Broadcasting, Property Rights, and the First Amendment

Gordon T. anderson is on the staff at the Cato Institute. a public policy research group in Washington, D.C.

When radio was still in its infancy in the early part of the twentieth century, no one could foresee the enormous scope of the technological revolution that was then just beginning. And in the midst of New Deal euphoria over central planning, few understood the implications of the Communications Act of 1934, which established the federal government’s ownership of the rights to use the electromagnetic spectrum and solidified its absolute power to regulate broadcasting. In the time since, however, it has become evident that Federal control of the airwaves is antithetical to the principles of a free society. By relinquishing its control of the airwaves the government could reaffirm the importance of those principles.

Federal regulation of broadcasting began with the Radio Act of 1912, which tried to set up a system for allocation of the spectrum through the administrative decisions of the Federal Radio Commission, the forerunner to the Federal Communications Commission (FCC). Perhaps because radio communication and its potential was so poorly understood at the time, the legislation had a fundamental flaw: it failed to establish any system of property fights in the electromagnetic spectrum.

By the mid-1920s, this omission had become glaring, as scores of competitors routinely jammed each other’s broadcasts, both intentionally and unintentionally. The chaos on the nation’s airwaves prompted the expanded Radio Act of 1927, and, ultimately, the comprehensive Communications Act of 1934. The latter legislation affirmed the government’s ownership of all broadcasting rights and established the Federal Communications Commission, which was given extensive regulatory powers. From the beginning, the use of such powers has been guided by politics, as University of Texas Law Professor Lucas Powe points out in his book, American Broadcasting and the First Amendment (University of California Press, 1987).

In the late 1920s, a right-wing religious broadcaster used a 1,000-watt station in Los Angeles as his pulpit, from which he issued blistering attacks on corrupt city fathers. Though many of his scurrilous assertions were later verified, the reverend nonetheless became one of the country’s earliest victims of political manipulation of the airwaves. At his renewal hearing in 1930, the broadcaster’s license was revoked because his sensational comments were deemed not to be in “the public interest.” On appeal, the D.C. Circuit Court upheld the revocation, ignoring the plaintiff’s arguments that broadcasting speech was protected by First Amendment guarantees. By refusing to review the case, the Supreme Court implicitly agreed with the lower court’s view that broadcasters did not have the right to freedom of

As Professor Powe notes, government domination of broadcasters expanded as the influence of the electronic media grew. Franklin Roosevelt, the first president to grasp the political opportunities mass communication offered, also understood the political danger of vigorous and unfettered broadcasting. Roosevelt expanded the reach of the FCC by appointing as its chairman James Lawrence Fly, an activist New Dealer whose principal objective as an administrator was to enact rules barfing ownership of broadcasting outlets by newspapers—especially those newspapers which opposed the Roosevelt administration.[2]

Though the courts blocked many of Roosevelt’s attempts to censor anti-New Deal broadcasting, later presidents of both parties were more successful in using the ever-broadening powers of the FCC to pursue their own political objectives. Every administration since Truman’s has at times used the Commission to favor broadcasters who supported them and to punish those who did not. And despite the fact that the FCC is theoretically impartial, the courts have generally upheld its politicization.

Since the early days of licensing, broadcasters have been mandated to “serve the public interest.” This duty can be fulfilled in part by airing public affairs programming, including major speeches by elected officials and political candidates. Until very recently, such political programming had to adhere to the dic tates of the Fairness Doctrine, an FCC rule which specified that political programming had to be “objective” and present both sides of an issue. If a station aired a Republican’s speech, a Democrat had to be given air time to respond, and vice versa. Violations of the Fairness Doctrine often resulted in heavy frees or loss of license for the offending station.

The First Amendment vs. Government Regulation

Controls over broadcasting content such as the Fairness Doctrine are troubling. Casting aside the dubious proposition that any issue has only two sides, a more significant objection becomes clear: FCC content regulation is fundamentally at odds with the concept of freedom of the press, as television journalist Bill Monroe observed in a 1984 speech: “The First Amendment sets up a clear-cut independence of press from government as the journalistic principle most vital to the American people. But the existing regulatory approach to broadcasting offers exactly the opposite formula: government guidance and government rules to protect the American people from independent journalism. The First Amendment idea and the regulation idea are mortal enemies.”[3]

Though Monroe’s thesis is intuitively correct, politicians and judges have continually rejected it. And while the Fairness Doctrine was officially repealed by the FCC in 1987, there is a major movement in Congress to make the former rules Federal law. Congressional supporters repeatedly cite their obligation “to protect the public interest” to justify the proposal.

