Federal Communications Commission v. American Broadcasting Co., Inc.

Section 1304 of the United States Criminal Code prohibited radio and television broadcasts of “any lottery, gift enterprise, or similar scheme” that awarded prizes based on chance. The American Broadcasting Co., Inc. (ABC) (defendant) operated broadcasting companies under the licensing authority of the Federal Communications Commission (FCC) (plaintiff). Many ABC broadcasts included giveaway programs that gave randomly selected listeners the chance to win prizes by answering certain questions. To be selected, listeners were not required to contribute money or other valuable consideration. The FCC adopted regulations that specifically prohibited these types of broadcasts by classifying them as violations of § 1304. The FCC argued that the giveaway programs constituted a “lottery, gift enterprise, or similar scheme” in violation of § 1304 because they involved consideration for the chance to win a prize. According to the FCC, the consideration paid by the audience was the time spent listening to the broadcast, which conferred a commercial benefit to the broadcaster. ABC brought an action to enjoin the FCC regulations on grounds that the time spent by the audience listening to a broadcast did not constitute the necessary consideration. The district court enjoined the FCC from enforcing the provisions of the program, finding that the FCC exceeded its authority by classifying the programs as lotteries. The FCC directly appealed to the United States Supreme Court.