Court Opinion

ID: 7840693
Source: CourtListenerOpinion
Date Created: 2022-09-08 16:59:59.497293+00
Date Added: 2024-06-11T16:01:32.939844
License: Public Domain

TAMM, Circuit Judge,
with whom MacKINNON, Circuit Judge, concurs, dissenting:
I respectfully dissent. The majority’s decision, I fear, usurps the proper role of the Federal Communications Commission (Commission) in the formulation of communications policy. In my view, the Commission’s determination that application of Citizens Committee to Save WEFM v. FCC (WEFM), 165 U.S.App.D.C. 185, 506 F.2d 246 (1974) (en banc), will not measurably increase diversity of entertainment formats is neither arbitrary nor capricious. Although I understand the frustration of reexamining an issue purportedly resolved, I believe that the much touted agency-court partnership is well served by continuing dialogue between administrator and judge. I am persuaded that the Commission, which Congress has entrusted with the duty to regulate broadcasting in the public interest, has advanced a reasoned position which this court should uphold.
In WEFM, we decided that when an application to transfer a radio license involves a change in format, the Commission must determine whether the assignor’s format is unique and financially viable.1 If so, the Commission, when faced with substantial questions of fact and significant public opposition to the transfer, must conduct a hearing to discern whether loss of the format is in the public interest before acting upon the application.2
*342The WEFM court based the hearing requirement on the “public interest in a diversity of broadcast entertainment formats.” 3 The court warned that format diversity would not necessarily result from the unregulated play of market forces because broadcasters derive revenue from the sale of time to advertisers, not from the sale of programming to listeners. A station with a larger audience may sell more advertising time, and at higher rates, than a station with fewer listeners. A station with a smaller but more demographically attractive audience may, however, sell as much or more time as the station with greater numbers of listeners. The court feared that the effect of demographics on the radio market would allow listeners with desirable demographic characteristics — typically eighteen-to thirty-year-olds with discretionary income — to exercise a disproportionate influence upon broadcast decisionmakers who choose formats. Because formats preferred by fewer younger people might prove financially more attractive than formats preferred by a greater number of older or lower income listeners, the court concluded that regulation was necessary to insure diversity. The court’s reasoning implicitly suggests that regulation is unnecessary if the radio market reflects the desires of the greatest numbers of listeners.
The Commission responded to WEFM by instituting a proceeding designed to develop methods for implementing the court’s ruling.4 After reviewing comments of both broadcasters and public interest representatives, the Commission concluded that use of the WEFM doctrine would noi demonstrably further the public interest.5
The Commission did not premise its decision upon a rejection of the court’s observation that the presence of demographic considerations might increase the influence of certain listeners.6 Rather, the Commission first contended that the radio market produces diversity of formats. In support, the Commission presented a study of formats aired in major cities demonstrating “an almost bewildering array of diversity.”7
Second, the Commission argued that administrative intervention in the format selection process could not be shown to further the public interest.8 The Commission contended that stations within a given format are not interchangeable to their respective audiences.9 Simply stated, listen*343ers of a particular station within a format category may not be equally willing to listen to any station within the same format category. The Commission’s assumption suggests that, for example, in a two-station market consisting of a top 40 format and a classical format, a second top 40 station might command a greater audience than the unique classical station.10
The majority does not dispute the possibility that more listeners may prefer a second top 40 station to a unique classical format. Rather, it suggests that retention of the classical format might be in the public interest because the desires of those preferring the second top 40 station can be easily satisfied by the first top 40 station. Classical tastes, to the contrary, would be less likely satisfied by a top 40 format. The majority explains:
When a unique format is abandoned, those loyal to that format have no adequate substitute in the service area; when a non-unique format is eliminated, its listeners will generally have an adequate substitute in other stations programing the same format. For this reason abandonment of a unique entertainment format raises the special public interest issue by our format cases.11
Thus, the majority introduces a novel doctrine that calculates the public interest without necessary reference to the aural desires of the greatest number of listeners. The majority’s approach is fraught with difficulties.
First, WEFM does not require use of the “substitution” theory. The WEFM court noted that the accuracy of listener preferences in the radio marketplace might be distorted by advertisers’ quests for demographically desirable audiences. Any demographic effect on the market, however, is cured if the Commission can ascertain the numbers of people that desire different formats. I harbor serious doubts that regulation based on direct listener “votes” is practicable; but even if it is, the majority, in an effort to justify regulation that may preserve a format favored by fewer listeners than would prefer a changed format, advances the “substitution” principle. Although this theory marks a substantial departure from the reasoning of WEFM, the majority offers no independent support for the principle.
Second, use of the “substitution” theory assumes that “unique” formats can be adequately distinguished from “non-unique” formats. Former Commissioner Glen O. Robinson, in his concurring statement in Notice of Inquiry, 57 F.C.C.2d at 594-95, emphasized the enormity of this task:
What makes one format unique makes all formats unique. If subjectivity is to be an important determinant of what makes a format “unique” (or, in other terms, what makes it a net contributor to diversity), how are we to avoid the fact that even with respect to formats which objectively seem identical, people — radio listeners — can and do make distinctions. For example, in most large markets there are a number of middle-of-the-road formats which seem identical on any objective or quantifiable basis; yet they are far from interchangeable to their respective audiences. Indeed, if people did not distinguish among these stations, there would be no reason for them to co-exist— and little economic likelihood that they would. Questions of pacing and style, the personalities of on-the-air talent (both individually and in combination with one another) all contribute to those fugitive values that radio people call a station’s “sound” and that citizens’ groups (and, *344alas, appellate judges) call format. It follows, therefore, that by the subjective standards that the Court seems to embrace, any format is unique; from which it follows, all must be preserved. At that thought the mind swims and the heart sinks. (Footnotes omitted).