In a seminal 1943 Supreme Court decision, NBC v. United States, the Court gave its judicial imprimatur to an omnipotent FCC by examining the Communications Act of 1934 in detail and firmly establishing its constitutionality. In the majority opinion, Justice Felix Frankfurter contended:

True enough, the [Communications] Act does not explicitly say that the [Federal Communications] Commission shall have the power to deal with network practices found inimical to the public interest. But Congress was acting in a field of regulation which was both new and dynamic . . . . The Act gave the Commission not niggardly but expansive powers. It was given a comprehensive man date to “encourage the larger and more effective use of radio in the public interest.”[4]

NBC v. United States was primarily concerned with antitrust violations in the broadcasting industry, but the Court did briefly consider First Amendment questions of the case. Frankfurter wrote:

The Regulations, even if valid in all other respects, must fall because they abridge, say the appellants, their right of free speech. If that be so, it would follow that every person whose application for.a license to operate a station is denied by the Commission is thereby denied his constitutional fight of free speech. Freedom of utterance is abridged to many who wish to use the limited facilities of radio. Unlike other modes of expression, radio inherently is not available to all. That is its unique characteristic, and that is why, unlike other modes of expression, it is subject to government regulation.[5]

The rationale for regulation has been that the number of potential broadcasting outlets is limited and therefore the government must be the one to decide who can use the spectrum. Frankfurter buttressed this argument by rejecting the plaintiff’s First Amendment arguments in this case.

In NBC v. United States the Court failed to grasp the basic economic fact that all things, including newspapers, are subject to a degree of scarcity. At the time the First Amendment was written, for example, the United States had only eight newspapers. BUt this did not prompt the Framers to allow the government to regulate the press. In fact, Thomas Jefferson once wrote, “The basis of our government being the opinion of the people, the very first object should be to keep that right; and were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.[6] Jefferson had a reverence for freedom of speech and an unrestrained fourth estate that was lost on Frankfurter.

Red Lion v. FCC

The effect of NBC was to establish as a legal principle the notion that broadcast speech is inherently different from printed speech in newspapers. The theory rests on the assumption that there is unlimited entry into the print media, but only a finite number of broadcasting outlets. Thus, the airwaves must be subjected to a degree of regulation not accorded the print media. This scarcity rationale has been consistently extended by the courts, including the landmark 1969 decision of Red Lion v. FCC.

In Red Lion the Court affirmed the FCC’s control over program content by upholding the constitutionality of the Fairness Doctrine. The case involved a small station in rural Pennsylvania which in the mid-1960s aired a number of vitriolic attacks by conservative preacher Billy Hargis on left~wing journalist Fred Cook, author of the book Goldwater: Extremist of the Right. Cook, with help from the Democratic National Committee, convinced the FCC that he was entitled to free air time to respond. In his opinion, Justice Byron White wrote:

Where one candidate is endorsed in a political editorial, the other candidates mustthemselves be offered reply time to use personally or through a spokesman . . . . It is not unreasonable for the FCC to conclude that the objective of adequate presentation of all sides may best be served by allowing those most closely affected to make the response, rather than leaving the response in the hands of the station which has attacked their candidacies, endorsed their opponents, or carried a personal attack upon them.[7]

The Court held that the government has a right and a duty to influence the presentation of ideas and issues over the airwaves. By implicitly lauding the “objective of adequate presentation of all sides,” the Court effectively discredited the value of individual opinion.

However, in another landmark decision, Miami Herald v. Tornillo (1974), the Court took a far different view of the obligation of the press to present all sides of an issue. In that case, the Miami Herald challenged the constitutionality of a Florida statute which forced newspapers to give space for targets of editorial attacks to respond—a law that was, in effect, a Fairness Doctrine for newspapers. In a unanimous decision, the Court overturned the statute, declaring the sanctity of a free press to be nearly absolute.

A comparison of Miami Herald and Red Lion is instructive in considering the flawed logic of the Court in broadcasting cases. When radio and television are concerned, the Court has not hesitated to use scarcity as a rationale for minimizing First Amendmem rights. Yet in the Miami Herald case, Chief Justice Burger noted that modern newspaper publishing has significant entry restrictions just as broadcasting does: “The obvious solution, which was available to dissidents at an earlier time when entry into publishing was relatively inexpensive, today would be to have additional newspapers. But the .same economic factors which have caused the disappearance of vast numbers of metropolitan newspapers, have made entry into the marketplace of ideas served by the print media almost impossible.”[8]

Recognition of the scarcity of publishing outlets did not compel the Court to uphold the regulation of newspapers. Rather, it strongly reaffirmed the value of an independent press.

