FCC Affirms and Clarifies Rules for Satellite Carriage of Local TV Stations
The Federal Communications Commission has rejected petitions by DirecTV and the Association of Local Television Stations (“ALTV”) seeking reconsideration of the newly adopted rules governing satellite carriage of local television broadcast signals (see our advisory dated Dec. 28, 2000). Most notably, the Commission maintained its “good signal quality” standard in the satellite context (i.e., the same standard applicable in the cable context), affirmed the requirement that satellite carriers carry program-related material contained in the broadcast signal’s vertical blanking interval (“VBI”), and affirmed its rule allowing satellite carriers to offer broadcast stations on an a la carte basis. On this last point, the Commission reiterated its finding that Congress did not intend to establish a basic service tier-type requirement for satellite carriers when it implemented the satellite must-carry rules, and that Congress did not explicitly prohibit the sale of local television station signals on an a la carte basis. The Commission also clarified and amended other requirements in the initial Report and Order.
The Commission issued its initial Report and Order adopting satellite broadcast signal carriage rules, otherwise known as the satellite “must carry” rules (the “Must Carry Order”) on Nov. 30, 2000. These rules were implemented pursuant to the Satellite Home Viewer Act (“SHVIA”), with the directive from Congress that the satellite must carry rules should be “comparable” to cable carriage requirements.1 Section 338 requires satellite carriers, by Jan. 1, 2002, to “carry upon request” all local television broadcast stations’ signals in areas where the satellite carriers are providing any local signals to subscribers under the copyright license established in Section 122 of the Copyright Act, which specifically authorizes the carriage of local signals (added by SHVIA—see our advisory dated Dec. 7, 1999). This rule has been coined the “carry one, carry all” rule by the Commission. The Must Carry Order also adopted election cycle rules and other related policies.
In denying DirecTV’s Petition, the Commission:
- declined to modify the non-commercial educational (“NCE”) station carriage rule by limiting a satellite carrier’s carriage obligation to only one qualified NCE station per DMA, with additional NCE stations to be carried on a voluntary basis only;
- refused to permit satellite carriers to include local NCE stations, carried pursuant to the satellite must-carry rules, in the calculation of the four percent public interest set-aside requirement;
- affirmed its rule requiring satellite carriers to carry, in its entirety, the audio and the closed-caption data contained in the VBI and, to the extent technically feasible, program-related material carried in the VBI or subcarriers;
- maintained its “good quality signal” standard (i.e., the same standard applicable to cable operators) requiring carriage only of “good quality” local signals delivered to the satellite carrier;
- declined to require television stations to pay new or additional costs to deliver a good quality signal in instances where a satellite carrier relocates its receive facilities in the middle of an election cycle; and
- refused to allow satellite carriers to offer local-into-local service through the use of different orbital positions that require subscribers to use multiple dishes and maintained its rule prohibiting satellite carriers from requiring subscribers to purchase additional equipment in order to receive some, but not all, local broadcast signals.
In denying ALTV’s Petition, the Commission:
- declined to prohibit a la carte sales of local broadcast signals or to require satellite carriers to offer all local signals as a unitary package; and
- affirmed the rule that all stations, whether they elect mandatory carriage or retransmission consent, may participate in voting on whether a satellite carrier’s “alternative receive” facility is acceptable.
On its own motion, the Commission made the following clarifications and changes:
- clarified that satellite carriers may not refuse carriage requests without a reasonable basis by shifting the burden to local broadcast stations to prove they are entitled to carriage.2
- clarified that where there is more than one satellite carrier providing local-into-local service subject to the satellite must-carry rules, a broadcaster may make inconsistent carriage elections;
- clarified that, absent an agreement to the contrary, if a broadcast station has a retransmission agreement that extends into and terminates during an election cycle, the station will not be entitled to demand must-carry at the end of its contract term with the carrier—it must elect must-carry by the required election date for the appropriate cycle;
- clarified that satellite carriers may not require local broadcast stations carried pursuant to must-carry to pay for basic reception equipment at local receive facilities but are responsible, as in the cable rules, for costs of additional or special equipment;
- amended the carriage request procedures to make the requirements consistent for all elections.
If you have any questions, please contact us.
1 The satellite industry has filed a civil action in federal district court challenging the constitutionality of both the satellite must carry requirements contained in SHVIA, as well as the Commission’s satellite must carry rules. On June 19, 2001, a district court in Virginia upheld the constitutionality of SHVIA, relying heavily on earlier decisions that upheld the cable must carry rules in the face of similar constitutional challenges. The satellite industry filed an appeal in the 4th Circuit Court of Appeals on Monday, June 25, 2001, and the case has been consolidated with the satellite industry’s case against the FCC, and placed on an expedited docket. Argument in that consolidated appeal is scheduled for Sept. 25 in Richmond.
2 This ruling was in response to reports that EchoStar issued blanket rejections of signal carriage requests for “failure to prove signal meets legal standard of quality necessary for mandatory carriage.” The FCC specifically ruled here that this “is not a valid reason for rejecting a request for mandatory carriage.”