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In 1980, Oklahoma's Attorney General determined that the re-broadcasting of out-of-state alcoholic beverage commercials by Oklahoma cable television stations violated the State's ban against advertising alcoholic beverages. Richard Crisp, the Director of Oklahoma's Alcoholic Beverage Control Board, warned the offending cable operators that their continued transmission of banned beverage commercials would result in criminal prosecution. In response, and on behalf of other cable operators, Capital Cities Cable challenged the constitutionality of Oklahoma's advertising ban. On appeal from the Tenth Circuit's reversal of a district court decision favoring Capital Cities Cable, the Supreme Court granted certiorari.

Did Oklahoma's ban against retransmitting out-of-state cable signals containing alcoholic beverage commercials violate the Supremacy or Commerce Clauses?

The Court held unanimously that Oklahoma's ban on local cable transmissions of out-of-state alcoholic beverage commercials violated both the Supremacy and Commerce Clauses. While Oklahoma can regulate local cable aspects, such as franchise formation and construction, it cannot tamper with the flow of information from other states. Such tampering violates the Federal Communication Commission's guidelines prohibiting the censorship or alteration of interstate broadcast signals. As such, in the interest of maintaining diverse program offerings and encouraging competition among cable providers, the FCC's guidelines supercede Oklahoma's local regulatory authority. Moreover, despite its broad power under the Twenty-first Amendment to regulate the importation and use of intoxicating liquor, the Court held that the federal government retains final authority under the commerce clause to regulate all aspects of interstate liquor commerce. Therefore, Oklahoma's continued ban on interstate alcoholic advertising violated the Commerce Clause.