Burger wrote, “A responsible press is an undoubtedly desirable goal, but press responsibility is not mandated by the Constitution and like many other virtues it cannot be legislated.”[9]

Where Burger’s opinion in Miami Herald rejected the role of scarcity in providing an excuse for print media regulation, Justice White used scarcity to support the Red Lion decision: “Where there are substantially more individuals who want to broadcast than there are frequencies to allocate, it is idle to posit an un-abridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write, or publish.”[10]

It is interesting to note that both White and Burger cited Associated Press v. United States (1945) in their opinions. In Red Lion, White used it to justify his contention that “there is no sanctuary in the First Amendment for unlimited private censorship operating in a medium not open to all.”[11] In the Miami Herald decision, Burger considered the Associated Press opinion and rejected it as precedent, noting the “confrontation with the express provisions of the First Amendment and the judicial gloss on that Amendment developed over the years.”[12]

The reasoning behind the Court’s paradoxically different view of the First Amendment fights of the print media and those of broadcasters stems from the Court’s apparent belief that the media are more dissimilar than alike. White argued in Red Lion that “although broadcasting is clearly a medium affected by a First Amendment interest, differences in the characteristics of new media justify differences in the First Amendment standards applied to them.”[13]

This view exists in part because of the failure of the early communications regulators to establish a property-based system for allocation of the spectrum. The response to the airwaves chaos of the early part of the twentieth century was to produce a system in which the government owns all rights to use the spectrum. Broadcasters are the trustees of the right to transmit over government-owned frequencies. In contrast, newspaper publishers are the owners of their means of communication, a crucial distinction.

Centuries-old common law traditions ofproperty rights serve to protect publishers in a way not currently applicable to broadcasting. Since a newspaper is recognized as actual property, it is a far greater offense for a ruling body to dictate what should and should not be done with it. Broadcasters, on the other hand, merely hold a government-granted privilege. They do not own their right to broadcast, and as a result retain no traditional rights of property. In other words, what the government gives, the government can take away.

A Property-Based System

Establishing a property-based system for the use of the electromagnetic spectrum would end the conflict between the First Amendment and government regulation. It would also have other far-reaching implications for society.

Since the spectrum has a variety of uses beyond television and radiobroadcasting, the FCC currently must make administrative decisions as to how much of the spectrum to allocate for each particular application. By the FCC’s own admission, these decisions are by nature arbitrary. It is simply impossible for any regulatory agency to decide how to allocate scarce resources most effectively.

For example, in the cellular mobile phone industry (which uses microwave radio transmission to connect callers) the FCC had to pick from a pool of 1,200 applicants for the first 90 licenses. When the Commission later assigned licenses in an additional 30 markets, more than 5,000 entrepreneurs applied. Like the television, radio, and satellite industries, as well as many others, the cellular mobile phone industry desperately wants to increase its share of the spectrum. Yet it can do so only with FCC approval, which in a spectrum filled almost to capacity means denying use for some other purpose. Without a price structure to determine the most efficient use of the spectrum, the FCC must weigh competing claims and decide on its own which services are more important than others.

The FCC should immediately undertake a program of privatization of the airwaves. There are a number of ways it could do this. It could auction off the rights to frequencies to the highest bidder. The advantage of this method would be that it tends to allocate frequencies to those individuals or firms which are most eager to have them and can use the frequency most efficiently and profitably. An added advantage would be to help reduce the Federal budget deficit through non-tax revenues gained from this unique form of asset sales.

The major disadvantage with auctions is that existing users have invested millions of dollars into equipment with the expectation of main-mining access to their frequencies. An alternative would be to award frequency rights through a lottery system, but this too might result in a tremendous waste of prior capital investment. If objections to those transfer mechanisms proved monumental, the FCC could simply award property rights to the current license holders. A marketplace for frequencies would then develop. This new market would allow entry for new firms that wished to buy frequency rights just as auctions would, but such a system would not penalize those users currently operating through government fiat.

But the particular mechanism for transferring control of the airwaves from the government to the private sector is not so important as the ideathat the public would be best served by the introduction of a market for frequency rights. Only such a market could determine the most productive and efficient allocation of the spectrum.

The record shows that government regulation has been an affront to the principles of free speech and a detriment to society. Until we recognize property rights in broadcasting, that record seems destined never to change. []

1.   Lucas Powe, American Broadcasting and the First Amendment (Berkeley: University of California Press, 1987), pp. 12-23.

2.   Ibid., pp. 73-74.

3.   “Broadcasting and the First Amendment,” Cato Policy Report, Volume VI, Number 5 (May/June, 1984), p. 1 (italics in original).

4.   National Broadcasting Company v. United States, 319 U.S. 554, at 219.

5.   Ibid., at 226.

6.   Thomas Jefferson, letter to Colonel Edward Carrington, January 16, 1787, quoted in Bartlett’s Book of Familiar Quotations, Fifteenth Edition (Boston: Little, Brown & Co., 1980), p. 388.

7.   Red Lion v. Federal Communications Commission, 395 U.S. 367, at 378.

8.   Miami Herald v. Tornillo, 418 U.S. 241, at 251.

9.   Ibid., at 256.

10.   Red Lion v. Federal Communications Commission. 395 U.S. 367, at 388.

11.   Ibid., at 392.

12.   Miami Herald v. Tornillo, 418 U.S. 241, at 254.

13.   Red Lion v. Federal Communications Commission, 395 U.S. 367, at 386.