Retransmission of Network Programming Under the Satellite Home Viewer Act: Summary of the PrimeTime 24 Decision

Order Code RS20057

Updated November 26, 1999

CRS Report for Congress

Received through the CRS Web

Retransmission of Network Programming Under

the Satellite Home Viewer Act: Summary of the

PrimeTime 24 Decision

(name redacted)

Legislative Attorney

American Law Division

Summary

On May 12, 1998, the Federal District Court in Miami, Florida issued a preliminary

injunction, ordering PrimeTime 24, a distributor of satellite television programming

services, to terminate the retransmission of network television signals (specifically the

programming of the Columbia Broadcasting System (CBS) and Fox television networks)

to many of its customers nationwide. The court predicated the issuance of the injunction

on its finding that PrimeTime 24 had violated provisions of the Satellite Home Viewer

Act, which limit the retransmission of network television signals to customers residing

in "unserved households." Because of the number of satellite television subscribers

affected and the potential inability of many such customers to receive any network signals

after the scheduled termination dates, the court orders have generated considerable

attention and questions regarding the need to modify the standards governing the

transmission of network signals by satellite carriers.

In an effort to remedy the effect of the court orders and to address other issues

related to the satellite transmission of broadcast programming, Congress approved the

“Intellectual Property and Communications Omnibus Reform Act of 1999" (S. 1948) on

November 19, 1999. Attached by reference to the Consolidated Appropriations Act for

Fiscal Year 2000 (H.Rept. 106-479), the Act amends the Satellite Home Viewer Act to

provide specific relief to subscribers whose satellite television network service was

subject to termination as a result of the injunctions; modified the standards used to

determine subscriber eligibility to receive network signals and authorized satellite carriers

to provide new programming services to subscribers.

Background: The Satellite Home Viewer Act

The Satellite Home Viewer Act (SHVA) seeks to provide a means by which

subscribers to satellite television services may receive network television programming and

to establish an efficient mechanism for compensating the copyright owners of such

programming for the retransmission of the network signal by satellite carriers. Under the

Congressional Research Service ˜ The Library of Congress

CRS-2

act, satellite carriers are provided a "compulsory license" to retransmit the programming

of network stations to subscribers residing in "unserved households" for private home

viewing.1 The act defines the term "unserved household" as a household that "with respect

to a particular television network... cannot receive, through the use of a conventional

outdoor rooftop receiving antenna, an over-the-air signal of grade B intensity (as defined

by the Federal Communications Commission) of a primary network station affiliated with

that network, and has not, within 90 days before the date on which that household

subscribes to receive [the satellite television service]..., subscribed to a cable system that

provides the signal of a primary network station affiliated with that network."2 The

Federal Communications Commission's (FCC's) "grade B intensity" standard is an

objective measure of the strength of a television station's signal.3

To ensure that retransmission of the network station's signal is limited to those

households for which such distribution is authorized, the act requires satellite carriers to

submit to the network affiliated with the station a list identifying all subscribers to which

the retransmission is made.4 In addition, satellite carriers are prohibited from willfully

altering the content of the particular program "or any commercial advertising or station

announcement transmitted by the [network station]."5

Violations of the act are actionable as an infringement of copyright and subject to the

remedies set out in the Copyright Act, including: injunctive relief; actual or statutory

damages; attorneys fees; and under certain circumstances, criminal sanctions.6 In addition,

satellite carriers engaging in the "willful or repeated" delivery of network programming to

unauthorized subscribers, are subject to permanent injunction, barring the retransmission

of any station affiliated with the network and statutory damages of up to $250,000 for

each six month period in which the unauthorized retransmission was made.7

1

See 17 U.S.C. § 119(a)(2). For more detailed information on the satellite television compulsory

licensing scheme, see CRS Report 98-320, Television Satellite and Cable Retransmission of

Broadcast Video Programming Under the Copyright Act's Compulsory Licenses.

2

17 U.S.C. § 119(d)(10).

3

See 47 C.F.R. § 73.683. The FCC's definition sets out field strength values for each channel over

which a television signal is transmitted. Thus, for channels 2-6 the strength of a grade B signal is

47dBu, 56 dBu for channels 7-13 and 64 dBu for channels 14-69. Id. As a rule of thumb, the

agency defines a "grade B contour"--the area over which a grade B signal covers, as "the set of

points along which the best 50 percent of the locations should get an acceptable picture at least 90

percent of the time." See Satellite Delivery of Broadcast Network Signals Under the Satellite

Home Viewer Act, 63 Fed. Reg. 67439 (December 7, 1998).

