| FCC v. Sanders Brothers Radio Station | |
|---|---|
 | |
| Argued February 9–, 1940 Decided March 25, 1940 | |
| Full case name | Federal Communications Commission v. Sanders Brothers Radio Station |
| Citations | 309U.S.470 (more) 60 S.Ct. 693 |
| Case history | |
| Prior | Sanders Brothers Radio Station v. Federal Communications Commission, 106F.2d 321;cert. granted,308 U.S. 546 (1939). |
| Holding | |
| Spectrum allocation decisions made by theFederal Communications Commission are made to serve thepublic interest and do not have to consider broadcaster profitability or business plans. | |
| Court membership | |
| |
| Case opinion | |
| Majority | Roberts |
| McReynolds took no part in the consideration or decision of the case. | |
| Laws applied | |
| Communications Act of 1934 | |
Federal Communications Commission v. Sanders Brothers Radio Station, 309 U.S. 470 (1940),[1] was an early precedent on the enforcement ofbroadcasting law in the United States. The Supreme Court held that when theFederal Communications Commission (FCC) makesspectrum allocation decisions regarding the use of broadcast frequencies by radio stations, such decisions should be made to serve thepublic interest, convenience, and necessity as defined by theCommunications Act of 1934. Consequently, such decisions by the FCC do not need to consider the profitability or business interests of the companies assigned such frequencies, or those of their competitors.
In 1936, theTelegraph Herald, a newspaper inDubuque, Iowa, applied to the FCC for a permit to construct a radio station, along with an allocated frequency on which to broadcast content. Shortly thereafter. the existing radio station WKBB in nearbyEast Dubuque, Illinois applied for a permit to move its transmitter to Dubuque. Upon learning of theTelegraph Herald application, the owners of WKBB appealed to the FCC to reject that application, in the belief that Dubuque did not have a large enough radio market for two different stations to be profitable, and that their frequencies would interfere with each other. Using language from theCommunications Act of 1934, the owners of WKBB argued that allowing theTelegraph Herald to build a second station would not serve thepublic interest, convenience, and necessity for the Dubuque region.[1]
An FCC examiner originally agreed with WKBB's position, though the Commission eventually decided to grant both applications. The Commission concluded that there was no evidence that the two stations would interfere with each other; meanwhile, both applicants were qualified to operate radio stations, and having two competing stations would be a benefit for the Dubuque region.[1]
The owners of WKBB appealed this FCC decision to theDistrict of Columbia Circuit Court, which held that the commission should have considered economic injury to the area's existing radio station (WKBB), and failing to do so resulted in anarbitrary and capricious licensing decision that was prohibited by Americanadministrative law.[2] The FCC appealed this ruling to theUnited States Supreme Court.
The Supreme Court reversed the circuit court decision. TheTelegraph Herald had argued previously that theCommunications Act of 1934 includes no requirements for the FCC to consider economic injury or business profitability when issuing radio station licenses, and those matters cannot be implied from the statute's language concerning thepublic interest, convenience, and necessity of broadcast licensing decisions. It was also noted that the owners of WKBB provided no verifiable evidence of potential economic harm if a competing radio station began operating in the area.[1]
The Supreme Court viewed the dispute as an opportunity to examine the "function and powers" of the then relatively new FCC. The court held that the Communications Act "contains no express command that in passing upon an application the Commission must consider the effect of competition with an existing station", and that the Commission need only consider its statutory requirements for fostering the development of networks andmanaging the use of spectrum frequencies. According to the court, the commission's primary responsibility is to ensure that frequencies are used efficiently and to avoid interference, and since interference wasnot found to be a risk in the present dispute, the commission acted appropriately in granting licenses to both operators. Furthermore, the Communications Act did not instruct the FCC to regulate the internal business operations of its licensees, and WKBB's complaint about unfair or damaging competition would instead be a matter for theInterstate Commerce Commission.[1]
Per Supreme Court precedent, broadcast frequencies were considered a matter offree competition in which the number of operators is only constrained by thescarcity of available frequencies, unlike other businesses such as railroads in which a new market entrant could have significant economic effects on the marketplace.[3] However, the FCC is enabled to consider the effects of competition among radio stations if thepublic interest would be impacted, which was not found to be the case in the present dispute.[1]
FCC v. Sanders Brothers Radio Station is often cited as a seminal ruling on the authority of the United States government, via the FCC, to regulate thebroadcast radio and television industries,[4] and on the government's stance that the broadcasting market should benefit fromfree competition.[5] The case has also been cited as an instructive precedent on the then relatively new issue ofjudicial review of regulatory decisions by subject matter agencies,[6] such as the FCC's authority over the precise matter ofspectrum allocation.