December 2008

As this Nation's 1,600 television stations begin to convert to a digital television format, it is appropriate to reexamine the longstanding social compact between broadcasters and the American people. In the words of Vice President Al Gore, this coming transition represents "the greatest transformation in television's history...one that is truly bigger than the shift from black and white to color....It's like the difference between a one-man band and a symphony."(1) The quality of governance, intelligence of political discourse, diversity of free expression, vitality of local communities, opportunities for education and instruction, and many other dimensions of American life will be affected profoundly by how digital television evolves. As a free and ubiquitous medium, over-the-air television has been and will continue to be a central, defining force in American society. Thus, the American people have a vital stake in the character of television in the new digital era.

Much remains unknown about the future of digital television, which is precisely why President Clinton established the Advisory Committee on Public Interest Obligations of Digital Television Broadcasters. It is important to help affirmatively shape the new digital television era, in concert with market forces and the technology itself, by recommending appropriate legal obligations and marketplace rules.

Acting on behalf of the American public, this is a role the Federal Government has played since the inception of broadcasting. As decreed by Congress, and affirmed by the Supreme Court, the airways are a public resource legally owned by the American people.(2) Broadcasters are licensed to use those airwaves, acting as fiduciaries for the public good, and the Congress and the Federal Communications Commission are authorized to ensure that broadcasters fulfill this function.

The framework for broadcasting was first articulated by Herbert Hoover when he was serving as Secretary of Commerce in the 1920s. "The ether is a public medium, and its use must be for a public benefit," Hoover said. "The dominant element for consideration in the radio field is, and always will be, the great body of the listening public, millions in number, country-wide in distribution."(3)

This principle is the golden thread that has run through more than seven decades of broadcasting. It was enshrined in the Radio Act of 1927 and the Communications Act of 1934 in the mandate that broadcasting serve the "public interest, convenience and necessity."(4) It has been elaborated on through numerous FCC regulations designed to enhance diversity of expression, political discourse, children's programming, and other important cultural functions. And it has been reaffirmed by Supreme Court rulings that balance the First Amendment rights of speakers and viewers/listeners in broadcasting.(5) The specific public interest obligations of television broadcasters have varied over time, but the principles of public interest service have been, and remain, central to the defining charter of broadcasting.

This Advisory Committee's recommendations on how public interest obligations of television broadcasters ought to change in the new digital television era -- outlined in Section III below -- represent a new stage in the ongoing evolution of the public interest standard: a needed reassessment in light of dramatic changes in communications technology, market structures, and the needs of a democratic society.

Before presenting those recommendations, this report reviews the historical events that have brought broadcasting to this point. Section I describes the evolution of digital television technology, while Section II describes the events that have affected the development of the public interest standard since 1927. These histories provide a useful context for understanding the Advisory Committee's recommendations and how they seek to preserve and extend many well-established principles in the new media environment. They also shed light on the special challenges of bringing commercial objectives and public needs into greater alignment in broadcast television, whose free and ubiquitous programming and tradition of public responsibilities make it a very special resource in American society.

ENDNOTES

(1) Vice President Al Gore, Address at the inaugural meeting of the Advisory Committee on Public Interest Obligations (Oct. 22, 1997).

(2 ) See, 47 U.S.C. - 301 (1997); Federal Communications Comm'n v. Sanders Bros. Radio Station, 309 U.S. 470, 475 (1939).

(3) Proceedings of the Fourth National Radio Conference, Washington, DC, Nov. 9-11, 1925 (Wash- ington, DC: Government Printing Office, 1926), p. 7.

(4) Radio Act of 1927, Pub. L. No. 632, 44 Stat. 1162, - 4 (1927). See also 47 U.S.C. -- 307(a), 309(a), 310(d).

(5) See, e.g., Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 650 (1994), vacated and remanded, 910 F. Supp. 734 (1995), aff 'd, 520 U.S. 180 (1997); Columbia Broad. Sys., Inc. v. Democratic Nat'l Comm., 412 U.S. 94, 117-18 (1973).

Advisory Committee on the Public Interest Obligations of Digital Television Broadcasters

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Federal Advisory Committee Act, as amended (5 U.S.C. App.) (the "Act"), and in order to establish an advisory committee on the public interest obligations of digital television broadcasters, it is hereby ordered as follows:

Section 1. Establishment. There is established the "Advisory Committee on the Public Interest Obligations of Digital Television Broadcasters" ("Committee"). The Committee shall consist of not more than 15 members appointed by the President. Members shall be chosen from the private sector, including members of the commercial and noncommercial broadcasting industry broadcasting industry, computer industries, producers, academic institutions, public interest organization, and the advertising community. The President shall designate a Chair from among the members of the Committee.

Sec. 2. Functions. On or before June 1, 1998, the Committee shall report to the Vice President on the public interest obligations digital television broadcasters should assume. For the purpose of carrying out its functions the Committee may, in consultation with the Assistant Secretary of Commerce for Communications and Information, hold meetings at such times and places as the Committee may find advisable.

Sec. 3. Administration. (a) To the extent permitted by law, the heads of executive departments, agencies, and independent instrumentalities shall provide the Committee, upon request, with such information as it may require for the purpose of carrying out its functions.

• (b) Upon request of the Chair of the Committee, the head of any executive department, agency, or instrumentality shall, to the extent permitted by law and subject to the discretion of such head, (1) make any of the facilities and services of such department, agency, or instrumentality available to the Committee; and (2) detail any of the personnel of such department, agency, or instrumentality to the Committee to assist the Committee in carrying out its duties.
• (c) Members of the Committee shall serve without compensation for their work on the Committee. While engaged in the work of the Committee, members appointed from the private sector may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by law and as the Chair, in consultation with the Assistant Secretary of Commerce for Communications and Information, may allow as needed, for persons serving intermittently in the Government service (5 U.S.C. 5701-5707), to the extent funds are available for such purposes.
• (d) To the extent permitted by law and subject to the availability of appropriations, the Department of Commerce shall provide the Committee with administrative services, staff, and other support services necessary for performance of the Committee's functions.
• (e) the Assistant Secretary of Commerce for Communications and Information, or his designee, shall perform the functions of the President under the Act, except that of reporting to the Congress, in accordance with the guidelines and procedures estab- lished by the Administrator of General Services.

Sec. 4. General. The Committee shall terminate 30 days after submitting its report, unless extended by the President.

[signed]

William J. Clinton

THE WHITE HOUSE,

March 11, 1997

See PIAC Charter

*Executive Order 13038 was amended by Executive Orders Nos. 13065, 13081, and 13102 to, among other things, extend the reporting deadline of the Advisory Committee on the Public Interest Obligations of Digital Television Broadcasters to December 31, 1998.

The purpose of this appendix is to offer some discussion of various possible innovative approaches to public interest obligations, and to compare them to more conventional approaches.* Our shared ground is that broadcasters should attempt to contribute to the educational, civic, and democratic goals of a well-functioning democracy. The question is what methods are best suited to achieving those goals and whether it is possible to think of more creative means for doing so. Thus we discuss a wide range of proposals, from deregulation to spectrum auctions to a system of "digital drop-ins," by which government would support a substantial amount of public interest programming.

