Order Code RS20057
February 10, 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
Kevin B. Greely
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. In addition, the Federal District Court for the
Middle District of North Carolina, in a similar opinion, enjoined the satellite carrier from
transmitting the programming of the American Broadcast Company (ABC) to satellite
dish owners within the market of ABC's Raleigh, North Carolina affiliate. In both
instances, 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. This report briefly summarizes the opinion of the Federal District
Court in Miami--the most broadly applicable among the court orders--and provides an
update on events that have taken place in the aftermath of the decision.
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
act, satellite carriers are provided a "compulsory license" to retransmit the programming
Congressional Research Service ˜ The Library of Congress

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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. In addition, satellite carriers are prohibited from willfull
4
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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
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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.

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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. The e
8
xclusive 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
retransmits the programming of an affiliate of each of the television networks to satellite
subscribers nationwide. In its attempt to comply with the "unserved household
10
"
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. Specifically, the networks
12
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.

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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. In addition, PrimeTime 24 argued that FC
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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. Similarly, the court
17
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 have been 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
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.

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the local market of WTVD--the network's Raleigh-Durham, North Carolina affiliate. In
20
addition, the four major television networks have brought an action against EchoStar
Communications alleging similar SHVA violations by that satellite carrier.21
Recent Developments
FCC Rulemaking Proceeding to Modify the Definition of Grade B Signal
As noted above, the district court has stayed the implementation of the preliminary
injunction against PrimeTime 24 in expectation of FCC action to modify its definition of
a "signal of grade B intensity" for purposes of the SHVA. In response to petitions filed
by the National Rural Telecommunications Association and EchoStar Communications
Corporation, the FCC initiated an expedited rulemaking proceeding on November 18,
1998 to explore issues related to the grade B signal definition.
22
In its notice of proposed rulemaking, the Commission sought comment on the extent
to which it possesses statutory authority to amend the definition of a "signal of grade B
intensity" for purposes of the SHVA.23 In addition, the agency requested comment on
how the definition could be redefined and invited proposals for the adoption of a model
for predicting which households could likely receive a grade B signal and a more accurate
method of measuring the strength of such signals at individual households. Input wa
24
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also solicited on the technical feasibility of "local-to-local" retransmission of broadcast
signals by satellite carriers and the necessity of modifying the grade B definition and
measurement procedures should Congress authorize a compulsory license to provide such
service.25 With respect to the PrimeTime 24 injunctions, the Commission noted its
apparent lack of authority to prevent most of PrimeTime 24's subscribers from losing
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). Note also that
EchoStar has filed suit against the broadcast networks, seeking a declaratory ruling that its
retransmissions do not violate the SHVA.
22 See Federal Communications Commission, Satellite Delivery of Broadcast Network
Signals Under the Satellite Home Viewer Act, 63 Fed. Reg. 67439 (1998).
23 63 Fed. Reg. at 67442-44. Those arguing against the agency's authority to modify the
definition assert that, by referencing the FCC's grade B standards in the statute, Congress intended
to effectively "freeze" those definitions at what they were at the time of the SHVA's enactment.
The FCC tentatively concluded that Congress did not intend to freeze the definition and that the
standards could be modified over time.
24 Id. at 67444-46.
25 Id. at 67447. "Local-to-local" service is the retransmission by satellite carriers of local
television stations into the stations' local market. Proposals were introduced in the 105th Congress
authorizing a compulsory license for the provision of such service by satellite carriers. For a
summary of the bills and issues connected with the provision of "local-to-local" service, see CRS
Report 98-942, Satellite Delivered Television: Issues Concerning Consumer Access to Broadcast
Network Television Via Satellite
.

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service, concluding that the evidence in the two cases "strongly suggests that many, if not
most, of those subscribers do not live in `unserved households' under any interpretation
of the term."26
The FCC issued its "Report and Order" in the proceeding on February 1, 1999,
adopting modifications to the measurement procedures and predictive models used to
assess the strength of television signals for purposes of the SHVA. The Order created
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a methodology by which signal strength could be measured at individual households, rather
than over an entire community. In addition, the Commission adopted a more accurate
model for predicting signal strength at individual households, which among other things
measures terrain elevation at shorter intervals and takes into account land use and land
cover (e.g.,vegetation and buildings). Moreover, the Order sets out a number of
recommendations for congressional action including: authorizing "local-into-local" service;
statutorily changing the definition of an "unserved household"; eliminating the 90-day
waiting period; and adopting a predictive model and "loser pays" mechanism by which the
party in error (i.e. the broadcaster or satellite carrier) pays the costs of signal testing at the
household in question. With respect to the PrimeTime 24 litigation, the Commission
reiterated that the new standards would do little to assist the majority of those subscribers
presently subject to termination as a result of the courts' injunctions.
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." In obtaining the written consent, PrimeTime 24 is required t
28
o
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 ."29 In addition, the
carrier must give affected stations 15 days advance notice, prior to conducting any signal
intensity testing. The court's order requires PrimeTime 24 to terminate the service of
customers, who subscribed to the service prior to March 11, 1997, no later than April 30,
1999.
30 Subscribers who signed up to receive service after March 11, 1997 remain subject
to the February 28, 1999 termination date set out in the court's earlier preliminary
injunction.
26 Id. at 67442.
27 See Satellite Delivery of Network Signals to Unserved Households for Purposes of the
Satellite Home Viewer Act, FCC 99-14 (February 1, 1999)(Report and Order).
28 See CBS, Inc. v. PrimeTime 24 Joint Venture, 1998 U.S. Dist. LEXIS 20488 (S.D. Fl.
December 30, 1998).
29 Id.
30 Prior to terminating its delivery of CBS and Fox programming, PrimeTime 24 is required
to give each subscriber 45 days notice. Id.