How CBS Lost the Super Bowl Case

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

If you listen carefully, you might still hear the echo of Champagne flutes clinking at the CBS headquarters and broadcasting offices around America, after the 3rd U.S. Circuit Court of Appeals returned the $550,000 worth of indecency fines the network paid to the Federal Communications Commission as a result of Janet Jackson’s “wardrobe malfunction” at the 2004 Super Bowl.

While the outcome of CBS v. FCC seems like a win for free speech, it is really the opposite. In last week’s decision, the court never tells the FCC that it may not regulate broadcast programming content. Indeed, it said that FCC regulation of broadcast speech is permissible, only the process was flawed.

Essentially, CBS won on a procedural technicality, not on the broader issue of whether the government may regulate speech. And while broadcasters are mistaken that this case is a major victory, let’s hope investors are more aware.

Investors know that broadcast properties trade at a discount relative to values they would command in a less regulated environment. There are the legal costs of complying with rules and litigating disputes, in addition to regulations circumscribing the full range not only of broadcast speech, but also of commercial and political speech. All of this puts broadcasters at a disadvantage to distribute programming relative to other technologies. Valuable programming content is becoming easier to produce and distribute through non-broadcast channels, with consumers and advertisers drawn to less-regulated distribution networks.

One might assume that the broadcast industry and the federal government would insist on less regulation to enable the broadcast industry to survive and compete. Just the opposite is the case. Congress threatens more, not less, broadcast regulation, and the industry, accustomed to abuse in Washington, has lost any sense of moral outrage. It sees victory each time the government slaps it in the face.

Federal indecency rules are but one example of regulations unique to broadcasting. They have been rationalized by the courts as part of a larger system of regulation artificially premised on spectrum scarcity (everything of value is scarce but not everything is subject to content regulation) and the protection of children.

But many parents want their children to have full access to books and the Internet, neither of which is federally regulated. Federal policy is to bring the Internet to every classroom and every farm and village in America at a cost of billions of dollars annually. The Internet has no shortage of indecent material.

Broadcasting, by contrast, is intellectually orphaned by the government. No federal program insists on, much less subsidizes, broadcast access to every classroom. Nonetheless, much of government content regulation is rationalized on protecting children.

How have we gotten in this mess? Many of the feeblest Supreme Court decisions of the past 50 years are those that sanction federal regulation of the content and ownership of the broadcast industry. Without such decisions, federal regulation of broadcasting would halt. The court rarely has an opportunity to review these misguided opinions.

A rare exception is FCC v. Fox Television Stations, a case currently before the courts that involves both administrative law and, possibly, the constitutionality of indecency regulations. A narrow administrative law decision is likely. Perhaps one of the justices will see through the fog of administrative law and look into the constitutionality of the regulations.

Investors and all Americans will cheer when the Supreme Court ultimately stops broadcast content regulation. Broadcasting will not turn into a cesspool of indecent material any more than book publishing or newspapers are today. Instead, unshackled from excessive regulation, broadcasters will be able to compete more effectively, to the benefit of all consumers.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at

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