Court Leaves DBS Must-Carry Alone

Author:
Publish date:
Updated on

Direct-broadcast satellite must-carry is the law of the land: The Supreme Court last Monday refused to hear a case challenging the 1999 law that requires DBS providers to retransmit all local TV stations that request carriage in markets where they have elected to carry any.

Opponents of the mandate label it must-carry, while supporters call it "carry one, carry all."

EchoStar Communications Corp. — the No. 2 DBS carrier, with 7.1 million subscribers — challenged the law on First Amendment grounds, but lost in U.S. District Court and in the U.S. Court of Appeals for the Fourth Circuit.

EchoStar chairman and CEO Charlie Ergen told reporters he would not try to take down DBS must-carry in court, but a few months later he changed his mind.

Without comment, the nine-member high court refused to consider EchoStar's appeal of the Fourth Circuit ruling.

It takes votes from at least four justices for a case to land on the docket. The court receives about 5,000 appeals a year, but hears only 100 or so of them.

"EchoStar is disappointed in the Supreme Court's decision today to deny a writ of certiorari to allow our appeal of satellite must-carry, but it is clear that Congress, the FCC and the courts are in agreement that the must-carry law is constitutional," EchoStar spokesman Marc Lumpkin said.

FREE-SPEECH CLAIM

Joined by its trade group, the Satellite Broadcasting & Communications Association, EchoStar maintained that the carriage law violates the First Amendment because it effectively restricts the number of markets a DBS carrier might serve with its limited spectrum.

It also promotes the speech of less-watched stations in markets where over-the-air stations are available via DBS at the expense of network affiliates in non-local-into-local markets, EchoStar argued.

Last December, the Fourth Circuit held that the law fell within the traditional bounds of the First Amendment and represented a tailored attempt by Congress to ensure that satellite carriers did not disrupt local TV markets by cherry-picking popular stations — affiliates of ABC, CBS, NBC and Fox — and ignoring others.

DirecTV Inc. — whose corporate parent, Hughes Electronics Corp., hopes to merge with EchoStar — was an original plaintiff, but dropped out of the case in March.

Both EchoStar and DirecTV retransmit local TV stations in about 40 markets. If the merger is approved, the companies have promised to offer local TV in all 210 markets within two years, provided stations offer meaningful local content.

DBS analyst Mickey Alpert, president of Alpert & Associates, indicated that neither EchoStar nor DirecTV expected the high court to take the case.

"But it was a worthwhile shot, because then they could say, 'Listen, we'll provide only the programming that people want to watch.' It was something Charlie [Ergen] believes in," Alpert said. "I don't think it has any major strategic implications or ramifications one way or the other."

The carriage mandate was a provision of the Satellite Home Viewer Improvement Act, a law signed by President Clinton that gave DBS carriers the right to offer local TV signals in their home markets for the first time.

Under a federal copyright license, DBS retransmission of local TV signals involves no payment of royalties. Local TV stations can insist that DBS carriers pay them a license fee for carriage.

NAB'S PLEASED

"We're pleased that the Supreme Court has upheld the 'carry one, carry all' mandate of Congress. This decision represents a major victory for viewers by enhancing the diversity of local television station choices on satellite," NAB president Edward Fritts said in a statement.

The NAB has been a vocal opponent of the EchoStar-DirecTV merger, in part because EchoStar sought to overturn the carriage law at the same time that it was highlighting local TV service in every TV market as a benefit of the merger.

A favorable ruling from the Supreme Court might have been a brief victory for EchoStar, anyway. If the Justice Department approves the merger with DirecTV, it might require the new company to carry every local TV station in the country.

In rejecting the case, the high court also avoided having to decide whether DBS carriers were still entitled to the royalty-free license if the carriage regime were struck down as unconstitutional.

Had the court voided the carriage mandate and the copyright license, it would have exposed millions of home dish owners to the loss of local over-the-air TV stations via satellite until Congress passed a new law.

Related