Some of the most interesting proposals below attempt to promote public interest goals by allowing considerable flexibility for broadcasters, as, for example, by allowing them to provide public interest broadcasting or instead to pay for someone else to do it, or by paying a spectrum fee (from an auction or from a set price) that might be used to support public interest broadcasting.

We have been greatly assisted by a number of presentations and documents, including those by the Media Institute, a working group of the Aspen Institute, and Hugh Carter Donahue. The public through electronic mail submissions, faxes, and attendance at meetings has also made substantial contributions to the Committee. We are very grateful for the creative thinking and assistance provided by these organizations and individuals. These ideas were vigorously debated within the Committee. Given the innovative and new approach taken by many of these proposals, the Committee chose not to reach any final judgment and conclu- sions or make any specific recommendations.

I. TRADITIONAL REGULATION: THE PUBLIC TRUSTEE MODEL

The traditional approach to regulation of broadcasting has treated broadcasters as public trustees, obligated to meet a large set of public service responsibilities. Because broadcasters get exclusive use of a scarce public resource—the airwaves, it has been deemed appropriate to subject them to national commands designed to ensure promotion of the public interest. Perhaps the public trustee model should be "carried over" to the digital era, though there are complexities in deciding exactly how the model applies in a new setting. There are serious questions about the extent to which federal commands should be specific (so as to ensure compliance) or vague and general (so as to allow room for private adaptation).

Advantages: It is reasonable to think that direct mandates are the simplest way to ensure compliance with public interest responsibilities. If, for example, broadcasters are told to provide three hours of educational programming per week, or five hours of free air time for candidates per year, the public interest may be well-served simply by virtue of the mandate. Other approaches might be easier to evade and less effective.

Disadvantages: In general, this approach may be anachronistic in light of the new communications market, with so many more options. As historically understood, the public trustee model also has a degree of rigidity -- a kind of "one size fits all" notion that is ill-suited to varying needs on the part of stations and viewers alike. Command-and-control approaches can also be counterproductive and have unintended bad side-effects.

II. ECONOMIC INCENTIVES: PAY OR PLAY, SPECTRUM CHECKOFF

In the environmental area, there have been many innovations designed to create efficient, or low-cost, ways of promoting regulatory goals. A creative illustration consists of "emissions trading," by which polluters are given a right to pollute a set amount, and permitted to trade that right with others.(1) The basic idea is that pollution is a public bad, and therefore people should be able to save money from doing less of it (and in that way lose money from doing more of it). If the right to pollute can be traded, there will be strong incentives to come up with low-cost ways of reducing pollution, and the result should be a system in which we obtain pollution reductions most cheaply. Existing experience with emissions trading approaches have shown many advantages.(2)

This basic approach -- using economic incentives -- might be adapted to the area of public interest programming. Indeed, the Children's Television Act now authorizes licensees to meet part of their obligation to children by demonstrating "special efforts . . . to produce or support [children's educational] programming broadcast by another station in the licensee's marketplace."(3) The idea might be generalized. Suppose, for example, that public interest programming is considered to be a "public good," in the sense that the public is better off with more of it. Suppose too that some broadcasters are good at providing such programming, and can do so in a cost-effective manner, whereas others are not so good at it, and can do so only at great expense. Adapting the environmental law model, it might be provided that broadcasters should have a choice: provide public interest programming of a certain defined level; or pay a certain amount to someone else who will do so.

A mild variation on this approach would involve what has been called the "spectrum check-off " model. On this model, broadcasters are given a choice: adhere to public interest responsibilities as nationally determined; or pay a fee for the use of the spectrum. The payment would be used for public broadcasting of one kind or other. This approach is somewhat less fine-tuned, and somewhat simpler, than the "pay or play" model. Under "spectrum check-off," there is only one "deal," whereas under "pay or play," there could be a number of trades every year.

Advantages: This approach might ensure a high level of public interest broadcasting, and do so in a way that ensures that such broadcasting will be provided by those most willing and able to do it. Thus the "pay or play" approach might combine the virtues of the public trustee model with the virtues of deregulation. Under this approach, people who do not want to provide public interest programming, or who can do so only at great expense, can make mutually beneficial deals with others who are willing to do so. This could serve both broadcasters and the public.

Disadvantages: In the environmental area, emissions trading does not work where it creates "hot spots," that is, areas that are highly polluted. A problem with "pay or play" is that it may result in the failure, on the part of some or many broadcasters, to do anything but "pay," with the consequence that many viewers do not see such programming -- and with the further consequences that broadcasters who provide such programming may be hurt in the market- place. In addition, there are symbolic and expressive values to uniform public interest obligations. Some people think that these obligations should apply to everyone and that no broadcaster should be allowed to buy its way out.

III. PAY PLUS ACCESS

Under this approach, broadcasters would pay a fee for a right to use the spectrum; the fee might be determined via auction or might be determined by government. At the same time, public interest obligations would be removed. In addition, broadcasters would be asked to allow a specified amount of programming in the public interest -- in other words, to set aside an identified amount of time for political candidates, educational programming, or diverse viewpoints. It would be possible to imagine various combinations of the three ingredients of this approach: payment, relief from general public service obligations, and access.

Advantages: As compared with economic incentives, this approach would tend to ensure that some public interest programming was on every station. Many people think that this is important -- that certain programming, for example candidate speech, should not be relegated to certain channels that are rarely watched. Thus this approach might do better in serving democratic goals. As compared with the public trustee model, this approach would better ensure that people will provide public interest programming who have the incentive to do so well.

Disadvantages: For those skeptical of "pay or play," this approach might create similar problems. It also would involve a degree of administrative complexity. It is possible that people would simply change the channel when the "access" material was on the station.

IV. DISCLOSURE OF PUBLIC INTEREST AND PUBLIC SERVICE ACTIVITIES

We have emphasized the importance of disclosure of public interest and public service activities. It would be possible to think that disclosure should be the exclusive governmental mandate, and that the market should be used for all specific decisions. Perhaps, then, government should restrict itself to a disclosure requirement.

Advantages: Disclosure might well trigger public-interested reactions on the part of broadcasters and diverse segments of the public. In the environmental context, disclosure has by itself done enormous good in terms of achieving low-cost pollution reductions.(4) The same may well be true here. If broadcasters are required to disclose their public interest activities, there may well be a kind of competition to have more such activities, and to create a kind of "race" to do better. Moreover, disclosure is a minimal mandate, not by itself requiring anything. Perhaps what emerges from the market, influenced as it is by the pressures that come from disclosure, is best for society, especially in light of the increasing range of programming options.

Disadvantages: In advance, it is impossible to know how much good would be done by disclosure on its own. Perhaps the good results in the environmental area will not be replicated here. If disclosure by itself has few effects, there is insufficient reason to think that whatever results is necessarily "best." Disclosure may, in short, be too close to deregulation.

V. SPECTRUM AUCTION WITHOUT PUBLIC INTEREST OBLIGATIONS

The FCC has experimented with an auction approach to allocating scarce communications resources. It would be possible to suggest that instead of being required to pay a "fee" for spectrum, to be set by government, broadcasters should receive licenses via any auction, where the market would set the relevant prices. The proceeds from the auction could be used however the taxpayers see fit.

