Antitrust language barriers: First Amendment constraints on defining an antitrust market by a broadcast's language, and its implications for audiences, competition, and democracy.

• Author: Sandoval, Catherine J.K.

1. INTRODUCTION II. THE COMMERCIAL SPEECH DOCTRINE AND LOWER LEVELS OF SCRUTINY USED FOR STRUCTURAL BROADCAST REGULATIONS DO NOT GOVERN ANTITRUST MARKET DEFINITION ANALYSIS A. Distinguishing Broadcast Programming From Commercial Speech B. Antitrust Market Definition Should be Subject to a Higher Level of Scrutiny Than That Used for Structural Regulation of Broadcasting III. IS DEFINING AN ANTITRUST RADIO MARKET BY LANGUAGE A CONTENT-BASED OR A CONTENT-NEUTRAL DISTINCTION? A. Standard of Review B. Is the Market Definition Content-Based or Content-Neutral? C. Benefits and Burdens Imposed by Distinguishing Radio Markets by the Broadcast's Language: Distinctive Content of Spanish-Language Broadcasts D. The Public's Interest in Broadcasters' Speech E. Defining a Broadcast Market by Language is Not a Reasonable Time, Place or Manner Restriction IV. MARKET STRUCTURE, SUBSTITUTION, LIKELIHOOD OF ENTRY, AND COMPELLING OR SUBSTANTIAL STATE INTEREST A. Product Substitution B. Supply-Side Antitrust Analysis: The Role of Market Entry and Structure in Proving a Compelling or Substantial Government Interest V. CONCLUSION I. INTRODUCTION

   Does the language of a broadcast's program appropriately define an antitrust market, consistent with First Amendment and antitrust principles? The Department of Justice ("DOJ") has traditionally defined the market for mass media transactions by type of media, casting radio as competing in one market, and over-the-air television, for example, in another. (1) Within the medium of radio, the DOJ has divided the market by the language of the broadcast, defining Spanish-language radio as a separate market from English-language radio in its 2008 analysis of the proposed private equity firm buyout of Clear Channel, and in its 2003 review of the merger of Univision Communications, Inc. ("Univision") and Hispanic Broadcasting Corporation ("HBC"), leading broadcasters of Spanish-language television and radio, respectively. (2) This Article contends that the decision to define an antitrust market by the broadcast's language raises concerns about its constitutionality and its effect on competition and democracy. If inaccurate, the market definition may not only distort competition, it may limit the broadcaster's freedom of speech and the public's ability to hear that programming. The First Amendment protects speakers and those who wish to hear that speaker's message. (3)

   The debate about the relevant market for broadcasters engaged in Spanish-language programming continued to reverberate in the 2007 sale of Univision to a consortium of private equity firms. Federal Communications Commission ("FCC") Commissioner Michael Copps criticized the FCC's approval of the Univision sale for its failure to decide "whether Spanish-language programming constitutes a separate market segment that must be analyzed in isolation from English-speaking programming." (4) In its 2008 approval of the purchase of Clear Channel by a consortium of private equity firms, the FCC did not address the issue of whether the Clear Channel stations programmed in Spanish competed in a separate market, in contrast to the DOJ's definition of the relevant market for analyzing the effect of the potential Clear Channel buyers' equity and voting interests in Univision as "the provision of advertising time on Spanish-language radio stations." (5) Future transactions involving stations programming in Spanish or other non-English languages that are sufficiently large to trigger antitrust merger review will require similar analysis of the role of language in defining an antitrust market. (6)

   The FCC's reconsideration of the limits on how many radio and television stations an entity may control locally or nationally and its evaluation of the cross-media ownership rules limiting newspaper ownership of television stations in the same market highlighted the role of Spanish-language media in the overall media market. (7) The FCC has previously rejected the contention that radio markets should be categorized by language based on evidence of ease of entry between program languages, and its conclusion that a market divided by program language would violate the ownership limits set by Congress in the Telecommunications Act of 1996. (8) However, the FCC has granted several temporary and long-term waivers to Spanish- and non-English-language television and cable stations to foster program diversity. (9) The DOJ has not yet articulated its position on whether there is a separate Spanish-language television market.

