4th Circuit Upholds DBS Must-Carry

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A panel of the 4th U.S. Circuit Court of Appeals last Friday upheld a federal law that requires direct-broadcast satellite carriers to carry all local broadcast-TV stations in markets where they elect to carry any local signals.

The three-judge panel, in a unanimous opinion by Judge M. Blane Michael, said the DBS must-carry law was consistent with satellite carriers' First Amendment free-speech protections, a decision that a lower court had reached earlier in the year.

"We hold, as did the district court, that the 'carry-one, carry-all' rule does not violate either the First Amendment or the other constitutional provisions cited by the satellite carriers," Michael wrote.

The court said the law was both content-neutral and narrowly tailored to ensure that DBS carriers did not "cherry-pick" local TV markets by carrying popular network affiliates but refusing carriage to lesser viewed independent stations.

The court said DBS must-carry was designed properly to protect a multiplicity of broadcast outlets from competitive distortion for the benefit of viewers who do not subscribe to cable or satellite.

The court also rejected the DBS industry's claim that the must-carry law violated the Fifth Amendment's ban on the taking of private property for public use without just compensation. A DBS industry claim that Congress violated the copyright clause in the constitution was also rejected.

The ruling means that starting Jan. 1, EchoStar Communications Corp. and DirecTV Inc. — which have agreed to merge, in part, to offer all local signals in 100 markets — must carry all local TV stations in the roughly 40 DMAs they serve today, unless they discontinue serving those regions.

In the 68-page opinion, the court upheld a Federal Communications Commission rule that allows DBS carriers to offer local TV signals on an à la carte basis.

The FCC rule permits DBS carriers to offer all local TV station on a single tier or à la carte. Providers may also let consumers pick between those two options.

The DBS must-carry law is also slated to take effect on Jan. 1 because the panel denied the satellite industry's request for an injunction barring implementation until after the U.S. Supreme Court had ruled on an appeal.

It's possible the DBS industry could prevent the law from taking effect on Jan. 1 by obtaining a stay from the full 4th Circuit or the U.S. Supreme Court.

Except for the à la carte ruling, the court's decision was a thorough victory for local TV.

"This is a New Year's Day gift for DBS subscribers — on Jan. 1, they will begin receiving all local stations in markets where 'local-to-local' service is being offered," National Association of Broadcasters president Edward Fritts said in a statement.

Satellite Broadcasting & Communications Association acting president Andy Wright said in a statement: "We are extremely disappointed in the decision from the 4th Circuit Court of Appeals. This is a tremendous loss for consumers and competition in small and mid-size markets because it limits the ability of Hughes' DirecTV and EchoStar's Dish Network to roll out local broadcast service in additional markets." Legal options will be explored, he added.

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