Advantages: It is usually better to have the market, rather than government, set the fees for goods and services. And if deregulation is an appropriate solution, a spectrum auction might well be part of a complete deregulatory package, in which broadcasters purchase "space" (at market prices) and then supply the relevant goods (also at market prices).

Disadvantages: Operation of so general an auction could be somewhat complicated. Some people believe that there would be serious questions of equity if digital "space" were put up for sale anew, especially in light of various investments that have already been made. Most important, this approach is unacceptable if the case for deregulation has not been made out. If, for example, there are various forms of market failure, it is reasonable to think that broadcasters should provide more public interest programming that the market guarantees (see below).

VI. COMPLETE OR NEAR-COMPLETE DEREGULATION

One possible approach, explicit in some of the suggestions that we have received, is to eliminate any public interest obligations. It might be thought, for example, that the market for communications is providing sufficient services for everyone, and that serious constitutional questions are raised by any governmental control of programming content. Even if the constitutional questions are not so serious, perhaps this form of government intrusion into the editorial discretion of broadcasting stations is no longer acceptable.

Advantages: Perhaps deregulation could do as well as any other approach at ensuring that viewers see what they want to see. It would certainly save money and reduce administrative burdens for broadcasters, a fact of general importance for the industry and of particular importance for many small and local stations. In light of the broad availability of options -- including cable -- it might be thought that there is no longer any reason for government control of content. On this view, any public interest programming should be funded by taxpayers, to the extent that they are willing to do so; broadcasters should not be required to pay for that programming on their own.

Disadvantages: There is good reason to believe that the communications market will not meet all social needs. Many people do not have cable television at all, and they rely instead on broadcasting. The market for broadcasting may well underproduce educational programming for children, and also programming relating to elections and other democratic concerns. There are large "external" benefits from such programming, and individual viewers may not adequately take account of those benefits in individual choices.(5) The fact that advertisers are involved in determining program content suggests that the communications market is not an ordinary one; since broadcasters deliver viewers to advertisers -- since viewers are in this sense commodities rather than consumers -- it is not at all clear that the communications market will simply provide viewers what they "want."(6) In any case people are citizens as well as consumers, and they may well, in their capacity as citizens, want broadcasters to produce more public interest programming than the market produces on its own. And if broadcasters are receiving licenses for free, it makes sense to say that they should be required to provide something in return.

VII. DEGREULATION WITH LICENSING FEE, WITH PROCEEDS DEVOTED TO PUBLIC INTEREST BROADCASTING

Some people have suggested that government should deregulate the market, and allow broadcasters to show whatever they wish, but that it would be appropriate to impose a licensing fee, the proceeds to go to public interest broadcasting. Of course the licensing fee might be established via auction.

Advantages: Like the deregulation option, this one would eliminate any government control of the content of broadcasting. But it would impose a quid pro quo: broadcasters would have to pay a certain amount as a licensing fee, with the proceeds to go to public interest broadcasting on, for example, PBS.

Disadvantages: Like the deregulation option, this approach may well produce too little educational viewing for children and too little attention to democratic and civic affairs. It is risky to leave all public interest obligations with PBS; our tradition has sought to impose minimal duties on all stations who receive broadcasting licenses.

VIII. DIGITAL DROP-INS IN THE PUBLIC INTEREST AND THE QUESTION OF "RESERVING" PUBLIC INTEREST "SPACE"

It has been suggested that when the 1600 channel analog television system becomes obsolete, some part of the spectrum should be specifically reserved, by government, for civic discourse or local and public affairs programming. The networks that produce such programming might be funded by money received from auctioning off a portion of the analog stations. The basic idea would be to ensure "space" for public broadcast stations that would serve civic aspirations. These stations could in turn develop relevant expertise and obtain niche markets, as for example, C-Span has done.

Advantages: This approach would involve little control of commercial broadcasters. At the same time, it would ensure a large level of civic and democratic programming. The goal would be to use new technologies to expand on the PBS model, creating a number of "little," and private, public stations.

Disadvantages: If it is desirable to ensure a certain level of public interest programming on all stations, this approach will be inadequate. There are also questions about the extent to which it is appropriate for government to reserve "space" for programming of a specific content, and about how strong a role government might have in overseeing those stations.

Endnotes

* The Advisory Committee thanks Angela Campbell and the Aspen Institute's Communications and Society Program directed by Charles M. Firestone and Amy Korzick Garmer for the submission, Toward a New Approach to Public Interest Regulation of Digital Broadcasting: A Preliminary Report of the Aspen Institute Working Group on Digital Broadcasting and the Public Interest, on which this Appendix is based.

1) See Ackerman and Stewart, Reforming Environmental Law, 37 STAN. L. REV. 1333 (1985).

2) See id.; Robert Stavins, What Can We Learn From the Grand Policy Experiment? Lessons from SO2 Allowance Trading, 12 J. ECON. PERSP. 69 (1998).

3) 47 USC 303b(b)(2).

4) See James Hamilton, CHANNELING VIOLENCE (1998).

5) See C. Edwin Baker, Giving the Audience What It Wants, 58 OHIO STATE L.J. 311, 352-83 (1997); see also JAMES HAMILTON, supra.

6) See C. Edwin Baker, ADVERTISING AND A DEMOCRATIC PRESS (1994).

1. Broadcasters are public trustees. As public trustees, broadcasters have public interest obligations, most of which are met voluntarily, not as a result of governmental mandate. Many of these obligations are simply good business. Some of them may or may not be good for business; they are followed because of the important democratic, economic, cultural, and civic functions of those who provide television programming for the American public.

The Federal Government also imposes some public interest obligations on broadcasters, and throughout the history of broadcasting, it has seriously considered imposing additional obligations. It has restrained itself partly because of its understanding of free speech principles and partly because of its belief that broadcasters are voluntarily doing what should be done.

2. Most broadcasters take their public interest obligations seriously, going well beyond the requirements of law.(1) Whether or not it is profitable to do so, they offer public service announcements; provide educational programming for children and take account of their particular needs; offer many community services; cover substantive issues in a serious way; serve the diverse social groups that represent the full community of viewers; avoid exploitation and sensationalism; offer programming for those who are deaf and hard-of-hearing and others with disabilities; help promote both accountability and deliberation; and give detailed and serious attention to important public issues, public debates, and elections.

3. The purpose of a code is to reflect an explicit and voluntary commitment to certain basic principles and aspirations, and to help ensure that broadcasters generally act as public trustees, and are not penalized in the marketplace for doing what public trustees should do. A code helps to ensure that broadcasters promote the educational, civic, cultural, and democratic goals of television, to counteract the short-term pressures that sometimes threaten to compromise those goals, and to reflect good practices on which there is a broad industry and public consensus.

4. In a period of remarkable innovation with respect to communications technologies, it is especially important that those who provide television programming continue to promote the democratic, educational, and other goals historically associated with broadcasting. Broadcasters should use the extraordinary opportunities provided by these new technologies to carry out these time-honored goals, with particular reference to providing educational and democratic services, and to serving the diverse range of people, and the diverse range of social groups, who enjoy and learn from television.

