corp. v. NLRB, 340 U.S. 474, 488 (1951). 15 B.The Historical Carriage Factor 16 After the Bureau issued its 2006 Order, but before the FCC 17 affirmed it, Verizon began carrying WRNN on its FiOS system to 18 areas of Nassau and Suffolk Counties. 2007 FCC Order, 22 19 F.C.C.R. at 21056 ¶ 4 & n.15. The FCC concluded that this 20 “overlapping carriage provides support for WRNN-DT with respect 21 to the historic carriage factor.” Id. at ¶ 4 n.15. In a single 22 paragraph in its brief, Cablevision argues that this analysis is 23 “contrary to clear statutory language” because “[c]arriage 24 initiated in the past few months does not constitute historical15 1 carriage.” Cablevision Br. at 36-37. 2 Cablevision, however, fails to supply a contrary, “correct” 3 definition of “historically carried,” and does not discuss 4 whether we should defer to the Bureau’s interpretation of the 5 term, in accordance with Chevron U.S.A., Inc. v. Natural 6 Resources Defense Council, Inc., 467 U.S. 837 (1984), as we did 7 with the must-carry statute generally in WLNY-TV, Inc. v. FCC, 8 163 F.3d at 142. Even if Cablevision could demonstrate error in 9 the sense that the Verizon carriage was not “historical,” they 10 have failed to show why such error would warrant vacatur given 11 that (1) Cablevision does not contest the propriety of 12 considering Verizon’s carriage as an unenumerated, non-statutory 13 factor, and (2) the Bureau decided to order carriage despite its 14 belief that WRNN had not been “historically carried” in the 15 relevant communities. Accordingly, we decline to vacate the 16 FCC’s order based on this asserted error in the FCC’s analysis of 17 the historical carriage factor. 18 C.Grade B Contour 19 In its 1997 FCC Order involving Cablevision and WRNN, the 20 Commission stated that “Grade B contour coverage, in the absence 21 of other determinative market facts (i.e.[,] . . . a terrain 22 obstacle such as a mountain range or a significant body of 23water), is an efficient tool to adjust market boundaries.” 1997 24 FCC Order, 12 F.C.C.R. at 12271 ¶ 17. Cablevision contends that16 1 the Hudson River, the Long Island Sound, and the “skyline of New 2 York City” constitute such terrain obstacles, and it was 3 therefore inconsistent with the 1997 FCC Order for the FCC and 4 the Bureau to weigh Grade B contour in WRNN’s favor here. 5 Cablevision Br. at 38. The 1997 FCC Order itself forcefully 6 rejects this reasoning, because it explicitly endorses the use of 7 Grade B contour as proof of market in the New York City DMA–the 8 same context in which Cablevision now contends that relying on 9 Grade B contour is inappropriate. Because the 1997 FCC Order 10 establishes, rather than refutes, the relevance of Grade B 11 contour in market modifications within the New York City DMA, the 12 FCC’s decision here is consistent with its precedent. 13 D.The Other Stations and Viewing Patterns Factors 14 Cablevision also alleges error in the FCC’s treatment of the 15 two remaining statutory factors. In the instant order, the FCC 16 stated that Congress did not intend “the ‘coverage by other 17 qualified stations’ factor to bar a request for extending a 18 station’s market when other stations could be shown to serve the 19 communities at issue.” 2007 FCC Order, 22 F.C.C.R. at 21055-56 ¶ 20 4. 21 In essence, then, the FCC decided to give the factor 22 significant weight when a lack of coverage by other stations 23 favored including a community in a station’s market, but to 24 discount its importance when the existence of coverage arguably17 1 cut against inclusion. Cablevision argues that this decision “is 2 directly contrary to . . . the statutory text.” Cablevision Br. 3 at 40. This argument is unavailing. The text of the statute 4 directs the agency to consider a number of factors, and it is 5 clear from the opinion that both the FCC and the Bureau did 6 consider this factor. Upon doing so, the FCC saw no reason to 7 depart from its normal policy, which is to discount the “other 8 stations’ coverage” factor when it tends to cut against 9 inclusion. Unsurprisingly, Cablevision cites no decision of this 10 court vacating a decision because we disagree with an agency’s 11 weighing of a statutory factor. The law is to the contrary. In 12 interpreting another provision of the 1992 Cable Act that directs 13 the FCC to undertake a factoral analysis, the D.C. Circuit 14 concluded that giving little or no weight to a statutory factor, 15 as long as the factor is expressly considered, does not violate 16 the statute: 17 [T]he statute by its terms merely requires the Commission to 18 consider the . . . factors . . . . That means only that it 19 must reach an express and considered conclusion about the 20 bearing of a factor, but is not required to give any 21 specific weight to it. Therefore, when the Commission, 22 after expressly considering the potential role of the . . . 