Fcc v. National Citizens Committee, 436 U.S. 775 (1978)
Federal Communications Commission v.
National Citizens Committee for Broadcasting
No. 76-1471
Argued January 16, 1978
Decided June 12, 1978 *
436 U.S. 775
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Syllabus
After a lengthy rulemaking proceeding, the Federal Communications Commission (FCC) adopted regulations prospectively barring the initial licensing or the transfer of newspaper-broadcast combinations where there is common ownership of a radio or television broadcast station and a daily newspaper located in the same community ("co-located" combinations). Divestiture of existing co-located combinations was not required except in 16 "egregious cases," where the combination involves the sole daily newspaper published in a community and either the sole broadcast station or the sole television station providing that entire community with a clear signal. Absent waiver, divestiture must be accomplished in those 16 cases by January 1, 1980. On petitions for review of the regulations, the Court of Appeals affirmed the FCC’s prospective ban, but ordered adoption of regulations requiring dissolution of all existing combinations that did not qualify for waivers. The court held that the limited divestiture requirement was arbitrary and capricious within the meaning of § 10(e) of the Administrative Procedure Act.
Held: The challenged regulations are valid in their entirety. Pp. 793-815.
(a) The regulations, which are designed to promote diversification of the mass media as a whole, are based on public interest goals that the FCC is authorized to pursue. As long as the regulations are not an unreasonable means for seeking to achieve those goals, they fall within the FCC’s general rulemaking authority recognized in United States v. StorerBroadcasting Co., 351 U.S. 192, and National Broadcasting Co. v. United States, 319 U.S. 190. Pp. 793-796.
(b) Although it is contended that the rulemaking record did not conclusively establish that the prospective ban would fulfill the stated purpose,
[d]iversity and its effects are . . . elusive concepts, not easily defined let alone measured without making quality judgments objectionable on both policy and First Amendment grounds,
and evidence of specific abuses by common owners is difficult to compile. In light of these considerations, the FCC clearly did not take an irrational view of the public interest when it decided to impose the prospective ban, and was entitled to rely on its judgment, based on experience, that "it is unrealistic to expect true diversity from a commonly owned station-newspaper combination." In view of changed circumstances in the broadcasting industry, moreover, the FCC was warranted in departing from its earlier licensing decisions that allowed co-located combinations. Pp. 796-797.
(c) The contention that the First Amendment rights of newspaper owners are violated by the regulations ignores the fundamental proposition that there is no "unabridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write, or publish." Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 388. In view of the limited broadcast spectrum, allocation and regulation of frequencies are essential. Nothing in the First Amendment prevents such allocation as will promote the "public interest" in diversification of the mass communications media. A newspaper owner need not forfeit his right to publish in order to acquire a station in another community; nor is he "singled out" for more stringent treatment than other owners of mass media under already existing multiple ownership rules. Far from seeking to limit the flow of information, the FCC has acted "to enhance the diversity of information heard by the public without on-going government surveillance of the content of speech." The regulations are a reasonable means of promoting the public interest in diversified mass communications, and thus they do not violate the First Amendment rights of those who will be denied broadcasting licenses pursuant to them. Pp. 798-802.
(d) The limited divestiture requirement reflects a rational weighing of competing policies. The FCC rationally concluded that forced dissolution of all existing co-located combinations, though fostering diversity, would disrupt the industry and cause individual hardship, and would or might harm the public interest in several respects, specifically identified by the FCC. In the past, the FCC has consistently acted on the theory that preserving continuity of meritorious service furthers the public interest. And, in the instant proceeding, the FCC specifically noted that the existing newspaper-broadcast combinations had a "long record of service" in the public interest, and concluded that their replacement by new owners would not guarantee the same, level of service, would cause serious disruption during the transition period, and would probably result in a decline of local ownership. Pp. 803-809.
(e) The function of weighing policies under the public interest standard has been delegated by Congress to the FCC in the first instance, and there is no bass for a "presumption" that existing newspaper-broadcast combinations "do not serve the public interest." Such a presumption would not comport with the FCC’s longstanding and judicially approved practice of giving controlling weight in some circumstances to its goal of achieving "the best practicable service to the public." There is no statutory or other obligation that diversification should be given controlling weight in all circumstances. The FCC has made clear that diversification of ownership is a less significant factor when the renewal of an existing license, as compared with an initial licensing application, is being considered, and the policy of evaluating existing licensees on a somewhat different basis from new applicants appears to have been approved by Congress. Since the decision to "grandfather" most existing combinations was based on judgments and predictions by the FCC, complete factual support in the record was not required; "a forecast of the direction in which future public interest lies necessarily involves deductions based on the expert knowledge of the agency," FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 9. Nor was it arbitrary for the FCC to order divestiture in only the 16 "egregious cases," since the FCC made a rational judgment in concluding that the need for diversification was especially great in cases of local monopoly. Pp. 809-815.
181 U.S.App.D.C. 1, 555 F.2d 938, affirmed in part and reversed in part.
MARSHALL, J., delivered the opinion of the Court, in which all other Members joined except BRENNAN, J., who took no part in the consideration or decision of the cases.
MR. JUSTICE MARSHALL delivered the opinion of the Court.
At issue in these cases are Federal Communications Commission regulations governing the permissibility of common ownership of a radio or television broadcast station and a daily newspaper located in the same community. Rules Relating to Multiple Ownership of Standard, FM, and Television Broadcast Stations, Second Report and Order, 50 F.C.C.2d 1046 (1975) (hereinafter cited as Order), as amended upon reconsideration, 53 F.C.C.2d 589 (1975), codified in 47 CFR §§ 73.35, 73.240, 73.636 (1976). The regulations, adopted after a lengthy rulemaking proceeding, prospectively bar formation or transfer of co-located newspaper-broadcast combinations. Existing combinations are generally permitted to continue in operation. However, in communities in which there is common ownership of the only daily newspaper and the only broadcast station, or (where there is more than one broadcast station) of the only daily newspaper and the only television station, divestiture of either the newspaper or the broadcast station is required within five years, unless grounds for waiver are demonstrated.
