Selected Skirmishes: The Cubic Zirconia Court

"Must carry" cable rules don't sparkle.

Twice in the 1980s, federal appeals courts threw out "must carry" rules crafted by the Federal Communications Commission. These regulations forced cable TV systems to give channel space to every local broadcast (over-the-air) television station. The courts found this infringement of the editorial discretion of "electronic publishers" a violation of the First Amendment's directive that "Congress shall make no law…abridging freedom of speech, or of the press."

That's when Congress got involved. Apparently encouraged by the tidy unconstitutionality of the twice-rejected rules, the House and Senate overrode George Bush's veto to enact the 1992 Cable Act, a measure featuring a statutory version of the old FCC rules. Industry wizards widely theorized that the law would again be overturned on constitutional grounds. But in a 5-4 decision, the Supreme Court has upheld new "must carry" rules--and delivered a stunning blow to free speech in these United States.

The premise of the decision is that cable television systems possess monopoly power in the local distribution of video programming. Hence, Congress serves the interests of "free speech" by compromising rights (including the right to select the networks featured on any one cable system) to enhance the speech of others--local broadcasters.

These TV stations, licensed by the FCC, are sprinkled with the fairy dust of "public interest, convenience, and necessity." As defined by Washington, they deliver the information services vital to the health of American Democracy.

In reality, "must carry" works like this: In the vast majority of cases, cable companies are happy to give carriage to all the locally available broadcast signals--it's cheap (essentially free to cable operators), popular programming. But in some markets (say, the San Francisco Bay Area), adjacent communities have been assigned TV stations (say, Oakland, San Jose, Petaluma, and San Francisco), and "must carry" dictates that multiple ABC or PBS affiliates elbow into the cable menu. These marginal stations are neither popular, as their programs are entirely duplicative, nor inexpensive, as they chew up megahertz which would otherwise transport The Learning Channel or C-SPAN2.

In the March 1996 issue of REASON, C-SPAN CEO Brian Lamb complained bitterly that the 1992 act had effectively eliminated or reduced carriage of his two networks for at least 7 million cable TV subscribers. This effect, said the Court, was but a small price to pay for ensuring the "governmental purpose of the highest order in ensuring public access to a multiplicity of information sources." Earth to Supremes: The high-quality, information-rich cable channels knocked out in millions of U.S. households are making room for low-valued, little-watched broadcast outlets featuring Mannix reruns and, most sensationally, home shopping!

Having sold its cable systems, The New York Times, a First Amendment protected newspaper, now endorses "must carry." At least the paper concedes that "one perverse result…is that it knocks out valuable channels like C-SPAN in favor of duplicate home-shopping or minimally watched channels." So we sacrifice the information cornucopia of the best public affairs television in the history of the medium to catch that Hello Larry rerun.

It is curious that local newspaper monopolies, exhibiting high profitability and mega-influence in the marketplace of ideas, cannot be similarly constrained--or protected--by government. The Times is not subject to common carrier regulations mandating that it run columns or news stories by a wide range of "public interest" licensees, despite its larger-than-life role as arbiter of everything "that's fit to print."

Interestingly, newspapers went unprotected against the broadcast TV onslaught --a massacre that has driven the evening edition to extinction and continues to forge one-paper (monopoly!) towns all across the land. The trick is that, as the Supreme Court has shielded the old-fashioned print press from regulation, Congress has grown attached to the news sources it can license. Hence, seeing unregulated newspapers perish in favor of broadcasting outlets with FCC leashes (and typically minuscule news operations) was a transition that didn't seem to offend the government's heartfelt support for a "multiplicity of information sources."

The Court actually began its analysis on solid ground: Local cable TV distribution is in fact dominated by franchise monopolies, thanks largely to anti-competitive attitudes at city hall and parsimonious radio spectrum allocations (for, among other technologies, "wireless cable") at the FCC. But in spinning a tale of protectionism--some "broadcast stations had…suffered serious reductions in operating revenues as a result of adverse carriage decisions by cable systems"--the Court spit in the face of audience choice.

According to an official study by the Federal Trade Commission that analyzed which TV stations cable operators dropped after "must carry" rules were abolished in the 1980s, the evidence was overwhelming that dropping "must carry" enabled customers to receive more of the programs they demanded.

But what use is pro-consumer evidence against the threat that "expansion in the cable industry was harming broadcasting"? And what good is cable-originated, unregulated C-SPAN competing against cubic zirconia salesmen and sitcom rerun syndicators licensed in the "public interest"? Hello Larry. Goodbye Brian.

Contributing Editor Thomas W. Hazlett ([e-mail]) teaches economics and public policy at the University of California, Davis.