RESPONSIBILITY TOWARD CHILDREN

1. Broadcasters have an obligation to serve children. Educational programming can serve as a supplement to schooling and to good parenting; harmful programming can undermine the efforts of parents and schools alike. Sometimes parents have a hard time monitoring the viewing habits of their children, and broadcasters should help them. Broadcasters have an obligation to provide beneficial and educational programming for children.

2. Broadcasters should attempt to ensure that children are not exposed to excessively violent programming or programming that is otherwise harmful to or inappropriate for children. Broadcasters should avoid programming that encourages criminal or self-destructive behavior; they should also be sensitive in presenting sexual material that children might encounter.

3. Programs designed primarily for children should take into account the range of interests and needs of children of various ages, from instructional and cultural material to a wide variety of entertainment material. In their totality, programs should contribute to the sound, balanced development of children to help them achieve a sense of the world at large and make informed adjustments to their society. In seeking balance, broadcasters should attempt to provide programming for children of diverse ages, recognizing that television is watched by very young children and also by near-adults.

4. Because of the potential importance of television to children's development, and to their feeling of belonging to their community, broadcasters should serve children of different religious, demographic, racial, and ethnic groups.

5. Each broadcaster should endeavor to provide a reasonable amount of educational programming for children each week. Broadcasters should also endeavor to inform viewers of whether the programs are not suitable for children of various ages.

6. Children are allowed to watch programs designed primarily for adults, and broadcasters should take this practice into account in the presentation of material in such programs when children may constitute a substantial segment of the audience.

7. Broadcasters should take care to ensure that advertising or promotional materials on programming directed toward children is appropriate for the relevant audience , and that it does not contain exploitative or excessively violent materials.

8. Television can play a significant role in preparing children for the rights and responsibilities of citizenship. Broadcasters should therefore endeavor to provide appropriate news and public affairs programming for children, including news relevant to children in the local community.

COVERING ELECTIONS

1. A well-functioning democracy depends on access to information and ideas, particularly in the context of elections. An informed citizenry is vital to a democracy that prizes both accountability and deliberation. Television should play a constructive role in promoting these values; new and emerging technologies should be harnessed to this goal.

2. Each station should devote a significant amount of time to coverage of Federal, State, and local elections, as well as initiatives and referendums, and to the substantive issues involved in the electoral process.

3. Coverage should be substantive and issue-oriented. It should not emphasize the sensational and the prurient. It should concern itself with claims and disagreements on matters of substance. Consistent with the exercise of legitimate station discretion, stations should endeavor not to give excessive or undue attention to sensational accusations or to issues of "who is ahead," at the expense of other issues.

4. Each station should provide ample opportunity for candidate-related and candidate- centered programming, focusing on races and candidates that the station believes are important and deserving of attention by its viewers. Stations may, at their discretion, use a combination of means—including debates, interviews, features, and grants of free time to candidates—to achieve this goal.

5. In the 30-day period before an election, each station should endeavor to provide, at minimum, 5 minutes of candidate-centered programming each night, between 5 p.m. and 11:35 p.m. Stations should choose the important races and candidates, and choose the appropriate formats, from 1-minute presentations by candidates to mini-debates to features to interviews to free airtime. The 5 minutes need not be contiguous. Consistent with station discretion and democratic goals, it is preferable to ensure that candidates provide something other than short "soundbites" (an appropriate goal is 1 minute or more of speaking time).

6. Stations are encouraged, in any election period, to give special attention to the most important elections and elections issues, whether they are Federal, State, or local. Consistent with the exercise of legitimate editorial discretion to select the most important races and themes, stations should endeavor to provide reasonable access to candidates for State and local office as well as to Federal candidates for office, and also to proponents and opponents of ballot initiatives. Stations should therefore not adopt any blanket policy of refusing to sell time to candidates for office and those seeking to express views on ballot initiatives.

7. Coverage of elections should be fair and balanced.

8. Each station should ensure that its coverage of elections, initiatives, and referendums, as well as its candidate-related and candidate-centered programming, is closed-captioned to the extent that providing such captioning does not impose an undue burden on the station.

TREATMENT OF NEWS, PUBLIC EVENTS, AND EMERGENCIES

News

1. A television station's news programming should be both substantive and well-balanced. Especially because they serve educational and democratic functions, stations should devote substantial attention to both local and national issues of general importance.

2. Morbid, sensationalistic, or alarming details not essential to a factual report, especially in connection with stories of crime or sex, should be avoided. News should be broadcast in such a manner as to avoid panic and unnecessary alarm. News programming should attempt to avoid prurience, sensationalism, and gossip.

3. News reporting should be factual, fair, and without bias.

4. A television broadcaster should exercise particular discrimination in the acceptance, placement, and presentation of advertising in news programs so that such advertising should be clearly distinguishable from the news content.

5. Commentary and analysis should be clearly identified as such.

6. Pictorial material should be chosen with care and not presented in a misleading, sensationalistic, or prurient manner.

7. All news interview programs should be governed by accepted standards of ethical journalism, under which the interviewer selects the questions to be asked. Where there is advance agreement materially restricting an important or newsworthy area of questioning, the interviewer should state on the program that such limitation has been agreed on. Such disclosure should be made if the person being interviewed requires that questions be submitted in advance or participates in editing a recording of the interview prior to its use on the air.

8. Stations should make an effort to devote enough time to public issues to permit genuine understanding of problems and disagreements.

Public Events

1. A television broadcaster has an affirmative responsibility to be informed of important public events and to inform the public of these events, in order to provide coverage consonant with the ends of an informed and enlightened citizenry.

2. The treatment of such events by a television broadcaster should provide adequate, substantive, and informed coverage of relevant issues, including issues of local concern.

Emergencies

1. Broadcasters should provide accurate and timely coverage of emergencies and disasters, sufficient to inform members of the public about the relevant problem and how to avoid danger to themselves and others. Coverage of emergencies and disasters should avoid undue alarmism and sensationalism.

2. Broadcasters should endeavor to provide textual presentations of all emergency programming in real time and ensure that such presentations incorporate substantially the entire text of the audio portion of such programming.

COMMUNITY RESPONSIBILITY

1. Television broadcasters and their staffs occupy positions of unique responsibility in their communities and should conscientiously endeavor to be acquainted fully with the community's needs and characteristics in order to better serve the welfare of its citizens.

2. Requests for time for the placement of public service announcements or programs should be carefully reviewed with respect to the character and reputation of the group, campaign, or organization involved; the public interest content of the message; and the manner of its presentation.

3. Public service announcements should not be relegated to off-hours, such as late night and early morning, but should be distributed throughout the broadcast day and during primetime.

4. Stations should devote substantial time to the provision of public service announcements. Typically, broadcasters have provided well over 75 public service "spots" per week;(2) they should endeavor to continue this practice, as community needs dictate.

5. Broadcasters are encouraged to engage in various public service activities such as telethons, blood drives, and related activities in order to give assistance to charitable causes locally and nationally.

6. In accordance with the educational and democratic functions of broadcasting, stations should provide reasonable access to those members of the local community who wish to use the airwaves to discuss issues of local concern. Broadcasters should therefore provide appropriate coverage of topics of particular concern to the local community.

