Antitrust Law Daily Wrap Up, ADVERTISING—9th Cir.: Prohibition of commercial advertising on public broadcasting stations held constitutional, (Dec 3, 2013)

By Jody Coultas, J.D.

The U.S. Court of Appeals in San Francisco upheld the constitutionality of a federal statute placing restrictions on advertising on public broadcasting stations (Minority Television Project, Inc. v. Federal Communications Commission, December 2, 2013, McKeown, M.). The statute’s prohibition of commercial, political, and issue-oriented advertising did not violate First Amendment rights, the appellate court ruled.

Minority Television Project, Inc. (Minority TV), a licensee of a noncommercial educational television station, challenged 47 U.S.C. §399b, which prohibits public stations from transmitting paid advertisements for for-profit entities, issues of public importance or interest, and political candidates as facially unconstitutional under the First Amendment. Section 399b’s advertising restrictions are based on the government’s substantial interest in maintaining the unique, free programming niche filled by public television and radio.

After another broadcaster complained to the Federal Communication Commission (FCC) about Minority TV’s underwriting announcements, the FCC’s Enforcement Bureau found that Minority TV had broadcast announcements that violated § 399b because they included improper promotional language. Minority TV then filed a petition for review of the FCC orders. A district court granted summary judgment for the FCC on Minority TV’s facial challenges to § 399b.

Section 399b prohibits paid advertising, except for advertising for goods and services offered by non-profit organizations. An “advertisement” is defined as material transmitted in exchange for remuneration that is intended: (1) to promote any service, facility, or product offered by any person who is engaged in such offering for profit; (2) to express the views of any person with respect to any matter of public importance or interest; or (3) to support or oppose any candidate for political office. The Supreme Court has held that the standard for evaluating the constitutionality of § 399b is intermediate scrutiny. Section 399b is a content-based broadcast regulation, and the court may uphold the statute’s restrictions on advertising only if the court finds that the restrictions are “narrowly tailored to further a substantial governmental interest.”

Substantial evidence before Congress supported a district court’s conclusion that the advertising prohibited by § 399b posed a threat to the noncommercial, educational nature of noncommercial education programming and that the additional evidence bore out Congress’s predictive judgment in enacting § 399b, according to the court. This case did not present a close call requiring the court to consider what evidentiary burden Congress bears in enacting a law that implicates First Amendment rights, the appeals court observed. Congress was well informed on the issues, but the information was necessarily limited because advertising had never been allowed on noncommercial education stations. However, the First Amendment does not require Congress to wait for a feared harm to take place before it can act.

Substantial interest in restrictions. The court found that the government had a substantial interest in imposing advertising restrictions in order to preserve the essence of public broadcast programming. In order to preserve the noncommercial nature of public broadcasting, the government set aside specific channels for noncommercial use, provided funding, and created special requirements and restrictions, such as Section 399a and 399b, for noncommercial education stations. Section 399b does not stand alone; it is an important piece of a comprehensive scheme to promote programming that is differentiated from the typical commercial fare, in the court’s view.

There was evidence that noncommercial stations offer statistically significantly more public affairs, children’s, and family programming, and statistically significantly less violent programming, than both affiliates of commercial networks and all other commercial stations. Evidence before Congress also suggested that advertising distorts programming decisions because advertisers have something to sell and want to sell it to the largest audience possible, and there was a need to protect public broadcasting from all special interests whose advertising dollars could affect programming decisions.

Narrowly-tailored restrictions. Section 399b was narrowly tailored to further the substantial government interest in preserving public broadcast programming, according to the court. Narrow tailoring requires a “fit” between the legislature’s ends and the means chosen to accomplish those ends. The statute allowed broadcasters to air enhanced underwriting, which both the FCC and Congress determined did not present the same risks to programming as advertisements. Broadcasters may air promotional content for which consideration was not received, as well as non-profit advertisements. Section 399b’s prohibitions are specifically targeted at paid advertising dollars, which Congress identified as a threat to public programming. There was also sufficient evidence that the goals of Section 399b could not be satisfied by less restrictive means. Minority TV’s argument that time, place, and manner restrictions could have achieved the same goals was rejected based on evidence of previous experiments with these types of restrictions.

Political, issue-oriented advertising. The statute was not over-inclusive because it prohibited issue and political advertising, according to the court. Minority TV’s focused its constitutionality argument on the political and issue advertising restrictions; specifically that Congress needed more before it could prohibit such advertising. However, Congress’s determination that this kind of advertising posed a significant threat to public programming was supported by substantial evidence. Evidence regarding the amount spent on political advertising confirmed Congress’s prediction that, like advertising by for-profit entities, political advertising dollars have the power to distort programming decisions. Advertisers generally seek programming that is consistent or at least not contrary to, their messages and values.

Minority TV could not show that Congress targeted political speech, critical speech, or particular viewpoints rather than simply targeting influence from advertising dollars. Also, Minority TV failed to show that issue and political advertising was less likely to result in commercialization than corporate goods and services advertising.

Advertising by non-profits. Minority TV was unable to show that Section 399b was under-inclusive because advertising by non-profit entities was not prohibited, according to the court. Congress narrowly tailored the legislation by allowing non-profit advertising for goods and services without regard to whether consideration was received. Non-profit advertising constituted a very small amount of money and this limited advertising has no impact on programming. Such advertising sales did not even register on the breakdown of public television revenue sources presented by the government. Only one non-profit announcement was presented as evidence, and Minority TV did not seek to broadcast it. Thus, non-profit advertising did not pose the same threat as commercial, political, or issue advertisements.

Dissent. The dissenting opinion stated that the judges would find Section 399b and the corresponding regulations unconstitutional based on the First Amendment. Unlike the majority, the dissenters found the government’s evidence supporting the prohibitions and distinctions of Section 399b to be sparse and ambiguous. There was little evidence of the dangers posed by issue and political advertising submitted to Congress at the time the statute was adopted. The dissent also felt that the general concerns about insulating public television from a variety of influences did not concern advertising. There was no evidence that paid advertising from politicians or organizations would make the broadcasters subject to influence by those politicians or organizations. Non-commercial entities, which may advertise themselves and their services, could pose a similar risk but are not prohibited. Further, the dissenters were not persuaded that public broadcast stations, generally run by government entities and non-profits, would abandon their programming in order to compete with commercial stations for advertising money.

The case is No. 09-17311.

Attorneys: Walter Elmer Diercks (Rubin, Winston, Diercks, Harris & Cooke, LLP) for Minority Television Project, Inc. Mark B. Stern, United States Department of Justice, Civil Division, for the Federal Communications Commission.

Companies: Minority Television Project, Inc.

Cases: Advertising AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews