Federal Communications Commission v. WNCN Listeners Guild

delivered the opinion of the Court.

Sections 309 (a) and 310 (d) of the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U. S. C. § 151 et seq. (Act), empower the Federal Communications Commission to grant an application for license transfer 1 or renewal only if it determines that “the public interest, convenience, and necessity” will be served thereby.2 The issue before us is whether there are circumstances in which the Commission must review past or anticipated changes in a station’s entertainment programming when it rules on an application for renewal or transfer of a radio broadcast license. The Commission’s present position is that it may rely on market forces to promote diversity in entertainment programming and thus serve the public interest.

This issue arose when, pursuant to its informal rulemaking authority, the Commission issued a “Policy Statement” concluding that the public interest is best served by promoting diversity in entertainment formats through market forces and competition among broadcasters and that a change in entertainment programming is therefore not a material factor that should be considered by the Commission in ruling on an application for license renewal or transfer. Respondents, a number of citizen groups interested in fostering and preserving particular entertainment formats, petitioned for review in the Court of Appeals for the District of Columbia Circuit. That court held that the Commission’s Policy Statement violated the Act. We reverse the decision of the Court of Appeals.

I

Beginning in 1970, in a series of cases involving license transfers,3 the Court of Appeals for the District of Columbia Circuit gradually developed a set of criteria for determining when the “public-interest” standard requires the Commission to hold a hearing to review proposed changes in entertainment formats.4 Noting that the aim of the Act is “to secure the maximum benefits of radio to all the people of the United States,” National Broadcasting Co. v. United States, 319 U. S. 190, 217 (1943), the Court of Appeals ruled in 1974 that “preservation of a format [that] would otherwise disappear, although economically and technologically viable and preferred by a significant number of listeners, is generally in the public interest.” Citizens Committee to Save WEFM v. FCC, 165 U. S. App. D. C. 185, 207, 506 F. 2d 246, 268 (en banc). It concluded that a change in format would not present “substantial and material questions of fact” requiring a hearing if (1) notice of the change had not precipitated “significant public grumbling”; (2) the segment of the population preferring the format was too small to be accommodated by available frequencies; (3) there was an adequate substitute in the service area for the format being abandoned;5 or (4) the format would be economically unfeasible even if the station were managed efficiently.6 The court rejected the Commission’s position that the choice of entertainment formats should be left to the judgment of the licensee,7 stating that the Commission’s interpretation of the public-interest standard was contrary to the Act.88

In January 1976, the Commission responded to these decisions by undertaking an inquiry into its role in reviewing format changes.9 In particular, the Commission sought public comment on whether the public interest would be better served by Commission scrutiny of entertainment programming or by reliance on the competitive marketplace.10

Following public notice and comment, the Commission issued a Policy Statement11 pursuant to its rulemaking authority under the Act.12 The Commission concluded in the Policy Statement that review of format changes was not compelled by the language or history of the Act, would not advance the welfare of the radio-listening public, would pose substantial administrative problems, and would deter innovation in radio programming. In support of its position, the Commission quoted from FCC v. Sanders Brothers Radio Station, 309 U. S. 470, 475 (1940): “Congress intended to leave competition in the business of broadcasting where it found it, to permit a licensee ... .to survive or succumb according to his ability to make his programs attractive to the public.” 13 The Commission also emphasized that a broadcaster is not a common carrier14 and therefore should not be subjected to a burden similar to the common carrier’s obligation to continue to provide service if abandonment of that service would conflict with public convenience or necessity.1515

The Commission also concluded that practical considerations as well as statutory interpretation supported its reluctance to regulate changes in formats. Such regulation would require the Commission to categorize the formats of a station’s prior and subsequent programming to determine whether a change in format had occurred; to determine whether the prior format was “unique”; 16 and to weigh the public detriment resulting from the abandonment of a unique format against the public benefit resulting from that change. The Commission emphasized the difficulty of objectively evaluating the strength of listener preferences, of comparing the desire for diversity within a particular type of programming to the desire for a broader range of program formats and of assessing the financial feasibility of a unique format.17

Finally, the Commission explained why it believed that market forces were the best available means of producing diversity in entertainment formats. First, in large markets, competition among broadcasters had already produced “an almost bewildering array of diversity” in entertainment formats.18 Second, format allocation by market forces accommodates listeners’ desires for diversity within a given format and also produces a variety of formats.19 Third, the market is far more flexible than governmental regulation and responds more quickly to changing public tastes. Therefore, the Commission concluded that “the market is the allocation mechanism of preference for entertainment formats, and .. . . Commission supervision in this area will not be conducive either to producing program diversity [or] satisfied radio listeners.” 20

The Court of Appeals, sitting en banc, held that the Commission’s policy was contrary to the Act as construed and applied in the court’s prior format decisions. 197 U. S. App. D. C. 319, 610 F. 2d 838 (1979). The court questioned whether the Commission had rationally and impartially reexamined its position 21and particularly criticized the Commission’s failure to disclose a staff study on the effectiveness of market allocation of formats before it issued the Policy Statement.22 The court then responded to the Commission’s criticisms of the format doctrine. First, although conceding that market forces generally lead to diversification of formats, it concluded that the market only imperfectly reflects listener preferences23 and that the Commission is statutorily obligated to review format changes whenever there is “strong prima facie evidence that the market has in fact broken down.” Id., at 332, 610 F. 2d, at 851. Second, the court stated that the administrative problems posed by the format doctrine were not insurmountable. Hearings would only be required in a small number of cases, and the Commission could cope with problems such as classifying radio format by adopting “a rational classification schema.” Id., at 334, 610 F. 2d., at 853. Third, the court observed that the Commission had not demonstrated that the format doctrine would deter innovative programming.24 Finally, the court explained that it had not directed the Commission to engage in censorship or to impose common carrier obligations on licensees: WEFM did not authorize the Commission to interfere with licensee programming choices or to force retention of an existing format; it merely stated that the Commission had the power to consider a station’s format in deciding whether license renewal or transfer would be consistent with the public interest. 197 U. S. App. D. C., at 332-333, 610 F. 2d, at 851-852.

Although conceding that it possessed neither the expertise nor the authority to make policy decisions in this area, the Court of Appeals asserted that the format doctrine was “law,” not “policy,” 25 and was of the view that the Commission had not disproved the factual assumptions underlying the format doctrine.26 Accordingly, the court declared that the Policy Statement was "unavailing and of no force and effect.” Id., at 339, 610 F. 2d, at 858.27

II

Rejecting the Commission’s reliance on market forces to develop diversity in programming as an unreasonable interpretation of the Act’s public-interest, standard, the Court of Appeals held that in certain circumstances the Commission is required to regard a change in entertainment format as a substantial and material fact in deciding whether a license renewal or transfer is in the public interest. With all due respect, however, we are unconvinced that the Court of Appeals’ format doctrine is compelled by the Act and that the Commission’s interpretation of the public-interest standard must therefore be set aside.

It is common ground that the Act does not define the term “public interest, convenience, and necessity.” 28 The Court has characterized the public-interest standard of the Act as “a supple instrument for the exercise of discretion by the expert body which Congress has charged to carry out its legislative policy.” FCC v. Pottsville Broadcasting Co., 309 U. S. 134, 138 (1940). Although it was declared in National Broadcasting Co. v. United States, that the goal of the Act is “to secure the maximum benefits of radio to all the people of the United States,” 319 U. S., at 217, it was also emphasized that Congress had granted the Commission broad discretion in determining how that goal could best be achieved. The Court accordingly declined to substitute its own views on the best method of encouraging effective use of the radio for the views of the Commission. Id., at 218. Similarly, in FCC v. National Citizens Committee for Broadcasting, 436 U. S. 775 (1978), we deemed the policy of promoting the widest possible dissemination of information from diverse sources to be consistent with both the public-interest standard and the First Amendment, id., at 795, but emphasized the Commission's broad power to regulate in the public interest. We noted that the Act permits the Commission to promulgate “such rules and regulations, . . . not inconsistent with law, as may be necessary to carry out the provisions of [the Act],”29 and that this general rulemaking authority permits the Commission to implement its view of the public-interest standard of the Act “so long as that view is based on consideration of permissible factors and, is otherwise reasonable.” Id., at 793.30 Furthermore, we recognized that the Commission’s decisions must sometimes rest on judgment and prediction rather than pure factual determinations. In such cases complete factual support for the Commission’s ultimate con-elusions is not required since “ ‘a forecast of the direction in which future public interest lies necessarily involves deductions based on the expert knowledge of the agency/ ” 31

The Commission has provided a rational explanation for its conclusion that reliance on the market is the best method of promoting diversity in entertainment formats. The Court of Appeals and the Commission agree that in the vast majority of cases market forces provide sufficient diversity. The Court of Appeals favors Government intervention when there is evidence that market forces have deprived the public of a “unique” format, while the Commission is content to rely on the market, pointing out that in many cases when a station changes its format, other stations will change their formats to attract listeners who preferred the discontinued format. The Court of Appeals places great value on preserving diversity among formats, while the Commission emphasizes the value of intraformat as well as interformat diversity. Finally, the Court of Appeals is convinced that review of format changes would result in a broader range of formats, while the Commission believes that Government intervention is likely to deter innovative programming.