4

17 U.S.C. § 119(a)(2)(C). The submissions are required 90 days after commencing

retransmission of the network signal. Additional submissions are required on the 15th of each

month listing any additions or deletions to the subscriber list. Id.

5

17 U.S.C. § 119(a)(4).

6

17 U.S.C. §119(a)(5)(A). See also 17 U.S.C. §§ 502-506, 509.

7

17 U.S.C. § 119(a)(5)(B). Similar remedies are available for violations occurring on a local or

regional basis.

CRS-3

The limited license provided satellite carriers to retransmit distant network signals

solely to "unserved households" was intended both to facilitate the delivery of network

programming to so called "white areas", in which such signals could not be received, and

to preserve the exclusive program distribution arrangements between the television

networks and their affiliate stations.8 The exclusive right to deliver network programming

in the local market is particularly important to the continued financial viability of the local

affiliate, which derives a substantial portion of its revenue from the sale of commercial

spots on such programming. As the price of a commercial spot is dependent upon the size

of the program audience, the importation of a duplicate network signal into the local

market reduces the affiliate's audience, and consequently, the value of the time to be sold

to advertisers.

Primetime 24's Delivery of Network Signals and the District Court's

Decision

At issue in the PrimeTime 24 litigation was the validity of PrimeTime 24's delivery

of network programming to satellite subscribers and whether the satellite carrier's

retransmissions exceeded the limited license granted under the act.9 PrimeTime 24

retransmitted the programming of an affiliate of each of the television networks to satellite

subscribers nationwide.10 In its attempt to comply with the "unserved household"

limitation in SHVA, PrimeTime 24 required its distributors to ensure that its services were

provided only to eligible subscribers; however, the carrier did not independently verify

whether such subscribers were able to receive a signal of grade B intensity. Rather,

service was provided based on the prospective subscriber's responses to a PrimeTime 24

questionnaire.11

In bringing its copyright infringement action, CBS and Fox asserted that PrimeTime

24 failed to adequately ensure that its retransmissions were limited to subscribers unable

to receive a grade B signal; and as a result, provided service to a number of households

which were not "unserved households" as defined in the act.12 Specifically, the networks

claimed that PrimeTime 24 accorded too much weight, in making service decisions, to

subscriber assessments of the picture quality received from over the air signals, while

failing to conduct its own investigation of the subscriber's over the air signal strength or

the location of the household to determine whether a grade B signal could likely be

received under the objective standards set out by the FCC. According to the networks,

PrimeTime 24's failure to limit its retransmissions to "unserved households" caused a

8

See H.Rept. 100- 887 (II), 100th Cong., 2d Sess. 19-20 (1988).

9

See CBS, Inc. v. PrimeTime 24 Joint Venture, 9 F. Supp. 2d 1333 (S. Dist. Fl. 1998).

10

Specifically, Primetime 24 offers network programming through the provision of three service packages:

PrimeTime East, consisting of programming from a CBS, ABC and NBC affiliate on the east coast;

PrimeTime West, comprising network affiliates on the west coast and Foxnet, which offers programming

from the Fox network. Subscribers may purchase all three of the service packages. 9 F. Supp. 2d at 1336.

11

The questionnaire inquired into whether the subscriber intends to use the programming for

residential use; whether the subscriber has subscribed to cable in the last 90 days and whether the

subscriber receives an acceptable signal over the air. Id.

12

Id. at 1338.