23 factor, ultimately concluded that it should not be given any 24 weight, it did not violate the statute. 25 26 Time Warner Entm’t Co. v. FCC, 56 F.3d 151, 175 (D.C. Cir. 1995) 27 (internal quotation marks and citations omitted). This sound 28 reasoning is equally applicable here. 29 Cablevision also argues that the FCC improperly weighed the18 1 evidence with respect to the viewership patterns factor. This 2 argument fails for the same reasons. 3 II.The FCC’s Consideration of the Purposes of the Must-Carry 4 Statute 5 The market modification provision of the must-carry statute 6provides that the FCC may add or remove communities from a local 7 broadcast station’s market “to better effectuate the purposes of 8 this section.” 47 U.S.C. § 534(h)(1)(C)(i). Cablevision argues 9 that the FCC’s inclusion of the Long Island communities in WRNN’s 10market contravened the purposes of must-carry in two ways. 11 First, expanding WRNN’s market in fact frustrates the goal of 12 “localism” by necessarily decreasing programming relevant to the 13 community WRNN has traditionally served (the Kingston community). 14 And second, rewarding WRNN’s actions with broader must-carry 15 rights encourages gamesmanship which frustrates the purpose of 16must-carry, which is to preserve, but not expand, a broadcast 17 station’s market. We reject the first argument because it 18 incorrectly presumes that WRNN cannot increase Long Island19 targeted programming without decreasing Kingston-targeted 20 programming. We reject the second because it rests on a 21 conception of the statute’s purpose that is overly narrow, 22 unsupported by precedent, and contrary to the language of the 23 statute.19 1 According to Cablevision, the FCC’s decision defeats the 2 purposes of the must-carry statute because “[a]ny targeting of 3 other spokes [i.e., communities that are remote from ‘a DMA’s 4 metropolitan center’] necessarily comes at the expense of the 5 station’s community of license.” Cablevision Br. at 43. This 6 argument rests on the false premise that WRNN’s programming 7 consists entirely of either Kingston-specific programming or Long 8 Island-specific programming. As Cablevision reminds us 9 elsewhere, however, a great deal of WRNN’s content is “home10 shopping” programming that targets neither Kingston nor Long 11 Island specifically. See Cablevision Br. at 33 (claiming that 12 78% of WRNN programming in a representative week “consisted of 13 home shopping and infomercials”). It is entirely possible, and 14 Cablevision does not suggest otherwise, that WRNN could increase 15 its Long Island-targeted programming by decreasing its home16 shopping programming, leaving its Kingston-targeted programming 17 unaffected. And to the extent that a Kingston viewer might 18 prefer certain home-shopping programming to programming 19 concerning Long Island, we do not see how frustrating that 20 preference undermines localism. 21 Essentially, Cablevision’s claim is that, as a matter of 22 law, a cable company in a community that is outside a “DMA’s 23metropolitan center,” such as Long Island, should not be required20 1 to carry a station based in a different community that is also 2 remote from the center, such as Kingston: in Cablevision’s 3parlance, a “spoke” cable company should not be required to carry 4 a station based in a different spoke. Congress, however, did not 5 share that view, and, as the FCC points out, the default rule is 6 that WRNN must be carried by cable operators throughout the New 7 York City DMA. See 47 U.S.C. § 534(a)-(b), (h)(1)(C). 