The questions for decision are whether these regulations either exceed the Commission’s authority under the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U.S.C. §151 et seq. (1970 ed. and Supp. V), or violate the First or Fifth Amendment rights of newspaper owners; and whether the lines drawn by the Commission between new and existing newspaper-broadcast combinations, and between existing combinations subject to divestiture and those allowed to continue in operation, are arbitrary or capricious within the meaning of §10(e) of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A) (1976 ed.). For the reasons set forth below, we sustain the regulations in their entirety.
I
A
Under the regulatory scheme established by the Radio Act of 1927, 44 Stat. 1162, and continued in the Communications Act of 1934, no television or radio broadcast station may operate without a license granted by the Federal Communications Commission. 47 U.S.C. § 301. Licensees who wish to continue broadcasting must apply for renewal of their licenses every three years, and the Commission may grant an initial license or a renewal only if it finds that the public interest, convenience, and necessity will be served thereby. §§ 307(a), (d), 308(a), 309(a), (d).
In setting its licensing policies, the Commission has long acted on the theory that diversification of mass media ownership serves the public interest by promoting diversity of program and service viewpoints, as well as by preventing undue concentration of economic power. See, e.g., Multiple Ownership of Standard, FM and Television Broadcast Stations, 45 F.C.C. 1476, 1476-1477 (1964). This perception of the public interest has been implemented over the years by a series of regulations imposing increasingly stringent restrictions on multiple ownership of broadcast stations. In the early 1940’s, the Commission promulgated rules prohibiting ownership or control of more than one station in the same broadcast service (AM radio, FM radio, or television) in the same community.{1} In 1953, limitations were placed on the total number of stations in each service a person or entity may own or control.{2} And in 1970, the Commission adopted regulations prohibiting, on a prospective basis, common ownership of a VHF television station and any radio station serving the same market.{3}
More generally, "[d]iversification of control of the media of mass communications" has been viewed by the Commission as "a factor of primary significance" in determining who, among competing applicants in a comparative proceeding, should receive the initial license for a particular broadcast facility. Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d 393, 394-395 (1965) (italics omitted). Thus, prior to adoption of the regulations at issue here, the fact that an applicant for an initial license published a new paper in the community to be served by the broadcast station was taken into account on a case-by-case basis, and resulted in some instances in awards of licenses to competing applicants.{4}
Diversification of ownership has not been the sole consideration thought relevant to the public interest, however. The Commission’s other, and sometimes conflicting, goal has been to ensure "the best practicable service to the public." Id. at 394. To achieve this goal, the Commission has weighed factors such as the anticipated contribution of the owner to station operations, the proposed program service, and the past broadcast record of the applicant -- in addition to diversification of ownership -- in making initial comparative licensing decisions. See id. at 395-400. Moreover, the Commission has given considerable weight to a policy of avoiding undue disruption of existing service.{5} As a result, newspaper owners in many instances have been able to acquire broadcast licenses for stations serving the same communities as their newspapers, and the Commission has repeatedly renewed such licenses on findings that continuation of the service offered by the common owner would serve the public interest. See Order, at 1066-1067 1074-1075.
B
Against this background, the Commission began the instant rulemaking proceeding in 1970 to consider the nee for a more restrictive policy toward newspaper ownership of radio and television broadcast stations. Further Notice of Proposed Rulemaking (Docket No. 18110), 22 F.C.C.2d 339 (1970).{6} Citing studies showing the dominant role of television stations and daily newspapers as sources of local news and other information, id. at 346; see id. at 344-346{7} the notice of rulemaking proposed adoption of regulations that would eliminate all newspaper-broadcast combinations serving the same market, by prospectively banning formation or transfer of such combinations and requiring dissolution of all existing combinations within five years, id. at 346. The Commission suggested that the proposed regulations would serve "the purpose of promoting competition among the mass media involved, and maximizing diversification of service sources and viewpoints." Ibid. At the same time, however, the Commission expressed "substantial concern" about the disruption of service that might result from divestiture of existing combinations. Id. at 348. Comments were invited on all aspects of the proposed rules.
The notice of rulemaking generated a considerable response. Nearly 200 parties, including the Antitrust Division of the Justice Department, various broadcast and newspaper interests, public interest groups, and academic and research entities, filed comments on the proposed rules. In addition, a number of studies were submitted, dealing with the effects of newspaper-broadcast cross-ownership on competition and station performance, the economic consequences of divestiture, and the degree of diversity present in the mass media. In March, 1974, the Commission requested further comments directed primarily to the core problem of newspaper-television station cross-ownership, Memorandum Opinion and Order (Docket No. 18110), 47 F.C.C.2d 97 (1974), and close to 50 sets of additional comments were filed. In July, 1974, the Commission held three days of oral argument, at which all parties who requested time were allowed to speak.
The regulations at issue here were promulgated and explained in a lengthy report and order released by the Commission on January 31, 1975. The Commission concluded, first, that it had statutory authority to issue the regulations under the Communications Act, Order, at 1048, citing 47 U.S.C. §§ 2(a), 4(i), 4(j), 301, 303, 309(a), and that the regulations were valid under the First and Fifth Amendments to the Constitution, Order, at 1050-1051. It observed that
[t]he term public interest encompasses many factors, including "the widest possible dissemination of information from diverse and antagonistic sources."
Order, at 1048, quoting Associated Press v. United States, 326 U.S. 1, 20 (1945), and that "ownership carries with it the power to select, to edit, and to choose the methods, manner and emphasis of presentation," Order at 1050. The Order further explained that the prospective ban on creation of co-located newspaper-broadcast combinations was grounded primarily in First Amendment concerns, while the divestiture regulations were based on both First Amendment and antitrust policies. Id. at 1049. In addition, the Commission rejected the suggestion that it lacked the power to order divestiture, reasoning that the statutory requirement of license renewal every three years necessarily implied authority to order divestiture over a five-year period. Id. at 1052.