7. Broadcasters should offer programming that serves the needs of diverse members of the local community, including traditionally underserved and disadvantaged groups. Broadcasters should be sensitive to the diversity of the communities that they serve and attempt to fulfill their responsibility to the full range of relevant groups, including but not limited to religious, demographic, racial, and ethnic groups.

CONTROVERSIAL PUBLIC ISSUES

1. Television provides a valuable forum for the expression of responsible views on public issues of a controversial nature. Television broadcasters should seek out and develop with accountable individuals, groups, and organizations, programs relating to controversial public issues of importance to fellow citizens and give fair representation to opposing sides of issues that materially affect the life or welfare of a substantial segment of the public.

2. Requests by individuals, groups, or organizations for time to discuss their views on controversial public issues should be considered seriously and on the basis of their individual merits, and in the light of the contribution that the use requested would make to the public interest, and to a well-balanced program structure.

3. Broadcasts in which stations express their own opinions about issues of general public interest should be clearly identified as editorials. They should be unmistakably identified as statements of station opinion and should be appropriately distinguished from news and other program material.

4. Stations should give attention to controversial issues of distinctively local concern.

SPECIAL PROGRAM STANDARDS

1. Anti-social behavior; crime. The treatment of criminal activities should attempt to convey their social and human effects. The presentation of techniques of crime in such detail as to be instructional or invite imitation should be avoided.

2. Violent materials. Violence, psychological but especially physical, should be portrayed responsibly, and not exploitatively. Presentation of violence should avoid the excessive, the gratuitous, the humiliating, and the instructional. The use of violence for its own sake and the detailed dwelling upon brutality or physical agony, by sight or sound, should be avoided. Programs involving violence should venture to present the consequences to its victims and perpetrators. Particular care should be exercised where children may see, or be involved in, the depiction of violent behavior.

3. Sexual violence. Programs should not present rape, sexual assault, or sexual violence in an attractive or exploitative light.

4. Sexually oriented material. Obscenity is not constitutionally protected speech and is at all times unacceptable for broadcast. Where significant child audiences are expected, special care should be exercised in addressing sexual themes; in particular children, should not be depicted as sexual objects for the control and use of others. Consistent with artistic freedom, programming that involves sexuality should not be exploitative, humiliating, or demeaning. In evaluating programming involving sexuality, broadcasters should consider the composition of the audience, the context in which sensitive material is presented, and the scheduling of the relevant programming.

5. Self-destructive behavior: drugs; gambling; guns; alcohol.

• (1) The use of illegal drugs or the abuse of legal drugs should not be encouraged or shown as socially acceptable. Glamorization of addiction, drug use, and substance use should be avoided, especially when children are likely to be viewing.
• (2) The use of gambling devices or scenes necessary to the development of a plot or as appropriate background is acceptable only when presented with discretion and in moderation, and in a manner which would not excite interest in, or foster, unlawful betting, or be instructional in nature.
• (3) Consistent with artistic freedom, the use of guns as instruments of unlawful violence should not be glamorized or encouraged.
• (4) Consistent with artistic freedom, the use of liquor and the depiction of smoking in program content should not be glamorized and should generally be de-emphasized. When shown, they should be consistent with plot and character development.

6. Professional advice/diagnosis/treatment. Professional advice, diagnosis, and treatment should be presented in conformity with law and recognized professional standards.

7. Subliminal perception. Any technique whereby an attempt is made to convey information to the viewer by transmitting messages below the threshold of normal awareness is not permitted.

8. Hatred of social groups. Consistent with the commitment to robust public debate, stations should not use group-based hatred in an exploitative manner, and stations should attempt not to fuel hatred against members of any social group, or to promote racial, religious, ethnic, or sexual violence.

9. Humane treatment of animals. The use of animals, consistent with plot and character delineation, shall be in conformity with accepted standards of humane treatment.

10. Game programs; contests. Quiz and similar programs that are presented as contests of knowledge, information, skill, or luck must, in fact, be genuine contests; and the results must not be controlled by collusion with or between contestants, or by any other action which will favor one contestant against any other.

None of these provisions shall be understood or interpreted to restrict appropriate artistic freedom or the expression of diverse views on public issues.

RESPONSIBILITY TOWARD INDIVIDUALS WHO ARE DEAF AND HARD OF HEARING

1. Broadcasters should ensure that their programming is responsive to the needs of citizens with disabilities. To this end, broadcasters should ensure that programming is accessible, through the provision of closed captioning and other means, to the extent that doing so does not impose an undue burden on the broadcaster. Particular efforts should be made to provide full access to news and public affairs programming.

2. Citizens who are deaf and hard of hearing are sometimes at risk of a form of disenfranchisement or even physical danger, because steps are not taken to ensure that television broadcasting is available to them. Technological means exist to overcome this problem; these means are increasingly available and feasible.

3. To the extent that no undue burden is involved, stations should take special steps to ensure that information about disasters and emergencies are fully accessible to those who are deaf and hard of hearing, including captioning in "real" time.

4. To the extent that no undue burden is involved, stations should attempt to carry out the responsibilities described in the preceding sections in such a way as to ensure as to ensure reasonable access by those who are deaf and hard of hearing.

REVISIONS AND ENFORCEMENT AUTHORITY

1. There shall be a continuing committee entitled the Television Code Board to be composed of not more than nine members, all of whom shall be from subscribers to the Television Code. These members shall be appointed by the President of the National Association of Broadcasters, ensuring reasonable participation by each network and by an appropriately diverse range of subscribers.

2. The Television Code Board shall meet twice each year.

3. The Television Code Board is authorized and directed:

• (1) To consider and recommend amendments to the television Code;
• (2) To provide special recognition of those stations that have provided excellent public service in the preceding year;
• (3) To consider claims and charges made by the Code Authority General Manager about noncompliance with the Code;
• (4) To withdraw the NAB seal from any station for continuing or egregious violations, in accordance with the provisions below; and
• (5) To compile detailed information about compliance with the Code and public service activities by television broadcasters, and to make such information available to the public.

4. There shall be a position designated as the Code Authority General Manager. The Code Authority General Manager is authorized and directed:

• (1) To maintain a continuing review of all programming material presented over television;
• (2) To receive, screen, and clear complaints about television programming , compliance with this Code, or amendments to this Code;
• (3) To define and interpret words and phrases in this Code;
• (4) To develop and maintain appropriate liaison with relevant and appropriate private and public institutions;
• (5) To inform, promptly and responsibly, any station of complaints and commendations;
• (6) To make recommendations about amendments to this Code;
• (7) To provide recommendations for special recognition for excellent public service in the preceding year;
• (8) To make public all relevant information about compliance and noncompliance with this Code and about public services and public interest activities of broadcasters.

ENFORCEMENT

Compliance with this Code is voluntary, and not mandatory, on the part of all stations. Compliance and noncompliance will be treated in the following way:

1. A seal of approval will be given to those who are shown to comply with its provisions.

2. Special public recognition may be given to those stations that have compiled an excellent public service record in the past year. Such recognition may be awarded for, among other things:

• (1) Meeting the needs of children in a sustained and creative way,
• (2) Offering substantive and extended coverage of elections, including interviews, free air time, and debates.
• (3) Offering substantive and extended coverage of public issues,
• (4) Providing outstanding news programming,
• (5) Providing opportunities for discussion of problems facing the local community,
• (6) Charitable activities.

