DOJ to Limit 505 Ruling to Playboy

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Washington -- The Department of Justice last week asked a
federal court to prevent adult cable networks other than those owned by Playboy
Entertainment Group Inc.
from benefiting from Playboy's recent victory over
a federal signal-scrambling law concerning adult films on pay-per-view.

But adult-programming executives likened the request to
"content discrimination," and they hope that the court upholds its ruling
declaring Section 505 of the Telecommunications Act of 1996 unconstitutional for all adult
programmers.

The DOJ, in a motion filed in Wilmington, Del., argued that
as the plaintiff, only Playboy should be exempt from the law, which required full audio
and video scrambling of adult networks to prevent signal bleed that could be seen by
children. Cable operators that refused to scramble had to limit showing Playboy from 10
p.m. to 6 a.m.

The three-member U.S. District Court's Dec. 28
decision declaring Section 505 unconstitutional on First Amendment grounds allows
operators to once again carry adult-PPV services such as Playboy TV and AdulTVision
full-time.

But the DOJ's request would keep other services --
such as soon-to-be-Playboy-owned Spice, Adam & Eve and Spice Hot, as well as The
Erotic Network -- from offering their services on a 24-hour basis.

Tony Lynn, president of Playboy Entertainment Group, said
the DOJ is discriminating against the other adult services.

"These motions seem to be an attempt to create content
discrimination within the category," Lynn said. "Section 505 was declared
unconstitutional not just because of Playboy's programming, but the category. We won
what is a clear First Amendment issue. It seems to me that the government is trying to
end-run the Constitution."

The DOJ, in a second motion, asked the court to amend its
Dec. 29 mandate to ensure that Playboy's contracts with cable operators require them
to notify subscribers of the availability of free channel-blocking devices.

The DOJ could still ask for a stay of the decision if it
decides to appeal to the Supreme Court, although industry observers believe that the
DOJ's move last week could be a signal that it is not seeking an appeal.

Representatives from the DOJ could not be reached for
comment by press time.

Meanwhile, Lynn said, Playboy will actively remind
affiliates how much more lucrative the business was before Section 505.

"I think that we will be able to get them to expand
carriage," he said. "If you just regain the primetime hours, you're already
gaining a significant amount of lost revenue."

Ted Hearn contributed to this story.

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