After reviewing the comments and studies submitted by the various parties during the course of the proceeding, the Commission then turned to an explanation of the regulations and the justifications for their adoption. The prospective rules, barring formation of new broadcast-newspaper combinations in the same market as well as transfers of existing combinations to new owners, were adopted without change from the proposal set forth in the notice of rulemaking.{8} While recognizing the pioneering contributions of newspaper owners to the broadcast industry, the Commission concluded that changed circumstances made it possible, and necessary, for all new licensing of broadcast stations to "be expected to add to local diversity." Id. at 1075.{9} In reaching this conclusion, the Commission did not find that existing co-located newspaper-broadcast combinations had not served the public interest, or that such combinations necessarily "spea[k] with one voice" or are harmful to competition. Id. at 1085, 1089. In the Commission’s view, the conflicting studies submitted by the parties concerning the effects of newspaper ownership on competition and station performance were inconclusive, and no pattern of specific abuses by existing cross-owners was demonstrated. See id. at 1072-1073, 1085, 1089. The prospective rules were justified, instead, by reference to the Commission’s policy of promoting diversification of ownership: increases in diversification of ownership would possibly result in enhanced diversity of viewpoints, and, given the absence of persuasive countervailing considerations, "even a small gain in diversity" was "worth pursuing." Id. at 1076, 1080 n. 30. With respect to the proposed across-the-board divestiture requirement, however, the Commission concluded that "a mere hoped-for gain in diversity" was not a sufficient justification. Id. at 1078. Characterizing the divestiture issues as "the most difficult" presented in the proceeding, the Order explained that the proposed rules, while correctly recognizing the central importance of diversity considerations, "may have given too little weight to the consequences which could be expected to attend a focus on the abstract goal alone." Ibid. Forced dissolution would promote diversity, but it would also cause "disruption for the industry and hardship for individual owners," "resulting in losses or diminution of service to the public." Id. at 1078, 1080.
The Commission concluded that, in light of these countervailing considerations, divestiture was warranted only in "the most egregious cases," which it identified as those in which a newspaper-broadcast combination has an "effective monopoly" in the local "marketplace of ideas, as well as economically." Id. at 1080-1081. The Commission recognized that any standards for defining which combinations fell within that category would necessarily be arbitrary to some degree, but "[a] choice had to be made." Id. at 1080. It thus decided to require divestiture only where there was common ownership of the sole daily newspaper published in a community and either (1) the sole broadcast station providing that entire community with a clear signal, or (2) the sole television station encompassing the entire community with a clear signal. Id. at 1080-1084.{10}
The Order identified 8 television-newspaper and 10 radio-newspaper combinations meeting the divestiture criteria. Id. at 1085, 1098. Waivers of the divestiture requirement were granted sua sponte to 1 television and 1 radio combination, leaving a total of 16 stations subject to divestiture. The Commission explained that waiver requests would be entertained in the latter cases,{11} but, absent waiver, either the newspaper or the broadcast station would have to be divested by January 1, 1980. Id. at 1084-1086.{12}
On petitions for reconsideration, the Commission reaffirmed the rules in all material respect. Memorandum Opinion and Order (Docket No. 18110), 53 F.C.C.2d 589 (1975).
C
Various parties -- including the National Citizens Committee for Broadcasting (NCCB), the National Association of Broadcasters (NAB), the American Newspaper Publishers Association (ANPA), and several broadcast licensees subject to the divestiture requirement -- petitioned for review of the regulations in the United States Court of Appeals for the District of Columbia Circuit, pursuant to 47 U.S.C. § 402(a) and 28 U.S.C. § 2342(1), 2343 (1970 ed. and Supp. V). Numerous other parties intervened, an the United States -- represented by the Justice Department -- was made a respondent pursuant to 28 U.S.C. §§ 2344, 2348. NAB, ANPA, and the broadcast licensees subject to divestiture argued that the regulations went too far in restricting cross-ownership of newspapers and broadcast stations; NCCB and the Justice Department contended that the regulations did not go far enough and that the Commission inadequately justified its decision not to order divestiture on a more widespread basis.
Agreeing substantially with NCCB and the Justice Department, the Court of Appeals affirmed the prospective ban on new licensing of co-located newspaper-broadcast combinations, but vacated the limited divestiture rules, and ordered the Commission to adopt regulations requiring dissolution of all existing combinations that did not qualify for a waiver under the procedure outlined in the Order. 181 U.S.App. D C. 1, 555 F.2d 938 (1977); seen. 11, supra. The court held, first, that the prospective ban was a reasonable means of furthering "the highly valued goal of diversity" in the mass media, 181 U.S.App.D.C. at 17, 555 F.2d at 954, and was therefore not without a rational basis. The court concluded further that, since the Commission "explained why it considers diversity to be a factor of exceptional importance," and since the Commission’s goal of promoting diversification of mass media ownership was strongly supported by First Amendment and antitrust policies, it was not arbitrary for the prospective rules to be "based on [the diversity] factor to the exclusion of others customarily relied on by the Commission." Id. at 13 n. 33, 555 F.2d at 950 n. 33; see id. at 11-12, 555 F.2d at 948-949.
The court also held that the prospective rules did not exceed the Commission’s authority under the Communications Act. The court reasoned that the public interest standard of the Act permitted, and indeed required, the Commission to consider diversification of mass media ownership in making its licensing decisions, and that the Commission’s general rulemaking authority under 47 U.S.C. §§ 303(r) and 154(i) allowed the Commission to adopt reasonable license qualifications implementing the public interest standard. 181 U.S.App.D.C. at 14-15, 555 F.2d at 951-952. The court concluded, moreover, that, since the prospective ban was designed to "increas[e] the number of media voices in the community," and not to restrict or control the content of free speech, the ban would not violate the First Amendment rights of newspaper owners. Id. at 16-17, 555 F.2d at 953-954.