3. At the time of license renewal, a notation will be given to the FCC that there has been compliance or continuing or egregious noncompliance with the Code. This notation will lack any legal force or effect.

4. The Television Code Board shall monitor compliance and report to the public the names of complying, noncomplying , and specially commended stations.

5. The Television Code Board should report continuing or egregious violations of the code to Congress, the public, and FCC on an ongoing basis. These reports will lack legal force and effect.

A BRIEF HISTORY OF BROADCASTING CODES

The purpose of this section is to provide some background information about the history of the idea of a broadcasting code.(3)

Origins and Precursors: The Spectrum and Roosevelt

The idea of a broadcasting "code" has a long history; cooperative agreements, designed to promote the public interest or shared financial goals, are nothing new. The National Association of Broadcasters (NAB) was founded in 1923, and it first attempted to produce a degree of self-regulation in 1926, as a response to the "chaos" widely perceived to have been produced by interference and piracy. Some progress was made, but ultimately the agreement broke down; hence, legislation was necessary, in the form of the Radio Act of 1927.

The initial NAB Code was produced in 1928. It included some content guidance, but it was quite vague and also lacked an enforcement mechanism. Just 1 year later the NAB adopted a new Code, involving ethics and standards of commercial practice. For example, the Code banned "fraudulent, deceptive or obscene" material, "false, deceptive, or grossly" exaggerated advertising claims, and "offensive" material. But the continuing imprecision of this code, together with the lack of an effective enforcement mechanism, made it something of limited usefulness.

The next major step resulted from President Roosevelt's National Recovery Administrative Codes in 1933. The NAB submitted a code of fair practices to the NRA, and on November 27, 1933, President Roosevelt signed it and gave it the force of law. The result included a seven-person Broadcaster Code Authority, designed to supervise compliance. But the National Recovery Act was struck down in 1935 by the Supreme Court, and the Code Authority was eliminated along with the "law" that President Roosevelt had signed.

After the New Deal, and Increased Content Control

Soon thereafter the NAB produced a new voluntary code, which was largely ignored. But in 1938 the NAB produced another, more specific code and also an explicit enforcement authority, the NAB Code Committee. Part of the reason for the new development was the increasing willingness of the FCC to regulate both structure and content and a specific warning, by the Chairman of the FCC (after the broadcast of War of the Worlds), that without industry self-policing, Government involvement was likely.

The 1938 Code included a number of important provisions. Among other things, it (a) required broadcasters to allot time fairly for discussion of controversial views; (b) banned the sale of time for the airing of controversial views; (c) asked broadcasters to cooperate with educational groups for the airing of educational programming; (d) required fair and accurate news programs; and (e) regulated commercials by limiting the time and length of advertisements. There were also prohibitions on hard liquor advertising. A code committee would enforce the Code by determining whether a station was in compliance. Notably, the head of the FCC publicly approved the Code, and the ACLU described it as "a great step forward in formulating a policy in the public interest."

Television

All of these steps involved radio, but the 1938 code was the unmistakable precursor of the eventual television code. In its first period, television witnessed a pattern that generally characterized the past debates over radio and late twentieth century debates over television: legislative concern, proposed legislation, steps toward self-regulation, and little or no legislation or regulation.

In 1951, members of Congress proposed a National Citizens Advisory Board for Radio and Television, to oversee programming content. At about the same time, the NAB began to draft its first television code in 1952, apparently in direct response to a congressional threat of legislation.(4) The new Code had a broad reach, emphasizing in particular educational and cultural programming. It also contained content restrictions on display of violent action and sexual material.

Compliance with the Code was voluntary. (Note also that station operators who were not members of the NAB were eligible to subscribe.) Its enforcement provisions were quite modest. The basic mechanism came in the form of a clearinghouse for complaints. In addition, subscribers could display a Code seal (the NAB "Seal of Good Practice"), and permission to display the seal would be withdrawn for "continuing, willful, or gross" violations. Thus the only formal sanction was that the noncomplying station owner could not display the seal. But there were informal pressures too. Stations who sought license renewal were likely to have prompt FCC processing if they adhered to the Code. Moreover, some people believe that subscription to the Code was appealing to those who bought advertising time, because the Code contained limits on the length and frequency of commercials, which would enhance the prominence of the announcement. Some stations in the United States did not adhere to the Code, but the vast majority chose to do so.

Family Viewing

In 1962, the FCC proposed to make parts of the Code into a legal mandate. The industry successfully resisted this step. But there was a continuing pattern of interaction among regulatory proposals, legislative reaction, public concern, and self-regulation. Of these the most important involved 1970s concerns about violence on television. The industry responded through the "family viewing policy," saying that inappropriate entertainment programming would not be shown between 7 p.m. and 9 p.m. eastern standard time. This was a distinctive form of self-regulation. But the Writers Guild of America challenged the policy on first amendment grounds (see below), arguing that the policy was not voluntary self-regulation but was in fact a product of government coercion.

In a controversial decision, the trial court accepted the challenge, and barred the NAB from enforcing the policy.(5) The court of appeals overturned the decision on the ground that the district court was not the right forum to resolve these issues in the first instance.(6) The Court of Appeals said that the issue should first be resolved by the FCC. Although the decision of the Court of Appeals was jurisdictional, that court suggested considerable doubt about the district court's judgment: "It simply is not true that the First Amendment bars all limitations of the power of the individual licensee to determine what he will transmit to the listening and viewing public."(7)

The FCC ruled in 1983 that there had been no Government coercion and that the NAB had adopted the family viewing policy voluntarily. In its key passage the FCC wrote, "voluntary industry action is often preferable to governmental solutions, and an industry frequently addresses a problem in order to forestall regulation by the Government; conversely, it is not unusual for a regulatory body to forego enacting rules when the regulated industry voluntarily adopts standards which deal with a perceived problem."(8) In June 1979, however, the Justice Department filed the antitrust suit described in detail below, resulting in the demise of the television code.

In the 1980s, continuing congressional concern about televised violence led to a new law exempting from the antitrust law networks, broadcasters, cable operators and programmers, and trade association, in order to permit them to generate standards to reduce the amount of violence on television.(9) But there was considerable doubt about whether an explicit exemption was necessary; a 1993 opinion from the Department of Justice said that the industry could cooperate to reduce television violence without offense to the law of antitrust.(10) In June 1990 the NAB issued new "voluntary programming principles" to cover violence, indecency and obscenity, drugs and substance abuse, and violence. The new standards were reaffirmed in June 1991, and in 1992, ABC, NBC, and CBS issued and agreed to adhere to a set of new standards. Thus in the 1990s self-regulation can be found in various places: the advance parental advisory system, joint advisory guidelines issued by the four networks, NAB principles, and an annual public assessment, by the four networks, of television violence.