CRS-4

reduction in the viewing audience for local affiliated programming and consequently a loss

of advertising revenue to its local affiliates.13

In defense of its actions, PrimeTime 24 maintained that its consideration of a potential

subscriber's picture quality, in determining whether to provide service was consistent with

congressional intent in enacting the SHVA. According to the satellite carrier, Congress

enacted the Satellite Home Viewer Act to provide clear reception of network signals to

viewers unable to receive such signals.14 In addition, PrimeTime 24 argued that FCC

regulations do not adequately define a grade B signal for purposes of the SHVA; that

typography maps and signal strength tests used to support the network claims were

unreliable; and that its actions did not amount to a "willful and repeated" violation of the

act.15

In granting the injunction, the court rejected the notion that Congress' primary intent

was to base the provision of service on existing picture quality, noting that the statutory

language does not discuss clear reception and expressly adopts the FCC's objective

definition of a grade B signal to determine whether a household is an "unserved

household."16 In addition, the court found that the legislative history indicated that

Congress considered and rejected a proposal to tie the provision of network programming

to subjective subscriber assessments of over the air signal quality.17 Similarly, the court

concluded that the FCC's objective standard, although inexact in estimating the presence

of a grade B signal in individual households, was specifically endorsed by Congress in the

statutory language and as indicated in the legislative history.18 With regard to whether

PrimeTime 24's actions constituted a "willful and repeated" violation of the act, the court

cited evidence demonstrating that the satellite carrier "knew of the governing legal

standard, but simply chose to ignore it."19

The court's preliminary injunction required PrimeTime 24 to terminate its delivery of

CBS and Fox programming to subscribers, not residing in "unserved households," who

signed up for the satellite service after March 11, 1997, the date the action was originally

filed. While service termination was to take effect, originally, no later than October 8,

1998, the court delayed enforcement of the order until February 28, 1999, pursuant to an

agreement between the parties, to await the conclusion of a FCC proceeding to modify the

definition of a grade B signal for purposes of the SHVA.

In addition to CBS and Fox's lawsuit, other actions were brought against PrimeTime

24, alleging violations of the Satellite Home Viewer Act by the carrier. On August 19,

1998, the American Broadcasting Company (ABC) obtained a permanent injunction,

barring PrimeTime 24 from retransmitting the signal of any ABC affiliate into the local

13

Id.

14

Id. at 1338.

15

9 F. Supp. 2d at 1339-43.

16

Id. at 1339.

17

Id.

18

Id. at 1340.

19

Id. at 1343-44.

CRS-5

market of WTVD--the network's Raleigh-Durham, North Carolina affiliate.20 In addition,

the four major television networks brought an action against EchoStar Communications

alleging similar SHVA violations by that satellite carrier.21

Subsequent Developments

Permanent Injunction Issued Against PrimeTime 24 by Miami Court

On December 30, 1998, the Federal District Court in Miami issued a permanent

injunction against PrimeTime 24, ordering the carrier to terminate its provision of CBS or

Fox programming to "any customer that does not live in an `unserved household'," unless

it obtains prior written consent to provide such service from the affected local network

affiliates or provides the stations with copies of signal intensity tests "showing that the

household cannot receive an over the air signal of grade B intensity... from any station of

the relevant network."22 In obtaining the written consent, PrimeTime 24 was required to

seek authorization from each "television station of the relevant network that is predicted...

to deliver a signal of at least grade B intensity to that household ."23 In addition, the

carrier was required to give affected stations 15 days advance notice, prior to conducting

any signal intensity testing. The court's order required PrimeTime 24 to terminate the

service of customers, who subscribed to the service prior to March 11, 1997, no later than

April 30, 1999.24 Subscribers who signed up to receive service after March 11, 1997

remained subject to the February 28, 1999 termination date set out in the court's earlier

preliminary injunction.

Legislative Action: The Intellectual Property and Communications

Omnibus Reform Act of 1999

Partly in response to the injunctions issued against PrimeTime 24, Congress enacted

the “Intellectual Property and Communications Omnibus Reform Act of 1999.”25 Adopted

as part of the Consolidated Appropriations Act for Fiscal Year 2000,26 the Act amends

SHVA to, among other things, provide relief to subscribers whose network signals were

20

See ABC, Inc. v. PrimeTime 24 Joint Venture, 17 F. Supp. 2d 478 (M.D.N.C. 1998). A similar

lawsuit against Primetime 24, filed by an Amarillo, Texas affiliate of the National Broadcasting

Company (NBC), is pending before a Federal District Court in Texas.. See Kannan

Communications, Inc. v. Primetime 24 Joint Venture, No. 2-96-CV-086 (N.D. Tex.).

21

See Communications Daily, vol. 18, no. 216 at p. 9 (November 9, 1998).