After affirming the prospective rules, the Court of Appeals invalidated the limited divestiture requirement as arbitrary and capricious within the meaning of § 10(e) of the Administrative Procedure Act (APA), 5 U.S.C. § 706(2)(A) (1976 ed.). The court’s primary holding was that the Commission lacked a rational basis for "grandfathering" most existing combinations while banning all new combinations. The court reasoned that the Commission’s own diversification policy, as reinforced by First Amendment policies and the Commission’s statutory obligation to "encourage the larger and more effective use of radio in the public interest," 47 U.S.C. § 303(g), required the Commission to adopt a "presumption" that stations owned by co-located newspapers "do not serve the public interest," 181 U.S.App.D.C. at 25-26, 555 F.2d at 962-963. The court observed that, in the absence of countervailing policies, this "presumption" would have dictated adoption of an across-the-board divestiture requirement, subject only to waiver "in those cases where the evidence clearly discloses that cross-ownership is in the public interest." Id. at 29, 555 F.2d at 966. The countervailing policies relied on by the Commission in its decision were, in the court’s view, "lesser policies" which had not been given as much weight in the past as its diversification policy. Id. at 28, 555 F.2d at 965. And "the record [did] not disclose the extent to which divestiture would actually threaten these [other policies]." Ibid. T he court concluded, therefore, that it was irrational for the Commission not to give controlling weight to its diversification policy, and thus to extend the divestiture requirement to all existing combinations.{13}
The Court of Appeals held further that, even assuming a difference in treatment between new and existing combinations was justifiable, the Commission lacked a rational basis for requiring divestiture in the 16 "egregious" cases while allowing the remainder of the existing combinations to continue in operation. The court suggested that "limiting divestiture to small markets of `absolute monopoly’ squanders the opportunity where divestiture might do the most good," since "[d]ivestiture . . . may be more useful in the larger markets." Id. at 29, 555 F.2d at 966. The court further observed that the record "[did] not support the conclusion that divestiture would be more harmful in the grandfathered markets than in the 16 affected markets," nor did it demonstrate that the need for divestiture was stronger in those 16 markets. Ibid. On the latter point, the court noted that,
[a]lthough the affected markets contain fewer voices, the amount of diversity in communities with additional independent voices may in fact be no greater.
Ibid.
The Commission, NAB, ANPA, and several cross-owners who had been intervenors below, and whose licenses had been grandfathered under the Commission’s rules but were subject to divestiture under the Court of Appeals’ decision, petitioned this Court for review.{14} We granted certiorari, 434 U.S. 815 (1977), and we now affirm the judgment of the Court of Appeals insofar as it upholds the prospective ban and reverse the judgment insofar as it vacates the limited divestiture requirement.{15}
II
Petitioners NAB and ANPA contend that the regulation promulgated by the Commission exceed its statutory rulemaking authority and violate the constitutional rights of newspaper owners. We turn first to the statutory, and then to the constitutional, issues.
A
(1)
Section 303(r) of the Communications Act, 47 U.S.C. § 303(r), provides that
the Commission from time to time, as public convenience, interest, or necessity requires, shall . . . [m]ake such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of [the Act].
See also 47 U.S.C. § 154(i). As the Court of Appeals recognized, 181 U.S.App.D.C. at 14, 555 F.2d at 951, it is now well established that this general rulemaking authority supplies a statutory basis for the Commission to issue regulations codifying it view of the public interest licensing standard, so long as that view is based on consideration of permissible factors and is otherwise reasonable. If a license applicant does not qualify under standards set forth in such regulations, and does not proffer sufficient grounds for waiver or change of those standards, the Commission may deny the application without further inquiry. See United States v. Storer Broadcasting Co., 351 U.S. 192 (1956); National Broadcasting Co. v. United States, 319 U.S. 190 (1943).
This Court has specifically upheld this rulemaking authority in the context of regulations based on the Commission’s policy of promoting diversification of ownership. In United States v. Storer Broadcasting Co., supra, we sustained the portion of the Commission’s multiple ownership rules placing limitations on the total number of stations in each broadcast service a person may own or control. Seen. 2, supra. And in National Broadcasting Co. v. United States, supra, we affirmed regulations that, inter alia, prohibited broadcast networks from owning more than one AM radio station in the same community, and from owning
"any standard broadcast station in any locality where the existing standard broadcast stations are so few or of such unequal desirability . . . that competition would be substantially restrained by such licensing."
See 319 U.S. at 206-208; n. 1, supra.
Petitioner NAB attempts to distinguish these cases on the ground that they involved efforts to increase diversification within the boundaries of the broadcasting industry itself, whereas the instant regulations are concerned with diversification of ownership in the mass communications media as a whole. NAB contends that, since the Act confers jurisdiction on the Commission only to regulate "communication by wire or radio," 47 U.S.C. § 152(a), it is impermissible for the Commission to use its licensing authority with respect to broadcasting to promote diversity in an overall communications market which includes, but is not limited to, the broadcasting industry.
This argument undersells the Commission’s power to regulate broadcasting in the "public interest." In making initial licensing decisions between competing applicants, the Commission has long given "primary significance" to "diversification of control of the media of mass communications," and has denied licenses to newspaper owners on the basis of this policy in appropriate cases. See supra at 781, and n. 4. As we have discussed on several occasions, see, e.g., National Broadcasting Co. v. United States, supra at 210-218; Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 375-377, 387-388 (1969), the physical scarcity of broadcast frequencies, as well as problems of interference between broadcast signals, led Congress to delegate broad authority to the Commission to allocate broadcast licenses in the "public interest." And "[t]he avowed aim of the Communications Act of 1934 was to secure the maximum benefits of radio to all the people of the United States." National Broadcasting Co. v. United States, supra at 217. It was not inconsistent with the statutory scheme, therefore, for the Commission to conclude that the maximum benefit to the "public interest" would follow from allocation of broadcast licenses so as to promote diversification of the mass media as a whole.