8 Cablevision also contends that the FCC’s decision rewards 9 “gamesmanship” because WRNN moved its transmitter and changed its 10 programming simply to obtain must-carry privileges in other 11 communities. Cablevision Br. at 46. In other words, they 12 suggest that the FCC cannot award WRNN a regulatory benefit if 13WRNN has changed its conduct in an attempt to receive that 14 benefit. This rule, applied universally, would run counter to a 15 central premise of the regulatory scheme that a regulated entity 16will change its conduct in socially desirable ways to achieve a 17 regulatory benefit. Accordingly, we reject it. 18 Cablevision also argues that any decision that increases a 19 station’s market is contrary to the purpose of the statute, 20 because the purpose is “to return broadcasters to their ‘natural 21market,’” Cablevision Br. at 47; thus, any FCC action which 22 augments a broadcaster’s market contravenes this purpose. The 23purpose of the statute, however, is not to “preserve” a group of 24 broadcast stations, or a particular conception of a station’s21 1market, but, inter alia, to “preserv[e] the benefits of free, 2 over-the-air television,” and “promot[e] the widespread 3 dissemination of information from a multiplicity of sources.” 4 Turner I, 512 U.S. at 662. We do not think that these purposes 5 are served only by granting broadcasters the minimum must-carry 6 coverage necessary for survival; or that these purposes are 7 frustrated by actions which result in a station’s greater 8 prosperity. Accordingly, we conclude that the FCC did not 9violate the statutory admonition that market modifications should 10 be made “to better effectuate the purposes of this section.” 47 11 U.S.C. § 534(h)(1)(C)(i). The remainder of Cablevision’s 12 arguments on this point fail to persuade us otherwise. 13 III.Cablevision’s First Amendment Challenge 14 Cablevision argues that “compelled carriage of WRNN on Long 15 Island violates the First Amendment on an as-applied basis.” 16 Cablevision Br. at 51. We think that the Turner cases do not 17 foreclose the possibility of a successful as-applied First 18Amendment challenge to the 1992 Cable Act’s market modification 19provisions. In this case, however, Cablevision has failed to 20 demonstrate that the FCC applied the market modification 21 provision unconstitutionally. 22 As a threshold matter, a party alleging violation of its 23 First Amendment rights must show that the challenged government 24 action actually regulates protected speech. Thus, in Turner I,22 1 the Court found it necessary to establish, as an “initial 2 premise,” that “[c]able programmers and cable operators engage in 3 and transmit speech,” and that “the must-carry rules,” in 4 general, “regulate cable speech.” 512 U.S. at 636. Similarly, 5 Cablevision here must articulate how the FCC’s order “interferes 6with [its] speech rights.” Time Warner Entm’t Co., 240 F.3d at 7 1129. 8 This threshold requirement serves two interrelated 9 functions. Identifying the “burden” imposed by government action 10 enables a court to undertake heightened scrutiny analysis: 11 without understanding how a regulation burdens speech, a court 12 cannot decide whether that burden is “no greater than is 13 essential” to further the goals of the regulation in question. 14 See United States v. O’Brien, 391 U.S. 367, 377 (1968). And the 15 failure to identify the burden has an even more fundamental 16 consequence: without a plausible allegation that the offensive 17 conduct interferes with First Amendment rights or, put 18 differently, that the interaction between government and citizen 19 “bring[s] into play the First Amendment,” id. at 376, a reviewing 20 court has neither a reason nor the ability to subject the conduct 21 of the governmental actor to heightened scrutiny. 22 The Turner I and Turner II Courts considered the First 23Amendment implications of the “must-carry provisions” taken as a 24 whole, as distinguished from the market modification provisions23 1 at issue here, and found that they posed two potential burdens on 2 speech rights: 3 First, the [must-carry] provisions restrain cable operators’ 4 editorial discretion in creating programming packages by 5 reducing the number of cable channels over which they 6 exercise unfettered control. Second, the rules render it 7 more difficult for cable programmers to compete for carriage 8 on the limited channels remaining. 9 Turner II, 520 U.S. at 214 (citation, alterations, and internal 10 quotation marks omitted); accord Turner I, 512 U.S. at 637. 