The majority does not explicitly concede the difficulty of classifying formats according to listener preference. Nevertheless, it suggests that the Commission may dispense with the requirement that an endangered format be demonstrably “unique” for purposes of ordering a hearing.12 Although the majority’s concession neatly sidesteps the difficulty of defining a “unique” format at the pre-hearing stage, it does nothing to ease the Commission’s task once a hearing is held.
Third, the “substitution” theory assumes that it is possible for a federal regulatory agency to measure listener preferences in entertainment formats. I would have thought that the best judge of the most desirable entertainment formats is the listening audience itself. When sufficient numbers of top 40 listeners switch channels to patronize another station, which for purposes of federal regulation is also classified as top 40, they must want to hear a “sound” not previously offered. If consumers purchased radio programming, classical listeners could express a greater intensity of preference simply by paying more than top 40 listeners. Alternatively, if the top 40 listeners intensely preferred a second top 40 station, they could respond by paying even more. Because radio broadcasting is a “zero price” good,13 however, consumers cannot register their intensity of preference through a price system. “Substitution” as used by the majority is merely a crude device meant to measure the intensity of listener preference.
The “substitution” theory runs afoul of the familiar economic principle that it is either impossible or extremely difficult to compare the intensity of preference of different persons.14 The range of audience preferences within the same format, for example, suggests that the Commission would be hard pressed to determine how much and how many listeners would prefer a variation of a pre-existing format to a unique format. Given the many aspects of a specific station’s “sound,” it is difficult to measure the amount or the depth of audience acceptance of a changed format without allowing broadcast of the new format — a solution which eradicates the controversy.
Finally, the majority’s “substitution” theory assumes that the Commission will be able to balance number of listeners against intensity of format preference. Consider *345the top 40/classical format hypothetical. If twenty percent of the listening audience would mildly prefer a second top 40 format and five percent would vigorously prefer retention of the classical format, does the size of one audience outweigh the intensity of preference of the other? The majority opinion offers no clue.
In sum, the majority’s opinion presents an unjustified rebuttal to the Commission’s conclusion that the public interest may not be discernibly furthered by implementation of the WEFM doctrine. The majority has not explained how to decide whether a specific format is unique, how to measure the number of listeners who favor a changed format, or how to compare the intensity of preference between listeners who desire retention of a unique format and those who prefer a variation of a pre-existing format. Finally, the majority has failed to identify the principle within the Communications Act that mandates regulation favoring the interests of fewer listeners over the interests of more listeners.
I am also troubled by another aspect of the majority opinion. The majority notes that petitioners allege that they did not have an adequate opportunity to comment on two studies relied upon by the Commission. The majority explicitly declines to “decide whether the failure to obtain public comment on the study is itself of sufficient gravity to warrant rejection of the Policy Statement,”15 although it says that this “procedural unfairness, coupled with the substantive uncertainty flowing from the lack of adequate adversarial testing during the comment period, is enough to make us view skeptically the Commission’s use of the study.”16 On the assumption that the former statement clearly asserts that the majority opinion does not rest upon a procedural ground, I have directed the thrust of these dissenting remarks to the substantive validity of the Commission’s decision.
I note in passing, however, that the two statements taken together may be read as suggesting that the alleged procedural unfairness was not serious enough to require a remand to the agency, yet was serious enough to allow the majority to subject the agency to unusually strict scrutiny. In my view, if the majority believes that the Commission has committed procedural error sufficient to alter the normal standard of review of administrative decisions, then a remand to the Commission is proper.17 A remand would afford the petitioners greater opportunity to comment upon the studies, offer the Commission the opportunity to build a better record for review, and allow this court to meet the Commission’s contentions head on.
More important than the specifics of the current debate, is the lack of deference the majority accords the Commission’s assessment of market conditions. Although the majority acknowledges the expertise of the Commission to challenge the factual premises that underly the WEFM decision,18 it mounts untested assumption upon untested assumption to create a theory of regulation that may bear little resemblance to the actual functioning of the broadcast market. Only the Commission, equipped with investigatory tools and a well of experience, may predict in the first instance the behavior of listeners and broadcasters. The majority has simply substituted its views for the Commission’s.
The Supreme Court has often reminded this court of the appropriate relationship between administrative agency and reviewing court. Only last year, the Court, reversing our finding that the Commission had acted improperly in “grandfathering” certain newspaper-broadcast station combi*346nations, noted that the Commission’s decision to adopt a general policy of prospective divestiture was primarily judgmental or predictive. “In such circumstances, complete factual support in the record for the Commission’s judgment or prediction is not possible or required; ‘a forecast of the direction in which future public interest lies necessarily involves deductions based on the expert knowledge of the agency.’ ” FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775, 814, 98 S.Ct. 2096, 2122, 56 L.Ed.2d 697 (1978) (quoting FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 29, 81 S.Ct. 435, 450 5 L.Ed.2d 377 (1961)). In the present case, the majority disregards the Commission’s expert knowledge and, in so doing, violates the mandate of FCC v. National Citizens Committee for Broadcasting.
The majority has lost sight of our role as a reviewing court whose proper function is to uphold an agency’s reasonable judgment. The Commission’s determination that use of the WEFM doctrine will not further the public interest is well within the parameters of reason. Faced with a conflict between judicial and administrative policies,19 I believe we are obliged to uphold the Commission. The court’s decision today, a reversal based on unverified factual assumptions about listener preferences and behavior, extends judicial review of administrative policymaking processes beyond its permissible bounds.20