Our past decisions have recognized, moreover, that the First Amendment and antitrust values underlying the Commission’s diversification policy may properly be considered by the Commission in determining where the public interest lies. "[T]he `public interest’ standard necessarily invites reference to First Amendment principles," Columbia Broadcasting System, Inc. v. Democratic National Committee, 412 U.S. 94, 122 (1973), and, in particular, to the First Amendment goal of achieving "the widest possible dissemination of information from diverse and antagonistic sources," Associated Press v. United States, 326 U.S. at 20. See Red Lion Broadcasting Co. v. FCC, supra at 385, 390. See also United States v. Midwest Video Corp., 406 U.S. 649, 667-669, and n. 27 (1972) (plurality opinion). And, while the Commission does not have power to enforce the antitrust laws as such, it is permitted to take antitrust policies into account in making licensing decisions pursuant to the public interest standard. See, e.g., United States v. Radio Corp. of America, 358 U.S. 334, 351 (1959); National Broadcasting Co. v. United States, supra at 222-224. Indeed we have noted, albeit in dictum:
[I]n a given case, the Commission might find that antitrust considerations alone would keep the statutory standard from being met, as when the publisher of the sole newspaper in an area applies for a license for the only available radio and television facilities, which, if granted, would give him a monopoly of that area’s major media of mass communication.
United States v. Radio Corp. of America, supra at 351-352.
(2)
It is thus clear that the regulations at issue are based on permissible public interest goals and, so long as the regulations are not an unreasonable means for seeking to achieve these goals, they fall within the general rulemaking authority recognized in the Storer Broadcasting and National Broadcasting cases. Petitioner ANPA contends that the prospective rules are unreasonable in two respects:{16} first, the rulemaking record did not conclusively establish that prohibiting common ownership of co-located newspapers and broadcast stations would, in fact, lead to increases in the diversity of viewpoints among local communications media; and second, the regulations were based on the diversification factor to the exclusion of other service factors considered in the past by the Commission in making initial licensing decisions regarding newspaper owners, see supra at 782. With respect to the first point, we agree with the Court of Appeals that, notwithstanding the inconclusiveness of the rulemaking record, the Commission acted rationally in finding that diversification of ownership would enhance the possibility of achieving greater diversity of viewpoints. As the Court of Appeals observed,
[d]iversity and its effects are . . . elusive concepts, not easily defined, let alone measured without making qualitative judgments objectionable on both policy and First Amendment grounds.
181 U.S.App.D.C. at 24, 555 F.2d at 961. Moreover, evidence of specific abuses by common owners is difficult to compile; "the possible benefits of competition do not lend themselves to detailed forecast." FCC v. RCA Communications, Inc., 346 U.S. 86, 96 (1053). In these circumstances, the Commission was entitled to rely on its judgment, based on experience, that
it is unrealistic to expect true diversity from a commonly owned station-newspaper combination. The divergency of their viewpoints cannot be expected to be the same as if they were antagonistically run.
Order at 1079-1080; see 181 U.S.App.D.C. at 25, 555 F.2d at 962.
As to the Commission’s decision to give controlling weight to its diversification goal in shaping the prospective rules, the Order makes clear that this change in policy was a reasonable administrative response to changed circumstances in the broadcasting industry. Order at 1074-1075; see FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 137-138 (1940). The Order explained that, although newspaper owners had previously been allowed, and even encouraged, to acquire licenses for co-located broadcast stations because of the shortage of qualified license applicants, a sufficient number of qualified and experienced applicants other than newspaper owners was now available. In addition, the number of channels open for new licensing had diminished substantially. It had thus become both feasible and more urgent for the Commission to take steps to increase diversification of ownership, and a change in the Commission’s policy toward new licensing offered the possibility of increasing diversity without causing any disruption of existing service. In light of these considerations, the Commission clearly did not take an irrational view of the public interest when it decided to impose a prospective ban on new licensing of co-located newspaper-broadcast combinations.{17}
B
Petitioners NAB and ANPA also argue that the regulations, though designed to further the First Amendment goal of achieving "the widest possible dissemination of information from diverse and antagonistic sources," Associated Press v. United States, 326 U.S. at 20, nevertheless violate the First Amendment rights of newspaper owners. We cannot agree, for this argument ignores the fundamental proposition that there is no "unabridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write, or publish." Red Lion Broadcasting Co. v. FCC, 395 U.S. at 388.
The physical limitations of the broadcast spectrum are well known. Because of problems of interference between broadcast signals, a finite number of frequencies can be used productively; this number is far exceeded by the number of persons wishing to broadcast to the public. In light of this physical scarcity, Government allocation and regulation of broadcast frequencies are essential, as we have often recognized. Id. at 375-377, 387-388; National Broadcasting Co. v. United States, 319 U.S. at 210-218; Federal Radio Comm’n v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 282 (1933); see supra at 795. No one here questions the need for such allocation and regulation, and, given that need, we see nothing in the First Amendment to prevent the Commission from allocating licenses so as to promote the "public interest" in diversification of the mass communications media.
NAB and ANPA contend, however, that it is inconsistent with the First Amendment to promote diversification by barring a newspaper owner from owning certain broadcasting stations. In support, they point to our statement in Buckley v. Valeo, 424 U.S. 1 (1976), to the effect that "government may [not] restrict the speech of some elements of our society in order to enhance the relative voice of others," id. at 449. As Buckley also recognized, however, "`the broadcast media pose unique and special problems not present in the traditional free speech case." Id. at 50 n. 55, quoting Columbia Broadcasting System v. Democratic National Committee, 412 U.S. at 101. Thus, efforts to "`enhanc[e] the volume and quality of coverage’ of public issues" through regulation of broadcasting may be permissible where similar efforts to regulate the print media would not be. 424 U.S. at 551, and n. 55, quoting Red Lion Broadcasting Co. v. FCC, supra at 393; cf. Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241 (1974). Requiring those who wish to obtain a broadcast license to demonstrate that such would serve the "public interest" does not restrict the speech of those who are denied licenses; rather, it preserves the interests of the "people as a whole . . . in free speech." Red Lion Broadcasting Co., supra at 390. As we stated in Red Lion, "to deny a station license because `the public interest’ requires it `is not a denial of free speech.’" 395 U.S. at 389, quoting National Broadcasting Co. v. United States, supra at 227. See also Federal Radio Comm’n v. Nelson Bros. Bond & Mortgage Co., supra.
