Lawyers for direct-broadcast satellite operators urged a federal appeals court Tuesday to strike down a local-TV-station carriage law they say intrudes on their First Amendment rights.
DBS operators want to avoid a federal requirement, starting Jan. 1, that mandates the carriage of all local TV station in a market where the carrier has decided to provide any local TV signals. DBS carriers have free-speech rights to choose their own programming lineups, they contended.
Arguing for the satellite industry, attorney Charles Cooper said the mandate would chew up channel capacity. And he said Congress, in the Satellite Home Viewer Improvement Act of 1999, imposed an "unconstitutional condition" by tying permission to carry local TV stations to a requirement that all stations be carried in a market.
Cooper said the so-called carry-one, carry-all requirement -- an attempt to bundle popular stations with lightly viewed stations -- would force DBS carriers to deny local TV service in secondary markets due to capacity constraints.
"The Richmond market will not get any local stations, including the four major networks," Cooper said
Justice Department lawyer Mark Stern said the law imposed no First Amendment burden on DBS carriers. Instead, he said, the law allowed DBS to provide local signals without payment of copyright royalties for the first time.
Stern said the law did not require DBS to carry local signals at all, but if carriers did so utilizing the copyright license, they needed to carry all signals in the market.
"Let's be clear. This is not a mandatory requirement," Stern said, referring to use of the copyright license.
But Cooper said carrying local TV signals without the license was nearly impossible because TV stations have agreements with a large number of copyright holders.
A three-judge panel of the U.S. Court of Appeals for the 4th Circuit heard arguments for 75 minutes. The judges were H. Emory Widener, Paul V. Niemeyer and M. Blane Michael.
None of the judges indicated whether the court would rule prior to Jan. 1.
"We want a result prior to the time these regulations take effect," said Andy Wright, acting president of the Satellite Broadcasting & Communications Association, which filed the suit along with carriers DirecTV Inc. and EchoStar Communications Corp.
WHAT THE JUDGES SAID
During the arguments, Judge Niemeyer said it appeared Congress developed "a sort of uniform scheme" that called for granting access to local signals in return for full must carry in order to "protect the free airwaves."
Michael suggested it might be appropriate for the court to defer to Congress because DBS wouldn't have access to any of the local signals if the law had not been passed. Cooper responded by saying that although the law was "enabling," Congress should not be allowed to force DBS carriers to surrender constitutional rights in exchange.
DOJ attorney Stern said DBS carriers would have a better argument if Congress had expressed a content-based reason for imposing full must-carry requirements. But he said Congress didn't do so.
"This is not a content-based restriction so they don't have a leg to stand on," Stern said.
Echoing that point, Donald Verrelli, a lawyer representing the National Association of Broadcasters, told the court that DBS provision of local TV signals was "an optional benefit" consistent with the First Amendment.
Both Widener and Michael showed some sympathy for Cooper's argument that the law unavoidably would cause DBS carriers to avoid serving secondary markets.
A few times, Widener suggested that maybe the manner in which the boundary for a local market is drawn is really the problem.
Despite his concern for small markets, Widener said Congress was concerned about injury to local TV stations that DBS carriers chose not to carry.
Even Cooper conceded that DBS had "a gatekeeper relationship" with its subscribers, but he added that should not be the court's concern because cable operators dominate the pay-TV market.
The court also heard arguments in NAB's move to block the Federal Communications Commission from allowing DBS carriers to provide local TV signals on an a la carte basis.
FCC rules allow DBS carriers to offer local TV signals in a single tier or a la carte, and they can provide both options simultaneously.
Nory Miller, a lawyer representing NAB, said Congress did not intend for the FCC to allow a la carte packaging. She said Congress wanted to preserve the tradition of consumer access to all local TV signals as the same time.
"Congress didn't want to change that relationship," she said.
Niemeyer defended the FCC's rule by indicating that NAB was looking for a form of regulatory protectionism that would deny a consumer the right to buy only those stations he or she wanted to view.
"The viewer makes the decision, just as the viewer makes the decision to turn the dial," Niemeyer said. "You want a regulation that is more friendly to channel surfers."
Louis Peraertz, an attorney for the FCC, said the agency developed the a la carte option because Congress did not require DBS carriers to offer a basic tier of local TV signals as it did for cable operators in the 1992 Cable Act.
Peraertz noted that the FCC barred DBS from creating multiple tiers of local TV signals and from offering some stations in a tier and some a la carte.
Niemeyer didn't seem impressed with the FCC's fine-tuning. "It seems to me you are making matters worse," he said to Peraertz.