11 Cablevision raises a similar, but not identical, First 12 Amendment challenge to that raised in Turner I and Turner II. 13 Cablevision presents an as-applied First Amendment challenge to 14 the FCC’s order modifying the market of WRNN, pursuant to the 15provision of the must-carry statute on market determinations, 47 16U.S.C. § 534(h)(1)(C)(ii). The challenged order threatens the 17 First Amendment interest of Cablevision in a similar manner to 18 that described in Turner I and Turner II. The order reduces the 19 number of channels over which Cablevision exercises editorial 20 control by forcing it to carry WRNN, see Turner II, 520 U.S. at 21 213, and it also makes it more difficult for the cable 22 programming arm of Cablevision to compete for carriage on the 23 remaining channels, id. 24 In order to apply the appropriate level of scrutiny, we must 25 first determine whether the order is content based or content 26 neutral. Turner I, 512 U.S. at 642. In Turner I, the Court 27 concluded that the burdens imposed on cable operators as well as24 1 the benefits conferred on broadcast channels were content 2 neutral. See id. at 643-44 (“Although the provisions interfere 3with cable operators’ editorial discretion by compelling them to 4 offer carriage to a certain minimum number of broadcast stations, 5 the extent of the interference does not depend upon the content 6 of the cable operators’ programming. The rules impose 7 obligations upon all operators, save those with fewer than 300 8 subscribers, regardless of the programs or stations they now 9 offer or have offered in the past.”); id. at 645 (noting that the 10 selection of broadcast channels that must be carried on the cable 11 systems was “also unrelated to content”). 12 The Turner I Court explicitly rejected the argument that 13 “the must-carry regulations are content based because Congress’ 14 purpose in enacting them was to promote speech of a favored 15 content.” Id. at 646. Indeed, as the Court noted, when a cable 16 system is required to “make room for a broadcast station, nothing 17 would stop a cable operator from displacing a cable station that 18 provides all local- or education-oriented programming with a 19broadcaster that provides very little.” Id. at 648. However, 20 separate from the must-carry provisions’ general requirements, 21 the Turner I Court expressly declined to decide whether a market 22 modification order motivated by a concern for localism would be 23 content based or content neutral. See id. at 644 n.6. The Court 24 suggested that such an order might confer “special benefits on 25 the basis of content.” Id.25 1 However, we think the order before us now is content 2 neutral. WRNN’s presumptive DMA would have included Nassau and 3 Suffolk counties. It was Cablevision that first invoked the 4 market modification provision to exclude these counties from 5WRNN’s market. It succeeded based on the FCC’s concern, in part, 6 that WRNN lacked a Grade B contour reaching Long Island. When 7 WRNN, after expanding its Grade B contour, returned to the FCC 8 seeking restoration of its presumptive DMA, Cablevision argued 9 that the station had failed to demonstrate that the various 10 factors outlined in the market modification provision, including 11 the local programming factor, weighed in WRNN’s favor. The 12 Bureau and the FCC reached different conclusions on this factor, 13 yet both agreed that the totality of circumstances no longer 14 justified excluding Long Island communities from WRNN’s 15presumptive DMA. The FCC considered the amount of local 16programming provided by WRNN only in this context, i.e., in 17 assessing the continued need to restrict a presumptive market 18 defined solely by geography. Moreover, WRNN’s local programming 19was an inconsequential factor in the FCC’s ultimate decision. 20Additionally, Cablevision has not alleged, much less proven, that 21 the restoration of the Long Island communities to WRNN’s market 22 under these circumstances was based on some illicit content-based 23motive. See id. at 652. We conclude, therefore, that the order 24 is content neutral and deserving of intermediate scrutiny.26 1 We have no trouble in concluding that the order “advances 2 important governmental interests unrelated to the suppression of 3 free speech and does not burden substantially more speech than 4 necessary to further these interests.” Turner II, 520 U.S. at 5 189 (citing O’Brien, 391 U.S. at 377). The burden imposed by the 6 order - the loss of control over one channel - is no greater than 7 necessary to further the government’s interest in preserving a 8 single broadcast channel it found serves the local community. 