In making these judgments, the Commission has not forsaken its obligation to pursue the public interest. On the contrary, it has assessed the benefits and the harm likely to flow from Government review of entertainment programming, and on balance has concluded that its statutory duties are best fulfilled by not attempting to oversee format changes. This decision was in major part based on predictions as to the probable conduct of licensees and the functioning of the broadcasting market and on the Commission’s assessment of its capacity to make the determinations required by the format doctrine. The Commission concluded that “ ‘[e]ven after all relevant facts ha[d] been fully explored in an evidentiary hearing, [the Commission] would have no assurance that a decision finally reached by [the Commission] would contribute more to listener satisfaction than the result favored by station management.’ ” Policy Statement, 60 F. C. C. 2d 858, 865 (1976). It did not assert that reliance on the marketplace would achieve a perfect correlation between listener preferences and available entertainment programming. Rather, it recognized that a perfect correlation would never be achieved, and it concluded that the marketplace alone could best accommodate the varied and changing tastes of the listening public. These predictions are within the institutional competence of the Commission.

Our opinions have repeatedly emphasized that the Commission’s judgment regarding how the public interest is best served is entitled to substantial judicial deference. See, e. g., FCC v. National Citizens Committee for Broadcasting, supra; FCC v. WOKO, Inc., 329 U. S. 223, 229 (1946). Furthermore, diversity is not the only policy the Commission must consider in fulfilling its responsibilities under the Act. The Commission’s implementation of the public-interest standard, when based on a rational weighing of competing policies, is not to be set aside by the Court of Appeals, for “the weighing of policies under the ‘public interest’ standard is a task that Congress has delegated to the Commission in the first instance.” FCC v. National Citizens Committee for Broadcasting, supra, at 810. The Commission’s position on review of format changes reflects a reasonable accommodation of the policy of promoting diversity in programming and the policy of avoiding unnecessary restrictions on licensee discretion. As we see it, the Commission’s Policy Statement is in harmony with cases recognizing that the Act seeks to preserve journalistic discretion while promoting the interests of the listening public.32

The Policy Statement is also consistent with the legislative history of the Act. Although Congress did not consider the precise issue before us, it did consider and reject a proposal to allocate a certain percentage of the stations to particular types of programming.33 Similarly, one of the bills submitted prior to passage of the Radio Act of 192734 included a provision requiring stations to comply with programming priorities based on subject matter.35 This provision was eventually deleted since it was considered to border on censorship.36 Congress subsequently added a section to the Radio Act of 1927 expressly prohibiting censorship, and other “inter-fer[ence] with the right of free speech by means of radio communication.” 37 That section was retained in the Communications Act.38 As we read the legislative history of the Act, Congress did not unequivocally express its disfavor of entertainment format review by the Commission, but neither is there substantial indication that Congress expected the public-interest standard to require format regulation by the Commission. The legislative history of the Act does not support the Court of Appeals and provides insufficient basis for invalidating the agency’s construction of the Act.

In the past we have stated that “the construction of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong . .. . .”39 Prior to 1970, the Commission consistently stated that the choice of programming formats should be left to the licensee.40 In 1971, the Commission restated that position but announced that any application for license transfer or renewal involving a substantial change in program format would have to be. reviewed in light of the Court of Appeals’ decision in Citizens Committee to Preserve the Voice of the Arts in Atlanta, 141 U. S. App. D. C. 109, 436 F. 2d 267 (1970), in which the Court of Appeals first articulated the format doctrine.41 In 1973, in a statement- accompanying the grant of the transfer application that was later challenged in WEFM, a majority of the Commissioners joined in a commitment to “take an extra hard look at the reasonableness of any proposal which would deprive a community of its only source of a particular type of programming.”42 However, the Commission’s later Policy Statement concluded that this approach was “neither administratively tenable nor necessary in the public interest.” 43 It is thus apparent that although the Commission was obliged to modify its policies to conform to the Court of Appeals’ format doctrine, the Policy Statement reasserted the Commission’s traditional preference for achieving diversity in entertainment programming through market forces.

Ill

It is contended that rather than carrying out its duty to make a particularized public-interest determination on every application that comes before it, the Commission, by invariably relying on market forces, merely assumes that the public interest will be served by changes in entertainment format. Surely, it is argued, there will be some format changes that will be so detrimental to the public interest that inflexible application of the Commission’s Policy Statement would be inconsistent with the Commission’s duties. But radio broadcasters are not required to seek permission to make format changes. The issue of past or contemplated entertainment format changes arises in the courses of renewal and transfer proceedings; if such an application is approved, the Commission does not merely assume but affirmatively determines that the requested renewal or transfer will serve the public interest.