A Note on the First Amendment

It is possible to argue, as some have, that a code of the sort suggested here would create serious first amendment problems. But this is a mistake. The first amendment applies to government, not to private industries. By itself, a code is a private set of guidelines, and private guidelines by themselves raise no first amendment issue. If a private group decides to impose restrictions on the speech of its members, and government is not involved, the first amendment is entirely irrelevant. We therefore believe that a voluntary form of self-regulation, of the kind suggested here, creates no first amendment problem.(11)

For first amendment purposes, there is no difference between a system in which individual broadcasters decide what programming to offer, and a system in which the industry as a whole engages in self-regulation with the help of a code. In neither case is a government mandate involved, and hence the first amendment is irrelevant.

Of course the issue would have to be analyzed differently if a code were a product of government threat, and were effectively required by government , In that case, the first amendment would come into play.(12) There can be no question that a governmentally mandated code, not voluntary but taking the form that we have outlined, would raise legitimate constitutional problems. This does not necessarily mean that the first amendment would be violated; the question would be whether any content regulation in the code could survive constitutional scrutiny, and to answer that question, each code provision would have to be investigated separately. The key point is that if government mandated a code, or even used compliance or noncompliance with a code for its own regulatory purposes, any such governmental action would have to be tested for compliance with first amendment principles, including the serious constitutional limits on content regulation.

Hence, it is extremely important that we are arguing on behalf of a code as a simple recommendation to private organizations, above all the NAB, and not as a proposed mandate from the government, either the FCC or Congress. (The point is fortified by the fact that this Committee is a body consisting of private citizens appointed for advisory purposes, rather than as a coercive act from a governmental body.) Indeed, this Committee has no coercive powers. Thus our attitude to the code is very much in the spirit of the NAB's own report on community service -- as a suggestion about non-governmental ways for the broadcasting industry to fulfill its public responsibilities.

Antitrust Law

In this section we offer a brief analysis of the antitrust issues raised by the proposed code. This is not an exhaustive discussion of an issue that is, in some of the details, quite complex. It is meant instead as a supplement to the analysis provided by the United States Department of Justice, which, we believe, is likely to be accepted by a court confronted with a challenge to any code. The discussion is necessarily a bit technical in parts.

A. Brief conclusion: The provisions that we are discussing are not likely to violate the antitrust laws. This is because (1) they would not have a significant anticompetitive effect, and without such an effect, there can be no violation of the antitrust laws; (2) it is unclear if any plaintiff could show an antitrust injury, and there is no violation of the antitrust laws without such an injury; and (3) the provisions would probably survive the "rule of reason," because any adverse effects on competition would be justified by the distinctive nature of the broadcasting media, which has been understood, historically, as an industry with a special obligation to the public interest.

There is considerable legal authority on behalf of our general conclusion. The United States Department of Justice has analyzed the issues in such a way as to give significant support to the legality of what we are discussing. (See Letter from Sheila Anthony, Assistant Attorney General for Legislative Affairs, attached as Exhibit A.) Notably, two district courts have upheld important aspects of prior codes. The leading district court ruling that might be thought to point the other way—often taken to be fatal to a code—was actually quite narrow. Thus there is no obvious legal authority against the kind of proposal that we are discussing here.

The best judgment is that courts would uphold a code that does not amount to price-fixing, or to a form of self-regulation designed in some way to increase broadcaster profits or to exclude new entrants. Of course the safest course would be for Congress to enact a law specifically authorizing codes of this kind, though we believe that this is not necessary.

B. Two favorable precedents. In two important cases, aspects of the Code were upheld against private antitrust attack. A district court refused to issue an injunction against code standards forbidding cigarette advertising, despite a claim that these standards were incon- sistent with the antitrust laws.(13) The court concluded that the plaintiff was not likely to prevail on the merits. The court referred in particular to the dangers posed by cigarette smoking and claimed that the standards and guidelines in the code serve the "public interest."(14)

A lower court also upheld the provisions involving standards for advertising for children.(15) The rule at issue there said that children's program hosts or primary cartoon characters "shall not be utilized to deliver commercial messages within or adjacent to the programs which feature such hosts or cartoon characters." The provision applied as well "to lead-ins to commercials when such lead-ins contain sell copy or imply endorsement of the product by program host or primary cartoon character." The plaintiff attacked the restrictions, claiming that it restricted the ability of hosts and actors to obtain free employment for delivery of commercials.

The court said, "There is not the slightest indication of any anti-competitive purpose in the creation of the rule," especially since there was no evidence of a motive "to benefit one class of performers competitively over another class of performers."(16) The court found it relevant that the rule "resulted from a bona fide concern on the part of various groups, and the FCC, regarding fair and ethical methods to be used in television advertising directed to children."(17) This was "a reasonable rule of conduct regarding good practice by its members in the public interest and is not in violation of the antitrust laws."(18)

In these cases, the court basically concluded that the restrictions were reasonable and in the public interest. This was a sufficient justification for the restriction.

C. An apparently unfavorable (but extremely narrow) precedent. Ultimately the Code met its demise as a result of an antitrust action brought by the Justice Department in 1979, based on an allegation that certain provisions of the Code violated the Sherman Act. We discuss this case in some detail, because it is often used as authority against the legality of any broadcasting code. This was actually a very narrow ruling that should not result in a successful legal challenge to a code of the kind that we are endorsing.

A narrow complaint. The Justice Department's complaint was quite narrow. It involved not the Code in general, but three specific kinds of advertising restrictions:

• Time standards, limiting the amount of commercial material that could be broadcast in an hour;
• Program interruption standards, which imposed a limit on the maximum number of commercial announcements per program as well as on the number of consecutive announcements per interruption;
• The multiple product standards, which prohibited the advertising of two or more products or services within a single commercial if the commercial was less than 60 seconds in length.

Note that each of these restrictions could be understood as a traditional form of collusion—as an effort by broadcasters to ensure high prices for advertisements. If, as is sometimes thought, broadcasters "deliver" viewers to advertisers in return for money, these parts of the code could be seen as illegitimate efforts to increase the return to broadcasters over the price that would prevail in an entirely competitive market. This is undoubtedly the concern that underlay the Justice Department's somewhat surprising decision to initiate the suit.

The ruling in brief. Basically, the court held that the multiple product standards were per se unlawful, but that the time standards and program interruption standards could not be tested without an inquiry into the facts.(19) This was a narrow ruling because it dealt only with a small segment of the old Code, involving an apparent effort to increase profits at the expense of advertisers.

The ruling in a little detail. A little background: Antitrust law applies a "per se rule" of illegality to certain obviously anticompetitive agreements. (Price-fixing agreements are the most obvious case.) It applies a "rule of reason," calling for a balancing test, to agreements that may or may not be anticompetitive. When the rule of reason is applied, it is necessary to find out a lot of facts.

On summary judgment in the case, the key issues were, first, whether the three agreements were so obviously anticompetitive that they were unlawful per se, and second whether, if they were not illegal per se, they were invalid under the "rule of reason," which requires -- to offer a bit more detail -- an inquiry into the facts of the business, the nature of the restraint, and the justification offered on its behalf.

The district court held that the time and product interruption standards were not invalid per se. In the court's view, the distinctive characteristics of the broadcasting industry argued against a per se rule of invalidity. Because broadcast frequencies are scarce, because the whole area is subject to regulation, and because of the fact that there are only 60 minutes in an hour (!), no simple solution would be sensible.