   Using First Amendment jurisprudence, Section II of this Article analyzes the standard of review for evaluating a market definition based on a broadcast's language. It rejects the application of the commercial speech doctrines because the market definition is based on the language of the broadcast program, not the advertisement. It argues that the lower level of scrutiny used for structural broadcast regulations is an inappropriate standard for analyzing the market definition because it subjects certain types of speech (broadcasts in Spanish) and certain types of speakers (Spanish-language broadcasters) to higher burdens than their English-language counterparts, while limiting audiences' ability to hear Spanish-language broadcast speech. Section III examines whether defining an antitrust market by the broadcast's language is a content-based distinction requiring strict scrutiny or a content-neutral distinction necessitating intermediate scrutiny. (10)

   This Article uses social science research on Spanish- and English-language radio and television to evaluate the nexus between language and content. The research indicates that Spanish- and English-language media offer distinctive content. For example, Spanish-language news emphasizes issues of importance to the Latino community and contains far more information about Latin America than is found on English-language newscasts. In 2003, the most common image of Latinos broadcast on English-language television newscasts featured would-be immigrants scaling a border fence. (11) Entertainment programs also embody messages about inclusion or exclusion evidenced in the paucity of Latino characters on English-language television and the portrayal of Latinos and Asians as speaking English with heavy accents. (12) These "regimes of representation" (13) influence audience program choices. The overlap between language and content suggests that defining an antitrust market based on a program's language is content-based.

   While English- and Spanish-language radio and television broadcasts are characterized by distinctive content, that distinctiveness alone does not establish a separate antitrust market. Attempts to categorize and separate media markets may run afoul of constitutional and antitrust principles when the markets drawn do not reflect the diversity of media usage or ease of entry between the allegedly separate markets. (14) Section IV A explores the "substitution" by broadcasters, audiences, and advertisers between program language, and advertiser alternatives if faced with a price increase by merging parties. The dynamic movement by broadcasters, advertisers, and audiences between languages and program formats indicates that media markets are not rigidly divided by language, but operate as one marketplace of ideas, with audience and advertiser loyalty contestable between languages.

   Section IV B offers a "supply-side" antitrust analysis that focuses on broadcaster "entry" or substitution between languages and its relationship to consolidation strategies designed to reap economies of scale. In defining the market, the DOJ assumed that no English-language broadcaster would change its format to compete directly in Spanish. (15) This assumption was wrong at the time of the merger between HBC and Univision. (16) Subsequent format changes by broadcasters moving between English- and Spanish-language programming confirmed that this assumption was misguided. (17) Media consolidation following the 1996 Telecommunications Act made economies of scale a driving force in radio competition. (18) Broadcasting in different languages has become another tool in the arsenal of consolidated competitors who seek advertisers and audiences through multilingual, multiformat and multiple-station approaches.

   Whether language is the appropriate basis for defining a broadcast antitrust market has yet to be subject to rigorous judicial review in a contested proceeding. (19) This results in part from the fact that many merger parties enter a consent decree with the DOJ (which is usually filed at the same time as the complaint) and agree to certain conditions, rather than challenge the market definition, because they value speedy closure of the deal. (20) Alternatively, the parties may agree to the DOJ's conditions based upon the Agency's market definition, and its resulting analysis of market concentration and participation, to dissuade the DOJ from filing a complaint in U.S. District Court challenging the deal, and instead grant "early termination" approval of the merger. (21) Thus, scholarly examination of whether language appropriately defines an antitrust market is critical since the merger process limits incentives for parties' legal challenges.

   In a previous article, Antitrust Law on the Borderland of Language and Market Definition: Is There a Separate Spanish-Language Radio Market? A Case Study of the Merger of Univision and Hispanic Broadcasting Corporation, (22) I argued that the DOJ's definition of the relevant antitrust market as "Spanish-language radio" did not meet the standard for a submarket definition which the Supreme Court articulated in Brown Shoe v. United States. (23) Although the DOJ's declared intent in defining the market as "Spanish-language radio" and ordering divestiture remedies was to protect and foster competition in the sale of advertising time on Spanish-language radio, (24) the justification...