Relying on cases such as Speiser v. Randall, 357 U.S. 513 (1958), and Elrod v. Burns, 427 U.S. 347 (1976), NAB and ANPA also argue that the regulations unconstitutionally condition receipt of a broadcast license upon forfeiture of the right to publish a newspaper. Under the regulations, however, a newspaper owner need not forfeit anything in order to acquire a license for a station located in another community.{18} More importantly, in the cases relied on by those petitioners, unlike the instant case, denial of a benefit had the effect of abridging freedom of expression, since the denial was based solely on the content of constitutionally protected speech; in Speiser, veterans were deprived of a special property tax exemption if they declined to subscribe to a loyalty oath, while in Elrod, certain public employees were discharged or threatened with discharge because of their political affiliation. As we wrote in National Broadcasting, supra, "the issue before us would be wholly different" if "the Commission [were] to choose among applicants upon the basis of their political, economic or social views." 319 U.S. at 226. Here, the regulations are not content related; moreover, their purpose and effect is to promote free speech, not to restrict it.
Finally, NAB and ANPA argue that the Commission has unfairly "singled out" newspaper owners for more stringent treatment than other license applicants.{19} But the regulations treat newspaper owners in essentially the same fashion as other owners of the major media of mass communications were already treated under the Commission’s multiple ownership rules, see supra at 780-781, and nn. 1-3; owners of radio stations, television stations, and newspapers alike are now restricted in their ability to acquire licenses for co-located broadcast stations. Grosjean v. American Press Co., 297 U.S. 233 (1936), in which this Court struck down a state tax imposed only on newspapers, is thus distinguishable in the degree to which newspapers were singled out for special treatment. In addition, the effect of the tax in Grosjean was "to limit the circulation of information to which the public is entitled," id. at 250, an effect inconsistent with the protection conferred on the press by the First Amendment.
In the instant case, far from seeking to limit the flow of information, the Commission has acted, in the Court of Appeals’ words, "to enhance the diversity of information heard by the public without ongoing government surveillance of the content of speech." 181 U.S.App.D.C. at 17, 555 F.2d at 954. The regulations are a reasonable means of promoting the public interest in diversified mass communications; thus, they do not violate the First Amendment rights of those who will be denied broadcast licenses pursuant to them.{20} Being forced to "choose among applicants for the same facilities," the Commission has chosen on a "sensible basis," one designed to further, rather than contravene, "the system of freedom of expression." T. Emerson, The System of Freedom of Expression 663 (1970).
III
After upholding the prospective aspect of the Commission’s regulations, the Court of Appeals concluded that the Commission’s decision to limit divestiture to 16 "egregious cases" of "effective monopoly" was arbitrary and capricious within the meaning of § 10(e) of the APA, 5 U.S.C. § 706(2)(A) (1976 ed.).{21} We agree with the Court of Appeals that regulations promulgated after informal rulemaking, while not subject to review under the "substantial evidence" test of the APA, 5 U.S.C. § 706(2)(E) (1976 ed.) quoted in n. 21, supra, may be invalidated by a reviewing court under the "arbitrary or capricious" standard if they are not rational and based on consideration of the relevant factors. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 413-416 (1971). Although this review "is to be searching and careful," "[t]he court is not empowered to substitute its judgment for that of the agency." Id. at 416.
In the view of the Court of Appeals, the Commission lacked a rational basis, first, for treating existing newspaper-broadcast combinations more leniently than combinations that might seek licenses in the future; and, second, even assuming a distinction between existing and new combinations had been justified, for requiring divestiture in the "egregious cases" while allowing all other existing combinations to continue in operation. We believe that the limited divestiture requirement reflects a rational weighing of competing policies, and we therefore reinstate the portion of the Commission’s order that was invalidated by the Court of Appeals.
A
(1)
The Commission was well aware that separating existing newspaper-broadcast combinations would promote diversification of ownership. It concluded, however, that ordering widespread divestiture would not result in "the best practicable service to the American public," Order at 1074, a goal that the Commission has always taken into account and that has been specifically approved by this Court, FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 475 (1940); see supra at 782. In particular, the Commission expressed concern that divestiture would cause "disruption for the industry" and "hardship for individual owners," both of which would result in harm to the public interest. Order at 1078. Especially in light of the fact that the number of co-located newspaper-broadcast combinations was already on the decline as a result of natural market forces, and would decline further as a result of the prospective rules, the Commission decided that across-the-board divestiture was not warranted. See id. at 1080 n. 29.
The Order identified several specific respects in which the public interest would or might be harmed if a sweeping divestiture requirement were imposed: the stability and continuity of meritorious service provided by the newspaper owners as a group would be lost; owners who had provided meritorious service would unfairly be denied the opportunity to continue in operation; "economic dislocations" might prevent new owners from obtaining sufficient working capital to maintain the quality of local programming;{22} and local ownership of broadcast stations would probably decrease.{23} Id. at 1078. We cannot say that the Commission acted irrationally in concluding that these public interest harms outweighed the potential gains that would follow from increasing diversification of ownership.