22

See CBS, Inc. v. PrimeTime 24 Joint Venture, 1998 U.S. Dist. LEXIS 20488 (S.D. Fl. December

30, 1998).

23

Id.

24

Prior to terminating its delivery of CBS and Fox programming, PrimeTime 24 was required to

give each subscriber 45 days notice. Id.

25

Note also that the scheduled sunsetting of SHVA on December 31, 1999 served as additional

motivation for congressional action.

26

The bill--S.1948, was a revised version of the proposal that emerged from Conference Committee.

The measure was attached as a rider to the FY2000 appropriations bill.

CRS-6

subject to termination as a result of the litigation.27 Section 1005 provides a moratorium

on copyright liability, permitting subscribers who receive a Grade B signal, and either (a)

whose “satellite delivered network signal was terminated after July 11, 1998 and before

October 31, 1999" or (b) [who] “received such service on October 31, 1999" to remain

eligible to receive such signals until December 31, 2004.

In addition, the Act broadens the category of subscribers eligible to receive distant

network signals. While the Act retains the limited authorization to retransmit such

programming only to “unserved households”, the term “unserved household” was

expanded to include subscribers in addition to those previously made eligible under SHVA.

The term now includes subscribers who cannot receive an over-the-air Grade B signal, as

defined by FCC rules in effect January 1, 1999; recreational vehicles and commercial

trucks; C-band satellite subscribers; and subscribers receiving a waiver from the network

station. Satellite carriers are limited to retransmitting the distant signal of no more than

two network stations for each of the television networks to subscribers residing in

“unserved households,” and may provide such signals in addition to the retransmission of

local network affiliates.28

The Act directs the FCC to promulgate rules applying “network nonduplication

protection; syndicated exclusivity protection and sports blackout protection” to the

retransmission of nationally distributed superstations; and to apply sports blackout

protection to the retransmission of network stations, “to the extent technically feasible and

not economically prohibitive.”29 In addition, the Commission is authorized to evaluate,

within one year of the date of enactment, alternative standards for determining subscriber

eligibility to receive a distant network signal and to recommend modifications to its Grade

B standard or the adoption of an alternative standard. Moreover, the Act requires the

FCC to promulgate rules to establish a “point-to-point” predictive model for determining

an individual subscriber’s ability to receive an over-the-air Grade B signal.

The Act also authorizes the retransmission of local network stations into the local

market by satellite carriers and imposes mandatory signal carriage (“must carry”) and

retransmission consent requirements on carrier “local-into-local” service offerings.30

27

See H.Rept. 106-479, § 1000(a)(9).

28

Satellite carriers found to have “knowingly and willfully” violated the distant signal limitations

are subject to a forfeiture penalty of 50,000 dollars for each violation. See § 1008(a).

29

The FCC’s existing network nonduplication, syndicated exclusivity and sports blackout rules

prohibit the distant retransmission by cable operators of network programming, syndicated

programming and programming of sporting events, respectively, where such programming is

carried by a television station in the local market. The rules effectively provide exclusive rights

to local television stations with respect to the transmission of such programs. See generally, 47

C.F.R. Part 76, subpart F; 47 C.F.R § 76.67.

30

For a more detailed discussion of provisions governing “local-into-local”; “must carry” and

retransmission consent, as well as a general overview of the legislation, see CRS Report 98-942,

Satellite Delivered Television: Issues Concerning Consumer Access to Broadcast Network

Television Via Satellite.

EveryCRSReport.com

The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the

Library of Congress, charged with providing the United States Congress non-partisan advice on

issues that may come before Congress.

EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The

reports are not classified, and Members of Congress routinely make individual reports available to

the public.

Prior to our republication, we redacted names, phone numbers and email addresses of analysts

who produced the reports. We also added this page to the report. We have not intentionally made

any other changes to any report published on EveryCRSReport.com.

CRS reports, as a work of the United States government, are not subject to copyright protection in

the United States. Any CRS report may be reproduced and distributed in its entirety without

permission from CRS. However, as a CRS report may include copyrighted images or material from a

third party, you may need to obtain permission of the copyright holder if you wish to copy or

otherwise use copyrighted material.

Information in a CRS report should not be relied upon for purposes other than public

understanding of information that has been provided by CRS to members of Congress in

connection with CRS' institutional role.

EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim

copyright on any CRS report we have republished.