. The court noted that an assignor’s asserted financial losses will only justify a format change when “those losses [are] attributable to the format itself.” Citizens Comm. to Save WEFM v. FCC, 165 U.S.App.D.C. 185, 201, 506 F.2d 246, 262 (1974) (en banc).

. 47 U.S.C. § 310(d) (1976) commands the Commission to decide whether an application to transfer a license would be in the public interest. See also 47 U.S.C. § 309(a) & (d) (1976).

. Citizens Comm, to Save WEFM v. FCC, 165 U.S.App.D.C. at 201, 506 F.2d at 262.

. See Notice of Inquiry, Development of Policy re: Changes in the Entertainment Formats of Broadcast Stations (Notice of Inquiry), 57 F.C.C.2d 580 (1976).

. See Development of Policy re: Changes in Entertainment Formats of Broadcast Stations (Policy Statement), 60 F.C.C.2d 858, 863-66 (1976).

. Id. at 863.

. Id. The Commission also argued that marketplace allocation accommodates rapidly shifting tastes without the necessity of governmental interference. Id. at 864.

. The Commission stated that determining whether a format change would serve the public interest involved three inquiries: “(1) what the station’s existing format is; (2) whether there are any reasonable substitutes for that format in the station’s market; (3) if there are not, whether the benefits accruing to the public from the format change outweigh the public detriment which the format abandonment would entail.” Id. at 861-62. The Commission suggested that definition of a unique format would present an “acute practical problem.” Id. at 862; see text at 343-344 of 197 U.S.App.D.C., at 862-863 of 610 F.2d infra. Addressing the third question, the Commission stated that it is impossible to determine whether consumers would be better off if a new format replaced a unique format. Policy Statement, 60 F.C.C.2d at 862; see note 14 infra.
The Commission voiced two other notable concerns. First, it suggested that the WEFM doctrine may decrease experimentation in formats, because broadcasters would fear being “locked” into a unique format. Id. at 865. Second, the Commission thought that format regulation would chill broadcaster’s first amendment rights. Id. Although I agree that the first amendment concerns are substantial, see Citizens Comm, to Save WEFM, 165 U.S.App.D.C. at 207, 506 F.2d at 268 (Bazelon, C. J., concurring), I do not believe the issue need be reached to sustain the Commission’s judgment.