In the past, the Commission has consistently acted on the theory that preserving continuity of meritorious service furthers the public interest, both in its direct consequence of bringing proved broadcast service to the public, and in its indirect consequence of rewarding -- and avoiding losses to licensees who have invested the money and effort necessary to produce quality performance.{24} Thus, although a broadcast license must be renewed every three years, and the licensee must satisfy the Commission that renewal will serve the public interest, both the Commission and the courts have recognized that a licensee who has given meritorious service has a "legitimate renewal expectanc[y]" that is "implicit in the structure of the Act," and should not be destroyed absent good cause. Greater Boston Television Corp. v. FCC, 143 U.S.App.D.C. 383, 396, 444 F.2d 841, 854 (1970), cert. denied, 403 U.S. 923 (1971); see Citizens Communications Center v. FCC, 145 U.S.App.D.C. 32, 44, and n. 35, 447 F.2d 1201, 1213, and n. 35 (1971); In re Formulation of Policies Relating to the Broadcast Renewal Applicant, Stemming From the Comparative Hearing Process, 66 F.C.C.2d 419, 420 (1977); n. 5, supra.{25} Accordingly, while diversification of ownership is a relevant factor in the context of license renewal as well as initial licensing, the Commission has long considered the past performance of the incumbent as the most important factor in deciding whether to grant license renewal, and thereby to allow the existing owner to continue in operation. Even where an incumbent is challenged by a competing applicant who offers greater potential in terms of diversification, the Commission’s general practice has been to go with the "proved product" and grant renewal if the incumbent has rendered meritorious service. See generally In re Formulation of Policies Relating to the Broadcast Renewal Applicant, Stemming from the Comparative Hearing Process, supra;n. 5, supra.
In the instant proceeding, the Commission specifically noted that the existing newspaper-broadcast cross-owners as a group had a "long record of service" in the public interest; many were pioneers in the broadcasting industry and had established and continued "[t]raditions of service" from the outset. Order at 1078.{26} Notwithstanding the Commission’s diversification policy, all were granted initial licenses upon findings that the public interest would be served thereby, and those that had been in existence for more than three years had also had their licenses renewed on the ground that the public interest would be furthered. The Commission noted, moreover, that its own study of existing co-located newspaper-television combinations showed that, in terms of percentage of time devoted to several categories of local programming, these stations had displayed "an undramatic but nonetheless statistically significant superiority" over other television stations. Id. at 1078 n. 26.{27} An across-the-board divestiture requirement would result in loss of the services of these superior licensees, and -- whether divestiture caused actual losses to existing owners, or just denial of reasonably anticipated gains -- the result would be that future licensees would be discouraged from investing the resources necessary to produce quality service.
At the same time, there was no guarantee that the licensees who replaced the existing cross-owners would be able to provide the same level of service or demonstrate the same long-term commitment to broadcasting. And even if the new owners were able in the long run to provide similar or better service, the Commission found that divestiture would cause serious disruption in the transition period. Thus, the Commission observed that new owners "would lack the long knowledge of the community, and would have to begin raw," and -- because of high interest rates -- might not be able to obtain sufficient working capital to maintain the quality of local programming. Id. at 1078; see n. 22, supra.{28}
The Commission’s fear that local ownership would decline was grounded in a rational prediction, based on its knowledge of the broadcasting industry and supported by comments in the record, see Order at 1068-1069, that many of the existing newspaper-broadcast combinations owned by local interests would respond to the divestiture requirement by trading stations with out-of-town owners. It is undisputed that roughly 75 of the existing co-located newspaper-television combinations are locally owned, see 181 U.S.App.D.C. at 26-27, 555 F.2d at 963-964, and these owners’ knowledge of their local communities and concern for local affairs, built over a period of years, would be lost if they were replaced with outside interests. Local ownership, in and of itself, has been recognized to be a factor of some -- if relatively slight -- significance even in the context of initial licensing decisions. See Policy Statement on Comparative Broadcast Hearings, 1 F.C.C.2d at 396. It was not unreasonable, therefore, for the Commission to consider it as one of several factors militating against divestiture of combinations that have been in existence for many years.{29}
In light of these countervailing considerations, we cannot agree with the Court of Appeals that it was arbitrary and capricious for the Commission to "grandfather" most existing combinations, and to leave opponents of these combinations to their remedies in individual renewal proceedings. In the latter connection, we note that, while individual renewal proceedings are unlikely to accomplish any "overall restructuring" of the existing ownership patterns, the Order does make clear that existing combinations will be subject to challenge by competing applicants in renewal proceedings, to the same extent as they were prior to the instant rulemaking proceedings. Order at 1087-1088 (emphasis omitted); seen. 12, supra. That is, diversification of ownership will be a relevant but somewhat secondary factor. And, even in the absence of a competing applicant, license renewal may be denied if, inter alia, a challenger can show that a common owner has engaged in specific economic or programming abuses. See nn. 12 and 13, supra.
(2)
In concluding that the Commission acted unreasonably in not extending its divestiture requirement across the board, the Court of Appeals apparently placed heavy reliance on a "presumption" that existing newspaper-broadcast combinations "do not serve the public interest." See supra at 790-791. The court derived this presumption primarily from the Commission’s own diversification policy, as "reaffirmed" by adoption of the prospective rules in this proceeding, and secondarily from " [t]he policies of the First Amendment," 181 U.S.App.D.C. at 26, 555 F.2d at 963, and the Commission’s statutory duty to "encourage the larger and more effective use of radio in the public interest," 47 U.S.C. § 303(g). As explained in Part II above, we agree that diversification of ownership furthers statutory and constitutional policies, and, as the Commission recognized, separating existing newspaper-broadcast combinations would promote diversification. But the weighing of policies under the "public interest" standard is a task that Congress has delegated to the Commission in the first instance, and we are unable to find anything in the Communications Act, the First Amendment, or the Commission’s past or present practices that would require the Commission to "presume" that its diversification policy should be given controlling weight in all circumstances.{30}
Such a "presumption" would seem to be inconsistent with the Commission’s longstanding and judicially approved practice of giving controlling weight in some circumstances to its more general goal of achieving "the best practicable service to the public." Certainly, as discussed in Part III-A(1) above, the Commission, through its license renewal policy, has made clear that it considers diversification of ownership to be a factor of less significance when deciding whether to allow an existing licensee to continue in operation than when evaluating applicants seeking initial licensing. Nothing in the language or the legislative history of § 303(g) indicates that Congress intended to foreclose all differences in treatment between new and existing licensees, and indeed, in amending § 307(d) of the Act in 1952, Congress appears to have lent its approval to the Commission’s policy of evaluating existing licensees on a somewhat different basis from new applicants.{31} Moreover, if enactment of the prospective rules in this proceeding itself were deemed to create a "presumption" in favor of divestiture, the Commission’s ability to experiment with new policies would be severely hampered. One of the most significant advantages of the administrative process is its ability to adapt to new circumstances in a flexible manner, see FCC v. Pottsville Broadcasting Co., 309 U.S. at 137-138, and we are unwilling to presume that the Commission acts unreasonably when it decides to try out a change in licensing policy primarily on a prospective basis.
