Judge Throws Out DBS Must-Carry Suit

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Washington— A U.S. District Court judge in Virginia has tossed out the direct-broadcast satellite industry's constitutional challenge of a 1999 law that required the carriage of all local TV signals starting in 2002.

The June 19 decision is a major victory for the National Association of Broadcasters, which has lobbied hard to include must-carry provisions in the 1999 Satellite Home Viewer Improvement Act. That law allowed DBS carriers to offer local signals in their home markets for the first time.

"We are pleased the court has vindicated the constitutionality of the local TV-station carriage provisions of SHVIA," said NAB spokesman Dennis Wharton.

The Satellite Broadcasting & Communications Association said the law violated the First Amendment by requiring any DBS provider that elects to carry just one TV station in a given market to carry all of that market's broadcast signals.

DirecTV Inc. and EchoStar Communications Corp. joined SBCA in the suit. The DBS industry also argued that the must-carry law violated the Fifth Amendment by taking private property for public use without just compensation.

"The court holds that the SHVIA is constitutional and does not in anyway violate the First and Fifth Amendment rights of satellite carriers," wrote Judge Gerald Bruce Lee of the Eastern District of Virginia last week.

In SHVIA, Congress granted satellite carriers a copyright license to retransmit local TV signals without charge, but stipulated that use of the license required carriage of all signals in a market if even one was carried.

"Satellite carriers decide whether to incur the must-carry obligations because the obligations travel with the optional copyright license into various markets," Lee wrote.

Lee also rejected SBCA's argument that must-carry was a content-based law subject to strict scrutiny, which is usually a fatal defect in a law that affects speech. Instead, he said must-carry was subject to intermediate scrutiny, the same standard the U.S. Supreme Court applied in 1997 when it ruled that must carry applied to cable operators.

The cable industry sat out of the case, but wished the SBCA luck in trying to overturn the must-carry mandate. C-SPAN, the cable network dedicated to public affairs, filed a brief in support of the SBCA's position.

The DBS industry is also challenging the constitutionality of the Federal Communications Commission's rules implementing the "carry one, carry all" requirement. That case is pending before the U.S. Court of Appeals for the 4th Circuit in Richmond, Va.

"We obviously are not happy with the court's decision, but our resolve is unchanged. It's the first inning of nine-inning ballgame," said Andrew Wright, the SBCA's general counsel and vice president of government affairs.

Wright said SBCA would appeal Lee's decision to the 4th Circuit, where he expects both cases to be consolidated for joint review.

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