.The Commission documented this reasonable assumption, see text at 343-344 of 197 U.S.App.D.C., at 862-863 of 610 F.2d infra, with *343a study of audience ratings for major radio markets showing that listener preferences are almost as varied within formats as among formats. The Commission concludes that formats of the same type are, therefore, not close substitutes for each other. Policy Statement, 60 F.C.C.2d at 863-64, 873-75.

. According to the majority opinion, the Commission may be called upon to review such a change in format when it considers applications either to transfer or to renew a license. See Maj.op., 197 U.S.App.D.C. at 319-330, 610 F.2d at 838-849.

. Id 197 U.S.App.D.C. at 338, 610 F.2d at 857 (footnote omitted).

. Id. 197 U.S.App.D.C. at 334 n.47, 610 F.2d at 853 n.47.

. See R. Noll, M. Peck & J. McCowan, Economic Aspects of Television Regulation 32-33 (1973).

. See R. Posner, Economic Analysis of the Law 11 (2d ed. 1977); L. Robbins, An Essay on the Nature & Significance of Economic Science 138-41 (2d ed. 1940). The Commission stated that no economically rational basis exists for comparing intensity of preference among listeners;
In theory preference should be given to that format which is of greater value to the consumers. Unfortunately, the Commission will find it impossible to measure the relative values of different formats because there exists no litmus or a priori way of measuring how much particular formats are worth to the audiences. All that can be known is simply how many people listen to available programs.
Unfortunately, the size of a station’s audience is not necessarily an appropriate measuring stick of the degree of satisfaction which listeners derive from its programming. That is, two different formats which attract audiences of equal size may not be of equal value. Preferences expressed by the audience of one format may be much stronger than preferences for the other, in which case the former should be the more valuable. In order to ascertain which format is the more valuable, one would have to know the intensity of demand for each. Again, there exists no acceptable, reliable way of measuring aspects of these consumer preferences because consumers are not required to pay for the opportunity to listen to radio.
Policy Statement, 60 F.C.C.2d at 873; see Bruce M. Owens, “Radio Station Format Changes, Diversity and Consumer Welfare,” Appendix to Brief for National Association of Broadcasters.

. Maj.op., 197 U.S.App.D.C. 328 n.24, 610 F.2d at 847 n.24.

. Id. at-, 610 F.2d at 856.

. See Portland Cement Ass’n v. Ruckelshaus, 158 U.S.App.D.C. 308, 326-27, 486 F.2d 375, 393-94, (1973) cert. denied, 417 U.S. 921, 94 S.Ct. 2628, 41 L.Ed.2d 226 (1974); see also South Prairie Constr. Co. v. Operating Eng'rs, 425 U.S. 800, 805-06, 96 S.Ct. 1842, 48 L.Ed.2d 382 (1976); NLRB v. Food Store Employees, 417 U.S. 1, 9-10, 94 S.Ct. 2074, 40 L.Ed.2d 612 (1974); FPC v. Idaho Power Co., 344 U.S. 17, 22, 73 S.Ct. 85, 97 L.Ed. 15 (1952).

. Maj.op., 197 U.S.App.D.C. at 336, 610 F.2d at 855.

. The majority argues vigorously that WEFM is “law” and not “policy.” See id. 197 U.S.App.D.C. at 335, 610 F.2d at 854. Of course, it is both. The Commission has not asserted that it is free to disregard the mandate of WEFM, it simply suggests that the definition of the public interest put forth in that decision is neither the only possible nor the preferable formulation. The majority concedes, as it must, that the public interest standard may subsume different, even opposing, policies. Id. 197 U.S.App.D.C. at 336 n.51, 610 F.2d at 855 n.51. Compare National Citizens Comm. for Broadcasting v. FCC, 186 U.S.App.D.C. 102, 567 F.2d 1095 (1977), cert. denied, 436 U.S. 926, 98 S.Ct. 2820, 56 L.Ed.2d 769 (1978), with Banzhaf v. FCC, 132 U.S.App.D.C. 14, 405 F.2d 1082 (1968), cert. denied, 396 U.S. 842, 90 S.Ct. 50, 24 L.Ed.2d 93 (1969). Although the Commission’s proposal closely tracks an interpretation we have previously rejected, the agency has now presented more persuasive reasons why its view should be upheld. For what purpose is the agency-court partnership if we cannot maintain an open mind?

. See Polsby, F.C.C. v. National Citizens Committee for Broadcasting and the Judicious Uses of Administrative Discretion, The Sup.Ct.Rev. 1, 17-22 (1979).