9 In sum, we conclude that the application of the market 10modification provision in this case does not violate the First 11Amendment. While we cannot rule out the possibility that the 12 FCC’s order might interfere with speech rights in other ways, 13 Cablevision has presented neither factual support nor even a 14 theory of any such additional infringement. 15 IV.Cablevision’s Fifth Amendment Challenge 16 Finally, Cablevision asserts that by ordering it to carry 17 WRNN, the FCC effected a per se taking under Loretto v. 18 Telepromter Manhattan CATV Corp., 458 U.S. 419, 426 (1982). The 19 sine qua non of the takings analysis in Loretto, however, is 20 “permanent physical occupation.” Id. (emphasis added). This per 21 se takings rule is “very narrow,” id. at 441, and its touchstone 22 is “required acquiescence” to the occupation of the property by 23 an uninvited stranger or an “interloper with a government 24 license.” FCC v. Fla. Power Corp., 480 U.S. 245, 252-53 (1987);27 1 see also Buffalo Teachers Fed’n v. Tobe, 464 F.3d 362, 374 (2d 2 Cir. 2006) (“Physical takings (or physical invasion or 3 appropriation cases) occur when the government physically takes 4 possession of an interest in property for some public purpose.”). 5 Our own test for whether a regulation constitutes a permanent 6physical occupation, set forth in Southview Associates, Ltd. v. 7 Bongartz, 980 F.2d 85 (2d Cir. 1992), looks to (1) the permanency 8 of the invasion, and (2) whether the invasion is an “absolute, 9 exclusive physical occupation.” Id. at 94-95. In turn, we must 10 examine the nature of the interference with “the bundle of rights 11 that constitute ownership,” id. at 95, such as the right to 12 possess and exclude, the right to control the use of the 13property, and the right to sell the property. 14 The initial determination - whether the invasion is physical 15 - is primarily factual. Cf. John R. Sand & Gravel Co. v. United 16 States, 457 F.3d 1345, 1357 (Fed. Cir. 2006) (“[T]he 17 determination of whether government occupancy is ‘permanent’ is 18 highly fact-specific.”). The fact finder must determine, in the 19 first instance, whether any physical assets are involved. See, 20 e.g., Qwest Corp. v. United States, 48 Fed. Cl. 672, 689 (2001) 21 (“In determining whether plaintiff's property has been subject to 22 a physical taking, our initial inquiry must focus on the nature 23 of the property at issue. What are the physical assets 24 involved?”). The FCC found that the transmission of WRNN over28 1 the Cablevision system did not require installation of any 2 equipment at Cablevision’s facilities. “Rather, a programming 3 stream is transmitted in bits of data over cable bandwidth 4 through electrons or photons at the speed of light.” 2007 FCC 5 Order, 22 F.C.C.R. at 21058 ¶ 8. It further found that 6 Cablevision “retains complete control over its property.” Id. 7 We see no reason to disturb these findings or the conclusion that 8 the transmission of WRNN’s signal does not involve a physical 9 occupation of Cablevision’s equipment or property. And 10 Cablevision effectively conceded that this physicality is absent 11 here when it argued in its reply brief that “[t]he result [under 12 Loretto] should be no different when the occupation is not of a 13physical pipeline but of an electronic one.” Cablevision Reply 14 Br. at 25. 15 The amorphous nature of the alleged “taking” suggests that 16 the takings claim here fits more comfortably within the Supreme 17 Court’s “regulatory taking” analytical framework. See Penn. 18 Cent. Trans. Co. v. City of New York, 438 U.S. 104 (1978). In 19 order to establish a regulatory taking, Cablevision was required 20 to show that the regulation had an economic impact that 21 interfered with “distinct investment-backed expectations.” Id. 22 at 124. Cablevision has presented no such evidence despite its 23 “heavy burden” on this issue, Tobe, 464 F.3d at 375, and any 24 regulatory taking theory must therefore fail.29 1 CONCLUSION 2 Because we find no abuse of discretion or constitutional 3violation in the FCC’s decision to include the relevant Long 4 Island communities in WRNN’s market for must-carry purposes, we 5 DENY the petition for review. In accordance with our order of 6March 14, 2008, the stay of the FCC order pending judicial review 7 is vacated, and the applicable deadline for Cablevision’s 8 compliance is one week from the issuance of the mandate in this 9 case.