The Court of Appeals also relied on its perception that the policies militating against divestiture were "lesser policies" to which the Commission had not given as much weight in the past as its diversification policy. See supra at 791. This perception is subject to much the same criticism as the "presumption" that existing co-located newspaper-broadcasting combinations do not serve the public interest. The Commission’s past concern with avoiding disruption of existing service is amply illustrated by its license renewal policies. In addition, it is worth noting that in the past when the Commission has changed its multiple-ownership rules it has almost invariably tailored the changes so as to operate wholly or primarily on a prospective basis. For example, the regulations adopted in 1970 prohibiting common ownership of a VHF television station and a radio station serving the same market were made to apply only to new licensing decisions; no divestiture of existing combinations was required. Seen. 3, supra. The limits set in 1953 on the total numbers of stations a person could own, upheld by this Court in United States v. Storer Broadcasting Co., 351 U.S. 192 (1956), were intentionally set at levels that would not require extensive divestiture of existing combinations. See Multiple Ownership of AM, FM and Television Broadcast Stations, 18 F.C.C. at 292. And, while the rules adopted in the early 1940’s prohibiting ownership or control of more than one station in the same broadcast service in the same community required divestiture of approximately 20 AM radio combinations, FCC Eleventh Annual Report 12 (1946), the Commission afforded an opportunity for case-by-case review, see Multiple Ownership of Standard Broadcast Stations, 8 Fed.Reg. 16065 (1943). Moreover, television and FM radio had not yet developed, so that application of the rules to these media was wholly prospective. See Rules and Regulations Governing Commercial Television Broadcast Stations, supra,n. l; Rules Governing Standard and High Frequency Broadcast Stations, supra,n. 1.
The Court of Appeals apparently reasoned that the Commission’s concerns with respect to disruption of existing service, economic dislocations, and decreases in local ownership necessarily could not be very weighty since the Commission has a practice of routinely approving voluntary transfers and assignments of licenses. See 181 U.S.App.D.C. at 26-28, 555 F.2d. at 963-965. But the question of whether the Commission should compel proved licensees to divest their stations is a different question from whether the public interest is served by allowing transfers by licensees who no longer wish to continue in the business. As the Commission’s brief explains:
[I]f the Commission were to force broadcasters to stay in business against their will, the service provided under such circumstances, albeit continuous, might well not be worth preserving. Thus, the fact that the Commission approves assignments and transfers in no way undermines its decision to place a premium on the continuation of proven past service by those licensees who wish to remain in business.
Brief for Petitioner in No. 76-1471, p. 38 (footnote omitted).{32}
The Court of Appeals’ final basis for concluding that the Commission acted arbitrarily in not giving controlling weight to its divestiture policy was the Court’s finding that the rulemaking record did not adequately "disclose the extent to which divestiture would actually threaten" the competing policies relied upon by the Commission. 181 U.S.App.D.C. at 28, 555 F.2d at 965. However, to the extent that factual determinations were involved in the Commission’s decision to "grandfather" most existing combinations, they were primarily of a judgmental or predictive nature -- e.g., whether a divestiture requirement would result in trading of stations with out-of-town owners; whether new owners would perform as well as existing cross-owners, either in the short run or in the long run; whether losses to existing owners would result from forced sales; whether such losses would discourage future investment in quality programming; and whether new owners would have sufficient working capital to finance local programming. 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," FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 29 (1961); see Industrial Union Dept., AFL-CIO v. Hodgson, 162 U.S.App.D.C. 331, 338-339, 499 F.2d 467, 474-475 (1974).
B
We also must conclude that the Court of Appeals erred in holding that it was arbitrary to order divestiture in the 16 "egregious cases" while allowing other existing combinations to continue in operation. The Commission’s decision was based not -- as the Court of Appeals may have believed, see supra at 792 -- on a conclusion that divestiture would be more harmful in the "grandfathered" markets than in the 16 affected markets, but rather on a judgment that the need for diversification was especially great in cases of local monopoly. This policy judgment was certainly not irrational, see United States v. Radio Corp. of America, 358 U.S. at 351-352, and indeed was founded on the very same assumption that underpinned the diversification policy itself and the prospective rules upheld by the Court of Appeals and now by this Court -- that the greater the number of owners in a market, the greater the possibility of achieving diversity of program and service viewpoints.
As to the Commission’s criteria for determining which existing newspaper-broadcast combinations have an "effective monopoly" in the "local marketplace of ideas as well as economically," we think the standards settled upon by the Commission reflect a rational legislative-type judgment. Some line had to be drawn, and it was hardly unreasonable for the Commission to confine divestiture to communities in which there is common ownership of the only daily newspaper and either the only television station or the only broadcast station of any kind encompassing the entire community with a clear signal. Cf. United States v. Radio Corp. of America, supra at 351-352, quoted supra at 796. It was not irrational, moreover, for the Commission to disregard media sources other than newspapers and broadcast stations in setting its divestiture standards. The studies cited by the Commission in its notice of rulemaking unanimously concluded that newspapers and television are the two most widely utilized media sources for local news and discussion of public affairs; and, as the Commission noted in its Order at 1081,
aside from the fact that [magazines and other periodicals] often had only a tiny fraction in the market, they were not given real weight since they often dealt exclusively with regional or national issues and ignored local issues.
Moreover, the differences in treatment between radio and television stations, seen. 10, supra, were certainly justified in light of the far greater influence of television than radio as a source for local news. See Order at 1083.
The judgment of the Court of Appeals is affirmed in part and reversed in part.
It is so ordered.
MR. JUSTICE BRENNAN took no part in the consideration or decision of these cases.