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Chicago Cable Communications v. Chicago Cable Commission and City of Chicago

decided*fn*: July 19, 1989.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 87 C 2591, Paul E. Plunkett, Judge.

Cummings, Coffey and Kanne, Circuit Judges.

Author: Cummings

CUMMINGS, Circuit Judge

The Chicago Cable Commission (the "Commission"), pursuant to Chapter 113.1 of the Municipal Code of Chicago, regulates the franchising of all cable television services for the City of Chicago. Plaintiffs in this case are three affiliated cable television service corporations, Chicago Cable Communications, South Chicago Cable, Inc., and Communications and Cable of Chicago, Inc. (collectively herein "CCTV" for "Chicago Cable TV"). They were fined $60,750 collectively by the Commission for allegedly violating the "local origination ("LO") provisions of their identical franchise agreements with the City. They sought restitution of this fine through review in the district court, which ultimately affirmed the administrative agency's actions. 678 F. Supp. 734, 736 (N.D.Ill. 1988). On appeal, CCTV contends that the City and particularly the Commission violated its rights to (1) due process by giving it inadequate notice or opportunity to be heard on the charges that it violated the franchise agreement, (2) equal protection by treating CCTV differently from another cable company which was not fined, and (3) free expression under the First Amendment due to impermissible content regulation.*fn1 We affirm.

The parties largely agree with the statement of facts provided by the district court*fn2 regarding LO programming and the Commission's regulatory efforts. 678 F. Supp. at 736-739. This Court therefore will not restate this summary in detail, but instead will focus on the Commission's imposition of sanctions to determine whether a due process, equal protection, or First Amendment violation occurred. In so doing we are guided by the district court's factual findings unless they are erroneous. Cf.Fed.R.Civ.P. 52(a); Anderson v. City of Bessemer City, 470 U.S. 564, 573, 84 L. Ed. 2d 518, 105 S. Ct. 1504 ; Evanston Bank v. Brink's, Inc., 853 F.2d 512, 516 (7th Cir. 1988).*fn3


Chapter 113.1 of the Municipal Code created five separate areas for cable services for the City of Chicago. CCTV was granted the franchises for Areas 1, 4 and 5, while a different company, Group W Cable (not a party to this litigation), was awarded the franchises for Areas 2 and 3. The franchise agreements between the City and grantees CCTV and Group W required the grantees both to produce and program a certain amount of LO programming per week, with each grantee to produce in Chicago one-half of the total required programming according to an agreed schedule. The grantees were to pledge up to $6,000,000 to produce this programming for 15 years and jointly to equip an LO production facility with staff consisting of local residents used for both full and part-time internship purposes. During the period involved here, CCTV and Group W Cable were obliged to transmit a total of nine hours local programming per week, and they divided this obligation evenly.

The Commission was created within the Mayor's office to supervise this regulation and to enforce the terms of the franchise agreements against the cable companies. Alter its initial July 1986 meeting, Commission Chairperson Robin Charleston requested Group W and CCTV to submit monthly reports on their LO scheduling, and in August, Group W responded for both, reporting that CCTV was "presently considering contracting its program production efforts to a third party [Cablenet, a suburban affiliate of CCTV] who would supply all necessary production manpower." This progress report was reiterated in Group W's monthly statement for September 1986.

In October, both grantees began to transmit their four and one-half hours apiece of LO programming. The Commission congratulated them on meeting the initial requirements for scheduling. The November meeting proceeded without problems; yet at the December meeting, the Commission, upon noticing that CCTV's monthly report on LO scheduling was less descriptive than Group W's report, asked CCTV for a sample of its LO programming.

Controversy between all concerned arose at the January 13, 1987, meeting when Chairperson Charleston requested the Commission's authorization to issue a "Notice of Violation" of the franchise agreement against CCTV allegedly because:

1. CCTV has not demonstrated how their current programming is actually local origination in that it is actually locally produced (within the City of Chicago) and is [instead] solely under the control of TCI [Telecommunications, Inc., Mt. Prospect, Illinois, affiliate of CCTV].

2. CCTV has not provided documentation on the provision of one full-time non-alphanumeric [video] channel and two alphanumeric channels in each Area.

3. No documentation of efforts to establish internship programs for local residents and ongoing relationships with local schools.

4. CCTV has not documented its [one-half] share of the nine hours required weekly in Year 1 for L.O. programming.

5. No documentation or proof of joint participation with other [Chicago] area grantees in centralized L.O. studio and mobile equipment has been provided by CCTV.

678 F. Supp. at 740. This action was done pursuant to Section 29 of the franchise agreement, which sets forth the procedure by which the Commission may enforce the terms of the agreement. The first step in any enforcement proceeding is the issuance of a notice of violation in writing setting forth the specific nature of the violation. The grantee then has 30 days (or less if the Commission determines the violation is so serious that a shorter time period is warranted) either to remedy the violation or to respond in writing contesting the notice of violation with supporting documentation indicating either that the violation did not occur or it was beyond the grantee's control, and requesting an opportunity to be heard. If after contesting the violation, the grantee fails to prove a violation did not occur, the Commission then may penalize the grantee. The Commission may fine the grantee up to $750 per day per violation, and must notify the grantee of the violation and fine by issuing a "Notice of Assessment." 678 F. Supp. at 739 n. 10.

CCTV responded to the January 15, 1987, notice of violation, stating that of the total nine hours of LO programming per week required of it and Group W, 4.5 hours came from Group W in Chicago and 4.5 hours came from CCTV's affiliated companies in the surrounding suburban area. CCTV also stated that it selected shows from a pool of all available suburban shows it believed would be interesting to its Chicago customers. However, it did not demonstrate that the 4.5 hours were geared to Chicago as required by the franchise agreements.

At its February 10, 1987, meeting, Chairperson Charleston recommended that CCTV be fined for violating the franchise agreements. The Commission heard testimony from Diane Minor, a staff member, as well as from Michael Green, CCTV's general manager. After this hearing, the Commission found a violation and fined CCTV $750 for each day for each of the ...

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