On these two issues, the court also denied summary judgment for the government under the "rule of reason," concluding that there were material issues of fact. The legal question was whether the time standards would have the effect of raising or stabilizing the price of commercial time (this was the antitrust problem); it was possible, the court said, that any such effect would be trivial in light of the importance of other factors. If this was true, the code would not violate the Sherman Act. This is because there is no antitrust violation without a significant adverse effect on competition.(20)

By contrast, the court held that the multiproduct standard was per se unlawful. In its view, this rule was akin to a standardization agreement by which food manufacturers set a standard for the ingredients that would be used in their products. This form of standardization was per se illegitimate. Thus, the court actually invalidated only one provision of the code, on the theory that it was analytically akin to a system for price-fixing. At the same time, the court denied summary judgment for the NAB.

The aftermath. After the court's ruling, the NAB suspended enforcement of all code provisions. In public it claimed that it would seek an appeal, but a consent judgment was issued, in which the NAB agreed, for 10 years, to cease monitoring and enforcement of the three disputed code provisions. The agreement also prohibited enforcing the standards for children's programming time. Thus, the district court's narrow decision -- untested in any court of appeals -- has loomed over the debate about codes.

An antitrust challenge to a new code? The best prediction is that a code of the sort that we are discussing would not violate the antitrust laws. In its most recent analysis of the problem, the Department of Justice reached this conclusion in suggesting that networks could agree to guidelines and principles to reduce unnecessary violence on television.(21) The Department of Justice concluded that "the conduct that was at issue in the NAB case differs significantly from that covered by" an agreement on televised violence.(22) In the NAB case, the problem was raising "the price of time," to "the detriment of both advertisers and the ultimate consumers of the products promoted on the air."(23) By contrast, an agreement covering violence should "be likened to traditional industry standard-setting efforts that do not necessarily restrain competition and may have significant procompetitive benefits."(24) In the view of the Department of Justice, "efforts to develop and disseminate voluntary guidelines to reduce the negative impact of television violence should fare well under the appropriate rule-of-reason antitrust analysis."(25)

More particularly, a code of the sort we are discussing should probably be upheld for the following reasons.

(a) This is not an ordinary form of collusion. It is not as if broadcasters are saying that advertisers must pay a minimum of $X per advertisement. This is very far from the usual domain of price fixing. Hence no per se rule is likely to attach.

(b) It is possible that the restrictions under discussion would have little or no adverse effect on competition; they may even have good effects on competition.(26) Without a significant adverse effect on competition, there is no antitrust violation. Even with a code, programmers would compete over a great many things, including the kinds of programming regulated by a code. The code might in a sense be procompetitive, because it would ensure television coverage of materials in which there is a substantial public interest and which might otherwise not be provided. This is so especially in light of the fact that stations would compete for viewers with respect to the kinds of programming covered by the code.

(c) It is not entirely clear that any plaintiff would have an antitrust injury. The self-regulation that we are discussing would allow a wide range of choices and options for consumers and producers. Perhaps some producer of some marginal programming could claim that he was unable to sell his product because of (for example) free air time for candidates; but this would be an extremely speculative injury. Perhaps viewers could argue that they were deprived of certain programming that they would like; but in view of the wide range of options available to viewers, this too is speculative. Perhaps some stations or programmers could contend that a code limited their freedom; but it is not clear that this would count as an antitrust injury, especially in light of the fact that the code is voluntary.

(d) In light of the distinctive nature of the television market, a code of the sort under discussion would probably survive a "rule of reason" inquiry. The effect on competition would be quite limited, if indeed there would be any adverse effects at all. The restriction, such as it is, could be defended as a means of promoting competition,(27) and also various public interest goals, e.g., education of children, access for the handicapped, democratic and civic functions. This idea is bolstered by the line of cases analyzing restrictions by trade associations and similar entities.(28)

Our most basic conclusion is that any antitrust challenge to a code of the sort we have endorsed would be most ill-advised, and extremely unlikely to succeed.

Attachment: Letter From Office of the Assistant Attorney General

Back to Recommendation 2

ENDNOTES

1) See Broadcasters Bringing Community Service Home: A National Report on the Broadcast Industry's Community Service (National Association of Broadcasters, Wash. D.C.), April 1998.

2) Id. at 6 (noting that the typical television station runs an average of 137 public service announcements per week).

3) We draw here on a variety of sources, including Mark M. MacCarthy, Broadcast Self-Regula- tion: The NAB Codes, Family Viewing Hour, and Television Violence, 13 CARDOZO ARTS & ENT. L.J. 667 (1995).

4) See Daniel L. Brenner, Note, The Limits of Broadcast Self-Regulation Under the First Amendment, 27 STAN. L. REV. 1527, 1529 (1975).

5) Writers Guild of Am. W. v. FCC, 423 F. Supp. 1064 (C. D. Cal.1976), vacated sub nom. Writers Guild of Am. W. v. ABC, 609 F.2d 355 (9th Cir. 1979), cert. denied, 449 US 824 (1980). 6) Writers Guild of Am. W. v. ABC, supra.

7) Id. at 364.

8) 95 FCC 2d at 710.

9) See 47 U.S.C. 303c.

10) See on next page, Letter from Sheila Anthony, Assistant Attorney General for Legislative Affairs, United States Department of Justice, to Senator Paul Simon (D-Ill) (Nov. 29, 1993).

11) See Flagg Bros. v. Brooks, 436 U.S. 149 (1978) (private contract raises no first amendment issue); San Francisco Arts & Athletics, Inc. v. United States Olympic Committee, 482 U.S. 522 (1987); Rendell-Baker v. Kohn, 457 U.S. 830 (1982).

12) See Writers Guild of Am. W. v. FCC, 423 F. Supp. 1064 (C. D. Cal.1976), vacated sub nom. Writers Guild of Am. W. v. ABC, 609 F.2d 355 (9th Cir. 1979), cert. denied, 449 US 824 (1980).

13) See American Brands Inc v. NAB, 308 F. Supp. 1166 (DDC 1969).

14) Id. at 1169.

15) See American Fed'n of Television & Radio Artists v. NAB, 407 F. Supp. 900 (SDNY 1976).

16) Id. at 902. An anticompetitive effect is also sufficient to trigger antitrust scrutiny, but it is not at all clear that restrictions of the kind we are discussing would have such an effect. See below.

17) Id.

18) Id. at 903.

19) U.S. v. NAB, 536 F. Supp. 149 (1982).

20) See, e.g., U.S. v. Arnold, Schwinn Co., 388 U.S. 365, 375 (1967), overruled on other grounds in Continental TV v. GTE Sylvania; Neeld v. NHL, 594 F.2d 1297, 1300 (9th Cir. 1979).

21) See Letter of Sheila Anthony, Assistant Attorney General, supra note 10.

22) Id. at 3.

23) Id.

24) Id.

25) Id. at 4.

26) Compare Smith v. Pro Football, 593 F.2d 1173, 1183 (D.C. Cir 1978).

27) See Letter of Sheila Anthony, supra note 10, at 4.

28) See, e.g., NCAA v. Board of Regents, 468 US 85 (1984); Allied Tube and Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988).