Under its present policy, the Commission determines whether a renewal or transfer will serve the public interest without reviewing past or proposed changes in entertainment format. This policy is based on the Commission’s judgment that market forces, although they operate imperfectly, not only will more reliably respond to listener preference than would format oversight by the Commission but also will serve the end of increasing diversity in entertainment programming. This Court has approved of the Commission’s goal of promoting diversity in radio programming, FCC v. Midwest Video Corp., 440 U. S. 689, 699 (1979), but the Commission is nevertheless vested with broad discretion in determining how much weight should be given to that goal and what policies should be pursued in promoting it. The Act itself, of course, does not specify how the Commission should make its public-interest determinations.

A major underpinning of its Policy Statement is the Commission’s conviction, rooted in its experience, that renewal and transfer cases should not turn on the Commission’s presuming to grasp, measure, and weigh the elusive and difficult factors involved in determining the acceptability of changes in entertainment format. To assess whether the elimination of a particular “unique” entertainment format would serve the public interest, the Commission would have to consider the benefit as well as the detriment that would result from the change. Necessarily, the Commission would take into consideration not only the number of listeners who favor the old and the new programming but also the intensity of their preferences. It would also consider the effect of the format change on diversity within formats as well as on diversity among formats. The Commission is convinced that its judgments in these respects would be subjective in large measure and would only approximately serve the public interest. It is also convinced that the market, although imperfect, would serve the public interest as well or better by responding quickly to changing preferences and by inviting experimentation with new types of programming. Those who would overturn the Commission’s Policy Statement do not take adequate account of these considerations.44

It is also contended that since the Commission has responded to listener complaints about nonentertainment programming, it should also review challenged changes in entertainment formats.45 But the difference between the Commission’s treatment of nonentertainment programming and its treatment of entertainment programming is not as pronounced as it may seem. Even in the area of nonentertainment programming, the Commission has afforded licensees broad discretion in selecting programs. Thus, the Commission has stated that “a substantial and material question of fact [requiring an evidentiary hearing] is raised only when it appears that the licensee has abused its broad discretion by acting unreasonably or in bad faith.” Mississippi Authority for Educational TV, 71 F. C. C. 2d 1296, 1308 (1979). Furthermore, we note that the Commission has recently reexamined its regulation of commercial radio broadcasting in light of changes in the structure of the radio industry. See Notice of Inquiry and Proposed Rulemaking, In the Matter of Deregulation of Radio, 73 F. C. C. 2d 457 (1979). As a result of that re-examination, it has eliminated rules requiring maintenance of comprehensive program logs, guidelines on the amount of nonentertainment programming radio stations must offer, formal requirements governing ascertainment of community needs, and guidelines limiting commercial time. See Deregulation of Radio, 46 Fed. Reg. 13888 (1981) (to be codified at 47 CFR Parts 0 and 73).

These cases do not require us to consider whether the Commission’s present or past policies in the area of nonentertainment programming comply with the Act. We attach some weight to the fact that the Commission has consistently expressed a preference for promoting diversity in entertainment programming through market forces, but our decision ultimately rests on our conclusion that the Commission has provided a reasonable explanation for this preference in its Policy Statement.

We decline to overturn the Commission’s Policy Statement, which prefers reliance on market forces to its own attempt to oversee format changes at the behest of disaffected listeners. Of course, the Commission should be alert to the consequences of its policies and should stand ready to alter its rule if necessary to serve the public interest more fully. As we stated in National Broadcasting Co. v. United States:

"If time and changing circumstances reveal that the ‘public interest’ is not served by application of the Regulations, it must be assumed that the Commission will act in accordance with its statutory obligations.” 319 U. S., at 225.

IV

Respondents contend that the Court of Appeals’ judgment should be affirmed because, even if not violative of the Act, the Policy Statement conflicts with the First Amendment rights of listeners “to receive suitable access to social, political, esthetic, moral, and other ideas and experiences.” Red Lion Broadcasting Co. v. FCC, 395 U. S. 367, 390 (1969). Red Lion held that the Commission’s “fairness doctrine” was consistent with the public-interest standard of the Communications Act and did not violate the First Amendment, but rather enhanced First Amendment values by promoting “the presentation of vigorous debate of controversial issues of importance and concern to the public.” Id., at 385. Although observing that the interests of the people as a whole were promoted by debate of public issues on the radio, we did not imply that the First Amendment grants individual listeners the right to have the Commission review the abandonment of their favorite entertainment programs. The Commission seeks to further the interests of the listening public as a whole by relying on market forces to promote diversity in radio entertainment formats and to satisfy the entertainment preferences of radio listeners.46 This policy does not conflict with the First Amendment.47

Contrary to the judgment of the Court of Appeals, the Commission’s Policy Statement is not inconsistent with the Act. It is also a constitutionally permissible means of implementing the public-interest standard of the Act. Accordingly, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

a , , So ordered.